UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2
(Amendment No. 5)
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
RESERVENET INCORPORATED
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
FILE NO. 333-68312
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. [ ]
If this Form is filed to register securities in a continuous offering pursuant
to Rule 415, check the following box. [X]
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.
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PROSPECTUS
RESERVENET INC.
500,000 SHARES
COMMON STOCK
OFFERED AT $0.10 PER SHARE
(UNTIL SUCH TIME THE SECURITIES ARE LISTED ON THE OTCBB)
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: May 14, 2002
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TABLE OF CONTENTS
ITEM Page
---- ----
Summary 5
Offering 5
Risk Factors 6
Forward Looking Statements 7
Use of Proceeds 8
Determination of Offering Price 8
Dilution 8
Dividend Policy 8
Selling Shareholders 8
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 13
Interests of Named Experts and Counsel 13
Securities Act Indemnification Disclosure 14
Organization within the Last Five Years 15
Description of Business 15
Plan of Operation 15
Description of Property 25
Certain Relationships and Related Transactions 25
Market for Common Equity and Related Stockholder
Matters 25
Executive Compensation 26
Financial Statements 26
Changes in or Disagreements with Accountants
Disclosure 26
Indemnification of Officers and Directors 45
Other Expenses of Offering and Distribution 45
Recent Sales of Unregistered Securities 45
List of Exhibits 46
Undertakings 46
Signatures 47
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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. ReserveNet Inc. does not consider itself a "blank check"
company as defined under Rule 419 of the Securities Act of 1933, which states
that it is a company issuing penny stock and that is "a development state
company that has no specific business plan or purpose or has indicated that its
business plan is to engage in a merger or acquisition with an unidentified
company or companies, or other entity." The company has a bonafide business plan
and our strategy is to develop the foregoing concept into a viable business. We
are not seeking to merge or acquire a particular company as a principal strategy
in our course of business. ReserveNet is not yet operational, however, limited
development has begun on its website (www.ReserveNet.ws). Although the website
is accessible at this time, it's purpose is purely informational until which
time ReserveNet is successful in raising capital for further development. The
Company has not secured any arrangements for financing despite our on-going
efforts to attract investment capital.
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, CEO and Director, Daniel Regidor acquired 140,000 shares at a
price of $0.025 per share for total proceeds of $3,500. Subsequently, ReserveNet
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, ReserveNet undertook a 20 for 1 forward stock split.
On the same date, the Founder cancelled 50% of his holdings to bolster
ReserveNet's attractiveness to potential outside investors as well as increase
the relative equity percentage for the existing shareholders.
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 ReserveNet decides to terminate this registration.
5
RISK FACTORS
Investors in ReserveNet should be particularly aware of the inherent risks
associated with its 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
ReserveNet could remain as a start-up company with no material operations,
revenues, or profits. There can be no assurance that ReserveNet will be
successful or that past experiences of its officers and directors will result in
a similar success for ReserveNet.
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 of ReserveNet'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 ReserveNet Inc. 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.
No arrangements have been made to finance our business. Our business strategy
requires us to raise funds in three stages; $300,000, $1,500,000, $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 ReserveNet be unable to raise capital in subsequent financing, debt, or
some combination thereof, ReserveNet may not be able to progress its business
plan. In that event, ReserveNet would likely fail. Even if ReserveNet were to
successfully raise its next round of financing, subsequent financing rounds may
likely be needed to further develop its product and underlying business. Should
ReserveNet be unsuccessful in raising these additional funds, it would face a
significant probability of failure. Even if ReserveNet were to successfully
raise sufficient investment capital, it still faces substantial risks and
uncertainties in developing its business. Although the company is continuing its
efforts to attract investment capital, no arrangements of any kind have been
made to finance our business.
At this early stage, there is substantial risk that ReserveNet Inc. may not
establish itself as a going concern.
Please refer to the Independent Auditor's Report in this prospectus, "Note #3 -
Going Concern", page 36. In our accountant's report, it states, among other
things, that "without sufficient financing it would be unlikely for the Company
to continue as a going concern".
The current officers, Daniel Regidor and Rick Collins, are the sole officers and
directors of ReserveNet, 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 ReserveNet Inc.
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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.
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 our initial seed capital of $300,000 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.
As technology regarding the internet and the communications industry advances,
ReserveNet may not have sufficient capital to fund research and development to
maintain a competitive technological advantage and the company's products may
become obsolete.
ReserveNet may experience a deterioration in its capital reserves as a result of
its investment in research and development. This potential drain on ReserveNet's
capital may inhibit its on-going operations should it be forced to scale down
operations in order to enhance its products. Furthermore, this may also result
in a loss of market share and profitability which may not be recoverable.
Even if ReserveNet develops a superior product, our competitors may infringe
upon our design specifications. Conversely, ReserveNet may develop products that
may infringe upon others intellectual property rights. The company may be
compelled to enter into third party licensing agreements, if available, to
utilize proprietary technology in its products. The terms of these agreements
may not be favorable to the company.
Should a well capitalized competitor copy or otherwise obtain the use of our
technology, ReserveNet may not be able to seek legal remedies due to our limited
capital reserves. By the same token, should a competitor claim that ReserveNet
has infringed upon their intellectual property, we may not have sufficient
resources to adequately provide for a legal defense. This may result in either
costly design changes within our product or.we may be compelled to enter into
third party licensing agreements at terms that may not be favorable to the
company. Any infringement claims by third parties against the company may have a
material adverse effect on the company's business, financial condition and
results of operations.
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
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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 ReserveNet's securities.
The Selling Shareholders may sell their common stock at a fixed price of $0.10
per share until which time our securities become listed on the OTCBB. The
Selling Shareholders may then sell their shares at prices then prevailing or
related to the then current market price or at negotiated prices. Please also
refer to the "Plan of Distribution" in this prospectus for further information
regarding the sale of our securities. The offering price used herein has no
relationship to any established criteria of value, such as book value or
earnings per share. Additionally, because ReserveNet Inc. has no 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 ReserveNet's
common stock indicative of current market value for the assets owned by
ReserveNet. No valuation or appraisal has been prepared for ReserveNet'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.
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 ReserveNet Inc. 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 the date of this Prospectus, 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;
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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 as of the date of this
Prospectus.
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%
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.
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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 will be fixed at $0.10 per share, until which time
our securities are quoted on the OTC Bulletin Board and thereafter may be:
1. the market price prevailing at the time of sale;
2. a price related to such prevailing market price;
3. a privately negotiated price; or
4. such other price as the selling shareholders may determine from time to
time.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
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. ReserveNet is not aware of such arrangements and
has not been informed of any intention of whether selling shareholders have made
any such arrangements with agents that may act in this capacity. ReserveNet has
not engaged any brokers or dealers to participate in this offering. In the event
that selling shareholders decide to utilize market makers or broker-dealers to
re-sell their securities, a new prospectus would be required that discloses the
particular underwriter and terms of that arrangement. 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.
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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 12/31/02, or at such a time as their successors shall be elected and
qualified are as follows:
Date First Term
Name & Address Age Position Elected Expires
- --------------------------------------------------------------------------------
Daniel Regidor 38 CEO, Director 10/31/00 12/31/02
3701 Sacramento St. #323
San Francisco, CA
Rick Collins 37 VP, Director 12/15/00 12/31/02
2912 Octavia St.
San Francisco, CA
Each of the foregoing persons may be deemed a "promoter" of ReserveNet Inc., 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.
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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 - CEO, Director, 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 incorporated the
concept of "equity for patronage" and sought to file a patent for its concept.
Mr. Regidor structured an equity offering that supported 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 also consulted for other developmental stage companies as a strategic
adviser.
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.
Rick Collins - Vice President, Director
Rick Collins is currently seeking to build alliances within the internet
community to build distribution channels for ReserveNet's services. Rick Collins
had built the channel sales and business partner program for the western United
States of Reef, Inc. Reef is a 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.
In January 1995, Mr. Collins founded Net Results Marketing. Mr. Collins focused
on formulating 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.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information on the ownership of ReserveNet's
voting securities by officers, directors and major shareholders as well as those
who own beneficially more than five percent of ReserveNet's common stock through
the most current date - May 14, 2002:
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%
Common Rick Collins 0 shares 0%
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 ReserveNet's prospect of attracting additional investors while
simultaneously increasing the remaining shareholders' relative percentage
interest in ReserveNet Inc.. In doing so, Mr. Regidor received no proceeds from
ReserveNet 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 ReserveNet's common shares held by
twenty six (26) shareholders. ReserveNet Inc. 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 ReserveNet Inc., 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 ReserveNet's Articles of Incorporation and ByLaws, which
are incorporated herein and provided as exhibits hereto, if you should require
more details about ReserveNet's securities.
INTEREST OF NAMED EXPERTS AND COUNSEL
We have retained Warren Soloski, Esq. to issue an opinion as to the validity of
ReserveNet's issued securities. His opinion and consent have been incorporated
as an exhibit to this prospectus. Mr. Soloski had been retained for a flat fee
to issue his opinion and will not receive any other compensation, including any
compensation on a contingency basis in connection with this offering. Mr.
Soloski, is not connected with ReserveNet Inc. as a promoter, managing or
principal underwriter, voting trustee, director, officer or employee.
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Other than Mr. Soloski's services in issuing his opinion on the validity of the
issuance of our securities, no expert or counsel named in this prospectus as
having prepared or certified any part of this prospectus 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.
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, ReserveNet'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.
SECONDARY MARKET REGULATIONS - OTC BULLETIN BOARD
If ReserveNet Inc. becomes listed for trading on the OTC electronic Bulletin
Board, the trading in ReserveNet'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 ReserveNet Inc., 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 ReserveNet Inc., and therefore a less liquid market for the
securities.
14
ORGANIZATION WITHIN LAST FIVE YEARS
ReserveNet Incorporated was incorporated in Delaware on November 22, 2000. In
February of 2001, ReserveNet's board of directors voted to seek capital to
further development its business plan. During the period from February through
May 2001, ReserveNet Inc. received funding through the sale of common stock to
private investors.
At present, ReserveNet remains in its development stage and has not yet
commenced operations or generated any revenues.
DESCRIPTION OF BUSINESS
ReserveNet is a development stage company, whose business plan is to provide
consumer reservation services to the restaurant industry. ReserveNet hopes to
develop a web-based reservation system that allows consumers to place
reservations directly with restaurants through the ReserveNet website. The
company hopes to generate subscription revenue from restaurants and advertising
revenue through its website. 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 favorable
restaurant reviews.
ReserveNet believes that a significant amount of information can be obtained
from its user base that may be valuable to advertisers and restaurants to
formulate more targeted marketing campaigns. Our website will make active use of
a file called a "cookie" which would be downloaded to our registered users'
computers. Cookies can be used to determine what web sites a user frequents,
store database information, custom page settings, or anything that would make a
site individual and customizable. There are many reasons a given site would wish
to use cookies. These range from the ability to personalize information, or to
help with on-line sales/services, or simply for the purposes of tracking popular
links or demographics. Cookies also provide programmers with a means of keeping
site content fresh and relevant to the user's interests. Most web servers use
cookies to help with back-end interaction as well, which can improve the utility
of a site by being able to securely store any personal data that the user has
shared with a site. By utilizing this data, ReserveNet hopes to provide a more
unique and individualized experience to its users.
ReserveNet plans to create a proprietary website to serve as the front-end of
its reservation management system for internet users. We are currently seeking
partnerships with high traffic web sites to provide links to the ReserveNet
service. ReserveNet's objective is to grow our user base through these web
partnerships..
PLAN OF OPERATION
ReserveNet is seeking to raise capital in three tranches; $300,000, $1,500,000,
and $1,500,000 for a total of $3,300,000 by way of a private equity offering,
debt, or some combination thereof to fund its product development, initial
product rollout, establish offices, pay salaries and purchase capital equipment.
ReserveNet will seek to raise this money in three installments, in private
offerings and not using this prospectus. The company has not received financing
commitments of any kind, although, we plan to continue our capital raising
efforts on an on-going basis. We hope to time the capital raising of each
additional tranche with the completion of as many milestones as possible (as set
forth in our Milestone Summary) in order to justify higher valuations. As such,
there are no expected time frames to close each round of funding. There is no
assurance that we will be able to adhere to the timing in our milestone schedule
as unforseen circumstances may pose an accelerated drain on our capital. This
may cause us to seek financing sooner than expected. Even if ReserveNet succeeds
in accomplishing its milestones, there can be no assurance that this will
justify an attractive valuation for the company and, moreover, our ability to
secure investment capital may not be at reasonable terms. Notwithstanding, the
company believes that it will be able to test its prototype, fund further
development and rollout its product within the San Francisco Bay area market
within six to eighteen months if we are successful in raising investment capital
as outlined for our first and second tranche.
15
We estimate the cost to develop ReserveNet's prototype to run approximately
$240,000 assuming hourly rates for a highly experienced engineer to run roughly
$125/hr. We've solicited a technical feasibility study and a request for
proposal from several development firms that would commit at least three
full-time engineers to the development of our prototype. The technology we plan
to use in our product is not leading edge. In fact, database, web, and telephony
technology is pervasive and widely adapted for a variety of uses in many
industries today. The total development time to complete the project would run
approximately four months. The initial seed capital tranche of $300,000, should
last the company up to six months on a conservative basis, depending on our
actual cash outlays for the period. We also expect to hire a Chief Technical
Officer within this period to oversee the development of our product and web
assets. We hope to complete our capital raising efforts for this tranche
sometime in September 2002, however, there is no guarantee the company will be
successful in these efforts or whether the timing of the receipt of this capital
will be within a prescribed period of time. We do not have any commitments of
any kind at this time. All contact with potential investors are at preliminary
stages.
Once the prototype is developed, tested and refined, the company will begin to
commence operations by rolling out its product. ReserveNet estimates that a
second tranche of $1,500,000 would be necessary to bring the product to market
and establish our corporate infrastructure. The Company has budgeted up to
$850,000 for salaries and outside contractors, and $180,000 for office rent,
furniture and technical equipment. The balance would be used for advertising,
marketing and general working capital needs. ReserveNet expects this tranche to
fund the company's operations for at least twelve to eighteen months from the
date of funding, depending on our actual cash outlays and the timing of cash
flow from operations.
Once ReserveNet establishes its niche market in San Francisco, the company plans
to develop other markets such as Los Angeles and Chicago. In order to finance
this expansion, ReserveNet plans to raise a third tranche of roughly $1,500,000
in capital. This will allow the company to establish satellite offices, purchase
equipment, hire additional personnel, provide for additional funds for
advertising and marketing, working capital, and fund further enhancements to its
product if deemed necessary.
If the company raises less than the minimum amount of $300,000, we may only be
able to progress the development of our prototype on an incremental basis.
ReserveNet may choose to acquire or license similar technology regarding
reservation management applications if it is determined that it is feasible to
obtain this technology within a budget consistent with the actual amount of
funds raised. If the Company were to adopt this strategy, it is highly likely
that modifications to an existing application would be necessary in order to
differentiate and increase the relative attractiveness of ReserveNet's product.
Provided the company can locate such technology at a reasonable cost, the
expense of modifying such an application is largely unknown due to the
uncertainty regarding its capabilities. Depending on how much money ReserveNet
raises, we may only succeed in cursory development of our website, database
modules, communication interface, or any other requisite portion of our product
which may not make our prototype fully functional or operational. If the company
experiences a shortage of funds, we may attempt to negotiate with engineers to
accept equity, debt or some combination thereof in the company, in order to
conserve our cash position and further development. Any agreements that involve
the distribution of equity will dilute the interests of the existing shareholder
base. Should the company achieve only incremental progress on its product
development due to a cash shortfall, the company may remain dormant until which
time it successfully raises the necessary capital to complete its prototype.
Should we raise less than $1,500,000 in our second tranche, but enough to cover
the development of our prototype, ReserveNet may not succeed in bringing our
product into full production due to engineering refinements that may be
necessary as a result of our market beta tests. The company may not have
sufficient resources to attract and hire key human resources, and/or provide for
an advertising & marketing campaign necessary to establish a presence within the
local marketplace. Without these elements, the company may have difficulty
growing revenue and, among other things, establishing itself as a going concern.
Attracting sufficient capital at this stage, will be essential to establishing
the company's infrastructure, and to spearhead the growth of its service.
16
Even if we raise sufficient capital to carry the company through our early
growth stages, the company will continue its capital raising efforts. We believe
a third tranche of $1.5 million would allow us to enter new markets, broaden our
marketing campaign, build upon our strategic partnerships, enhance our product
and hire additional staff to continue revenue growth. Based on our estimates, we
anticipate that this amount will be sufficient for the company to sustain
operations up through our third year of operation. Our objective is to achieve
positive cash flow from operations by the end of our third year of operation. If
the company raises an amount less than our objective for this third round of
financing, the company may not be able to meet its growth objectives and may be
limited to only one geographic market.
Our current cash balance is $1,021 as of the date of the prospectus. Management
believes the current cash balance is sufficient to fund its current minimum
level of operations through at least the second quarter of 2002, 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 ReserveNet Inc. 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
ReserveNet'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 ReserveNet. 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.
Even in the event that additional financing is received, the company may not be
able to withstand the intense competition it may face from larger and more
adequately financed companies. If the company succeeds in obtaining the level of
funding it considers necessary, there are no guarantees that projected revenues
and/or profits will materialize. In fact, keeping in mind the uncertainties
regarding research and development expenses involved with developing new
software and related technology, ReserveNet Inc. can give no assurances of any
kind regarding funding, revenues, costs, expenses, and/or profits.
ReserveNet currently has no commitments for any additional funds as of the date
of this prospectus.
Milestone Summary
Milestones accomplished
- -----------------------
o Purchased www.reservenet.ws domain.
-----------------
o Published site with informational content.
o Developed corporate logo.
o Met with outside contractors to determine technical feasibility and
outlined product architecture.
17
o Obtained request for proposals (RFP's) regarding development cost and time
to completion.
o Obtain letter of intent from contractors for development.
Milestones in progress
- ----------------------
o Explore financial viability of licensing existing technology to integrate
into ReserveNet's product architecture to reduce cost of development and
shorten product rollout time.
o Raise financing in three tranches: $300,000/$1,500,000/$1,500,000.
Prepare updated executive summary and business plan.
Attend venture capital conferences.
Present business plan to investors.
Estimated cost: $15,000 - $25,000
Current burn rate: approx. $1,500 per month
Milestones to be achieved upon successfully raising seed funding of $300,000
- ----------------------------------------------------------------------------
(Months 0 - 6, Six months total)
- --------------------------------
o Hire chief technical officer and support engineer.
o Engage outside software development firm
o Secure test market alliances with syndication of restaurants and local
content providers
o Complete prototype
o Implement 30 day product testing period
o Re-engineer prototype to incorporate refinements
o Re-test prototype and make any requisite modifications
Estimated Burn Rate: $50,000 per month
Milestones to be achieved upon successfully raising second tranche of $1,500,000
- --------------------------------------------------------------------------------
(Months 7-18, one year total)
- -----------------------------
o Recruit and elect Board of Directors
o Secure & establish office space (incl. Phone lines, T-1 broadband)
o Purchase office furniture, PC's, servers, printers
o Hire Directors of Marketing and Sales, Controller, Administrator
o Prepare launch strategy and release product
o Formulate & launch branding, advertising and marketing strategy
o Formalize alliances with strategic web partners
o Formulate strategy to technically integrate product to restaurants'
existing point-of-sale systems.
o Refine product to enable tracking of customer order behavior
Estimated burn rate: $125,000 per month
Milestones to be achieved upon successfully raising third tranche of $1,500,000
- -------------------------------------------------------------------------------
(Months 18-36, 1.5 years total)
- -------------------------------
Hire additional support staff.
Prepare launch strategy for new market: Los Angeles
Outline technical integration of our product with inventory management
application providers.
Roll-out product in Los Angeles market.
Estimated burn rate: $83,333 per month (*assumption excludes anticipated cash
flow from operations)
18
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 Inc. is seeking to develop a web-based reservation interface to
provide instantaneous reservation services for the restaurant industry. We
expect to generate revenue primarily from general advertising and restaurants
who will be charged for each confirmed reservation. A reservation becomes
confirmed when the restaurant secures an available time slot and the patron
keeps his appointment with the restaurant. We also hope to glean information
regarding our users' web surfing habits. We expect that this information to be
of value to potential advertisers and restaurant owners to better understand our
user base in order to formulate more targeted marketing campaigns. We have begun
to explore strategic relationships with online service providers, regional media
properties (such as the LA Times and CitySearch) and dining specific sites, to
capture incidental user traffic. Most sites do not currently offer a direct,
reservation capability for restaurants. We believe that advertisers would have
the opportunity to tailor highly targeted marketing campaigns to our users by
utilizing information we gather regarding our users web surfing habits. As an
incentive to web media businesses, ReserveNet, will share a portion of our
advertising revenue with those that enter into partnership agreements with the
Company. By providing an interactive, proprietary means to deliver reservation
services via the Internet, we hope to simultaneously promote traffic on both our
domain and strategic partners' web sites.
Although ReserveNet Inc. does not have any commitments in place with any
strategic web media businesses, our preliminary discussions with the LA Times
and CitySearch have indicated a verbal interest in testing our technology once
we've developed a prototype. No formal agreements with any web media businesses
have been entered into at this time.
PLANNED PRODUCT
RESERVATIONS INTERFACE
The ReserveNet reservation system can best be understood from a typical
reservation request.
The consumer will arrive to the ReserveNet service in two ways:
1) On the web, by clicking on a link located on one of ReserveNet's strategic
partners' websites. On our partners' websites the links to ReserveNet will
likely be positioned within pages that are specific to dining. A ReserveNet
icon will correspond to those links and will appear next to each listed
restaurant that subscribed to our service.
2) On the web by going directly to ReserveNet's website (www.ReserveNet.ws).
We expect to provide informational content regarding the company and an
online demo of our product on our website once we've completed prototype
testing.
19
Once the ReserveNet website is fully developed, the customer will be prompted
for information to register as a new user. The customer is then prompted for
information related to their desired reservation. If the consumer arrived at our
site via a specific restaurant link, then the consumer is prompted to initiate
the request for a reservation with the restaurant. If the consumer arrived to
www.ReserveNet.ws directly, then she is prompted to select a restaurant that has
subscribed to our service.
Once the customer initiates the request for a reservation, ReserveNet's
computers will place a telephone call to the restaurant. While ReserveNet is
confirming with the restaurant, the customer is asked to standby for
confirmation. The information the customer indicated for their desired
reservation will be relayed to the restaurant using voice synthesis. The
restaurant will have the choice of responding in three ways:
1) Confirming the time requested.
2) Declining the reservation request and offering an alternative time.
3) Relaying to the patron that the restaurant is fully booked for the evening.
Option #2 places the restaurant on hold while ReserveNet relays the information
back to the customer on ReserveNet's website. Options #1 and #2 effectively end
the call with restaurant.
The customer receives the restaurant's response directly on ReserveNet's
website. If an alternate time is offered by the restaurant, then the customer is
prompted to accept or decline the suggested reservation. In either case, the
customer's response is relayed to the restaurant, ending the communication
between the parties.
ReserveNet solicited a technical feasibility study and request for proposal from
several software engineering firms. The technology to develop the initial
ReserveNet reservation system is readily available. Database, voice synthesis
and interactive telephony software exist in the marketplace today, however
engineering resources will be required to integrate our desired features into
the comprehensive system ReserveNet envisions. Based on the wide availability of
these technologies, ReserveNet does not forsee any technical issues that would
prevent the company from incorporating these technologies. Based upon the
proposals we've received, ReserveNet anticipates that the technology above could
be incorporated into its prototype within the $300,000 budget of our first
tranche. The Company is also searching the marketplace for existing applications
that could be modified to meet our objectives for our initial prototype.
Provided that the company raises the requisite amount of capital to develop its
prototype, we believe development would be achievable within a reasonable time
frame and within our budget estimate. Future enhancements to the reservation
management system will incorporate more sophisticated technology and will
require additional investments in research and development.
During the next 36 months ReserveNet's business plan will require, the company,
to raise capital of several tranches through the sale of common stock in a
private placement, debt, or some combination thereof. This capital will be used
to fund the development of its prototype, hire technical, administrative, sales
and marketing staffs, purchase computers and fixed assets, advertising, travel
expenses, rent and other operating expenses for up to three years.
If ReserveNet 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
ReserveNet Inc.. 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.
20
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. We hope to establish
relationships with established web media businesses that provide restaurant
information in various forms. This type of information may be in a simple
listing format, to sites that provide comprehensive reviews of restaurants.
These sites may have a vast, dedicated audience frequenting their websites.
ReserveNet hopes to capture a portion of their web traffic to use our services.
Product Distribution
ReserveNet Inc. 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 several Internet companies who have indicated preliminary
interest in establishing a strategic relationship with ReserveNet. Although no
agreements or commitments exist between these companies and ReserveNet, they
have verbally expressed interest in testing our technology once developed. We
hope to pursue more formal agreements once our product is developed and
successfully tested.
COMPETITION AND COMPETITIVE POSITION
Many existing companies are already directly and indirectly established within
the market that ReserveNet plans to enter. ReserveNet's primary competitors, at
present, are ISeatz.com and OpenTable.com. ReserveNet will also compete with
restaurants that offer the ability to make reservations from their proprietary
Web sites.
OpenTable, Inc. is a provider of Internet-enabled customer relationship
management, marketing, 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.
ReserveNet 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.
21
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 ReserveNet'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 it site. Such market effects could have a
material adverse effect on ReserveNet's business, results of operations, and
financial condition.
ReserveNet's competitors may develop Web based reservation services that are
equal to or superior to those of ReserveNet Inc. or that achieve greater market
acceptance than ReserveNet'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, ReserveNet may not attract
sufficient investment capital to fully develop such a system. Additionally,
ReserveNet may not be able to implement such technology quickly enough due to
capital constraints and/or engineering resources. The ability of ReserveNet Inc.
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 ReserveNet 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
ReserveNet's web-site. The above factors including any other unforeseen
circumstances may have a material adverse effect on ReserveNet's business,
results of operations, and financial condition.
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 per engineer. ReserveNet
estimates the time to develop a prototype to be roughly four months from the
receipt of additional capital, for a total expenditure of roughly $240,000 if we
outsource the project. Even if we outsource the project, we expect to hire a
technical staff to oversee the development, testing and provide for general
technical maintenance of our products. 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. We are also exploring
licensing technology for existing reservation management applications. This
option will also require engineering resources to modify the application
according to ReserveNet's architecture, however it would require significantly
less programming hours in addition to shortening the time to bring a product to
market. Our goal is to begin beta testing of our product approximately four
months after receipt of our initial seed capital of $300,000.
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. 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 ReserveNet is unsuccessful in establishing an
alliance with an established brand in a market where few content providers
exist, ReserveNet may fail to attract the requisite critical mass of patrons to
utilize its service. This may have an adverse financial impact on ReserveNet
Inc.
22
ReserveNet must also build a critical mass of restaurant owners to subscribe to
its products and services. ReserveNet hopes to amass a diverse restaurant base
to appeal to the taste and preferences of its consumers. In order to shorten the
time to acquire individual restaurants, ReserveNet 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.
ReserveNet may seek to protect its products by filing for patent protection once
a prototype is developed and tested. There can be no assurance that any
patent(s) that may be issued will not be challenged, invalidated or
circumvented, or that any rights granted thereunder would provide proprietary
protection to the company. The failure of any patent(s) to protect ReserveNet's
products may make it easier for the company's competitors to offer products
equivalent to or superior to the company's products.
ReserveNet plans to enter into confidentiality or license agreements with its
employees and consultants, and generally controls access to and distribution of
its documentation and other proprietary information. Despite these precautions,
it may be possible for a third party to copy or otherwise obtain and use the
company's technology without authorization, or to develop similar technology
independently. In addition, effective copyright, trademark and trade secret
protection may be unavailable or limited in certain foreign countries, and the
global nature of the Web makes it virtually impossible to control the ultimate
destination of ReserveNet's products. Policing unauthorized use of the company's
technology is difficult. There can be no assurance that the steps taken by
ReserveNet Inc. will prevent misappropriation or infringement of its technology.
ReserveNet Inc. may receive in the future, notice of claims of infringement of
other parties' proprietary rights, including, but not limited to, claims for
infringement resulting from utilizing other company's restaurant rating systems.
Although the company will investigate any claims and respond as it deems
appropriate, there can be no assurance that infringement or invalidity claims
(or claims for indemnification resulting from infringement claims) will not be
asserted or prosecuted against the company or that any assertions or
prosecutions will not materially and adversely affect ReserveNet's business,
results of operations and the value of the shareholders' interests.
If any claims or actions were asserted against ReserveNet Inc., the company
might seek to obtain a license under a third-party's intellectual property
rights. There can be no assurance, however, that under such circumstances a
license would be available on commercially reasonable terms, or at all.
As ReserveNet Inc. continues to introduce new services that incorporate new
technologies, it anticipates that it may be required to license additional
technologies from others. There can be no assurance that these third-party
technology licenses will be available to the company on commercially reasonable
terms, if at all. The inability of the company to obtain any of these technology
licenses could result in delays or reductions in the introduction of new
services or could materially and adversely affect the performance of its
services until equivalent technology could be identified, licensed and
integrated. Any such delays or reductions in the introduction of services or
adverse impact on service quality could materially and adversely affect the
company's business, results of operations and the value of the shareholders'
interests.
23
ReserveNet Inc. relies on common law trademark rights to protect its
unregistered trademarks as well as its trade dress rights. Common law trademark
rights generally are limited to the geographic area in which the trademark is
actually used, while a United States federal registration of a trademark enables
the registrant to stop the unauthorized use of the trademark by any third party
anywhere in the United States. The protection available, if any, in
jurisdictions other than the United States may not be as extensive as the
protection available to the Company in the United States.
Although ReserveNet Inc. seeks to avoid infringement on the intellectual
property rights of others, there can be no assurance that third parties will not
assert intellectual property infringement claims against the company. Any
infringement claims by third parties against the company may have a material
adverse effect on the company's business, financial condition and results of
operations.
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 RESERVENET'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 made limited progress on the development of ReserveNet's website but
have received quotes from outside contractors to develop our prototype.
Development will not progress until the company successfully raises at least
$300,000. Monies raised less than this amount may only progress our product
development on an incremental basis and may not make our product fully
functional or marketable.
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 & Director, Daniel Regidor.
ReserveNet plans to rely on the services of its Vice-President and Director,
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 ReserveNet Inc. 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 this prospectus, 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
24
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.
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.
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 our
second tranche of $1,500,000 and then begin hiring new employees per the
business plan.
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 no assurance that ReserveNet Inc. 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 December 31, 2001, ReserveNet had twenty-six (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 ReserveNet Inc.. 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
25
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
ReserveNet 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.
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 reviewed and audited financial statements of the Company for the
nine months ended September 30, 2001, the year ended December 31, 2001, 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)
26
G. BRAD BECKSTEAD
- -----------------
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540 (fax)
INDEPENDENT AUDITOR'S REPORT
March 19, 2002
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 December 31, 2001 and 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 December
31, 2001. These financial statements are the responsibility of the Company's
management 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 December 31, 2001 and 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 December 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 3 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 plan in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ G. Brad Beckstead
G. Brad Beckstead, CPA
27
ReserveNet, Inc.
(A Development Stage Company)
Balance Sheets
as of
December 31, 2001 and 2000
and
Statements of Income,
Stockholders' Equity, and
Cash Flows
for the periods ending
December 31, 2001 and 2000
and for the period
October 31, 2000 (Date of Inception)
through
December 31, 2001
28
TABLE OF CONTENTS
-----------------
PAGE
----
Independent Auditor's Report 1
Balance Sheets 2
Statements of Operations 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Footnotes 6
29
ReserveNet, Inc.
(a Development Stage Company)
Balance Sheets
December 31,
---------------------------------------------
2001 2000
--------------------- --------------------
Assets
Current assets:
Cash $ 5,720 $ 3,575
Due from shareholder 755 -
--------------------- --------------------
Total current assets 6,475 3,575
--------------------- --------------------
$ 6,475 $ 3,575
===================== ====================
Liabilities and Stockholders' Equity
Current liabilities:
Due to shareholder $ - $ 2,732
--------------------- --------------------
Total current liabilities - 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 12/31/01 and 12/31/00, respectively 190 7
Additional paid-in capital 28,310 3,493
(Deficit) accumulated during development stage (22,025) (2,657)
--------------------- --------------------
6,475 843
--------------------- --------------------
$ 6,475 $ 3,575
===================== ====================
The accompanying notes are an integral part of these financial statements.
30
ReserveNet, Inc.
(a Development Stage Company)
Statements of Operations
For the year October 31, 2000 October 31, 2000
ended (Inception) to (Inception) to
December 31, December 31, December 31,
2001 2000 2001
----------------- ----------------- -----------------
Revenue $ - $ - $ -
----------------- ----------------- -----------------
Expenses:
General administrative expenses 18,568 2,657 21,225
General administrative expenses - related party 800 - 800
----------------- ----------------- -----------------
Total expenses 19,368 2,657 22,025
----------------- ----------------- -----------------
Net (loss) $ (19,368) $ (2,657) $ (22,025)
================= ================= =================
Weighted average number of
common shares outstanding - basic and fully diluted 1,775,683 623,358
================= =================
Net (loss) per share - basic and fully diluted $ (0.01) $ (0.00)
================= =================
The accompanying notes are an integral part of these financial statements.
31
ReserveNet, Inc.
(a Development Stage Company)
Statement of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
-------------------------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
--------------- -------------- -------------- ---------------- ----------------
December 2000
Founders 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
Recapitalization
adjustment 180 (180) -
Net (loss)
January 1, 2001 to
December 31, 2001 (19,368) (19,368)
--------------- -------------- -------------- ---------------- ----------------
Balance, 12/31/01 1,900,000 $ 190 $ 28,310 $ (22,025) $ 6,475
=============== ============== ============== ================ ================
The accompanying notes are an integral part of these financial statements.
32
ReserveNet, Inc.
(a Development Stage Company)
Statements of Cash Flows
For the year October 31, 2000 October 31, 2000
ended (Inception) to (Inception) to
December 31, December 31, December 31,
2001 2000 2001
----------------- --------------- ---------------
Cash flows from operating activities
Net (loss) $ (19,368) $ (2,657) $ (22,025)
Adjustments to reconcile net (loss) to net cash
provided (used) by operating activities:
(Increase) in due from shareholder (18,427) - (18,427)
Increase in due to shareholder 14,940 2,732 17,672
----------------- --------------- ---------------
Net cash provided (used) by operating activities (22,855) 75 (22,780)
----------------- --------------- ---------------
----------------- --------------- ---------------
Cash flows from 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 2,145 3,575 5,720
Cash - beginning 3,575 - -
----------------- --------------- ---------------
Cash - ending $ 5,720 $ 3,575 $ 5,720
================= =============== ===============
Supplemental disclosures:
Interest paid $ - $ - $ -
================= =============== ===============
Income taxes paid $ - $ - $ -
================= =============== ===============
The accompanying notes are an integral part of these financial statements.
33
ReserveNet, Inc.
(a Development Stage Company)
Notes
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
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 December 31, 2001.
Impairment of long-lived assets
- -------------------------------
Long-lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of
an asset may not be recoverable or is impaired. No such impairments have been
identified by management at December 31, 2001.
Revenue recognition
- -------------------
The Company reports revenue as invoiced on an accrued basis.
Advertising costs
- -----------------
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in selling, general and administrative expenses in
2001.
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. The
Company had no dilutive common stock equivalents, such as stock options or
warrants as of December 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.
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.
34
ReserveNet, Inc.
(a Development Stage Company)
Notes
Fair value of financial instruments
- -----------------------------------
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of December
31, 2001. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term in nature
and their carrying amounts approximate fair values or they are payable on
demand.
Income Taxes
- ------------
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable on the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable or refundable
for the period plus or minus the change during the period in deferred tax
assets and liabilities.
Segment reporting
- -----------------
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information". The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
Dividends
- ---------
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.
Recent pronouncements
- ---------------------
The FASB recently issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133". The Statement defers for one year the effective date of
FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal
years beginning after June 15, 2000. In June 1998, the FASB issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement will require the company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted
to fair value through income, if the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The company does not expect SFAS No. 133 to have a material impact on
earnings and financial position.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
(SAB No. 101), which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101 did not impact
the company's revenue recognition policies.
Stock-BasedCompensation
- -----------------------
The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations and has adopted the disclosure-only
alternative of FAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and other
non-employees are accounted for using the fair value method as prescribed by
FAS No. 123.
Year end
- --------
The Company has adopted December 31 as its fiscal year end.
35
ReserveNet, Inc.
(a Development Stage Company)
Notes
Note 3 - 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 raised funds via private securities offering. If
the securities offering does not provide sufficient capital, a shareholder of
the Company has agreed to provide sufficient funds as a loan over the next
twelve-month period. However, the Company is dependent upon its ability to
secure equity and/or debt financing and there are no assurances that the Company
will be successful, without sufficient financing it would be unlikely for the
Company to continue as a going concern.
The officers and directors 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 4 - Income taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred tax
assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
-----
Total -%
======
As of December 31, 2001, the Company has a net operating loss carry forward of
approximately $22,025 for tax purposes, which will be available to offset future
taxable income. If not used, this carry forward will expire in 2021.
36
ReserveNet, Inc.
(a Development Stage Company)
Notes
Note 5 - 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
20-for-1 forward split.
During December 2000, the Company issued 1,400,000 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 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.
Note 6 - Warrants and options
There are no warrants or options outstanding to acquire any additional shares of
common stock.
Note 7 - Related party transactions
The Company paid professional fees totaling $300 to an individual, who is
shareholder of the Company, during the year ended December 31, 2001.
The Company paid professional fees totaling $500 to an individual, who is an
officer and director of the Company, during the year ended December 31, 2001.
37
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 prospectus 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 prospectus, or most recent
post-effective amendment, which, individually or in the
aggregate, represent a fundamental change in the information
set forth in this prospectus; and
c. Include any material information with respect to the plan of
distribution not previously disclosed in this prospectus or
any material change to such information in the prospectus.
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 prospectus 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.
38
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 May 14, 2002.
ReserveNet, Inc.
By /s/ Daniel Regidor
-------------------------------
Daniel Regidor,
CEO, Director
By /s/ Rick Collins
-------------------------------
Rick Collins,
Vice President, Director
In accordance with the requirements of the Securities Act of 1933, this
prospectus was signed by the following persons in the capacities and dates
stated.
/s/ Daniel Regidor May 14, 2002
- ----------------------------- -------------------
Daniel Regidor Date
CEO and Director
(Principal Executive Officer,
Principal Financial Officer,
Principal Accounting Officer)
/s/ Rick Collins May 14, 2002
- ----------------------------- -------------------
Rick Collins Date
Vice President, Director
39