SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
Exact name of issuer as specified in its charter)
State of Nevada
State or other jurisdiction of incorporation or organization)
One Campus Place, Brooklyn NY 11208, (718) 827-7422
Address, including zip code, and telephone number,
including area code of issuer's principal executive office)
Samuel H. Sloan, One Campus Place, Brooklyn NY 11208
Name, address, including zip code, and telephone number,
including area code, of agent for service)
Primary Standard Industrial Classification Code Number)
I.R.S. Employer Identification Number)
It is the intention of the issuer that this offering statement shall become qualified by operation of the terms of Regulation A.
Part I -- Notification
The information requested shall be provided in the order which follows specifying each item number; the text of each item as presented in this form may be omitted. All items shall be addressed and negative responses should be included.
ITEM 1. Significant Parties
list the full names and business and residential addresses, as applicable, for the following persons:
a. the issuer's directors;
Samuel H. Sloan
One Campus Place
Brooklyn NY 11208
Kanagawa Prefecture, Japan 253-0083
Shirogane 1-27-1, Apt. 601
Tokyo, Japan 108-0072
b. the issuer's officers;
Chairman of the Board
Kanagawa Prefecture, Japan
Samuel H. Sloan
One Campus Place
Brooklyn NY 11208
Vice-President in charge of Software Development
Shirogane 1-27-1, Apt. 601
Tokyo, Japan 108-0072
c. issuer's general partner
d. record owners of 5 percent or more of any class of the issuer's securities:
As of this date, Richard Bozulich, Morosawa Yuko and Samuel H. Sloan each own
33.33% of the common stock of the issuer's equity securities.
e. beneficial owners of 5 percent or more of any class of the issuer's securities:
The record owner described in (d) above are the only owners as of this date that owns any class of issuer's equity securities.
f. promoters of the issuer:
Samuel H. Sloan
One Campus Place
Brooklyn NY 11208
Kanagawa Prefecture, Japan
Shonan Dai 1-33-2
Kanagawa Prefecture, Japan
h. counsel to the issuer with respect to the proposed offering:
i. each underwriter with respect to the proposed offering.
There is no underwriter. Issuer is selling securities.
j. any underwriter's directors:
k. the underwriter's officers:
l. the underwriter's general partner's:
m. counsel to the underwriter:
ITEM 2. Application of Rule 262
a. State whether any of the persons identified in response to item 1 are subject to any of the disqualification provisions set forth in Rule 262.
They are not.
b. If any such person is subject to these provisions, provide a full description including pertinent names, dates and other details, as well as whether or not an application has been made pursuant to rule 262 for a waiver of such disqualification and whether or not such application has been granted or denied.
ITEM 3. Affiliate Sales
If any part of the proposed offering involves the resale of securities by affiliates of the issuer, confirm that the following description does not apply to the issuer.
The issuer has not had a net income from operations of the character in which the issuer intends to engage for at least one of its two last fiscal years.
ITEM 4. Jurisdictions in Which Securities are to be Offered.
a. List the jurisdictions in which the securities are to be offered by underwriters, dealers or salespersons.
Not Applicable. Issuer will sell the Securities.
b. List the jurisdictions in which the securities are to be offered other than by underwriters, dealers or salespersons and state the method by which such securities are to be offered.
Securities will be offered on a web site of the World Wide Web. Because the World Wide Web is world wide, the issuer will have no control over who sees its web site. The issuer may have difficulty in determining where the purchaser or the prospective purchaser of securities resides or is physically located. Pursuant to Commission Release No. 33-7233 (October 6, 1995), if the document is provided on an Internet web site, however, separate notice would be necessary to satisfy the delivery requirements unless the issuer can otherwise evidence that delivery to the investor has been satisfied or the document is not required to be delivered under the federal securities laws.
Issuer will market and sell the shares. Interest will be generated by placing tombstone ads and a prospectus or offering circular on an Internet web site.
The web site will be arranged in such a way that no prospective investor can subscribe to the shares unless he or she certifies that he has read the prospectus which is on the World Wide Web. The Company may also solicit invitations through direct e-mail, but in each case these direct e-mail solicitations will refer the recipient to the World Wide Web site so that it will effectively be impossible to subscribe to the shares unless the subscriber has at least seen the prospectus or offering circular on the web site.
Prospective purchasers will also have the option of receiving a paper prospectus or offering circular in the mail, if they so choose.
The Company has no plans for direct telephone or paper mail solicitation except that it may send a mailing to the members of the American Go Association, to the regular customers of Kiseido and to Go players in Japan, China and Korea. These direct mail solicitations, if they occur, will refer prospective purchasers to the web site.
ITEM 5. Unregistered Securities Issued or Sold within one year.
a. As to any unregistered securities issued by the issuer or any of its predecessors or affiliated issuers within one year of the filing of this Form 1-A state:
(1) Name of Such Issuer: GO-WORLD.NET
(2) The title and amount of Securities Issued: Common Stock: 80,000 shares were issued to each of Richard Bozulich, Morosawa Yuko, and Samuel H. Sloan. These constitute all of the outstanding shares of the Company.
(3) These are promotional shares, issued to the founders of the Company. There was no consideration. No other shares have been issued.
ITEM 6. Other Present or Proposed Offerings
State whether or not the issuer or any of its affiliates is currently offering or contemplating the offering of any securities in addition to those covered by this Form 1-A. If so, describe fully the present or proposed offering.
No. Not Applicable.
ITEM 7. Marketing Arrangements
(a) Briefly describe any arrangement known to the issuer or to any person named in response to Item 1 above, or to any selling security holder in the offering covered by this Form 1-A for any of the following purposes:
(1) To limit or restrict the sale of other securities of the same class as those to be offered for the period of distribution:
(2) To stabilize the market for any of the securities to be offered.
(3) For withholding Commissions, or otherwise to hold each underwriter or dealer responsible for the distribution or its participation.
(4) Identify any underwriter that intends to confirm sales to any accounts over which it exercises discretionary authority and include an estimate of the amount of securities so intended to be confirmed.
ITEM 8. Relationship with Issuer of Experts Named in Offering Statement
If any expert named in the offering statement as having prepared or certified any part thereof was employed for such purpose on a contingent basis or, at the time of such preparation or certification or at any time thereafter, had a material interest in the issuer or any of its parents or subsidiaries or was connected with the issuer or any of its subsidiaries as a promoter, underwriter, voting trustee, director, officer or employee furnish a brief statement of the nature of such contingent basis, interest or connection.
Not Applicable. There are no experts named in the offering statement.
ITEM 9. Use of a Solicitation of Interest Document
Indicate whether or not a publication authorized by Rule 254 was used prior to the filing of this notification. If so, indicate the date(s) of publication and of the last communication with prospective purchasers.
Not Applicable. No such written documents or broadcast scripts were used prior to the filing of this notification.
Exact name of Company as set forth in Charter)
Type of securities offered: Shares of Common Stock.
Maximum number of securities offered: 500,000 shares
Minimum number of securities offered: No Minimum
Price per security: $ 10.00
Total proceeds: If maximum sold: $ 5,000,000
(See Questions 9 and 10)
Is a commissioned selling agent selling the securities in this offering?
[ ] Yes [x ] No
If yes, what percent is commission of price to public? N/A ____________%
Is there other compensation to selling agent(s)?
[ ] Yes [ x ] No
Is there a finder's fee or similar payment to any person?
[ ] Yes [ x ] No (See Question No. 22)
Is there an escrow of proceeds until minimum is obtained?
[ ] Yes [ x ] No (See Question No. 26)
Is this offering limited to members of a special group, such as employees of the Company or individuals?
[ ] Yes [x ] No (See Question No. 25)
Is transfer of the securities restricted?
[ ] Yes [ x] No (See Question No. 25)
INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE QUESTION NO. 2 FOR THE RISK FACTORS THAT MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS OFFERING.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR SELLING LITERATURE. THESE SECURITIES ARE OFFERED UNDER AN EXEMPTION FROM REGISTRATION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THESE SECURITIES ARE EXEMPT FROM REGISTRATION.
[x] Has never conducted operations.
[ ] Is in the development stage.
[ ] Is currently conducting operations.
[ ] Has shown a profit in the last fiscal year.
[ ] Other (Specify):
(Check at least one, as appropriate)
This Offering is being made on a "best efforts basis," and there is no minimum number of Shares which must be sold in this Offering. The Company can give no assurance that all or any of the Shares will be sold. No escrow account has been established, and all subscription funds will be paid directly to the Company. Subscriptions are irrevocable.
The Offering will begin on the effective date of this Offering Circular and continue until the Company has sold all of the Shares offered hereby or such earlier date as the Company may close or terminate the Offering. There is no designated termination date for the Offering, but in no event shall the Offering remain open for more than one year from the date hereof.
This offering is not contingent on a minimum number of shares to be sold and it is on a first come, first served basis. If subscriptions exceed 500,000 shares, all excess subscriptions will be promptly returned to subscribers (without interest) and without deduction for commissions or expenses.
NO STATE REGISTRATION: THE COMPANY HAS NOT AS YET REGISTERED FOR SALE IN ANY STATE. THE COMPANY CAN UNDERTAKE NO ASSURANCE THAT STATE LAWS ARE NOT VIOLATED THROUGH THE FURTHER SALE OF ITS SECURITIES. THE ISSUER INTENDS TO REGISTER ITS SHARES FOR SALE IN THOSE STATES IN WHICH THERE ARE INDICATIONS OF SUFFICIENT INTEREST. SO FAR, NO SHARES HAVE BEEN OFFERED AND THEREFORE THERE HAVE BEEN NO INDICATIONS OF INTEREST FROM ANY STATE.
TABLE OF CONTENTS
The Company .................................................................................................... 10
Risk Factors ...................................................................................................... 10
Plan of Distribution ............................................................................................ 19
The Business of The Company ........................................................................... 20
Use of Proceeds .................................................................................................. 22
Dilution .............................................................................................................. 25
Consolidated Financial Data Selected Statements of Income (Loss) Data .............. 25
Employees ......................................................................................................... 26
Facilities ............................................................................................................ 27
Litigation ........................................................................................................... 27
Management ...................................................................................................... 27
THIS OFFERING CIRCULAR CONTAINS ALL OF THE REPRESENTATIONS BY THE COMPANY CONCERNING THIS OFFERING, AND NO PERSON SHALL MAKE DIFFERENT OR BROADER STATEMENTS THAN THOSE CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS OFFERING CIRCULAR.
This Offering Circular, together with Financial Statements and other Attachments, consists of a total of ______ pages.
1. Exact corporate name: GO-WORLD.NET
State and date of incorporation: Nevada, April 13, 2000
Street address of principal office: One Campus Place, Brooklyn NY 11208
Company Telephone Number: (718) 827-7422
Fiscal year: November 4
Person(s) to contact at Company with respect to offering: Samuel H. Sloan
Telephone Number (if different from above): N/A
GO-WORLD.NET (the "Company") is a developer of Internet based computer software pertaining to the game of Go. Go is played by nearly 50 million active players around the world, primarily in Japan, China and Korea, and there is a growing population of players in the West estimated to be about 500,000 players.
The Company is a Nevada corporation with corporate headquarters in Brooklyn, New York. However, program development is taking place in Chigasaki, Japan. The Company's principal executive offices are located at One Campus Place, Brooklyn New York, but its program development is taking place at Nishikobu 754, Chigasaki, Japan, and its telephone number at that address is 011-81-467-57-5815.
A maximum of 500,000 common shares are being offered to the public at $10 per share. There is no minimum.
A maximum of $5,000,000 will be received from the offering. The insiders will hold 240,000 shares. This means that about 67.5% of the Company will be held by the public, assuming that all shares are sold in the offering.
The Company does not at present have an underwriter. If it does obtain an underwriter, any underwriter will receive such compensation as is allowed by the NASD. This will most likely be a 10% commission on all sales, plus 3% nonaccountable expenses. There will also likely be underwriters warrants of 1 warrant for each 10 common shares sold.
Of the shares (the "Shares") of Common Stock, par value $0.01 per share ("Common Stock"), of the Company offered hereby (the "Offering"), all shares are being offered by the Company and no shares are being offered by stockholders of the Company. The Company will receive all proceeds from the sale of shares of Common Stock, after expenses and any brokers compensation. Prior to this Offering, there has been no public market for the Common Stock.
2. List in the order of importance the factors which the Company considers to be the most substantial risks to an investor in this offering in view of all facts and circumstances or which otherwise make the offering one of high risk or speculative (i.e., those factors which constitute the greatest threat that the investment will be lost in whole or in part, or not provide an adequate return).
Risk factors relating to the Company and its Business:
High Risk Factors
The Securities offered hereby are highly speculative, involve a high degree of risk and should be purchased only by persons who can afford to lose their entire investment. Prospective investors should consider very carefully the following risk factors, as well as all of the other information set forth elsewhere in the prospectus.
The following factors, in addition to the other information contained in this Prospectus, should be considered carefully in evaluating the Company and its business before purchasing shares of Common Stock offered hereby. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below and in "Business of the Company" as well as those discussed elsewhere in this Prospectus.
Best Efforts: This Offering is being made on a "best efforts basis," and there is no minimum number of Shares which must be sold in this Offering. The Company can give no assurance that all or any of the Shares will be sold. No escrow account has been established, and all subscription funds will be paid directly to the Company. Subscriptions are irrevocable.
Go is a game of pure skill, and in that respect is similar to chess. The Company intends to arrange tournaments and competitions between Go players around the world through the Internet and the World Wide Web. Participants in these contests may be expected to pay entry fees and the winners may be awarded cash prizes. The Company intends to sell memberships and those who join can play Go against each other or can watch others play go. The Company intends to invite famous professional Go players to play against each other. Members will get to watch these top level Go matches. Because of the continuously shifting law in this area, especially as it involves new technology, it raises legal questions with which the international legal systems have no prior experience.
No Assurance That Shares Will Be Purchased; No Minimum Offering; No Escrow; Need for Additional Capital: This Offering is being made on a "best efforts basis," and there is no minimum number of Shares which must be sold in this Offering. Therefore, the Company can give no assurance that all or any of the Shares will be sold. In addition, no escrow account has been established and all subscription funds will be paid directly to the Company. Subscriptions are irrevocable.
The Company plans an ambitious development program that may require the net proceeds from this Offering. If less than all of the Shares offered are sold, the Company may have to delay or modify its marketing plans and proceed on a much slower or smaller scale. There can be no assurance that any delay or modification of the Company's marketing plans would not adversely affect the Company's business, financial condition and results of operations. If additional funds are needed to produce and market its products and services, the Company may be required to seek additional financing. The Company may not be able to obtain such additional financing or, if obtained, such financing may not be on terms favorable to the Company or to the purchasers of the Shares.
There is the possibility that a very nominal number of shares will be sold in this offering. In that case the Company still intends to proceed with its plans but will obviously have to proceed on a much smaller scale and with a lower likelihood of success.
There are no preliminary agreements or understandings with respect to loans or advances to the Company from officers, directors or principal shareholders.
Following the Offering, the Company may be considered a "non-reporting" issuer whose securities are not listed or subject to regulation under the Securities Exchange Act of 1934, depending on how many securities are sold and to how many investors. The vast majority of broker-dealers generally do not engage in the sale or trading of securities of a "non-reporting" issuer. Further limitations upon the development of a trading market are likely by virtue of regulations under Rule 15c2-11 of the 1934 Act which require that before broker-dealers can make a market in the Company's securities and thereafter as they continue making the market, the Company must provide these broker-dealers with current information about the Company. The Company presently has formulated limited specific plans to distribute current information to broker-dealers and will only do so if there appears otherwise to be adequate interest in making a market in the Company's securities. Furthermore, in view of the absence of an underwriter, the relatively small size of the Offering and the duration of the Offering and the nature of the Company as a "non-reporting" issuer, it is possible that a regular trading market will not develop in the near term, if at all, or that if developed it will be sustained. Accordingly, an investment in the Company's Common Stock should be considered highly illiquid.
No State Registration: The Company has not as yet registered for sale in any state. The Company can undertake no assurance that state laws are not violated through the further sale of its securities. The issuer intends to register its shares for sale in those states in which there are indications of sufficient interest. So far, no shares have been offered and therefore there have been no indications of interest from any state.
Uncertainty of Location of Internet Services Expected to be Provided by the Company: The Company intends to set up and establish several Internet Go Servers in various jurisdictions of the world. The Company has considered various possible sites, but no determination has been made as to which site will be chosen. Because of the nature of the World Wide Web, almost any site in the world is accessible from almost any other site in the world. For this reason, the Company sees no need to establish a firm site for its operations and anticipates that it may move its site frequently. However, web sites are subject to attacks by hackers and others. For this reason, the Company intends to establish several mirror sites in the hope that if one goes down, the others will survive. The uncertainty of this situation creates potential risks to consider.
Beyond what is provided in this offering circular, the Company can provide no further details of the precise activities to be engaged in, each material event or step required in the start-up operations until revenues are generated, the material risks, conditions or contingencies to the achievement of those events or steps (including the receipt of funding from this offering and material liquidity risks), and the manner for each present or proposed activity, nor can the Company furnish a timetable for the commencement of revenue generating activities.
The Company may confront legal challenges in each jurisdiction in which a user of the Company's services are located. The Company will not have the capability of controlling user locations.
Possibly Inadequacy of Capital Raised in this Offering: The Company does not know if the amount of money it will raise in this offering will be sufficient to do what it wants to do. The proceeds of this offering may be nominal. Because of the rapidly changing and emerging technology in the Internet and computer field, it is impossible to anticipate costs, except to observe that the costs of entering this field are rapidly becoming less.
Dependence upon proprietary software: Although the Company has only recently been formed, many of its intended products and services are based upon computer programs and algorithms developed by Morosawa Yuko and Takeshiro Yoshikawa over the past five years. These computer programs and algorithms are not exclusively owned by the Company. Rather, Morosawa Yuko and Takeshiro Yoshikawa have allowed the Company to use these programs. Many of the programs and algorithms are still in the developmental stage, and, if problems arise in the development of the programs and algorithms, revenue generating activities could be delayed.
Richard Bozulich is a well known Go personality. His knowledge and prestige is an important asset of the Company. Without his involvement, the Company might not be successful. Morosawa Yuko is a programmer who teaches C Language programming at a Japanese university. The programs developed by Morosawa Yuko are essential to the success of the Company. Should either of these persons, Richard Bozulich or Morosawa Yuko, become unhappy with the Company or become disaffected or incapacitated for any reason, the Company would have to try to find replacements and this would likely involve increased expenses and would cause the Company to have difficulty entering the business which it intends to enter. More than that, the Company considers both Richard Bozulich and Morosawa Yuko to be irreplaceable and that without their involvement the Company would likely not be successful.
The software has been developed primarily by Morosawa Yuko, and, although it is documented, Morosawa Yuko is the only person who has a complete understanding of it, and, should Morosawa Yuko become disaffected with the Company or otherwise be unable to carry out duties, this could have disastrous consequences for the Company.
Possible Conflict of Interest: Richard Bozulich and Morosawa Yuko do work for both the Company and for Kiseido. Neither the Company nor Kiseido have exclusive contracts with Richard Bozulich and Morosawa Yuko. This creates possible problems if at some future date either Richard Bozulich or Morosawa Yuko become disaffected with the Company.
Arbitrary Offering Price of the Company's Securities: Prior to this offering, there has been no public market for the securities of the Company. The initial offering price of the Shares has been determined by arbitrarily, with no consideration being given to the current status of the Company's business, the value of its properties, its financial condition, its present and prospective operations, the general status of the securities market and the market conditions for new offerings of securities. The initial offering price bears no relationship to the assets, net worth, book value, recent sales, price of shares issued to principal shareholders or any other ordinary criteria of value.
No Prior Market for Common Stock: Prior to this offering, there has been no public market for the Company's securities, and there can be no assurance that an active trading market will develop after this offering or, if developed, that it will be sustained. At least initially, the Company will be too small for its securities to be included on the NASDAQ SmallCap Market. Such securities may be subject to a rule under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that imposes additional stringent sales practice requirements on broker-dealers who sell the Common Stock. Those sales practice requirements, if imposed, would adversely affect the ability of broker-dealers to sell the Common Stock, and consequently would adversely affect the public market for and the trading price of the Common Stock.
Risk of Low-Priced Securities: The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share. The securities may become subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of purchasers in this offering to sell the Common Stock offered hereby in the secondary market.
Shares Eligible for Future Sale: The availability for sale of certain shares of Common Stock held by existing shareholders of the Company after this offering could adversely affect the market price of the Common Stock. Of the maximum of 740,000 shares of Common Stock to be outstanding following this offering, 240,000 shares were given to the Company's existing shareholders in private transactions in reliance upon exemptions from registration under the Act and are, therefore, "restricted securities" under the Act, which may not be sold publicly unless the shares are registered under the Act or are sold under Rules 144 or 144A of the Act after expiration of applicable holding periods. Sales of substantial amounts of the Company's currently outstanding shares could adversely affect prevailing market prices of the Company's securities and the Company's ability to raise additional capital by occurring at a time when it would be advantageous for the Company to sell securities.
Underwriters' Influence on the Market: The Company does not at present have an underwriter and no underwriters have advised the Company that they intend to make a market in the Common Stock after the offering or otherwise to effect transactions in the Common Stock. Market-making activity may terminate at any time. If they participate in the market, underwriters may exert a dominating influence on the market for the Common Stock. The price and liquidity of the common stock may be significantly affected by the degree, if any, of underwriters' participation in such market.
Dilution: Purchasers of the common shares offered hereby will incur an immediate substantial dilution, in terms of book value, from the public offering price of approximately $ 3.25 per share of Common Stock, assuming that all offered shares are sold. If less than the maximum is sold, the dilution will increase to approach a limit of $10.00 per share.
No Dividends: No dividends have been paid on the Common Stock of the Company. The Company does not intend to pay cash dividends on its Common Stock in the foreseeable future, and anticipates that profits, if any, received from operations will be devoted to the Company's future operations. Any decision to pay dividends will depend upon the Company's profitability at the time, cash available therefor and other relevant factors.
No Operating History as a Software Company; Uncertainty of Future Operating Results: The Company has no operating history as a developer and provider of Go Network software upon which an evaluation of its business and prospects can be based. Since inception, the Company's software business has incurred no sales and income. The Company does not expect to achieve profitability for the next several quarters, and there can be no assurance that it will be profitable thereafter, or that the Company will sustain any such profitability if achieved. The limited operating history of the Company makes the prediction of future results of operations difficult if not impossible, and the Company and its prospects must be considered in light of the risks, costs and difficulties frequently encountered by emerging companies, particularly companies in the competitive software industry.
Emerging Service Level, Dependence on telecommunications Carriers and Other Service Providers, Demand for Go network Products: The market for the Company's products is in an early stage of development. Although the rapid expansion and increasing complexity of computer networks in recent years has increased the demand for Go Network software products, the awareness of and the need for such products is a recent development. Delays in the introduction of advanced services, such as network management outsourcing, failure of such services to gain widespread market acceptance or the decision of telecommunications carriers and other service providers in the deployment of these services would have a material adverse effect on the Company's business, operating results and financial condition.
Dependence on Key Personnel: Officers of the Company could fall victim to some kind of accident which would render them incapable of serving the Company. The Company's success is substantially dependent upon a limited number of key management, sales, product development, technical services and customer support personnel. The loss of the services of one or more of such key employees could have a material adverse effect on the Company's business, financial condition or results of operations. In particular, the Company would be materially adversely affected if it were to lose the services of Richard Bozulich, Chairman, Samuel H. Sloan, Chief Executive Officer of the Company, and Morosawa Yuko, chief programmer, who have provided significant leadership and direction to the Company since its inception. The Company does not have employment contracts with and does not hold key-man life insurance and accident insurance policies on these key personnel. Even if it did, there is no assurance that these persons could be replaced by qualified personnel.
New Products and Rapid Technological Change: The market for the Company's products is characterized by rapidly changing technologies, evolving industry standards, changing regulatory environments, frequent new product introductions and rapid changes in customer requirements. There can be no assurance that the introduction or announcement of new product offerings by the Company or one or more of its competitors will not cause customers to defer licensing of existing Company products. Any such deferment of purchases could have a material adverse effect on the Company's business, operating results or financial condition.
Risk of Product Defects: Software products as internally complex as Go software frequently contain errors or defects, especially when first introduced or when new versions or enhancements are released. The Company does not maintain product liability insurance. Although the Company's license agreements with its customers will typically contain provisions designed to limit the Company's exposure to potential claims as well as any liabilities arising from such claims, such provisions may not effectively protect the Company against such claims and the liability and costs associated therewith. Accordingly, any such claim could have a material adverse effect upon the Company's business, results of operations or financial condition.
Competition: There are other servers offering on-line Go playing. Although none of them presently offer the services which the Company intends to offer, it can be expected that they will attempt to do so.
Many of the Company's current and potential competitors may have longer operating histories and may have significantly greater financial, technical, sales, marketing and other resources, as well as greater name recognition and a larger customer base, than the Company. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the development, promotion, sale and support of their products than the Company. Existing competitors could also increase their market share by bundling products having management functionality offered by the Company's products with their current applications. Moreover, the Company's current and potential competitors may increase their share of the Go Network market by strategic alliances and/or the acquisition of competing companies. In addition, network operating system vendors could introduce new or upgrade and extend existing operating systems or environments that include management functionality offered by the Company's products, which could render the Company's products obsolete and unmarketable. There can be no assurance that the Company will be able to compete successfully against current or future competitors or that competitive pressures faced by the Company will not materially adversely affect its business, operating results or financial condition.
The principal competitive factors affecting the market for the Company's software are price/performance, functionality and speed of implementation. The Company's market is still evolving, and there can be no assurance that the Company will be able to compete successfully against current and future competitors and the failure to do so successfully will have a material adverse effect upon the Company's business operating results and financial condition.
Intellectual Property and Other Proprietary Rights: The Company's success and ability to compete is dependent in significant part upon its proprietary software technology. The Company relies on a combination of trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect its proprietary rights. Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use information that the Company regards as proprietary. There can be no assurance that the steps taken by the Company to protect its proprietary technology will prevent misappropriation of such technology, and such protections may not preclude competitors from developing products with functionality or features similar to the Company's products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. While the Company believes that its products and trademarks do not infringe upon the proprietary rights of third parties, there can be no assurance that the Company will not receive future communications from third parties asserting that the Company's products infringe, or may infringe, the proprietary rights of third parties. The Company expects that software product developers will be increasingly subject to infringement claims as the number of products and competitors in the Company's industry segment grows and the functionality of products in different industry segments overlaps. Any such claims, with or without merit, could be time-consuming, result in costly litigation and diversion of technical and management personnel, cause product shipment delays or require the Company to develop non-infringing technology or enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company or at all. In the event of a successful claim of product infringement against the Company and failure or inability of the Company to develop non-infringing technology or license the infringed or similar technology, the Company's business, operating results or financial condition could be materially adversely affected. Although the Company believes that alternative software is available from other third-party suppliers, the loss of or inability to maintain any of these software licenses or the inability of the third parties to enhance in a timely and cost-effective manner their products in response to changing customer needs, industry standards or technological developments could result in delays or reductions in product shipments by the Company until equivalent software could be developed internally or identified, licensed and integrated, which would have a material adverse effect on the Company's business, operating results and financial condition.
Dependence upon Proprietary Technology; Risk of Third-Party Claims of Infringement: The Company's success and ability to compete is dependent in significant part upon its proprietary software technology. The Company relies on a combination of trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect its proprietary rights. Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use information that the Company regards as proprietary. There can be no assurance that the steps taken by the Company to protect its proprietary technology will prevent misappropriation of such technology, and such protections may not preclude competitors from developing products with functionality or features similar to the Company's products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company or at all. In the event of a successful claim of product infringement against the Company and failure or inability of the Company to develop non-infringing technology or license the infringed or similar technology, the Company's business, operating results or financial condition could be materially adversely affected.
No Prior Trading Market for Common Stock; Potential Volatility of Stock Price: Prior to this Offering, there has been no public market for the Common Stock of the Company, and there can be no assurance that an active trading market will develop or be sustained after this Offering. The initial public offering price will be determined arbitrarily and may not be indicative of the market price of the Common Stock after this Offering. The market price of the shares of Common Stock is likely to be highly volatile and may be significantly affected by factors such as actual or anticipated fluctuations in the Company's operating results, announcements of technological innovations, new products or new contracts by the Company or its competitors, developments with respect to copyrights or proprietary rights, adoption of new accounting standards affecting the software industry, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market price for the common stocks of technology companies. These types of broad market fluctuations may adversely affect the market price of the Company's Common Stock. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been initiated against such company. Such litigation could result in substantial costs and a diversion of management's attention and resources which could have a material adverse effect upon the Company's business, operating results or financial condition.
General Economic and Market Conditions: Segments of the software industry have experienced significant economic downturns characterized by decreased product demand, price erosion, work slowdowns and layoffs. The Company's operations may in the future experience substantial fluctuations from period to period as a consequence of general economic conditions affecting the timing of orders from major customers and other factors affecting capital spending. Therefore, any economic downturns in general would have a material adverse effect on the Company's business, operating results and financial condition.
Control by Existing Stockholders: Immediately after the closing of this Offering, assuming that the maximum of securities offered hereby are sold, 28.5% of the outstanding Common Stock will be held by the directors and executive officers of the Company. As a result, the public stockholders, if acting together, would be able to control substantially all matters requiring approval by the stockholders of the Company, including the election of all directors and approval of significant corporate transactions. The new stockholders might be able to throw out the existing management, with possible adverse effects for the Company. On the other hand, if less than the maximum number of shares are sold, the present stockholders, if acting together, may be able to control substantially all matters requiring approval by the stockholders of the Company, including the election of all directors and approval of significant corporate transactions. This could make it impossible for the public stockholders to influence the affairs of the Company.
Anti-takeover Effects of Certificate of Incorporation, Bylaws and Nevada Law: Certain provisions of the Company's Certificate of Incorporation and Bylaws and certain provisions of Nevada law could delay or make difficult a merger, tender offer or proxy contest involving the Company.
Shares Eligible For Future Sale: Sales of a substantial number of shares of Common Stock in the public market after this Offering could materially adversely affect the market price of the Common Stock. Such sales also might make it more difficult for the Company to sell equity securities or equity-related securities in the future at a time and price that the Company deems appropriate.
Dilution; Potential Need for Additional Financing; Dividend Policy: Investors participating in this offering will incur immediate and substantial dilution of pro forma net tangible book value per share of at least $ 3.25 from the initial public offering price. There can be no assurance that the Company will not require additional funds to support its working capital requirements or for other purposes, in which case the Company may seek to raise such additional funds through public or private equity financing or from other sources. There can be no assurance that such additional financing will be available or that, if available, such financing will be obtained on terms favorable to the Company and would not result in additional dilution to the Company's stockholders.
Plan of Distribution
The Company and its officers, Richard Bozulich, Morosawa Yuko and Samuel H. Sloan, will attempt to place the shares offered herein at a price of $10.00 per share. In that event, no commissions will be paid. The Company may, however, retain various broker/dealers to act as agents to sell shares. A ten percent (10%) commission will be paid for each sale made by a broker dealer.
Securities will be offered on a web site of the World Wide Web. Because the World Wide Web is world wide, the issuer will have no control over who sees the web site. The issuer may have difficulty in determining where the purchaser or the prospective purchaser of securities resides or is physically located. Pursuant to Commission Release No. 33-7233 (October 6, 1995), if the document is provided on an Internet web site, however, separate notice would be necessary to satisfy the delivery requirements unless the issuer can otherwise evidence that delivery to the investor has been satisfied or the document is not required to be delivered under the federal securities laws.
The web site will be arranged in such a way that no prospective investors can subscribe to the shares unless they certify that they have read the prospectus or offering circular which is on the World Wide Web. The Company may also solicit invitations through direct e-mail, but in each case these direct e-mail solicitations will refer the recipient to the World Wide Web site, so that it will effectively be impossible to subscribe to the shares unless the subscriber has at least seen the prospectus on the web site.
Prospective purchasers will also have the option of receiving a paper prospectus or offering circular in the mail, if they so choose.
The Company has no plans for direct telephone or paper mail solicitation, except that it may send a mailing to the members of the American Go Association and to the regular customers of Kiseido, as well as to Go players in Japan, China and Korea. These direct mail solicitations, if they occur, will refer prospective purchasers to the web site.
The Company has not as yet registered for sale in any state. The Company can undertake no assurance that state laws are not violated through the resale of its securities. The issuer intends to register its shares for sale in those states in which there are indications of sufficient interest, after consulting the blue sky laws of the states in which there is an interest. So far, no shares have been offered and therefore there have been no indications of interest from any state.
The Business of The Company
The main business of the Company is the development of software for the oriental game of Go.
Go, like chess, is an intellectual board game. Go evolved over thousands of years in China and its strategic and tactical principles took more than 500 years to develop and refine in Japan. Today, Go is played by nearly 50 million people throughout the world.
Using the simplest of materials and concepts, wood and stone, line and circle, black and white, complex strategies and tactics can be devised that stagger the imagination. Generals have mapped out battle plans and won wars based on Go (see Ma Xiaochun, "The Thirty-Six Stratagems Applied to Go''), politicians have taken over whole countries by espousing Go principles (see Bormann, "The Protracted Game'' published by Oxford University Press), and businessmen have achieved dominant positions in the market place by using Go strategy (see Miura, "Go: An Asian Paradigm for Business Strategy").
Go is played by two players on a board with a grid of 19 horizontal and 19 vertical lines which make up 361 intersections. One player starts with 181 black stones and the other with 180 white stones. A move consists of placing a stone on an intersection. The player holding the black stones makes the first move. After that the players alternate in making their moves. The object of the game is to control territory (intersections). The player who controls the most territory at the end of the game is the winner.
Go is a game that anyone, even a child, can learn in a few minutes. Still, the strategy of Go is so profound that it is hard to program a computer to play Go at a level of a human player who has studied Go for about a month. This is in sharp contrast to chess, where computers have mastered that game to the point where they can defeat the world champion in match play. Experts in the field believe that Go-playing programs will never reach the level where they can defeat an average club player.
The Company has developed Go-playing software named "Dai Honinbo", but it feels that the area of real profitability for Go is software which can allow Go to be played on the Internet. Among the proprietary software that the Company is developing is one that will give an accurate count of the score at the end of the game.
Kiseido as a leading publisher of books on the game of Go has access to some of the strongest Go players in the world and will negotiate contracts with famous Go players to provide content for the Go web. The Company will provide computer software to Kiseido. Kiseido will in turn provide that software plus its Go expertise, including Go problems, games of Go by famous players and commentary by famous Go players for the web site.
Because of the intricacies and complexities of Go, developing computer software which would essentially referee the game and determine the score and winner of the game is not a trivial task. Officers of the Company have been working on this problem for the past five years.
The main business activity that the Company intends to engage in will be to provide a venue on its Internet site for Go players throughout the world to play games of Go with each other. Although there are other competing Internet Go sites (see risk factors), the Company feels that the market is potentially so large that if it can capture just a minuscule part of this market, it can generate revenues of around $1,000,000 a month.
For example, according to a survey done in Japan (which has a total population of 120 million) 10 million people stated that Go is one of their hobbies. In Korea (population 30 million), Go is the number one hobby of male Koreans and surveys done there show that the country's Go-playing population is 9 million persons. The game is known as "baduk" in Korea. At the present time, 120,000 Korean Go players are linked to the Internet. China (population 1.2 billion) has a Go-playing population of about 30 million. The game is known as "weiqi" in China. Presently, there are 7 million Internet users in China and this number is increasing geometrically every year. It can be assumed that a significant percentage of these users are Go players. In the West as well, mainly in the United States and Europe, the Go-playing population is estimated to be around 500,000. Go is played everywhere that Chinese, Japanese or Korean people can be found. This means that altogether there are nearly 50 million Go players in the world, making it perhaps the most popular intellectual board game in the world, possibly even exceeding chess which has perhaps 30 to 40 million players.
That Go has a wide popular following is shown by the number of professional players in the world. There are nearly 500 players in Japan who make their living professionally by playing Go in tournaments. Korea has 166 professional Go players and China has about 150.
To support these professionals, there are a number of international tournaments. There are five main international Go tournaments: the Samsung Cup ($330,000 first prize, Korean sponsored), the LG Cup ($165,000, Korean sponsored), the Fujitsu Cup ($190,000, Japanese sponsored), the Chunlan Cup ($150,000, Chinese sponsored) and the Tong Yang Securities Cup ($150,000, Korean sponsored). There is also the Ing Invitational Cup, held every four years, sponsored by the Ing Educational Goe Foundation, with a $400,000 first prize. With the exception of the Ing Cup, which is invitational, each of these tournaments are preceded by large-scale preliminary tournaments, consisting of hundreds of players, which culminate in a final knockout tournament. The two survivors then play a best-of-five match or a best-of-three match for the Cup and prize. At each stage of the preliminary tournament, all players receive a game fee for each game they play. In the first preliminary rounds, the fees are about $3,000 per player and the game fees gradually becomes greater in the later rounds. The strongest players and previous champions are usually seeded into the final knockout tournament. Therefore the total prize money for each of these tournaments is at least double the winner's purse.
Besides international Go tournaments, Japan, Korea and China have a large number of domestic tournaments, sponsored by newspapers, which are closely followed by Go fans in these countries. Japan has about 17 such tournaments and Korea about 15. Of special interest would be the top seven titles in Japan and the top five in Korea. In Japan, these titles offer first prizes ranging from about $60,000 to $300,000. In Korea, almost all the titles are contested by two players, Lee Chang-ho and Cho Hoon-hyun, who stand head and shoulders above other Korean players in strength. In Japan, there are as many as twenty players who are strong enough to take a major title. However, for the last three years, one player in Japan, Cho Chikun, a Korean who has made his home and career there, has dominated the top three Japanese titles. Before and during title matches, there is much interest and speculation as to whether Cho will be unseated by a Japanese challenger.
A feature of the Company's Internet Go site will be that members will be able both to play games of Go and to watch them as well. The Company intends to sponsor high profile tournaments and matches in which the strongest players in the world compete on the site over the Internet. The Company believes that by matching China's, Japan's and Korea's strongest players, enormous interest will be generated which will result in a large number of paying members observing the games, which in turn will make our site attractive to advertisers.
Due to the colonial control of Korea and China by Japan in the early part of this century, patriotic emotions reach a fever pitch with Go fans in these countries fiercely supporting their national Go champions in contests against Japanese players. Although Japan had been indisputably the strongest Go-playing country in the world, in the last ten years, the strongest Koreans and Chinese players have drawn level with and have even surpassed the top Japanese Go champions. For these reasons, the Company believes that an exceptionally high level of interest and participation by Go fans from these three countries can be expected.
Use of Proceeds
The Internet is a rapidly evolving technology. For this reason, the Company does not know precisely how it will use the proceeds of this offering, except to say that the proceeds of this offering will be used to set up, staff, establish and maintain an Internet Go Server. A significant amount of the proceeds will be used to advertise and promote the Server.
Because there is no minimum to this offering, the possibility exists that almost no shares will be sold and almost no proceeds will be received by the Company. If that occurs, the Company will continue its development of an Internet Go Server, a project which is already underway, but the implementation of this project will likely be substantially delayed due to a lack of funds.
The Company is unable to provide any further information as to the numerous steps and inherent risks in commencing and conducting its activities, including the material steps necessary to achieve such activities and the material risks to the Company and investors in starting and conducting those activities.
The net proceeds to the Company from the sale of the shares of Common Stock to be sold by the Company in this Offering are estimated to be $5,000,000, before deducting any discounts, commissions and offering expenses payable by the Company and assuming that the maximum number of shares are sold.
The principal purposes of the Offering are to increase the Company's equity capital, to create a public market for the Common Stock, to facilitate future access by the Company to public equity markets, to provide liquidity for certain of the Company's existing stockholders and to provide increased visibility of the Company in the marketplace.
The Company intends to use the proceeds of the Offering for working capital and general corporate purposes. The Company is a developer of Internet based computer software pertaining to the game of Go. Go is played by nearly 50 million active players around the world, primarily in Japan, China and Korea. The Company is developing software which enables Go to be played on the Internet. One component of this software is an accurate count of the score at the end of the game.
Through this software, which is still in the development stage, it is possible to play Go for money, with the winner paid according to the number of points by which he has won the game. For example, if a player wins by 8 points, and the players are playing for one dollar per point, the winner of the game wins eight dollars.
Because of the intricacies and complexities of the game of go, developing computer software which would essentially referee the game and determine the score of the winner is not a trivial task. Officers of the Company have been working on this problem for the past five years. The problem has still not been entirely solved.
The Company already has a working program which will enable two players to play a game of Go over the Internet. However, this program still needs development. Improvement is required in many areas, including the graphics interface. Furthermore, the Company needs to hire real Go players to play games against each other, to report any problems and to suggest areas for improvement.
The Company estimates that fully to complete this phase of the development of the product will require one million dollars.
However, if this offering does not raise one million dollars, the Company will still continue the project, which is already well under way. The Company may go ahead with the product in its present form and use the proceeds it hopes to receive from online subscribers to improve the product.
The Company intends to offer its product online on a subscription basis. Initially, Go players will be invited to play for free online. After a sufficient number of subscribers are hooked on the product and a large number of Go games are being played every day, the Company will announce that hereafter subscribers must pay a membership fee. This is the plan which has been followed with great success by the Internet Chess Club at http://www.chessclub.com for the game of chess.
The first one million dollars which the Company receives will be devoted towards developing the product. If the Company receives more than one million dollars, the next money will go to advertising and promotion. The Company intends to invite famous players to play matches of Go on its server. Right now, interest in Go is reaching a fever pitch in Korea. The leading Go player in Korea, who is possibly the strongest Go player in the world, is Lee Chang-ho. However, he almost always loses to a Japanese player named Yoda. Therefore, the Company plans to sponsor a Go match between Lee Chang-ho and Yoda for a prize purse. This match will involve a series of games played on the Internet over the period of one year. The only way for members of the public to see this Go match will be to become a member by subscribing to the Company's services.
It is noteworthy that in the recent Internet chess match of Kasparov vs. The Rest of the World, Microsoft reported that there were seven million registered viewers who observed that game, even though it was only during the last few moves of the game that registration was required.
The Company also plans to sell advertising on its web site. The Company believes that a Go match between Lee Chang-ho and Yoda will bring in millions of viewers and that advertisers will be willing to pay to advertise during these matches. Thus, the Company hopes to generate revenues through both membership subscription fees and advertisements.
Salaries of Officers: The Company's current policy is that the officers and directors serve without compensation. The Company plans not to pay any salaries to the officers and directors until it starts receiving revenues other than revenues from this offering.
The Company intends that none of net offering proceeds that will be payable to promoters, management, principal shareholders or their affiliates in the event that a nominal amount of proceeds is received in the offering.
The proceeds from this offering will satisfy the Company's cash requirements for the next 12 months provided that the maximum is received. If less than the maximum is received, the Company may seek additional capital financing.
The Company reserves the right to vary the Use of Proceeds according to the actual amount raised and the timing thereof.
Dividend Policy: The Company has never declared or paid any cash dividends on its capital stock and does not expect to do so in the foreseeable future. The Company anticipates that all future earnings, if any, generated from operations will be retained by the Company to develop and expand its business. Any future determination with respect to the payment of dividends will be at the discretion of the Board of Directors and will depend upon, among other things, the Company's operating results, financial condition and capital requirements, the terms of then-existing indebtedness, general business conditions and such other factors as the Board of Directors deems relevant.
As of September 30, 2000, the Company had a net pro forma net tangible book value of $0.00, or approximately $0.00 per share of Common Stock. "Net tangible book value" represents the amount of tangible assets less total liabilities. Without taking into account any other changes in the net tangible book value after September 30, 2000, other than to give effect to the receipt by the Company of the net proceeds from the sale of the shares of Common Stock offered by the Company hereby at an assumed initial public offering price of $10.00 per share and without deducting discounts and estimated offering expenses, the pro forma net tangible book value of the Company as of September 30, 2000 would have been $ 5,000,000, or $ 6.75 per share. This represents an immediate increase in net tangible book value of $ 6.75 per share to existing stockholders and an immediate dilution in net tangible book value of $ 3.25 per share to purchasers of Common Stock in the Offering. Investors participating in this Offering will incur immediate, substantial dilution. This is illustrated in the following table:
Assumed initial public offering price per share .................................................... $10.00
Pro forma net tangible book value per share as of September 30, 2000 ................... $ 6.75
Increase per share attributable to new investors .................................................. $ 6.75
Dilution per share to new investors ..................................................................... $ 3.25
Consolidated Financial Data Selected Statements of Income (Loss) Data:
The Company has no operating history. The following financial data has been derived from the financial statements of the Company as of September 30, 2000. The financial data should be read in connection with the financial statements of the Company and the related notes thereto.
Inception through September 30, 2000
Revenue $ -0-
Net Sales $ -0-
Net Income (loss) $ -0-
Net (Loss) per share $ -0-
Total Assets: $ -0-
Total Liabilities $ -0-
Stockholders Equity $ -0-
Key officers of the Company are also key and controlling officers of Kiseido Publishing Company ("Kiseido"). Kiseido is the foremost publisher of English-language Go books in the world. In Japanese, Kiseido means "Temple of the Go Saint". Advisors and staff include some of the strongest players in the world. The founders of Kiseido have been writing and translating books on Go for more than 30 years. Kiseido has more than 25 Go titles presently in print as well as the magazine Go World, of which 87 issues have been published. Its main advisor, Richard Bozulich, who is also the Chairman of the Company, has contacts with the main Go organizations in the world. It also has access to mailing lists of 40,000 players in Japan, Korea and China, and Kiseido's directors intend to make these mailing lists available to the Company.
As of September 30, 2000, the Company had 3 employees. They are:
Richard Bozulich, Chairman
Nishikobu 754, Chigasaki City, Kanagawa Prefecture, Japan.
Morosawa Yuko, President of Kiseido, Vice president of The Company and chief programmer
Shirogane 1-27-1, Apr. 601, Minato-ku, Tokyo, Japan 108-0072
Samuel H. Sloan, President and CEO.
One Campus Place, Brooklyn New York 11208.
The Company believes that its relations with its employees are good.
The Company believes that its future success will depend in large part on its ability to attract and retain highly-skilled managerial, sales, technical services, customer support and product development personnel. Competition for qualified personnel in the software industry is intense, and there can be no assurance that the Company will be successful in attracting and retaining such personnel. Failure to attract and retain key personnel could materially adversely affect on the Company's business, operating results or financial condition.
Richard Bozulich is a prominent personality in the field of GO. He has been publishing books on Go since 1968. He has a degree in mathematics from the University of California at Berkeley. He has resided in Japan since 1967.
Morosawa Yuko is a programmer who teaches C Language programming at a Japanese University in Chigasaki (Bunkyo University).
Samuel H. Sloan has 18 years experience working in the Wall Street Financial District for various securities and stockholder relations firms. He is the author of four books and once argued orally before the United States Supreme Court, winning a landmark decision is the area of federal securities law. He is an expert at chess and several other board games. He is now best known for his Internet web sites, which receive more than 35,000 hits per day.
The Company's principal product development operations are located in approximately 1,500 square feet of office space in Chigasaki, Japan. This office space is provided by Kiseido on a rent free basis. The Company believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard. There are no written agreements.
The Company is not a party to any material legal proceeding.
Management EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth certain information regarding the executive officers and directors of the Company as of September 30, 2000:
NAME AGE POSITION
Addresses: Morosawa Yuko, 51, President of Kiseido, Vice president of the Company, Shirogane 1-27-1, Apr. 601, Minato-ku, Tokyo, Japan 108-0072
Richard Bozulich, 63, Chairman of the Company, Nishikobu 754, Chigasaki City, Kanagawa Prefecture, Japan
Samuel H. Sloan, 55, President and CEO of the Company
One Campus Place, Brooklyn New York 11208.
Morosawa Yuko graduated from Osaka University with a degree in Economics in March 1970. From 1970 to 1974 was a computer programmer with Japan Software Corporation. From 1970 to 1974 was a computer programmer with Japan Computer Corporation. From 1984 to 1995: was a Lecturer in Computer Science at Japan University . From 1995 to Present: Bunkyo University -- Lecturer in Computer Science. From 1996 to Present: President of Kiseido Publishing Company.
Richard Bozulich graduated from the University of California at Berkeley in 1966 with a degree in mathematics. Richard Bozulich has since 1968 been an author and publisher of books on the game of go and a supplier of go equipment. Mr. Bozulich established Ishi Press, a Japan corporation in 1969 and was it's president and chairman until 1999. Since 1995, Mr. Bozulich has been the general manager of Kiseido, a publisher of go books.
Sam Sloan has been the President of Ishi Press International, a California Corporation, since 1995. Since 1999, Mr. Sloan has been the Managing Director and President of The Ishi Press, a Japan corporation. Ishi Press International and The Ishi Press have been publishers of books on the game of go. Mr. Sloan is the owner of five Internet domain names which combined receive an average of 50,000 hits per day.
Samuel H. Sloan has served as President and Chief Executive Officer of the Company since its inception. Morosawa Yuko has served as vice-president and director of the Company since its inception. Richard Bozulich had served as Chairman and a director of the Company since December, 1999.
Board Composition: The Board of Directors is currently comprised of three directors. The directors are Richard Bozulich, Morosawa Yuko and Samuel H. Sloan. At each annual meeting of stockholders, the successors to directors whose term will then expire will be elected to serve from the time of election and qualification until the second annual meeting following election.
Each officer is elected by and serves at the discretion of the Board of Directors. Each of the Company's officers and directors devotes substantially full time to the affairs of the Company. There are no other family relationships among any of the directors, officers or key employees of the Company.
Director Compensation: Directors receive no cash remuneration for serving on the Board of Directors but are to be reimbursed for reasonable expenses incurred by them in attending meetings of the Board of Directors and Audit Committee. On April 13, 2000, the Company issued to each of Richard Bozulich, Morosawa Yuko and Samuel H. Sloan 80,000 shares of Common Stock.
Limitation of Liability and Indemnification Matters: The Company's Certificate of Incorporation limits the liability of its directors for monetary damages arising from a breach of their fiduciary duty as directors, except to the extent otherwise required by the Nevada General Corporation Law. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief or rescission.
The Company's bylaws provide that the Company shall indemnify its directors and officers to the fullest extent permitted by Nevada law, including in circumstances in which indemnification is otherwise discretionary under Nevada law. The Company has also entered into indemnification agreements with its officers and directors containing provisions that may require the Company, among other things, to indemnify such officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from willful misconduct of a culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors' and officers' insurance if available on reasonable terms.
At present, there is no pending litigation or proceedings involving any director, officer, employee or agent of the Company where indemnification will be required or permitted. The Company is not aware of any threatened litigation or proceeding that might result in a claim for such indemnification.
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED BEFORE THE OFFERING SHARES OWNED AFTER THE OFFERING BY NAMED EXECUTIVE OFFICERS AND DIRECTORS
Samuel H. Sloan .............. 80,000
Morosawa Yuko .............. 80,000
Richard Bozulich .............. 80,000
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (3 PERSONS) 240,000
Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Common Stock subject to options currently exercisable or exercisable within 60 days of September 30, 2000 are deemed outstanding for purposes of computing the percentage ownership of the person holding such option but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Except where indicated, and subject to community property laws where applicable, the persons in the table above have sole voting and investment power with respect to all Common Stock shown as beneficially owned by them.
Common Stock: As of September 30, 2000, there were 240,000 shares of Common Stock outstanding that were held of record by three stockholders. There will be a maximum of 740,000 shares of Common Stock outstanding after giving effect to the sale of the shares of Common Stock to the public offered hereby.
The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. In the event of the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities, if any, then outstanding. The Common Stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and nonassessable, and the shares of Common Stock to be issued upon completion of this Offering will be fully paid and nonassessable.
Nevada Takeover Statute: The Company is subject to Section 203 of the Nevada General Corporation Law ("Section 203") which, subject to certain exceptions, prohibits a Nevada corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that such stockholder became an interested stockholder unless: (i) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (iii) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
Section 203 defines business combinations to include: (i) any merger or consolidation involving the corporation and the interested stockholder; (ii) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; (iii) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (iv) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (v) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.
Registration Rights: After this Offering, the holders of 240,000 shares of Common Stock will be entitled to certain rights with respect to the registration of such shares under the Securities Act. If the Company proposes to register any of its securities under the Securities Act, either for its own account or for the account of other security holders exercising registration rights, such holders are entitled to notice of such registration and are entitled to include shares of such Common Stock therein. Additionally, such holders are also entitled to certain demand registration rights pursuant to which they may require the Company to file a registration statement under the Securities Act at its expense with respect to their shares of Common Stock, and the Company is required to use its best efforts to effect such registration. Further, holders may require the Company to file additional registration statements on Form S-3 at the Company's expense. All of these registration rights are subject to certain conditions and limitations, among them the right of any underwriters of an offering to limit the number of shares included in such registration and the right of the Company not to effect a requested registration within six months following an offering of the Company's securities, including the Offering made hereby.
Transfer Agent and Registrar: The Transfer Agent and Registrar for the Common Stock is Continental Stock Transfer and its telephone number is (212) 509-4000.
Shares Eligible for Future Sale: Upon completion of this Offering, the Company will have approximately 740,000 shares of Common Stock outstanding if the maximum is sold. All of the shares sold in this Offering are freely tradable under an exemption from registration. The remaining 240,000 shares of Common Stock are deemed "restricted securities" under Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which rules are summarized below. As a result the provisions of Rules 144, 144(k) and 701, no shares will be available for immediate sale in the public market on the date of this Prospectus. Beginning 180 days after the date of this Prospectus (i) no shares will be available for immediate sale in the public market in accordance with Rule 144(k) and (ii) some shares will be available for sale in the public market in accordance with Rule 144 or Rule 701, subject to the volume and other resale limitations of Rule 144. The remaining 240,000 shares are eligible for sale in the public market more than 180 days after the date of this Prospectus.
In general, under Rule 144, beginning approximately 90 days after the effective date of the Offering Statement of which this Prospectus is a part, a stockholder, including an Affiliate, who has beneficially owned his or her restricted securities (as that term is defined in Rule 144) for at least one year from the later of the date such securities were acquired from the Company or (if applicable) the date they were acquired from an Affiliate, is entitled to sell, within any three-month period, a number of such shares that does not exceed the greater of 1% of the then outstanding shares of Common Stock (approximately 7,400 shares immediately after this Offering) or the average weekly trading volume in the Common Stock during the four calendar weeks preceding the date on which notice of such sale was filed under Rule 144, provided certain requirements concerning availability of public information, manner of sale and notice of sale are satisfied. In addition, under Rule 144(k), if a period of at least two years has elapsed between the later of the date restricted securities were acquired from the Company, a stockholder who is not an Affiliate of the Company at the time of sale and has not been an Affiliate of the Company for at least three months prior to the sale is entitled to sell the shares immediately without compliance with the foregoing requirements of Rule 144.
Securities issued in reliance on Rule 701 (such as shares of Common Stock that may be acquired pursuant to the exercise of options granted prior to this Offering) are also restricted securities and, beginning 90 days after the date of this Prospectus, may be sold by stockholders other than Affiliates of the Company subject only to the manner of sale provisions of Rule 144 and by an Affiliate under Rule 144 without compliance with its one-year holding period requirement.
Prior to this Offering, there has been no public market for the Common Stock. No prediction can be made as to the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price of the Common Stock prevailing from time to time. The Company is unable to estimate the number of shares that may be sold in the public market pursuant to Rule 144, since this will depend on the market price of the Common Stock, the personal circumstances of the sellers and other factors. Nevertheless, sales of significant amounts of the Common Stock of the Company in the public market could adversely affect the market price of the Common Stock and could impair the Company's ability to raise capital through an offering of its equity securities.
Any Underwriting Agreement will provide that the Company will indemnify the several Underwriters against certain liabilities, including civil liabilities under the Securities Act, as amended, or will contribute to payments any underwriters may be required to make in respect thereof.
Certain persons participating in this offering may over-allot or effect transactions which stabilize, maintain or otherwise affect the market price of the Common Stock at levels above those which might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids. A stabilizing bid means the placing of any bid or effecting of any purchase for the purpose of pegging, fixing or maintaining the price of the Common Stock. A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with this offering. A penalty bid means an arrangement that permits any underwriters to reclaim a selling concession from a syndicate member in connection with this offering when shares of Common Stock sold by the syndicate member are purchased in syndicate covering transactions. Such transactions may be effected in the over-the-counter market, or otherwise. Such stabilizing, if commenced, may be discontinued at any time.
Additional Information: The Company intends to furnish to its stockholders annual reports containing audited consolidated financial statements examined by an independent accounting firm and quarterly reports for the first three quarters of each fiscal year containing interim unaudited consolidated financial information.
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brooklyn, New York, on this 30th day of May, 2000.
By: /s/ Samuel H. Sloan
Samuel H. Sloan President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Samuel H. Sloan, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Offering Statement, and to sign any registration statement for the same offering covered by this Offering Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS OFFERING STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
/s/ Samuel H. Sloan President, Chief, September 30, 2000
Executive Officer and Samuel H. Sloan Director (Principal Executive Officer)
/s/ Richard Bozulich Director, September 30, 2000
Richard Bozulich Director
/s/ Morosawa Yuko Director, September 30, 2000
Chigasaki, Japan September 30, 2000