-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OKHanY5UD+bK1+6ieq8tU9nUtQZ4ndUGazJiWHsOCZwsOibkn18Xu7/Ne/Vmw8R/ a8Ox1vS3+ytsgt5E3wbpRw== 0001096906-02-000372.txt : 20020514 0001096906-02-000372.hdr.sgml : 20020514 ACCESSION NUMBER: 0001096906-02-000372 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESERVENET INC CENTRAL INDEX KEY: 0001157688 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 94338108 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-68312 FILM NUMBER: 02647254 BUSINESS ADDRESS: STREET 1: 3701 SACRAMENTO STREET 2: SUITE 323 CITY: SAN FRANCISCO STATE: CA ZIP: 94118 BUSINESS PHONE: 4157522578 MAIL ADDRESS: STREET 1: 3701 SACRAMENTO ST #323 CITY: SAN FRANCISCO STATE: CA ZIP: 94118 SB-2/A 1 reservenetsb2_a5.txt AMENDMENT NO 5 TO FORM SB-2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form SB-2 (Amendment No. 6) 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. 2 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 3 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 4 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. 6 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 7 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; 8 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. 9 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. 10 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. 11 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. 12 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. 13 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 PART II INDEMNIFICATION OF DIRECTORS AND OFFICERS Our By-laws provide for the indemnification of our officers and directors with respect to their duties in performing in the capacity of their offices. The board of directors makes the determination with respect to the indemnification of the directors, officers, or employee as is proper under the circumstances if he has met the applicable standards of conduct set forth in the Delaware Code. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION We have estimated the costs of this offering to be as follows. These will be borne by us, on behalf of the selling security holders. Registration Fee $ 13 Legal Fees 1,000 Accounting Fees 1,500 Other 500 ------ Total Estimated Costs 3,013 RECENT SALES OF UNREGISTERED SECURITIES The company has had the following sales of unregistered securities: During December 2000, the company's board of directors authorized the issuance of up to 300,000 shares of its common stock to the founder at a cost of $0.025 per share. The founder subsequently purchased 140,000 shares of common stock for a total of $3,500. In such transaction, the company relied upon Section 4(2) of the Securities Act of 1933, as amended. The founder falls under the definition of an accredited investor under Regulation D, Rule 501(a) of the Act. During May 2001, the company closed its private offering and sold 25,000 shares of its common stock at a price of $1.00 per share to twenty-five (25) non-affiliated private investors. In doing so, the company relied upon Rule 504 as promulgated by the Securities Act of 1933, as amended. As part of this offering, each prospective investor was provided a detailed offering memorandum which sought disclose to the investor all the pertinent details and risks of an investment in the company. These included such things as the offering details, risks, financial statements, management, and the business plan/strategy. The subscription agreement also provided for such investor acknowledgements that they were either an accredited or sophisticated investor, that they were buying for their own account and not with a view towards further distribution, and that they indeed had the opportunity to ask management questions and to seek further corporate advice, if necessary. The Company did not accompany the offering with any general advertisement or general solicitation. On May 28, 2001, the Company rescinded 70,000 shares of its common stock from the founder in order to increase the attractiveness of the capital structure to potential outside investors and to increase the relative control of its current shareholders. 38 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. 39 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 40 EX-3.1 5 exhibit3.txt ARTICLES OF INCORPORATION Exhibit 3(i) - Articles of Incorporation State of Delaware Certificate of Incorporation A Stock Corporation 1. Name of Corporation is: ReserveNet Incorporated 2. Its registered office in the State of Delaware is to be located at Street Address: 1220 North Market Street, Suite 606 City/State/Zip: Wilmington, DE 19801 County : New Castle The registered agent in charge thereof is American Incorporators Ltd. 3. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The amount of the total authorizing capital stock of this corporation is Ten Thousand Dollars ($10,000), divided into 100,000,000 shares of One One-Hundredth Cent ($0.0001) each. 5. The name and mailing address of the incorporator are as follows: Name: Daniel A. Regidor Mailing Address: 3701 Sacramento Street #323 San Francisco, California 94118 I, The Undersigned, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do, certify that the facts herein stated are true, and I have accordingly hereunto set my hand this 31st day of October, AD 2000. BY: /s/ Daniel A Regidor --------------------- (Incorporator) NAME: Daniel A. Regidor EX-3.2 6 bylaws.txt BY-LAWS Exhibit 3(ii) - By-Laws RESERVENET INCORPORATED By-Laws Article I The Stockholders Section 1.1. Annual Meeting. The annual meeting of the stockholders of ReserveNet Incorporation (the "Corporation") shall be held on the third Thursday in October of each year at 1:00 p.m. local time, or at such other date or time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, for the election of directors and for the transaction of such other business as may come before the meeting. Section 1.2. Special Meetings. A special meeting of the stockholders may be called at any time by the written resolution or request of two-thirds or more of the members of the Board of Directors, the president, or any executive vice president and shall be called upon the written request of the holders of two-thirds or more in amount, of each class or series of the capital stock of the Corporation entitled to vote at such meeting on the matters(s) that are the subject of the proposed meeting, such written request in each case to specify the purpose or purposes for which such meeting shall be called, and with respect to stockholder proposals, shall further comply with the requirements of this Article. Section 1.3. Notice of Meetings. Written notice of each meeting of stockholders, whether annual or special, stating the date, hour and place where it is to be held, shall be served either personally or by mail, not less than fifteen nor more than sixty days before the meeting, upon each stockholder of record entitled to vote at such meeting, and to any other stockholder to whom the giving of notice may be required by law. Notice of a special meeting shall also state the purpose or purposes for which the meeting is called and shall indicate that it is being issued by, or at the direction of, the person or persons calling the meeting. If, at any meeting, action is proposed to be taken that would, if taken, entitle stockholders to receive payment for their stock, the notice of such meeting shall include a statement of that purpose and to that effect. If mailed, notice shall be deemed to be delivered when deposited in the United States mail or with any private express mail service, postage or delivery fee prepaid, and shall be directed to each such stockholder at his address, as it appears on the records of the stockholders of the Corporation, unless he shall have previously filed with the secretary of the Corporation a written request that notices intended for him be mailed to some other address, in which case, it shall be mailed to the address designated in such request. Section 1.4. Fixing Date of Record. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of, or to vote at, a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of, or to vote at, a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting (to the extent that such action by written consent is permitted by law, the Certificate of Incorporation and these By-Laws), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in its state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 1.5. Inspectors. At each meeting of the stockholders, the polls shall be opened and closed and the proxies and ballots shall be received and be taken in charge. One or more inspectors shall decide all questions touching on the qualification of voters and the validity of proxies and the acceptance or rejection of votes. Such inspectors shall be appointed by the Board of Directors before or at the meeting, or, if no such appointment shall have been made, then by the presiding officer at the meeting. If for any reason any of the inspectors previously appointed shall fail to attend or refuse or be unable to serve, inspectors in place of any so failing to attend or refusing or unable to serve shall be appointed in like manner. Section 1.6. Quorum. At any meeting of the stockholders the holders of such number of all of the outstanding shares of the capital stock of the Corporation taken together as a single class as represents one-third of all votes that may be made at such meeting, present in person or represented by proxy, shall constitute a quorum of the stockholders for all purposes, unless the representation of a larger number shall be required by law, and, in that case, the representation of the number so required shall constitute a quorum. If the holders of the amount of stock necessary to constitute a quorum shall fail to attend in person or by proxy at the time and place fixed in accordance with these By-Laws for an annual or special meeting, a majority in interest of the stockholders present in person or by proxy may adjourn, from time to time, without notice other than by announcement at the meeting, until holders of the amount of stock requisite to constitute a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 1.7. Business. The chairman of the Board, if any, the president, or in his absence the vice-chairman, if any, or an executive vice president, in the order named, shall call meetings of the stockholders to order, and shall act as chairman of such meeting; provided, however, that the Board of Directors or executive committee may appoint any stockholder to act as chairman of any meeting in the absence of the chairman of the Board. The secretary of the Corporation shall act as secretary at all meetings of the stockholders, but in the absence of the secretary at any meeting of the stockholders, the presiding officer may appoint any person to act as secretary of the meeting. Section 1.8. Stockholder Proposals. No proposal by a stockholder shall be presented for vote at a special or annual meeting of stockholders unless such stockholder shall, not later than the close of business on the fifth day following the date on which notice of the meeting is first given to stockholders, provide the Board of Directors or the secretary of the Corporation with written notice of intention to present a proposal for action at the forthcoming meeting of stockholders, which notice shall include the name and address of such stockholder, the number of voting securities that he holds of record and that he holds beneficially, the text of the proposal to be presented to the meeting and a statement in support of the proposal. Any stockholder who was a stockholder of record on the applicable record date may make any other proposal at an annual meeting or special meeting of stockholders and the same may be discussed and considered, but unless stated in writing and filed with the Board of Directors or the secretary prior to the date set forth hereinabove, such proposal shall be laid over for action at an adjourned, special, or annual meeting of the stockholders taking place sixty days or more thereafter. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors, and committees, but in connection with such reports, no new business proposed by a stockholder, qua stockholder, shall be acted upon at such annual meeting unless stated and filed as herein provided. Notwithstanding any other provision of these By-Laws, the Corporation shall be under no obligation to include any stockholder proposal in its proxy statement materials or otherwise present any such proposal to stockholders at a special or annual meeting of stockholders if the Board of Directors reasonably believes the proponents thereof have not complied with Sections 13 or 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder; nor shall the Corporation be required to include any stockholder proposal not required to be included in its proxy materials to stockholders in accordance with any such section, rule or regulation. Section 1.9. Proxies. At all meetings of stockholders, a stockholder entitled to vote may vote either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the secretary before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 1.10. Voting by Ballot. The votes for directors, and upon the demand of any stockholder or when required by law, the votes upon any question before the meeting, shall be by ballot. Section 1.11. Voting Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares of stock registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Section 1.12. Place of Meeting. The Board of Directors may designate any place, either within or without the state of incorporation, as the place of meeting for any annual meeting or any special meeting called by the Board of Directors. If no designation is made or if a special meeting is otherwise called, the place of meeting shall be the principal office of the Corporation. Section 1.13. Voting of Stock of Certain Holders. Shares of capital stock of the Corporation standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the by-laws of such corporation may prescribe, or in the absence of such provision, as the board of directors of such corporation may determine. Shares of capital stock of the Corporation standing in the name of a deceased person, a minor ward or an incompetent person may be voted by his administrator, executor, court-appointed guardian or conservator, either in person or by proxy, without a transfer of such stock into the name of such administrator, executor, court-appointed guardian or conservator. He or she, either in person or by proxy may vote shares of capital stock of the Corporation standing in the name of a trustee. Shares of capital stock of the Corporation standing in the name of a receiver may be voted, either in person or by proxy, by such receiver, and stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in any appropriate order of the court by which such receiver was appointed. A stockholder whose stock is pledged shall be entitled to vote such stock, either in person or by proxy, until the stock has been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote, either in person or by proxy, the stock so transferred. Shares of its own capital stock belonging to this Corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding stock at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding stock at any given time. Article II Board of Directors Section 2.1. General Powers. The business, affairs, and the property of the Corporation shall be managed and controlled by the Board of Directors (the "Board"), and, except as otherwise expressly provided by law, the Certificate of Incorporation or these By-Laws, all of the powers of the Corporation shall be vested in the Board. Section 2.2. Number of Directors. The number of directors, which shall constitute the whole Board, shall be not fewer than one nor more than seven. Within the limits above specified, the number of directors shall be determined by the Board of Directors pursuant to a resolution adopted by a majority of the directors then in office. Section 2.3. Election, Term and Removal. Directors shall be elected at the annual meeting of stockholders to succeed those directors whose terms have expired. Each director shall hold office for the term for which elected and until his or her successor shall be elected and qualified. Directors need not be stockholders. A director may be removed from office at a meeting expressly for that purpose by the vote of stockholders holding not less than two-thirds of the shares entitled to vote at an election of directors. Section 2.4. Vacancies. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors then in office, though less than a quorum; except that vacancies resulting from removal from office by a vote of the stockholders may be filled by the stockholders at the same meeting at which such removal occurs provided that the holders of not less than two-thirds of the outstanding capital stock of the Corporation (assessed upon the basis of votes and not on the basis of number of shares) entitled to vote for the election of directors, voting together as a single class, shall vote for each replacement director. All directors elected to fill vacancies shall hold office for a term expiring at the time of the next annual meeting of stockholders and upon election and qualification of his successor. No decrease in the number of directors constituting the Board of Directors shall shorten the term of an incumbent director. Section 2.5. Resignations. Any director of the Corporation may resign at any time by giving written notice to the president or to the secretary of the Corporation. The resignation of any director shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 2.6. Place of Meetings, etc. The Board of Directors may hold its meetings, and may have an office and keep the books of the Corporation (except as otherwise may be provided for by law), in such place or places in or outside the state of incorporation as the Board from time to time may determine. Section 2.7. Regular Meetings. Regular meetings of the Board of Directors shall be held as soon as practicable after adjournment of the annual meeting of stockholders at such time and place as the Board of Directors may fix. No notice shall be required for any such regular meeting of the Board. Section 2.8. Special Meetings. Special meetings of the Board of Directors shall be held at places and times fixed by resolution of the Board of Directors, or upon call of the chairman of the Board, if any, or vice-chairman of the Board, if any, the president, an executive vice president or two-thirds of the directors then in office. The secretary or officer performing the secretary's duties shall give not less than twenty-four hours' notice by letter, telegraph or telephone (or in person) of all special meetings of the Board of Directors, provided that notice need not given of the annual meeting or of regular meetings held at times and places fixed by resolution of the Board. Meetings may be held at any time without notice if all of the directors are present, or if those not present waive notice in writing either before or after the meeting. The notice of meetings of the Board need not state the purpose of the meeting. Section 2.9. Participation by Conference Telephone. Members of the Board of Directors of the Corporation, or any committee thereof, may participate in a regular or special or any other meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. Section 2.10. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if prior or subsequent to such action all the members of the Board or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board or committee. Section 2.11. Quorum. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business; but if at any meeting of the Board there be less than a quorum present, a majority of those present may adjourn the meeting from time to time. Section 2.12. Business. Business shall be transacted at meetings of the Board of Directors in such order as the Board may determine. At all meetings of the Board of Directors, the chairman of the Board, if any, the president, or in his absence the vice-chairman, if any, or an executive vice president, in the order named, shall preside. Section 2.13. Interest of Directors in Contracts. (a) No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the Corporation's directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors or the stockholders. (a) Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee, which authorizes the contract or transaction. Section 2.14. Compensation of Directors. Each director of the Corporation who is not a salaried officer or employee of the Corporation, or of a subsidiary of the Corporation, shall receive such allowances for serving as a director and such fees for attendance at meetings of the Board of Directors or the executive committee or any other committee appointed by the Board as the Board may from time to time determine. Section 2.15. Loans to Officers or Employees. The Board of Directors may lend money to, guarantee any obligation of, or otherwise assist, any officer or other employee of the Corporation or of any subsidiary, whether or not such officer or employee is also a director of the Corporation, whenever, in the judgment of the directors, such loan, guarantee, or assistance may reasonably be expected to benefit the Corporation; provided, however, that any such loan, guarantee, or other assistance given to an officer or employee who is also a director of the Corporation must be authorized by a majority of the entire Board of Directors. Any such loan, guarantee, or other assistance may be made with or without interest and may be unsecured or secured in such manner as the Board of Directors shall approve, including, but not limited to, a pledge of shares of the Corporation, and may be made upon such other terms and conditions as the Board of Directors may determine. Section 2.16. Nomination. Subject to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, the close of business on the last day of the eighth month after the immediately preceding annual meeting of stockholders, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the fifth day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors, and; (e) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer at the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Article III Committees Section 3.1. Committees. The Board of Directors, by resolution adopted by a majority of the number of directors then fixed by these By-Laws or resolution thereto, may establish such standing or special committees of the Board as it may deem advisable, and the members, terms, and authority of such committees shall be set forth in the resolutions establishing such committee. Section 3.2. Executive Committee Number and Term of Office. The Board of Directors may, at any meeting, by majority vote of the Board of Directors, elect from the directors an executive committee. The executive committee shall consist of such number of members as may be fixed from time to time by resolution of the Board of Directors. The Board of Directors may designate a chairman of the committee who shall preside at all meetings thereof, and the committee shall designate a member thereof to preside in the absence of the chairman. Section 3.3. Executive Committee Powers. The executive committee may, while the Board of Directors is not in session, exercise all or any of the powers of the Board of Directors in all cases in which specific directions shall not have been given by the Board of Directors; except that the executive committee shall not have the power or authority of the Board of Directors to (i) amend the Certificate of Incorporation or the By-Laws of the Corporation, (ii) fill vacancies on the Board of Directors, (iii) adopt an agreement or certification of ownership, merger or consolidation, (iv) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, or a dissolution of the Corporation or a revocation of a dissolution, (v) declare a dividend, or (vi) authorize the issuance of stock. Section 3.4. Executive Committee Meetings. Regular and special meetings of the executive committee may be called and held subject to the same requirements with respect to time, place and notice as are specified in these By-Laws for regular and special meetings of the Board of Directors. Any member may call special meetings of the executive committee thereof. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special or regular meeting of the executive meeting if a quorum is present. At any meeting at which every member of the executive committee shall be present, in person or by telephone, even though without any notice, any business may be transacted. All action by the executive committee shall be reported to the Board of Directors at its meeting next succeeding such action. The executive committee shall fix its own rules of procedure, and shall meet where and as provided by such rules or by resolution of the Board of Directors, but in every case the presence of a majority of the total number of members of the executive committee shall be necessary to constitute a quorum. In every case, the affirmative vote of a quorum shall be necessary for the adoption of any resolution. Section 3.5. Executive Committee Vacancies. The Board of Directors, by majority vote of the Board of Directors then in office, shall fill vacancies in the executive committee by election from the directors. Article IV The Officers Section 4.1. Number and Term of Office. The officers of the Corporation shall consist of, as the Board of Directors may determine and appoint from time to time, a chief executive officer, a president, one or more executive vice-presidents, a secretary, a treasurer, a controller, and/or such other officers as may from time to time be elected or appointed by the Board of Directors, including such additional vice-presidents with such designations, if any, as may be determined by the Board of Directors and such assistant secretaries and assistant treasurers. In addition, the Board of Directors may elect a chairman of the Board and may also elect a vice-chairman as officers of the Corporation. Any two or more offices may be held by the same person. In its discretion, the Board of Directors may leave unfilled any office except as may be required by law. The officers of the Corporation shall be elected or appointed from time to time by the Board of Directors. Each officer shall hold office until his successor shall have been duly elected or appointed or until his death or until he shall resign or shall have been removed by the Board of Directors. Each of the salaried officers of the Corporation shall devote his entire time, skill and energy to the business of the Corporation, unless the contrary is expressly consented to by the Board of Directors or the executive committee. Section 4.2. Removal. The Board of Directors may remove any officer whenever, in its judgment, the best interests of the Corporation would be served thereby. Section 4.3. The Chairman of the Board. The chairman of the Board, if any, shall preside at all meetings of stockholders and of the Board of Directors and shall have such other authority and perform such other duties as are prescribed by law, by these By-Laws and by the Board of Directors. The Board of Directors may designate the chairman of the Board as chief executive officer, in which case he shall have such authority and perform such duties as are prescribed by these By-Laws and the Board of Directors for the chief executive officer. Section 4.4. The Vice-Chairman. The vice-chairman, if any, shall have such authority and perform such other duties as are prescribed by these By-Laws and by the Board of Directors. In the absence or inability to act of the chairman of the Board and the president, he shall preside at the meetings of the stockholders and of the Board of Directors and shall have and exercise all of the powers and duties of the chairman of the Board. The Board of Directors may designate the vice-chairman as chief executive officer, in which case he shall have such authority and perform such duties as are prescribed by these By-Laws and the Board of Directors for the chief executive officer. Section 4.5. The President. The president shall have such authority and perform such duties as are prescribed by law, by these By-Laws, by the Board of Directors and by the chief executive officer (if the president is not the chief executive officer). The president, if there is no chairman of the Board, or in the absence or the inability to act of the chairman of the Board, shall preside at all meetings of stockholders and of the Board of Directors. Unless the Board of Directors designates the chairman of the Board or the vice-chairman as chief executive officer, the president shall be the chief executive officer, in which case he shall have such authority and perform such duties as are prescribed by these By-Laws and the Board of Directors for the chief executive officer. Section 4.6. The Chief Executive Officer. Unless the Board of Directors designates the chairman of the Board or the vice- chairman as chief executive officer, the president shall be the chief executive officer. The chief executive officer of the Corporation shall have, subject to the supervision and direction of the Board of Directors, general supervision of the business, property and affairs of the Corporation, including the power to appoint and discharge agents and employees, and the powers vested in him by the Board of Directors, by law or by these By-Laws or which usually attach or pertain to such office. Section 4.7. The Executive Vice-Presidents. In the absence of the chairman of the Board, if any, the president and the vice-chairman, if any, or in the event of their inability or refusal to act, the executive vice-president (or in the event there is more than one executive vice-president, the executive vice-presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the chairman of the Board, of the president and of the vice-chairman, and when so acting, shall have all the powers of and be subject to all the restrictions upon the chairman of the Board, the president and the vice-chairman. Any executive vice-president may sign, with the secretary or an authorized assistant secretary, certificates for stock of the Corporation and shall perform such other duties as from time to time may be assigned to him by the chairman of the Board, the president, the vice-chairman, the Board of Directors or these By-Laws. Section 4.8. The Vice-Presidents. The vice-presidents, if any, shall perform such duties as may be assigned to them from time to time by the chairman of the Board, the president, the vice-chairman, the Board of Directors, or these By-Laws. Section 4.9. The Treasurer. Subject to the direction of chief executive officer and the Board of Directors, the treasurer shall have charge and custody of all the funds and securities of the Corporation; when necessary or proper he shall endorse for collection, or cause to be endorsed, on behalf of the Corporation, checks, notes and other obligations, and shall cause the deposit of the same to the credit of the Corporation in such bank or banks or depositary as the Board of Directors may designate or as the Board of Directors by resolution may authorize; he shall sign all receipts and vouchers for payments made to the Corporation other than routine receipts and vouchers, the signing of which he may delegate; he shall sign all checks made by the Corporation (provided, however, that the Board of Directors may authorize and prescribe by resolution the manner in which checks drawn on banks or depositaries shall be signed, including the use of facsimile signatures, and the manner in which officers, agents or employees shall be authorized to sign); unless otherwise provided by resolution of the Board of Directors, he shall sign with an officer-director all bills of exchange and promissory notes of the Corporation; whenever required by the Board of Directors, he shall render a statement of his cash account; he shall enter regularly full and accurate account of the Corporation in books of the Corporation to be kept by him for that purpose; he shall, at all reasonable times, exhibit his books and accounts to any director of the Corporation upon application at his office during business hours; and he shall perform all acts incident to the position of treasurer. If required by the Board of Directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such sure ties as the Board of Directors may require. Section 4.10. The Secretary. The secretary shall keep the minutes of all meetings of the Board of Directors, the minutes of all meetings of the stockholders and (unless otherwise directed by the Board of Directors) the minutes of all committees, in books provided for that purpose; he shall attend to the giving and serving of all notices of the Corporation; he may sign with an officer-director or any other duly authorized person, in the name of the Corporation, all contracts authorized by the Board of Directors or by the executive committee, and, when so ordered by the Board of Directors or the executive committee, he shall affix the seal of the Corporation thereto; he may sign with the president or an executive vice-president all certificates of shares of the capital stock; he shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors or the executive committee may direct, all of which shall, at all reasonable times, be open to the examination of any director, upon application at the secretary's office during business hours; and he shall in general perform all the duties incident to the office of the secretary, subject to the control of the chief executive officer and the Board of Directors. Section 4.11. The Controller. The controller shall be the chief accounting officer of the Corporation. Subject to the supervision of the Board of Directors, the chief executive officer and the treasurer, the controller shall provide for and maintain adequate records of all assets, liabilities and transactions of the Corporation, shall see that accurate audits of the Corporation's affairs are currently and adequately made and shall perform such other duties as from time to time may be assigned to him. Section 4.12. The Assistant Treasurers and Assistant Secretaries. The assistant treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors may determine. The assistant secretaries as thereunto authorized by the Board of Directors may sign with the chairman of the Board, the president, the vice-chairman or an executive vice-president, certificates for stock of the Corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The assistant treasurers and assistant secretaries, in general, shall perform such duties as shall be assigned to them by the treasurer or the secretary, respectively, or chief executive officer, the Board of Directors, or these By-Laws. Section 4.13. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. Section 4.14. Voting upon stocks. Unless otherwise ordered by the Board of Directors or by the executive committee, any officer, director or any person or persons appointed in writing by any of them, shall have full power and authority in behalf of the Corporation to attend and to act and to vote at any meetings of stockholders of any corporation in which the Corporation may hold stock, and at any such meeting shall possess and may exercise any and all the rights and powers incident to the ownership of such stock, and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors may confer like powers upon any other person or persons. Article V Contracts and Loans Section 5.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 5.2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Article VI Certificates for Stock and Their Transfer Section 6.1. Certificates for Stock. Certificates representing stock of the Corporation shall be in such form as may be determined by the Board of Directors. Such certificates shall be signed by the chairman of the Board, the president, the vice-chairman or an executive vice-president and/or by the secretary or an authorized assistant secretary and shall be sealed with the seal of the Corporation. The seal may be a facsimile. If a stock certificate is countersigned (i) by a transfer agent other than the Corporation or its employee, or (ii) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In the event that any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. All certificates for stock shall be consecutively numbered or otherwise identified. The name of the person to whom the shares of stock represented thereby are issued, with the number of shares of stock and date of issue, shall be entered on the books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificates shall be issued until the former certificate for a like number of shares of stock shall have been surrendered and canceled, except that, in the event of a lost, destroyed or mutilated certificate, a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 6.2. Transfers of Stock. Transfers of stock of the Corporation shall be made only on the books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the Corporation, and on surrender for cancellation of the certificate for such stock. The person in whose name stock stands on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Article VII Fiscal Year Section 7.1. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January in each year and end on the last day of December in each year. Article VIII Seal Section 8.1. Seal. The Board of Directors shall approve a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation. Article IX Waiver of Notice Section 9.1. Waiver of Notice. Whenever any notice is required to be given under the provisions of these By-Laws or under the provisions of the Certificate of Incorporation or under the provisions of the corporation law of the state of incorporation, waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of any person at a meeting for which any notice is required to be given under the provisions of these By-Laws, the Certificate of Incorporation or the corporation law of the state of incorporation shall constitute a waiver of notice of such meeting except when the person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Article X Amendments Section 10.1. Amendments. These By-Laws may be altered, amended or repealed and new By-Laws may be adopted at any meeting of the Board of Directors of the Corporation by the affirmative vote of a two-thirds or more of the members of the Board, or by the affirmative vote of the holders of 75 percent or more of the outstanding capital stock of the Corporation (assessed upon the basis of votes and not on the basis of number of shares) entitled to vote generally in the election of directors, voting together as a single class, cast at a meeting of the stockholders called for that purpose. Article XI Indemnification Section 11.1. Indemnification. The Corporation shall indemnify its officers, directors, employees and agents to the fullest extent permitted by the Delaware General Corporation Law, as amended from time to time. KNOWN ALL MEN BY THESE PRESENTS: That I, the undersigned, being the sole director and officer of the above named corporation, do hereby consent to the forgoing By-Laws and adopt the same as and for the By-Laws of said corporation. IN WITNESS WHEREOF, we have hereunto set our hand this 13th Day of October 2000. By: /s/ Daniel Regidor ------------------- Daniel Regidor EX-5 7 legal.txt OPINION RE: LEGALITY LAW OFFICES OF WARREN J. SOLOSKI A PROFESSIONAL CORPORATION 11300 WEST OLYMPIC BLVD., SUITE 900 LOS ANGELES, CALIFORNIA 90084 August 22, 2001 ReserveNet, Inc. C/O Daniel Regidor 3701 Sacramento Street Suite 323 San Francisco, CA 94118 Re: Registration Statement on Form SB-2 re 500,000 Shares of Common Stock Ladies and Gentlemen: We have acted as counsel to ReserveNet, Inc., a Delaware corporation (the "Company"), in connection with the filing of a Registration Statement to which this opinion is an Exhibit (the "Registration Statement") with respect to the offer and sale of up to an aggregate of 500,000 shares of the Company's Common Stock, $.001 par value per share (the "Shares") as described in the Registration Statement. We are familiar with the corporate actions taken and proposed to be taken by the Company in connection with the authorization, issuance and sale of the Shares and have make such other legal and factual inquiries as we deem necessary for the purpose of rendering this opinion. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, the authenticity of the originals of such copied documents, and except with respect to the Company, that all individuals executing and delivering such documents were duly authorized to do so. Based on the foregoing and in reliance thereon, and subject to the qualifications and limitations set forth below, we are of the opinion that the Shares to be issued have been duly authorized and reserved and when issued upon payment will be validly issued, fully paid and non-assessable. This opinion is limited to the laws of the State of Delaware, and federal law as in effect on the date hereof, exclusive of state securities and blue sky laws, rules and regulations, and to all facts as they presently exist. We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement and to the filing of this opinion as Exhibit 5 to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the General Rules and Regulations of the Securities and Exchange Commission. Very truly yours, Warren J. Soloski, A Professional Corporation /s/ Warren J. Soloski - --------------------------------- By Warren J. Soloski, President EX-23.1 8 reservenetsb2a5_consent2.txt CONSENT OF EXPERTS G. BRAD BECKSTEAD - ----------------- Certified Public Accountant 330 E. Warm Springs Las Vegas, NV 89119 702.257.1984 702.362.0540 (fax) May 14, 2002 To Whom It May Concern: I have issued my report dated March 19, 2002, accompanying the financial statements of ReserveNet, Inc. on Form SB-2 for the period of October 31, 2000 (inception date) through December 31, 2001. I hereby consent to the Independent Auditors Report in the Registration Statement of ReserveNet Inc. I also hereby consent to the reference to myself under "Experts" in their prospectus. Signed, /s/ G. Brad Beckstead G. Brad Beckstead, CPA -----END PRIVACY-ENHANCED MESSAGE-----