Public Offerings of Securities on the Web.
THE INTERNET AND THE CYBERSECURITIES MARKETPLACE
Denis T. Rice, July 1998
II. The Internet As A Means To Market New Securities. Continued
C. Public Offerings of Securities on the Web.
1. General Regulatory Considerations.
Apart from liberalized notice, access and delivery requirements (subsection II.B above), a securities offering in cyberspace remains subject to the regulatory scheme that predates the advent of the Internet. For example, if an offering is required to be registered under the 1933 Act, there is a ban on publicity that might condition the market, such as publication of bullish information on the issuer’s Web site. Moreover, the issuer or underwriter must not violate “quiet period” restrictions by hyperlinking a preliminary prospectus to research reports or other information that are not found in the registration statement. Once the registration statement is filed with the SEC, however, there are no restrictions on oral offers other than normal antifraud restrictions. The Internet has introduced a special question unique to the medium: what is the impact of having a prospectus posted on the issuer’s own Web site? Are other materials on the site going to be deemed incorporated in the prospectus? Thus, assume an issuer posts its public offering on its home page. The home page may contain links to press releases or bulletins put out by the same issuer over recent months, relating to new products or market developments. These are accessible within the website by hypertext link.
As of the summer of 1998, the SEC has not yet addressed the question as to how much if any of the link-accessible information will be deemed part of the filed prospectus. It had, however, taken a no-action position that mere identification of an issuer’s Web site in its registration statement, without more, will not be deemed to incorporate the information from the site into the registration statement. In the meantime, it is advisable to (1) not include any direct link from the prospectus page to any subpage within the site, but only link the prospectus back to the home page, and (2) include a disclaimer next to any part of the site containing information relating to new products, the market or the status of the issuer’s operations.
After a registration statement becomes effective, the Web site containing the final version of the prospectus can be hyperlinked to other sales literature. Tombstone advertisements under SEC Rule 134 and other advertisements under SEC Rule 482 need not be accompanied or precluded by a prospectus and hence may be delivered electronically without raising issues under the 1933 Act. The listing of a Website address within a published tombstone is permitted under Rule 134. In fact, the issuer or underwriter can mail sales literature to persons for whom delivery of the prospectus via the Web site was effective, so long as notice of the availability of the final prospectus and its Web site location accompany or precede the sales literature.
2. Underwritten Offerings Over the Internet.
Underwritten offerings that use the Web for publicity will be typically filed on SEC Form S-1, S-2 or S-3, and hence will be exempt from qualifying under state blue-sky statutes. However, state qualification is required where the offering is made by means of the Regulation A (“Reg A”) exemption from 1933 Act registration or by a “small business issuer” on SEC Forms SB-1 or SB-2.
The first online posting of a conventional firm commitment underwriting occurred in 1996, when Solomon Brothers created an Internet site for the initial public offering of Berkshire Hathaway’s new Class B stock. In the Berkshire Hathaway offering, the prospectus itself could not been seen on the Web site; it was only obtainable by contacting the underwriters. In the subsequent 1996 public stock offering of Yahoo!, the Web search engine, the viewer could download the Yahoo! prospectus directly from the Web site. However, orders for shares could not be made on the Web. Orders could only be placed by contacting the underwriters by phone or mail or through another broker-dealer.
The same year, the regional firm ABN Amro Chicago Corp. led a syndicate which posted $500 million of GMAC’s “Smart Notes” on ABN Amro’s Web site (www.direct-notes.com). As with Berkshire Hathaway, the prospectus for the GMAC notes could not be directly downloaded. Instead, the viewer had to fill in his or her name and address on-screen and request that a prospectus be mailed. Wit Capital Corp., which initiated and then abandoned the concept of bulletin board trading on the Internet, by Spring 1998 was a discount brokerage firm which provided opportunities for investing in underwritten IPO’s on its web site (www.witcapital.com).
3. Conducting “Roadshows” Over the Internet.
Underwritten public offerings have traditionally been preceded by a “roadshow.” The roadshow involves presentations made by the issuer and its underwriters to large investors, institutions and analysts. It is conducted between the filing of a registration statement with the SEC and the time the registration becomes effective. In the presentations, the issuer’s management and the underwriters explain the issuer’s business and industry as well as the offerings and respond to questions. Beginning in 1997, the SEC opened the door for underwriters and issuers to conduct “roadshows” over the Internet.
The Internet raises several unique roadshow issues. The 1933 Act prohibits the transmission of any “prospectus” relating to a security being publicly offered unless it is the same preliminary prospectus as filed with the SEC. “Prospectus,” a term of art in the 1933 Act, is broadly defined to include any “prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.” Accordingly, no written material can be distributed in a traditional “oral” roadshow other than copies of the preliminary prospectus. The question arises as to whether an electronic “roadshow” is like a written, radio or television communication and hence an impermissible “prospectus” under the 1933 Act. Through several no-action letters, the SEC has carved out an interpretation of “prospectus” that allows virtual roadshows to be legally conducted on the Internet.
First, in March 1997, the SEC agreed to take no action against closed-circuit video roadshows, so long as they were transmitted solely to subscribers who consist principally of registered broker-dealers and investment advisors and all of whom would receive a copy of the preliminary prospectus before receiving the video transmission. In so doing, SEC agreed with the position that because no written material was to be generated in the transmission, only pictures and oral presentations, no “prospectus” would be involved. The same rationale was at the core of another SEC position in September, 1997, allowing public offering roadshows by Internet. The SEC agreed that such a virtual roadshow would not constitute a 1933 Act “prospectus” where the following format was used:
(a) A Web site for roadshows regarding public offerings would be established, with a posted index of those available for viewing by qualified investors and by the underwriting investment banks. The roadshows would be indexed by offering company, underwriter and industry classification.
(b) To view an online roadshow, a qualified investor would be required to contact an institutional salesman or the syndicate department at one of the underwriters. The qualified investors would be typical of those customarily invited to attend live roadshows (e.g., registered broker/dealers and investment advisers). An access code be required to view the roadshow on the Internet, a log would be maintained of who specifically received the access code. The access code for each roadshow is changed each day and each qualified investor will be allowed to view a roadshow one day only.
(c) The Internet roadshow would be exactly the same as the live show. The live roadshow would be filmed in its entirety, including the filming of all questions and answers. The Internet version of the roadshow would present the charts and oral presentation at a similar speed as the live roadshow.
(d) A large and obvious button reading “PRELIMINARY PROSPECTUS” would be continuously displayed throughout the roadshow. A viewer would simply click on the button to access the preliminary prospectus on file with the Commission to view it in its entirety.
(e) Before accessing the roadshow, a potential viewer would be required to agree to a broad disclaimer and statement to the effect that copying, downloading or distribution of the material is not permitted, that the roadshow does not constitute a prospectus and disclaim any regulatory approval in a manner similar to a preliminary prospectus.
(f) The viewer would be informed by a periodic crawl across the screen or by prominent text of the importance of viewing the filed prospectus, which is available by clicking a button the screen.
In late 1997, another Internet roadshow producer, the online investment news service Bloomberg, gained SEC permission for its presentations. The Bloomberg presentations also limit access to persons who have been authorized by the underwriters to view the roadshow. The difference in Bloomberg’s roadshow from that of Net Roadshow lies in its simultaneous broadcast: the viewer can participate in the roadshow presentation on an interactive basis by sending questions which are fielded by an online monitor who can present the question to representatives of the issuer. This moves a step beyond the rebroadcast that occurs in earlier online roadshows. In the Bloomberg roadshow, the preliminary prospectus can be called up on the viewer’s screen or downloaded at any time.
Because roadshows traditionally have not been available to average investors, but only to securities professionals and sophisticated investors, the main impact of Web-based presentations will probably be to reduce the number of locations where such live presentations are made, thereby saving expenses of the issuer. However, the ready availability of roadshows, together with increased availability of financial information, analysis and tools to the individual investor (Section IV, infra) raise the question whether it makes regulatory sense any longer to deny the individual investor the ability to “attend” a virtual roadshow. SEC Chairman Arthur Levitt, Jr. has observed that “technology is a powerful tool in helping establish a `level playing field’ for all investors, large and small.” Assuming the Chairman is correct, there is a substantial question whether it makes sense to restrict the type of information available at a roadshow–which consists of more recent information and projections not contained in the prospectus–to more affluent and powerful investors. This barrier may be lifted as the Internet evolves further: one venture firm was reported in March, 1998 as prepared to seek a no-action letter from the SEC that would allow retail investors access to roadshows via the Internet.
4. Mutual Fund Offerings and the Internet.
Open-end mutual funds are engaged in a continuous offer to sell and offer to repurchase their shares. They now are able to offer their securities on the Internet under the same SEC guidelines that apply to other issuers.However, there are a few aspects of the new rule peculiar to funds. For instance, the mutual fund information may be presented on-screen in a sequence different from that prescribed by SEC Form N-4A and yet still satisfy the form.
The regulatory arm of the National Association of Securities Dealers, NASD Regulation (“NADR”) has adopted special advertising rules applicable to mutual funds. In 1995, the word “electronic” was added to definitions of advertising and sales literature under what are NASDR rules dealing with public communications. NASDR policy allows banner ads on the Internet which do no more than name a fund group and link the viewer to the fund group’s home page. However, where the banner ad offers specific services or products or stresses the desirability of a fund, there must be an accompanying prospectus.
5. Direct Public Offerings (“DPOs”).
As discussed earlier, a DPO involves an offering without a broker-dealer intermediary; instead, the issuer sells its own securities directly to investors. It is in effect a “best-efforts” offering made by the issuer itself. The DPO will typically involve an escrow into which the proceeds from a minimum level of sales must be deposited in order for any funds to be released to the issuer. Direct offerings have been around for many years before the Internet, although only a relatively small number were made. The World Wide Web is changing the DPO landscape because it enables the issuer to access so many potential investors so rapidly. Dozens of sites for DPOs on the World Wide Web–most of them put up since mid-1996–demonstrate the online approach to corporate finance.
a. Regulatory Considerations.
Most DPOs on the Web have used either SEC Form 1-A promulgated under SEC Reg. A, which provides an exemption from full-blown registration for stock offerings that do not exceed $5 million, or a state securities form available for offerings not over $1 million. The state form, U-7, has been approved by the North American Securities Administrators Association (“NASAA”) and is called the Small Corporate Offerings Registration or “SCOR” form. It is a 50 question form designed to be understood by the lay person and is accepted in every state except Alabama, Delaware, Hawaii and Nebraska.
Offerings made on Form U-7 are exempt from SEC registration by virtue of SEC Rule 504, which exempts offerings directly by issuers (but not resales) of not more than $1 million. In May 1998 the SEC proposed changes to Rule 504 which could inhibit its role as a means to raise capital by placing new constrains on resale of the securities. Thus, securities issued pursuant to the rule could not be resold until either the holding period required by SEC Rule 144 had been satisfied (generally one year) or the securities had been registered under the 1933 Act or qualified for some other exemption.
In any event, the states impose various requirements on use of U-7 for offers within their jurisdiction. For instance, some states require that the issuer have equity capital of a certain percentage of the total capital being raised. Most states limit the costs and expenses of originating the capital and require audited financial statements for offerings over $500,000. The SCOR form can also be used as part of a Reg. A filing, and some listing services on the Web require that listing companies which file under Reg. A incorporate the SCOR form.
b. Examples of DPOs.
An early Reg. A DPO was located on the Web site of “IPO DataSystems” (www.ipodata.com/dpo.html). The issuer, “Interactive Holdings Corporation” (www.thevine.com/ihchome.htm), sought to sell its own stock directly by allowing the downloading of an offering circular and a subscription agreement. The offering circular on the Web site, however, was not the “official offering circular” filed with the SEC. That document had to be obtained by request made via fax, phone, e-mail or regular mail. Other DPO sites, such as that for “Pyromid Inc.,” allow the offering document to be viewed online and downloaded by the viewer (www.pyromid.com/pyromid/ offcirc.html). Pyromid makes what it calls “technologically advanced” portable outdoor cooking systems for campers, hikers and other outdoor enthusiasts, and its Reg. A offering circular covered a minimum-maximum best efforts offering between about $3 million to $5 million.
Another site that allowed direct downloading was at the address of Dechtar Direct, Inc. (“DDI” at www.dechtar.com). DDI’s prospectus, placed on the Web in February 1997, stated that it is the “largest advertising company in North America specializing in the adult entertainment and adult mail-order industries.” Among its services are providing catalog lead generation and response services. DDI’s offering was the first Web DPO to combine a secondary offering of already outstanding shares by selling stockholders with new shares offered by the issuer. Its offering was also unusual because it was done by means of a registration statement on SEC Form SB-2, rather than using one of the exemptions such as Reg. A or Form U-7. Form SB-2 had to be used because the foregoing exemptions are not available for secondary sales by existing stockholders.
A Web-posted DPO must take steps to avoid problems under state blue-sky laws. If an offering document can be read and downloaded directly at the site, the issuer should install a “screen” to prevent making offers to residents of those states in which the offering has not been qualified. This procedure allows the offering to meet the states’ blue-sky exemptions discussed in subsection V.B. below. At DDI’s site, for example, the viewer is presented with a screen that lists all 50 states as well as various foreign countries. The viewer first clicks in the state of residence from this list, and access to the prospectus and subscription material is only granted if the offering has been qualified in that state.
To the extent “success” in a DPO is defined as reaching the minimum amount of sales required to close escrow and release funds to the issuer, a minority of all DPOs have achieved success. Even fewer have sold the maximum amount of a minimum-maximum range. These results may improve over the longer term as more DPOS are assisted by new kinds of on-line intermediaries that have sprung up. Perhaps the most ambitious DPO to date is the $100 million offering of Technology Funding Venture Capital Fund VI, LLC (“Tech Funding”) (www.techfunding.com). Tech Funding also linked its site to the Direct Stock Market, one of the interface sites between DPO issuers and investors discussed below and its prospectus located on the SEC’s EDGAR database (www. sec.gov/Archives/edgar/). Tech Funding filed on Form N-2, using a wholly-owned broker-dealer subsidiary to assist in the offering without being paid any sales commission, and its registration became effective in December 1997. Unlike most other DPO issuers, Tech Funding is not seeking to develop a public or secondary market for its shares. Instead, share transfer will be subject to the control of the Fund managers. The Fund will be a nondiversified investment company under the 1940 Act.
Five months after its offering was first posted, Tech Funding ‘s investment manager and sole distributor received an exemptive order from the SEC to accept payment for its fund shares over the Internet by means of credit card. The staff approval stressed that the credit card purchases would be allowed only through the Internet, a prominent warning would be displayed on the Fund’s Web site to dissuade investors from carrying a balance on their cards as a result of a purchase of the Fund’s shares and to show how related interest costs could exceed any increase in share value, and the distributor’s employees would not be compensated on the basis of shares sold.
One of the most bizarre offerings to hit the online channel is that of Travelzoo.com. This ban online travel service, located in the Bahamas, which began giving away its stock in the summer of 1998. Travel.zoo limited visitors to its site to no more than three free shares each, which shares are hold electronically in the Bahamas. Travelzoo.com claims that it will benefit from giving away free stock, because it will attract so many “hits,” or visitors, that advertisers and others will find its site to be an attractive venue.
It is too early to forecast the extent to which the World Wide Web will be a ubiquitous tool for public offerings at all levels of the market, but some commentators believe that the base must be broadened and the number of households with Internet connection substantially increased in order to support general securities offerings. As noted above, most early DPOs have not appeared to achieve their sales targets. A prospective Web investor will quickly discover that a substantial proportion of the companies using the Web to offer their securities directly to the public are in some phase of consumer goods or services, whether beer, health products, or outdoor cooking devices. These kinds of issuers probably have the best chance to succeed with unassisted DPOs, because they already have some built-in “constituency” of consumers who are familiar with their products and therefore might be receptive to their stock. DPO issuers who start with just a new product or technology, in contrast, are in a weaker position so far as reaching potential investors.
The picture may change as there are increased numbers of Web sites that assist DPOS by developing databases of potential investors whom issuers can solicit. Over time, we can expect to see such investor groups divided and subdivided accordingly to the types of industries they like. This will allow more “targeting” in the DPO process. There are also reports of a “dutch auction” DPO system being developed by a new venture of William Hambrecht, who co-founded Hambrecht & Quist. The system would allow institutions, professionals and individual investors to bid for a certain number of shares at a specific price. The offering would be sold to those whose bids, when aggregated, represented the best price for the total shares being offered.
c. Sites Providing Interaccess Between Groups of Potential Investors and a Number of DPOs.
Even though DPOs do not use traditional underwriters, they have spawned a new type of financial intermediary. The new model is a Web site designed to develop databases of potential investors in new stock offerings which can be linked on site to new DPOs. For example, “Internet Capital Exchange” (www.inetcapital.com/), operated by Internet Capital Corp. (“ICC 1”), was one of the first Web startups to attempt to connect various DPO issuers with potential investors. To register with ICC 1’s “exchange,” a viewer would be required to first fill out a questionnaire giving certain personal information. Completion of the questionnaire would allow access to the “Roadmap to a Direct IPO,” which would include a description of SEC forms suitable for public offerings of newer and emerging companies. Upon completing personal registration, the participant would be entitled to be notified by e-mail of new offerings which are legally offered in the viewer’s state of residence. The Internet Capital Exchange system for secondary trading of already-issued securities was to be based on its bulletin board. Access to the board would permit the participant to find posted sell offers, select one to accept, or post the viewer’s own offer to buy.
Internet Capital Exchange initially offered its service without any SEC clearance. It disclaimed on its Web site being a broker/dealer, investment advisor, or being registered with the SEC or any state blue-sky agency, and disclaimed having evaluated or investigated any company listed on the site or endorsing any such company. Nevertheless, its assured its audience that modern technology is creating fantastic opportunities “to realize the American dream of success and independence” and that Internet Capital is “bringing these opportunities directly to you.”
The SEC then stepped in and informed ICC 1 that it could not operate the bulletin board until it requested a no-action letter, feeling the site would be involved in active solicitation and conducting business as an underwriter. In its subsequent request for a no-action letter from the SEC, ICC 1 specified the conditions which would govern its operations in order to avoid registration as a broker-dealer. The conditions included the following:
(a) ICC 1 would charge only a flat fee, not contingent upon the success of the offering, to issuers to provide a Web site for facilitating the issuer’s online securities offering.
(b) ICC 1’s service would be provided for issuers of registered offerings as well as Reg. A and SCOR offerings. ICC 1 would not provide this service for securities to be issued pursuant to Rule 505 or 506 of the Act.
(c) ICC 1’s Web site would support a grouping of individual corporate bulletin board areas or “corporate listings.” An individual logged on to the site could elect to visit any corporate bulletin board area where a tombstone, preliminary offering document, or final offering document can be viewed regarding a specific company. Each corporate bulletin board area would remain autonomous and operate separately from all of the other corporate areas; only offerings and information pertaining to that specific corporation would be displayed in its bulletin board area.
(d) “Tombstone” advertisements on the site would meet the requirements of SEC Rule 134, and the red herring prospectus would meet the requirements of SEC Rule 430. Such “tombstone” advertisements and the red herring prospectus would set forth the names of the issuers.
(e) The distribution of the “tombstone” advertisement and the red herring prospectus would be in accordance with Release 33-7233. There would be no “hot links” between the Web site and any other corporate marketing information or a corporation’s home page.
(f) The order in which issuers were to be displayed within ICC 1’s site would be determined by objective criteria (either alphabetically by name of issuer, or sequential by date of listing). A disclaimer will state that the order of presentation in no way constitutes any judgment by ICC as to the merits of a particular offering. The site would link to any “tombstone” advertisement or any red herring prospectus the disclaimers required under SEC Rule 134(b)(1) and (d), respectively.
(g) Once an issuer were to receive notice that its registration is effective, ICC 1 would post the final offering document on its Web site. Only the final offering document will contain the subscription documents necessary to purchase the offered securities.
(h) The Web site would contain a disclaimer that ICC 1 is an underwriter of the securities or is acting as a broker-dealer or agent of the issuer, and in fact would not function as an underwriter or a broker/dealer, but merely act as a delivery mechanism for an issuer.
(i) ICC 1 would not receive any commission nor take compensation of any kind based on the sale of any securities. Instead, its one-time flat fee (the “Listing Fee”) would cover such items as development of the software, use of the software platform, design and graphics work and technical consulting regarding the listing and access to the ICC 1 system. The Listing Fee would be independent of the number of hits to the Web Site after listing, or success of the offering.
(j) ICC 1 would not receive, transfer, or hold funds or securities, nor provide information of any nature regarding the advisability of buying or selling securities.
(k) A viewer seeking to access ICC 1’s corporate listing areas would first have to go through a registration process involving disclosure of key information about the viewer and issuance of a selected log-on name and password required for required for further access to the Web site.
(l) Viewers would be given the opportunity to download a prospectus electronically or request that the issuer deliver a printed copy of the prospectus, and ICC 1 would have no contractual liability for improper prospectus delivery. Instructions for sending the proper funds and subscription information to the issuer or its agent will be contained in the prospectus. Subscription agreements would be included in the file delivered with the prospectus. No subscription agreements could be accessed without delivery of a prospectus.
(m) After electronic delivery of a prospectus, ICC 1 would have no further involvement in the transaction, such as negotiations regarding prospective purchases, record keeping of completed transactions or any reporting requirements of the issuer.
(n) ICC 1’s Web site would be structured so as to preclude any solicitation or viewing of an offering document by persons in states where the securities were not qualified for sale.
Based on the foregoing methods and procedures described, the SEC said it would not require ICC 1 to register as a broker-dealer pursuant to Section 15(b) of the 1934 Act. The SEC specifically expressed no view on whether ICC 1 would be acting as an “underwriter” within the meaning of the 1933 Act nor whether the prospectus delivery procedures described in ICC’s letter satisfy the standards previously articulated by the SEC in the October Releases and Release 7288.
Internet Capital Corp. by mid-1998 was still in beta test on its website and had no DPO’s posted. Its bulletin board was likewise still in beta test. The principal product being marketed by ICC-1 at the time was a software program for preparing and conducting DPOs.
Another firm proposing an even more extensive role in DPOs over the Internet is First Internet Capital Corp. (“INTERCAP” at www.1stcap.com). As of early 1998, INTERCAP claimed to offer “a fully integrated range of services necessary for a company to go public over the Internet via a Reg. A offering. Among services described on its Web site were:
(1) Conducting initial due diligence.
(2) Drafting offering materials.
(3) “Making available at a package price a highly competent securities attorney” to review and file the offering with the SEC, and to provide “follow-up” until the offering is cleared.
(4) “Making available, at the best price possible, a Big 6 accounting firm” to audit the issuer.
(5) Providing escrow and stock transfer services of Huntington National Bank “on a negotiated package basis.”
(6) “Direct access” to INTERCAP’s list of interested investors.
(7) Promoting and advertising the issuer’s offering over the Internet.
For the foregoing services, INTERCAP said it would receive unspecified cash, a “moderate contingent fee” to be paid from the proceeds of the offering, plus a “small percentage of the company’s stock.”
Because it was to receive contingent compensation for, among other activities, “due diligence” and “promoting and advertising” the offering, INTERCAP would appear to fall within the statutory definition of an underwriter under the 1933 Act. Whether it has yet applied to the SEC for a no-action letter is not known (an online search of posted no-action letters did not locate any for INTERCAP). INTERCAP may be exposing itself to possible liability for any failings on the part of attorneys whom it “makes available [to issuers] at a package price.” Indeed, the attorneys themselves could encounter sticky conflict of interest issues in view of the way they are planned to be brought into the DPO transactions.
Another firm that announced plans to deliver DPO prospectuses to potential investors is Virtual Wall Street (www.virtualwallstreet.com). In early 1998, Virtual Wall Street reportedly was negotiating an alliance with Standard & Poor’s. It plans to offer prospective investors due diligence on DPO issuers. The potential liability undertaken by Virtual Wall Street to Web investors in offering due diligence on thinly-capitalized issuers is difficult to predict, because liability would be affected by whatever cautionary language, disclaimers and waivers can be built into the Web site and made legally effective on investors. In any event, Virtual Wall Street said it would seek its own no-action letter from the SEC, stating that it is reluctant to rely on the ICC 1 letter.
In the spring of 1998 a venture capital site for the smaller investors leapt onto the Web. Called “Garage” after the Silicon Valley dream in which companies start in a garage and become powerhouses, Garage.com plans to admit potential venture investors into membership which will allow them to invest seed capital in new companies whose business plans have been vetted by Garage’s staff. Garage did not plan to activate its full services until after broker-dealer registration was completed in the second half of 1998.
Some Web sites are less proactive, and simply provide centralized links to DPO issuers without additional services such as databases of investors. The utility and potential profitability of such sites is dubious, because the linking service offered is narrow, and there are better ways to access DPOs. Few of these limited sites have lasted long with such limited services. For example, in 1996 a viewer could have logged on to “SCORnet” (scor-net.com) to find lists of issuers who filed using Form U-7, SEC Reg. A or who had registered on SEC Form SB-2. “SCORnet” also contained a list of prospectuses of a number of issuers listed by state. However, in June 1997 SCORnet was merged into “Direct Stock Market Incorporated,” with its Web address changed (www.directstockmarket.com). Direct Stock Market as of early 1998 was hosting electronic road shows and seminars (in which “full streaming video and audio” could be presented together with presentations by issuers while taking questions from the audience through a chat window), and lists public and private offerings which are accessible on-line only by registered viewers. It uses “push” technology to send notices of new public and private offerings to its subscribers. It says it has requested a no-action letter from the SEC to allow it to operate an electronic bulletin board for secondary transactions.