American Energy Production (AENP) Inactive
Filed: 21 Feb 01, 12:00am
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Amendment 1
COMMUNICATE NOW.COM, INC.
DELAWARE
(State or jurisdiction of incorporation or organization)
731900
(Primary Std. Industrial Classification Code Number)
74-2945581
(IRS Employer ID Number)
2015 Bird Creek Terrace, Suite 101/102
P.O. Box 2309
Temple, TX 76502
254-771-0999
(Address and telephone number of principal executive offices)
ATTN: David Hancock
2015 Bird Creek Terrace, Suite 101/102
P.O. Box 2309
Temple, TX 76502
254-771-0999 or 254-718-1956
(Address of principal place of business or intended principal place of business)
The Company Corporation
1013 Centre Road
Wilmington, DE 19805
(302) 636-5440 or 800-315-9420 (ext. 3214)
(Name, address and telephone number of agent for service)
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3,488,820 SHARES ARE BEING OFFERED BY SELLING SECURITY HOLDERS
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration 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 of 1933, check the following box and list the
Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE (1)(2)(3)
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Title of Each Amount Proposed Proposed Amount of
Class of Being Maximum Maximum Registration
Securities to be Offered Offering Aggregate Fee
Registered Price per Offering
Share(1)(2) Price(1)(2)
Common 3,488,820 .0078 $27,202.80 $ 7.57
Total Registration Fee:
(1) Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(h) (1).
(2) Selling shareholders hold all of the shares, which we are registering.
These shares will be sold at prevailing market prices. We will not receive
proceeds from the sale of shares from the selling shareholders.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we 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 this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
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The information in this prospectus is not complete and may be changed. Our
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2001
Communicate Now.com, Inc.
3,488,820 shares of Common Stock
Our current shareholders are offering 3,488,820 shares of our common stock.
Our common stock is not now listed on any national securities exchange or
the NASDAQ stock market.
The selling security holders may offer their shares at any price. We will
pay all expenses of registering the securities.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 9.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed. Our
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to sell these securities in any state where the offer or sale is not
permitted.
The date of this preliminary prospectus is February 13, 2001.
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Offering Information
TOTAL PER SHARE
------------- ---------------
Estimated offering expenses (1) $0.00 $0.00
3
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to sell these
securities in any state where the offer or sale is not permitted.
TABLE OF CONTENTS
Page
PART I - INFORMATION REQUIRED IN PROSPECTUS
ITEM 1. Front of Registration Statement and Outside Front Cover of
Prospectus........................................................... 1
ITEM 2. Inside Front and Outside Back Cover Pages of Prospectus.............. 2
ITEM 3. Summary Information.................................................. 7
o Our poor financial condition raises substantial doubt about our
ability to continue as a going concern; you will be unable to
determine whether we will ever become profitable................. 9
o Because we are a development stage company in the business of
Internet advertising, we have a limited operating history,
accordingly, you will be unable to evaluate our business.......... 9
o There is no trading market for our shares of common stock and you
may be unable to sell your investment quickly or at all.......... 11
o Because our common stock is considered a penny stock, any
investment in our common stock is considered to be a high-risk
investment and is subject to restrictions on marketability....... 12
o If our common stock becomes tradable on the Over-the-Counter
Bulletin Board, sales of our common stock by selling shareholders
could affect the level of public interest in our common stock as
well as its value.................................................12
o Our business is dependent upon obtaining and retaining advertising
customers; if we fail to obtain a sufficient number of advertising
customers to sustain our operations, we may have to seek alternative
revenue sources that would cause substantial delays in our
operations....................................................... 13
o We will rely upon third parties for the development and
maintenance of our technological components; any failures on the
part of our third party providers may negatively impact our
Internet connections and the security and integrity of our
software and accounting...........................................14
o We have only two methods of promoting our Internet display
advertising business; if these methods are inadequate, we will
have to adopt new methods of promoting our Internet advertising
which may increase our costs and cause substantial interruptions
to our operations................................................ 14
o We have no insurance to cover risk of loss from theft or damage
to the personal computers and digital cameras that we will
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provide to our sales force; because we will be forced to expend
additional funds to replace this equipment in the event of theft or
damage, or total operating costs will increase................... 14
o We devote substantial resources to our business information
database from which we receive no direct revenues; if our costs
related to the information database exceed our revenue sources,
we may have to charge fees for business information searches,
which may negatively impact our advertising revenues..............14
o Our agreements with Acxiom Corporation and Interliant may be
terminated by either party at any time; if either or both of these
agreements are terminated by any of the contracting parties, we
will lose these third party services requiring us to seek other
third party services which may cause substantial delays in our
operations........................................................14
o Our sales force will be compensated solely on a commission basis;
if we are unable to retain sales personnel and/or hire replacement
sales persons on a timely basis, our advertising revenues will be
negatively impacted and/or we will be required to provide a salary
to our sales personnel............................................14
o We have no contracts or arrangements with computer, database or
network personnel to provide technical assistance to our
operations; if we fail to establish these contracts or
arrangements, our website and other aspects of our internet
operations will be negatively impacted............................15
o Our vulnerability to security breaches, glitches and other computer
failures, could negatively affect our ability to broaden our
customer base and promote our brand name......................... 16
o Because our capital requirements may vary substantially at certain
times, we may need to obtain additional capital, if we fail to
obtain additional capital when required, we may be unable to
implement our business plan...................................... 16
o If we are unable to attract and retain qualified personnel, we may
be unable to implement our business plan..........................17
o If we are unable to obtain a trademark for Communicate now.com
and/or Bizfinders.com., we may not be able to successfully develop
our brand name recognition.......................................17
o Any reduction in our sales force could negatively impact sales
of our Internet display advertisements............................17
o Because we face intense competition, we may be unable to
successfully market our Internet display advertisements...........18
o Because our principal stockholders retain control over a majority
of the issued and outstanding shares, you will be severely limited
in your ability to affect change in how we do business............18
o Because conflicts of interest exist among our directors, you
should exercise caution before your purchase......................18
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ITEM 4. Use of Proceeds................................................... 19
ITEM 5. Determination of Offering Price................................... 19
ITEM 6. Dilution.......................................................... 19
ITEM 7. Selling Security Holders.......................................... 19
ITEM 8. Plan of Distribution.............................................. 22
ITEM 9. Legal Proceedings..................................................24
ITEM 10. Directors, Executive Officers, Promoters and Control Persons.......24
ITEM 11. Security Ownership of Certain Beneficial Owners....................26
ITEM 12. Description of Securities..........................................27
ITEM 13. Interest of Named Experts and Counsel..............................29
ITEM 14. Disclosure of Commission Position on Indemnification...............29
ITEM 15. Organization Within Last Five Years................................30
ITEM 16. Description of Business............................................31
ITEM 17. Management's Discussion and Analysis or Plan of Operation.........40
ITEM 18. Description of Property............................................44
ITEM 19. Certain Relationships and Related Transactions.....................45
ITEM 20. Market for Common Equity and Related Stockholder Matters...........46
ITEM 21. Executive Compensation.............................................48
ITEM 22. Financial Statements...............................................49
ITEM 23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure............................... x
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers......................... x
ITEM 25. Other Expenses of Issuance and Distribution....................... x
ITEM 26. Recent Sales of Unregistered Securities........................... x
ITEM 27. Exhibits.......................................................... x
ITEM 28. Undertakings...................................................... x
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future business operations
that involve risks and uncertainties. Our actual results could differ
significantly from our anticipated future operations, as a result of many
factors, including those identified under the "Risk Factors" section of this
prospectus beginning on page 9. The prospectus summary contains a summary of all
material terms of the prospectus. You should carefully read all information in
the prospectus, including the financial statements and their explanatory notes,
under the Financial Statements section beginning on page 49, prior to making an
investment decision.
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OUR COMPANY:
We were incorporated in the State of Delaware on January 31, 2000 to engage
in an Internet based advertising business. We are a development stage company.
Our principal executive offices are located at 2015 Bird Creek Terrace, Suites
101 and 102, Temple, TX 76502. Our telephone number is 254-771-0999. We are
authorized to issue 100,000,000 shares of common stock of which 22,998,820
shares are issued and outstanding. We are not currently authorized to issue
preferred stock.
OUR BUSINESS:
We have had limited operations and revenues and we have sustained losses
since our inception. We have developed a website at www.bizfinders.com that
began operations on November 1, 2000. This website contains a business
information database consisting of names, addresses and phone numbers of
approximately 11 million U.S. businesses through which visitors to our website
may use a search engine to locate businesses. Searches may be made under subject
category, city, state, actual name of business and zip code. We obtained the
license to use this business database from Acxiom Corporation. We will obtain no
revenue from the searches of our database; instead our revenue will be derived
from Internet display advertisements that appear on our website, which are
developed through real time face to face interaction with our advertising
customers. Our Internet display advertisements are accessed through the public
searches of our business information database. Our services do not involve the
development or design of websites on behalf of our customers. Our current
business plans are to develop and expand our Internet advertising business. In
March 2000, we began limited operations consisting of our sales personnel
conducting personal visits to small businesses to demonstrate our Internet
display advertisements. Our marketing plans are to expand the promotion of our
Internet display advertisements throughout major metropolitan areas in the State
of Texas by using our sales force and billboard advertising to demonstrate the
advantages of our advertisements. There are no assurances that we will have
sufficient funds to develop our business plan, including hiring sales personnel
and purchasing personal computers and digital cameras to enable our sales
personnel to construct the Internet display advertisements.
THE OFFERING:
As of the date of this prospectus, we had 22,998,820 shares of common stock
outstanding and no shares of preferred stock outstanding. This offering is
comprised entirely of shares of our common stock held by our selling security
holders.
Although we have agreed to pay all offering expenses, we will not receive
any proceeds from the sale by the selling security holders of their securities.
We anticipate offering expenses of approximately $50,000. Because we have now no
revenue sources, we may borrow funds from our management or others to pay the
offering expenses.
OUR FINANCIAL SUMMARY:
Because this is only a financial summary, it does not contain all the
financial information that may be important to you. Therefore, you should also
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carefully read all the information in this prospectus, including the financial
statements and their explanatory notes before making an investment decision.
- ----------------------------------- -----------------------------------
STATEMENT OF PERIOD FROM
OPERATIONS INCEPTION
TO OCTOBER 31, 2000.
- ----------------------------------- -----------------------------------
Net Sales $0.00
- ----------------------------------- -----------------------------------
Cost of Sales N/A
- ----------------------------------- -----------------------------------
Gross Profit $0.00
- ----------------------------------- -----------------------------------
Operating Expenses $631,961
- ----------------------------------- -----------------------------------
Loss from Operations ($631,961)
- ----------------------------------- -----------------------------------
Other Expenses, Net $1,845
- ----------------------------------- -----------------------------------
Net Loss ($633,806)
- ----------------------------------- -----------------------------------
Net Loss per Common Share ($0.03)
- ----------------------------------- -----------------------------------
BALANCE SHEET PERIOD FROM
INCEPTION
TO OCTOBER 31, 2000.
- ----------------------------------- -----------------------------------
ASSETS
- -----------------------------------------------------------------------
Total Current Assets $21,098
- ----------------------------------- -----------------------------------
Other Assets $200,000
- ----------------------------------- -----------------------------------
Total Assets $338,627
- ----------------------------------- -----------------------------------
LIABILITIES & STOCKHOLDER'S EQUITY
- -----------------------------------------------------------------------
Current Liabilities:
- -----------------------------------------------------------------------
Accounts Payable & Accrued
Liabilities $14,214
- ----------------------------------- -----------------------------------
Note Payable - Current
Portion $6,410
8
- ----------------------------------- -----------------------------------
Note Payable to Stockholder $30,000
- ----------------------------------- -----------------------------------
Note Payable to Bank $42,000
- ----------------------------------- -----------------------------------
Commitment to issue
common stock for services $ 71,740
- ----------------------------------- -----------------------------------
Total Current Liabilities $164,274
- ----------------------------------- -----------------------------------
Long Term Liabilities:
- -----------------------------------------------------------------------
Note Payable - Net of
Current Portion $11,339
- ----------------------------------- -----------------------------------
Total Liabilities $175,613
- ----------------------------------- -----------------------------------
Total Stockholder's Equity $163,014
- ----------------------------------- -----------------------------------
Total Liabilities and
Stockholder Equity $338,627
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED IN THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. WE CANNOT ASSURE PROSPECTIVE INVESTORS THAT WE
WILL CONTINUE OPERATIONS, GENERATE REVENUES OR MAKE A PROFIT IN THE FUTURE.
Our poor financial condition raises substantial doubt about our ability to
continue as a going concern; you will be unable to determine whether we will
ever become profitable.
We are a development stage company with no revenues through October 31,
2000 and limited revenues since November, 2000 totaling only $6,376, as follows:
o November 2000 $182
o December 2000 $1,048
o January 2001 $2,573
o February 2001 $2,573
From our inception to October 31, 2000, we incurred operating losses of $633,806
and had a working capital deficiency of $143,176. In addition, as of October 31,
2000, we had only $21,098 of current assets, only $13,613 of which is cash.
Although our cash position increased to $465,724 as of December 31, 2000, we
still cannot satisfy our cash requirements for a period of 12 months through our
existing cash resources; accordingly there are no assurances that our cash and
revenues will be sufficient to satisfy anticipated capital expenditures of
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$1,094,600 over the next twelve months. Our ability to continue as a going
concern is dependent on our ability to raise additional capital or obtain
financing and implement our business plan; however there is no assurance that
such capital or financing will be available. As such, there is substantial doubt
about our ability to continue as a going concern over the next twelve months. We
anticipate that we will experience continued losses, even if we obtain funding
through various financing means. Our poor financial condition could adversely
affect our ability to hire employees, develop our website or purchase equipment
and inventory. Because we are currently operating at a substantial loss, with a
limited operating history and no reliable revenue source, an investor cannot
determine if we will ever become profitable.
We are a development stage company in the business of Internet advertising
and we have a limited operating history; accordingly, you will be unable to
evaluate whether our Internet advertising business will be successful.
Our business has consisted only of our development of a business database
website and limited sales of our Internet advertisements. You must consider the
risks and difficulties frequently encountered by development stage companies in
the Internet advertising business, which have little or no operating history,
including whether we will be able to overcome the following challenges:
o Whether we can establish a presence on the Internet or develop
a customer base;
o Our ability to adequately train our sales force in how to sell
and construct our Internet display advertisements;
o Inordinate development expenses;
o Dependence on our Internet display advertising business and
consumer search services that have had only limited market
acceptance;
o Whether we are able to compete effectively against established
Internet websites offering the same type of business database
search services;
o Our ability to generate sufficient revenues to offset the
substantial costs of implementing a sales force, developing
customer support and administrative infrastructure, and
enhancing technologies pertaining to our website and
operations; and
o Our ability to attract and retain customers despite
traditionally high attrition rates among Internet-related
start-ups.
Because significant up-front advertising, sales, and other expenses are
required to develop and expand our Internet display advertisements, we
anticipate that we may incur losses until revenues are sufficient to cover our
operating costs. Future losses are likely before our operations become
profitable. As a result of our limited operating history, you will have no basis
upon which to accurately forecast our:
o Total Revenues;
o Gross and operating margins; and
o Labor costs
10
Accordingly, you have no basis upon which to judge our ability to develop
our business and you will be unable to forecast our future growth.
There is no trading market for our shares of common stock and you may be
unable to sell your investment quickly or at all.
Investors should be aware of the long-term nature of, and the lack of
liquidity of an investment in our common stock. Our common stock is not
registered under the Securities Act of 1933 or under any applicable state
securities laws. The securities must be acquired for investment purposes only
and not with a view to resell or distribute to others. In addition, no trading
or other market exists for the common stock. There is no assurance that a
trading market will develop at any time in the future. While we are registering
the shares of selling security holders in this registration statement, there can
be no assurance that the Securities and Exchange Commission will declare our
registration statement effective.
We intend to apply for listing of our securities on the Over the Counter
Bulletin Board, but there can be no assurance that we will be able to obtain
this listing. Over the Counter Bulletin Board securities are not listed and
traded on the floor of an organized national or regional stock exchange.
Instead, Over the Counter Bulletin Board securities transactions are conducted
through a telephone and computer network connecting dealers in stocks.
Over-the-Counter Bulletin Board securities traditionally involve smaller
companies that do not meet the financial and other listing requirements of a
regional or national stock exchange.
There has never been a market for our securities. There is no established
public trading market or market maker for our securities. There can be no
assurance that a trading market for our common stock will be established or
that, if established, a market will be sustained.
A market maker sponsoring a company's securities is required to obtain a
listing of the securities on any of the public trading markets, including the
Over the Counter Bulletin Board. If we are unable to obtain a market maker for
our securities, we will be unable to develop a trading market for our common
stock. We may be unable to locate a market maker that will agree to sponsor our
securities. Even if we do locate a market maker, there is still no assurance
that our securities will be able to meet the requirements for a quotation or
that the securities will be accepted for listing on the Over the Counter
Bulletin Board.
Therefore, if you purchase our securities you may be unable to sell them
and, you should be able to bear the financial risk of losing your entire
investment.
Because our common stock is considered a penny stock, any investment in our
common stock is considered to be a high-risk investment and is subject to
restrictions on marketability; you may be unable to sell your shares.
Our Shares are "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 as equity securities with a price of less than
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$5.00. Our shares may be subject to rules that impose sales practice and
disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to
anyone other than an established customer or "accredited investor" must make a
special suitability determination regarding the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with his or her spouse is considered an accredited investor.
In addition, under the penny stock regulations the broker-dealer is required to:
o Deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Securities and Exchange
Commission relating to the penny stock market, unless the
broker-dealer or the transaction is otherwise exempt;
o Disclose commissions payable to the broker-dealer and its
registered representatives and current bid and offer quotations
for the securities;
o Send monthly statements disclosing recent price information
pertaining to the penny stock held in a customer's account, the
account's value and information regarding the limited market in
penny stocks.
o Make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction, prior to
conducting any penny stock transaction in the customer's account.
Because of these regulations, broker-dealers may encounter difficulties in
their attempt to sell shares of our common stock, which may affect the ability
of selling security holders or other holders to sell their shares in the
secondary market and have the effect of reducing the level of trading activity
in the secondary market. These additional sales practice and disclosure
requirements could impede the sale of our securities, if our securities become
publicly traded. In addition, the liquidity for our securities may be adversely
affected, with a corresponding decrease in the price of our securities. Our
shares may someday be subject to such penny stock rules and our shareholders
will, in all likelihood, find it difficult to sell their securities.
If our common stock becomes tradable on the Over-the-Counter Bulletin
Board, sales of our common stock by selling shareholders could reduce the price
of our common stock and decrease the public interest in our common stock.
By our filing of this registration statement, we are attempting to register
3,488,820 shares of our common stock held by the selling shareholders. If this
registration statement is declared effective, the selling shareholders will be
able to sell their shares at negotiated prices. If our common stock becomes
tradable on the Over the Counter Bulletin Board, prospective purchasers will be
able to purchase and our selling shareholders will be able to sell our common
stock in the open market. If a substantial amount of the selling shareholders'
shares of common stock are sold, especially if the nine selling shareholders
that each have share holdings in excess of 100,000 shares, sell their shares,
which in the aggregate total 2,625,000 shares, there may be downward price
pressures on our common stock price. This selling activity could:
o Cause the market price of our common stock to decrease in value
o Decrease the level of public interest in our common stock;
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o Inhibit buying activity that might otherwise help support the
market price of our common stock; and
o Prevent possible upward price movements in our common stock.
Our business is dependent upon obtaining and retaining advertising
customers; if we fail to obtain a sufficient number of advertising customers to
sustain our operations, we may have to seek alternative revenue sources that
would cause substantial delays in our operations or failure of our Internet
display advertising as our sole revenue source.
Our ability to develop and expand our business is dependent upon the number
of advertisers that advertise on our website. To date, we have only sold a
limited number of Internet display advertisers that appear on our website. The
use of the Internet as an advertising medium is a relatively new form of
advertising that has only achieved limited market acceptance. Many advertisers
have limited experience on the Internet and are reluctant to use Internet
advertising. Their are no assurances that our sales force will be successful in
generating advertising revenues. Accordingly, our advertising services may not
be successful.
Accordingly, if we are unsuccessful in making advertising sales, we may be
forced to revise our business plan by seeking alternative revenue sources. For
instance, we could charge an access fee or search fee for the business searches
conducted on our business database website; however, because the same
information will be available elsewhere at no cost, our implementation of these
fees may discourage persons from using our business database. Moreover, any
changes we make to our fee structure will cause substantial delays in our
operations or failure of our Internet display advertising as our sole revenue
source.
We will rely upon third parties for the development and maintenance of our
technological components; any failures on the part of our third party providers
may negatively impact our Internet connections and the security and integrity of
our software and accounting.
We will rely on third parties to maintain, house and operate the Internet
servers that host our website and business database. Although our agreements
with these third parties include service agreements, in the event of any
technical failures, there is no assurance that the third parties will comply
with the terms of the service agreements. Any service interruptions resulting
from failures by third party maintenance providers would have a negative impact
on confidence in our services.
In addition, we will rely upon third parties to process our billings and
payments due to us. Any service interruptions by these third party providers due
to computer failures, labor problems, credit card fraud, or other unforeseen
developments, could cause accounting errors or possible cash flow disruptions.
We also rely upon third party providers to write and improve our software
per our specifications. These third parties may be unable to keep up with new
technology that may be required in order to adjust to the rapidly changing
Internet arena. Any failure to meet the demands of new technology may undermine
any present or future attempts to gain market awareness and acceptance.
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Any failures on the part of our third party providers could negatively
impact the operation of our website and business database.
We have only two methods of promoting our Internet display advertising
business; if these methods are inadequate, we will have to adopt new methods of
promoting our Internet advertising which may increase our costs and cause
substantial interruptions to our operations.
We now have only our billboard advertising and our sales visits to
businesses that promote our Internet display advertising business. There are no
assurances that our billboard advertising or personal sales visits will be an
effective means by which to attract customers to our form of advertising. If
these methods of attracting advertising revenue are ineffective, we will be
forced to develop new methods of promoting our Internet display advertisements,
which may increase our costs of conducting business and cause interruptions in
our operations.
We have no insurance to cover risk of loss from theft or damage to the
personal computers and digital cameras that we will provide to our sales force;
because we will be forced to expend additional funds to replace this equipment
in the event of theft or damage, our total operating costs will increase.
We will be providing our salespersons with personal computers to construct
the Internet advertisements and digital cameras to take pictures of businesses
that will be incorporated into the advertisements. We may experience loss from
theft or damage to this equipment; however, we have no insurance coverage to
cover any such risk of loss. If we have to absorb the cost of replacing or
repairing the damaged or lost equipment, our total operating costs will
increase.
We devote substantial resources to our business information database from
which we receive no direct revenues; if our costs related to the information
database exceed our revenue sources, we may have to charge fees for business
information searches, which may reduce or eliminate our revenues from sales of
our Internet display advertisements.
We pay Axciom Company a fee for the right to use their business information
database software. We also have other costs associated with our business
database including the leasing and maintenance of our servers, which contain our
website and business database. Despite these costs, we derive no direct revenues
from or searches conducted on our business database. Although increased
visitation to our business database may enhance our prospects for increased
advertising sales, there are no assurances that we will be successful in
attracting increased visitation to our website or even that an increase in
visitation to our website will result in increased advertising sales.
If the costs of maintaining our information database exceed our advertising
revenues, we may have to charge fees for business information searches. Because
the same information will be available elsewhere at no cost, the implementation
of these fees may discourage visitation to our website. In turn, because
prospective advertisers may interpret that decreased visitation to our website
may decrease exposure of an advertiser's business, sales of our Internet
advertisements may decrease. Accordingly, the implementation of these fees may
reduce or eliminate revenues from sales of our Internet advertisements.
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Our agreements with Acxiom Corporation and Interliant may be terminated by
either party at any time; if either or both of these agreements are terminated
by any of the contracting parties, we will lose these third party services
requiring us to seek other third party services which may cause substantial
delays in our operations.
Our agreement with Acxiom Corporation, our data base supplier, may be
terminated by either contracting party, at any time, with a 90-day notice. In
addition, either contracting party may terminate the Interliant agreement, our
server supplier, at any time, with a 30-day notice. Our existing business
database is essential to our operations because it is the primary incentive for
our prospective advertisers to purchase our Internet display advertisements. Our
server is essential because persons wishing to access our business database will
be unable to do so if our server ceases providing such services. Accordingly, if
these agreements are terminated and we fail to find companies to replace these
services, we may experience substantial delays in our operations until such time
that we find suitable replacements to provide such services.
Our sales force will be compensated solely on a commission basis; if we are
unable to retain sales personnel and/or hire replacement sales persons on a
timely basis, our advertising revenues will be negatively impacted and/or we
will be required to provide a salary to our sales personnel.
Our sales personnel will be compensated only on a commission basis. If our
sales personnel fail to generate enough advertising sales to provide them with
what they perceive to be adequate compensation, they will seek other employment.
Accordingly, we may experience high attrition rates among our sales force. If we
fail to maintain an adequate sales force on a continual basis, our advertising
revenues will be negatively impacted. In addition, if we determine that
compensating our sales personnel solely on a commission basis is no longer a
viable way of conducting our business, we will be forced to provide our sales
personnel with a wage or salary that will increase our total costs of doing
business. Moreover there are no assurances that the implementation of a wage or
salary for our sales personnel will be a successful means of retaining or hiring
sales personnel.
We have no contracts or arrangements with computer, database or network
personnel to provide technical assistance to our operations; if we fail to
establish these contracts or arrangements, the presentational and technical
aspects of our website, business database and Internet display advertisements
will be negatively impacted.
Our management has no Internet management, marketing or technology related
work experience. We will require substantial assistance from third parties to
manage, market and develop our product and services. Unless our current
management has the financial resources to hire qualified computer, database or
network personnel, the overall presentation and technical aspects of our website
and quality of our information database and Internet display advertising may be
negatively impacted.
Our vulnerability to security breaches, glitches and other computer
failures, could negatively affect our ability to broaden our customer base and
promote our brand name.
The secure transmission of confidential information over public networks is
a critical element of our operations. A party who is able to circumvent security
15
measures could misappropriate proprietary information or cause interruptions in
our operations. If we are unable to prevent unauthorized access to our user's
information and transactions, the computer component of our business could be
harmed. Although we intend to implement industry-standard security measures, we
cannot assure that these measures will prevent future security breaches. Because
our software and services are dependent upon the integrity of software and
hardware systems we obtain from third parties, security breaches in these
systems could materially adversely affect our business, financial condition and
operating results. In this regard we face the following risks:
o Heavy stress placed on our systems that could cause systems
failures or operation of our systems at unacceptably low
speeds;
o Failures in our system could also be caused by acts beyond our
control, such as failures caused by our online service
providers; and
o Failures or shortcomings in our record-keeping and data
processing functions performed by third parties:
Any significant compromise of our system's security could hinder our
ability to broaden our customer base and positively promote our brand name.
Because our capital requirements may vary substantially at certain times,
we may need to obtain additional capital, if we fail to obtain additional
capital when required, our marketing plans and operation of our business
database may be hindered.
We require substantial amounts of revenue to implement our business plan.
Our capital requirements may vary substantially depending on our rate of
development and other factors. We plan to generate revenue from the sale of
Internet display advertisements. Even if we begin sales and marketing campaigns,
we may not generate enough revenue to achieve profitability. Furthermore, as we
continue to develop our business, we expect that our operating expenses will
increase. We plan to increase our operating expenses as we:
o Continue to develop and improve our website and database;
o Increase marketing activities and advertising efforts;
o Hire and train salespersons and other necessary employees and
consultants;
o Purchase computer hardware for salespersons;
o Purchase or lease other assets; and
o Increase our general and administrative functions to support our
developing operations.
In addition, the actual costs of implementing and developing our business
may be more expensive than we currently anticipate. Increases in expenditures
will depend on many factors including but not limited to, our advertising and
marketing expenses, the number of personnel we hire, the amount and quality of
the equipment we purchase, and the assets we decide to purchase or lease. We
cannot assure that we will have sufficient financial resources to meet our
capital needs or to operate profitably. If adequate financing is not available,
we may be required to curtail operations or to obtain funds by entering into
16
agreements on unattractive terms. Our inability to obtain financing or raise
capital could impair our ability to market our Internet display advertisements
and operate our business database.
If we are unable to attract and retain qualified personnel, we may be
unable to develop or retain a sufficient customer base to fund our operations,
or implement our business plan.
Our current and future success depends on our ability to identify, attract,
hire, train, retain and motivate various employees and consultants, including
skilled technical, managerial and professional personnel as well as sales,
marketing and customer service personnel. Competition for Internet-specific
employees is intense and we may be unable to attract or retain the technical
professionals necessary to maintain an effective website and business database.
Even if we out-source our Internet-related work, we may not be able to afford
the fees associated with doing so. If we fail to attract and retain the
necessary managerial, sales, marketing and customer service personnel, we will
be unable to develop or retain a sufficient customer base to fund our operations
or implement our business plan.
If we are unable to obtain a trademark for Communicate now.com and/or
Bizfinders.com., we may be unable to develop our brand name.
We will attempt to obtain brand name recognition and protection for our
Internet names, Communicate Now.Com and BizFinders.Com. The regulations
regarding the protection of domain names as trademarks are evolving and
unpredictable. We may be unable to prevent third parties from acquiring domain
names similar to our domain names. If a third party was to infringe upon our
domain names we may become involved in litigation that may be costly and time-
consuming. In addition, any challenge to our domain names may decrease the value
of our trademarks or other proprietary rights. If we fail to obtain a trademark
for our business names or there is a decrease in the value of our domain names
our ability to develop our brand name recognitions , will be negatively
impacted.
Any reduction in our sales force could negatively impact sales of our
Internet display advertisements.
We plan to employ a sales staff of approximately 126 sales persons and 3
sales managers over the next twelve months. We cannot assure that we will have
available financial resources needed to implement a sales force of this size.
The costs associated with hiring our anticipated sales force and equipping them
with computers and digital cameras may exceed our financial resources, in which
case we will be unable to hire the anticipated number of sales persons. Any
reduction in our sales force may negatively impact sales of our Internet display
advertisements.
Because we face competition, we may be unable to successfully market our
Internet display advertisements.
The Internet business database and Internet phone book market is becoming
increasingly competitive with hundreds of competitors. Some of our biggest
competitors include:
o The Southwestern Bell Yellow Pages;
o The AT&T Phone Books; and
o On-line Directories including:
17
o The Any Who Internet Directory;
o GTE Internet Directories and Business Phone Books; and
o The Big Yellow Internet Directory.
Our ability to compete will be based on our success in distinguishing our
website from our competitors. Because we do not operate an exclusive database of
information, we will encounter difficulties in distinguishing our website from
others. In addition, the business information accessible through our website
will be available elsewhere on the Internet and in other informational formats
offered by our competitors. We also do not have an established brand name or
reputation while our competitors have significantly greater brand recognition,
customer bases, operating histories and financial and other resources. There can
be no assurance that we will be able to compete in the Internet advertising
business, which may negatively impact market awareness and acceptance of our
business.
Because our principal stockholders retain control over a majority of the
issued and outstanding shares, you will be limited in your ability to affect
change in how we do business.
Our principal stockholders, Mr. David Hancock and Damber Production
Company, collectively own approximately 82% of our common stock and the
remaining stockholders own approximately 18% of our common stock. As a result,
our two principal stockholders have significant influence over all matters
requiring approval by our stockholders without the approval of minority
stockholders. In addition, they are able to elect all of the members of our
Board of Directors, which allows them to significantly control our affairs and
management. They are also able to affect most corporate matters requiring
stockholder approval by written consent, without the need for a duly noticed and
duly-held meeting of stockholders. Such control could adversely affect the
market value of our common stock or delay or prevent a change in our control.
Accordingly, you will be limited in your ability to affect change in how we
conduct our business.
Because conflicts of interest exist among our directors, you should exercise
caution before you invest in our common stock.
Because some of our officers, directors and stockholders are, and may, in
the future, become involved in other business activities, our officers and
directors may face a conflict of interest in selecting between us and their
other business interests. We have not formulated a policy for the resolution of
such conflicts. One of our directors, Randal Leblanc is also the principle owner
of JCL Associates and holds 125,000 of our common stock options. JCL Associates
has a software development agreement with us and has developed the software we
use in our Internet display advertising business. JCL Associates received 50,000
shares of our common stock which are being registered on this registration
agreement in return for their development of this software. Mr. Leblanc's
position as our director and as the principal owner of a company that provides
services to us may create a conflict of interest. Because there are no
assurances that any such conflicts or other potential conflicts will be resolved
in our best interests, you should exercise caution before your purchase our
common stock.
Because we have never paid dividends, you should exercise caution before
making an investment in our common stock.
As a new company, we have never paid dividends nor do we anticipate the
declaration or payments of any dividends in the foreseeable future. We intend to
retain earnings, if any, to finance the development and expansion of our
18
business. Our Board of Directors will determine future dividend policy at their
sole discretion and future dividends will be contingent upon future earnings, if
any, our financial condition, capital requirements, general business conditions
and other factors. Future dividends may also be affected by covenants contained
in loan or other financing documents, which may be executed by us in the future.
Therefore, there can be no assurance that cash dividends of any kind will ever
be paid.
ITEM 4. USE OF PROCEEDS
Not Applicable. We will not receive any proceeds from the sale of the
securities by the selling security holders.
ITEM 5. DETERMINATION OF OFFERING PRICE
Not Applicable. The selling security holders will be able to determine the
price at which they sell their securities.
ITEM 6. DILUTION
Not Applicable. We are not offering any shares in this registration
statement. All shares are being registered on behalf of our selling
shareholders.
ITEM 7. SELLING SECURITY HOLDERS
The selling security holders named below are selling the securities. The
table assumes that all of the securities will be sold in this offering. However,
any or all of the securities listed below may be retained by any of the selling
security holders, and therefore, no accurate forecast can be made as to the
number of securities that will be held by the selling security holders upon
termination of this offering. We believe that the selling security holders
listed in the table have sole voting and investment powers with respect to the
securities indicated. We will not receive any proceeds from the sale of the
securities by the selling security holders.
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Name Relationship Amount Amount To Be Amount Percentage
With Issuer Beneficially Registered Beneficially Owned
Owned Prior to Owned Before/After
Offering After Offering Offering
(1) (2)
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Amos, Charles D. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Atanian, Debra M. 2,000 2,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Best, William Consultant 16,000 16,000 0 Less than 1%
19
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Birdwell, James Jr. 30,000 30,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Bitters, Charles 600,000 600,000 0 2.6%/Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Bitters, Helen 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Boatwright, Nika M. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Brandt, Chance Wade 30,000 30,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Burson, Byron 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Butler, Tim D. 2,500 2,500 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Carruth, Johnny Bob 425,000 375,000 50,000 1.6%/Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Chance Research Corp. 250,000 250,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Cleveland, Charlie 500,000 450,000 50,000 1.9%/Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Crabtree, Peter 1,250 1,250 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Damber Productions, Corp. 9,450,000 250,000 9,200,000 41%/40%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Dlugosch, Pete 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Drum, Max 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Dunn, Hal 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Eudaly, Tom R. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Gann, Brandy 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Glenn Pattern Family, L.P. 50,000 50,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Hall, Barrett 100,000 100,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Hallford, Mike 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Law Offices of Brenda Lee Law Firm 100,000 100,000 0 Less than 1%
Hamilton, P.A.
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Hamilton, John 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Hancock, David President and 9,441,500 250,000 9,191,500 41%/40%
Director
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Hanson, Thomas 1,000 1,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Harless, Sheila 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Harris, Carolyn 1,000 1,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Harris, Henry 21,000 21,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Irby, Jim 30,000 30,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Jacoby, Allen, J. 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
JCL Associates, Inc. 50,000 50,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Lacy, Chad 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Lancaster, B. Joye 1,000 1,000 0 Less than 1%
20
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Lane, Charlene 120,000 100,000 20,000 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Langerhans, Roy R. 2,000 2,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Lisner, Tracy 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Lynam, Bruce 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
McCarthy, Elsie 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
McDonald, Christel 1,000 1,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
McGregor, Chris 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
McNeely, Lance 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Michael, Richard 150,000 150,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Mitchell, J. Brad 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Morrison, Jeff 3,500 3,500 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Newton, Tommy 2,500 2,500 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Oplinger, T. 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Ozgo, Tom 3,920 3,920 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Ozgo, Thomas W. 1,250 1,250 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Petree, Monte 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Petter, Roger A. 25,000 25,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Powers, Jimmy 50,000 50,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Reider, John L. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Rideout, John T. 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Rhoads, Michael 2,000 2,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Roth, David 2,500 2,500 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Sanderson, Bruce 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Scheible, Margarette 15,000 15,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Seay, Jimmy 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Sims, John F. 5,000 5,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Smith, Carl 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Smith, Jackie 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Smith, Shane D. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Stephenson, James A. 900 900 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Texas Industrial Scrap 25,000 25,000 0 Less than 1%
Metal, Inc.
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Vaca, Gabriel 2,500 2,500 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Vogel, Luther N. 1,000 1,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Wang, Margaret Yuk Chu 100,000 100,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Waskom, Sam D. 2,000 2,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Weatherford, David 2,000 2,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Williams, Clay 1,000 1,000 0 Less than 1%
21
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Williams, J. Marvin 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Winkler, Jack 10,000 10,000 0 Less than 1%
Motors, Inc.
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Winkler, Jack 10,000 10,000 0 Less than 1%
Resource Limited
Partnership
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Winkler, John 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Ying Wai Lam, Patrick 20,000 20,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
Zerr, Stephen J. 10,000 10,000 0 Less than 1%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
TOTAL 22,000,320 3,488,820 18,511,500 95.6%/80.5%
- --------------------------- ----------------- ---------------- ---------------- ------------------ -------------------
(1) Assumes all registered selling shareholders shares will be sold.
(2) Assumes the sale of 3,488,820 shares of Common Stock held by the
selling shareholders
We intend to seek qualification for sale of the securities in those states
where the securities will be offered. That qualification is necessary to resell
the securities in the public market and only if the securities are qualified for
sale or are exempt from qualification in the states in which the selling
shareholders or proposed purchasers reside. There is no assurance that the
states in which we seek qualification will approve of the security resales.
ITEM 8. PLAN OF DISTRIBUTION
Our Selling Shareholders are offering 3,488,820 shares of our common stock.
The selling shareholders may sell their shares at any price. We will not
receive proceeds from the sale of shares by the selling shareholders.
The securities offered by this prospectus will be sold by the selling
security holders or by those to whom such shares are transferred. We are not
aware of any underwriting arrangements that have been entered into by the
selling security holders. The distribution of the securities by the selling
security holders may be effected in one or more transactions that may take place
in the over-the-counter market, including broker's transactions, privately
negotiated transactions or through sales to one or more dealers acting as
principals in the resale of these securities.
Any of the selling security holders, acting alone or in concert with one
another, may be considered statutory underwriters under the Securities Act of
1933, if they are directly or indirectly conducting an illegal distribution of
the securities on behalf of our corporation. For instance, an illegal
distribution may occur if any of the selling security holders were to provide us
with cash proceeds from their sales of the securities. If any of the selling
shareholders are determined to be underwriters, they may be liable for
securities violations in connection with any material misrepresentations or
omissions made in this prospectus.
22
In addition, the selling security holders and any brokers and dealers
through whom sales of the securities are made may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and the commissions or
discounts and other compensation paid to such persons may be regarded as
underwriters' compensation.
The selling security holders may pledge all or a portion of the securities
owned as collateral for margin accounts or in loan transactions, and the
securities may be resold pursuant to the terms of such pledges, accounts or loan
transactions. Upon default by such selling security holders, the pledgee in such
loan transaction would have the same rights of sale as the selling security
holders under this prospectus. The selling security holders may also enter into
exchange traded listed option transactions, which require the delivery of the
securities listed under this prospectus. The selling security holders may also
transfer securities owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such selling security holders under this
prospectus.
In addition to the above, each of the selling security holders and any
other person participating in a distribution will be affected by the applicable
provisions of the Securities Exchange Act of 1934, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
any of the securities by the selling security holders or any such other person.
There can be no assurances that the selling security holders will sell any
or all of the securities. In order to comply with state securities laws, if
applicable, the securities will be sold in jurisdictions only through registered
or licensed brokers or dealers. In various states, the securities may not be
sold unless these securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with. Under applicable rules and regulations of the Securities Exchange
Act of 1934, as amended, any person engaged in a distribution of the securities
may not simultaneously engage in market-making activities in these securities
for a period of one or five business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of the securities.
Pursuant to the various agreements we have with the selling security holders, we
will pay all the fees and expenses incident to the registration of the
securities, other than the selling security holders' pro rata share of
underwriting discounts and commissions, if any, which is to be paid by the
selling security holders.
Should any substantial change occur regarding the status or other matters
concerning the selling security holders, we will file a Rule 424(b) prospectus
disclosing such matters.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings, in which
we are involved.
23
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors elects our executive officers annually. A majority
vote of the directors who are in office is required to fill vacancies. Each
director shall be elected for the term of one year, and until his successor is
elected and qualified, or until his earlier resignation or removal. There are no
family relationships between any of the directors and executive officers. Our
directors and executive officers are as follows:
- --------------------------------------------------------------------------------------------------
Name Age Position Term
- --------------------------------------------------------------------------------------------------
David Hancock 44 Director, Chairman One
Year* of the Board of
Directors, President
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Bill Elliott 53 Director One Year*
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Randal Leblanc 51 Director One Year*
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
John C. Winkler 55 Director One Year*
- -------------------------------------------------------------------------------------------------
*Our Director's current terms, subject to re-election, expire on the second
Tuesday of April 2001, or within 60 days thereof.
Mr. David Hancock has served as our President, Chief Executive Officer, and
a Director since our inception. From 1992 until February 2000, Mr. Hancock
served as a Technical Service Manager for Wilsonart International, where he was
responsible for customer technical sales and support, customer complaints, and
quality assurance for high pressure laminates, flooring products, solid
surfacing sheets and shape goods, and adhesives. Mr. Hancock earned a Bachelors
Degree in Industrial Arts Education from Abilene Christian University in 1979.
Mr. Hancock does not hold any other directorships or managerial positions.
Mr. Bill Elliott has been one of our directors since August 19, 2000. Mr.
Elliott has been the owner and operator of Bill Elliot Homes, a custom
home-building company in Temple, Texas since 1985. Mr. Elliott earned a
Bachelors degree in Agri-business from Tarleton State University in 1973. Mr.
Elliott does not hold any other directorships.
24
Mr. Randal Leblanc has been one of our directors since August 19, 2000.
From 1990 to present, Mr. Leblanc has been a part owner and President of JCL
Associates, Inc., a provider of computer programming and consulting services to
the Texas state area. Mr. Leblanc earned a bachelor's degree in Accounting from
McNeese State University in 1971. Mr. Leblanc does not hold any other
directorships.
Mr. John C. Winkler has been one of our directors since August 19, 2000.
Mr. Winkler has been the owner and operator of a "Four-line General Motors New
Car Franchise" and two affiliated used car lots since 1968. Mr. Winkler earned a
Bachelor's degree in Business Administration from Trinity University in 1968.
Mr. Winkler does not hold any other directorships.
SIGNIFICANT EMPLOYEES
Ms. Sheila Diane Llewellyn has been our corporate secretary since November
2000. Ms. Llewellyn served as a sales coordinator for the flooring division of
Wilsonart, International from 1995 to 2000.
Mr. Dennis Bash has been our Vice President of Operations and Technology
since March 15, 2000. Mr. Bash served as an Operations Manager for Wilsonart
International from 1986 until March 15, 2000. As a Technical Representative, Mr.
Bash was responsible for technical support, product development, technical
analysis, process development, technical sales support and technical training.
Mr. Bash earned an Associates Degree in Applied Science - Solar Engineering from
Texas State Technical College in 1982. In 1992, Mr. Bash earned a Bachelors
Degree in Management Information Systems from University of Houston.
Ms. Bernadatee Pate has been Manager of our Training and Development
Division since December 15, 2000 and is responsible for training our sales
personnel. Ms. Pate was an educator and curriculum consultant for the Temple,
Texas Independent School District from 1990 to 2000. Ms. Pate received a
Bachelors of General Studies Degree with a concentration in Religious Education
from Howard Payne University located in Brownwood, Texas in 1986. Ms. Pate
received her Teacher Certification from the University of Mary Hardin Baylor
located in Belton, Texas in 1991. Ms. Pate also received a Masters Degree of
Agriculture in Plant Science from Texas A&M University located in Bryan
College Station, Texas in 1999.
FAMILY RELATIONSHIPS
There are no family relationships among our officers, directors, or persons
nominated for such positions.
LEGAL PROCEEDINGS.
25
No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of February 6, 2001, of
our common stock (a) by each person known by us to be the beneficial owner of
more than 5% of our outstanding common stock, and (b) by each of our directors,
by all executive officers and our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted. There are not any pending or
anticipated arrangements that may cause a change in control of our company.
Security Ownership of Certain Beneficial Owners
- -------------------- ---------------------------- ----------------- -------------------- --------------------
Title of Class Name& Address # Of Shares Nature of Current Current %
Ownership
- -------------------- ---------------------------- ----------------- -------------------- --------------------
- -------------------- ---------------------------- ----------------- -------------------- --------------------
Common David Hancock
3402 Red Bud Road 9,441,500 Direct 41%
Temple, Texas 76502
- -------------------- ---------------------------- ----------------- -------------------- --------------------
- -------------------- ---------------------------- ----------------- -------------------- --------------------
Common Damber Production Corp.
Amanda Bitters (sole owner) 9,450,000 Direct 41%
P.O. Box 1136
Mineral Wells, Texas 76068
- -------------------- ---------------------------- ----------------- -------------------- --------------------
- -------------------- ---------------------------- ----------------- -------------------- --------------------
TOTAL 18,891,500 Direct 82%
- -------------------- ---------------------------- ----------------- -------------------- --------------------
Security Ownership of Officers and Directors
- -------------------- ------------------------------ -------------- --------------------- --------------------
Title of Class Name & Address # Of Shares Nature of Current Current %
Ownership
- -------------------- ------------------------------ -------------- --------------------- --------------------
- -------------------- ------------------------------ -------------- --------------------- --------------------
Common David Hancock
President & Chairman of the 9,441,500 Direct 41%
Board of Directors
3402 Red Bud Road
Temple, Texas 76502
- -------------------- ------------------------------ -------------- --------------------- --------------------
- -------------------- ------------------------------ -------------- --------------------- --------------------
Common William Elliott (Director) Option for
26
88 Oakmount Circle 125,000 0.005%
Morgan Point Resort, Texas
76513
- -------------------- ------------------------------ -------------- --------------------- --------------------
- -------------------- ------------------------------ -------------- --------------------- --------------------
Common Jackie Winkler (Director) Option for
1209 Shady Lane 125,000 0.005%
Hondo, Texas 78861
- -------------------- ------------------------------ -------------- --------------------- --------------------
- -------------------- ------------------------------ -------------- --------------------- --------------------
Common Randal Leblanc Option for
6200 Savoy Drive #1200 125,000 0.005%
Houston, Texas 76502
- -------------------- ------------------------------ -------------- --------------------- --------------------
- -------------------- ------------------------------ -------------- --------------------- --------------------
Total 9,816,500 41.02%
- -------------------- ------------------------------ -------------- --------------------- --------------------
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary of the material terms of our
Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws
have been filed as exhibits to the registration statement of which this
prospectus is a part.
COMMON STOCK
GENERAL:
We are authorized to issue 100,000,000 shares of common stock with a par
value of $.0001 per share. As of February 6, 2001, there were 22,998,820 common
shares issued and outstanding held by 90 shareholders of record. All shares of
common stock outstanding are validly issued, fully paid and non-assessable.
VOTING RIGHTS:
Each share of common stock entitles the holder to one vote, either in
person or by proxy, at meetings of shareholders. The holders are not permitted
to vote their shares cumulatively. Accordingly, the holders of common stock
holding, in the aggregate, more than fifty percent of the total voting rights
can elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of the such directors. The vote of
the holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
DIVIDEND POLICY:
27
Holders of common stock are entitled to receive ratably such dividends, if
any, as may be declared by the board of directors out of funds legally
available. We have not paid any dividends since our inception and presently
anticipate that all earnings, if any, will be retained for development of our
business. Any future disposition of dividends will be at the discretion of our
Board of Directors and will depend upon, among other things, our future
earnings, operating and financial condition, capital requirements, and other
factors.
MISCELLANEOUS RIGHTS AND PROVISIONS:
Holders of our common stock have no preemptive rights. Upon our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities. All
outstanding shares of our common stock are, and the common stock to be
outstanding upon completion of this offering will be fully paid and assessable.
There are not any provisions in our Articles of Incorporation or our by-laws
that would prevent or delay change in our control.
SHARES ELIGIBLE FOR FUTURE SALE.
Once this registration statement is effective, the 3,488,820 shares being
offered by our selling shareholders will be freely tradable without restrictions
under the Securities Act of 1933, except for any shares held by our
"affiliates", which will be restricted by the resale limitations of Rule 144
under the Securities Act of 1933.
In general, under Rule 144 as currently in effect, any of our affiliates
and any person or persons whose sales are aggregated who has beneficially owned
his or her restricted shares for at least one year, may be entitled to sell in
the open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates who have
held their restricted shares for one year may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited
resales of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning 90 days
28
after the date of this prospectus. The availability for sale of substantial
amounts of common stock under Rule 144 could adversely affect prevailing market
prices for our securities.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
Our Financial Statements for the period ending October 31, 2000 have been
included in this prospectus in reliance upon Salberg & Company, P.A.,
independent Certified Public Accountants, as experts in accounting and auditing.
The Law Offices of Hamilton, Lehrer and Dargan, P.A. opined upon the validity of
the securities being offered and other legal matters. Brenda Lee Hamilton of the
Law Firm of Hamilton, Lehrer and Dargan, received compensation of $10,000 cash
and 100,000 shares of stock as consideration for legal services.
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
The By-laws of this corporation, subject to the provisions of Section 145
of Delaware General Corporation Law, contain provisions which allow the
corporation to indemnify any person against liabilities and other expenses
incurred as the result of defending or administering any pending or anticipated
legal issue in connection with service to us if it is determined that person
acted in good faith and in a manner which he reasonably believed was in the best
interest of the corporation. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to our directors, officers and
controlling persons, we have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
common stock to David Hancock.
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
common stock to Damber Productions Corp., a Texas corporation, a Texas
corporation that operates an oil and gas lease and exploration business in
Mineral Wells, Texas. These shares were issued in exchange for services rendered
in our corporate formation by the sole shareholder, officer and director of
Damber Productions Corp., Amanda Bitters. Specifically, Ms. Bitters formulated
our business concept of operating an Internet display advertising business
supported by operation of a business database search service. In addition, Ms.
Bitters assisted in the preparation of our business plan.
On March 26, 2000, we entered into a Software Development Agreement with
JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary
point-of-sale software and administrative support software that will allow for
the integration of sales, billing and payments. JCL Associates also agreed to
provide us with technical services. The software development fee of $200,000.00
29
was payable in two installments of $90,000.00 and $110,000.00, both of which
have been paid. Mr. Randal Leblanc is the President and a principle owner of JCL
Associates. Mr. Leblanc holds 33,000 of 100,000 total outstanding shares of JCL
Associates. On August 19, 2000, we nominated and elected Mr. Randal Leblanc to
serve as our Director. In November 2000, JCL Associates received 50,000 shares
of common stock in return for software enhancements JCL Associates provided to
us. In consideration for his services as our Director, Mr. Leblanc may exercise
a non-transferable option to purchase up to 125,000 shares of our common stock
at $1.00 per share while he serves as one of our Directors Because Mr. Leblanc
is a principal of JCL Associates and one of our directors, a possible conflict
of interest exists.
On April 16, 2000, we entered into a consulting agreement with Charles
Bitters for general business start-up consulting. In consideration for his
services, we paid Mr. Charles Bitters $10,000. Mr. Bitters is the father of
Amanda Bitters who is the President and sole Director of Damber Production
Company. Damber Production Company is a beneficial owner of 41% our common
stock.
On August 19, 2000, we nominated and elected Mr. William Elliott to serve
as a Director. In consideration for his services as our Director, Mr. Elliott
may exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as
a Director. In consideration for his services as our Director, Mr. Winkler may
exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On October 20, 2000, we entered into a second consulting agreement with
Charles Bitters. In consideration for his services, we paid Mr. Charles Bitters
$16,500 and 600,000 shares of our common stock. Mr. Bitters is the father of
Amanda Bitters, who is the President and sole Director of Damber Production
Company. Damber Production Company is the beneficial owner of 41% of our common
stock.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, nominee for director,
beneficial owner of five percent or more of our common stock, or family members
of such persons. Also, we have not had any transactions with any promoter. We
are not a subsidiary of any company.
ITEM 16. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT.
We were incorporated in Delaware on January 31, 2000 for the purpose of
engaging in an Internet based advertising business. We have operated as a
development stage company since our inception. We have devoted all of our
efforts to:
o Financial planning;
o Formulating our business plan;
o Raising capital;
30
o Research and development of our product and services;
o Establish our back office operations;
o Developing proprietary software to create our electronic display
advertisements; and
o Establishing our website.
We have never been the subject of any bankruptcy or receivership action. We
have had no material reclassification, merger, consolidation, or purchase or
sale of a significant amount of assets outside the ordinary course of business.
We began implementing our business plan in March 2000 that consisted of the
above activities. We began actively attempting to sell our Internet display
advertisements in November 2000.
PRINCIPAL PRODUCT & SERVICES: DATABASE SEARCHES THROUGH OUR WEBSITE:
We are currently operating a business information website located at
www.Bizfinders.com. Our search directory allows users the ability to search for
and locate businesses and business information by providing any of the following
identifying information:
o Business name;
o Business location;
o Name of service or product or subject category;
o City;
o State; and
o Zip code
We obtained a license to use this business information database from Acxiom
Corporation. This database includes the names, addresses and phone numbers of
approximately eleven million U.S. businesses. Visitors to our website can also
choose to download maps and directions to any business included on the database.
Our business database search service is offered to the public free of charge and
we receive no revenue from this aspect of our business. Our business database is
a means by which to attract visitors to our website to purchase our Internet
display advertisements.
INTERNET DISPLAY ADVERTISEMENTS
We have developed a point of sale software tool that builds Internet
display advertisements that are personally constructed by our sales personnel at
our customer's place of business.
Through this process, the customer has the ability to view our lap top
computer screen while our sales persons configures an advertisement to the exact
specifications of the customer as it will be seen on the our Bizfinders
database. The sales person uses a laptop computer to design and configure the
advertisement and a digital camera to take pictures of the business as they will
appear in the advertisement.
SOFTWARE TECHNOLOGY TO CONSTRUCT THE ADVERTISEMENTS
Our software technology includes twelve templates to format and design the
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advertisements. Each template has various colors, font sizes, and graphics that
when used in combination with each other create thousands of combinations in
design. The customer may view the advertisement on the salesperson's computer
screen exactly as it will appear on our Bizfinders website. Our sales persons
will work with the customer to modify and change the advertisement until such
time that it specifically meets customer specifications. We plan to have the
finished product include a one-page color advertisement with digital images of
the customer's facilities or products. We anticipate that the advertisement's
creation will take approximately forty minutes. The following day, the customer
will be able to view his advertisement by visiting our website.
We plan to utilize our own proprietary Point-of-Sale software that will
allow our salespersons to submit invoice receipts to a central server via an
Internet transmission. At the central server, sales commissions are calculated
and forwarded to our payroll service, Time Plus Company. We plan to have the
central server send billing invoice information to a billing service, Express
Bill that will process and send the actual bill to the customer. The customer
will then return payment to our Bank, Bank One Texas, N.A.'s billing fulfilling
center for payment acceptance and processing.
ADDITIONAL ADVERTISING OPTIONS THAT MAY BE PURCHASED AND THEIR COST
The following table illustrates the pricing of our products and services:
------------------------ ------------- -----------------------------------------------------------------------
Product Description Price (Per Description
Year)
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
"Electronic Display $179.00 This charge is for a full-page color advertisement created real
Ad" (EDA) time. Customer may print the advertisement himself or pay printing
specialty service to download and print.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Permanent Data File $100.00 This charge involves the addition of a permanent data file to the
electronic display advertisement. Examples of permanent data files
include menus, price sheets, or inventory descriptions the business
may want to accompany the electronic display advertisement.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Alpha Search Listing $29.00 This charge involves in advertisement listing in more than one
Option category. For example, an automobile dealership may be listed in the
new car section as well as the used car section, and in multiple
cities. Each additional listing cost $29.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Unscheduled Change $0.00 No charge if within one week of purchase. We plan to have a toll-free
phone line available.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Change Options $200.00 For 12 modifications of existing ad over one year. Otherwise, $50.00
per modification.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Additional Page $75.00 Additional advertisement pages are $75.00 for each page.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Additional City Listing $49.00 A business may choose to be listed in more than one city. Additional
city listings cost $49.00 for each additional city.
32
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Link to Website or $49.00 The cost for links to a company's existing website or to their e-mail
Email is $49 per year.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Language Options Per $49.00 The advertisement may be written in multiple languages for a $49.00
Page fee per year.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Mini Website $279.00 A non-interactive website of up to 3 pages that fully details the
business and its goods and services may be purchased for $279.00 per
year.
------------------------ ------------- -----------------------------------------------------------------------
------------------------ ------------- -----------------------------------------------------------------------
Mini Website with $379.00 A non-interactive website of up to 3 pages that fully details the
Permanent Data files business and its goods and services, including permanent data files
such as restaurant menus, price sheets, or detailed inventory
descriptions the business wants to feature. The fee for his service
is $379.00 per year.
------------------------ ------------- -----------------------------------------------------------------------
DISTRIBUTION OF PRODUCTS & SERVICES:
We currently deliver our licensed business information through our website
located at www.bizfinders.com. Users of our website utilize a search engine to
locate the business information stored on our database servers. We provide our
Internet display advertisements through personal visits by our sales staff.
Because we are a development stage company, we cannot assure that we will ever
have the resources available to continue distributing business information
through our website or begin distribution of our Internet display advertisements
and other services.
MATERIAL AGREEMENTS:
JCL ASSOCIATES SOFTWARE DEVELOPMENT AGREEMENT
On May 26, 2000, we executed a software development agreement with JCL
Associates that required JCL Associates to provide us with technical services
and develop our proprietary Internet display advertisement development software,
point-of-sale software and administrative support software. We paid JCL
Associates $200,000.00 in two installments for these services. The first
installment of $90,000.00 was paid at the time the agreement was executed and
the remainder was paid upon completion of the software development on July 31,
2000. This agreement also commits us to minimum maintenance fees of $3,200 per
month from July 2000 through the expiration of the agreement on May 25, 2001.
All software programs and code developed under this agreement will remain our
property.
ACXIOM CORPORATION DATABASE LICENSE AGREEMENT
On May 1, 2000, we entered into a licensing agreement with The Acxiom
Corporation for the use of a United States business database on our website. The
size of this database is approximately eleven 11 million United States
businesses. This license fee of $75,000 per year, payable in twelve monthly
33
installments of $6,250, expires on April 30, 2001. As of October 31, 2000, the
total licensing fees charged to our operations was $31,250. Either contracting
party may terminate the agreement at any time with a 90 day notice.
CONSULTING AGREEMENT WITH RICHARD MICHAEL
On December 5, 2000, we entered into a consulting agreement with Richard
Michael to create and produce on demand general business start-up services
pertaining to our future business in the state of Florida, including but not
limited to:
o Advertising campaign to be conducted in the State of Florida;
o Recruitment of our sales employees in the State of Florida; and
o Compliance with all state laws pertaining to the conduct of
business in the State of Florida.
The term of the agreement is for three months with a provision for an automatic
3 month renewal unless either party terminates the agreement in writing. Mr.
Michael received 150,000 shares of our common stock in return for
his services.
CONSULTING AGREEMENT WITH CHANCE RESEARCH CORPORATION
On December 5, 2000, we entered into a consulting agreement with Chance
Research Corporation of Temple, Texas to create and produce on demand general
business start-up services pertaining to the review and testing of software
necessary to create for our Internet display advertisements a shopping cart
interactive Internet Display Advertisement and an interactive
reservation/scheduling function. The term of the agreement is for three months
with a provision for an automatic 3 month renewal unless either party terminates
the agreement in writing. Chance Research Corporation received 250,000 shares of
our common stock in return for these services.
CONSULTING AGREEMENT WITH CHARLIE CLEVELAND
On November 13, 2000, we entered into a consulting agreement with Charlie
Cleveland of Lubbock, Texas to create and produce on demand general business
start-up services pertaining to the creation, review and testing of software and
hardware necessary to bill customers and receive and collect/credit customer
payments. The term of the agreement is for three months with a provision for an
automatic 3-month renewal unless either party terminates the agreement in
writing. Mr. Cleveland received 150,000 shares of our common stock in return for
these services.
Additionally, On December 04, 2000, we entered into a second Consulting
Agreement for further services related to the creation, review and testing of
software and hardware necessary to bill customers and receive and collect/credit
customer payments. The term of this second agreement is for three months with a
provision for an automatic 3-month renewal, unless either party terminates the
agreement in writing. Mr. Cleveland received 125,000 shares of our common stock
in return for these services.
CONSULTING AGREEMENT WITH CHARLES BITTERS
On April 16, 2000, we entered into a consulting agreement with Charles
Bitters of Mineral Wells, Texas to create and produce on demand general business
start-up services. The term of the agreement is for three months with a
34
provision for an automatic 3-month renewal unless either party terminates the
agreement in writing. Charles Bitters received $10,000 in return for these
services.
Additionally, on October 20, 2000 we entered into a second Consulting
Agreement for further services related to our start-up and development, such as
the review of software and hardware necessary to bill customers and receive and
collect customer payments, review and negotiation of advertising contracts for
bill board advertising, creation and review/testing of payroll software,
overseeing the negotiation and agreements between us and Standard and Poor
listing service, oversee and review the agreements between us and a stock
transfer agent and all other aspects of our start-up and development as needed.
The term of this second agreement is for three months with a provision for an
automatic 3-month renewal unless either party terminates the agreement in
writing. Charles Bitters received 600,000 shares of our common stock and $16,500
in return for these services. Mr. Bitters is the father of Amanda Bitters who is
the President and sole Director of Damber Production Company. Damber Production
Company is a beneficial owner of 41% of our common stock.
CONSULTING AGREEMENT WITH BILL BEST
On May 1, 2000, we entered into a consulting agreement with Bill Best of
Nolanville, Texas to create and produce on demand general business start-up
services. The term of the agreement is for three months with a provision for an
automatic 3-month renewal unless either party terminates the agreement in
writing. Mr. Best received 11,000 shares of our common stock in return for these
services.
CONSULTING AGREEMENT WITH JOHNNY CARRUTH
On December 4, 2000, we entered into a consulting agreement with Johnny
Carruth of Lubbock, Texas to create and produce on demand our general business
start-up services pertaining to the State of Texas, including but not limited
to, the Texas advertising campaign, employee recruitment, and ensuring that we
meet all Texas State Government requirements applicable to do business in Texas.
The term of the agreement is for three months with a provision for an automatic
3-month renewal unless either party terminates the agreement in writing. Mr.
Carruth received 125,000 shares of our common stock in return for these
services.
INTERLIANT, INC. NETWORK SERVICE AGREEMENT
In July of 2000, we entered into a one 1 year lease agreement with
Interliant, Inc. for the use of their servers which will store, among other
things, our website, our proprietary software, and our databases. This one-year
network service agreement included a onetime fee of approximately $4,250 and
will require the payment by us of a monthly fee of approximately $6,640. Either
contracting party may terminate the agreement at any time with a 30 day notice.
BILLING SERVICE ARRANGEMENT WITH EXPRESS BILL, INC.
We have an arrangement with Express Bill, Inc. whereby they provide billing
services.
EMPLOYMENT AGREEMENT WITH BERNADETTE PATE.
35
On November 21, 2000 we entered into an Employment Agreement with
Bernadette Pate to perform the duties of our Manager of Training and
Development. The term of the agreement is for one year and if after the term of
agreement has expired, the parties continue to do business together as if the
Agreement were still in effect, the Agreement shall be renewed and continue in
effect until on of the parties notifies the other in writing of its termination.
This one year Employment Agreement included a sign on bonus of 5,000 shares of
our restricted common stock and $1,000 cash. In accordance with the agreement,
Ms. Pate receives a base pay of $52,500 per year.
EMPLOYMENT AGREEMENT WITH SHEILA D. LLEWELLYN
On November 15, 2000 we entered into an Employment Agreement with Sheila
Llewellyn to perform the duties of our Corporate Secratary. The term of the
agreement is for one year and if after the term of agreement has expired, the
parties continue to do business together as if the Agreement were still in
effect, the Agreement shall be renewed and continue in effect until on of the
parties notifies the other in writing of its termination. This one year
Employment Agreement included a sign on bonus of 5,000 shares of our restricted
common stock and $1,000 cash. In accordance with the agreement, Ms. Llewellyn
receives a base pay of $38,500 per year.
LAMAR ADVERTISING AGREEMENT
Lamar Advertising will be furnishing us with billboard advertising in the
designated metropolitan areas that we will target during our first year of
operations. Our current agreement with Lamar Advertising pertains only to
billboard advertising for the Central Texas area for a one-time fee of $7,900
and $10,000 per month with a ninety-day cancellation term. Their services
include the design, graphics and billboard space lease.
COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET:
The Internet business database and Internet phone book market is
increasingly competitive with hundreds of competitors on the Internet alone. In
addition, because barriers to market entry are relatively low and new
competitors can establish new sites at a relatively low cost by utilizing a
variety of market available software, we expect competition to increase in the
future. There are no assurances that we can compete in this market. There are
hundreds of websites that operate similar businesses to us. Some of our biggest
existing competitors include the following companies in the following
categories:
YELLOW PAGE ADVERTISING:
o Southwestern Bell Yellow Pages;
o AT&T Yellow Page Phone Books; and
o Business Phone Books
ON LINE DIRECTORIES
o AnyWho Internet Directory;
o GTE Internet Directories; and
o Big Yellow Internet Directory;
o Hoovers;
o Comfind.com
36
These companies have substantially longer operating histories, greater name
recognition, larger customer bases, and greater financial and technical
resources than us. Accordingly, these companies are able to conduct extensive
marketing campaigns that we are financially unable to accomplish. In addition,
these companies may offer more attractive pricing to potential advertisers. Our
ability to compete will be limited by our success in distinguishing our website
and business database. We will be limited in this endeavor because we do not and
will not operate an exclusive database of information. The information available
on our website will be available elsewhere on the Internet and in other
informational formats such as phone books. We will be further limited in our
ability to promote our product and services because computer hardware/software
products are available at less cost to customers if they wish to construct their
own advertisement, instead of using our advertising services. In addition, we do
not have an established brand name or reputation while our competitors have
significantly greater brand recognition, customer bases, operating histories and
financial and other resources. There can be no assurance that we will be able to
compete in the sale of Internet advertising products and services, which could
have a materially negative impact upon market awareness and acceptance of our
products and services.
We believe the following aspects of our website will enable us to compete
effectively:
Convenience to the customer:
Our point of sale software allows our salesperson to build Internet display
advertisements typically in one visit to the customer's place of business. In
contrast, most of our competitors build advertisements only at their own
business location that may require multiple visits. Accordingly, because the
customer does not have to visit our business location or have multiple
communications with us, we provide convenience to the customer. In addition,
other advertisers require their customers to supply camera ready art work,
photographs and detailed text, all of which require the customers to spend extra
time and cost. Because our sales personnel can create advertisements with the
use of our software, laptop computer and digital camera, we do not need or
require our customers to furnish us with these items. Our prospective customers
are not required to have computer or Internet capability because our sales
personnel are equipped with personal computers and other equipment to display
the capabilities of our Internet advertising. Therefore, by choosing our method
of Internet display advertising, the customer saves time and expense compared
with other advertising competitors.
Quicker production time to advertisements:
We service the customer's needs by constructing advertisements for them at
their place of business in a short period of time, usually in approximately 40
minutes. In contrast, many of our competitors need days or weeks to complete an
advertising project and do not offer the convenience of offering services at the
customers place of business.
Cost advantage to customers:
Our basic advertisements may be purchased without additional advertising
options for less than $200 while some of our competitors may charge from $300 to
$1,500 for their advertising services. In addition, our customers can actually
37
view draft advertisements and make corrections prior to spending or committing
to expend any money. In contrast, many advertisers will require full payment or
a down payment prior to undertaking advertising projects.
Varied uses of our Internet display advertising:
Once our advertisement is constructed it may be printed from the Internet
in a clean flyer format. Once printed in this clean flyer format, the
advertisements can be folded and mailed or otherwise be available for our
customer's use to promote their business. Most of our competitors do not have
this additional feature to their advertising.
There are no assurances that we will be successful in these components of
our business or that these aspects of our business will act as competitive
forces. In addition, many of our competitors produce advertisements that are
more elaborate and intricate requiring more time and cost and facilities to
complete such products.
SOURCES AND AVAILABILITY OF RAW MATERIALS:
We do not require raw materials in our business.
CUSTOMER DEPENDENCY:
We currently have approximately 18 customers. We plan to market our
services to a variety of businesses. Although we do not plan on being dependent
upon one single customer or just a few customers, there are no assurances that
we will not become dependent upon a single or a few customers.
INTELLECTUAL PROPERTY:
At present, we have applied for service mark protection for our
Bizfinder.com domain name and for our corporate name, CommunicateNow.com. Our
software technology is fully owned by us and is copyright protected. We do not
have any patents or royalty agreements.
GOVERNMENTAL APPROVAL REQUIREMENTS:
We are not aware of the need for any government approval of our principal
product or services.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS:
Other than federal and state employment regulations such as those
administered and regulated by the Occupational Safety and Health Administration,
we are not aware of any governmental regulations that will affect our business
plan. However, due to increasing usage of the Internet, a number of laws and
regulations may be adopted relating to the Internet, covering user privacy,
pricing, and characteristics and quality of products and services. Furthermore,
the growth and development for Internet commerce may prompt more stringent
consumer protection laws imposing additional burdens on those companies
conducting business over the Internet. The adoption of any additional laws or
regulations may decrease the growth of the Internet, which, in turn, could
decrease the demand for Internet services and increase the cost of doing
business on the Internet. These factors may have an adverse effect on our
business, results of operations and financial condition.
38
Moreover, the interpretation of sales tax, libel and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
RESEARCH AND DEVELOPMENT:
During the period from our inception to December 22, 2000, we have not
spent funds on research. We have spent $200,000 on software development.
COSTS ASSOCIATED WITH ENVIRONMENTAL COMPLIANCE:
We currently have no costs associated with compliance with environmental
regulations. We do not anticipate any costs associated with environmental
compliance because delivery and distribution of our products and services should
not involve substantial discharge of environmental pollutants. However, there
can be no assurance that we will not incur such costs in the future.
EMPLOYEES:
We currently have four (4) full time salaried employees, one part time
hourly employee, and eight (8) commissioned sales people. All of our employees
are based at our corporate office in Temple, Texas. We have employment
agreements with all of our salaried employees. Our salaried employees and part
time employees positions are as follows:
Salaried Employees
o Mr. David Hancock, President and CEO.
o Mr. Dennis Bash, Vice President of Operations and Technology.
o Sheila Llewellyn, Corporate Secretary
o Bernadette Pate, Manager of Training and Development
Part Time Employees
o Kris Jones, Book keeper
REPORTS TO SECURITY HOLDERS:
After the effective date of this document, we will be a reporting company
under the requirements of the Securities Exchange Act of 1934 and will file
quarterly, annual and other reports with the Securities and Exchange Commission.
Our annual report will contain the required audited financial statements. We are
not required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to the security holders. The
reports and other information filed by us will be available for inspection and
copying at the public reference facilities of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549.
39
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
ITEM 17. PLAN OF OPERATIONS
The discussion contained in this prospectus contains "forward-looking
statements' that involve risk and uncertainties These statements may be
identified by the use of terminology such as 'believes","expects", "may",
"will", or " should", or " anticipates", or expressing this terminology
negatively or similar expressions or by discussions of strategy. The cautionary
statements made in this prospectus should be read as being applicable to all
related forward-looking statements wherever they appear in this prospectus. Our
actual results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "risk factors," as well as those
discussed elsewhere in this prospectus.
We are a development stage company with no revenues or significant
operations. We plan to implement a sales staff that will attempt to sell
Internet single-page display advertisement's, primarily to small business owners
in various metropolitan markets. We plan to include these Internet display
advertisements in a separate database that may be accessed through our website.
We have developed a website containing a business information database
consisting of names, addresses and phone numbers of approximately 11 million
U.S. businesses through which visitors to our site will use a search engine to
locate businesses. Searches may be made under subject category, city, state,
actual name of business and zip code. We obtained the license to use this
database from Acxiom Corporation. We will obtain no revenue from the searches of
our database; instead our revenue will be derived from Internet display
advertisements through real time face-to face interaction with the customer.
During the next twelve months, we will need to hire and train sales persons,
purchase laptop computers, and digital cameras to enable for our sales staff to
compose the Internet display advertisements and conduct our marketing campaign
composed primarily of billboard advertising.
We anticipate total estimated capital expenditures of $1,094,600 over the
next twelve months, as follows:
o $70,000 for the purchase of four automobiles that will be used
by our sales managers;
o $219,600 for the purchase of 126 laptop computers and digital
cameras that will be used by our sales personnel and management;
o $805,000 for our billboard advertising to promote our brand
name, Bizfinders.com;
o $158,000 for training of our sales force
40
We intend to satisfy these capital expenditures by:
o Our cash on hand of $475,922, as of December 31, 2000;
o Our sales revenue;
o Controlling the pace of the growth of our sales force throughout
our 12 month developmental period from 8 sales people to a
total for the year of 126 sales people that will not exceed our
existing capital; and
o Compensating our sales persons solely on a commission basis,
rather than cash outlays in the form of guaranteed salaries.
Accordingly, our existing cash and future revenues from sales of our
Internet display advertisements may be insufficient to fund our operations and
we will be forced to seek additional financing through financial institutions.
We have not arranged for any sources of additional capital through outside
financing. Our president has a line of credit with Bank One for $42,000.00 which
he is prepared to use under these circumstances; however, there are no
assurances that he will utilize this line of credit for our purposes. We may
seek our own financing from financial institutions if our revenues are
insufficient to conduct our operations; however, there are no assurances that
such financing will be available on attractive terms or at all. Over the next
twelve months, we plan to continue to develop our website and implement our
current business plan.
I. OUR PLAN OF OPERATIONS TO DATE
CONDUCTED MARKET RESEARCH
From approximately February 2000 to approximately September 2000 we
conducted research into the markets for Internet Phone Directory Databases by
conducting focus studies. Based on our research, we decided to plan to sell our
products and services to small businesses that want to become involved in
Internet advertising, but lack the required knowledge to do so.
RAISED CAPITAL
We have raised $1,423,900 before offering expenses for our operations
through the sale of a private placement of our securities.
DEVELOPMENT OF A WEBSITE
From approximately May 2000 to approximately August 2000, our management
developed a website with access to a searchable database that contains the
names, addresses and phone numbers of approximately 11 million businesses in the
United States.
REGISTERED DOMAIN NAME
We have registered "Bizfinders.com" and "Communicate Now" USA.com with the
U.S. Department of Commerce as our Internet domain names.
DEVELOPMENT OF OUR BACK OFFICE INFRASTRUCTURE
From approximately March 2000 through November 2000 we researched, designed
and established our back office, the key components of which are:
41
1. OUR OFFICES:
We have building space of approximately 2000 square feet for our operations
area that includes a conference room, two offices, employee break room and 9
cubicle work areas that will be used for customer support purposes. We also have
building space of approximately 700 square feet to house our executive office.
2. QUALITY ASSURANCE SERVER
Through our agreement with Interliant, Inc. we have a server-based phone
system through which our customer support staff will be able to modify our
Internet display advertisements and bill for such modifications.
3. MAIN SERVER
We have secured, through a lease agreement with Interliant, Inc., a server
for the hosting of our business database. Software associated with the server
operates the Bizfinders.com database and captures and tracks customer billing as
well as commissions to our salespersons.
II. Our Plan Of Operations Over The Next Twelve Months
HIRE A SALES FORCE:
o We will hire a sales force through the following methods:
o Contacts of our management;
o Classified advertising; and
o If necessary, hire a staffing agency.
TRAINING A SALES FORCE
From approximately June 2000 to approximately November 2000, our training
was handled through a consulting agreement with one individual. In December 2000
we hired Ms. Bernadette Pate as a full-time training person to train our sales
personnel. Training will consist of two eight-hour sessions covering the
following subjects:
o How to build an Internet display advertisement through the
personal computer furnished to each sales person;
o How to operate the digital camera; and
o Sales techniques
DEPLOY OUR SALES FORCE INTO MAJOR METROPOLITAN AREAS
We plan to deploy our sales force into the following geographic areas over
the next twelve months with a specified number of salespersons as indicated
below:
Central Texas area including: Temple, Killeen and surrounding areas
o January 2001 - We planned to have 8 sales representatives
deployed to this area, which we have accomplished.
42
Houston, Texas Metropolitan Area
o March 2001 - 15 sales representatives and 1 sales manager will
be deployed to this area
o April 2001 - an additional 15 sales representatives will be
deployed to this area
Beaumont - Port Arthur, Texas Area
o May 2001 - 10 sales representatives will be deployed to this area
Dallas/Fort Worth, Texas Metropolitan Area
o June 2001 - 15 sales representatives and one sales manager will
be deployed to this area
o July 2001 - 15 additional sales representatives will be deployed
to this area
San Antonio/New Braunfels, Texas Area
o September 2001 - 15 sales representatives and one sales manager
will be deployed to this area
o October 2001 - 10 additional sales representatives will be
deployed to this area
Lubbock, Texas Area
o November 2001 - 8 sales representatives will be deployed to this
area
Austin/San Marcos, Texas Area
o December 2001 - 15 sales representatives will be deployed to this
area
Our plans then are to deploy a total of 126 sales representatives and 3
sales managers in the various Texas metropolitan areas named above.
The sales person will demonstrate the following advantages of our Internet
display advertising:
o Inexpensive cost, especially compared to yellow page advertising;
o Quick production of Internet display advertisements, typically
within twenty four hours;
o Advertising made to customer specifications; and
o Additional functions of print and brochure capability
DEVELOPING CUSTOMER LEADS
Our customer leads will be derived from our BizFinders database, prior
business contacts, yellow pages and any other sources indicating small
businesses with a business telephone listing.
OUR PLANNED COMPENSATION TO OUR SALES FORCE
Our sales force will be compensated through a combination of 35%
commission, allowances and draws. A sales person will receive a base pay against
commission of $1,250 per month. In addition, they will receive $250 per month
for use towards transportation and Internet service.
43
BILLBOARD ADVERTISING CAMPAIGN
Two to four weeks prior to deploying our sales force in a respective
metropolitan area, Lamar Advertising and/or other similar companies will launch
a billboard campaign in that particular area.
RESEARCH AND DEVELOPMENT
We do not expect to conduct any direct market research and development over
the next twelve months. We have entered into a consulting agreement with Chance
Research for the review and testing of our third party software to create a
shopping car interactive Internet display advertisements and an interactive
reservation/scheduling function that can be integrated as part of an Internet
display advertisement.
ITEM 18. DESCRIPTION OF PROPERTY
We do not own any property nor do we have any plans to own any property in
the future. We are currently leasing office suites 101,102 and 103 on a property
located at 2015 Birdcreek Terrace, in the City of Temple, Bell County, Texas.
Suite 101 contains approximately 705 square feet of space. Suites 102 and 103
contain approximately 1100 square feet of space.
Suite 101 is being leased for a period of nine months commencing on July
15, 2000 and terminating on April 30, 2001. Rent is $600.00 per month. The
renewable rate will be $630 per month. Suites 102 and 103 are being leased for a
period of one year commencing on May 1, 2000 and terminating on April 30, 2001.
Rent is $1151.25 per month. The renewable rate for the second year will be $1228
per month. The renewable rate thereafter will be $1304.75 per month. We are
required to obtain general liability and damage insurance over the leased
premises in the amount of $1,000,000.
We have no policy with respect to investments in real estate or interests
in real estate and no policy with respect to investments in real estate
mortgages. Further, we have no policy with respect to investments in securities
of or interests in persons primarily engaged in real estate activities.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
Common stock to our president, David Hancock shares of our common stock.
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
common stock to Damber Productions Corp., a Texas corporation that operates an
oil and gas lease and exploration business in Mineral Wells, Texas. These shares
were issued in exchange for services rendered in our corporate formation by the
sole shareholder, officer and director of Damber Productions Corp., Amanda
44
Bitters. Specifically, Ms. Bitters formulated our business concept of operating
an Internet display advertising business supported by operation of a business
database search service. In addition, Ms. Bitters assisted in the preparation of
our business plan. We have no continuing business arrangement with Damber
Productions Corp., or Ms. Bitters.
On November 15, 2000 we entered into an Employment Agreement with Sheila
Llewellyn to perform the duties of Corporate Secretary and Office Manager. The
term of the agreement is for one year and if after the term of agreement has
expired, the parties continue to do business together as if the Agreement were
still in effect, the Agreement shall be renewed and continue in effect until on
of the parties notifies the other in writing of its termination. This one year
Employment Agreement included a signing bonus of 5,000 shares of our restricted
common stock and $1,000 cash. In accordance with the agreement, Ms. Llewellyn
receives a base pay of $38,500 per year.
On March 26, 2000, we entered into a Software Development Agreement with
JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary
point-of-sale software and administrative support software that will allow for
the integration of sales, billing and payments. JCL Associates also agreed to
provide us with technical services. The software development fee of $200,000.00
was payable in two installments. The first installment of $90,000.00 was paid at
the time the agreement was executed and the second installment of $110,000.00
was paid upon completion of the software package on July 31, 2000. Mr. Randal
Leblanc, is the President and a principle owner of JCL Associates. Mr. Leblanc
holds 33,000 of 100,000 total outstanding shares of JCL Associates. On August
19, 2000, we nominated and elected Mr. Randal Leblanc to serve as our Director.
In November 2000, JCL Associates received 50,000 shares of common stock in
return for software enhancements. In consideration for his services as our
Director, Mr. Leblanc may exercise a non-transferable option to purchase up to
125,000 shares of our common stock at $1.00 per share while he serves as our
Director. Because Mr. Leblanc is a principal of JCL Associates and one of our
directors, a possible conflict of interest exists.
On August 19, 2000, we nominated and elected Mr. William Elliott to serve
as a Director. In consideration for his services as our Director, Mr. Elliott
may exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as
our Director. In consideration for his services as our Director, Mr. Winkler may
exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, nominee for director,
beneficial owner of five percent or more of our common stock, or family members
of such persons. Also, we have not had any transactions with any promoter. We
are not a subsidiary of any company.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
45
There is no established public trading market for our securities.
Management has not discussed market making with any market maker or broker
dealer. No market exists for our securities and there is no assurance that a
regular trading market will develop, or if developed will be sustained. A
shareholder in all likelihood, therefore, will not be able to resell their
securities should he or she desire to do so when eligible for public resales.
Furthermore, it is unlikely that a lending institution will accept our
securities as pledged collateral for loans unless a regular trading market
develops. We have no plans, proposals, arrangements or understandings with any
person with regard to the development of a trading market in any of our
securities.
We currently have no shares of preferred stock outstanding.
There are 3,488,820 shares of our common stock held by non-affiliates and
19,510,000 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933 defines as restricted securities. No shares have been
sold pursuant to Rule 144 of the Securities Act of 1933 and no shares are
eligible to be resold pursuant to Rule 144. We have agreed to register all of
the shares held by our existing non-affiliate selling shareholders. We plan to
issue common stock subject to an employee benefit plan.
Options.
375,000 shares of our common equity are subject to outstanding options to
purchase. 375,000 shares are issuable pursuant to three Director Agreements
where each Director is entitled to exercise an option to purchase 125,000 shares
of our common stock for one dollar per share while he is acting as our Director.
The remainder of these outstanding options are based on annual bonus packages
available to our two executive employees. These remaining options are renewable
on an annual basis and vest only after a certain number of our products and
services are sold.
Holders.
As of the date of this registration, we had 90 holders of record of our
common stock. We have one class of common stock outstanding.
Dividends.
We have not declared any cash dividends on our common stock since our
inception and do not anticipate paying such dividends in the foreseeable future.
We plan to retain any future earnings for use in our business. Any decisions as
to future payment of dividends will depend on our earnings and financial position
and such other factors, as the Board of Directors deems relevant.
ITEM 21. EXECUTIVE COMPENSATION
We have entered into employment agreements with our employees and we have
arrangements under which we are obligated to compensate our officers or
46
employees in the future. The following Executive Compensation Chart highlights
the terms of compensation for our Executives.
- ----------------------------- ------------------------------------------- --------------------------------------------------
Summary Annual Compensation Long Term Compensation
Compensation Chart
- ----------------------------- ------------------------------------------- --------------------------------------------------
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
Name & Position Year Salary Bonus Other Restricted Options LTIP All
($) ($) ($) Stock Awards ($) ($) Other
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
$120,000
David Hancock, 2000 Equal to Cell Phone None None None None
President/Director/CEO that paid and Laptop
to VP of Computer
S&M
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
Dennis Bash, 2000 $100,000 Based on Cell Phone Based on Based on None None
Vice President of Sales* and Laptop Sales * Sales*
Operations & Computer
Technology
- -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ----------
* Please see immediately below for details on each Executive's bonus plan.
Our March 1, 2000 employment agreement with Mr. David Hancock provides for
a term of one-year as our President and Chief Executive Officer, commencing on
March 1, 2000. The agreement provides that if after the term of the agreement
has expired, the parties continue to do business together as if the agreement
were still in effect, the agreement shall be renewed and continue in effect
until one of the parties notifies the other in writing.
Mr. Hancock will receive a base pay of $120,000.00 per year, exclusive of
bonuses, benefits and other compensation, with the exception that he will
receive additional cash compensation in the form of a base salary which is at a
minimum 20% greater than the base salary of the Vice President of Sales and
Marketing. We also offer our president an annual cash bonus that is equal to the
cash bonus paid to the Vice President of Sales and Marketing.
Our March 2, 2000 employment agreement with Mr. Bash provides for a
one-year term of his employment as our Vice President, commencing on March 15,
2000. The agreement provides that:
- If, after the term of the agreement has expired, the parties
continue to do business together as if the agreement were still in
effect, the Agreement shall be renewed and continue in effect until
one of the parties notifies the other in writing.
- Mr. Bash will receive a base pay of $100,000.00 per year, exclusive
of bonuses, benefits and other compensation.
- Mr. Bash will receive a yearly bonus paid in December of each year
47
based upon the number of sales as follows:
(a) the bonus will be $125,000 provided business plan objectives
of a minimum of 36,100 sales to customers and, in addition,
Mr. Bash will receive 25,000 shares of restricted stock and
a stock option to purchase an additional 125,000 shares of
stock at a price of $1.00 per share; and
(b) in the event that 36,100 sales have not been made due to our
inability to start selling in June 2000, the December 2000
bonus will be paid based on $3.45 per customer sold.
ITEM 22. FINANCIAL STATEMENTS
Statements included in this prospectus that do not relate to present or
historical conditions are "forward-looking statements." We may make future
forward-looking statements, which may be included in documents that we file with
the Commission other than this registration statement. Forward-looking
statements involve risks and uncertainties that may differ materially from
actual results, and may relate to our plans, strategies, objectives,
expectations, intentions and adequacy of resources.
48
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
OCTOBER 31, 2000
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEET AT OCTOBER 31, 2000
PAGE 3 STATEMENT OF OPERATIONS FOR THE PERIOD FROM JANUARY
31, 2000 (INCEPTION) TO OCTOBER 31, 2000
PAGE 4 STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD
FROM JANUARY 31, 2000 (INCEPTION) TO OCTOBER 31, 2000
PAGE 5 STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JANUARY
31, 2000 (INCEPTION) TO OCTOBER 31, 2000
PAGES 6 - 16 NOTES TO FINANCIAL STATEMENTS
49
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Communicate Now.Com, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Communicate Now.Com, Inc.
(a development stage company) as of October 31, 2000 and the related statements
of operations, changes in stockholders' equity and cash flows for the period
from January 31, 2000 (inception) to October 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we 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 statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly
in all material respects, the financial position of Communicate Now.Com, Inc. (a
development stage company) as of October 31, 2000, and the results of its
operations and its cash flows for the period from January 31, 2000 (inception)
to October 31, 2000, in conformity with United States generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company's operating losses of $633,806 and working
capital deficiency of $143,176 raise substantial doubt about its ability to
continue as a going concern. Management's Plan in regards to these matters is
also described in Note 8. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
November 24, 2000 (except for Notes 6(c) and 9 as to which the date is December
8, 2000)
50
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
OCTOBER 31, 2000
----------------
ASSETS
Current Assets
Cash $ 13,613
Prepaid expenses 2,500
----------------
Other assets 4,985
------------
----------------
Total Current Assets 21,098
- --------------------
----------------
Property and Equipment, Net 117,529
----------------
Other Assets
Software development costs 200,000
----------------
Total Other Assets 200,000
----------------
TOTAL ASSETS $ 338,627
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 14,124
Note payable - current portion 6,410
Note payable to stockholder 30,000
Note payable to bank 42,000
Commitment to issue common stock for services 71,740
----------------
Total Current Liabilities 164,274
----------------
Long Term Liabilities
Note payable - net of current portion 11,339
----------------
TOTAL LIABILITIES 175,613
----------------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, 100,000,000 shares authorized, 20,801,820 shares issued
and outstanding 2,080
Additional paid-in capital 794,740
Deficit accumulated during development stage (633,806)
----------------
TOTAL STOCKHOLDERS' EQUITY 163,014
----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 338,627
================
See accompanying notes to finanicail statements.
F-2
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FROM JANUARY 31, 2000 (INCEPTION)
TO OCTOBER 31, 2000
-------------------
OPERATING EXPENSES
Compensation $ 214,666
Consulting 223,289
General and administrative 194,006
-------------------------
Total Operating Expenses 631,961
-------------------------
LOSS FROM OPERATIONS (631,961)
OTHER EXPENSE
Interest expense (1,845)
-------------------------
NET LOSS $ (633,806)
=========================
Net loss per share - basic and diluted $ (.03)
=========================
Weighted average number of shares outstanding during the period - basic and diluted 20,335,623
=========================
See accompanying notes to financial statements.
F-3
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JANUARY 31, 2000 (INCEPTION) TO
OCTOBER 31, 2000
----------------
Deficit
Additional Accumulated
Common Stock Paid-In During Development
Shares Amount Capital Stage Total
------------ ------------ -------- ----------- ----------
Common stock issued for services to founders 20,000,000 $ 2,000 $ - $ - $ 2,000
Common stock issued for cash 686,900 69 686,831 - 686,900
Common stock issued for services 114,920 11 114,909 - 114,920
Offering costs - - (7,000) - (7,000)
Net loss from January 31, 2000 (inception) to
October 31, 2000 - - - (633,806) (633,806)
------------- ------------ ---------- ------------ -----------
BALANCE, OCTOBER 31, 2000 20,801,820 $ 2,080 $794,740 $(633,806) $163,014
============= ============ ========== ============ ===========
See accompanying notes to financail statements.
F-4
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FROM JANUARY 31, 2000 (INCEPTION)
TO OCTOBER 31, 2000
-------------------
Cash flows from operating activities
Net loss $ (633,806)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 7,585
Stock issued for services 116,920
Commitment to issue common stock for services 71,740
Changes in operating assets and liabilities:
(Increase) decrease in:
Prepaid expenses (2,500)
Deferred offering costs (4,985)
Increase (decrease) in:
Accounts payable and accrued liabilities 14,124
-----------------------
Net cash (used in) operating activities (430,922)
-----------------------
Cash flows from investing activities
Purchase of property and equipment (107,365)
Payment of software development costs (200,000)
-----------------------
Net cash (used in) investing activities (307,365)
-----------------------
Cash flows from financing activities
Borrowings 77,000
Repayment of debt (5,000)
Proceeds from sale of common stock 686,900
Offering costs (7,000)
-----------------------
Net cash provided by financing activities 751,900
-----------------------
Net increase in cash 13,613
Cash and cash equivalents at beginning of period -
-----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,613
=======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the year for:
Interest $ 1,845
=======================
During March 2000, the Company acquired a vehicle at a purchase price of $28,557
for cash of $8,000 and a note payable of $20,557.
See accompanying notes to financial statements.
F-5
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
----------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Description of Business and Summary of Significant
-------------------------------------------------------
Accounting Policies
-------------------
Communicate Now.Com, Inc. (the "Company") was incorporated on
January 31, 2000 under the laws of the State of Delaware and
has elected a fiscal year end of December 31.
The Company is in the development stage and operates a website,
www.bizfinders.com, containing a business information database
consisting of names, addresses and phone numbers of
approximately 11 million U.S. businesses. Visitors to this
website may use a search engine to locate businesses. The
website became operational on November 1, 2000. Revenue will
be derived from Internet display advertisements, that appear
on the website, which are developed at point-of-sale visits by
the Company's sale representative to customer sites.
Activities during the development stage include raising capital
and development of the Company's web site, technology, and
infrastructure.
(B) Use of Estimates
--------------------
In preparing financial statements, management is required to
make estimates and assumptions that effect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual
results may differ from these estimates.
(C) Cash Equivalents
---------------------
For the purpose of the cash flow statement, the Company
considers all highly liquid investments with original
maturities of three months or less at the time of purchase to
be cash equivalents.
(D) Property and Equipment
--------------------------
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures for maintenance and repairs are
charged to expense as incurred. Depreciation is provided using
the straight-line method over the estimated useful life's of
the assets of five to seven years.
See accompanying notes to financial statements.
F-6
COMMUNICATE NOW. COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
(E) Software Development Costs
------------------------------
In accordance with EITF Issue No. 00-2, the Company accounts
for its web site development software in accordance with
Statement of Position No. 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use"
("SOP 98-1").
SOP 98-1 requires the expensing of all costs of the preliminary
project stage and the training and application maintenance
stage and the capitalization of all internal or external direct
costs incurred during the application development stage. The
Company amortizes the capitalized cost of software developed
or obtained for internal use over an estimated life of three
years.
Internal use software license fees paid to third parties are
charged to operations as incurred.
(F) Long-Lived Assets
---------------------
During 1995, Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-lived Assets and
for Long-lived Assets to be Disposed Of" ("SFAS 121"), was
issued. SFAS 121 requires the Company to review long-lived
assets and certain identifiable assets related to those assets
for impairment whenever circumstances and situations change
such that there is an indication that the carrying amounts may
not be recoverable. If the non-discounted future cash flows of
the enterprise are less than their carrying amount, their
carrying amounts are reduced to fair value and an impairment
loss is recognized. The adoption of this pronouncement did not
have a significant impact on the Company's financial
statements for the period January 31, 2000 (inception) to
October 31, 2000.
(G) Advertising
---------------
In accordance with Accounting Standards Executive Committee
Statement of Position 93-7, ("SOP 93-7") costs incurred for
producing and communicating advertising of the Company, are
charged to operations as incurred. Advertising costs for the
period ended October 31, 2000 was $11,039.
(H) Stock-Based Compensation
----------------------------
The Company accounts for stock options issued to employees in
accordance with the provisions of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. As such, compensation
See accompanying notes to financial statements.
F-7
COMMUNICATE NOW. COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise
price. Such compensation amounts are amortized over the
respective vesting periods of the option grant. The Company
adopted the disclosure provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation," which permits entities to
provide pro forma net income (loss) and pro forma earnings
(loss) per share disclosures for employee stock option grants
as if the fair-valued based method defined in SFAS No. 123 had
been applied.
The Company accounts for stock options issued to non-employees
for goods or services in accordance with SFAS 123.
The Company accounts for stock issued for goods or services at
the stock's fair market value on the grant dates.
(I) Income Taxes
----------------
The Company accounts for income taxes under the Financial
Accounting Standards No. 109 "Accounting for Income Taxes"
("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income
in the period which includes the enactment date.
(J) Net Loss Per Common Share
------------------------------
Basic net income (loss) per common share (Basic EPS) excludes
dilution and is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during
the year. Diluted net income per share (Diluted EPS) reflects
the potential dilution that could occur if stock options or
other contracts to issue common stock, such as convertible
notes, were exercised or converted into common stock. The
assumed exercise of common stock equivalent was not utilized
since the effect was antidilutive. At October 31, 2000 there
were 375,000 common stock options outstanding which may dilute
future earnings per share.
See accompanying notes to finanical statements.
F-8
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
----------------------
(K) Fair Value of Financial Instruments
---------------------------------------
Statement of Financial Accounting Standards No. 109,
"Disclosures about Fair Value of Financial Instruments",
requires disclosures of information about the fair value of
certain financial instruments for which it is practicable to
estimate that value. For purposes of this disclosure, the fair
value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation.
The carrying amounts of the Company's short-term financial
instruments, including accounts payable and accrued
liabilities, and notes payable, approximate fair value due to
the relatively short period to maturity for these instruments.
The carrying value of the Company's long-term debt approximates
fair value because the interest rate on this instrument
approximates the Company's borrowing rate at October 31, 2000.
(L) New Accounting Pronouncements
---------------------------------
The Financial Accounting Standards Board has recently issued
one new accounting pronouncement. Statement No. 133 as amended
by Statement No. 137 and 138, "Accounting for Derivative
Instruments and Hedging Activities" established accounting and
reporting standards for derivative instruments and related
contracts and hedging activities. This statement is effective
for all fiscal quarters and fiscal years beginning after June
15, 2000.
The adoption of this pronouncement did not have a material
effect on the Company's financial position or results of
operations.
(M) Segment Information
-----------------------
The Company applies Statement of Financial Accounting No. 131
"Disclosures about Segments of an Enterprise and Related
Information." The Company currently operates in one segment
and has no revenues and geographic concentrations, therefore,
segment information is not presented.
See accompanying notes to financial statements.
F-9
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
NOTE 2 PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment consists of the following at October
31, 2000:
Automobile $ 28,557
Machinery and equipment 80,889
Furniture and fixtures 15,668
-------------
-------------
125,114
Less: Accumulated depreciation (7,585)
-------------
$ 117,529
=============
Depreciation was $7,585 for the period from January 31, 2000
(inception) to October 31, 2000.
NOTE 3 SOFTWARE DEVELOPMENT COSTS
- -----------------------------------
Pursuant to SOP 98-1, as of October 31, 2000, the Company
capitalized $200,000 in software application development
costs paid to a third party contractor to develop their web
site development and maintenance software (See Notes 1(A) and
6(E)(iii)). No amortization has been taken as of October 31,
2000 since the asset had not yet been placed in service. The
Company placed the software in service on November 1, 2000 and
began amortizing it over three years at that date.
During the period from January 31, 2000 (inception) to October
31, 2000, the Company expensed $31,250 in database license
fees and $6,207 of other software and product development
costs.
NOTE 4 NOTES PAYABLE
- ----------------------
Notes payable to unrelated parties consists of the following
at October 31, 2000:
Note payable due in monthly installments of $697, including $ 17,749
interest at 13.48%, due May 2003, secured by vehicle
Line of credit note payable to bank, interest at prime plus 2%,
due on demand. Secured by all present and future equipment of
the Company, right of offset against the Company's bank
account, guaranteed by principal stockholder. 42,000
Less current portion (48,410)
-----------------
$ 11,339
=================
See accompanying notes to financial statements.
F-10
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
The line of credit note payable to bank of $42,000 was paid in
full in November 2000.
The note payable to stockholder of $30,000 is at 6.5%, due by
October 16, 2001 and unsecured. The note was paid down by
$3000 in November 2000.
Long-term debt maturities are as follows:
Period ending October 31:
2001 $ 78,410
2002 7,284
2003 4,055
----------------
----------------
$ 89,749
================
NOTE 5 STOCKHOLDERS' EQUITY
- ------ --------------------
(A) Stock Issuances
-------------------
The Company issued 20,000,000 shares of common stock to
its founders on January 31, 2000 in exchange for services
valued at $2,000.
On February 23, 2000, the Company issued a private placement
memorandum, as amended, pursuant to Regulation D, Rule 506,
offering up to 11,000,000 shares of its common stock at $1 per
share or a maximum of $11,000,000. Through October 31, 2000
the Company issued 686,900 shares for cash of $686,900 and
issued 114,920 shares for services performed through October
31, 2000, valued at $114,920 pursuant to this offering.
Deferred offering costs of $7,000 were charged to additional
paid-in capital as of October 31, 2000. (See Note 9)
(B) Stock Options
-----------------
In August 2000 the Company granted a total of 375,000 common
stock options to three directors at an exercise price of $1.00
per share. The options vest immediately, have no definitive
expiration date and may be exercised only as long as the
individual is a member of the Board of Directors.
See accompanying notes to financial statements.
F-11
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
In accordance with SFAS 123, for options issued to employees,
the Company applies APB Opinion No. 25 and related
interpretations. Accordingly, no compensation cost has been
recognized for options issued as of October 31, 2000. Had
compensation cost for the Company's options issued to
directors been determined on the fair value at the grant dates
consistent with SFAS 123, the Company's net loss for the
period ended October 31, 2000 would have been increased to the
pro-forma amounts indicated below.
Net loss As reported $ (633,806)
Pro forma $ (697,556)
Net loss per share -
basic and diluted As reported $ (0.03)
Pro forma $ (0.03)
The effect of applying Statement No. 123 is not likely to be
representative of the effects on reported net income (loss)
for future years due to, among other things, the effects of
vesting.
For financial statement disclosure purposes, the fair market
value of each stock option granted to directors was estimated
on the date of grant using the Black-Scholes Model in
accordance with SFAS 123 using the following weighted-average
assumptions: fair market value of common stock $1.00, expected
dividend yield 0%, risk-free interest rate of 6.17%,
volatility 0% and expected term of three years.
A summary of the options issued as of October 31, 2000 and changes during the year is presented below:
------------------------------------------------------------------------------------------------------
Weighted Average
Number of Options Exercise Price
-------------------- -------------------------
Stock Options
-------------
Balance at beginning of period - $ -
Granted 375,000 $ 1.00
Exercised - $ -
Forfeited - $ -
-------------------------
--------------------
Balance at end of period 375,000 $ 1.00
==================== =========================
Options exercisable at end of period 375,000 $ 1.00
Weighted average fair value of options granted
during the period $ 0.17
=========================
See accompanying notes to financial statements.
F-12
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
The following table summarizes information about stock options outstanding at October 31, 2000:
Options Outstanding Options Exercisable
--------------------------------------------------------------------- -------------------------------
Weighted Number
Number Average Weighted Exercisable Weighted
Range of Outstanding Remaining Average at Average
Exercise at October Contractual Exercise October 31, Exercise
Price 31, 2000 Life Price 2000 Price
----------- -------------- -------------- ------------ --------------- ------------
$ 1.00 375,000 N/A 1.00 375,000 1.00
-------------- ------------ --------------- ------------
375,000 N/A $ 1.00 375,000 $ 1.00
============== ============== ============ =============== ============
NOTE 6 COMMITMENTS AND CONTINGENCIES
- --------------------------------------
(A) Leases
----------
The Company currently leases office space under an Operating
Lease Agreement, which started May 1, 2000 and expires April
30, 2001. Rent under this lease is $1,228 per month.
On July 15, 2000, the Company leased additional space in the
same office building under a new lease at $600 per month. This
lease also expires April 30, 2001.
Total rent expense for the period ended October 31, 2000, was
$10,159.
Future minimum lease payments under the operating leases are
as follows:
Period ended October 31:
2001 $ 10,968
=================
(B) Employment Agreements
-------------------------
In March 2000, the Company entered into three one-year
employment agreements to pay two employees a base salary of
$100,000 and the third employee $120,000. The two employees
will also receive a performance based bonus consisting of
$125,000, 25,000 shares of restricted stock and stock options
to purchase 25,000 shares at $1.00 per share. If the
performance bonus objectives are not met, a second tier bonus
will pay each employee $3.45 for each customer sale up to
36,100 customers. One employee will receive an additional
$2.00 and one restricted common share for each customer sale
See accompaying notes to financial statements.
F-13
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
made over 36,100 if the original bonus objectives are met. As
of October 31, 2000, the performance bonuses have not been
paid.
Subsequent to October 31, 2000 the Company entered into two
one-year employment agreements with salaries of $38,500 and
$52,500 and sign-on bonuses of 5,000 common shares each.
(C) Consulting Agreements
-------------------------
The Company enters into various short-term consulting
agreements, generally three months, whereby cash and/or
capital stock is paid.
At October 31, 2000, there was one consulting agreement with a
service period of October 20, 2000 to January 20, 2001 whereby
the consultant will receive 600,000 shares of common stock.
The Company recognized a consulting expense of $71,740 and a
related liability for the period from October 20, 2000 to
October 31, 2000. Subsequent to October 31, 2000 the Company
entered into four additional consulting agreements whereby the
consultants will receive an aggregate 650,000 shares. All of
the above 1,250,000 were issued as of the date of the
accompanying audit report. The Company will recognize the
related expenses over the service periods of the agreements.
(D) Advertising and Promotional Services Agreements
---------------------------------------------------
On June 20, 2000 (the "effective date") the Company entered
into two agreements (the "Agreements") with service providers
(the "Service Providers") to receive advertising and
promotional services as stipulated in the Agreements.
Through November 2000, no services were performed by the
service providers and no payments were made by the Company.
In November 2000 these agreements were cancelled and both
parties released each other from any obligations or
liabilities.
(E) Other Agreements
--------------------
(i) A legal services agreement entered into in June 2000 requiring
payment of $10,000 and 100,000 shares of common stock for
services rendered relating to the Company filing a proposed
SB-2 with the Securities and Exchange Commission. As of the
date of the accompanying audit report, such services were
substantially complete and the stock was issued.
See accompanying notes to financial statements.
F-14
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
(ii) A license fee of $75,000 per year, payable in twelve monthly
installments of $6,250, commencing May 2000 and expiring April
2001. (See Notes 1(E) and 3). As of October 31, 2000 total
license fees charged to operations was $31,250.
(iii) A software development fee of $200,000 paid as of October 31,
2000 and reflected as software development costs on the balance
sheet. (See Notes 1(E) and 3). The agreement also commits the
Company to minimum maintenance charges of $3,200 per month from
July 2000 through the expiration of the agreement on May 25,
2001. All software programs and code developed under this
agreement, remain the property of the Company.
(iv) A one-year network service agreement entered into in July 2000
with a onetime fee of approximately $4,250 and a monthly fee
of approximately $6,640.
NOTE 7 INCOME TAXES
- ------ ------------
There was no income tax expense for the period October 31,
2000 due to the Company's net losses.
The Company's tax expense differs from the "expected" tax
expense for the period ended October 31, 2000, (computed
by applying the Federal Corporate tax rate of 34% to loss
before taxes), as follows:
Computed "expected" tax expense (benefit) $ (215,494)
Effect of net operating losses 215,494
--------------
$ -
==============
The effects of temporary differences that gave rise to
significant portions of deferred tax assets and liabilities
at October 31, 2000 are as follows:
Deferred tax assets:
Net operating loss carryforward 215,494
--------------
Total gross deferred tax assets 215,494
Less valuation allowance (215,494)
--------------
Net deferred tax assets $ -
==============
The Company has a net operating loss carryforward of
approximately $634,000 available to offset future taxable
income through 2020.
There was no valuation allowance at January 31, 2000. The net
change in valuation allowance during the period ended October
31, 2000 was an increase of $215,494.
See accompanying notes to financials statements.
F-15
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
NOTE 8 GOING CONCERN
- ----------------------
As reflected in the accompanying financial statements, the
Company is a development stage company with no revenues,
losses of $633,806 and a working capital deficiency of
$143,176. The ability of the Company to continue as a going
concern is dependent on the Company's ability to raise
additional capital and implement its business plan. The
financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a
going concern.
The Company anticipates raising additional working capital and
as of the date of the accompanying audit report subsequent to
October 31, 2000 has issued additional shares as discussed in
Note 9. The Company has also begun operations and generated
sales and related revenues starting November 1, 2000. The
Company is currently preparing a Securities and Exchange
Commission Form SB-2 to register the selling securityholders
outstanding common stock in order to become quoted on the OTC
Bulletin Board. Management believes that the actions presently
being taken to obtain additional funding and implement its
business plan provide the opportunity for the Company to
continue as a going concern.
NOTE 9 SUBSEQUENT EVENTS
- ------ -----------------
During November and December 2000, the Company issued 737,000
shares of common stock for $737,000 cash. In addition,
1,460,000 shares were issued for services. For financial
accounting purposes the 1,460,000 shares were valued at $1.00
per share based on concurrent cash issuances resulting in an
expense of $1,460,000.
See accompanying notes to financial statements.
F-16
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Salberg Company, P.A., Certified Public Accountants,
audited our Financial Statements for the period from January 31, 2000
(inception) to October 31, 2000. Prior to this, the accounting firm of Weinberg
& Company, PA, Certified Public Accountants, audited our Financial Statements
for the period from January 31, 2000 (inception) to June 30, 2000. Weinberg &
Company P.A. was dismissed effective November 16, 2000. Weinberg & Company's
report contained a going concern opinion due to the development stage nature of
the company. Our board of directors approved the change in accountants. Since
inception, we have had no disagreements with our former and new accountants.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ninety days after the effectiveness of the registration statement of
which this prospectus is a part, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PART II - INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws provide that we may indemnify any persons who:
(a) were or are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation or is or was serving at the request of
such corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
51
(b) were or are, or are threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred y
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of nay claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that despite he
adjudication of liability but in view of all the circumstances of the case such
person is fairly and reasonably entitled to indemnify for such expenses which
the Court of Chancery or such other court shall deem proper. Any indemnification
under subsections (a) and (b) of this section, unless ordered by a court, shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify officers and directors in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses that
such officer or director actually and reasonably incurred.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling an issuer
pursuant to the foregoing provisions, the opinion of the Commission is that such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
INDEMNIFICATION AGREEMENTS
We have agreed to indemnify and hold harmless all of our Directors,
Officers, employees, consultants, sales placement agents, and fiduciaries, (the
"indemnified party"), by entering into indemnification agreements with such
persons, to the fullest extent permitted by applicable law. The agreement
includes indemnification against expenses, including reasonable attorneys' fees,
judgments, penalties, fines, and mounts paid in settlement actually and
reasonably incurred by the Indemnified Party in connection with any civil or
criminal action or administrative proceeding arising out of the Indemnified
Party's performance of their duties in regard to all aspects arising from this
Offering of our securities. Our bylaws and Certificate of Incorporation provide
52
a blanket indemnification that we shall indemnify to the fullest extent under
the law our directors and officers against certain liabilities incurred with
respect to their service in such capacities. In addition, our Certificate of
Incorporation provides that the personal liability of directors and officers to
us and our shareholders for monetary damages will be limited. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of the Corporation in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933, as amended, and will be governed by the
final adjudication of such case.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without
consideration to future contingencies, incurred or expected to be incurred by
our Corporation in connection with the issuance and distribution of the
securities being offered by this prospectus. Items marked with an asterisk (*)
represent estimated expenses. We have agreed to pay all the costs and expenses
of this offering. Selling security holders will pay no offering expenses.
ITEM EXPENSE
---- ------
SEC Registration Fee $7.57
Legal Fees and Expenses $10,000
Accounting Fees and Expenses $12,705
Miscellaneous* $ 7,400
=============================================
Total* $30,112.57
* Estimated Figure
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
We relied upon the exemption from registration provided by Section 4(2) and
Rule 506 of Regulation D of the Securities Act of 1933, as amended to offer and
sell our shares of common stock to the persons and entities listed below. We
believed Section 4(2) and Rule 506 were available for our offering because:
o Each investor represented in writing that they were an
accredited investor as defined by Rule 501 of Regulation D of
the Securities Act of 1933, as amended;
53
o The transactions not involving a public offering;
o We did not offer or sale the shares through general
solicitation or advertising; and
o We had a prior relationship with each investor.
On January 31, 2000, we issued 10,000,000 shares to David Hancock and
10,000,000 to Damber Production, Inc. for services rendered in the course of our
corporate formation.
Between February 23, 2000, and December 8, 2000, we sold 1,423,900 shares
of Our Common Stock to 71 accredited investors at a price of $1.00 per share. We
received total proceeds of $1,423,900.
On June 28, 2000, we issued Brenda Lee Hamilton, Esq. 100,000
shares of our common stock in exchange for legal services rendered.
On July 6, 2000, we issued 2,205 shares to Tom Ozgo for brokerage services
rendered.
On July 24, 2000, we issued 11,000 shares to William Best for consulting
services rendered.
On August 1, 2000, we issued 1,715 shares to Tom Ozgo for brokerage
services rendered.
On November 13, 2000, we issued 50,000 shares to JCL Associates for
services rendered in connection with software development.
On November 13, 2000, we issued 600,000 shares to Charles Bitters for
consulting services rendered.
On November 13, 2000, we issued 150,000 shares to Charlie Cleveland for
consulting services rendered.
On November 15, 2000, we issued 5,000 shares to Sheila Llewellyn as an
employee sign-on bonus.
On November 16, 2000, we issued 150,000 shares to Richard Michael for
consulting services rendered.
On December 4, 2000, we issued 125,000 shares to Charlie Cleveland for
consulting services rendered.
On December 4, 2000, we issued 125,000 shares to Johnny Carruth for
services rendered.
54
On December 5, 2000, we issued 5,000 shares to Bernadette Pate as an
employee sign-on bonus.
On December 5, 2000, we issued 250,000 shares to Chance Research
Corporation for services rendered.
ITEM 27. EXHIBITS
- --------------------------- ----------------------------------------------------
EXHIBIT NUMBER EXHIBIT DESCRIPTION
- --------------------------- ----------------------------------------------------
3.1 Articles of Incorporation **
- --------------------------- ----------------------------------------------------
3.2 Bylaws **
- --------------------------- ----------------------------------------------------
5 Legal Opinion of Hamilton, Lehrer & Dargan, P.A.
- --------------------------- ----------------------------------------------------
8 Consent of Salberg & Company, P.A.
- ---------------------------- ---------------------------------------------------
10.1 Database Licensing Agreement between COMMUNICATE
NOW.COM, INC. and Acxiom Corporation. **
- ---------------------------- ---------------------------------------------------
10.2 Software Development Agreement between COMMUNICATE
NOW.COM, INC. and JCL Associates. **
- ---------------------------- ---------------------------------------------------
10.3 Networking Agreement between COMMUNICATE NOW.COM,
INC. and Interliant, Inc. **
- ---------------------------- ---------------------------------------------------
10.4 Website Mapping Licensing Agreement between
COMMUNICATE NOW.COM, INC. and ESRI. **
- ---------------------------- ---------------------------------------------------
10.5 Billing Agreement between COMMUNICATE NOW.COM,
INC. and ExpressBill, Inc. **
- ---------------------------- ---------------------------------------------------
10.6 Leasing Agreement between COMMUNICATE NOW.COM,
INC. and 3513 L.C. **
- ---------------------------- ---------------------------------------------------
10.7 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Chance Research Corporation.
- ---------------------------- ---------------------------------------------------
10.8 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Johnny Carruth
55
- ---------------------------- ---------------------------------------------------
10.9 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Richard Michaels
- ---------------------------- ---------------------------------------------------
10.10 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Bill Best
- ---------------------------- ---------------------------------------------------
10.11 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Charles Cleveland.
- ---------------------------- ---------------------------------------------------
10.12 Consulting Agreement between COMMUNICATE NOW.COM,
INC. and Charles Bitters
- ---------------------------- ---------------------------------------------------
10.13 Employment Agreement between Dennis J. Bash and
COMMUNICATE NOW.COM, INC.
- ---------------------------- ---------------------------------------------------
10.14 Employment Agreement between David Hancock and
COMMUNICATE NOW.COM, INC.
- ---------------------------- ---------------------------------------------------
10.15 Employment Agreement between Bernadette Pate and
COMMUNICATE NOW.COM, INC.
- ---------------------------- ---------------------------------------------------
10.16 Employment Agreement between Sheila Llewellyn and
COMMUNICATE NOW.COM, INC.
- ---------------------------- ---------------------------------------------------
10.17 The Lamar Companies Bulletin Contract with Mel
Ransom
- ---------------------------- ---------------------------------------------------
10.18 The Lamar Companies Poster or Poster Paper
Contract with Mel Ransom
- ---------------------------- ---------------------------------------------------
16.1 Change in certifying accountant by Weinberg &
Company, P.A.
- ---------------------------- ---------------------------------------------------
16.2 Change in certifying accountant by Weinberg &
Company, P.A.
- ---------------------------- ---------------------------------------------------
27 Financial Data Schedule
** Denotes previously filed exhibits.
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
56
1. To file, during any period in which it offers or sells securities, a post-
effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement;
c. Include any additional or changed material information on the plan of
distribution.
2. That, for determining liability under the Securities Act of 1933, to treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities,
other than the payment by the Registrant of expenses incurred and paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding, is asserted by such director, officer
or controlling person in connection with the securities being registered hereby,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
57
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Temple,
State of Texas on _________________, 2000.
(REGISTRANT) COMMUNICATE NOW.COM, INC.
By____________________________________
(Signatures and Title)
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ David Hancock /s/ Bill Elliott
- ------------------------------ ------------------------------
David Hancock Bill Elliott
(President, Chairman of the Board, (Director)
Chief Executive Officer) December 22, 2000
December 22, 2000 ------------------------------
- ------------------------------
/s/ Randal Leblanc
- ------------------------------
Randal Leblanc
(Director)
December 22, 2000
- ------------------------------
/s/ John C. Winkler
- ------------------------------
John c.Winkler
(Director)
December 22, 2000
- ------------------------------
(Signature)
- ----------
(Principle Financial Officer)
(Date)
- ----------
58