As filed with the Securities and Exchange Commission June 7, 2002
Registration No. 333-______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IEXALT, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of 75-1667097
incorporation or organization) (I.R.S. Employer Identification No.)
12000 AEROSPACE AVENUE
SUITE 375
HOUSTON, TEXAS 77034
(Address of Principal Executive Offices) (Zip Code)
JAMES W. CHRISTIAN LEGAL SERVICES AGREEMENT
(Full Title of Plans)
DONALD W. SAPAUGH
iExalt, Inc.
12000 Aerospace Avenue, Suite 375
Houston, Texas 77034
(281) 464-8400
(Name and address, including zip code, and telephone number, including
area code, of registrant's agent for service)
Copy to:
Lawrence E. Wilson
Franklin, Cardwell & Jones
1001 McKinney
Suite 1800
Houston, TX 77002
(713) 222-6025
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SECURITY (1) AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
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Common Stock, par value $0.05
per share 85,000 $1.00 $85,000 $7.82
====================================================================================================================================
(1) The proposed maximum offering price per share is based upon the terms and
conditions of the legal services agreement between the Registrant and
James W. Christian.
EXPLANATORY NOTE
This Registration Statement contains two parts. The first part contains a
prospectus on Form S-3 (in accordance with Section C of the General Instructions
to Form S-8) which covers re-offers and re-sales from time to time by the
selling security holder listed in the prospectus of shares of Common Stock of
the Company acquired pursuant to a legal services agreement with the Company.
The second part contains information required by the Registration
Statement pursuant to Part II of Form S-8.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Pursuant to the Note to Part I of Form S-8, the Plan Information specified
by Part I is not being filed with the Securities and Exchange Commission as such
information is either contained in the legal services agreement or provided to
the participant in accordance with Rule 428(b)(1) under the Securities Act of
1933, as amended (the "Securities Act"). Such legal services agreement,
additional information, and the information incorporated by reference into this
Registration Statement pursuant to Item 3 of Part II of this Registration
Statement, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act.
I-1
PROSPECTUS
(Form S-3)
IEXALT, INC.
85,000 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 85,000 shares of
our common stock, par value $.05 per share, for sale by our shareholder
identified in this prospectus. The shareholder is referred to throughout this
prospectus as the "selling security holder". The selling security holder will
acquire the shares of our common stock pursuant to the terms of a legal services
agreement under which the selling security holder has provided legal services to
us.
Our common stock is quoted on the Over-the-Counter ("OTC") Bulletin Board
under the symbol "IEXA.OB". On May 29, 2002, the last sale price of our common
stock on the OTC Bulletin Board was $.70 per share.
We will not receive any of the proceeds from the sales of shares by the
selling security holder but we received the benefit of the services provided by
the selling security holder pursuant to his legal services agreement. The
selling security holder, directly or through agents, dealers or representatives
to be designated from time to time, may sell his shares on terms to be
determined at the time of sale. The amount of any commissions in connection with
such sales will be negotiated before the sales. See "Plan of Distribution."
The address of our principal executive offices is 12000 Aerospace Avenue,
Suite 375, Houston, Texas 77034, and our telephone number is (713) 464-8400.
--------------------
INVESTING IN THE COMMON STOCK OFFERED HEREIN INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CONSIDER CAREFULLY THE "RISK FACTORS" CONTAINED IN THIS PROSPECTUS
BEGINNING ON PAGE 3.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
The date of this prospectus is June 7, 2002.
TABLE OF CONTENTS
Risk Factors 3
Use of Proceeds 6
Selling Security Holders 6
Plan of Distribution 7
Experts 8
Information We Incorporate by Reference 8
Where You Can Find More Information 8
Security and Exchange Commission on Certain Indemnification 8
We have not authorized anyone to provide you with information different
from that contained in this prospectus. This prospectus is not an offer to sell
nor is it seeking an offer to buy these securities in any jurisdiction where
such offer or sale is not permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock. In this
prospectus, references to the "Company", "we", "us" and "our" refer to iExalt,
Inc., a Nevada corporation, and its subsidiaries.
This prospectus contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements may relate to
such matters as anticipated financial performance, future revenues or earnings,
business prospects, projected ventures, new products and services, anticipated
market performance and similar matters. When used in these documents, the words
"anticipate," "feel," "believe," "estimate," "expect," "plan," and "intend" and
similar expressions are intended to identify forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. To comply with the terms of the safe harbor, we
caution readers that a variety of factors could cause our actual results to
differ materially from the anticipated results or other matters expressed in our
forward-looking statements. These risks and uncertainties, many of which are
beyond our control, include (i) the sufficiency of our existing capital
resources and our ability to raise additional capital to fund cash requirements
for future operations, (ii) uncertainties involved in the rate of growth and
acceptance of the Internet and other media delivery systems, (iii) adoption by
the Christian community of electronic technology for gathering information,
facilitating e-commerce transactions, and providing new products, and services,
(iv) volatility of the stock market, particularly within the technology sector,
(v) the ability to use our capital stock as a currency for acquisitions, and
(vi) general economic conditions. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, the expectations
reflected in these forward-looking statements may prove to have been incorrect.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK IS SPECULATIVE IN NATURE AND INVOLVES A
HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT, AND THE INFORMATION INCORPORATED BY REFERENCE BEFORE INVESTING IN
THE COMMON STOCK OFFERED HEREBY. THE PRICE OF OUR COMMON STOCK COULD DECLINE DUE
TO ANY OF THESE RISKS, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT. IN
ADDITION, THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US. WE HAVE
DESCRIBED ONLY THE RISKS WE CONSIDER MATERIAL. HOWEVER, THERE MAY BE ADDITIONAL
RISKS THAT WE VIEW AS NOT MATERIAL OR OF WHICH WE ARE NOT PRESENTLY AWARE.
IF ANY OF THE EVENTS DESCRIBED BELOW WERE TO OCCUR, OUR BUSINESS,
PROSPECTS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS OR CASH FLOW COULD BE
MATERIALLY ADVERSELY AFFECTED. WHEN WE SAY THAT SOMETHING COULD OR WILL HAVE A
MATERIAL ADVERSE EFFECT ON IT, WE MEAN THAT IT COULD OR WILL HAVE ONE OR MORE OF
THESE EFFECTS.
WE HAVE RECEIVED A "GOING CONCERN" OPINION FROM OUR INDEPENDENT AUDITORS AND MAY
NOT BE ABLE TO REALIZE THE VALUE OF OUR ASSETS IF WE CEASE TO OPERATE AS A GOING
CONCERN.
Our financial statements have been prepared on the basis that we will
continue to operate as a going concern and that the value of our assets will be
realized in the normal operations. In the event that we are unable to continue
to operate as a going concern and are forced to liquidate assets to satisfy
creditors, the value of such assets may be adversely affected and our
liabilities may exceed the value of our assets. Our earnings from operations
have not been sufficient to fund our operating requirements and we may cease to
operate as a going concern without the investment of additional funds or the
improvement of operating results. We cannot assure you that we will continue to
operate as a going concern.
WE HAVE A SHORT OPERATING HISTORY BY WHICH YOU CAN EVALUATE OUR BUSINESS AND
PROSPECTS AND DID NOT GENERATE AN OPERATING PROFIT IN THE LAST FISCAL YEAR.
While we were originally incorporated in 1979, we only commenced our
current business objectives in January 1999 and have a limited operating history
from which to evaluate our business and prospects. We had a net loss of
$9,075,508 for the year ended August 31, 2001 and a net loss of $3,363,102 for
the six months ended February 28, 2002. Our operations are subject to the risks
and competition inherent in the establishment of a business enterprise. We can
give no assurance that our future operations will be profitable. Our revenues
and profits, if any, will depend upon various factors, including, but not
limited to, economic conditions specific to media enterprises, difficulties in
managing growth, costs and risks associated with potential acquisitions and
increases in our selling and marketing expenses. We may not achieve our business
objectives and the failure to achieve such goals would have an adverse impact on
us.
WE MAY NEED TO RAISE ADDITIONAL FUNDS IN THE FUTURE FOR OUR OPERATIONS AND IF WE
ARE UNABLE TO SECURE SUCH FINANCING, WE MAY NOT BE ABLE TO SUPPORT OUR
OPERATIONS.
Future events, including the problems, delays, expenses and difficulties
frequently encountered by companies, may lead to cost increases that could make
our funds insufficient to support our operations. We may seek additional
capital, including an offering of our equity securities, an offering of debt
securities or obtaining financing through a bank or other entity. We have not
established a limit as to the amount of debt we may incur nor have we adopted a
ratio of our equity to a debt allowance. If we need to obtain additional
financing, there is no assurance that financing will be available from any
source, that it will be available on terms acceptable to us, or that any future
offering of securities will be successful. If additional funds are raised
through the issuance of equity securities, there may be a significant dilution
in the value of our outstanding common stock. We could suffer adverse
consequences if we are unable to obtain additional capital when needed.
WE MAY ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK OR SHARES OF PREFERRED STOCK,
WHICH MAY DILUTE OUR SHARE VALUE.
Our Certificate of Incorporation authorizes the issuance of 100,000,000
shares of common stock, par value $.05 per share, and 20,000,000 shares of
preferred stock, par value $.001 per share. As of May 29, 2002, there were
2,088,300 shares of common stock and no shares of preferred stock issued and
outstanding. The future issuance of all or part of our remaining authorized
common stock or preferred stock may result in substantial dilution in the
percentage of our common stock held by our then existing shareholders. We may
value any common stock or preferred stock issued in the future on an arbitrary
basis. The issuance of common stock or preferred stock for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect on
any trading market for our common stock.
3
WARRANTS, STOCK OPTIONS AND SHARES AVAILABLE FOR SALE IMMEDIATELY BY THE SELLING
SECURITY HOLDER COULD SIGNIFICANTLY REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
At May 29, 2002, a total of 1,722,938 shares of common stock were subject
to options, warrants and other rights to acquire common stock at prices ranging
from $0.39 per share to $90.00 per share. In addition, 5,000,000 shares were
reserved for options available for grant under the Employee Stock Option Plan
and 1,000,000 shares were reserved for options available for grant pursuant to
the Director Stock Option Plan. The Board of Directors may grant options to
purchase the shares reserved under the Employee Stock Option Plan at any time in
its discretion. The exercise of these options and warrants at a price less than
the market price could dilute the value of outstanding shares and depress the
market price. The perception that these options and warrants may be exercised
for or converted into common stock that could be sold into the public market
could adversely affect the market price of our common stock. In addition, after
a one-year holding period, shares held by our non-affiliates will become
eligible for trading, pursuant to Rule 144 of the General Rules and Regulations
of the Securities and Exchange Commission, without any additional payment to us
or any increase in our capitalization. A drop in the market price could
adversely affect holders of our common stock and could also harm our ability to
raise additional capital by selling equity securities.
INADEQUATE MARKET LIQUIDITY.
Only a limited number of shares of our common stock is actively traded in
the public market. An investor may find it difficult to sell shares of our
common stock in the public market because of the limited number of potential
buyers at any time.
THE LOSS OF OUR KEY EMPLOYEES MAY ADVERSELY AFFECT OUR GROWTH OBJECTIVES.
Our success in achieving our growth objectives depends upon the efforts of
our top management team including the efforts of Donald W. Sapaugh, our Chief
Executive Officer, Russell Ivy, our Chief Operating Officer, Chris Sisk, our
Chief Financial Officer, as well as other of our management members. The loss of
the services of any of these individuals may have a material adverse effect on
our business, financial condition and results of operations. We can give no
assurance that we will be able to maintain and achieve our growth objectives
should we lose any or all of these individuals' services.
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND/OR RETAIN QUALIFIED PERSONNEL.
A change in labor market conditions that either further reduces the
availability of employees or increases significantly the cost of labor could
have a material adverse effect on our business, our financial condition and
results of our operations. Our business is dependent upon our ability to attract
and retain sales personnel, business administrators, managers and other
personnel familiar with the media industry. We can give no assurance that we
will be able to employ a sufficient number of such personnel in order to
accomplish our growth objectives.
MANY OF OUR COMPETITORS ARE LARGER AND HAVE GREATER FINANCIAL AND OTHER
RESOURCES THAN WE DO AND THOSE ADVANTAGES COULD MAKE IT DIFFICULT FOR US TO
COMPETE WITH THEM.
The Christian media industry is extremely competitive and includes several
companies which have achieved substantially greater market share, have longer
operating histories, have larger customer bases and have substantially greater
financial, development and marketing resources than we do. There are several
companies, including nonprofit organizations, which are attempting or may
attempt to aggregate Christian or family-friendly media assets. We can not give
assurance that the competitive pressures we face will not result in increased
marketing costs or loss of market share or otherwise will not materially
adversely affect our business, results of operations and financial condition. If
overall demand for our products and services should decrease it could have a
material adversely affect on our operating results.
WE COMPETE IN A MARKET SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND MUST CONTINUE
TO ENHANCE OUR PRODUCTS AND SERVICES TO COMPETE EFFECTIVELY.
The market in which we compete is characterized by rapidly changing
technology, evolving industry standards, frequent new service and product
announcements, introductions and enhancements and changing customer demands. If
we do not respond to rapid technological change and evolving industry standards
in the Web-based information market, we will be at a competitive disadvantage
and we could lose potential customers to our competitors. As a result, our
success depends upon our ability to improve the performance, content and
reliability of our products in response to both evolving demands of the
Christian community and competitive product offerings. We cannot assure you that
we will be able to do so successfully
4
or that any enhancements or new products that we introduce will gain acceptance
in the marketplace. If we are not successful or if our products are not
accepted, we could lose potential customers to our competitors.
WE MUST CONTINUE TO DEVELOP AND INCREASE AWARENESS OF A "BRAND IDENTITY" IN
ORDER TO ATTRACT AND EXPAND OUR USER AND ADVERTISER BASE.
We believe that developing and maintaining the "iExalt" brand is
critically important to our future success in attracting and expanding our
audience and advertiser base. Promotion and enhancement of our brand will depend
in large part on our ability to continue producing high-quality products and
services to the consumers of our media products and services. We may also find
it necessary to substantially increase our expenditures for creating and
maintaining our distinct brand loyalty among consumers.
WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR GROWTH THAT COULD ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS.
A key part of our strategy is to grow, which may strain our managerial,
operational and financial resources. The rapid execution necessary for us to be
established as a leader in the developmental market for Christian related
products, sponsorship and advertising requires an effective planning and
management process. We cannot assure you that our personnel, systems and
controls will be adequate to support future growth. Further, we will be required
to manage multiple relationships with consumers, strategic partners and other
third parties. We can give no assurance that our systems, procedures or controls
will be adequate to support our future operations. Our future operating results
will also depend on our ability to expand our sales and marketing organizations,
implement and manage new services to penetrate broader markets and further
develop and expand our organization.
OUR GROWTH STRATEGY IS HIGHLY DEPENDENT UPON FUTURE ACQUISIONS.
Growth through acquisition of competitive and complementary providers of
products and services involves unique risks, including the diversion of
resources and management's attention; amortization of an acquired company's
intangible assets; the potential loss of key employees of the acquired
companies; expenses, delays and difficulties integrating the acquired company
into our existing organization; impairment of relationships with third parties;
and potential additional expenses. We can give no assurance that our management
will be successful in overcoming these risks or any other problems encountered
in connection with such acquisitions. Our inability to manage growth effectively
or to maintain the quality of our products and services could cause us to lose
customers and could materially increase our operating expenses.
THE APPLICATION OF THE "PENNY STOCK REGULATION" COULD ADVERSELY AFFECT THE
MARKET PRICE OF OUR COMMON STOCK.
Our securities may be deemed a penny stock. Penny stocks generally are
equity securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. Our securities may be subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell our securities
and may have the effect of reducing the level of trading activity of our common
stock in the secondary market. The foregoing required penny stock restrictions
will not apply to our securities if such securities maintain a market price of
$5.00 or greater. We can give no assurance that the price of our securities will
reach or maintain such a level.
THE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS.
There is currently a public market for our common stock, but we can give
no assurance that there will always be such a market. The trading price of our
common stock is highly volatile and could be subject to wide fluctuations in
response to factors such as actual or anticipated variations in quarterly
operating results; announcements of technological innovations;
5
changes in financial estimates by securities analysts; announcements of
significant acquisitions, strategic partnerships, joint ventures or capital
commitments; additions or departures of key personnel; sales of common stock; or
other general economic or stock market conditions, many of which are beyond our
control.
IN THE FUTURE, THE AUTHORIZATION OF OUR PREFERRED STOCK MAY HAVE AN ADVERSE
EFFECT ON THE RIGHTS OF HOLDERS OF OUR COMMON STOCK.
We may, without further action or vote by our shareholders, designate and
issue additional shares of our preferred stock. The terms of any series of
preferred stock, which may include priority claims to assets and dividends and
special voting rights, could adversely affect the rights of holders of the
common stock and thereby reduce the value of the common stock. The designation
and issuance of preferred stock favorable to current management or shareholders
could make the possible takeover of us or the removal of our management more
difficult and defeat hostile bids for control of us which bids might have
provided shareholders with premiums for their shares.
OUR OFFICERS AND DIRECTORS HAVE LIMITED LIABILITY AND HAVE INDEMNITY RIGHTS.
Our Certificate of Incorporation and By-Laws provide that we may indemnify
our officers and directors against losses sustained or liabilities incurred
which arise from any transaction in that officer's or director's respective
managerial capacity unless that officer or director violates a duty of loyalty,
did not act in good faith, engaged in intentional misconduct or knowingly
violated the law, approved an improper dividend, or derived an improper benefit
from the transaction.
WE HAVE NOT PAID ANY DIVIDENDS ON OUR COMMON STOCK AND DO NOT INTEND TO DO SO IN
THE FORESEEABLE FUTURE, A PURCHASER IN THIS OFFERING WILL ONLY REALIZE AN
ECONOMIC GAIN ON HIS OR HER INVESTMENT FROM AN APPRECIATION, IF ANY, IN THE
MARKET PRICE OF OUR COMMON STOCK.
We have never paid, and have no intentions in the foreseeable future to
pay, any cash dividends on our common stock. Therefore an investor in this
offering, in all likelihood, will only realize a profit on his investment if the
market price of our common stock increases in value.
USE OF PROCEEDS
The shares of common stock offered by this prospectus are being registered
for the account of the selling security holder, and we will not receive any
proceeds from the sale of common stock by the selling security holder. We did
receive the benefit of the services rendered by the selling security holder
under his legal services agreement.
SELLING SECURITY HOLDER
Set forth below is (i) the name of the selling security holder and his
relationship with the Company, (ii) the number of shares of common stock
currently owned by the selling security holder, (iii) the number of shares that
may be offered by the selling security holder under this prospectus, and (iv)
the number of shares and percentage of the outstanding common stock that would
be owned by the selling security holder if all of the shares offered by this
prospectus are sold. We obtained some of this information from the selling
security holder and other sources which we have not verified.
NUMBER OF PERCENT OF NUMBER OF PERCENT OF SHARES
SHARES SHARES SHARES BENEFICIALLY OUTSTANDING
BENEFICIALLY OUTSTANDING BEFORE NUMBER OF OWNED AFTER AFTER
NAME AND POSITION OWNED OFFERING SHARES OFFERED OFFERING (1) OFFERING
James W. Christian, Attorney 105,000 5.65 85,000 20,000 1.08
(1) Assumes that all shares offered hereunder are sold.
6
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling security holder. As
used in this prospectus, "selling security holder" includes donees and pledgees
selling shares received from the named selling security holder after the date of
this prospectus. We will pay all costs, expenses and fees in connection with the
registration of the shares offered by this prospectus. The selling security
holder will pay brokerage commission and similar selling expenses, if any,
attributable to the sale of shares. The selling security holder may sell shares
from time to time in one or more types of transactions, including the following:
o in the over-the-counter market;
o in negotiated transactions;
o through put or call options transactions relating to the shares;
o through short sales of shares; or
o through a combination of these methods of sale.
The selling security holder may sell shares in block transactions. The
selling security holder will sell at market prices prevailing at the time of
sale, or at negotiated prices. Sales by the selling security holder may or may
not involve brokers or dealers.
The selling security holder may effect these transactions by selling
shares directly to purchasers or to or through underwriters or broker-dealers.
These underwriters or brokers-dealers may act as agents or principals. These
underwriters or broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling security holder and/or
the purchasers of shares for whom the underwriters or broker-dealers may act as
agents or to whom they sell as a principal. Compensation as to a particular
underwriter or broker-dealer might be in excess of customary commissions.
The selling security holder and any underwriters or broker-dealers that
act in connection with the sale of shares might be deemed to be `underwriters"
within the meaning of Section 2(a)(l1) of the Securities Act. Commissions
received by underwriters or broker-dealers and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. The selling
security holder may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against liabilities
arising under the Securities Act.
The selling security holder also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
if they meet the criteria and conform to the requirements of that rule.
Upon receipt of notice from a selling security holder that they have
entered into any material arrangement with an underwriter or broker-dealer for
the sale of shares through a block trade, special offering, exchange
distribution or secondary distribution, or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required, under Rule 424(b) under
the Securities Act, disclosing:
o the name of each participating selling security holder and of the
participating broker-dealer(s);
o the number of shares involved;
o the price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
o that the broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
o other facts material to the transaction.
In addition, we will file a supplement to this prospectus if a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares.
We intend to require the selling security holder to indemnify us against
civil liabilities resulting from the failure by the selling security holder to
deliver a prospectus if required. The indemnified civil liabilities include any
liabilities under the Securities Act or the Exchange Act resulting from any
untrue or any alleged untrue statement of a material fact or omission of a
material fact in the registration statement or a prospectus supplement. We
intend to require the selling security holder to indemnify us only to the extent
the liability relates to information supplied by the selling security holder for
inclusion in the registration statement or prospectus supplement.
7
In order to comply with state securities laws, if applicable, the shares
will be sold only through registered or licensed brokers or dealers in states
that require that sales be made through registered or licensed brokers or
dealers. Some states require that selling shareholders or the issuer of shares
register or qualify shares for sale in that state, unless an exemption from
registration or qualification is available and is obtained.
EXPERTS
The financial statements as of August 31, 2001, incorporated by reference
in this prospectus and registration statement have been audited by Harper &
Pearson Company, P.C. independent certified accountants, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Legal aspects of this offering have been passed on by the firm of
Franklin, Cardwell & Jones.
INFORMATION WE INCORPORATE BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
may make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934. The documents we incorporate by reference are:
o our Annual Report on Form 10-KSB for the year ended August 31, 2001;
o our Quarterly Reports on Form 10-QSB for the three months ended November
30, 2001 and the three and six months ended February 28, 2002, and Current
Reports on Form 8-K filed with the SEC on December 12, 2001, and December
28, 2001; and
o
o the description of our common stock contained in our Registration
Statement on Form 8-A, dated July 22, 1980 (Registration Number 0-9322).
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
iExalt, Inc.
12000 Aerospace Avenue
Suite 375
Houston, Texas 77034
(281) 464-8400
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information filed by us at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
Our filings with the SEC are also available to the public from commercial
document retrieval services and at the SEC's web site at "http://www.sec.gov."
This prospectus is part of a registration statement we have filed with the
SEC relating to the securities that may be offered by the selling security
holder. As permitted by SEC rules, this prospectus does not contain all of the
information we have included in the registration statement and the accompanying
exhibits and schedules we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and our
securities. The registration statement, exhibits and schedules are available at
the SEC's Public Reference Room.
SECURITIES AND EXCHANGE COMMISSION POSITION ON CERTAIN INDEMNIFICATION
8
Pursuant to Nevada law, a corporation may eliminate or limit the personal
liability of a director or officer for damages arising from a breach of
fiduciary duty, other than liability for (a) acts or omission which involve
intentional misconduct, fraud, or a knowing violation of law, or (b) the payment
of distributions in violation of Nevada law. Our articles of incorporation limit
the personal liability of our directors and officers for damages for breach of
fiduciary duty in a manner identical in scope to that permitted under the Nevada
Law.
In addition, under Nevada law, our Board of Directors has the power to
indemnify officers and directors, present and former, for expenses incurred by
them in connection with any proceeding they are involved in by reason of their
being or having been an officer or director. The person being indemnified must
have acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to our best interests. Our bylaws provide for indemnification of
substantially identical in scope to that permitted under the Nevada Law. Such
bylaws provide that the expenses of our directors and officers incurred in
defending any action, suit or proceeding, whether civil, criminal,
administrative or investigative, must be paid by us as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of such director or officer to repay all
amounts so advanced if it is ultimately determined by a court of competent
jurisdiction that the director or officer is not entitled to be indemnified by
us.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "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 SEC such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
9
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3: INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company incorporates by reference into this Registration Statement the
following documents which have been or will be filed by the Company with the
Securities and Exchange Commission (the "Commission"):
1. Annual Report on Form 10-KSB for the fiscal year ended August 31, 2001.
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since August
31, 2001.
3. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated July 22, 1980 (Registration
Number 0-9322).
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have been
sold or which de-registers all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Registration Statement.
ITEM 4: DESCRIPTION OF SECURITIES.
Not Applicable
ITEM 5: INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable
ITEM 6: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection 1 of Section 78.037 of the Nevada Revised Statutes (the "Nevada
Law") empowers a corporation to eliminate or limit the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but such a provision must not
eliminate or limit the liability of a director or officer for (a) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or (b) the payment of distributions in violation of Section 78.300 of the
Nevada Law.
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Our articles of incorporation limit the personal liability of our
directors and officers for damages for breach of fiduciary duty in a manner
identical in scope to that permitted under the Nevada Law. Our articles of
incorporation also provide that any repeal or modification of that provision
shall apply prospectively only.
Subsection 1 of Section 78.7502 of the Nevada Law empowers a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she 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 (an "Indemnified Party"), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the Indemnified Party in connection with such action, suit or
proceeding if the Indemnified Party acted in good faith and in a manner the
Indemnified Party reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe the Indemnified Party's conduct
was unlawful.
Subsection 2 of Section 78.7502 of the Nevada Law empowers a corporation
to indemnify any Indemnified Party who was or is a party or is 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 such person acted in the capacity of an Indemnified Party against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by the Indemnified Party in connection with the defense or
settlement of such action or suit if the Indemnified Party acted under standards
similar to those set forth above, except that no indemnification may be made in
respect of any claim, issue or matter as to which the Indemnified Party shall
have been adjudged to be liable to the corporation or for amounts paid in
settlement to the corporation unless and only to the extent that the court in
which such action or suit was brought determines upon application that in view
of all the circumstances the Indemnified Party is fairly and reasonably entitled
to indemnity for such expenses as the court deems proper.
Section 78.7502 of the Nevada Law further provides that to the extent an
Indemnified Party has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsection (1) or (2) described
above or in the defense of any claim, issue or matter therein, the corporation
shall indemnify the Indemnified Party against expenses (including attorneys'
fees) actually and reasonably incurred by the Indemnified Party in connection
therewith.
Subsection 1 of Section 78.751 of the Nevada Law provides that any
discretionary indemnification under Section 78.7502 of the Nevada Law, unless
ordered by a court or advanced pursuant to Subsection 2 of Section 78.751, may
be made by a corporation only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper in the
circumstances. Such determination must be made (a) by the stockholders,
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(b) by the board of directors of the corporation by majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding,
(c) if a majority vote of a quorum of such disinterested directors so orders, by
independent legal counsel in a written opinion, or (d) by independent legal
counsel in a written opinion if a quorum of such disinterested directors cannot
be obtained.
Subsection 2 of Section 78.751 of the Nevada Law provides that a
corporation's articles of incorporation or bylaws or an agreement made by the
corporation may require the corporation to pay as incurred and in advance of the
final disposition of a criminal or civil action, suit or proceeding, the
expenses of officers and directors in defending such action, suit or proceeding
upon receipt by the corporation of an undertaking by or on behalf of the officer
or director to repay the amount if it is ultimately determined by a court that
he is not entitled to be indemnified by the corporation. Said Subsection 2
further provides that the provisions of that Subsection 2 do not affect any
rights to advancement of expenses to which corporate personnel other than
officers and directors may be entitled under contract or otherwise by law.
Subsection 3 of Section 78.751 of the Nevada Law provides that
indemnification and advancement of expenses authorized in or ordered by a court
pursuant to said Section 78.751 does not exclude any other rights to which the
Indemnified Party may be entitled under the articles of incorporation or any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
for either an action in his official capacity or in another capacity while
holding his office. However, indemnification, unless ordered by a court pursuant
to Section 78.7502 or for the advancement of expenses under Subsection 2 of
Section 78.751 of the Nevada Law, may not be made to or on behalf of any
director or officer of the corporation if a final adjudication establishes that
his or her acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action. Additionally, the
scope of such indemnification and advancement of expenses shall continue as to
an Indemnified Party who has ceased to hold one of the positions specified
above, and shall inure to the benefit of his or her heirs, executors and
administrators.
Section 78.752 of the Nevada Law empowers a corporation to purchase and
maintain insurance or make other financial arrangements on behalf of an
Indemnified Party for any liability asserted against such person and liabilities
and expenses incurred by such person in his or her capacity as an Indemnified
Party or arising out of such person's status as an Indemnified Party whether or
not the corporation has the authority to indemnify such person against such
liability and expenses.
Our bylaws provide for indemnification of Indemnified Parties
substantially identical in scope to that permitted under the Nevada Law. Such
bylaws provide that the expenses of our directors and officers incurred in
defending any action, suit or proceeding, whether civil, criminal,
administrative or investigative, must be paid by us as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of such director or officer to repay all
amounts so advanced if it is ultimately determined by a court of competent
jurisdiction that the director or officer is not entitled to be indemnified by
us.
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The above described provisions relating to the indemnification of
directors and officers are sufficiently broad to permit the indemnification of
such persons in certain circumstances against liabilities (including
reimbursement of expenses incurred) arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors and officers, and to persons controlling
our company pursuant to the foregoing provisions, we have been informed that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
ITEM 7: EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable
ITEM 8: EXHIBITS.
The following exhibits are filed as part of this Registration Statement:
5.1 Opinion of Franklin, Cardwell & Jones.
23.1 Consent of Harper & Pearson Company, P.C.
23.2 Consent of Franklin, Cardwell & Jones (included in Exhibit 5.1).
24.1 Power of Attorney (included on Signature Page).
ITEM 9: UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
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aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
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. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or 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, 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 Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to 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 for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 7th day of June,
2002.
iEXALT, INC.
BY: /s/ Donald W. Sapaugh
Donald W. Sapaugh
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following individuals in the
capacities and on the date indicated. Each person whose signature appears below
constitutes and appoints Donald W. Sapaugh and Russell Ivy true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full powers and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this 7th day
of June, 2002.
SIGNATURE TITLE
/s/ Donald W. Sapaugh
DONALD W. SAPAUGH Chairman of the Board of Directors
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Chris L. Sisk
CHRIS L. SISK Executive Vice President and
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
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/s/ Hunter M. A. Carr
HUNTER M. A. CARR Director
/s/ Victoria R. A. Carr
VICTORIA R. A. CARR Director
/s/ Morris H. Chapman
MORRIS H. CHAPMAN Director
/s/ Dane B. West
DANE B. WEST Director
/s/ Ramond Corson
RAMOND CORSON Director
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EXHIBIT INDEX
EXHIBIT DOCUMENT
5.1 Opinion of Franklin, Cardwell & Jones
23.1 Consent of Harper & Pearson Company, P.C.
23.2 Consent of Franklin, Cardwell & Jones (included in Exhibit 5.1).
24.1 Power of Attorney (included on Signature Page).