UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. _________________)
APTUS CORP.
(Exact name of small business issuer in its charter)
DELAWARE 7372 72-1528259
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 691-1531
(Address and telephone number of principal executive offices)
1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402
(Address of principal place of business or
intended principal place of business)
JOHN P. GORST, 1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 691-1531
________________________________________________________________________________
(Name, Address and telephone number of agent for service)
COPIES TO:
MILES GARNETT, ESQ., 66 WAYNE AVENUE, ATLANTIC BEACH, NY 11509 (516) 371-4598
Approximate date of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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, 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, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. _______
CALCULATION OF REGISTRATION FEE
<s>
Common Stock 10,000,000 $0.50 $5,000,000 $460
Title of each Share Proposed maximum Proposed offering Maximum aggregate Amount of
class of securities to amount to be price per unit offering registration fee
be registered registered
NOTE: Specific details relating to the fee calculation shall be
furnished in notes to the table, including references to provisions of Rule 457
(ss.230.457 of this chapter) relied upon, if the basis of the calculation is not
otherwise evident from the information presented in the table. If the filing fee
is calculated pursuant to Rule 457(o) under the Securities Act, only the title
of the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
need to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
APTUS CORP.
10,000,000 SHARES OF COMMON STOCK
This is our initial public offering of common stock. The initial public
offering price is $0.50 per share. No public market currently exists for our
common stock. We are selling 10,000,000 shares of common stock, which have $.001
par value per share. This represents 45.5% of the total outstanding shares based
on the maximum amount of the offering. We are a software Application Service
Provider (ASP). Prior to this offering there has been no public market for the
shares. The initial public offering price of the shares has been arbitrarily
determined by us and does not bear any relationship to such established
valuation criteria as assets, book value or prospective earnings. We are a
Delaware corporation.
We will sell the shares ourselves. We do not plan to use underwriters
or pay any commissions. We will be selling our shares in a direct participation
offering and no one has agreed to buy any of our shares. The offering will
terminate no later than November 30, 2004, and unless a minimum of 1,000,000
shares are sold by that time the proceeds will be returned with interest. We
will escrow the proceeds with National City Bank, NA until the minimum is
reached.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The offering price for the common stock has been arbitrarily determined
by us. The minimum subscription is 1,000,000 shares and the maximum subscription
is 10,000,000 shares. Prior to this offering, there has been no public market
for the shares and there can be no assurance that a regular trading market will
develop for the shares after this offering or that, if developed, any such
market will be sustained. We anticipate that trading of the shares will be
conducted through what is customarily known as the "pink sheets" and/ or on the
National Quotation Bureau's Over-The-Counter Electronic Bulletin Board (the
"Bulletin Board"). Any market for the shares, which may result, will likely be
less well developed than if the shares were traded on NASDAQ or on an exchange.
See "Risk Factors" and "The Offering."
Our officers and directors may purchase the shares sold in the offering
under the same terms and conditions as the public investors. Such purchases, if
made, will be for investment purposes only and not for redistribution. Such
purchases may be made for the purpose of closing the minimum offering.
UNTIL 90 DAYS AFTER THE DATE FUNDS AND SECURITIES ARE RELEASED FROM THE
ESCROW OR TRUST ACCOUNT, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS.
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK. SEE THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 10.
<table>
<caption>
TOTAL
PER SHARE MINIMUM MAXIMUM
----------------------- -------------------- --------------
<s>
Public offering price1 $0.50 $500,000 $5,000,000
Underwriting discounts and commissions None None None
Proceeds, before expenses, to us2 $0.50 $500,000 $5,000,000
(1) We plan to offer and sale the shares directly to investors and have not
retained any underwriters, brokers or placement agents in connection with
this offering. However, we reserve the right to use brokers or placement
agents and could pay commissions equal to as much as 10 percent of the
gross proceeds and 3% non-accountable expenses.
(2) Before deduction of offering expenses estimated to be $36,000.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED 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 , 2004
TABLE OF CONTENTS
Summary.................................................................................. 6
Our Company.............................................................................. 6
Risk Factors............................................................................. 8
Use of Proceeds..........................................................................11
Dilution.................................................................................12
Capitalization...........................................................................14
Plan of Distribution.....................................................................14
Proposed Business........................................................................14
Management Discussion of Analysis of Condition and Results of Operations..... 42
Principal Shareholders...................................................................43
Management...............................................................................43
Certain Transactions.....................................................................46
Description of Securities................................................................46
Shares Eligible for Future Sale..........................................................47
Available Information....................................................................48
Dividend Policy..........................................................................49
Stock Transfer Agent.....................................................................49
Escrow Agent.............................................................................49
Experts..................................................................................49
Legal matters............................................................................50
Index to Financial Statements............................................................F-1
</table>
SUMMARY
This summary highlights selected information from elsewhere in this
prospectus. It is not complete and may not contain all of the information that
is important to you. To understand this offering fully, you should read the
entire prospectus carefully, including the risk factors and financial statements
and the related notes to those statements included in this prospectus.
OUR COMPANY
Our company, Aptus Corp., is an Application Service Provider ("ASP"; an
ASP customer uses a web browser to run software products without the need to
download or install the software application) focused on the small office/home
office and small/medium enterprise (SoHo and SME) markets. See "Risk Factors"
and "Proposed Business." We are in the development stage and have no operating
history. No representation is made or implied that we will be able to carry on
our activities profitably. Our subsistence is dependent initially upon
sufficient proceeds being realized by us from this offering, of which there is
no assurance. Proceeds of this offering may be insufficient to enable us to
conduct potentially profitable operations or otherwise to engage in any business
endeavors. The likelihood of our success must be considered in light of the
expenses, difficulties and delays frequently encountered in connection with the
formation of any new business. Further, no assurance can be given that we will
have the ability to acquire assets, businesses or properties with any value to
us.
We were incorporated on April 4, 2002 under the laws of the State of
Delaware. Our offices are located at 1127 Broadway Plaza, Suite 203, Tacoma, WA
98402, and the telephone number is (253) 691-1531.
Since the incorporation of Aptus Corp., we have not commenced
operations and have not generated any revenue. With limited financial resources,
we may not be able to continue as a going concern. We have three officers, two
directors and no employees.
THE OFFERING
Unless otherwise indicated, the
information in this prospectus,
irrespective of the date referenced,
assumes that there is no exercise of
outstanding options or warrants to
purchase additional shares. We
intend to use the net proceeds of
this offering to market the services
the company currently offers and
initiate new business development
and relationships. Additionally,
management will use a small portion
of these funds to settle outstanding
liabilities. We shall seek to employ
qualified, but as yet unidentified,
individuals to manage such business.
No assurance can be given that the
net proceeds of the maximum number
of shares offered in this offering
or any lesser net amount will be
sufficient to accomplish our goals.
In the event that substantially less
than the net proceeds from the
maximum offering are raised, our
plans may be materially and
adversely affected in that we may
find it even more difficult, if not
impossible, to realize our goals.
Investors will be providing their
funds to management who will have
complete discretion as to their
expenditure. See "Risk Factors",
"Use of Proceeds" and "Proposed
Business."
If proceeds from this offering are
insufficient, we may be required to
seek additional capital. No
assurance can be given that we will
be able to obtain such additional
capital, or even if available, that
such additional capital will be
available on terms acceptable to us.
COMMON STOCK OFFERED
FOR SALE HEREBY Up to a maximum of 10,000,000 shares
by us.
OFFERING PRICE $0.50 per share offered to the
public. The shares are being sold on
a "best efforts" basis.
6
TERMS OF THE OFFERING The offering will
remain open until November 30, 2004,
unless we decide to terminate the
selling efforts prior to this date.
The minimum subscription is 1,000
shares.
Common Preferred Preferred
AUTHORIZED AND Stock Class A Class B
OUTSTANDING
SHARES OF Authorized: 250,000,000 10,000,000 10,000,000
STOCK Outstanding:
Prior to Offering: 12,000,000 -0- -0-
After minimum of
Offering is sold 13,000,000 -0- -0-
After maximum
Offering is sold 22,000,000 -0- -0-
PLAN OF DISTRIBUTION This is a direct participation, and
with no commitment by anyone to
purchase any shares. None of the
officers and directors (a) is
subject to a statutory
disqualification (as defined in
Sec. 3(a)(35), (b) is paid
commissions or other remuneration
for securities transactions, or (c)
is an associated person of a broker
or dealer. The shares will be
offered and sold on a "best
efforts" basis by our principal
executive officers and directors.
We will amend the registration
statement of which this Prospectus
is a part following its
effectiveness to identify a
selected broker-dealer at such time
as such broker-dealer sells shares
offered in this offering. All
proceeds from subscriptions to
purchase shares will be transmitted
by us and any participating dealer
to the escrow account by noon of
the next business day after
receipt. The shares are offered by
us on a "best efforts" 1,000,000
Share minimum, 10,000,000 Share
maximum, basis. In the event that
the minimum of 1,000,000 shares is
not sold by November 30, 2004, all
proceeds raised will be returned
promptly to subscribers in full
with interest thereon. Subscribers
will not be entitled to a return of
funds from the escrow account
during the offering period.
USE OF PROCEEDS Assuming that the entire offering
will be sold, then up to the last
$36,000 that we raise will be used
to pay the expenses of the offering
after the escrow is released. We
intend to apply substantially all
of the net proceeds of this
offering (after the minimum amount
to be raised is released from
escrow) to market the services the
company currently offers and
initiate new business development
and relationships as an application
Service Provider ("ASP"; an ASP
customer uses a web browser to run
software products without the need
to download or install the software
application) focused on the small
office/home office and small/medium
enterprise (SoHo and SME) markets.
See "Use of Proceeds," "Proposed
Business" and "Certain
Transactions."
RISK FACTORS The shares offered hereby
involve a high degree of risk and
immediate substantial dilution and
should not be purchased by investors
who cannot afford the loss of their
entire investment. Such risks
include, among others: our mere 16
month existence and limited
resources; the discretionary use of
proceeds; and intense competition in
effecting a Business Combination.
See "Risk Factors," "Dilution" and
"Use of Proceeds."
7
ESCROWED FUNDS NOT TO BE USED FOR ACCRUED SALARIES OR PRIOR REIMBURSABLE
EXPENSES
No funds (including any interest earned thereon) will be disbursed from
the escrow account for the payment of accrued salaries or reimbursement of
expenses incurred on our behalf prior to the effective date of this offering by
our officers and directors. Other than the foregoing, there is no limit on the
amount of such reimbursable expenses, and there will be no review of the
reasonableness of such expenses by anyone other than our board of directors, all
of whom are officers. In no event will the escrowed funds (including any
interest earned thereon) be used for any purpose other than implementation of a
business combination.
See "Risk Factors," "Use of Proceeds" and "Certain Transactions."
MATERIAL PERSONS
Our officers, directors and major shareholders are the only persons who
have been instrumental in arranging our capitalization to date. Neither of our
officers or directors are acting as nominee for any persons or is otherwise
under the control of any person or persons. There are no agreements, agreements
in principle, or understandings with regard to compensation to be paid by us to
any of our officers or directors.
It is anticipated we may make sales of shares to officers and
directors. Such purchases shall be made for investment purposes only and in a
manner consistent with a public offering of our shares. Such purchases may be
used to reach the amount required for closing in the event such amount is not
reached as a result of purchases by the general public. Thus the officers and
directors could purchase up to 100% of the amount required for closing if no
sales are made to new shareholders. Such purchases will increase the equity
interests already owned by the officers and directors.
Investors should carefully review the financial statements, which are
an integral part of this prospectus.
Dealers participating in this offering are required to deliver a copy
of the final prospectus to any person who is expected to receive a confirmation
of the sale at least 48 hours prior to the mailing of the confirmation.
RISK FACTORS
The securities offered hereby are highly speculative and involve
substantial risks. You should carefully consider the risks and uncertainties
described below and the other information in this prospectus before deciding
whether to invest in shares of our common stock. Any of the following risks
could cause the value of our common stock to decline.
Our financial status creates a doubt whether we will continue as a
going concern for more than 12 months from the date of this prospectus, and, if
we do not continue as a going concern, investors may lose their entire
investment.
We have nominal assets and limited operations with which to create
operating capital. We seek to raise additional capital to promote and advertise
our services in an offering of our common stock on Form SB-2. If all the shares
offered are sold, we will receive up to $4,964,000 net proceeds to pay for our
estimated operating expenses. There can be no assurance that such offering will
be successful.
Our Chief Executive Officer will conduct our activities on a part time
basis. As a result of his participation in business activities of other
companies, his limited attention to our company may delay the development of our
business.
This offering is self-underwritten, and has no minimum which must be
raised, which means that we may not raise any proceeds or only nominal, and
investors run the risk of losing their entire investment.
8
We have no customers and generate no revenues and if we fail to
successfully implement our business plan by developing a solid customer base and
generating revenues we will go out of business.
Our success is dependent on successful implementation of our business
plan. This involves developing and expanding our operations on a profitable
basis and developing marketing and promotional channels to promote our services
on a regular basis. We have not entered into any agreements to utilize our
services with any company. We do not believe that we will generate significant
revenues in the immediate future. We will not generate any meaningful revenues
unless we obtain contracts with a significant number of clients. If we fail to
obtain contracts with a significant number of clients to generate meaningful
revenues, we may not achieve profitability and may go out of business.
We face intense competition from other ASP providers with similar
applications, which may adversely affect our revenue and profitability.
A large number of ASP providers offer similar services that we plan to
offer. Most of these firms have greater resources in terms of people, money and
experience. If we cannot successfully compete with these firms, the future of
our business and results of operations will be adversely affected in terms of
little or no revenue and profitability.
Our success depends significantly on the continued services of our
management personnel, John P. Gorst, our Chairman of the Board, President and
Chief Executive Officer and M. Carroll Benton Secretary and Treasurer, Chief
Administrative Officer and Interim Chief Financial Officer. Losing any one of
them could seriously harm our business. Competition for executives is intense.
If we had to replace either one, we would not be able to replace the significant
amount of knowledge that they have about our operations. We do not maintain "key
man" insurance policies on anyone. We do not have employment contracts with John
P. Gorst or M. Carroll Benton.
Other business ventures of our executive officer may present a
potential conflict of interest.
John P. Gorst and M. Carroll Benton are two of our three officers and
sole directors and have control in directing our activities. They are involved
in other business activities and may, in the future, become involved in
additional business opportunities. If a specific business opportunity becomes
available, they may face a conflict of interest. Either one may take advantage
of this business opportunity through other companies that they work with. In
such event, we will loose potential revenue, which will negatively affect the
value of shares of our common stock.
Shares eligible for public sale after this offering could adversely
affect our stock price.
After this offering there will be outstanding 22,000,000 shares of our
common stock. Of these shares, the shares sold in this offering will be freely
tradable except for any shares purchased by our "affiliates" as defined in Rule
144 under the Securities Act. The remaining 12,000,000 shares will be
"restricted securities," subject to the volume limitations and other conditions
of Rule 144 under the Securities Act. These restricted securities will first
become eligible for resale under Rule 144 on November 7, 2004.
We cannot predict if future sales of our common stock, or the
availability of our common stock for sale, will materially and adversely affect
the market price for our common stock or our ability to raise capital by
offering equity securities. Our stock price may decline if the resale of shares
under Rule 144 in addition to the resale of registered shares at certain time in
the future exceeds the market demand for our stock.
Market conditions and Market Makers may cause your an investment in our
common stock to may be very illiquid. Unless a trading market for our shares is
developed, you will not be able to resell your stock, and, market makers may
influence the stock price.
We plan to have our shares trade on the NASD over-the-counter bulletin
board. There is no trading market for our shares, and we cannot assure you that
any such market will ever develop or be maintained. The absence of an active
trading market would reduce the liquidity of an investment in our shares.
To the extent that brokerage firms act as market makers for our shares
on the NASD over-the-counter bulletin board, they may be a dominating influence
in any market that might develop, and the degree of participation by such
9
firms may significantly affect the price and liquidity of our shares. These
firms may discontinue their market making activities at any time. The prices at
which our shares are traded in the market will be determined by these firms and
by the purchasers and sellers of our shares, but such prices may not necessarily
relate to our assets, book value, results of operations or other established and
quantifiable criteria of value.
The application of the "penny stock" rules could adversely affect the
market for our stock.
The Securities and Exchange Act of 1934 requires additional disclosure
relating to the market for "penny stocks." A penny stock is generally defined to
be any equity security not listed on NASDAQ or a national securities exchange
that has a market price of less than $5.00 per share, subject to certain
exceptions. Among these exceptions are shares issued by companies that have:
o net tangible assets of at least $2 million, if the issuer has been in
continuous operation for three years;
o net tangible assets of at least $5 million, if the issuer has been in
continuous operation for less than three years; or
o average annual revenue of at least $6 million for each of the last three
years.
We do not currently meet the requirements of these exceptions and,
therefore, our shares would be deemed penny stocks for purposes of the Exchange
Act if and at any time while our common stock trades below $5.00 per share. In
such case, trading in our shares would be regulated pursuant to Rules 15-g-1
through 15-g-6 and 15-g-9 of the Exchange Act. Under these rules, brokers or
dealers recommending our shares to prospective buyers would be required, unless
an exemption is available, to:
o deliver a lengthy disclosure statement in a form designated by the SEC
relating to the penny stock market to any potential buyers, and obtain a
written acknowledgement from each buyer that such disclosure statement
has been received by the buyer prior to any transaction involving our
shares;
o provide detailed written disclosure to buyers of current price
quotations for our shares, and of any sales commissions or other
compensation payable to any broker or dealer, or any other related
person, involved in the transaction;
o send monthly statements to buyers disclosing updated price information
for any penny stocks held in their accounts, and these monthly
statements must include specified information on the limited market for
penny stocks.
In addition, if we are subject to the penny stock rules, all brokers or
dealers involved in a transaction in which our shares are sold to any buyer,
other than an established customer or "accredited investor," must make a special
written determination that our shares would be a suitable investment for the
buyer, and the brokers or dealers must receive the buyer's written agreement to
purchase our shares, as well as the buyer's written acknowledgement that the
suitability determination made by the broker or dealer accurately reflects the
buyer's financial situation, investment experience and investment objectives,
prior to completing any transaction in our shares.
These Exchange Act rules may limit the ability or willingness of
brokers and other market participants to make a market in our shares and may
limit the ability of our shareholders to sell in the secondary market, through
brokers, dealers or otherwise. We also understand that many brokerage firms will
discourage their customers from trading in shares falling within the "penny
stock" definition due to the added regulatory and disclosure burdens imposed by
these Exchange Act rules.
The SEC from time to time may propose and implement even more stringent
regulatory or disclosure requirements on shares not listed on NASDAQ or on a
national securities exchange. The adoption of the proposed changes that may be
made in the future could have an adverse effect on the trading market for our
shares.
10
We are controlled by officers, directors and principal shareholders.
John P. Gorst, M. Carroll Benton, Mark Levin, Clifford Mastricola and
Clayton Chase will beneficially own approximately 55% of the outstanding stock
upon completion of this offering. As a result, these persons, acting together,
will have the ability to control substantially all matters submitted to our
stockholders for approval (including the election and removal of directors and
any merger, consolidation or sale of all or substantially all of our assets) and
to control our management and affairs. Accordingly, this concentration of
ownership may have the effect of delaying, deferring or preventing a change in
control of us, impeding a merger, consolidation, takeover or other business
combination involving us or discouraging a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could materially and adversely affect the market price of the common stock.
We have a need for subsequent funding.
We may need further funding to proceed with our proposed plan of
business. We believe that we will be able to fund our planned operations from
the proceeds of this offering for twelve months from the date of this
prospectus, even if we only raised a nominal amount of additional capital. We do
not have a commitment with respect to any additional capital. We have no loan
commitments from, or lines of credit with, banks or other financial
institutions. Therefore, the continuation of our business will depend on our
ability to raise additional funds through equity and/or debt financing. We can
not assure you that we will be able to obtain additional funding when it is
needed, or that such funding, if available, will be obtainable on terms
favorable to and affordable by us. Our inability to obtain additional funding,
as required, would impair severely our business operations.
This prospectus contains certain forward-looking statements" based on
our current expectations, assumptions, estimates and projections about us and
our industry. These forward-looking statements involve risks and uncertainties.
Our actual results could differ materially from those anticipated in such
forward-looking statements as a result of certain factors, as more fully
described in this section and elsewhere in this prospectus. We undertake no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
Such factors include those set forth in this section and elsewhere in this
prospectus.
We have designated only limited specific use for the net proceeds from
the sale of common stock described in this prospectus. We expect to use the net
proceeds for working capital and general corporate purposes. Consequently, the
Board of Directors and our management will have broad discretion in allocating
the net proceeds of this offering. See "Use of Proceeds."
We have never declared or paid cash dividends on our capital stock. We
currently intend to retain all of our earnings, if any, for use in our business
and does not anticipate paying any cash dividends in the foreseeable future. The
payment of any future dividends will be at the discretion of our Board of
Directors and will depend upon a number of factors, including future earnings,
the success of our business activities, regulatory capital requirements, the
general financial condition and future prospects, general business conditions
and such other factors as the Board of Directors may deem relevant.
Prior to this offering, there has been no trading market for the shares
of common stock offered. Consequently, the initial public offering price of the
shares of common stock was arbitrarily determined. The factors considered in
determining the offering price were our financial condition and prospects, our
limited operating history and the general condition of the securities market.
The offering price is not an indication of and is not based upon our actual
value. The offering price bears no relationship to our book value, assets or
earnings or any other recognized criteria of value. The offering price should
not be regarded as an indicator of the future market price of the securities.
USE OF PROCEEDS
Because management has no specific business contemplated for us,
it is unable to indicate precisely categories for the use of proceeds from
this offering. In the table below, we have
11
detailed the minimum amount of capital required for us to operate our business
as currently planned. The table also shows how we will use the proceeds of the
offering.
AMOUNT OF NET PROCEEDS
AT 10% AT 100%
Company Proceeds from the Offering $500,000 $5,000,000
Less: Offering Expenses 15,000 36,000
-------------------- --------------
Net Proceeds from Offering $485,000 $4,964,000
-------------------- --------------
Use of Net Proceeds:
General Working Capital $485,000 $4,964,000
Total Use of Net Proceeds $485,000 $4,964,000
==================== ==============
(1)We intend to utilize the proceeds from this offering in the priority set
forth in this column whether or not such gross proceeds or a lesser amount are
raised. No assurances are given that we will sell any shares.
(2)The working capital (i.e., monies to be used, including but not limited to
due diligence, travel and related out-of-pocket expenses, and consulting fees,
if any. Working capital also will be used to pay other costs of our operations,
including legal fees and costs incurred in filing periodic reports under the
federal securities laws. A portion of the gross proceeds raised hereby may be
paid to officers, directors and promoters, and their affiliates or associates,
for any of their out-of-pocket expenses relating to this offering. We have not
established any limit on the amount of the gross proceeds that may be paid to
officers, directors and promoters and their affiliates or associates for
expenses of the offering. However, no portion of the proceeds raised hereby will
be paid to those persons, directly or indirectly, as consultants' fees,
advisors' fees, officers' accrued salaries, directors' fees, finders' fees for
acquisitions, purchase of shares or other payments, in accordance with an
informal understanding among management. Management is not aware of any
circumstances under which such policy may be changed.
We have not and do not presently intend to impose any limits or other
restrictions on the amount or circumstances under which any of such transactions
may occur, except that none of our officers, directors or their affiliates shall
receive any personal financial gain from the proceeds of this offering except
for reimbursement of out-of-pocket offering expenses. No assurance can be given
that any of such potential conflicts of interest will be resolved in our favor
or will otherwise not cause us to lose potential opportunities.
None of the proceeds raised hereby will be used to make any loans to
our promoters, management or their affiliates or associates of any of our
shareholders. Further, we may not borrow funds and use the proceeds therefrom to
make payments to our promoters, management or their affiliates or associates.
DILUTION
We were initially capitalized by the sale of common stock to our
founders. The following table sets forth the difference between our founders and
purchasers of the shares in this offering with respect to the number of shares
purchased from us, the total consideration paid and the average price per share
paid.
The table below assumes that the minimum of 10% of the amount of
shares offered hereby are sold.
SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 92% $30,000 5.7% $0.0025
New Investors 1,000,000 8% $500,000 94.3% $0.50
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-------------- -------------- ------------- ------------
Total 13,000,000 100% $530,000 100% $0.041
============== ============== ============= ============
The table below assumes the maximum amount of the shares offered hereby
are sold.
SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 54.5% $30,000 .6% $0.0025
New Investors 10,000,000 45.5% $5,000,000 99.4% $0.50
-------------- -------------- ------------- ------------
Total 22,000,000 100% $5,030,000 100% $0.23
============== ============== ============= ============
As of November 30, 2003, the net tangible book value of our common
stock was $11,727 or $.00098 per share based on the 12,000,000 shares
outstanding. "Net tangible book value" per share represents the amount of total
tangible assets less total liabilities, divided by the number of shares. After
giving effect to the sale by us of 10,000,000 shares at an offering price of
$0.50 per share and after deducting estimated expenses, our pro-forma net
tangible book value as of that date would be $4,975,727 or $.226 per share,
based on the 22,000,000 shares outstanding at that time. This represents an
immediate dilution (i.e. the difference between the offering price per share of
common stock and the net tangible book value per share of common stock after the
offering) of $.46 per share to the new investors who purchase shares in the
offering ("New Investors"), as illustrated in the following table (amounts are
expressed on a per share basis):
(1) Calculations concerning dilution are based on an assumption of the
offering being fully subscribed.
The following table represents the dilution per share based on the
percentage sold of the total amount of shares being offered.
SHARES SHARES
50% sold 100% sold
---------------- ---------------
Offering Price $0.50 $0.50
Net tangible book value before offering $0.00003 $0.00003
Increase attributable to the offering $0.50 $0.46
Net tangible book value after giving effect $0.00 $0.037
to the offering
Per share Dilution to new investors $0.50 $0.46
Percent Dilution per share 100% 92%
We do not intend to pay any cash dividends with respect to our common
stock in the foreseeable future. We intend to retain any earnings for use in the
operation of our business. Our Board of Directors will determine dividend policy
in the future based upon, among other things, our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
at the time. We intend to retain appropriate levels of our earnings, if any, to
support our business activities.
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CAPITALIZATION
This table represents our capitalization as of November 30, 2003 as
adjusted to give effect to this offering.
ACTUAL SHARES SHARES
Stockholders Equity At 50% At 100%
- ------------------------------- ----------------------- -------------- -------------- --------------
Common Stock, $0.001 par
value Authorized -
250,000,000 shares
Issued and Outstanding -
12,000,000 shares 12,000
@50% 17,000,000 shares 17,000
2,495,000
@100% 22,000,000 shares 22,000
4,990,000
Additional Paid in Capital 18,000 18,000 18,000
Deficit Accumulated (8,850) (8,850) (8,850)
Total Stockholder Equity $3,650 $253,708 $503,758
======================= ============== ============== ==============
PLAN OF DISTRIBUTION
This is a direct participation with no commitment by anyone to purchase
any shares. The shares will be offered and sold on a "best efforts" basis by our
principal executive officers and directors at $.50 per share until all shares
are sold or until the offering is terminated or November 30, 2004.
PROPOSED BUSINESS
BUSINESS OVERVIEW
Aptus Corp., (collectively referred to as "we" and "Aptus"), was
incorporated under the laws of the State of Delaware on April 4, 2002, and is in
the early developmental and promotional stages. To date our only activities have
been organizational ones, directed at developing our business plan and raising
our initial capital. We have not commenced any commercial operations. We have no
full-time employees and own no real estate.
EXECUTIVE SUMMARY
Aptus is an Application Service Provider ("ASP"; an ASP customer uses a
web browser to run software products without the need to download or install the
software application) focused on the small office/home office and small/medium
enterprise (SoHo and SME) markets. Aptus's provides three levels of service that
enable subscribers to use standard off-the-shelf Windows applications, and more
complex line of business applications that are not currently installed on their
individual PC's. Aptus's users can easily subscribe to a variety of Windows
applications, and store and maintain their personal documents and data on the
Aptus data center or the local machine.
Aptus develops, implements, operates and supports packaged software
applications that can be accessed and used over the Internet. The Internet
Quality Application (IQA) services, are based on packaged applications from
leading software vendors and are selected to meet the needs of the small and
medium enterprise (SME) market, and include business functions such as
e-commerce, sales force automation, customer support, human resource and
financial management, messaging and collaboration, and professional services
automation. In order to deliver and support our IQA services, we have
constructed a highly reliable and secure network, including one primary Data
Center located in the Pacific Northwest region and the intent of building one
additional Data Center on the East Coast.
14
We implement selected packaged software applications in our Data Center,
configure them to meet the needs of our clients, then bundle them with Internet
access, back up, security, virus protection services and operational support.
Part of our differentiation and value proposition is we integrate these elements
of technology on our own proprietary Linux based infrastructure - made up of
terminals, routers, firewall security, and specific printer management
technology and sell them to clients as a service for a recurring monthly fee
over a fixed term. In addition, as part of our IQA services, we offer complex
Web hosting services to clients who want to run their own software applications
using our highly reliable and secure network.
The advantages our clients realize by purchasing our IQA services
rather than purchasing and implementing the application software include:
o faster time to benefit;
o reduced technical and integration risk;
`
o reduced reliance on internal IT staff; and
o lower total costs and elimination of large capital investment.
We are able to deliver these benefits to our clients through a central
Data Center linked by a dedicated network and by robust transit connections to
four major Internet backbones. Our Data Center is comprised of standardized
hardware environments to support our applications, embedded security, Hewlett
Packard and Dell Computers disk arrays for storage and real-time back-up, and
significant levels of infrastructure redundancy. Our network is monitored and
managed through the IQA, which enables an engineer to see all hardware,
software, and network elements of a client application in a single view. Hewlett
Packard assisted in the design of our network. We believe that controlling all
elements of the network from the client's Internet backbone provider or LAN with
our proprietary methodology enables us to deliver superior response time,
reliability and security for our clients. We can substantially reduce
implementation time because we deliver our applications in a consistent and
pre-configured environment. Moreover, our clients do not need to mediate among
disparate vendors because we take total responsibility for application support
and system performance and availability.
APTUS PRODUCT VALUE PROPOSITION
LOWER COST
Typically, for most of the SME market, the total of all Aptus
subscription fees per year is less than half of what it costs them now per year
to provision, support, maintain, upgrade, replace and depreciate both the PCs &
software for all their workers and the requisite servers, local area networks,
and wide area connectivity between offices.
Gartner and many other authoritative sources put this total annual cost
for each worker at $7,500 to $9,000 or more versus $2,000 for each virtual
desktop provisioned by Aptus Subscriber Computingtm (which incorporates basic
file, print and email server functionality, local area network infrastructure
and wide area connectivity). So, as we say, "Everything you're doing now, only
better, and at half the cost."
The same math holds true for new enterprises. Aptus represents a low
cost alternative to installing an all-new computer infrastructure with
traditional distributed client service architecture.
NO CAPITAL COST
Most enterprises will find Utility Computing a key advantage. In
addition to the Aptus solution being low cost, it also provides zero start-up
costs by utilizing the current customer's hardware. Enterprises, large and
small, can conserve capital dollars and lines of credit.
15
MORE SECURE
With Aptus Utility Computing, enterprise information is far more secure
and information integrity far more robust than with typical in-house
client-server environments. Never worry about "C" drives on PC's crashing ever
again. All files are redundantly stored at the Data Center and backed up daily.
Access to enterprise files is strictly controlled.
The Aptus Processing Center is Class A facility with the most advanced
access security, fire protection, un-interruptible power supplies and
environmental controls. Dedicated servers maintain the tightest virus protection
including active real-time scanning of inbound files.
MORE FLEXIBLE
Utility Computing is a liberating source of flexibility. Customers can
very simply add subscriptions for new workers - and with no capital cost - or
they can de-subscribe them if they are downsizing. Individual workers can
subscribe to new applications as they need, or they can de-subscribe them when
they are no longer required.
All this means is that the enterprise can be far more nimble.
Infrastructure can be quickly and effortlessly adjusted to suit the business
requirements of the moment.
APTUS PRODUCT AND ITS IMPACT ON BUSINESS OPERATIONS
REDUCE DEPENDENCE ON INFORMATION TECHNOLOGY RESOURCES
Larger enterprises will find that they can focus their limited
Information Technology (IT) resources on the enterprise and mission critical
applications while leveraging these IT resources more effectively. Most large IT
shops would like very much to offload the desktop issue and that is where Aptus
plays a key role.
In the SME arena, properly qualified IT staff are hard to find, hard to
keep and seem to be relatively expensive. With Aptus this dependence is
mitigated because we design, install, support, manage, maintain and upgrade your
entire enterprise computer infrastructure from a central Data Center.
HIGHER PRODUCTIVITY
Workers cannot download and play games, or fiddle with their Virtual
Desktop environment. Aptus provides a locked down, no nonsense, work
environment. Moreover, the guaranteed homogeneity of this work environment
across the enterprise reduces productivity losses stemming from
non-interoperability, and the availability of effective help desk support
reduces productivity losses arising from peer support.
And, the Aptus environment works - works fast and works all the time.
Workers have access to their Virtual Desktops 24 hours a day, 7 days a week, 52
weeks a year - and help desk support too - so key work never has to be delayed.
With everyone using the same tools, communication and collaboration across the
enterprise is assured.
Aptus's three levels of service are:
ALWAYS-ON UTILITY COMPUTING - This level of service provides standard
off-the-shelf Windows applications to small/medium enterprise and SoHo clients
on a subscription basis alleviating the need for the client to purchase
licenses, servers, antivirus software, or other items needed to maintain a
Windows network. The Always-On service is provided through direct telesales for
the smaller (10 - 50 user) clients, and through face-to-face sales for the
larger clients that have more complex needs.
16
For its subscribers, Always-On offers immediate access to a variety of
software titles, with no installation required. The Aptus and the ASP model
eliminates the need to install and maintain software on personal computers,
allows for storage of data and information either at the data center or the
local machine, and provides value added features while using the software. The
ASP concept also reduces the risk of computer viruses and allows for ongoing
backups of user data and important information.
ENTERPRISE UTILITY COMPUTING (EUC)-
This service is targeted at the resellers of the more complex line of
business applications such as accounting, sales management, contact management,
human resources etc. that require a more involved and complex back office
functionality. By providing their applications in an ASP model, the reseller can
increase sales traction and reduce sales cycles by off-loading the back office
complexities to Aptus. The service is provided to the small to medium enterprise
through resellers, and when appropriate these software packages will be offered
to the existing Always-On users.
The ASP model creates immediate revenue opportunities for software
resellers and reduces the phenomena of software piracy, as the software title is
no longer downloaded or installed on the user's PC.
Aptus intends to develop long-term relationships with resellers and
together market the service to the end-users. Revenues will be generated from
software hosting fees, and additional value added offerings such as thin
clients, online training and E-commerce references. Aptus will support and
promote the ongoing software industry trend toward renting software, and plans
to become a leading ASP for the SOHO and small/medium enterprise market.
E-ACCOUNTING (Core Business)
Aptus is negotiating an exclusive licensing agreement with Insynq Inc.
a premier ASP provider. Insynq will license the e-Accounting brand as Aptus
adapts, implements, operates and delivers industry-leading software and services
for small and medium size enterprise business. Using the public Internet as the
underlying network infrastructure, Aptus's services can be deployed to virtually
any location with Internet service. The applications hosted are developed by
leading software vendors, and are designed to meet the needs of the small and
medium enterprise market. These applications are used to support such business
functions as accounting and finance, electronic commerce, customer service and
support, general office productivity, messaging and communications, document
management and storage, information technology management, and specific
vertically-oriented business processes. These services are provided to
businesses on a monthly subscription basis.
In order to deliver and support the ASP solutions, Aptus has
constructed a highly reliable and secure data services infrastructure, including
one primary data center located in the Pacific Northwest region, and with the
intent of building additional data centers as our market presence is expanded.
The data center is comprised of standardized hardware environments to support
application hosting services, embedded security, sophisticated storage disk
arrays and data storage facilities, off-site data archival, and a significant
level of infrastructure redundancy.
Aptus's major differentiator is in our proprietary delivery system and
technologies. Aptus's ability to bundle and deliver integrated application
environments, facilitated with the use of our delivery technologies, allows
rapid deployment of highly complex and completely managed systems in less time
and at less cost.
The advantages that our clients realize by subscribing to the services
are:
Faster time to benefit from new technology implementations
Reduced risk of implementing or integrating new technologies
Reduced reliance on internal information technology staff
The reduction of large IT capital investment
and a lower total cost of ownership
Aptus believes that, by understanding and managing all elements of the
network - from the client's local area network to the data center infrastructure
- - it can substantially reduce implementation time and consistently deliver a
high level of security, reliability, and response. In addition, clients do not
need to interact with or mediate disparate vendor deliveries, because Aptus
takes total responsibility for application services, delivery and system
support.
17
Once a client signs with Aptus, investment is made in the hardware,
software, and implementation resources needed to deliver that client's services.
Since Aptus owns or provides most of the elements for a client's implementation
and can therefore control the quality of the deliverable, it is anticipated that
Aptus will experience a high level of client satisfaction and retention. Aptus
also expects to benefit from rapidly growing recurring revenue streams, which is
believed will generate substantial positive cash flow in later years.
There are key trends occurring in the marketplace that create a
substantial opportunity for a single-source provider that combines application
services, implementation and operational support, hardware, software, and
Internet-based communications for small and medium size businesses.
A number of potential vertical market opportunities have been
identified that are generating focus in the industry, and have developed a
method for defining and leveraging our competencies to reach those markets
through a targeted "channel" sales approach.
In developing a channel or vertical market opportunity, members of our
subscriber base are identified that are experiencing substantial value using the
service and by learning from them. Management explores its own knowledge
resources and competencies as they relate to this new business model, and find
them to be substantial or build on them. Opportunities are advanced by
partnering with organizations whose mission is to create or support a business
model that matches very closely that of Aptus's model profile. Services are then
crafted that not only meets with the requirements of the target model, but that
capitalizes on the understanding of the technology and its application,
partnerships and alliances, and the Companies own core competencies. The primary
requirement for introduction to any vertical or channel is to increase the value
opportunity for the target subscriber, rather than simply provide a commodity
product or service.
For the past several years, Aptus has been delivering outsourced
technology services to small business customers. In the past year, Aptus has
been focusing heavily on creating products and services to address the changing
needs of the accounting industry.
Accounting and bookkeeping services spend tremendous amounts of time
traveling to client offices and manipulating and transporting electronic and
paper media. Many view this as the "necessary evil" of the service they provide,
particularly when the desire is to have access to the same accounting data using
the same applications. As the accounting practices became more and more the
systems consultant when it came to computerized accounting applications, there
was increased opportunity to become involved and influence other areas of the
business.
Unfortunately, this progression into technology consulting does not
work for everyone. Many accounting and bookkeeping practices continue to find it
difficult to express their value to their client base, drive increases in
revenues by providing more product or service opportunities, and keeping their
costs of doing business down. Competencies in accounting and finance may become
clouded with competencies in technology and implementation, causing many
professionals to hesitate in becoming involved with technology to any
substantial degree for fear of losing credibility. As the primary outside
influencer to most businesses, and working in an increasingly competitive
industry, the accountant cannot afford to make serious business mistakes
involving his clients.
The professional accountant - often acting as the small business CFO -
is generally the one from whom a business owner takes advice. Yet, in the
Internet and e-business economy, the accountant's position may be weakened by
not clearly understanding the importance and appropriate uses for technology.
Aptus has developed the business model, the technology delivery, and
the application environment that addresses the specific needs of this industry.
Through the increased efficiencies experienced with using our services,
professional accountants and bookkeepers find that they are now able to realize
increased revenues by billing for services, not by the billable hour. Further,
we provide our clients with the opportunity and tools necessary to broaden their
scope of service and involvement with their client businesses, and we have the
DOMAIN EXPERTISE and resources to help those businesses transition to or
incorporate e-business technologies. The professional has the opportunity to
develop new competencies in business technologies without having to invest the
entire practice and put the client base
18
at risk. This allows the professional to establish his position more closely to
the top of the business value chain, and creates business opportunities for
bookkeeping and data processing services and others who perform the mechanics of
the accounting and business process. The value opportunity is directly extended
to client businesses and outsourcing agencies, as well. The efficiency and
flexibility of this delivery model solves many technology and business problems
that a more conventional approach only exacerbates
Aptus capitalizes on a number of key strengths in developing a leading
market position as an Applications Infrastructure and Applications and Managed
Services Provider. These strengths include:
E-ACCOUNTING PRODUCT DEVELOPMENT
The Executive Dashboard
The concept of the Executive Dashboard (EDB) is to give the CEO,
president, or owner of a small business their own personal summary of the things
that matter most to them. While it is based on the company's accounting, it is
not an accounting tool, per se. It does not require any accounting knowledge to
understand or use. It is a simple yet very powerful and attractive tool to
monitor one's own business. EDB was conceived to create an additional revenue
stream, in which a majority of the customers of the e-Account it products are
expected to also purchase the EDB within several months of their initial
purchase--if not immediately after learning of its existence.
The EDB is a web-enabled application that bolts on to our e-Account it
Professional products. Before going to market, this product will we also
integrate with other well-known accounting software such as Intuit Quick Books,
Peachtree and MS GREAT PLAINS. By integrating the EDB with these and other
applications this would give Aptus access to 94% of the Accounting software
market.
To ensure both the sale of the e-Account it product and the Executive
Dashboard itself, the plan is to include the Executive Dashboard within the
e-Account it product. In the e-Account it package itself, only the opening
screen (Overview) would be available to the users with their own data. A click
on any of the other tabs, reports, or other utilities, would produce a message
instructing them to call and register the add-on to activate its full
functionality. E-Account it customers will be able to view the different tabs
themselves (see screen shots below) and see the information included, but none
of their own data would actually appear.
Aptus strongly believes that the customers' experience with the opening
screen, and their own data, will compel them to acquire the full power of the
EDB. All the vital information is accessible to the executives as it happens,
anywhere, anytime--instantly at their fingertips. All of these features would be
available on a subscription basis.
The inclusion of the EDB in the e-Account it product (with only the
first screen functional) is THE hook for the sale of e-Account it as well as the
Executive Dashboard. Also, in this manner, no packaging is necessary for the
Executive Dashboard itself, leaving a 100% profit margin.
The Executive Dashboard also produces html files designed specifically
for the CEO's PDA giving him all the information in the palm of his hand.
The following are screen shots of the Executive Dashboard:
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PROFESSIONAL SERVICES - Professional services are provided as a
consulting engagement to those larger medium enterprises and Fortune 1000 level
corporations, government, or education institutions that for internal reasons
cannot utilize externally hosted services but would rather bring the technology
in house. Professional services are provided through direct sales to these
clients through an account management team.
Aptus intends to engage with major global resellers and clients such as
Lehman Brothers, Com Systems and many others, and, is rapidly working to offer
the Aptus service globally.
MARKETING STRATEGY
Aptus's marketing strategy calls for the more traditional direct sales
approach to small to medium enterprises and SoHo clients for the Always-On
services, and reseller recruitment for the EUC services. Through the planned
marketing strategy, Aptus intends to attract a maximum number of users at the
lowest possible cost. And Always-On EUC reseller enjoys the benefits of
providing their users with a unique and "sticky" service, with no capital
expenditure. This marketing approach allows the reseller to focus on their core
business and maintain their brand name and client "control."
The Company believes the strongest differentiators are the proprietary
methodologies employed to ensure application delivery, subscriber management,
and application provisioning and billing.
The Aptus short-term marketing goals are to establish a sales
presentation, marketing approach to achieve sales traction in two target
markets. Then tune the presentation and approach via metrics tracked in the
sales and marketing cycle to facilitate replication of the successful components
in other markets nationally, then internationally.
23
MANAGEMENT TEAM
John P. Gorst, President and Chief Executive officer
M. Carroll Benton, Chief Administrative Officer and Interim Chief
Financial Officer Joanie C. Mann, Vice President
BOARD OF DIRECTORS AND ADVISORY MEMBERS:
John P. Gorst - Co-founder of Aptus
M. Carroll Benton - Co-founder of Aptus
OUR SERVICES
THE ALWAYS-ON SERVICE
Always-On answers the need of consumers in the SoHo (Small Office &
Home Office) and SME (Small & Medium Enterprises) marketplace to find high
cost/benefit, low maintenance, and convenient software applications, and
introduces a new application subscription model. Always-On is an Application
Service Provider (ASP) that allows consumers to subscribe to a variety of
software applications through a number of platforms, and from any access point,
wireless, wired or web.
Always-On reduces or eliminates the need to:
o Purchase software and hardware upgrades
o Purchase software packages that will be used only occasionally o Install and
troubleshoot software o Backup files and important user information o Maintain
user information and access to it o Deal with computer viruses and hardware
failures
Aptus will provide these services directly through telesales to smaller
clients (10 to 50 users) and account representatives for medium size (50-1000
users) clients. Users can reach their applications and data from any remote
access platform, using any Internet browser, ending the need to be at home to
use their "home PC", and enjoying greater availability and access to software
packages and their data and documents.
The Always-On service will expand the application reach of end-users
and provide them with a "virtual" desktop and documentation library. The user
can benefit from using the Always-On web portal for storing and maintaining
documents and files online, enjoying the convenience of easy and secured
accessibility from anywhere.
In essence, Always-On forms a "remote desktop portal" and a "remote
hard drive" for Internet users. With a variety of applications and practically
unlimited storage capacity, Always-On is able to eliminate many of the problems
that many application users face.
Users are no longer required to unwillingly purchase a software package
whose practicality is unknown. The subscription program will allow users to rent
applications on-line. Subscribers will be able to try various applications to
determine the optimal package, and continue to rent the application, as they
need it.
With Internet access, there is no longer a requirement to install or
adjust applications to the user's computer. Always-On's portal allows for a
seamless application execution and utilization, comparable to surfing a web
site.
Always-On eliminates the aggravation of realizing that a software or
hardware package has been made obsolete, incompatible, or virtually useless due
to new versions, program compatibility or hardware upgrade issues. Always-On
administers the upgrading of the software in its inventory. Furthermore, with a
speed scalable server, users
24
do not face the possibility of new software versions exceeding the capability of
their hardware. Even slower modem speeds, such as 28.8K, receive a good response
from the server. Again, like Internet applications, the ability to click and use
programs is compatible with virtually any system.
One of the major advantages of the Always-On's service is that users do
not need to worry about backing up files, virus protection, firewalls,
application licensing or purchasing new storage space, servers or other
hardware. Always-On enables users to merely save files in their portal, where
they will be kept safe and secure.
Lastly, users are completely freed from issues concerning viruses.
Always-On servers automatically screen all of its downloads and uploads of files
and data with the most recent anti-virus software, and uses cutting edge
technologies to eliminate any possibility of the Company's systems being
affected. Users do not need to purchase anti-virus software or screen downloads.
Furthermore, with the user's files and applications stored at Always-On, viruses
have fewer opportunities to do damage.
25
THE ALWAYS ON PORTAL
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26
ENTERPRISE UTILITY COMPUTING (EUC)-
This service is targeted at the resellers of the more complex line of
business applications such as accounting, sales management, contact management,
human resources etc. that require a more involved and complex back office
functionality. By providing their applications in an ASP model, the reseller can
increase sales traction and reduce sales cycles by off-loading the back office
complexities to Aptus. The service is provided to the small to medium enterprise
through resellers, and when appropriate these software packages will be offered
to the existing Always-On users.
The ASP model creates immediate revenue opportunities for software
resellers and reduces the phenomena of software piracy, as the software title is
no longer downloaded or installed on the user's PC.
Aptus intends to develop long-term relationships with resellers and
together market the service to the end-users generating revenues from software
hosting fees, and additional value added offerings such as thin clients, online
training and E-commerce references. Aptus will support and promote the ongoing
software industry trend toward renting software, and plans to become a leading
ASP for the SOHO and small/medium enterprise market.
ADVANTAGES
The major advantage to Aptus ASP Services is that it allows the
reseller to private label the service with a "powered by Aptus" statement to its
prospective clients. The reseller focuses on what they do best - develop, sell,
and support their software. EUC is focused on what it does best - deploy
applications utilizing its technologies.
o The EUC service provides the reseller with the availability to: o Host their
software without large upfront costs o Demonstrate their application across the
internet to prospective clients o Provide training and support remotely
o Utilize Aptus's proprietary technology to bill, audit, manage and support
their clients o Provide HIPAA (Health Insurance Portability and Accountability
Act) Compliance in their hosted solution o Provide FDIC regulation August 2001
Compliance in their hosted solution o Offer their software, if applicable, to
the Always-On user base.
Aptus's strategic relationships also provide for a high level of
technical assistance from our strategic partners ensuring our quality of
service, expedited problem resolution, and new product/service development
assistance. The Aptus EUC data centers have been audited and certified by IBM
and Microsoft.
Resellers are being driven to the ASP marketplace by the continuous
pressures placed on them by competitors, the press, and market demand. The ASP
applications reduce the reseller's time to market and aids them in maintaining
focus on their core business rather than developing their own internal ASP
offering and building their own data centers, which incur a large upfront cost.
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PRIVATE LABEL RESELLER PORTAL (BASIC)
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PROFESSIONAL SERVICES
Professional services are provided as a consulting engagement to those
larger medium enterprises and Fortune 1000 level corporations, government, or
education that for internal reasons cannot utilize externally hosted services
but would rather bring the technology in house. Professional services are
provided through direct sales to these clients through an account management
team.
CORE TECHNOLOGIES
ALWAYS-ON APPLICATION PORTAL
The Always-On application portal is a state of the art Internet portal
that uses leading industry solutions. The web site provides easy and secured
access to available Windows(TM) applications at Always-On, and enables the user
to access a personal desktop portal and the information that it contains. The
Always-On web site is designed for maximum flexibility and ease of use, and
allows users to fully personalize their applications.
Use of the system is as simple as using a browser. By going to the
Always-On Application Portal, users are presented with a simple applications
menu from which to choose. Applications are capable of being fully customized,
meaning that the options allowed by the application to change interface modes,
use macros, etc., are immediately incorporated into the launched application.
The web site window is designed for rapid access to a user's documents and
applications.
The Always-On Application Portal also presents features that add to a
client's utility. Notices of software issues, online training and assistance,
and account information are all provided in a user-friendly menu.
The Always-On Advanced Client, for Windows PC users initially, then
through research and development efforts ported to Macintosh and Linux, the
end-user is provided with an advanced feature set including:
o Automatic file association (Current Version)
o This allows a locally stored document (i.e. on a laptop) to be launched
from the Always-On Portal
o The functionality provides for on-line and off-line functionality to
allow for remote unconnected periods (i.e. laptop onboard an airplane)
o Driver-less Printing (v2.0)
o This feature allows the end-user to connect any printer regardless of
windows 2000 compatibility, this dramatically reduces calls to the
Always-On helpdesk
o Always-On "My Documents" folder (Current Version)
o Provides instant access to client files stored in the Always-On data
center, similar to the local "My Document" folder functionality.
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o Connection Tester (v2.0)
o This feature provides a connectivity test to the data center from the
client ensuring the client's connection to the Internet is clean and
reliable.
o Single Sign-On (Current Version)
o Regardless of where the applications are physically hosted the client
authenticates the user, in order that a user does not have to re-enter
login credentials.
RESELLER MANAGEMENT PLATFORM - EXCALIBUR
EUC's Excalibur Management Platform can help resellers setup and manage their
software application services. Excalibur frees resellers to focus on their core
business and operational tasks...delivering valuable services to their clients.
Excalibur has a unique subscription based provisioning system that integrates
Citrix MetaFrame and a powerful internal billing system which records usage
history and allows for billing by time, frequency, or transactions. With
Excalibur, resellers can provide flexible billing structures as well as a
platform for "sub-providers," (such as strategic partners or sub-resellers) to
add extra profit margins, setup fees, integration fees, etc.
VALUE PROPOSITION
Excalibur saves time and money compared to other methods of recording
application usage, billing and deployment. Also, Excalibur can deploy and manage
applications with no recoding and no duplicate data entry.
Scalability has long been an issue for providers in addition to high costs to
track, capture, bill and interchange data with clients, vendors and partners.
Excalibur addresses these issues by providing a truly scalable provisioning and
service management platform from top to bottom of the ASP Eco-System, it allows
for instant deployment of applications to the resellers clients, and totally
automated billing based on the resellers business rules.
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FUTURE ACCESS METHODS
Any user that has digital data remote access capability is able to
initiate application launching and personal desktop access over the Internet.
All that is required in addition to a remote access technology is hardware
capable of processing the application, such as:
Desktop Computer - Completed and Deployed Laptop Computer - Completed
and Deployed WebTV - Pending Further Market Study PDA1 - Enabled on all
Windows CE and Pocket PC Devices Paging Device - Pending Further Market
Study Television Set Top Box - Pending Further Market Study Sony
PlayStation - Pending Further Market Study Internet TV - Pending
Further Market Study
Cellular Phone - Deployed on certain Nokia and Ericsson phones
Thin Clients / Internet Appliances - Maxspeed, Wyse, Compaq, IBM, HP,
Others
Such an array of hardware options provides extensive benefits for users
that do not need or are uncertain about purchasing a state-of-the-art, large
memory, and high processing power computer. Such consumers can instead rely on a
simpler, less expensive technology, and derive more computing power from Aptus.
Management had decided in early 2002 to shelve this project due to budget
constraints. However, financial resources have recently been budgeted for the
completion of the technology and anticipate Excalibur will be revived in 2004.
PRODUCT STRATEGY & ROADMAP
Aptus's business objective for the fiscal year 2004 is to be among the
first to offer this service in the market, and build a large market share.
SERVICE DELIVERY STRATEGY
APTUS DATA CENTERS
The Always-On Application Portal and Enterprise Utility Computing
services will include a number of Internet and application servers, referred to
as a "server farm". The server farms will become one of Aptus's most valuable
assets, and will be co-located at Internet data centers to be managed by one of
the leaders in the Internet application collocation market. These facilities are
to be located in Washington State and the East Coast with major Internet
backbone junctions to allow for the fastest Internet connection available.
We anticipate the management by leading data center hosting companies
with state of the art Internet backbone will, provide Aptus with Data Center
operation and monitoring, as well as state of the art redundancy support and
maintenance.
Aptus has selected the co-location hosting approach to reduce operating
and maintenance costs, and to get the maximum available communication bandwidth.
The server farm has high scalability, and can easily increase its capacity for a
sudden influx of users. This will ensure our service's optimal response time and
bandwidth. The data center staff will ensure its proper function and redundancy.
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DATA CENTER OPERATIONS
The data centers maintain a 5-layer security profile, preventing and monitoring
for unauthorized access, hackers or malicious attacks. All application services
are provided at an n*2 rather than an n+1 service level unlike other ASP's.
ALWAYS-ON SPECIFIC SECURITY INFORMATION
User authentication and credit card transactions are performed by the
"gatekeeper" user authentication services, which is a proprietary service, and
protocol that communicates between the application server operating systems,
credit card processing company and the web servers, providing an additional
buffer security layer. Also the "gatekeeper" in coordination with the credit
card merchant authenticates credit card transactions in such a manner that
Always-On is NEVER in possession of the clients credit card data, adding to the
clients' level of comfort.
CUSTOMER SERVICE
Customer Service is responsible for analyzing customer service delivery
requirements, provides for determining account support resource needs,
developing service deployment processes, managing service deployment processes,
administering level 1 technical support, surveying customer needs and
satisfaction, and estimating account support costs.
REQUEST NOTIFICATION & RESPONSE
Upon opening a trouble ticket, the Aptus Call Center sends a request
notification indicating the trouble ticket's call number by e-mail to the
Customer or reseller. If requested, a request notification is also sent by
e-mail to the reseller's customer.
STATUS UPDATE
At any time during the customer care process, the customer or reseller
can request a status update by sending an e-mail to the Aptus Call Center with
the following text in the "subject" line:
Call Status (Insert Call # here)
EX. Call Status (680)
REQUEST RESOLUTION
Upon resolution of the trouble ticket, the Aptus Call Center notifies
the customer or reseller by e-mail and/or telephone.
SUPPORT OPTIONS
Customer Support for Always-On and EUC are available to subscribers in a
number of ways: E-MAIL. - 24 / 7 / 365 Monitored email support accounts
with guaranteed 15 minute response time.
TOLL-FREE PHONE. 24 / 7 / 365 Manned call center with basic support and
immediate escalation as needed.
LIVE CHAT. Chat real-time with an Aptus Customer Service Representative
in either Always-On or EUC support centers 24 / 7 / 365. Access chat
anywhere from the Always-On and EUC sites by clicking on the "Support
Chat" button.
SELF SERVICE. Always-On and EUC provide self-service support options to
clients and resellers including administration tools to resellers, and
Internet connectivity test tools.
ON LINE TRAINING. Customer Service Representatives provide online
training for clients 4 times per week utilizing a web based conferencing
tool, EUC technical engineers provide support to resellers utilizing
both web based and Citrix management tools.
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ALWAYS-ON/EUC RESELLER SUPPORT
Each reseller is supported by a Channel Account Manager, as well as Customer
Service and Marketing support personnel. Customer service and marketing
support efforts will be based on negotiated terms in the Channel Partner
Agreement. Channel Account Managers will assist in collaborative sales calls,
marketing efforts and provide support incident escalation as necessary.
CORPORATE TECHNICAL SERVICES
Technical Services provides quality help support service to Customers
to maintain maximum customer satisfaction. Additionally, technical services will
provide technical and Customer support services to Sales and Marketing in
assisting in increasing sales and to achieve maximum customer retention.
Technical Services provides for the continuous evaluation and testing
of the Aptus services operating system, operating system and software
installations, upgrades, service packs, and shrink-wrap application updates.
Content and service delivery is also administered by Technical Services.
Technical Services has the responsibility for maintaining the library of content
(applications) installation scripts, and supports a data center environment that
is scalable and can be replicated, adaptable and to achieve 7 x 24 x 365 hours
of 99.9% service level.
CALL CENTER
Aptus Call Center defines the help desk support for customers,
resellers and end-users, supports level 1 always-on customer help desk, supports
level 2 customer or reseller help desk, provides for 24 X 7 help desk support,
establishes production service level agreement metrics, measures production
service performance, and manages the help desk knowledge based application.
SALES & MARKETING
MARKET OVERVIEW
The ASP industry is clearly in the embryonic stages of its life cycle
despite all the hype and attention. According to IDC, the industry marketing
analysis firm, worldwide spending for outsourcing services was $89 billion in
1997 and should reach $142 billion by 2002, a 10% compounded annual growth rate.
IDC estimates the application outsourcing (AO) market, which comprises both
application maintenance outsourcing and ASPs, will grow to $16.2 billion in 2003
from $7.0 billion in 1998. Forrester Research estimates more aggressive growth
for AO with the market reaching $21 billion by 2001.
The early adopters and targeted markets for the ASP alternative have
been small to medium size enterprises (SMEs). Forrester Research estimates that
there are 300,000 emerging enterprises in the U.S. with revenues between $40
million to $500 million and IT budgets of $5 million or less. Based upon IDC's
projections, less than 5% of the emerging enterprises in the U.S. will need to
utilize an ASP solution to achieve this projected market size.
The ASP industry is highly fragmented as is customary in early stage
industries. The prospects for the ASP market have captured the interest and
commitment of a large number of companies and industries. Some of the industries
that are establishing a presence in the ASP market include "pure" ASPs; Internet
Service Providers (ISPs), telecommunication providers, ISVs, and IT service
providers. By all accounts, the ASP concept will be a formidable alternative to
traditional methods. Consequently, numerous companies and industries have begun
formulating strategies in this emerging market.
The emergence of the Internet as a medium for organizations to conduct
business, leverage partnerships and streamline operations has permanently
changed the future of software marketing. The following trends all contribute to
the current Internet market economy:
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o The failure of many "dot com" companies has left organizations wary of
Internet based services.
o Perceived and actual economic downturns have led organizations to look
at more cost effective technological solutions that leverage current
assets rather than purchasing new equipment software etc.
o Continued industry intolerance for proprietary-based solutions.
o Continued growth of mobile computing and sales force automation
applications and solutions.
o Organizations are shifting to leaner more effective operational
postures.
All of these factors lend credence to the ASP model for small to medium
businesses; the lowered operating cost and utility of a properly delivered ASP
service makes common sense.
"Pay for use" application services, flexible enough to allow for immediate
application enablement for employees, provide the ability to add and detract
employees from the service at will. These services provide up to a 400% return
on investment for these types of firms by reducing or eliminating the need for
additional hardware upgrades, software licensing costs, setup and consulting
fees, virus protection firewalls and other infrastructure devices necessary to
run an a business.
CURRENT MARKET CONDITIONS
A year ago, the ASP concept began permeating throughout the world, as
numerous companies jumped onto the ASP bandwagon and investors rushed to find
gold in the promise of an early-stage, high growth market. Indeed, many market
estimates forecasted, and continue to forecast, that the ASP industry will grow
dramatically into a billion-dollar industry over the next couple of years.
In 1999, ASPs were generating $540 million in revenue, with projections
of over $11 billion by 20042.
However, early evidence has shown that customer adoption is slower than
initially projected, due to:
o the need for certain technologies (e.g. last mile telecommunications
infrastructure, architecture of many software applications) to
mature/improve dramatically;
o tremendous marketing noise and resulting customer confusion and lack of
education; current economic slowdown in software deployments (especially
e-commerce) by customers;
o the lack of any effective indirect distribution channel into
smaller-sized customers;
o many ASP solutions' being based on applications that are a shift in
market share as opposed to a new market and, thus, more difficult sales
to customers; and
o the price-to-performance ratio of an ASP solution having yet make any
material strides, a key factor that eventually helped the PC market
develop in the early 1980's.
However, Aptus still feels that the ASP model is viable and eventually
will emerge as a multi-billion dollar industry, as it solves some very important
customer needs. Should these obstacles, i.e. security and reliability, be
overcome, the research indicates that the ASP market looks set to take off in 18
months with one in five companies looking to evaluate application rental from
ASPs.
While it might have been anticipated that the smaller SME organizations
would be the earliest adopters of ASP services, research demonstrates that
companies with turnover ranging from $100 million to US$200 million show the
earliest propensity to use them. Organizations of this size typically have
systems requirements equivalent to the larger corporations but lack the
immediate spending power to match them. Therefore, renting from ASPs may be a
short cut to deploying high functionality enterprise systems, which they
previously might not have afforded.
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MARKETING STRATEGY
ALWAYS-ON
The Always-On marketing strategy is based on utilizing direct telesales and
face-to-face direct sales to a predetermined target client. Through its
marketing strategy, Aptus intends to maximize the loyalty and use of its service
though the cost of acquiring customers is higher; the company will attract a
loyal base of subscribers from the business community by utilizing a
personalized direct sales approach. The primary target market for Always-On will
be the small business market using Windows based PCs. The Company's marketing
efforts will also take advantage of alliances with Microsoft, Citrix, UUnet,
Cable and Wireless and others.
Basic to the Always-On marketing strategy is that a significant portion of
subscribers will become long-term customers. This is based on the notion that
once subscribers become accustomed to using the Always-On service and store many
documents and files on the system, customers will build loyalty to our service
and also become increasingly reluctant to drop the service or defect to a
competitor.
ENTERPRISE UTILITY COMPUTING (EUC)
The EUC marketing strategy is based on using the resellers of certain
predetermined types of software as a primary distributor of the EUC service.
Service and Marketing partnerships based on formal Channel Partner Agreements,
with resellers of software, such as Microsoft Dynamics, Goldmine, Saleslogix and
others will form the foundation for the distribution strategy for EUC.
Agreements with software resellers will serve to provide the software
applications that will add to the Content offering for our Always-On customer
base.
Through its marketing strategy, the Company intends to minimize the cost of
acquiring customers while attracting a maximum number of subscribers from the
Channel Partner customer base. The primary target market for Aptus will be the
small business market using Windows based PCs. The Company's marketing efforts
will also take advantage of alliances with Microsoft, Citrix, UUnet, Cable and
Wireless and others.
Basic to the EUC marketing strategy is that a significant portion of subscribers
will become long-term customers. This is based on the notion that once
subscribers become accustomed to using the EUC service and store many documents
and files on the system, customers will build loyalty to our service and also
become increasingly reluctant to drop the service or defect to a competitor.
Such a stable and scalable customer base will form the basis of EUC's revenue
stream
Larger clients (1000 users or greater) seeking to utilize the
technologies provided by Aptus but prefer internally deployed rather than hosted
will be referred to the Professional services group which will utilize direct
sales to engage these prospects.
TARGET CUSTOMER GROUPS & TARGET MARKET POTENTIAL
The purchase and use of most personal computer applications is confined
to a common model. Consumers must purchase applications at a computer software
retailer (or purchase them as part of a hardware package) and install the
software on their PC or laptop. Although seemingly simplistic, this model causes
many problems for the common end-user. The result of these problems, described
below, all impact on the bottom line - a poor cost /benefit solution.
Aptus solutions are needed in the market because of the manner in which
user groups across the SoHo and SME PC spectrum must purchase and use software,
both standard shrink wrap software as well as lines of business software such as
complex accounting, human resources or other customized applications. With the
Aptus solutions, users have the opportunity to benefit from a completely new
purchase model. The diagram below illustrates the issues and how the Aptus
services address them.
- --------------------------------------------------------- ----------------------
Issue Solution
- --------------------------------------------------------- ----------------------
Up-front cost of new versions of software Always-On service
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provides all
necessary software
licensing in a
subscription model
- --------------------------------------------------------- ----------------------
Hardware upgrades required to run new versions of Both the Always-On
and EUC services are
client hardware
independent and
require no client
upgrades to execute
new applications
- --------------------------------------------------------- ----------------------
Virus Protection Both the Always-On
and EUC services
provide total virus
protection.
- --------------------------------------------------------- ----------------------
Internet Firewall Protection Both the Always-On and
EUC services utilize
best of breed firewall
solutions to ensure
data security.
- --------------------------------------------------------- ----------------------
File and Application Backup
Both the Always-On and
EUC services perform
and guarantee data and
application
availability and
backups.
- --------------------------------------------------------- ----------------------
Application and File Security Both
the Always-On and EUC
services utilize best
practices security
methodology with a
simplified interface
for the client,
removing complexity.
- --------------------------------------------------------- ----------------------
Line of Business application up-front installation EUC services allow
costs resellers to deploy
their applications
instantly reducing
costs.
- --------------------------------------------------------- ----------------------
Line of Business application new hardware costs Utilizing EUC's
services the neither
client nor reseller
needs any additional
hardware
- --------------------------------------------------------- ----------------------
Line of Business application continued maintenance Utilizing EUC's
costs services, EUC provides
all infrastructure
maintenance as part of
the monthly
subscription cost.
- --------------------------------------------------------- ----------------------
Software Licensing Flexibility Always-On services
provide total
flexibility in
licensing desired
software allowing
clients to subscribe
and unsubscribe at
will, paying only for
what is used.
- --------------------------------------------------------- ----------------------
TARGET MARKET POTENTIAL
Collectively, according to Jupiter Research, the numbers of people with
at-work access to broadband connectivity will more than double from 24 million
to 55 million by 2005; all of which are potential customers.
According to a report by eMarketer, more than 1 million US businesses
will turn to xDSL technologies for broadband Internet access within the next
three years. During the same period, the number of businesses accessing the
Internet will rise from 4.5 million in the year end 2000 to more than 6.7
million by 2003; all potential customers.
There are 1.5 million businesses in the US employing 10 to 50
employees; another 200,000 employ between 51 and 99, of which 64% have Internet
access. Only 20,000 small businesses use ASP services now. Less than 30% of all
small businesses have broadband access. Another 36% plan to upgrade their
connectivity within the next 12 months
These small businesses are projected to spend per year $2,300 on ASP
and connectivity charges by 2004. Total small businesses spending on ASP
services is expected to reach $1 billion by the end of 2004, growing at a rate
of 500% each year.
SALES STRATEGY
ALWAYS-ON
The primary market for the Always-On subscription software services is
the small to medium business market. Our sales efforts will be targeted at the
small to medium business market comprised of businesses with fewer than 1000
employees and enabled with Internet capabilities. To build our subscriber base,
Aptus will implement a multi-tiered marketing approach directed at this market.
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The sales and marketing strategy will be designed to generate
subscribers through the following marketing approaches:
Through a direct to customer (small to medium business) marketing
effort, Always-On will market its service directly to the small business market
through direct mail, telesales and Internet advertising in appropriate
magazines, and Internet sites. An Always-On.com sign-up site to develop our
subscriber base through direct sign up, with a follow-up confirmation from
Customer Service to schedule training and ensure proper use and understanding of
the terms of use of the service. This strategy will entail utilizing a targeted
marketing approach to generate subscribers in a cost efficient manner using
proven marketing tools such as direct mail marketing, magazine and television
advertising, seeding of search engines, Internet marketing and public relations.
Another aspect of our sales strategy is to tap the existing customer
base of broadband service providers that have agreed to work with Aptus as a
Strategic Partner. This will provide a pre-qualified customer base of small to
medium businesses with high speed Internet connectivity. Access to this pool of
businesses will provide high potential prospects for our subscriber sales and
marketing programs. A key benefit of this approach will be to keep the marketing
acquisition costs for subscribers low compared to prospecting for subscribers
through general marketing channels.
This focused sales strategy will ensure broad market coverage and a
high retention rate for small to medium business clients for Always-On.
ENTERPRISE UTILITY COMPUTING
The primary market for the EUC subscription services is the line of
business reseller market. Our sales and marketing efforts will be targeted at
resellers that sell a predetermined type of application to a defined market
comprised of businesses with fewer than 1000 employees. To build our subscriber
base, Aptus will implement a direct and aggressive marketing approach directed
at this market of software resellers.
Key to our sales strategy is to define the types of line of business
software that are a) most likely to rapidly adopt the hosted model and b) serve
the appropriate end-user client market and c) maximize the use of our internal
resources. Through our existing strategic partnerships EUC will market its
services to resellers that currently work with EUC Strategic Partners. EUC will
prepare and execute a marketing campaign to recruit these resellers as members
of EUC's Channel Program. This will provide access to a customer base of small
to medium businesses currently prospected by these resellers. Access to this
pool of businesses will provide high potential prospects for our subscriber
sales. A key benefit of this approach will be to keep the marketing acquisition
costs for subscribers low compared to prospecting for subscribers through
general and direct marketing channels.
The sales and marketing strategy will be designed to generate
subscribers through the following marketing approaches:
Through a direct recruitment effort, EUC will market its educate this
market aware of its services through directed advertising and regular e-seminar
events as well as advertising in appropriate magazines, and Internet sites. A
EUC channel partner sign-up site to develop our reseller base through direct
sign up. With a follow-up confirmation from Channel manager to qualify the
reseller, schedule training and product launch. This will ensure proper
understanding of the terms of use of the service and processes. This strategy
will entail utilizing a targeted marketing approach to generate resellers in a
cost efficient manner using proven marketing tools such as seminars, direct mail
marketing, magazine advertising, seeding of search engines, Internet marketing
and public relations.
This focused marketing strategy will ensure proper laser focused
coverage and a high retention rate for resellers that can produce subscribers to
EUC's services.
BUSINESS MODEL
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ONLINE APPLICATION SERVICES - The Always-On Portal will use this co-branded
service to improve website "stickiness" and encourage users to spend more time
on their website. Software product will be used as a commodity to improve
website offerings and attract new and repeating users. Always-On would earn
service recognition, attract users and partners and share revenues with portal &
ISP partners.
Aptus will offer the service directly from its application portal and
through portals and ISP partners. Internet users will gain access to leading
Windows applications. Portals and ISPs would use the service to improve their
website "stickiness", attract users, and generate additional revenues.
Aptus's application subscription service will generate revenues from
monthly subscription packages ranging from $24.95 and up to $79.95, and related
set-up fees and, customization and integration fees. Additionally, for those
larger market broadband providers, AOS will offer software licensing, and
additional customization.
Always-On generates revenues from the following sources:
Subscription Fee (monthly)
The subscription fee is based on the content provided in Bundles that
are merchandised by Always-On directly to small and medium businesses. Always-On
offers multiple types and levels of bundles to the small to medium business
market. Each bundle is targeted to a specific corporate profile. Additionally,
the end-user will have the opportunity to subscribe to "a la carte" applications
in lieu of or addition to. Examples of the current bundle(s) are attached as
Appendix III to this document.
Service offerings:
Always-On provides lower priced bundles containing limited service
offerings;
Always-On provides intermediate priced-bundles giving access to key
applications and lower profile applications Always-On provides higher
priced bundles lending access to complete application sets
Based on the Company's projections, an average Aptus user will generate
approximately $480 in annual revenues.
Revenue Sharing:
Aptus will enter into Channel Partner Agreements, most having a
duration of at least one year. Within the Channel Partner Agreement, Aptus and
the partner will negotiate a level of revenue sharing, based on the sum of gross
receipts generated from the subscription services. The percentage amount will
vary from a minimum of 5% to 15% of gross receipts, and will be volume driven.
However, the volumes that will drive the percentages may vary from channel
partner to channel partner. Revenue sharing will be calculated on subscription
fees only, and exclusive of all taxes.
Future revenue generating channels:
Aptus intends to offer software licensing of its intellectual property
to large telcos, DSL, ISP, and other Broadband providers (i.e. AT&T, Yahoo,
TimeWarner Roadrunner).
Always-On has determined through its internal research that the larger
distribution channels will want to provide their own ASP services, thus looking
to Aptus to provide the operating system in order to deliver to their end-users.
The structuring of this type of offering will be based on the number of
prospective users, the amount of development required to accommodate user
interface changes, and service/technology changes, and other incremental
37
work. Pricing will evolve over time, but will initially be offered at a minimum
of $100,000 for up to 1,000 users, plus maintenance and special work (billed at
time and materials).
SALES & MARKETING TEAM
The sales team will be comprised of three teams: (1) Direct Sales which
oversees the telemarketing and direct sales efforts to small accounts (< 100
users) mainly selling the Always-On service; (2) Large Accounts which handles
all accounts >100 users, selling a mix of Always-On and EUC services as
appropriate; and, (3) Business Development, focusing on strategic relationships
and channel partners. Aptus's business development team will be responsible for
creating agreements with software vendors and other business partners, as well
as for distribution of the OEM Client.
e-Account-it Collaborative Commerce Platform
THE MARKET
The software products described in this document are designed
specifically for the 20 million small and mid-size businesses in the United
States. Additionally, they are designed to be delivered and deployed by
consultants, value-added resellers and CPAs, creating large revenue streams for
these resellers through the sales of both products and services.
THE PROBLEMS
The small-office/home office business needs good accounting software to
ensure the proper tracking and success of their business. Typically this small
company will buy off-the-shelf software to meet their needs. E-Account-It retail
product, at $99 MSRP, is a highly competitive product that brings much more
value to its users than any of its competitors. But once a small company has
successfully implemented such a product, it is expected that they will grow in
size and needs. Most small companies outgrow their software as soon as they
double in size. The competing retail products do not offer an upgrade path for
these users, and so, these companies must start over with a new computing
system.
The product line ensures that a company's investment in their computing
system is never lost. They can easily grow from 1 user, to 5 users, to 10--all
the way up to 200 users without retraining or re-entering of any data. They can
move from E-Account-It to E-Account-It Professional to Custom Suite. This is a
very attractive aspect to the businessman with growth in mind.
The consultant, VAR, or CPA who is servicing these small businesses can
easily retain their customers for their lifetime. Beyond the sales of the
products themselves, these resellers realize tremendous revenues from services
and custom programming.
THE SOLUTIONS
The products address and solve the problems of the small business and
the consultants, VARs, and CPAs delivering and servicing the software. The
products solve the end-users problems by their rich feature sets, while solving
the problems of the reseller with their portability (Windows, Mac, Linux),
scalability (1-200 users), and modifiability. Resellers can provide a complete
spectrum of services to the software by use of the different components of the
Collaborative Commerce Platform, which allow them to meet most needs of their
customers remotely through the Internet.
The Products
Both the Custom Suite and E-Account-It Professional are business
management/accounting software products designed especially to fit the needs and
solve the problems of the small business. Both products are derivatives of the
Collaborative Commerce Platform.
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THE COLLABORATIVE COMMERCE PLATFORM
E-Account-It Professional is a value package of Collaborative Commerce products
that were built on the Collaborative Commerce Platform, while the Custom Suite
is a collection of collaborative commerce modules built on the same platform.
The `Platform' is the run time engine and variable-length relational database on
which the Collaborative Commerce modules run. These modules were designed
specifically for use by small and mid-sized businesses of all types. As a
business grows, they can move up from E-Account-It Professional to Custom Suite
in which the Collaborative Commerce modules may be assembled in any way that
suits your business needs. These modules include General Ledger, Accounts
Receivable, Accounts Payable, Payroll, Billing, Bank Reconciliation, Sales and
Purchase Orders, Inventory Control, Job Cost, Bill of Materials, ODBC, SSL
Security (not yet released), CBT (character-based terminal support), the Total
Business Management interface, and others.
In today's Internet-centric world, business software must not only be
user-friendly and comprehensive, it must also be able to work with the myriad of
other technologies available to the same small and mid-sized businesses. These
other technologies may be software, such as office automation, or hardware, like
bar code readers, handheld computers, wireless devices of all sorts, and so on.
Equally important is that the business software be able to communicate easily
with that of all business partners (customers and vendors) to ensure the best
customer relationships and supply-chain effectiveness. This collaboration with
business partners is made possible today, and continues to grow, through the use
of the Internet and the variety of devices that attach to it (e.g., cellular
phones, personal digital assistants, notebook computers, etc.). Software
inherently provides this collaborative ability through its various developer and
ISV programs, and the Collaborative Commerce Platform, which also includes the
Development System and API.
THE DEVELOPMENT SYSTEM
A very important component of the Platform is the Development System. This
development system is a high-level 4GL application-programming environment
designed to enable application programmers to rapidly create proto-types and
then continue on to a finished business application software product. In this
manner, the consultant or VAR can deliver quality custom software to end-users
within a turnaround time that doesn't obsolete the original specifications. The
development system is tightly integrated with the variable-length relational
database in order to take full advantage of its unique features that allow the
servicing programmer to make changes to the database without recompiling or
restructuring the database.
The Development System may also be used to quickly and easily tailor
different aspects of the E-Account-It, E-Account-It Professional, and Custom
Suite products to the users' specific needs. This type of work may even be
performed remotely and directly on the users' computers, as they continue to use
the system without disruption. The Development System and API (application
programming interface) can also be used to create new application modules to
complement the existing ones in the current products and create new revenue
streams.
THE CUSTOM SUITE
The Custom Suite is a collection of collaborative commerce modules from
which you select to form a `Total Business Management' computing environment for
your own small to mid-sized business. These modules were designed specifically
for use by small and mid-sized businesses of all types, and may be assembled in
any way that suits your business needs. The modules include General Ledger,
Accounts Receivable, Accounts Payable, Payroll Processing, Billing, Bank
Reconciliation, Sales Order Processing, Purchase Order Processing, Inventory
Control, Job Cost Tracking, Bill of Materials, ODBC, SSL Security, CBT
(character-based terminal support), the Total Business Management Interface, and
others. The business accounting modules are general ledger based, true double
entry, fully audited, conforms to the standards of GAAP (Generally Accepted
Accounting Principles), and are modifiable, scalable, and portable. The Custom
Suite may be deployed on Unix, Windows(R), Mac OS X(R), and Linux systems in
standalone, peer-to-peer, and client/server configurations. A Developer's Kit is
available to tailor the modules to specific needs. Customization is also
provided by 's Professional Services Group and worldwide network of developers
and Value-Added Resellers (VARs). The Custom Suite scales to hundreds of users.
Each application module is $995 MSRP plus $175 per user.
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The Custom Suite provides Fortune-sized management power and
productivity to small and midsize businesses. These 11 feature-rich applications
built on the Collaborative Commerce Platform are available as economical
standalone modules that can be purchased as needed. For companies or
corporations that need customized solutions and personalized service, these
Collaborative Commerce modules can be tailored for your business by an expert
Value Added Reseller or 's Professional Services Group.
There is never a need to purge data. All of your data, including
archival data, remains instantly accessible all of the time--with no system
slowdown--and you can drill all the way down to any original document from any
inquiry screen at any time. The Collaborative Commerce modules are modifiable,
scalable, portable, and support both multi-user and multi-company environments.
Furthermore, they provide true integration for businesses that use multiple
operating systems.
The same powerful applications that run in a Windows, Linux, or Mac
platform can be easily upgraded to run on IBM AIX, SCO Unix, Sun Solaris, and
everything else that matters--without re-entering data or retraining your staff.
All of the Collaborative Commerce applications run simultaneously on
PCs and Apple computers in a full GUI format, and on ordinary 'green screen'
computer terminals, in a character format. This allows one server, and one set
of applications, to service both utility operators (data entry personnel) and
power users. Collaborative Commerce applications also have the ability to
communicate with popular desktop applications such as word processors,
spreadsheets, etc.
E-ACCOUNT-IT PROFESSIONAL
E-Account-It Professional is a collaborative accounting system for
small to mid-sized businesses that is designed to simplify your approach to
accounting with jargon-free menus that make it easy to manage your business. A
single application interface for either your service-based or product-based
company helps you grow your business by gaining control over your sales,
customers, vendors, purchases, bank accounts, inventory, billing, payroll, and
financial statements, with complete sales order and purchase order subsystems
and a separate Accountant's Page that includes the functions of the underlying
general ledger system. E-Account-It Professional is a true double-entry, fully
audited accounting system that conforms to the standards of GAAP and is
modifiable, scalable, and portable. The ten-user license is installable on Apple
Mac OS X, Linux, and Microsoft Windows(R)--right out of the box. It may be used
by a single user on a standalone machine, or by multiple users in a peer-to-peer
Windows environment or in a client/server network configuration that includes a
Mac or Linux server with any combination of Mac, Linux, and Windows clients.
E-Account-It Professional is modifiable by 's Professional Services Group or by
its worldwide network of developers and Value-Added Resellers (VARs).
THE SMB MARKET
The target market for the software products is all small-to-midsize
for-profit businesses. There are approximately 20 million such companies in this
country alone. E-Account-It Professional and Custom Suite are products that are
sold and implemented by consultants, VARs, and CPAs. The advantage to these
resellers is not simply the profit on the sale of the product, but more
importantly, the ongoing revenue streams they create with their services. By
properly servicing their customers, the resellers retain them for life. Services
they offer include delivery and setup, training, technical support, software
tailoring, and custom programming. These resellers often also develop their own
applications on the Collaborative Commerce Platform and open whole new vertical
markets for themselves while easily integrating the new packages with the
accounting software.
Resellers keep their overhead down by providing most services from
their own office rather than having to appear on-site. The client/server model
is IP based allowing resellers (and users) to access the customers' computers
via the Internet.
The smaller businesses will start with the E-Account-It retail package.
As they grow, they are a primed market for resellers to sell more products and
services into.
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POTENTIAL COMPETITION
PORTALS AND INTERNET SERVICE PROVIDERS
Internet companies that are already involved in providing an Internet
channel - i.e., giving a user the means to access another site - have the
potential ability to use this capability to expand service offerings by
channeling large numbers of users to on-line applications at their proprietary
web site.
Still, these companies are not focused on providing a "terminal
product". Instead, they are a pipeline to terminal products. As such, the
expertise of these firms lies in providing a means to reach a third-party, which
does not suit the type of operation that an Application Service Provider
requires.
BUSINESS APPLICATION SERVICE PROVIDERS
Application services are currently exclusively concentrated on
enterprise software. Firms such as Corio and HireSystems have made important
inroads to a burgeoning market that currently serves small to midsize corporate
clients. It is quite possible that these firms could expand to serve the home
market.
This move has so far not occurred due to the simpler marketing
strategies of selling ASP services to businesses. With distinct needs and
extensive capital, businesses are often the most eager to try new technologies.
Application services have yet to become a mainstream distribution method,
however, and a first mover advantage still exists in the consumer market.
SOFTWARE PROVIDERS
With the distribution capabilities of the Internet, software providers
that wish to reach a larger customer base or increase margins by eliminating
middlemen now have the option to license technologies via the Internet directly
to consumers. However, a single software provider often lacks the ability to
attract attention on the Internet. Instead, they are confined to using the same
publicity tactics as other companies. Without a more efficient method of
exposure, independent Internet marketing does not necessarily make full use of
the potential of E-Commerce.
COMPETITIVE ADVANTAGES
Aptus's products should perform in virtually every situation. The
ability to access all software applications available at Aptus with full
capability on Windows systems, Internet-enabled devices, and network computers,
is unique to Aptus.
Among Aptus's technical advantages are its server technology and
adjustments, and the unique Aptus OEM client. Other advantages include being
among the first to launch this service, a state of the art web site, and
marketing agreements with software vendors.
Aptus is expert at vital factors in the production process, which
include knowledge of proprietary tools and methods for building and programming
an Internet based application server farm, and knowledge and understanding of
creating a comprehensive and scaleable web site.
Aptus has achieved a technical barrier by completing development of the
Application Portal and it's core functions. The Application Portal consists of
many hours and knowledge in Internet websites development and will grant the
company an advantage over potential competitors seeking to provide a similar
service.
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CASH REQUIREMENTs
In order to finance acquisition of companies, and fund projects, it is
our intent to raise net proceeds of $5,000,000 from this public offering. This
will allow us to reduce the time frame to become fully operational from several
years to less than one year. The following summarizes anticipated cash
requirements to achieve these goals. Should we not raise the net proceeds from
this offering we would have to acquire debt to fund the aforementioned cash
requirements.
NEED FOR ADDITIONAL PERSONNEL
It is anticipated that the number of employees may triple during the
next twelve months, even with our outsourcing many tasks.
LIQUIDITY AND CAPITAL RESOURCES
We remain in the development stage and, since inception, have
experienced no significant change in liquidity or capital resources or
stockholder's equity.
We will carry out our plan of business as discussed above. We cannot
predict to what extent our liquidity and capital resources will be diminished
prior to the consummation of a business combination or whether our capital will
be further depleted by the operating losses (if any) of the business entity
which we may eventually acquire.
RESULTS OF OPERATIONS
We have engaged in no significant operations other than organizational
activities, acquisition of capital and preparation for registration of our
securities under the Securities Exchange Act of 1934, as amended. No revenues
were received by us since our formation.
For the current fiscal year, we anticipate incurring a loss as a result
of organizational expenses, expenses associated with registration under the
Securities Exchange Act of 1934. Although no assurances can be made, we believe
we can satisfy our cash requirements with 10% of the net proceeds derived
hereby. Prior to the conclusion of this offering we currently anticipate our
expenses to be limited to accounting fees, legal fees, telephone, mailing,
filing fees, escrow agent fees and transfer agent fees.
See "Risk Factors."
NEED FOR ADDITIONAL FINANCING
We believe that the minimum offering for capital will be sufficient to
meet our cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934, as amended, for a
period of approximately one year.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to us to allow it to cover our expenses.
Irrespective of whether our cash assets prove to be inadequate to meet
our operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash.
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FORWARD-LOOKING INFORMATION
Certain statements in this document are forward-looking in nature and
relate to trends and events that may affect our future financial position and
operating results. The words "expect" "anticipate" and similar words or
expressions are to identify forward-looking statements. These statements speak
only as of the date of the document; those statements are based on current
expectations, are inherently uncertain and should be viewed with caution. Actual
results may differ materially from the forward-looking statements as a result of
many factors, including changes in economic conditions and other unanticipated
events and conditions. It is not possible to foresee or to identify all such
factors. We make no commitment to update any forward-looking statement or to
disclose any facts, events or circumstances after the date of this document that
may affect the accuracy of any forward-looking statement.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of November 30, 2003, by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Act of 1934 (the "Exchange Act") who is known by us to own
beneficially 5% or more of the common stock, (ii) each director of the Company,
and (iii) all directors and executive officers as a group. Unless otherwise
indicated, all persons listed below have sole voting power and investment power
with respect to such shares. The total number of shares authorized is
250,000,000 shares, each of which is $.001 per share par value. 12,000,000
shares have been issued and are outstanding as follows:
Shares Beneficially Shares Beneficially
Owned Prior to Offering Owned After Offering
Number Percent Number Percent
John P. Gorst (1) 3,000,000 25.0% 3,000,000 13.64%
M. Carroll Benton (1) 3,000,000 25.0% 3,000,000 13.64%
Clifford Mastricola 1,500,000 12.5% 1,500,000 6.82%
Clayton Chase 1,500,000 12.5% 1,500,000 6.82%
Mark Levin 3,000,000 25.0% 3,000,000 13.64%
----------------------- ---------------------- ----------------------- -----------------------
Total Shares 12,000,000 100.0% 12,000,000 54.56%
(1) Directors and officers as a group - 6,000,000 shares
MANAGEMENT
There are currently two (2) occupied seats on the Board of Directors.
The following table sets forth information with respect to the directors and
executive officers.
DATE SERVICE
NAME AGE OFFICE COMMENCED
John P. Gorst* 36 Chairman, President November, 2003
& Chief Executive Officer
M. Carroll Benton* 59 Secretary Treasurer November, 2003
Chief Administrative
Officer, Interim Chief
Financial Officer, Director
Joanie C. Mann 42 Vice President November, 2003
* Indicates Board Member
All directors will hold office until the next annual stockholder's
meeting and until their successors have been elected or qualified or until
death, resignation, retirement, removal, or disqualification. Vacancies on the
board will be filled by a majority vote of the remaining directors. Our officers
serve at the discretion of the board of directors. We intend to increase the
board from its present two members to a minimum of six members by adding outside
directors at our next shareholders meeting.
Our management team brings more that thirty years of experience in the
fields critical to the success of the corporation. They involve but are not
limited to management, finance, compliance, technology, sales and marketing and
mergers and acquisitions.
The officers and directors are set forth below.
JOHN P. GORST - Co-Founder, Chairman, President and Chief Executive
Officer.
Mr. John P. Gorst is a co-founder of Aptus and has directed all
development and business efforts for Aptus. Mr. Gorst has over 14 years
experience in founding entrepreneurial technology ventures, specifically in the
development of software and data services for business. Prior experience
includes serving as Chief Executive Officer of Insynq, Inc., Vice President & GM
of Interactive Information Systems Corp. both based in the Pacific Northwest
Region, and a training/IS consulting business in conjunction with Nynex Business
Centers of New York. Mr. Gorst's primary responsibility shall be as majority
stockholder and chairman of the board and CEO. Mr. Gorst will be directing
company strategy, and positioning of Aptus in the business marketplace by
forging strategic business alliances and M&A. Mr. Gorst will also serve as
company and technology evangelist at tradeshows, press conferences and industry
analyst meetings in order to increase awareness for the Aptus brand. Mr. Gorst
graduated top of his class as an Electronic Design Engineer from one of the top
trade schools in Arizona, and is currently pursing his MBA at Villanova
University. Mr. Gorst was also awarded a medal of honor for business leadership
in 2001 from the National Republican Congress.
M. CARROLL BENTON, - Co-Founder, Secretary/Treasurer, Chief
Administrative Officer, Interim Chief Financial Officer and Board Member
Ms. M. Carroll Benton is a co-founder of Aptus and has directed and
managed the fiscal responsibilities of the enterprise. Ms. Benton's early career
spanned both the public and private sectors working largely with the banking
systems and higher education institutions where she assisted in the development
and deployment strategies necessary for computerization of these and other
entities. Ms Benton has successfully managed a 13 state insurance brokerage firm
and has been a consultant to the small to medium business markets via accounting
system design, support and business practice analysis. She also taught
undergraduate accounting courses at several Puget Sound colleges and
universities. With an in-depth understanding of the Company's finances,
accounting infrastructure and compliance issues, Ms. Benton directs the
Company's current administrative and financial practices. Prior public sector
experience includes serving as Chief Administrative Officer for Insynq, Inc.,
based in the Pacific Northwest Region. Formerly with a local CPA firm, Ms.
Benton brings over 37 years of financial expertise to the business.
JOANIE C. MANN - Vice President
Ms. Joanie Mann brings to Aptus's team over 25 years of experience in
multi-user system design and implementation, voice and data networking, and
advanced network integrations. Ms Mann also has extensive experience in business
process automation and a strong background in business accounting principles.
Previous positions held include vice President of Insynq, Inc., a Pacific
Northwest based company, founder of Com-Pacific Resources, Inc., a network
integration firm which was successfully sold to Communications World
International;
43
manager of the Seattle-based computer telephony and data integration division of
Commworld; and IS Management Consultant for Interactive Information Systems
Corp., a Pacific Northwest regional network integration company.
ADVISORY BOARD
Aptus is currently recruiting and is continuing to assemble a board of
industry experts. We will establish an informal executive advisory board,
appointed by John P. Gorst. The role of the executive advisory board is to be
available to assist our management with general business and strategic planning
advice upon request from time-to time. Accordingly, the executive advisory board
members intend to devote themselves part-time to our affairs.
STAFFING PLAN
Aptus's staffing plan is built around meeting demand. As demand grows
for the products and services, staff will be added to meet that demand, and not
before. Aptus intends to employ approximately 15 people located in Tacoma,
Washington.
EXECUTIVE COMPENSATION
No officer or director has received any compensation. Until the Company
acquires additional capital, it is not intended that any officer or director
will receive compensation from the Company other than reimbursement for
out-of-pocket expenses incurred on behalf of the Company. See "Certain
Relationships and Related Transactions." The Company has no stock option,
retirement, pension, or profit-sharing programs for the benefit of directors,
officers or other employees, but the Board of Directors may recommend adoption
of one or more such programs in the future.
The Company has employed the law firm of Miles Garnett, Esq. for
providing legal services in connection with registration of the Company's
shares. It may also employ the same law firm to provide legal services in
connection with the acquisition of a business. Mr. Garnett if employed, would be
paid his normal hourly rate for legal services provided.
STOCK OPTIONS
We have not adopted any formal stock option plans to reward and provide
incentives to our officers, directors, employees, consultants and other eligible
participants.
OTHER TRANSACTIONS
All transactions between our company and its officers, directors and 5%
or more shareholders will be on terms no less favorable to the Company than that
which could be obtained from independent third parties.
DIRECTORS' COMPENSATION
Our directors receive no compensation for their services as directors.
Members of the executive advisory board will receive payment for their services,
travel and other expenses incurred in connection with attendance at each
meeting.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
At present we have not entered into individual indemnity agreements
with our officers or directors. However, our by-laws contain a provision which
requires us to indemnify any director or officer or former director or officer
against actual expenses incurred in defending any legal action where they are a
party by reason of being or having been a director or officer. However we are
not require to indemnify any such person who is found to be liable for
negligence or misconduct in their performance of their duty.
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
44
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 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 controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and we will be governed by the final
adjudication of such case.
DIRECTORS AND OFFICERS INSURANCE
We are exploring the possibility of obtaining directors and officers
("D & O") liability insurance. We have obtained several premium quotations but
have not entered into any contract with any insurance company to provide said
coverages as of the date of this offering. There is no assurance that we will be
able to obtain such insurance.
KEYMAN LIFE INSURANCE
Life insurance on key personnel is expected to be purchased after the
effective date of this offering in amounts up to $1 million, 50% payable to the
Company and 50% payable to family beneficiaries. We are planning to purchase
such insurance towards the cross purchase of shares from the estate of an
officer or director and to provide us with the capital to replace the executive
loss (executive search for successor, etc.). The costs of such insurance is not
expected to be material.
CERTAIN TRANSACTIONS
Since inception, we have, pursuant to an oral agreement with the
financial officer, have maintained at no cost to us its executive offices.
We shall not make any loans to any officers or directors following this
offering. Further, we shall not borrow funds for the purpose of making payments
to our officers, directors, promoters, management or their affiliates or
associates.
None of our officers, directors, or affiliates has or proposes to have
any direct or indirect material interest in any asset proposed to be acquired by
us through security holdings, contracts, options, or otherwise, although this
situation could arise.
It is not currently anticipated that any salary, consulting fee, or
finder's fee shall be paid to any of our directors or executive officers, or to
any other affiliate of the Company except as described under "Executive
Compensation" above.
DESCRIPTION OF SECURITIES
All material provisions of our capital stock are summarized in this
prospectus. However the following description is not complete and is subject to
applicable Delaware law and to the provisions of our articles of incorporation
and bylaws. We have filed copies of these documents as exhibits to the
registration statement related to this prospectus.
COMMON STOCK
45
We are authorized to issue 250,000,000 shares, at a par value of $.001
per share. As of the date of this prospectus, there are 12,000,000 shares
outstanding. After giving effect to the offering, the issued and outstanding
capital stock of the Company will consist of 22,000,000 shares.
You have the voting rights for your shares. You and all other holders
of common stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. You have no cumulative voting rights
with respect to the election of directors, with the result that the holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors then up for election.
You have dividend rights for your shares. You and all other holders of
common stock are entitled to receive dividends and other distributions when, as
and if declared by the Board of Directors out of funds legally available, based
upon the percentage of our common stock you own. We will not pay dividends. You
should not expect to receive any dividends on shares in the near future. This
investment may be inappropriate for you if you need dividend income from an
investment in shares.
You have rights if we are liquidated. Upon our liquidation, dissolution
or winding up of affairs, you and all other holders of our common stock will be
entitled to share in the distribution of all assets remaining after payment of
all debts, liabilities and expenses, and after provision has been made for each
class of stock, if any, having preference over our common stock. Holders of
common stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the common stock.
All of the outstanding common stock and the common stock offered hereby, when
issued in exchange for the consideration paid as set forth in this Prospectus,
will be, fully paid and nonassessable. Our directors, at their discretion, may
borrow funds without your prior approval, which potentially further reduces the
liquidation value of your shares.
You have no right to acquire shares of stock based upon the percentage
of our common stock you own when we sell more shares of our stock to other
people. This is because we do not provide our stockholders with preemptive
rights to subscribe for or to purchase any additional shares offered by us in
the future. The absence of these rights could, upon our sale of additional
shares, result in a dilution of our percentage ownership that you hold.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 22,000,000 shares issued
and outstanding assuming all the shares offered herein are sold. The common
stock sold in this offering will be freely transferable without restrictions or
further registration under the Securities Act, except for any of our shares
purchased by an "affiliate" (as that term is defined under the Act) who will be
subject to the resale limitations of Rule 144 promulgated under the Act.
There will be approximately 12000,000 shares outstanding that are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act.
The common stock owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and in
the future may be sold under Rule 144, which provides, in essence, that a person
holding restricted securities for a period of one (1) year may sell every three
(3) months, in brokerage transactions and/or market maker transactions, an
amount equal to the greater of (a) one percent (1%) of our issued and
outstanding common stock or (b) the average weekly trading volume of the common
stock during the four (4) calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of common stock without any
quantity limitation by a person who is not an affiliate of the Company and who
has satisfied a two (2) year holding period. Additionally, common stock
underlying employee stock options granted, to the extent vested and exercised,
may be resold beginning on the ninety-first day after the Effective Date of a
Prospectus, or Offering Memorandum pursuant to Rule 701 promulgated under the
Securities Act.
As of the date hereof and upon completion of the offering, none of our
common stock (other than those which are qualified by the SEC in connection with
this offering) are available for sale under Rule 144. Future sales under Rule
144 may have an adverse effect on the market price of the Common stock. Our
officers, directors and certain of
46
our security holders have agreed not to sell, transfer or otherwise dispose of
their common stock or any securities convertible into common stock for a period
of 12 months from the date hereof.
Under Rule 701 of the Securities Act, persons who purchase shares upon
exercise of options granted prior to the date of this Prospectus are entitled to
sell such common stock after the 90th day following the date of this Prospectus
in reliance on Rule 144, without having to comply with the holding period
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after this 90-day
period, but without a holding period.
There has been no public market for our common stock. With a relatively
minimal public float and without a professional underwriter, there is little or
no likelihood that an active and liquid public trading market, as that term is
commonly understood, will develop, or if developed that it will be sustained,
and accordingly, an investment in our common stock should be considered highly
illiquid. Although we believe a public market will be established in the future,
there can be no assurance that a public market for the common stock will
develop. If a public market for our common stock does develop at a future time,
sales by shareholders of substantial amounts of our common stock in the public
market could adversely affect the prevailing market price and could impair our
future ability to raise capital through the sale of our equity securities.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 relating to the common stock
offered hereby. This prospectus, which is part of the Registration Statement,
does not contain all of the information included in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
us, the common stock offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules thereto. Statements contained in
this Prospectus concerning the provisions or contents of any contract, agreement
or any other document referred to herein are not necessarily complete. With
respect to each such contract, agreement or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved.
The Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at prescribed rates at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
DC 20549. The Commission also maintains a web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission, including the Company. The address of such
site is http://www.sec.gov.
We intend to furnish to our shareowners annual reports containing
audited consolidated financial statements certified by independent public
accountants for each fiscal year and quarterly reports containing unaudited
consolidated financial statements for the first three quarters of each fiscal
year.
We will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of any of the
information that was incorporated by reference in the Prospectus (not including
Exhibits to the information that is incorporated by reference unless the
Exhibits are themselves specifically incorporated by reference). Any such
request shall be directed to the Financial Officer of Aptus Corp., M. Carroll
Benton, 1127 Broadway Plaza, Suite 203, Tacoma, WA 98402, Tel.# (253) 691-1531.
Within five days of our receipt of a subscription agreement accompanied
by a check for the purchase price, we will send by first class mail a written
confirmation to notify the subscriber of the extent, if any, to which such
subscription has been accepted. We reserve the right to reject orders for the
purchase of shares in whole or in part. Upon acceptance of each subscriber, we
will promptly provide our stock transfer agent the information to issue shares.
You can also call or write us at any time with any questions you may
have. We would be pleased to speak with you about any aspect of this offering.
47
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our
views about future events and financial performance. Our actual results,
performance or achievements could differ materially from those expressed or
implied in these forward-looking statements for various reasons, including those
in the "risk factors" section beginning on page 5. Therefore, you should not
place undue reliance upon these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance, or achievements.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock and
anticipate that all future earnings will be retained for development of our
business. The payment of any future dividends will be at the discretion of our
Board of Directors and will depend upon, among other things, future earnings,
capital requirements, our financial conditions and general business conditions.
STOCK TRANSFER AGENT
Our transfer agent and registrar of the Common Stock is Colonial Stock
Transfer, 66 Exchange Place, Salt Lake City, Utah, 84111, Tel. (801) 355-5740.
ESCROW AGENT
All securities issued in connection with this offering and the gross
proceeds from the offering shall be deposited promptly into an escrow account.
Wire transfer instructions are shown in the subscription documents.
EXPERTS
Our financial statements of Aptus Corp. as of and for the period from
December 31, 2002 to November 30, 2003 have been audited by De Joya & Company,
independent auditors, as set forth in their report included herein and
incorporated herein by reference. Such financial statements have been included
in reliance upon such report given upon their authority as experts in accounting
and auditing.
48
LEGAL MATTERS
There is no past, pending or, to our knowledge, threatened litigation
or administrative action which has or is expected by our management to have a
material effect upon our business, financial condition or operations, including
any litigation or action involving our officers, directors, or other key
personnel.
The Law Offices of Miles Garnett, Esq., 66 Wayne Avenue, Atlantic
Beach, N.Y.11509, Tel. #(516) 371-4598, will pass upon certain legal matters
relating to the Offering.
49
INDEX TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------ ------
Report of Independent Certified Public Accountants F-2
- ------------------------------------------------------------------------ ------
Balance Sheets F-3
- ------------------------------------------------------------------------ ------
Statements of Operations F-4
- ------------------------------------------------------------------------ ------
Statements of Shareholders' Equity F-5
- ------------------------------------------------------------------------ ------
Statements of Cash Flows F-6
- ------------------------------------------------------------------------ ------
Notes to Financial Statements F-7
- ------------------------------------------------------------------------ ------
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Aptus, Corp.
(A Development Stage Company)
Tacoma, Washington
We have audited the accompanying balance sheets of Aptus, Corp. (A Development
Stage Company) as of November 30, 2003 and December 31, 2002, and the related
statements of operations, stockholders' deficit, and cash flows for the eleven
months ended November 30, 2003, the period from April 4, 2002 (Date of
Inception) through December 31, 2002 and the period from April 4, 2002 (Date of
Inception) through November 30, 2003. 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 auditing standards generally accepted
in the United States. 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 Aptus, Corp. (A Development
Stage Company) as of November 30, 2003 and December 31, 2002, and the results of
its activities and cash flows for the eleven months ended November 30, 2003, the
period from April 4, 2002 (Date of Inception) through December 31, 2002 and the
period from April 4, 2002 (Date of Inception) through November 30, 2003 in
conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered losses from operations, all of
which raise substantial doubt about its ability to continue as a going concern.
Management's plans in regards to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
De Joya & Company
December 17, 2003
Las Vegas, Nevada
F-2
APTUS, CORP.
(A DEVELOPMENT STATE COMPANY)
BALANCE SHEETS
NOVEMBER 30, 2003 AND DECEMBER 31, 2003
November 30, December 31,
2003 2002
------------------- -------------------
ASSETS
Current assets
Cash $ 30,000 $ --
-------- --------
Total current assets 30,000 --
-------- --------
Total assets $ 30,000 $--
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 18,273 $ 273
-------- --------
Total current liabilities 18,273 273
-------- --------
Total liabilities 18,273 273
Commitments and contingencies -- --
Stockholders' deficit
Class A preferred stock; $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Class B preferred stock; $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock; $.001 par value; 50,000,000 shares
authorized, 12,000,000 shares issued and outstanding 12,000 --
Additional paid-in capital 18,000 --
Accumulated deficit (18,273) (273)
-------- --------
Total stockholders' deficit 11,727 (273)
-------- --------
Total liabilities and stockholders' deficit $ 30,000 $ --
======== ========
See Accompanying Notes to Financial Statements
F-3
APTUS, CORP.
(A DEVELOPMENT STAGE COMPANY
STATEMENTS OF OPERATIONS
Period from Period from
April 4, 2002 April 4, 2002
Eleven months (Date of inception) (Date of inception)
ended through through
November 30,
2003 December 31, 2002 November 30, 2003
----------------- ---------------------- --------------------------------
Revenue $ -- $ -- $ --
Operating expenses
General and administrative 18,000 273 18,273
--------- --------- ---------
Total operating expenses 18,000 273 18,273
--------- --------- ---------
Loss before provision for income
taxes (18,000) (273) (18,273)
Provision for income taxes -- -- --
--------- --------- ---------
Net loss $ 18,000) $ (273) $ (18,273)
========= ========= =========
Basic and diluted loss per common $ (0.02) $ -- $ (0.03)
share ========= ========= ==========
Basic and diluted weighted average
common shares outstanding 862,275 -- 547,248
========= ========= =========
See Accompanying Notes to Financial Statements
F-4
APTUS, COCRP.
(A DEVELOPMENT STATE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
Outstanding shares Additional Total
------------------ Preferred Common Paid-in Accumulated Stockholders'
Preferred Common Stock Stock Capital Deficit Deficit
-------------- --------- ---------------------------- ---------------- --------------- ---------------
Balance at April 4, 2002
(Date of inception) -- -- $-- $ -- $ -- $ -- $ --
Net loss -- -- -- -- -- (273) (273)
---------- ---- ---------- ---------- ---------- ----------
Balance, December 31, 2002 -- -- -- -- -- (273) (273)
Issuance of common stock
for cash, $0.001 -- 12,000,000 -- 12,000 18,000 -- 30,000
Net loss for the eleven
months ended -- -- -- -- -- (18,000) (18,000)
-------- ---------- ---- ---------- ---------- ---------- ----------
Balance, November 30, 2003 -- 12,000,000 $-- $ 12,000 $ 18,000 $ (18,273) $ 11,727
======== ========== ==== ========== ========== ========== ==========
See Accompanying Notes to Financial Statements
F-5
APTUS, CORP.
(A DEVELOPMENT STATE COMPANY)
STATEMENTS OF CASH FLOWS
Period from Period from
April 4, 2002 April 4, 2002
Eleven months (Date of inception) (Date of inception)
ended through through
November 30, 2003 December 31, 2002 November 30, 2003
-------------------------- -------------------------- ------------------------
Cash flows from operating activities:
Net loss $ (18,000) $ (273) $ (18,273)
Changes in operating assets and liabilities:
Increase in accounts payable 18,000 273 18,273
-------------------------- -------------------------- ------------------------
Net cash used by operating -- -- --
activities
Cash flow from financing activities:
Proceeds from issuance of common stock 30,000 -- 30,000
-------------------------- -------------------------- ------------------------
Net cash provided by financing 30,000 -- 30,000
activities
-------------------------- -------------------------- ------------------------
Net increase (decrease) in cash 30,000 -- 30,000
Cash, beginning of period -- -- --
-------------------------- -------------------------- ------------------------
Cash, end of period $ 30,000 $ -- $ 30,000
========================== ========================== ========================
See Accompanying Notes to Financial Statements
F-6
APTUS, CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. Description of business, HISTORY and summary of significant policies
Description of business - Aptus, Corp. (hereinafter referred to as the
"Company") is seeking merger and asset-purchase activity to pursue
application service providers and small-niche software companies. The
Company has minimal operations and is considered a development stage
company in accordance with Statement of Financial Accounting Standards No.
7. The Company was incorporated in the State of Delaware on April 4, 2002.
Going concern - The Company incurred net losses of approximately $18,273
from the period of April 4, 2002 (Date of Inception) through November 30,
2003 and has not commenced its operations, raising substantial doubt about
the Company's ability to continue as a going concern. The Company plans to
identify a suitable business to commence or acquire. The Company will seek
additional sources of capital through the issuance of debt or equity
financing, but there can be no assurance the Company will be successful in
accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Year end - The Company's year end is December 31.
Use of estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the straight-line
method over the estimated useful lives of the assets. The cost of repairs
and maintenance is charged to expense as incurred. Expenditures for
property betterments and renewals are capitalized. Upon sale or other
disposition of a depreciable asset, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in other income
(expense). Currently, the Company has no fixed assets.
Income taxes - The Company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards No. 109, which requires
recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and tax credit carryforwards. 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. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in operations in the period that includes the
enactment date.
As of November 30, 2003, the Company has available net operating loss
carryovers of approximately $18,000 that will expire in various periods
through 2023. Such losses may not be fully deductible due to the
significant amounts of non-cash service costs. The Company has established
a valuation allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.
F-7
1. Description of business and summary of significant policies (continued)
New accounting pronouncements - In September 2001, the Financial Accounting
Standards Board (FASB) issued Statement No. 143, ASSET RETIREMENT
OBLIGATIONS. This statement addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The statement will be
effective for the Company's fiscal year ending 2003. Management does not
expect the adoption of this standard to have a material impact on the
Company's financial statements.
In April 2002, the FASB issued Statement No. 145, RESCISSION OF FASB
STATEMENTS NO. 4, 44, AND 64, AMENDMENTS OF FASB STATEMENT NO. 13, AND
TECHNICAL CORRECTIONS. The Company does not believe that the adoption of
this pronouncement will have a material effect on its financial statements.
In June 2002, the FASB issued Statement No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. This statement requires the
recognition of a liability for a cost associated with an exit or disposal
activity when the liability is incurred versus the date the Company commits
to an exit plan. In addition, this statement states the liability should be
initially measured at fair value. The statement is effective for exit or
disposal activities that are initiated after December 31, 2002. The Company
does not believe that the adoption of this pronouncement will have a
material effect on its financial statements.
In January 2003, the FASB issued SFAS No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION -- TRANSITION AND DISCLOSURE. This statement
provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee
compensation. In addition, this statement also amends the disclosure
requirements of SFAS No. 123 to require more prominent and frequent
disclosures in the financial statements about the effects of stock-based
compensation. Because the Company continues to account for employee
stock-based compensation under APB Opinion No. 25, the transitional
guidance of SFAS No. 148 has no effect on the financial statements at this
time.
In November 2002, the Financial Accounting Standards Board issued
FASB Interpretation No. 45 ("FIN No. 45"), Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others an interpretation of SFAS No. 5, 57, and 107 and
rescission of FASB Interpretation No. 34, was issued. FIN No. 45 clarifies
the requirements of SFAS No. 5, Accounting for Contingencies, relating to a
guarantor's accounting for, and disclosure of, the issuance of certain
types of guarantees. The adoption of the provisions of FIN No. 45 did not
have a material impact on the Company's results of operations, financial
position or cash flows.
In January 2003, the FASB issued Interpretation No. 46,
CONSOLIDATION OF VARIABLE INTEREST ENTITIES. This interpretation
establishes standards for identifying a variable interest entity and for
determining under what circumstances a variable interest entity should be
consolidated with its primary beneficiary. Until now, a company generally
has included another entity in its consolidated financial statements only
if it controlled the entity through voting interests. Interpretation No. 46
changes that by requiring a variable interest entity to be consolidated by
a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or is entitled to receive a
majority of the entity's residual returns or both. The Company does not
believe that the adoption of this pronouncement will have a material effect
on its financial statements.
F-8
1. Description of business and summary of significant policies (continued)
Net loss per common share - The Company computes net loss per share in
accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff
Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB
98, basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is antidilutive. For the eleven months ended
November 30, 2003 and for the period from April 4, 2002 (Date of Inception)
through December 31, 2002, no options and warrants were excluded from the
computation of diluted earnings per share because their effect would be
antidilutive.
Comprehensive income (loss) - The Company has no components of other
comprehensive loss. Accordingly, net loss equals comprehensive loss for all
periods.
Advertising costs - The Company recognizes advertising expenses in accordance
with Statement of Position 93-7 "Reporting on Advertising Costs." Accordingly,
the Company expenses the costs of producing advertisements at the time
production occurs, and expenses the costs of communicating advertisements in the
period in which the advertising space or airtime is used. The Company has
recorded no significant advertising costs for the eleven months ended November
30, 2003 and the period from April 4, 2002 (Date of Inception) through December
31, 2002.
Research and development costs - Research and development costs are charged to
expense as incurred.
Stock-based compensation - The Company applies Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related
Interpretations, in accounting for stock options issued to employees. Under APB
No. 25, employee compensation cost is recognized when estimated fair value of
the underlying stock on date of the grant exceeds exercise price of the stock
option. For stock options and warrants issued to non-employees, the Company
applies SFAS No. 123, Accounting for Stock-Based Compensation, which requires
the recognition of compensation cost based upon the fair value of stock options
at the grant date using the Black-Scholes option pricing model.
The Company issued no stock, neither granted warrants or options, to employees
for compensation for the eleven months ended November 30, 2003 and the period
from April 4, 2002 (Date of Inception) through December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS
No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock
options using the fair value method and, if so, when to begin transition to that
method.
2. STOCKHOLDERS' DEFICIT
During the eleven months ended November 30, 2003, the Company issued 6,000,000
shares of its common stock for cash in the amount of $30,000 ($0.005 per share)
to five individuals.
3. SUBSEQUENT EVENT
On December 15, 2003, the Company increased the authorized number of common
stock to 250,000,000.
F-9
There is no underwriter for this offering, therefore, offerees will not
have the benefit of an underwriter's due diligence efforts which would typically
include the underwriter to be involved in the preparation of disclosure and the
pricing of the common stock offered hereby among other matters. As we have never
engaged in the public sale of our common stock. We have no experience in the
underwriting of any such offering. Accordingly, there is no prior experience
from which investors may judge our ability to consummate this offering. In
addition, the common stock is being offered on a "best efforts" basis.
Accordingly, there can be no assurances as to the number of shares that may be
sold or the amount of capital that may be raised pursuant to this offering.
No dealer, salesperson or any other person is authorized to give any information
or to make any representations in connection with this Prospectus and, if given
or made, such information or
representations must not be relied upon as having been authorized by Aptus Corp.
us. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the
securities offered by this Prospectus, or an offer to sell or
solicitation of an offer to buy any securities by anyone in any
jurisdiction in which such offer or solicitation is not authorized
or is unlawful. The delivery of this Prospectus shall not, under any 10,000,000
circumstances, create any implication that the information herein is
correct as of any time subsequent to the date of the SHARES COMMON STOCK
Prospectus. (par value $.001 per share)
______
Until November 30, 2004 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
Aptus Corp.
1127 Broadway Plaza, #203
TABLE OF CONTENTS Tacoma, Washington 98402
Summary ...................................................4
Our Company..............................................4 _______, 2004
Risk Factors..............................................10
Use of Proceeds........................................17
Dilution....................................................19
Capitalization............................................20
Plan of Distribution.....................................20
Proposed Business....................................20
Management Discussion of Analysis of Condition and Results of
Operations.................................27
Principal Shareholders................................29
Management.............................................30
Certain Transactions..................................32
Description of Securities.............................33
Shares Eligible for Future Sale.....................34
Available Information..................................35
Dividend Policy..........................................36
Stock Transfer Agent.................................36
Escrow Agent...........................................36
Experts...................................................36
Legal Matters...........................................36
Index to Financial Statements.....................F-1
---------------------------------------
<Page>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The information required by this item is incorporated by reference to
"indemnification" in the prospectus herein.
At present we have not entered into individual indemnity agreements
with our Officers or Directors. However, our By-Laws and Certificate of
Incorporation provide a blanket indemnification that we shall indemnify, to the
fullest extent under Delaware law, our directors and officers against certain
liabilities incurred with respect to their service in such capabilities. In
addition, the Certificate of Incorporation provides that the personal liability
of our directors and officers and our stockholders 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 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 controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and we will be governed by the final
adjudication of such case.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 460.00
Blue Sky Fees and Expenses 10,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 5,000.00
Accountant's fees and Expenses 2,500.00
Total $ 35,960.00
===================
The foregoing expenses, except for the SEC fees, are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Unregistered Securities Sold within the past three years
The following sets forth information relating to all previous sales of
common stock by the Registrant which sales were not registered under the
Securities Act of 1933.
On November 7, 2003, the board of directors authorized the initial
issuance of an aggregate of 12,000,000 shares as founder's stock at a price of
$.001 per share to John P. Gorst, M. Carroll Benton, Mark Levin, Clifford
Mastricola and Clayton Chase.
On December 17, 2003, the board of directors authorized the purchase of
an aggregate of 1,200,000 shares of Class A common stock at a price of $0.001
per share to John P. Gorst, M. Carroll Benton, Mark Levin, Clifford Mastricola
and Clayton Chase.
II-1
ITEM 27. - EXHIBITS
Index to Exhibits
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
3.1 Articles of Incorporation This filing page
3.2 Amended Articles of Incorporation
Changing authorized common
shares to 250,000,000 This filing page
3.3 Amended Articles of Incorporation
Adding Class A common shares
With super voting rights This filing page
3.4 Bylaws This filing page
5.1 Consent of Miles Garnett, Esq. To be filed
with amendment
23.1 Consent of Accountants To be filed
with amendment
II-2
ITEM 28. UNDERTAKINGS
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement
To include any prospectus required by section I O(a)(3) of the
Securities Act of 1933;
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) which, individually or in the
aggregate, represent a fundamental change in the information
in the registration statement;
To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to the information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering.
(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.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission any supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
to that section.
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 our certificate of incorporation or provisions of
Delaware law, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission the indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. If a claim for
indemnification against 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 a director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of our
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether the indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of the issue.
II-3
APPENDIX
FOR OFFICE USE ONLY:
SUBSCRIPTION AGREEMENT
FOR
APTUS CORP.
COMMON STOCK ($0.50 PER SHARE)
Persons interested in purchasing common stock of Aptus Corp. must complete and
return this Subscription Agreement along with their check or money order to:
Aptus Corp.
1127 Broadway Plaza, #203
Tacoma, Washington 98402, ("the Issuer") ("the Company")
Subject only to acceptance hereof by the issuer, in its discretion, the
undersigned hereby subscribes for the number of common shares and at the
aggregate subscription price set forth below.
An accepted copy of this Agreement will be returned to the Subscriber as a
receipt, and the physical stock certificates shall be delivered to each Investor
within thirty (30) days of the Close of this Offering.
Securities Offered - The Company is offering 10,000,000 shares
(par value $.001 per share) at $0.50 per share. The minimum subscription is
1,000 shares.
Subscription - In connection with this subscription the
undersigned hereby subscribes to the number of common shares shown in the
following table.
NUMBER OF COMMON SHARES = ___________________
Multiply by Price of Shares x $.50 per Share
Aggregate Subscription Price = $___________________
Check or money order shall be made payable to APTUS CORP. ESCROW ACCOUNT
II-4
In connection with this investment in the Company, I represent and warrant as
follows:
a) Prior to tendering payment for the shares, I received a copy of and read your
prospectus dated ______________, 2004.
b) I am a bona fide resident of the state of ________________________________.
c) The Issuer and the other purchasers are relying on the truth and accuracy of
the declarations, representations and warranties herein made by the undersigned.
Accordingly, the foregoing representations and warranties and undertakings are
made by the undersigned with the intent that they may be relied upon in
determining his/her suitability as a purchaser. Investor agrees that such
representations and warranties shall survive the acceptance of Investor as a
purchaser, and Investor indemnifies and agrees to hold harmless, the Issuer and
each other purchaser from and against all damages, claims, expenses, losses or
actions resulting from the untruth of any of the warranties and representations
contained in this Subscription Agreement.
Please register the shares, which I am purchasing as follows:
Name: _____________________________________ Date: ___________________
As (check one)
Individual Tenants in Common Existing Partnership
Joint Tenants Corporation Trust
Minor with adult custodian under the Uniform Gift to Minors Act IRA
For the person(s) who will be registered shareholder(s):
___________________________________________ ________________________________
Signature of Subscriber Residence Address
__________________________________________ _________________________________
Name of Subscriber (Printed) City or Town
___________________________________________ _________________________________
Signature of Co-Subscriber State Zip Code
___________________________________________ __________________________________
Name of Co-Subscriber (Printed) Telephone
___________________________________________ __________________________________
Subscriber Tax I.D. or Co-Subscriber Tax I.D. or
Social Security Number Social Security Number
___________________________________________
E-mail Address (if available)
ACCEPTED BY: APTUS CORP.
By: _______________________________________ Date: _________________________________
Officer
II-5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
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 our behalf by the undersigned, in the City of Tacoma,
_____________ County, State of Washington, on December 19, 2003.
(Registrant) APTUS CORP.
By
John P. Gorst, President and
Chairman of the Board of Directors
In accordance with the Securities Act of 1933 this registration was
signed by the following persons in the capacities and on the dates indicated.
(Signature)
_________________________________________
John P. Gorst, President
and Chief Executive Officer
(Date) _______________________
(Signature)
__________________________________________
M. Carroll Benton, Secretary and Treasurer, Interim Chief
Financial Officer, Director
(Date) ______________________