AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 16, 2004
Registration No. 333-111419
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. 2)
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 organization) Classification Code Number) Identification No.)
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) 677-6649
________________________________________________________________________________
(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: [ ]
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
Common Stock 10,000,000 $0.50 $5,000,000 $460
Title of each share Proposed maximum Proposed offering Maximum aggregate Amount of registration
class of securities to amount to be price per unit offering 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.
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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 a par value
$0.001 per share. This represents 43.77% 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. We are a Delaware corporation.
We will sell the shares ourselves through our officers and directors. 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 March 31, 2005, and unless a
minimum of 500,000 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 SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 9.
TOTAL TOTAL
PER SHARE MINIMUM MAXIMUM
---------------------------------------------
Public offering price(1) $0.50 $250,000 $5,000,000
Underwriting discounts and commissions None None None
Proceeds, before expenses, to us(2) $0.50 $250,000 $5,000,000
(1) We plan to offer and sell 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
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TABLE OF CONTENTS
Summary........................................................................5
Risk Factors...................................................................9
Use of Proceeds................................................................13
Dilution.......................................................................13
Dividend Policy................................................................15
Capitalization.................................................................15
Plan of Distribution...........................................................16
Our Business...................................................................16
Plan of Operation..............................................................26
Principal Shareholders.........................................................31
Management.....................................................................32
Certain Relationships and Related Transactions.................................35
Description of Securities......................................................36
Shares Eligible for Future Sale................................................37
Available Information..........................................................39
Special Note Regarding Forward-Looking Statements..............................40
Stock Transfer Agent...........................................................40
Experts........................................................................40
Legal Matters..................................................................40
Index to Financial Statements..................................................F-1
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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 the financial statements and the
related notes to these statements included in this prospectus.
OUR COMPANY
We are an Application Service Provider ("ASP"). An ASP offers hosted proprietary
software along with other hosted software business solutions distributed over
Internet ready computers. The ASP customer uses a web browser to run software
products, anywhere at anytime, without the need to download or install the
software application. Our goal is to become a reliable and secure on-demand
computing platform.
We are engaged and have begun implementation of a targeted and stragically
defined plan to purchase selected assets or businesses from within the highly
fragmented application service provider and software development industries. As
a result of our implementation efforts, we recently acquired four business
software applications.
o On January 23, 2004, we acquired certain assets of Appgen
Technologies, Inc. (Appgen) and Mark Andre, which includes the
Appgen Custom Suite and MyBooks Professional, both are software
applications.
o On February 1, 2004, we acquired certain assets of QwikQuote,
Inc, which includes QwikQuote Sales and QwikQuote Professional
Sales, sales quote applications.
We will provide hosting for either leased applications or customer owned
software on leased servers located in leased data centers, rent computing
services to our customers for a monthly fee, and perform remote management and
maintenance of our customers' servers from our network operations center. We
focus on the small office/home office ("SOHO") and small/medium enterprise
("SME") markets. See "Risk Factors." We are in the development stage and have a
limited 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 often encountered in connection
with the formation of any new business. Further, no assurance can be given that
we will have the ability to acquire additional assets, businesses or properties.
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.
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
we currently offer 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 be employed in our
business. No assurance can be given
that the net proceeds from the sale
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
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materially and adversely affected
in that we may find it even more
difficult, if not impossible, to
realize our goals. See "Risk
Factors."
The minimum required amount of
shares to be sold is 500,000 shares
and the maximum amount 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 on the Over-The-Counter
Electronic Bulletin Board (the
"Bulletin Board") referred to as
OTCBB, which is maintained by the
NASD. There is no guarantee that we
will be able to trade on the
Bulletin Board. Any market for the
shares, which may result, will
likely be less well developed than
if our shares were traded on NASDAQ
or on an exchange.
See "Risk Factors."
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 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.
TERMS OF THE OFFERING The offering will remain open until
March 31, 2005, unless we decide to
terminate the selling efforts prior
to this date. The minimum investment
by each investor is 1,000 shares.
AUTHORIZED AND OUTSTANDING
COMMON PROCEEDS FROM CLASS A CLASS A CLASS B
STOCK OFFERING COMMON PREFERRED PREFERRED
STOCK STOCK STOCK
- ----------------- ----------------- ---------------- ------------------- ------------- ---------------- ----------------
SHARES OF STOCK:
Authorized 250,000,000 5,000,000 10,000,000 10,000,000
Outstanding
prior to
offering 12,845,000 1,200,000 -0- -0-
After minimum
of offering
is sold 13,345,000 $250,000 1,200,000 -0- -0-
After maximum
offering is
sold 22,845,000 $5,000,000 1,200,000 -0- -0-
PLAN OF DISTRIBUTION This is a direct participation,
and with no commitment by anyone
to purchase any shares. The minimum
required subscription is 1,000
shares. In the event that the
minimum of 500,000 shares is not
sold by March 31, 2005, all
proceeds raised will be returned
promptly to subscribers in full
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with interest thereon. Subscribers
will not be entitled to a return of
funds from the escrow account during
the offering period.
USE OF PROCEEDS In the event that the minimum of
500,000 shares are sold, then the
last $36,000 that we raise will be
used to pay the expenses of the
offering after the escrow is
released. Our expenses are expected
to be $36,000 regardless of the
amount sold over our minimum.
SEC Registration Fee $ 460.00
Blue Sky Fees and Expenses 6,000.00
Trustee's and Transfer Agent Fees 4,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 3,500.00
Accountant's Fees and Expenses 4,000.00
-------------------
Total $ 35,960.00
===================
This is the only amount raised in
the offering that will be applied to
outstanding expenses. We intend to
apply substantially all of the net
proceeds of this offering (after the
minimum amount raised is released
from escrow) to market the services
we currently offer and initiate new
business development and
relationships as an ASP focused on
the SOHO and SME business.
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 a limit of
$36,000 on the total 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 our
business plan. See "Risk Factors."
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
short-term existence and limited
resources, the discretionary use of
proceeds, and the intense
competition in effecting our
business strategy. See "Risk
Factors."
SUMMARY FINANCIAL INFORMATION
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SUMMARY BALANCE SHEETS
December December 31,
31, 2003 2002
------------- --------------
Assets
Current assets
$ 24,227 $ --
Other assets 1,170 --
------------- --------------
Total assets $ 25,397 $ --
============= ==============
Liabilities
and
Stockholders'
Deficit
Current
liabilities $ 33,927 $ 273
------------- --------------
Total
liabilities 33,927 273
Total
stockholders'
deficit (8,530) (273)
------------- --------------
Total
liabilities and
stockholders'
deficit
$ 25,397 $ --
============= ==============
SUMMARY STATEMENTS OF OPERATIONS
Period from Period from
April 4, 2002 April 4, 2002
For the (Date of (Date of
year ended inception) inception)
December through through December
31, 2003 December 31, 31, 2003
2002
------------ --------------- ------------------
Revenue $ -- $ -- $ --
Total
operating
expenses 38,257 273 38,530
------------ --------------- ------------------
Net loss $ (38,257) $ (273) $ (38,530)
============ =============== ==================
8
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 WILL 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. In its audit report dated March 31, 2004, our auditors indicated
that there was substantial doubt as to our ability to continue as a going
concern due to on going losses since inception to December 31, 2003, and, that
our ability to continue as a going concern is dependant upon our obtaining
additional financing for our operations or reaching profitability. There can be
no assurance that we will be able to achieve either of these.
ALL OF OUR DIRECTORS AND OFFICERS WILL CONDUCT OUR ACTIVITIES ON A PART TIME
BASIS. AS A RESULT OF THEIR PARTICIPATION IN BUSINESS ACTIVITIES OF OTHER
COMPANIES, THEIR LIMITED ATTENTION TO US MAY DELAY THE DEVELOPMENT OF OUR
BUSINESS.
Our chief executive officer, John P. Gorst, is the president and chairman of the
board of Insynq, Inc. (Insynq), a public company. M. Carroll Benton, our chief
administrative officer, secretary and treasurer is also chief administrative
officer, secretary and treasurer of Insynq, and Joanie C. Mann, vice president
of strategic alliances for Insynq is our executive vice president.
WE HAVE FEW CUSTOMERS AND GENERATE LIMITED 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 customer 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 customers. If we fail to
obtain contracts with a significant number of customers 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 APPLICATION
SERVICES, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND PROFITABILITY.
A large number of ASPs offer similar services that we plan to offer. Most of
these companies have greater resources in terms of people, money and experience.
If we cannot successfully compete with these firms, the future of our business
and of operations will be adversely affected in terms of little or no revenue
and profitability.
OUR EXECUTIVE MANAGEMENT TEAM IS CRITICAL TO THE EXECUTION OF OUR BUSINESS
PLAN AND THE LOSS OF EITHER ONES' SERVICE COULD SEVERELY IMPACT NEGATIVELY ON
OUR BUSINESS.
Our success depends significantly on the continued services of our management
personnel, John P. Gorst, chairman of the board, president and chief executive
officer, M. Carroll Benton, secretary and treasurer, chief administrative
officer and interim chief financial officer and Joanie C. Mann, executive vice
president. 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
9
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, M. Carroll Benton and Joanie C.
Mann.
OTHER BUSINESS VENTURES OF OUR EXECUTIVE OFFICERS MAY PRESENT A POTENTIAL
CONFLICT OF INTEREST, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND
PROFITABILITY.
John P. Gorst and M. Carroll Benton are two of our three officers and the sole
directors and have substantial control in directing our activities. They are
involved in other business activities, including Insynq, 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 with
whom they work. In such event, we may lose potential revenue, which will
negatively affect the value of shares of our common stock.
Although both current business activities that our officers are involved with
are ASPs, we have different service offerings. We primarily will be selling our
propriety software applications, either for local installation or as a hosted
technology alternative through our value added resellers and dealer channels and
integrating any future business or asset acquisitions into our business. Insynq
services are to provide content to the telephone, cable and data-line
industries, by offering virus protection, data storage, email management,
marketing services, and hosted QuickBooks for their business customers by
developing relationships within those industries. Sales will be generated by
utilization of their own inside sales organizations.
WE CURRENTLY DO NOT HAVE A DATA CENTER AND SERVER INFRASTRUCTURE REQUIREMENT,
HOWEVER, WHEN WE DO, WE WILL NEED TO NEGOTIATE LEASES AND/OR PURCHASE. IF WE
ARE UNABLE TO NEGOTIATE FAVORABLE LEASES OR PURCHASE WITHIN OUR BUDGET
ALLOWANCE, WE WILL NOT BE ABLE TO EXECUTE A SIGNIFICANT PORTION OF OUR
BUSINESS PLAN.
We currently do not own or lease server infrastructure or data center
facilities, nor do we currently have a requirement for these components. When
demand is created from our sales growth or future business or asset
acquisitions, we will be required to meet these needs through a combination or
leases and/or purchases. We cannot be assured that we can negotiate favorable
leases, or if at all, or purchase within our budget allowance. If we are unable
to accomplish this, we will be unable to execute on a significant portion of our
business plan.
SUBJECT TO OUR RAISING THE MAXIMUM AMOUNT OF PROCEEDS FROM OUR OFFERING, WE
WILL NEGOTIATE WITH INSYNQ FOR A SOLE AND EXCLUSIVE NON-COMPETE LICENSING
AGREEMENT FOR THE BRAND E-ACCOUNTING. IF WE ARE UNSUCCESSFUL IN OBTAINING AN
AGREEMENT ON FAVORABLE TERMS, OR IF AT ALL, WE WILL BE UNABLE TO EXECUTE ON A
SIGNIFICANT PORTION OF OUR BUSINESS PLAN.
Subject to our raising the maximum amount of proceeds from our offering, we will
negotiate with Insynq, a sole and exclusive, non-compete, licensing agreement
for the e-Accounting business model and brand. Insynq has developed the
e-Accounting brand of services and bundled third party products that directly
address the needs of one our target markets, that of the accounting and
bookkeeping professionals. If we are unsuccessful in obtaining an agreement on
favorable terms, or it at all, we will be unable to execute on a significant
portion of our business plan.
IF WE ARE UNABLE TO OBTAIN KEY SOFTWARE APPLICATIONS FROM CERTAIN VENDORS, WE
WILL BE UNABLE TO DELIVER OUR SERVICES, WHICH MAY RESULT IN THE TERMINATION
OF OUR OPERATIONS.
We will rely on third-party suppliers, including Microsoft and Citrix to provide
us with key software applications for our infrastructure and our hosted
application rental model. Certain components or applications are only available
from limited sources. If we are unable to obtain these products or other
services, including connectivity services, in a timely manner at an acceptable
cost or at all, it may substantially inhibit our ability to deliver our
services, which may result in the termination of our operations.
IF WE FAIL TO PROTECT OUR PROPRIETARY PRODUCTS FROM INFRINGEMENT THROUGH
PATENTS, AND TRADEMARKS WE COULD AFFECT OUR ABILITY TO COMPETE EFFECTIVELY
AND OUR RESULTS OF OPERATIONS.
10
Our services are highly dependent upon proprietary technology, such as the
Appgen Custom Suite, MyBooks Professional and the QwikQuote softwares. These
applications and trade names are copyrighted but not protected by registered
trademarks or patent rights. Currently, we rely on contracts, confidentiality
agreements, and trade-secrecy laws to protect our proprietary rights in our
technology. We will be pursuing several trademark, copyright, and patent
registrations for our various products and their names. The protective steps we
have taken may not be adequate to deter misappropriation of our proprietary
information. In addition, some end-user license provisions protecting against
unauthorized use, copying, transfer and disclosure of a licensed program may be
unenforceable under the laws of certain jurisdictions and foreign countries. In
addition, the laws of some foreign countries do not protect proprietary rights
to the same extent as the laws of the United States. Failure to adequately
protect our intellectual property could harm our brand name, devalue our
proprietary content, and affect our ability to compete effectively. Furthermore,
defending our intellectual property rights could result in the expenditure of
significant financial and managerial resources, which could materially and
adversely affect our business, results of operations and financial condition.
Also, it is possible that our competitors or others will adopt product or
service brands similar to ours, possibly leading to customer confusion.
DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT AND OTHER CLAIMS COULD
BE TIME CONSUMING AND EXPENSIVE, AND, IF WE ARE NOT SUCCESSFUL, COULD SUBJECT
US TO SIGNIFICANT DAMAGES AND DISRUPT OUR BUSINESS.
Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit or interfere with our ability to
make, use or sell our services. As a result, we may be found to infringe on the
proprietary rights of others. In the event of a successful claim of infringement
against us and our failure or inability to license the disputed technology, our
business and operating results would be significantly harmed. Intellectual
property litigation has become prevalent in the Internet and software fields.
Any litigation or claims, whether or not valid, could result in substantial
costs and diversion of resources.
INSYNQ DOES NOT HOLD ANY PATENTS OR REGISTERED TRADEMARK RIGHTS TO THEIR
E-ACCOUNTING BRAND AND PROPRIETARY SOFTWARE, AND, IF OUR COMPETITORS WERE TO
IMITATE OUR LICENSED E-ACCOUNTING MODEL WE WOULD, IF WE HAD AN EXECUTED
LICENSING AGREEMENT WITH INSYNQ, EXPERIENCE ADVERSE REVENUES AND
PROFITABILITY.
Insynq has developed the e-Accounting brand and business model consisting of
proprietary marketing materials and software, and, together are bundled with
other third party services or products, which are directed, primarily, to the
financial professional such as certified pubic accountants, bookkeepers and tax
professionals. Insynq has not obtained any patents or registered trademarks for
the brand e-Accounting or for their proprietary software. We will negotiate with
Insynq for a master license agreement, subject to our raising the maximum
proceeds from this offering, which would allow us the sole and exclusive use and
development of this brand. Assuming we are successful in obtaining an agreement
with Insynq that does not include protective rights, and, our competitors were
to imitate this brand, we would experience adverse revenues and profitability.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT
OUR STOCK PRICE.
After this offering there will be issued and outstanding 22,845,000 shares of
our common stock. Of these shares, the 10,000,000 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 12,845,000 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 held 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.
11
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. Market
conditions and market makers may cause your investment in our common stock to
significantly diminish and may become very illiquid.
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 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.
OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS CONTROL US. THIS MIGHT LEAD
THEM TO MAKE DECISIONS THAT DO NOT BENEFIT THE SHAREHOLDER INTERESTS.
John P. Gorst, M. Carroll Benton, Mark Levin, Clifford Mastricola and Clayton
Chase will beneficially own approximately 54.9% 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 MAY HAVE A NEED FOR SUBSEQUENT FUNDING. IF WE DO NOT GET SUCH FUNDING WE
MIGHT NOT BE ABLE TO CONTINUE OPERATIONS.
We may need further funding to proceed with our proposed plan of business. We do
not have a commitment with respect to any additional capital. We have no loan
commitments 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 cannot assure you that
we will be able to obtain additional funding when or if 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, when required,
would impair severely our business operations.
This prospectus contains certain forward-looking statements based on our current
expectations, assumptions, estimates and projections about our industry and us.
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. Such factors include those set forth
in this section and elsewhere in this prospectus.
12
USE OF PROCEEDS
In the table below, we have detailed the minimum amount of capital required
for us to operate our business as currently planned. The table also shows how we
will plan to use the proceeds of the offering.
AMOUNT OF NET PROCEEDS
AT 5% AT 25% AT 50% AT 75% AT 100%
Proceeds from Offering $ 250,000 $1,250,000 $2,500,000 $3,750,000 $5,000,000
Less: Offering Expenses 36,000 36,000 36,000 36,000 36,000
- --------------------------------------- ---------- ---------- ---------- ---------- ----------
Net Proceeds from Offering $ 214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
========== ========== ========== ========== ==========
Use of Net Proceeds:
Acquisitions $ -- $ 520,000 $1,414,000 $2,241,000 $3,000,000
Infrastructure -- 62,500 125,000 187,500 250,000
Research and Development -- 62,500 125,000 187,500 250,000
Sales and Marketing 50,000 186,500 350,000 562,500 750,000
Operations 164,000 382,500 450,000 535,500 714,000
---------- ---------- ---------- ---------- ----------
Total Use of Net Proceeds $ 214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
========== ========== ========== ========== ==========
We intend to utilize the proceeds from this offering as set forth in the above
columns. No assurances are given that we will sell any shares.
The net proceeds, monies to be used, includes but not limited to, due diligence,
travel and related out-of-pocket expenses, and consulting fees, if any. Proceeds
will also 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, not to exceed $500 per
individual, including travel. However, no portion of the proceeds raised hereby
will be paid to those persons, directly or indirectly, as, officers' accrued
salaries, directors' fees, and 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 as aforementioned. 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. As of
March 31, 2004, (unaudited) the following table sets forth the difference
between our issued and outstanding shares and purchasers of the shares in this
13
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, AS OF MARCH 31, 2004 (UNAUDITED), ASSUMES THAT THE MINIMUM (5%)
OF THE AMOUNT OF COMMON SHARES OFFERED HEREBY IS SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 90.0% $30,000 3.2% $0.0025
Issuances 345,000 2.6 172,500 18.1 $0.50
Asset Purchase Issuance
500,000 3.7% 500,000 52.5 $1.00
---------------- ------------- ------------------- ------------
Total before offering 12,845,000 96.3% 702,500 73.8
New Investors 500,000 3.7 250,000 26.2 $0.50
---------------- ------------- ------------------- ------------
Total 13,345,000 100% $952,500 100% $0.071
================ ============= =================== ============
THE TABLE BELOW, AS OF MARCH 31, 2004 (UNAUDITED), ASSUMES THE MAXIMUM (100%)
AMOUNT OF THE COMMON SHARES OFFERED HEREBY IS SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 52.5% $30,000 0.5% $0.0025
Issuances 345,000 1.5 172,500 3.0 $0.50
Asset Purchase Issuance
500,000 2.2 500,000 8.8 $1.00
---------------- -------------- ----------------- ------------
Total before offering 12,845,000 56.2 702,500 12.3
New Investors 10,000,000 43.8 5,000,000 87.7 $0.50
---------------- -------------- ----------------- ------------
Total 22,845,000 100% $5,702,500 100% $0.25
================ ============== ================= ============
AS OF MARCH 31, 2004 (UNAUDITED) THE FOLLOWING TABLE REPRESENTS THE DILUTION PER
SHARE BASED ON THE PERCENTAGE SOLD OF THE TOTAL AMOUNT OF SHARES BEING OFFERED.
COMMON SHARES COMMON SHARES
5% sold 100% sold
---------------- ---------------
Offering price $0.500 $0.500
Net tangible book value before offering $0.048 $0.048
Increase attributable to the offering $0.014 $0.196
Net tangible book value after giving effect
to the offering $0.062 $0.244
Per share dilution to new investors $0.438 $0.256
Percent dilution per share 87.5% 51.1%
As of March 31, 2004, "unaudited", the net tangible book value of our common
stock was $618,313 or $.048 per share based on the 12,845,000 shares
outstanding. "Net tangible book value" per share represents the amount of total
tangible assets less total liabilities, divided by the number of outstanding
shares of common stock . After giving effect
14
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 $5,582,313 or $0.244 per share, based on the 22,845,000
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 $0.256 per
share to the new investors who purchase shares in the offering ("New
Investors"), as illustrated in the table above (amounts are expressed on a per
share basis).
DIVIDEND POLICY
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.
CAPITALIZATION
This table represents our capitalization as of March 31, 2004, (unaudited), as
adjusted to give effect to this offering.
ACTUAL SHARES SHARES
STOCKHOLDERS' EQUITY at 5% at 100%
------------------- --------------------- -----------------------
Class A common stock, $0.001 par value,
authorized 5,000,000 shares Issued and
outstanding 1,200,000 shares at par
value $1,200 $1,200 $1,200
Common stock, $0.001 par
value, authorized
250,000,000 shares
Issued and outstanding -
12,845,000 shares at
par value 12,845 12,845 12,845
Additional paid in
capital 689,655 689,655 689,655
at 5% 500,000 shares at
par value 500
Additional paid in
capital 249,500
at 100% 10,000,000 shares at
par value 10,000
Additional paid in
capital 4,990,000
Offering expenses (36,000) (36,000)
Accumulated deficit (85,387) (85,387) (85,387)
------------------- --------------------- -----------------------
Total stockholders' equity
$618,313 $832,313 $5,582,313
=================== ===================== =======================
</table>
15
PLAN OF DISTRIBUTION
The shares will be offered and sold by our principal executive officers and
directors. 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 are offered by us at $.50 per share with 500,000
shares required to be sold before any funds can be released from escrow and with
a 10,000,000 share maximum basis. Our officers and directors will offer the
shares to vendors doing business with the corporation and to persons using the
software when such persons are able to be identified as users. We expect to also
advertise the sale of our securities in financial publications such as Forbes
magazine in their display classified section. We will file a post effective
registration statement of which this Prospectus is a part to identify a selected
broker-dealer at such time as such broker-dealer intends to sell shares offered
in this offering and prior to such sale. 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.
Our officers, directors and major shareholders are the only persons who have
been instrumental in arranging our capitalization to date. Neither of our
officers nor our directors are acting as a nominee for any person 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. These
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 the purpose of closing of our offering in the event such
amount is not reached as a result of lack 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.
If we file a post effective registration statement identifying selected
broker/dealers, these 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.
ESCROW AGENT
All securities issued in connection with first 500,000 shares of this offering
and the gross proceeds from the offering shall be deposited promptly into an
escrow account with National City Bank, NA. Wire transfer instructions are shown
in the subscription documents.
OUR BUSINESS
Except for historical information, the following description of our business
contains forward-looking statements based on current expectations that involve
risks and uncertainties. Our actual results could differ materially from those
set forth in these forward-looking statements as a result of a number of
factors, including those set forth in this prospectus under the heading "Risk
Factors."
OUR HISTORY
Unless the context requires otherwise, the terms "We", "Our" and "Us" refer to
Aptus Corp. which was incorporated under the laws of the State of Delaware on
April 4, 2002, and in November 2003 we began the early stage of implementation
of our business plan.
16
OUR BUSINESS
GENERAL
We are engaged and have begun implementation of a targeted and strategically
defined plan to purchase selected assets or businesses from within the highly
fragmented application service provider and software development industries. Our
acquisitions will enable us to offer hosted proprietary software along with
other hosted software business solutions distributed over Internet provider
services. As a result of our implementation efforts, we recently acquired four
business software applications from unrelated parties, along with other
intellectual property and miscellaneous furniture and equipment.
On January 23, 2004, we acquired certain assets of Appgen Technologies, Inc.
(Appgen) and Mark Andre, which include: The Appgen Custom Suite and MyBooks
Professional, both accounting software applications,
o A limited amount of used computer equipment and a limited amount of used
office furniture and equipment,
o Trade and company name(s),
o Web site "WWW.APPGEN.COM" and the domain name "appgen.com",
o Customer lists,
o Marketing materials,
o Software documentation and manuals, and
o VAR and dealer lists.
On February 1, 2004, we acquired certain assets of QwikQuote, Inc, which
include:
o QwikQuote Sales and QwikQuote Professional Sales, sales quote
applications,
o A limited amount of used computer equipment and a limited amount of used
office furniture and equipment,
o The QwikQuote name,
o Web site "WWW.QWIKQUOTE.COM" and the domain name "qwikquote.com"
None of the trade names have been registered for trademarks and none of the
software applications have had patents applied for, however, they do have
unregistered copyright protection.
At present, we have signed a non-binding letter of intent to acquire an on-line
curriculum service business that targets the K-12 public and private educational
institutions. Under the terms of the letter of intent the following requirements
are:
o Pay $2,000,000 in cash paid to certain stockholders,
o Issue 10,000,000 shares of our common stock valued at $1.00 per share,
o We must have a minimum of $3,000,000 in working capital at closing,
o Grant a warrant to purchase an additional 10,000,000 shares of our common
stock at an exercise price of $1.00 per share, and
o Provide two board seats.
As of the date of this filing, we have not completed a definitive agreement.
Either party may terminate this letter of intent at any time without cause. It
is impossible for us to predict the outcome of this letter of intent, as we may
be unsuccessful in raising the maximum amount of proceeds from our offering,
and, we may be untimely in our effective registration, whereby there will no
longer an interest by the intended seller, or, they are purchased by another
party. The due diligence process is not yet started and upon completion we may
determine that it is in our best interests to terminate the letter of intent.
Even if we were to sell 75% of our 10,000,000 shares of common stock, we would
not be able consummate the terms of the letter of intent because we would not
have enough available cash and working capital to meet the aforementioned
minimum requirements.
17
We will provide hosting for either leased applications or customer owned
software, rent computing services to our customers for a monthly fee, and
perform remote management, support and maintenance of our customers' servers
from our network operations center. We will develop and provide the necessary
tools to our customers enabling them to implement business workflow and process
ideas quickly and cost effectively. We will make it possible for many businesses
to take advantage of technology solutions that have typically been reserved for
larger business enterprises. These solutions will enable our customers to
benefit from reliable and secure technology operations, which can grow or
contract to accommodate changing business needs. These services can be delivered
without undertaking the difficulty and expense associated with acquiring,
disposing, building and maintaining the required in-house expertise and
infrastructure.
Due to management's experience and in-depth knowledge of the ASP industry, we
believe that the ASP or utility computing model of distributing computer
processing services or software over the Internet has generally proven itself to
deliver a lower total cost of operations as compared to building and maintaining
physically separated information technology systems. This is due in part to the
increasing complexities and significant financial investment of successfully
deploying and maintaining the various components of software solutions, as well
as the hardware and connectivity required for a successful Internet business
operation. In addition, the operation must have the in-house expertise required
to meet these challenges is significant and typically requires a host of
technical specialists.
Our customers will connect to leased data center facilities over the Internet,
through an Internet connection, such as a telephone line or a digital cable
line. We intend to provide our services with the speed, simplicity and
reliability of a traditional utility-like service. Like a utility company, we
will allow business customers to "turn on", or access, their software
applications and data instantly, on-demand, through any web enabled computer,
regardless of operating system.
With the customer utilizing our on-demand computing platform, we can
consistently deploy our customers' operations across multiple locations while
maintaining those services through a centralized operations center. Among other
things, our services will enable our customers to:
o Quickly expand their Internet presence as business opportunities arise
in new geographies and markets, and
o Efficiently incorporate new and evolving technologies into their
existing business operations.
The ASP concept reduces the risk of computer viruses, allows for ongoing backup
of user data and important information, disaster recovery and security. The ASP
model also reduces the phenomena of software piracy, as the software title is no
longer downloaded or installed on the user's computer.
BUSINESS STRATEGY We target selected assets or businesses of ASP companies that
are at or below the 1,500-subscriber level. These targets are those that have
developed messaging, disaster recovery, accounting and finance, sales force
management, enterprise resource planning, customer relationship management,
manufacturing resource planning, or human resources applications. Our strategy
is to apply basic consolidation practices, which should reduce overhead and
increase net margins.
We will identify these targeted assets or businesses, through a variety of
means, such as the bankruptcy courts, referrals, independent research and trade
publications. These companies will, at a minimum, have target markets and the
prospects of a well-defined and long-term revenue stream. While we recognize
some companies may not be currently profitable, they may still be suitable
candidates because we would be able to consolidate many common expenses. Through
this consolidation principle we believe we can achieve a larger base of users,
reduce expenses and generate more profitable revenues.
Target organizations or selected assets for acquisition will
meet the following service mix criteria:
18
WINDOWS OR UNIX APPLICATION HOSTING SERVICES UTILIZING EITHER OF THE FOLLOWING
TECHNOLOGIES
Citrix Metaframe, Tarantella Enterprise, Microsoft Terminal Services, or New
Moon Canaveral
MISSION CRITICAL APPLICATIONS SUCH AS:
Messaging, Disaster Recovery, Accounting and Finance, Sales Force Management,
Enterprise Resource Planning, Customer Relationship Management, Manufacturing
Resource Planning, or Human Resources
KEY VERTICAL MARKET PRODUCTS
Due to management's experience and in-depth knowledge of the ASP industry and
the recognition of the various pitfalls and opportunities that exist in the
market, we strongly believe that an ASP eventually should own and/or control its
core content (Intellectual Property) just as the cable industry has done. With
the cable industry now maturing, content has become strategically vital to the
equally important distribution network.
The ASP industry and Internet delivery model has reached a similar level of
maturity. Website development and hosting services has become commonplace and
has fueled the need to replace unproductive static content with bundled
interactive business applications and processes. With that in mind, it is our
intention to acquire several more business niche software applications that are
either Web- or Windows-based that can be added to our Appgen Custom Suite of
accounting applications. The modular nature of the Appgen Custom Suite allows us
to bundle the application functionality into a single package, or deliver
specific modules individually.
Accounting and bookkeeping practices 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.
By proxy, the financial professional has evolved as their clients' software and
information technology consultant. In addition, the professional, often acts as
the small business CFO, and 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.
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, to grow their practice
through value-added service opportunities, all while keeping their costs of
doing business down. Competencies in accounting and finance may become clouded
with the perceived additional competencies in technology, thereby causing many
professionals to hesitate in becoming more involved with technology for fear of
losing client 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.
We believe our computing models or business solutions will assist a wide range
of businesses financial professionals to close the technology gap. Our business
computing solutions are as follows:
QWIKQUOTE SOFTWARE
Our four versions of QwikQuote Software are QwikQuote Sales, single user, and
network version, and QwikQuote Professional Sales single user and network
version, and, are designed for the electronic business processes, such as
emailing the quote directly from our software. Our software allows for the
generation of customized sales quotations and assists sales people by managing
their company's inventory or products. QwikQuote can also link to popular
contact manager applications, such as ACT!, Goldmine, Outlook, TeleMagic and
Maximizer, so that quotes can be synchronized and attached to the customer
contact record. It is our opinion, for a sales force to succeed, they should be
equipped with current and accurate product and pricing information that quickly
satisfies the modern customer's demands and time constraints. QwikQuote can
assist them with this problem by providing an electronic means of storing
product information in the form of picture, video, database, and free text that
is instantly available when a
19
customer asks a question. Installed, using our on-demand model, sales people can
access and record their sales quote anytime, anywhere.
Our QwikQuote software is copyrighted, but not registered, and, is not protected
by patent rights.
ALWAYS-ON UTILITY COMPUTING
This level of service provides for either leased or customer owned standard
Windows applications, such as MS Office, Intuit's QuickBooks or other Windows
based products to the SME and SOHO customers on a subscription basis alleviating
the need for the customer to purchase servers, anti-virus software, information
technology consultant services or other items needed to maintain a Windows
network. Always-On allows for secured storage of data and information at leased
data centers. This service, Always-On, also provides the customer with the added
value and features of a wide-area network, allowing remote access to
applications and data anytime, anywhere.
APPGEN CUSTOM SUITE
Our Appgen Custom Suite software is a collection of collaborative commerce
modules from which a customer may select to form a total business computing
environment for the mid-sized business. These modules are designed specifically
for use by mid-sized enterprises of all types, and may be assembled in any way
that suits their 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, and others. The business accounting modules are
modifiable and grow with the customer's business. The Appgen Custom Suite may be
deployed on Unix, Windows, Mac OS X, and Linux operating systems on a single
computer or any other type of networked configuration.
The Appgen Custom Suite of applications are copyrighted, but not registered,
and, are not protected by patent rights.
MYBOOKS PROFESSIONAL
MyBooks Professional is a collaborative accounting system for small to mid-sized
businesses that is designed to simplify the approach to accounting with
jargon-free menus that make it easy to manage a user's business. A single
application interface for either a service-based or product-based company helps
grow the business by gaining control over information regarding 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. MyBooks Professional is a true double-entry, fully
auditable accounting system and is modifiable and scalable. The application can
accommodate one to ten simultaneous users and is installable on Unix, Apple Mac
OS X, Linux, and Microsoft Windows, requiring little or no technical assistance.
It may be used by a single user on a single machine, or by multiple users in a
network Windows environment or other operating systems such as Macintosh or
Linux server with any combination. MyBooks Professional is modifiable by our
network of developers and VARs.
MyBooks Professional is copyrighted, but not registered, and, is not protected
by patent rights.
PLANNED PRODUCTS AND SERVICES
E-ACCOUNTING
We will negotiate with Insynq, subject to our raising the maximum amount of
proceeds from our offering, a sole and exclusive, non-compete, master licensing
agreement, for the e-Accounting business model and brand. Insynq, an ASP, has
provided hosted business solution applications since 1997. During this time,
Insynq developed the e-Accounting brand of services and bundled third party
products that directly address the needs of the accounting and bookkeeping
20
professionals. We will have the right to further enhance the offerings of the
e-Accounting model as the market dictates.
Currently, e-Accounting products and services include:
o E-COLLABORATE AND E-WORKPLACE - proprietary document management and
work flow process software applications, owned by Insynq. These
applications are copyrighted, but not registered, and, are not
protected by patent rights.
Insynq has obtained the permission from third party vendors to add
their services from which our customers may choose to purchase
directly:
o EFILESHARE - is a document storage service which allow our customers to
create a shared file system on the Internet, assign users and
permissions, and allow people inside and outside of their company to
interact and collaborate in real-time. Automatic data backup included.
o CONSTANT CONTACT - is a web-based email marketing service. Small- and
mid-sized businesses build their email list, create and send
professional email newsletters and promotions, and track results with
this self-service solution. No technical expertise required.
o BIZACTIONS - is a weekly email communication system that keeps our
customers connected with their clients, prospects and referral sources.
Our customers may get more business by providing valuable ideas, making
timely announcements and accessing online reports that discover key
information and needs about their clients and prospects.
o BSYTECH - is a provider of template or custom web sites for
professional service firms and businesses that want affordable
websites.
o J2 GLOBAL COMMUNICATIONS - has developed a way to receive faxes and
voicemail from anywhere. People send faxes and voicemail to our
customer's j2 fax number and receive them by email.
In addition, the e-Accounting brand anticipates developing a set of business
processes that speak to the growing interest in back office transaction
processing by the third party, commonly called outsourcing.
We intend, with the licensed business model, the online technology delivery, and
the application environment, bundled together, to address the specific needs of
the financial professional. Through the increased efficiencies experienced with
the e-Accounting services, professional accountants and bookkeepers will find
that they will be able to realize increased revenues by billing for additional
value added services. We will provide our customers with the opportunity and
tools necessary to broaden their scope of professional services and involvement
with their clients' business, and we believe we have the expertise and resources
to help those businesses transition to or incorporate Internet business
technologies. The professional now has the opportunity to develop new
competencies in business technologies without having to invest the entire
practice and put the client base at risk. Therefore, e-Accounting allows the
professional to establish a position more closely to the top of the business
value chain, and also creates additional business opportunities for bookkeeping
and data processing services. This 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
common to the professional and client that a more conventional technology
approach only exacerbates.
Our online technology delivery model will allow both the professional and the
client to access and work simultaneously on the same data file. This business
solution delivers financial information in "real time".
Our target will be the small to medium sized financial professional firm
whose client base primarily uses accounting software, such as QuickBooks and
requires assistance from the professional in the maintenance of the data. We
will market to those financial professionals by employing the functions of
direct telemarketing, e-marketing, direct mail,
21
seminars and trade shows.
The target market for the software products will also be the small-to-midsize
for-profit businesses. We believe there are approximately 20 million such
companies in this country alone. QuickBooks is a product that may be sold and
implemented by consultants, VARs, and CPAs.
While we currently do not have any third party software vendor agreements, we
will actively seek licensing agreements for those applications that will allow
us to provide our services and those which will enhance the value of the
e-Accounting services to the customer.
MARKETING AND SALES
QWIKQUOTE SOFTWARE
We sell our QwikQuote Sales and QwikQuote Professional Sales through our web
site, WWW.QWIKQUOTE.COM. The information on this web site is not part of this
prospectus. Interested potential customers, after providing their name and
contact information, may download a copy of the software for testing. We then
call the potential customer to determine if there are any specific questions or
requirements. The customer may then purchase the downloaded software and have it
registered for full use. These companies are usually the small to medium sized
enterprise.
We also, for a fee, distribute our software through a third party vendor,
Digital River. This vendor is an e-commerce platform designed specifically to
reduce costs and streamline digital software sales. Customers can search their
web site, WWW.DIGITALRIVER.COM, for our software by title or functionality and
download to their computer and call us for registration. We have begun the
process to transfer the distribution agreement to us.
Our QwikQuote products have two versions each and priced as follows:
QwikQuote Sales Software - single user, retail price is $199.00
QwikQuote Sales Software - network, retail price is
$649.00
QwikQuote Professional Sales Software - single user, retail
price is $249.00
QwikQuote Professional Sales Software - network, retail price is
$1,475.00
Sales of our QwikQuote Software, prior to our purchase, from January 2003
through January 2004 were approximately $171,500. The number of units sold was
1,062. To-date, our sales for the month of February 2004 are approximately
$11,600 for 82 units and for the month of March 2004 sales are approximately
$14,300 for 88 units.
ALWAYS-ON
We will sell to small and medium enterprises and the high-end segment
of the small office and home office market for the sale of hosted leased or
owned software and access to Internet-related services. We will sell products
and services to our customer subscriber base that allows our customers to adopt
"Web-based" computing that serves as an alternative to both traditional local
area networks and wide area networks implementations. The Always-On service will
be marketed and sold through direct telesales for the smaller (10 - 50 user)
customers, and through face-to-face sales for the larger clients that have more
complex needs.
APPGEN CUSTOM SUITE
Existing reseller and channels are preferred,
though strong direct sales organizations will be considered. Our first
acquisition, Appgen Custom Suite, has given us 300 dealers and 80 value added
resellers (VARs), located around the world, to begin the sales process and
initiate cross selling of other products and services that we may offer. 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
develop their own applications around the Appgen Custom Suite and open whole
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new vertical markets for themselves while easily integrating the new packages or
modules and customizations with the accounting software.
Our resellers of the Appgen software are:
Platinum Level - is entitled to purchase the software and user licenses at a
discount for a fixed monthly fee. This level of involvement entitles the VAR to
have Gold Level and Dealer Level participants assigned under them. In addition,
the Platinum VAR, in consideration of the support and reporting requirements of
the Gold and Dealer Level resellers shall receive a commission based on the
retail value of the licenses sold through these resellers. The Platinum VAR
essentially bundles the Appgen Custom Suite or the MyBooks Professional
software, customized or un-customized, with other services or products that they
may provide and sell to their customers. A Developer's Kit is available to the
VAR with which to customize the base software to meet their customer's
requirements. We copy the application from the master copy of the software on to
installation media, such as a Compact Disk (CD) and ship to the VAR for
installation at the customer site. User licenses are considered delivered upon
registration by us. Support for the Appgen software is also included in the
Platinum Level.
Gold Level - is entitled to purchase the software and user licenses at a
discount for a fixed monthly fee. A Gold Level reseller may bundle the Appgen
Custom Suite or MyBooks Professional, customized or un-customized, with other
services or products that they may provide and sell to their customers. A
Developer's Kit is available to the VAR with which to customize the base
software to meet their customer's requirements. We copy the application from the
master copy of the software on to installation media, such as a CD and ship to
the VAR for installation at the customer site. User licenses are considered
delivered upon registration by us. Support for the Appgen software is also
included in the Gold Level.
Dealer Level - is entitled to purchase the software and user licenses at a
discount. A Dealer Level reseller may bundle the Appgen Custom Suite or MyBooks
Professional, customized or un-customized, with other services or products that
they may provide and sell to their customers. A Developer's Kit is available to
the VAR with which to customize the base software to meet their customer's
requirements. We copy the application from the master copy of the software on to
installation media, such as a CD and ship to the VAR for installation at the
customer site. User licenses are considered delivered upon registration by us.
Support for the Appgen software is also included in the Dealer Level.
Developer - essentially purchases a Developers Kit and a copy of Appgen Custom
Suite and/or MyBooks Professional software. The Developer is free to create and
sell customizations of his choosing or that of an end user. Support is available
for a fee.
We target the VARs and dealers of the more complex line of business applications
such as accounting, sales management, contact management, and human resources
that require a more involved and complex back office functionality. By providing
their applications in an ASP model, the reseller can increase new sales and
reduce sales cycles by off-loading the back office technical complexities to us.
The service is provided to the medium enterprise exclusively through resellers
and dealers, and when appropriate these software packages may be offered to the
existing Always-On users.
We intend to develop long-term relationships with VARs and dealers and together
market the service to the end-users. Revenues will be generated from the direct
sales of local installations and/or software hosting fees, and additional value
added offerings such as online training and E-commerce references. We will
support and promote the ongoing software industry trend toward renting software.
Sales of the Appgen software products, from January 2003 to January 2004 prior
to our purchase were approximately $336,800. The wholesale prices for our
products range from $50 to $3,500 and may purchased by the VAR with a variety of
discounts and volume pricing. To-date, our sales for the month of February 2004
are approximately $33,500 for 66 units and for the month of March 2004 sales are
$11,900 for 14 units.
The success of our marketing and sales activities is dependent, among other
things, on our ability to retain and attract qualified resellers and
telemarketers, as well as positive overall market perception of our products and
services.
23
COMPETITION
The market for Internet based data processing, information technology
services , hosted business solutions, and software applications are rapidly
evolving and intensely competitive. In addition to a customer's internally built
and supported operations, our primary current and prospective competitors
include:
o Providers of computer equipment,
o Providers of co-location, web site hosting and related services,
o Providers of technology that have recently announced their intentions
to offer some of the services that we may offer to a portion of our
targeted customer base,
o Providers of Internet based systems integration or professional
services, and
o Developers of software similar to ours.
Many of our competitors have been in business longer than us, have significantly
greater financial, technical, and other resources, or greater name recognition.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements. Competition could negatively
impact our ability to sell additional services on terms favorable to us.
Competitive pressures could cause us to lose market share or to reduce the price
of our services, either of which could harm our business, financial condition
and operating results.
RESEARCH AND DEVELOPMENT ACTIVITIES
To remain competitive, we must continually enhance and improve the functionality
and features of our software. Through a combination of outsourced developers and
programmers and employees, each with differing coding skills, we will convert
our Windows based accounting and quoting software applications to that which
functions totally in an Internet environment. We will develop further Web-based
software tools as the market demands.
GOVERNMENT REGULATION
Due to the increasing popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect to the Internet
generally, covering issues such as user privacy. Development of the market for
Internet commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business over
the Internet. The adoption of any such laws or regulations may decrease the
growth of commerce over the Internet, which could have a harmful effect on our
business.
To date, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New and existing laws may
cover issues that include:
o Sales and other taxes,
o User privacy,
o Pricing controls,
o Characteristics and quality of products and services,
o Consumer protections,
o Cross-border commerce,
o Libel and defamation,
o Copyright, trademark and patent infringement, and
o Other claims based on the nature and content of the Internet
materials.
Such new laws may impact our ability to market our products and services offered
on our web site in accordance with our business plan.
We may have to qualify to do business in other jurisdictions. If we make sales
of our products or services, we anticipate that sales and our customers will be
in multiple states and foreign countries. As our customers may reside in
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such state and foreign countries, such jurisdictions may claim that we are
required to qualify to do business as a foreign company in each such state and
foreign country. We are qualified to do business only in the state of
Washington. Failure to qualify as a foreign company in a jurisdiction where
required to do so could subject us to taxes and penalties.
At present, we do not collect sales or other similar taxes in respect of sales
and shipments of our products through Internet purchases. However, various
states have sought to impose state sales tax collection obligations on
out-of-state direct marketing companies similar to us. A successful assertion by
one or more of these states that it should have collected or be collecting sales
tax on the sale of our products could result in additional costs and
corresponding price increases to its customers.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
We currently own four software applications Appgen Custom Suite, MyBooks
Professional and QwikQuote Sales and QwikQuote Professional Sales, which are
copyrighted, but not registered, and, are not protected by trademark and patent
rights. However, we would anticipate acquiring the appropriate protections at a
later date. We regard service marks, domain names, and similar intellectual
property as critical to our success. We will rely on trademark, unfair
competition and copyright laws, trade secret protection and contracts such as
confidentiality and license agreements with our employees, customers, partners,
and others to protect our proprietary rights. Despite precautions, it may be
possible for competitors to obtain and/or use the proprietary information
without authorization, or to develop technologies similar to ours and
independently create a similarly functioning infrastructure. Furthermore, the
protection of proprietary rights in Internet-related industries is uncertain and
still evolving. The laws of some foreign countries do not protect proprietary
rights to the same extent, as do the laws of the United States. Protection for
proprietary rights in the United States or abroad may not be adequate.
We intend to license certain technology from third parties such as Citrix,
Microsoft, and others, for our technologies that support business systems. The
market is evolving and we may need to license additional technologies to remain
competitive. We may not be able to license these technologies on commercially
reasonable terms or at all. In addition, we may fail to successfully integrate
licensed technology into our operations.
Although we are not aware of any infringement or misappropriation of our
intellectual property or similar proprietary rights, it may be anticipated that
infringements and misappropriations will occur as our business grows and there
is more brand loyalty attaching to our trade names and domain names. We intend
to police against infringement or misappropriation. However, we cannot guarantee
that we will be able to enforce our rights and enjoin the alleged infringers
from their use of confusingly similar trademarks, service marks, telephone
numbers, and domain names.
We intend to police against infringement or misappropriation. However, we cannot
guarantee that we will be able to enforce our rights and enjoin the alleged
infringers from their use of confusingly similar trademarks, service marks,
telephone numbers, and domain names. In addition, third parties may assert
infringement claims against us. We cannot be certain that our technologies or
service marks do not infringe on valid patents, trademarks, copyrights, or other
proprietary rights held by third parties. We may be subject to legal proceedings
and claims from time to time relating to the intellectual property of others in
the ordinary course of our business. Intellectual property litigation is
expensive and time-consuming and could divert management resources away from
running the business as forecasted.
In addition, third parties may assert infringement claims against us. We cannot
be certain that our technologies or service marks do not infringe valid patents,
trademarks, copyrights, or other proprietary rights held by third parties. We
may be subject to legal proceedings and claims from time to time relating to the
intellectual property of others in the ordinary course of our business.
Intellectual property litigation is expensive and time-consuming and could
divert management resources away from running the business as planned.
DESCRIPTION OF PROPERTY
We lease approximately 750 square feet of office space located at 1127 Broadway
Plaza #203, Tacoma, Washington 98402. The monthly rent is $550.00 and can be
cancelled by either party with thirty (30) days notice. We also lease office
space located at 300 Vanderbilt Motor Parkway, Hauppauge, NY 11788. The monthly
rent is $750 and is
25
renewable every two months and may be cancelled with sixty (60) days notice. We
believe these arrangements are adequate to support our future operations.
We currently do not have a data center and nor an infrastructure requirement. We
will acquire these components, either purchased or leased, as sales and business
demands grow. We cannot be certain that we will have successful negotiations to
secure such leases with third party vendors.
CUSTOMER SERVICE AND SUPPORT
Customer service employees will be responsible for analyzing customer service
delivery requirements, provide for determining account support resource needs,
developing service deployment processes, managing service deployment processes,
administering level I technical support, surveying customer needs and
satisfaction, and estimating account support costs.
Customer support will be available to subscribers in a number of ways:
o E-MAIL. 24x7x365 Monitored email support accounts with 15-minute response
time.
o TOLL-FREE PHONE. 24x7x365 Manned call center with basic support and
immediate escalation as needed.
o LIVE CHAT. 24x7x365 Chat real-time with our customer service
representative in a support center. Access chat anywhere from our web
sites by clicking on the "Support Chat" button.
o SELF-SERVICE. Self-service support options to clients and resellers
including administration tools to resellers, and Internet connectivity
test tools.
o ONLINE TRAINING. Customer service representatives to provide online
training for clients utilizing web based conferencing and Citrix
management tools.
EMPLOYEES
As of March 31, 2004, we employ three part-time, and, at present, do not receive
compensation. Our staffing plan is built around meeting demand. As demand grows
from the sale of our products and services, staff will be added to meet that
demand, and not before. We intend to employ approximately fifteen people located
in Tacoma, Washington and five on the East Coast.
PLAN OF OPERATION
We have engaged in no significant operations other than organizational
activities, acquisition of capital and assets and preparation for the
registration of our securities under the Securities Exchange Act of 1934, as
amended. Since our inception to date, we have received nominal revenues, and we
remain in the development stage and, have experienced no significant change in
liquidity or capital resources or stockholders' equity. We anticipate incurring
a loss as a result of organizational expenses, expenses associated with
registration. We currently anticipate our offering expenses to be limited to
accounting fees, legal fees, telephone, mailing, filing fees, escrow agent fees
and transfer agent fees. See "Risk Factors."
With our recent acquisition of the Appgen Custom Suite, we have begun to market
and sell to our VAR and dealer channel. Marketing to this channel will be
nominal, as they are already familiar and are working with the product. They
will be provided with technical development assistance when requested. We will
assist the VARs in cooperative marketing to each of their niche markets by using
telemarketing, e-marketing and direct mail. With our other recent acquisition,
we will introduce our QwikQuote applications to the VAR channel for cross
selling and increase our web presence to drive an increase in sales.
CASH REQUIREMENTs
In order to finance future acquisitions of assets and companies, and fund
operations, it is our intent to raise gross proceeds of $5,000,000 less expenses
of approximately $36,000 from this public offering. If we succeed in raising the
maximum proceeds from this offering, we will apply $4,964,000 to our plan of
operations over the next twelve
26
months. This will allow us to reduce the time frame to become fully operational
from several years to less than one year. The following summarizes our
anticipated cash requirements to achieve these goals. Should we not raise the
net minimum proceeds from this offering we will have to acquire debt to fund the
aforementioned operating requirements.
1. We will spend approximately $3,000,000 to acquire assets or businesses.
Currently, we have a letter of intent (LOI) to purchase a targeted company for
$2,000,000 in cash, and, provide a minimum of $3,000,000 in working capital.
This potential acquisition provides for a variety of on-line curriculum services
to K-12 public and private educational institutions. We have yet to perform our
due diligence, to include the audit of its financial statements, its
representations and warranties, on-site inspections and interviews. Subject to:
o receiving the maximum proceeds from this offering, and
o the satisfactory completion of all the due diligence items, and
o the completion of the audit of the financial statements,
the definitive agreement(s) should be completed within two months, thereof. If
we do not raise the full amount from this offering, the letter of intent will
most likely become null and void, and we will immediately seek out other
targeted companies, or selected assets, for acquisition. Because timing is of
essence with this letter of intent, and, if we are not able to comply with all
the terms of the LOI, and yet, we are still able to raise the maximum funds from
this offering, we would then be able to pursue new opportunities. However, if we
raise only our minimum amount of proceeds we would seek to purchase other, less
impacting, opportunities, and obviously of lesser value, either in the form of
asset purchases or business combinations, at an approximate cost not to exceed
$140,000. Acquisitions of businesses and/or selected assets are critical to the
overall success of our business. For this reason, we are committing substantial
funds, regardless of the funding level, in order to achieve the first phase of
our business plan.
2. We currently do not have a data center and an infrastructure requirement. We
will acquire these components, either purchased or leased, as sales and business
demands grow. Our intention is to add server equipment to that of any already
leased equipment, as demand for computing is required. This need will be
entirely dependent on sales and market demand for our new products. However,
certain new customers may require special computing equipment. If we are
unsuccessful in raising the maximum proceeds from our offering, we will limit
the purchase of any equipment and accordingly look to leasing equipment to meet
our short-term needs while relying on our projected revenues. It is our intent
to lease as much of our equipment as possible in order to preserve cash. Our
twelve-month budget for this infrastructure is not to exceed $250,000.
4. While currently we do not have any agreements with third parties, we intend
to develop arrangements to bundle other products and services with our
proprietary software and ASP capabilities as the market demands. We will
continue to search the market for new and innovative products and services to
offer to our customers.
5. We will continue to develop and execute on our strategic marketing plan,
which will consist mainly of telemarketing, e-marketing, direct mail, trade
shows and seminars at an approximate cost of $750,000. Subject to our raising
the maximum proceeds from our offering, we plan to do the following:
o Issue newsletters, which will be emailed to the finance professional,
which outlines current developments and articles of interest. We also
anticipate a bi-weekly supplemental newsletter promoting our products and
services.
o Mail marketing pieces to approximately 68,000 small to medium sized
accounting and bookkeeping firms over the next year on a monthly basis.
Any follow up on inquiries will be conducted by our inside sales team.
o Purchase advertising space in a variety of trade magazine aimed at the
financial professional and the various niche markets of the VARs'
customers.
o Target appropriate trade show events, and, subject to our raising the
maximum proceeds from our offering, we anticipate attending one per month.
If our minimum proceeds are raised from our
27
offering, we will curtail our efforts and rely on our forecasted revenues.
o Initiate a series of targeted seminars to the financial professional,
which will explain our services and products and the on-line computing
model. Seminars of this nature will also be targeted to the small to
medium sized business. We intend to hold such seminars timed around the
business cycle of the financial professional.
o Enhance contact on our various web sites, such as WWW.QWIKQUOTE.COM,
WWW.APPGEN.COM, and www.aptus-3c.com by increasing our product name
recognition on the various search engines, such as WWW.GOOGLE.COM,
WWW.YAHOO.COM and WWW.MSN.COM. We believe this is essential in gaining
awareness of our services and software.
o Conduct targeted telemarketing campaigns to the niche based financial
professionals and the small to medium sized companies.
Overall regardless of the level of funds raised from this offering, we have
committed approximately 14% to 15% of net proceeds for this activity.
6. To remain competitive, we must continually enhance and improve the
functionality and features of our software. Through a combination of outsourced
developers and programmers and employees, each with differing coding skills, we
will convert our Windows based accounting and quoting software applications to
that which function totally in an Internet environment. We expect, subject to
our success in raising the maximum proceeds from our offering, it would take
approximately 5,500 hours to complete the various conversions. The expenditures
for this activity are approximately 5% of the net proceeds if we are successful
in raising the maximum amount of proceeds from our offering. If we raise only
the minimum proceeds from our offering, we would have to curtail our conversion
activity and/or rely on our projected revenues.
7. If we succeed in raising the maximum from our offering, we will use the
remaining balance of approximately $714,000 to fund the day-to-day routine
monthly operations, such as paying salaries, taxes, rent, licensing, consultants
and professional fees. If we succeed only in raising our minimum proceeds of our
offering we would anticipate employing more part-time employees and relying on
our projected revenues
We do not anticipate a requirement for us to purchase office facilities, as it
is our intention to lease these facilities when required.
We plan to retain staffing levels sufficient to achieve our goals. If we sell
the maximum number of shares under this offering, we expect to employ over the
next twelve months approximately between 15 and 20 personnel, to include our
executive management team, sales and administration staff and customer support
and developers. This staffing may include full-time and part-time employees. If
we are not successful in raising the maximum proceeds from our offering we will
hire only three employees and outsource the remaining functions such as,
accounting, customer support and telesales, until such time funds are available.
If we are unsuccessful in raising the minimum proceeds from this offering, and,
without sufficient revenues, we will continue limiting our part-time employees
to our chief executive officer, chief administrative officer and executive vice
president.
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 asset purchase or whether our capital
will be further depleted by the operating losses (if any) of the business entity
or assets which we may eventually acquire.
RECENT ACQUISITIONS
On January 23, 2004 we have purchased certain assets from Mark Andre and Appgen
Technologies, Inc. The purchase price to Mark Andre is made up of:
28
o $500,000 payable in common stock valued at $1.00 per share of common
stock.
o A cash payment at closing of $8,500.
o A Warrant to purchase common stock up to 500,000 with an exercise price of
$0.50 per share.
o Assumption of development support of the software code.
The purchase price to Appgen Technologies, Inc. is in the form of a cash payment
in the amount of $9,000.00.
In connection with our purchase of the Appgen Custom Suite, we entered into two
separate agreements with Mark Andre described as follows:
o Distribution Agreement under which Mark Andre will receive 5.5%, in
perpetuity, distribution of gross revenues received of all sales of Appgen
products.
o Consulting Agreement for the term of two (2) years with monthly
compensation in the amount of $5,000.
On February 1, 2004 we purchased certain assets from QwikQuote, Inc. The
purchase price to QwikQuote, Inc. is made up of:
o $21,000 payable in cash.
o Consulting and Non-Compete Agreement with Alan Katz in the amount $17,000
for a term of 12 months and a warrant to purchase 58,147 shares of common
stock with an exercise price of $0.0095 per share.
o Consulting and Non-Compete Agreement with Glenn Paul in the amount of
$17,000 for a term of 12 months and a warrant to purchase 219,706 shares
of common stock with an exercise price of $0.0095 per share.
o Consulting and Non-Compete Agreement with Win Straube (The Straube
Foundation) in the amount of $17,000 for a term on 12 months and a warrant
to purchase 58,147 shares of common stock with an exercise price of
$0.0095 per share.
o Payment of a transition bonus to Tim Heath in the amount of $9,000 and a
warrant to purchase 42,000 shares of common stock with an exercise price
of $0.0095 per share.
o Finders fee to Mark Levin in the amount of $9,000 and a warrant to
purchase 42,000 shares of common stock with an exercise price of $0.0095
per share.
With our recent acquisitions, we have begun to sell our products through our
Appgen VAR and dealer channel and through our QwikQuote dealer channel and our
web site located at WWW.QWIKQUOTE.COM. We have begun to implement, on a limited
basis, our marketing plan for these products.
REVENUES
We anticipate our revenues will be generated from sales of our software or
on-line subscription-based hosting fees from:
o Our Appgen Custom Suite accounting modules and user licenses, version
upgrades, and developer's tools, among others.
o MyBooks Professional.
o QwikQuote Sales and QwikQuote Professional Sales software, licenses,
maintenance and support.
Initially, these applications will be sold as non-recurring revenue, however,
with the introduction of the on-line application hosting services, we will
market and sell the applications as subscription-based service, generating
monthly recurring revenue. We will also continue the sale of the applications to
the end user for installation on their computer or in-house computer network.
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e-Accounting services and bundled offerings will be sold on a subscription
basis, which is expected to generate monthly recurring revenue.
In the event we are not successful in reaching certain levels of our initial
revenue targets from the sales of our products and services, additional capital
or debt funds may be required. In this event, we would then restrict the
expenditures for the development and marketing of our products and services,
until such funds have been raised to supplant this portion of the budget.
AGREEMENTS
We have consulting agreements with the following:
o In connection with our purchase of the Appgen Custom Suite and MyBooks
Professional, we executed a consulting agreement with Mark Andre, for him
to provide consulting services on projects as consultant and we mutually
agreement upon. The term of the agreement is for two years and monthly
compensation in the amount of $5,000 will commence the earlier of April
15, 2004 or when our gross revenues exceed $40,000 per month.
o In connection with our purchase of the Appgen Custom Suite and MyBooks
Professional, we executed a distribution agreement with Mark Andre, under
the terms of which we will pay 5.5%, in perpetuity, on gross sales of the
acquired software. Payments will commence thirty (30) days after the end
of the second quarter, 2004.
o We executed a three month independent consulting agreement with Errol
Alahverdi for him to act as consultant on such projects as we shall
mutually determine and shall receive monthly compensation in the amount of
$7,000 and is automatically renewable unless notified by either party
thirty days (30) prior of intent not to renew.
o We executed a three month independent consulting agreement with Marianne
Grimaldi for her to act as consultant on such projects as we shall
mutually determine and shall receive monthly compensation in the amount of
$5,500 and is automatically renewable unless notified by either party
thirty days (30) prior of intent not to renew.
o We executed a three month independent consulting agreement with Sylvia Sze
for her to act as consultant on such projects as we shall mutually
determine and shall receive monthly compensation in the amount of $5,750
and is automatically renewable unless notified by either party thirty days
(30) prior of intent not to renew.
In connection with our purchase of the QwikQuote Software, we executed:
o A consulting and non-compete agreement with Glenn Paul, for him to provide
advice and consulting services related to the selling and marketing of the
applications. In addition, for the term of one year, consultant will
refrain from creating, marketing or reselling sales quoting software or
services. Compensation for the consulting portion of the agreement is a
cash payment in the amount $10,000 and a $7,000 cash payment for the
non-compete portion of the agreement.
o A consulting and non-compete agreement with Alan Katz, for him to provide
advice and consulting services related to the selling and marketing of the
applications. In addition, for the term of one year, consultant will
refrain from creating, marketing or reselling sales quoting software or
services. Compensation for the consulting portion of the agreement is a
cash payment in the amount of $10,000 and a $7,000 cash payment for the
non-compete portion of the agreement.
o A consulting and non-compete agreement with Win Straube (The Straube
Foundation), for him to provide advice and consulting services related to
the selling and marketing of the applications. In addition, for the term
of one year, consultant will refrain from creating, marketing or reselling
sales
30
quoting software or services. Compensation for the consulting
portion of the agreement is a cash payment in the amount of $10,000 and a
$7,000 cash payment for the non-compete portion of the agreement.
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 after first adopting a stock option plan.
NEED FOR ADDITIONAL FINANCING
Insynq, Inc. has provided administrative and financial assistance to us during
this offering period. Insynq is partially owned by two of our officers,
directors and stockholders. As of March 31, 2004, Insynq has advanced us
approximately $79,540 and we have paid them $52,000, leaving a net amount due
them of $27,540. In addition, we intend, subject to the minimum proceeds raised
from this offering, to negotiate a sole and exclusive master licensing agreement
with Insynq for its e-Accounting business model. We believe that there is an
overall, long-term and mutual benefit derived from this relationship. If deemed
feasible by our management, a licensing agreement such as this, will permit us
to accelerate our business plan goals by immediately cross selling and marketing
additional related business solutions to our customers. As direct result of a
master licensing agreement such as this, we anticipate we will be able to
directly impact our total revenues because we have potential access to 300
dealers and 80 VARs worldwide to sell our core products, meaning we have a
built-in marketing mechanism for more than just our core software application
products. Meanwhile, we believe Insynq would then be able to focus its marketing
efforts as a content provider to the telecommunications, cable and Internet
service provider industries instead of dividing its resources among the many
divergent ASP initiatives it already serves.
Completion of our plan of operations is subject to securing adequate financing
and generating minimum revenues through the sales our products and services.
Management believes that the sources of the forecasted funds, both from the net
proceeds from this offering and from the operations needed to maintain current
limited operations will be to sufficient to pay our forecasted operating
expenses for the next twelve months. In the absence of our projected revenues,
we may be unable to proceed with our plan of operation.
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
cannot assure you that we will be able to obtain additional funding when or if
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,
when required, would impair severely our business operations.
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.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership
of our common stock as of March 31, 2004, for:
o Each person or group who is known by us to beneficially own more than 5%
of the outstanding shares of our common stock;
o Each of our directors; o Each of our named executive officers; and
o All of our directors and executive officers as a group.
The percentage of shares owned provided in the table is based on
12,845,000 shares of common stock outstanding as of March 31, 2004 and a
maximum amount of sales from this offering. Beneficial ownership is determined
in accordance with the rules of Section 13(d)(3) of the Securities Act of 1934
(the "Exchange Act") and generally includes voting or investment power with
respect to securities. Except as indicated by footnote, the persons named in
the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them. The determination of whether
these persons have sole voting and investment power is based on information
provided by them.
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Common Shares Beneficially Common Shares Beneficially
Owned Prior to Offering Owned After Offering
Number Percent Number Percent
John P. Gorst (1) 3,300,000 23.5% 3,300,000 13.72%
1127 Broadway Plaza #203
Tacoma, WA 98402
M. Carroll Benton (1) 3,300,000 23.5% 3,300,000 13.72%
1127 Broadway Plaza #203
Tacoma, WA 98402
Clifford Mastricola (2) 1,650,000 11.75% 1,650,000 6.86%
2190 Carmel Valley Rd
Delmar, CA. 92014
Clayton Chase (2) 1,650,000 11.75% 1,650,000 6.86%
2190 Carmel Valley Rd
Delmar, CA. 92014
Mark Levin (1) 3,300,000 23.5% 3,300,000 13.72%
9812 Falls Rd, Suite 198
Potomac, MD. 20854
Directors and Officers as a group 6,600,000 46.99% 6,600,000 27.45%
(2 persons) (3)
(1) This includes 300,000 shares of class A common stock outstanding, which
may be converted to common stock.
(2) This includes 150,000 shares of class A common stock outstanding, which
may be converted to common stock.
(3) This includes 600,000 shares of class A common stock outstanding, which
may be converted to common stock.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
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.
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NAME AGE OFFICE DATE OF SERVICE OFFICER AND/OR
DIRECTOR OF OTHER
PUBLIC COMPANIES
John P. Gorst 36 Chairman of the Board, Chief November 2003 Insynq*
Executive Officer and President
M. Carroll Benton 59 Secretary, Treasurer, Chief November 2003 Insynq*
Administrative Officer and
Director
Joanie C. Mann 42 Executive Vice President November 2003 Insynq
*Indicates a 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.
Where executive management is employed by another public company, Insynq, time
will be allocated between the two corporations by each of the aforementioned
executive management team in such a manner and combination that least one of
those officers will be active for us at all times. In order to maintain
independence, it is anticipated, pending the growth of our business, certain key
management will be become full-time in our business activities. Any agreements
entered into by us and Insynq will be reviewed by an independent third party to
determine if there is a conflict of interest and any such services rendered will
be provided on terms no less favorable to us than that which could be obtained
from independent third parties. If it is determined that such conditions of
conflict of interest or more favorable terms exist we will submit to binding
arbitration. Such arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in effect
at that time.
Our executive management team brings more that seventy-six years of combined
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 of the Board, President and Chief Executive
Officer.
Mr. John P. Gorst is one of our co-founders and has directed all development and
business efforts for us since November 2003. Mr. Gorst has over 14 years
experience in founding entrepreneurial technology ventures, specifically in the
development of software and data services for business. His experience includes
serving as chief executive officer and board chairman of Insynq, an application
service provider, from August 1998 to present, vice president & general manager
for a computer integration company, Interactive Information Systems Corp., from
July 1996 to August 1998, and a training/IS consulting business in conjunction
with Nynex Business Centers of New York. Mr. Gorst's primary responsibility
shall be chairman of the board and chief executive officer and president. Mr.
Gorst will be directing our strategy, and positioning us in the business
marketplace by forging strategic business alliances and mergers and
acquisitions. Mr. Gorst will also serve as company and technology evangelist at
tradeshows, press conferences and industry analyst meetings in order to increase
awareness for our 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.
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M. CARROLL BENTON, - Co-Founder, Secretary/Treasurer, Chief Administrative
Officer, Interim Chief Financial Officer and Director.
Ms. M. Carroll Benton is one of our co-founders and has directed and managed the
fiscal responsibilities of the enterprise since November 2003. 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, implementation, support, and business practice
analysis. She also taught undergraduate accounting courses at several Puget
Sound colleges and universities. With an in-depth understanding of our finances,
accounting infrastructure and compliance issues, Ms. Benton oversees the current
administrative and financial operations. From December 1995 through December
1999 Ms. Benton was president of a computer integration company, Interactive
Information Systems, Corp. Her public sector experience includes serving as
chief administrative officer, secretary, treasurer, interim chief financial
officer and director for Insynq a Pacific Northwest application service
provider, from August 1998 to present. Formerly with a local CPA firm, Ms.
Benton brings over 37 years of financial expertise to the business.
JOANIE C. MANN - Executive Vice President.
Beginning in November 2003, Ms. Joanie Mann brings to our management team, as
the executive vice president 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 formation, in January 1985, of Com-Pacific Resources,
Inc. a network integration firm, which was successfully sold to Communications
World International, a telephone sales and service provider, in September 1994.
From July 1998 to December 1999, Ms Mann was an information systems management
consultant for Interactive Information Systems Corp., a Pacific Northwest
regional network integration company. Her public experience includes serving as
the vice president of strategic alliances for Insynq, a Pacific Northwest
application service provider from January 2000 to present.
There are no family relationships among any of our directors or executive
officers. See "Certain Relationships and Related Transactions" for a description
of transactions between our directors, executive officers and/or their
affiliates.
STAFFING PLAN
Our staffing plan is built around meeting demand. As demand grows for our
products and services, staff will be added to meet that demand, and not before.
We intend to employ approximately fifteen people located in Tacoma, Washington
and five people on the East Coast.
EXECUTIVE COMPENSATION
No officer or director has received any compensation. Until we acquire
additional capital, it is not intended that any officer or director will receive
compensation from us other than reimbursement for out-of-pocket expenses, up to
$500 per individual, including travel, incurred on our behalf. See "Certain
Relationships and Related Transactions." No officer and/or director will receive
any remuneration out of the proceeds of this offering. They will be compensated
only from revenue generated from operations. We have no stock option,
retirement, pension, or profit-sharing plans for the benefit of directors,
officers or other employees, but the Board of Directors may recommend adoption
of one or more such plans in the future.
We have employed the law firm of Miles Garnett, Esq. for providing legal
services in connection with registration of our shares. We 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
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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 us and our officers, directors and 5% or more
shareholders will be on terms no less favorable to us than that which could be
obtained from independent third parties.
DIRECTORS' COMPENSATION
Our directors receive no compensation for their services as directors.
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
required 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 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 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 anticipate obtaining several premium quotations. We 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 afford such insurance.
KEYMAN LIFE INSURANCE
Life insurance on key personnel will be purchased after the effective date of
this offering in amounts up to $1 million, 50% payable to us and 50% payable to
family beneficiaries. We are planning to purchase such insurance towards the
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 are not expected to be material.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
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Our chief executive officer, John P. Gorst, is the president and chairman of the
board of Insynq, a public company. M. Carroll Benton, our chief administrative
officer, secretary and treasurer is also chief administrative officer, secretary
and treasurer of Insynq, Joanie C. Mann, vice president of strategic alliances
for Insynq is our executive vice president.
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 ours except as described under "Executive Compensation" above.
Subject to our raising the maximum amount of proceeds from our offering, we will
negotiate an exclusive master licensing arrangement with Insynq, for the use of
its proprietary brand of bundled services and either third party or owned
software applications as described under "Risk Factors" and Plan of Operation.
On November 7, 2003, our board of directors authorized and issued the initial
issuance of an aggregate of 12,000,000 shares as founder's stock at a price of
$0.0025 per share of which 3,000,000 shares were issued each to John P. Gorst
and M. Carroll Benton totaling $7,500 each, which was paid for in cash;
3,000,000 shares were issued to Mark Levin totaling $7,500, which was paid for
in cash; and 1,500,000 shares were issued to each Clifford Mastricola and
Clayton Chase totaling $3,750 each, which was paid for in cash. In the past,
executive management of Insynq had engaged Mark Levin, Clifford Mastricola and
Clayton Chase as consultants regarding possible merger and acquisition targets
and other business advice. Their contributions to us as founders were in the
form of cash investment for common stock. These individuals may be consultants
to assist us in executing that portion of our business plan relating to mergers
and acquisitions and other business advice.
In connection with our purchase of the QwikQuote software, the purchase price
included a finder's fee, in the amount of $9,000, to Mark Levin for his services
in locating the then potential business opportunity.
No promoter was compensated in connection with our purchase of the Appgen Custom
Suite.
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.
Our authorized capital stock consists of 250,000,000 shares of common stock,
$0.001 par value per share, 10,000,000 shares of class A common stock, $0.001
par value per share, and 10,000,000 shares of class A preferred stock and
10,000,000 class B preferred stock, each with $0.001 par value per share. On
December 15, 2003, by majority vote of the shareholders, we were authorized an
additional 200,000,000 shares of common stock, increasing the total number to
250,000,000 of authorized shares of common stock. On December 17, 2003, by
majority vote of the shareholders, we were authorized to issue up to 5,000,000
shares of class A common stock.
COMMON STOCK
There were 12,845,000 shares of our common stock outstanding and held of record
by 19 stockholders as of March 31, 2004. After giving effect to the offering,
the issued and outstanding capital stock will consist of 22,845,000 shares.
The holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Because the shares of common stock
do not have cumulative voting rights, the holders of more than 50 percent of the
shares voting for the election of directors can elect all the directors if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the board of directors. Subject to preferences
that may be applicable to the holders of outstanding shares of preferred stock,
if any, the holders of our common stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the board of
directors out of funds legally available therefore. In the event of liquidation,
dissolution or winding-up, and subject to the prior distribution rights of the
holders of outstanding shares of preferred stock, if any, the holders of shares
of our common stock shall be entitled to receive pro rata all the remaining
assets available for distribution to our stockholders. Our common stock has no
preemptive or conversion rights or other subscription rights.
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Our board of directors is authorized to issue additional shares of common stock,
not to exceed the amount authorized by our Certificate of Incorporation, and to
issue options and warrants for the purchase of such shares, on such terms and
conditions and for such consideration as the board may deem appropriate without
further stockholder action.
CLASS A COMMON STOCK
As of March 31, 2004 there were 1,200,000 shares issued and outstanding of our
class A common stock to 5 stockholders of record. The holders of our class A
common stock are entitled to one hundred votes per share on all matters to be
voted upon by the stockholders. Because the shares of common stock do not have
cumulative voting rights, the holders of more than 50 percent of the shares
voting for the election of directors can elect all the directors if they choose
to do so and, in such event, the holders of the remaining shares will not be
able to elect any person to the board of directors. The holders of our class A
common stock are not entitled to receive cash dividends, if any, as may be
declared from time to time by the board of directors. In the event of
liquidation, dissolution or winding-up, and subject to the prior distribution
rights of the holders of outstanding shares of preferred stock, if any, the
holders of shares of our class A common stock shall be entitled to receive pro
rata all the remaining assets available for distribution to our stockholders.
Our class A common stock has no preemptive rights. The holders of class A common
stock may at any time or from time to time, at their discretion, convert any
whole number or all of the class A common stock held into fully paid and
non-assessable common stock at the rate (subject to adjustment) of one share of
common stock for each share of class A common stock. There are no redemption or
sinking fund provisions applicable to our class A common stock.
Our board of directors is authorized to issue additional shares of class A
common stock, not to exceed the amount authorized by our Certificate of
Incorporation, and to issue options and warrants for the purchase of such
shares, on such terms and conditions and for such consideration as the board may
deem appropriate without further stockholder action.
PREFERRED STOCK
We currently have no outstanding shares of preferred stock. The board of
directors has the authority, without further action by our stockholders, to
issue up to ten million shares of preferred stock in one or more series and to
fix the rights, preferences and privileges thereof, including dividend rates and
preferences, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any series
or the designation of such series, without further vote or action by the
stockholders. The board of directors, without stockholder approval, could issue
preferred stock with voting and conversion rights, which could adversely affect
the voting power of the holders of common stock. The issuance of preferred stock
may also have the effect of delaying or preventing a change of control of us.
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.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 22,845,000 shares of common stock
issued and outstanding assuming all the shares offered herein are sold. The
10,000,000 shares of 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.
37
There will be approximately 12,845,000 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 ours 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 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.
THE APPLICATION OF THE "PENNY STOCK" RULES
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:
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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; and,
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. 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.
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 us. The address of such site is
http://www.sec.gov.
We intend to furnish to our shareowners annual reports containing audited
financial statements certified by independent public accountants for each fiscal
year and quarterly reports containing unaudited 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
39
reference). Any such request shall be directed to the Interim 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.
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 9. 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.
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.
EXPERTS
Our financial statements, as of and for the periods, December 31, 2002 and
December 31, 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.
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.
40
INDEX TO FINANCIAL STATEMENTS
Page
No.
Report of Independent Certified Public Accountants F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholders' Deficit 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 December 31, 2003 and 2002, and the related statements of
operations, stockholders' deficit, and cash flows for the year ended December
31, 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 December 31,
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 December 31, 2003 and 2002, and the results of its
operations and cash flows for the year ended December 31, 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 December 31, 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.
/s/ De Joya & Company
De Joya & Company
March 31, 2004
Las Vegas, Nevada
F-2
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
------------------- -------------------
December 31, December 31,
2003 2002
---------------------------------------
ASSETS
Current assets
Cash $ 9,227 $ --
Deposit 15,000 --
-------- --------
Total current assets 24,227 --
Other asset 1,170 --
-------- --------
Total assets $ 25,397 $ --
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 18,927 $ 273
Due to related party 15,000 --
-------- --------
Total current liabilities 33,927 273
-------- --------
Total liabilities 33,927 273
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 --
Class A common stock, $.001 par value, 5,000,000 shares
authorized and 1,200,000 shares issued and outstanding 1,200 --
Additional paid-in capital 18,000 --
Stock subscriptions receivable (1,200) --
Accumulated deficit (38,530) (273)
-------- --------
Total stockholders' deficit
(8,530) (273)
-------- --------
Total liabilities and stockholders' deficit $ 25,397 $ --
======== ========
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
(Date of inception) (Date of inception)
For the year ended through through
December 31, 2003 December 31, 2002 December 31, 2003
--------------------- ----------------------- ------------------------
Revenue $ -- $ -- $ --
Operating expenses
General and administrative 38,257 273 38,530
----------- ----------- -----------
Total operating expenses 38,257 273 38,530
----------- ----------- -----------
Loss before provision for
income taxes (38,257) (273) (38,530)
Provision for income taxes -- -- --
----------- ----------- -----------
Net loss $ (38,257) $ (273) $ (38,530)
=========== =========== ===========
Basic and diluted loss per
common share $ (0.02) $ -- $ (0.04)
=========== =========== ===========
Basic and diluted weighted
average of common shares
outstanding 1,804,932 -- 1,032,864
=========== =========== ===========
See Accompanying Notes to Financial Statements.
F-4
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
Outstanding Stock
-------------------------- Class A Additional Stock Total
Class A Common Common Paid-in Subscriptions Accumulated Stockholders'
Common Common Stock Stock Capital Receivable Deficit Deficit
------------- ------------- ---------- ----------- --------- ---------- ----------- ------------
Balance, April 4, 2002
(Date of inception) $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Net loss for the period
ended December 31, 2002 -- -- -- -- -- -- (273) (273)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2002 -- -- -- -- -- -- (273) (273)
Issuance of common stock for 12,000,000 -- 12,000 -- 18,000 -- -- 30,000
cash, at $0.0025 per share
Issuance of class A common
stock for subscriptions
receivable, at $0.001 per
share -- 1,200,000 -- 1,200 -- (1,200) -- --
(38,257)
Net loss for the year ended
December 31, 2003 -- -- -- -- -- -- (38,257)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2003 12,000,000 1,200,000 $ 12,000 $ 1,200 $ 18,000 $ (1,200) $ (38,530) $ (8,530)
=========== =========== =========== =========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements.
F-5
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Period from Period from
April 4, 2002 April 4, 2002
(Date of inception) (Date of inception)
For the year ended through through
December 31, 2003 December 31, 2002 December 31, 2003
---------------------- ------------------------ ------------------------
Cash flows from operating activities:
Net loss $ (38,257) $ (273) $ (38,530)
Changes in operating assets and liabilities:
Increase in deposit (15,000) -- (15,000)
Increase in other asset (1,170) -- (1,170)
Increase in accounts payable 18,654 273 18,927
Increase in due to related party 15,000 -- 15,000
------------- -------------- --------------
Net cash used by operating activities (20,773) -- (20,773)
Cash flow from financing activities:
Proceeds from issuance of common stock 30,000 -- 30,000
------------- -------------- --------------
Net cash provided by financing activities 30,000 -- 30,000
------------- -------------- --------------
Net increase in cash 9,227 -- 9,227
Cash, beginning of period -- -- --
------------- -------------- --------------
Cash, end of period $ 9,227 $ -- $ 9,227
============= ============== ==============
See Accompanying Notes to Financial Statements.
F-6
APTUS CORP.
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 $32,000
from the period of April 4, 2002 (Date of Inception) through December 31,
2003 and has not commenced its operations, raising substantial doubt about
the Company's ability to continue as a going concern. 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 the 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 December 31, 2003, the Company has available net operating loss
carryovers of approximately $32,000 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 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 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 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 year ended December 31, 2003 and for the period
from April 4, 2002 (Date of Inception) through December 31, 2002, no
options and warrants were included 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 year ended December 31, 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 year ended December 31, 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. DEPOSIT
As of December 31, 2003, deposit totaling $15,000 relates to an asset
purchase agreement with QwikQuote, Inc. as described in Note 5.
3. DUE TO RELATED PARTY
As of December 31, 2003, due to related party is comprised of advances from
an entity owned by a shareholder. This amount is due on demand, unsecured
and bears no interest.
F-9
4. STOCKHOLDERS' DEFICIT
On November 7, 2003, the Company issued 12,000,000 shares of its common
stock for cash in the amount of $30,000 ($0.0025 per share) to five
individuals.
On December 15, 2003, the Company increased the authorized number of shares
of common stock to 250,000,000, par value $0.001 per share.
On December 17, 2003, the Company authorized 5,000,000 shares of class A
common stock, par value of $0.001 per share.
On December 22, 2003, the Company issued 1,200,000 shares of class A common
stock to five individuals in consideration of a stock receivable totaling
$1,200 ($0.001 per share).
5. SUBSEQUENT EVENTS
The Company collected $1,200 in cash related to 1,200,000 shares of class A
common stock issued in December 2003 as discussed in Note 4.
ASSETS PURCHASED - On January 23, 2004, the Company consummated an asset
purchase agreement with Appgen Technologies, Inc. and Mark Andre
(collectively the "Sellers") for the purchase of proprietary software,
source codes and computer hardware totaling $294,250 in consideration of
$17,500 in cash, 500,000 shares of the Company's common stock valued at
$250,000 ($0.50 per share), and stock warrants for 500,000 shares of the
Company's common stock at strike price of $0.50 per share valued at
$26,750. Additionally, the Company will assume existing obligations of the
Sellers related to provide continuing customer service and support to the
existing licensee of the acquired proprietary software in accordance with
the existing license agreements between such licensees and the Sellers. The
entire purchase cost will be allocated to the acquired proprietary software
and hardware.
In addition, in connection with the assets purchased, the Company executed
a distribution agreement under terms of which the Company will pay Mark
Andre a 5.5% distribution fee on all revenues. The Company also executed a
consulting agreement with Mark Andre for a term of 2 years at a fee of
$5,000 per month.
On February 1, 2004, the Company consummated an asset purchase agreement
with QwikQuote, Inc. for the purchase of software and equipment
approximating $296,000 in consideration of $90,000 in cash and stock
warrants for 420,000 shares of the Company's common stock at strike price
of $0.0095 per share valued at approximately $206,000. The entire purchase
cost will be allocated to the acquired software and equipment.
COMMON STOCK ISSUED FOR CASH - During January 2004, the Company issued
240,000 shares of common stock to 7 individuals for a total cash
consideration of $120,000 ($0.50 per share). During March 2004, the Company
issued 105,000 shares of common stock to 7 individuals/parties for a total
cash consideration of $52,500 ($0.50 per share).
F-10
<c>
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. 10,000,000
_____________________________________________
SHARES OF COMMON STOCK
Until March 31, 2005 all dealers effecting transactions in the
(par value $.001 per share) 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.
TABLE OF CONTENTS
Aptus Corp.
1127 Broadway Plaza, #203
Tacoma, Washington 98402
Summary .................................................5
Risk Factors.............................................9
Use of Proceeds..........................................13 ________, 2004
Dilution.................................................13
Dividend Policy..........................................15
Capitalization...........................................15
Plan of Distribution.....................................16
Our Business.............................................16 ---------------------------------------
Plan of Operation........................................26
Principal Shareholders...................................31
Management...............................................32
Certain Relationships and Related Transactions...........35
Description of Securities................................36
Shares Eligible for Future Sale..........................37
Available Information....................................39
Special Note Regarding Forward-Looking
Statements...............................................40
Stock Transfer Agent.....................................40
Experts..................................................40
Legal Matters............................................40
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 6,000.00
Trustee's and Transfer Agent Fees 4,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 3,500.00
Accountant's Fees and Expenses 4,000.00
-------------------
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, as amended.
On November 7, 2003, our board of directors authorized the initial issuance of
an aggregate of 12,000,000 shares as founder's stock at a price of $0.0025 per
share totaling $7,500 each to John P. Gorst, M. Carroll Benton, Mark Levin, and
$3,750 each to Clifford Mastricola and Clayton Chase. The stock was purchased
and the remaining balance of 238,000,000 shares of authorized common stock
remained unissued.
On December 17, 2003, our 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, totaling $300.00 each to John P. Gorst, M. Carroll Benton and Mark Levin,
and $150.00 each to Clifford Mastricola and Clayton Chase. The stock has been
purchased and the remaining balance of 3,800,000 shares of authorized class A
common stock remained unissued.
II-1
In the past, executive management of Insynq has engaged Mark Levin, Clifford
Mastricola and Clayton Chase as consultants regarding possible merger and
acquisition targets. Their contributions to Aptus as founders were in the form
of cash investment for common stock. These individuals will be, in the future,
consultants to assist us in executing that portion of our business plan relating
to mergers and acquisitions.
On January 23, 2004, we purchase purchased certain assets from Mark Andre and
Appgen Technologies, Inc. The purchase price to Mark Andre was made up of:
o $500,000 payable in common stock valued at $1.00 per share of common
stock.
o A cash payment at closing of $8,500.
o A warrant to purchase up to 500,000 shares of common stock at an
exercise price of $0.50 per share.
o Assumption of development support of the software code.
In connection with the purchase of the Appgen Custom Suite, we executed a
Consulting Agreement with Mark Andre for the term of two years with monthly
compensation in the amount of $5,000.
In addition, we executed a Distribution Agreement with Mark Andre. We will pay
5.5%, in perpetuity, on all gross proceeds from the sales of the Appgen Custom
Suite and MyBooks Professional products.
The purchase price to Appgen Technologies was in the form of a cash payment in
the amount of $9,000.
The purchase price was negotiated between John P. Gorst, our chief executive
officer and Mark Andre and Mark Andre for Appgen Technologies, Inc., using past
revenue streams and applying the industry guidelines as provided by Tripletree
Investments Banking (www.triple-tree.com).
On February 1, 2004 we purchased certain assets from QwikQuote, Inc. The
purchase price was made up of:
o $21,000 payable in cash at closing.
o Payment of a transition bonus to Tim Heath in the amount of $9,000.
o Payment of a finders' fee to Mark Levin, a founding stockholder, in the
amount of $9,000.
o Consulting and Non-Compete Agreement with Alan Katz in the amount of
$17,000 for a term of 12 months.
o Consulting and Non-Compete Agreement with Glenn Paul in the amount of
$17,000 for a term of 12 months.
o Consulting and Non-Compete Agreement with Win Straube (The Straube
Foundation) in the amount of $17,000 for a term of 12 months.
The purchase price was determined by John Gorst, our chief executive officer and
Glenn Paul, the owner of the QwikQuote Software by applying industry guidelines
provided by Tripletree Investment Banking (www.triple-tree.com).
In connection with the purchase of the QwikQuote Software, we issued to Win
Straube (The Straube Foundation) a warrant to purchase 58,147 shares of our
common stock with an exercise price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Tim
Heath a warrant to purchase 42,000 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Glenn
Paul a warrant to purchase 219,706 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Alan
Katz a warrant to purchase 58,147 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Mark
Levin a warrant to purchase 42,000 shares of common stock with an exercise price
of $0.0095 per share.
II-2
On March 31, 2004, the board authorized the issuance of an aggregate of 345,000
shares of stock to personal friends of the original incorporators at a price of
$0.50 per share. These were 13 individuals or entities as shown in the list
hereafter. These issuances were private transaction made only to friends and
relatives, in reliance on of Section 4(2) of the Securities Act of 1933. The
shares were not acquired with a view to public distribution but for investment.
The Company has sold its common stock to the persons listed in the table below
in transactions summarized as follows:
Name Price per Share Date of Sale Shares Aggregate
Purchase
Price
- ------------------------------------ ---------------- --------------------- ------------- ------------
David Fargo $0.50 January 8, 2004 20,000 $10,000
Kristina and Joseph O'Brien $0.50 January 9, 2004 20,000 $10,000
Anthony Edlin $0.50 January 9, 2004 20,000 $10,000
Marview Holdings $0.50 January 14, 2004 40,000 $20,000
Mary and Norman Dyer $0.50 January 14, 2004 30,000 $15,000
Jeffery Salomon $0.50 January 24, 2004 80,000 $40,000
Mary and Norman Dyer $0.50 January 27, 2004 30,000 $15,000
The Chase Family Trust $0.50 March 2, 2004 10,000 $5,000
Kenneth Grimm $0.50 March 18, 2004 10,000 $5,000
Juan Gamez $0.50 March 18, 2004 10,000 $5,000
Marvin Sauter $0.50 March 19, 2004 20,000 $10,000
Daniel Lauter $0.50 March 23, 2004 30,000 $15,000
D. Alan Dillenberg III $0.50 March 24, 2004 20,000 $10,000
Absolute Internet Service, Inc. $0.50 March 24, 2004 5,000 $2,500
These issuances were made in reliance on Section 4(2) of the Securities Act of
1933, as amended, and we did not seek information whether the acquirers were
accredited or sophisticated investors. The purchasers all were members of the
incorporator group and not solicited.
II-3
ITEM 27. EXHIBITS
Index to Exhibits
- ----------------- ------------------------------------------------------------------------------------------------
EXHIBIT
NUMBER DESCRIPTION
- ----------------- ------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form SB-2 as filed December 19, 2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.2 Amended Articles of Incorporation changing authorized common shares to 250,000,000.
(Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form SB-2 as filed December 19,
2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.3 Amended Articles of Incorporation adding class A common shares with super voting rights.
(Incorporated by reference to Exhibit 3.3 to the Company's
Registration Statement on Form SB-2 as filed December 19,
2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.4 Bylaws (Incorporated by reference to the Company's Registration Statement on Form SB-2 as
filed December 19, 2003)
- ----------------- ------------------------------------------------------------------------------------------------
4.1 Warrant Agreement issued to Mark Levin dated February 1, 2004. (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.2 Warrant Agreement issued to Glenn Paul dated February 1, 2004. (Incorporated by reference to
Exhibit 4.2 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.3 Warrant Agreement issued to Straube Foundation dated February 1, 2004. (Incorporated by
reference to Exhibit 4.3 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.4 Warrant Agreement issued to Tim Heath dated February 1, 2004. (Incorporated by reference to
Exhibit 4.4 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.5 Asset Purchase Agreement dated February 1, 2004 between QwikQuote, Inc. and Aptus Corp.
(Incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form SB-2
as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.6 Asset Purchase Agreement dated January 23, 2004 between Mark Andre and Aptus Corp.
(Incorporated by reference to Exhibit 4.6 to the Company's
Registration Statement on Form SB-2 as filed February 25,
2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.7 Asset Purchase Agreement dated January 23, 2004 between Appgen Technologies, Inc. and Aptus
Corp. (Incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on
Form SB-2 as filed February 25,2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.8* Warrant Agreement issued to Mark Andre dated January 23, 2004.
- ----------------- ------------------------------------------------------------------------------------------------
4.9* Amendment to Asset Purchase Agreement between Mark Andre and Aptus Corp. dated April 5, 2004.
- ----------------- ------------------------------------------------------------------------------------------------
4.10* Revised Warrant Agreement issued to Mark Levin dated February 1, 2004 filed as Exhibit 4.1 to
the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.11* Revised Warrant Agreement issued to Glenn Pauldated February 1, 2004 filed as Exhibit 4.2 to
the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.12* Revised Warrant Agreement issued to Straube Foundation dated February 1, 2004 filed as Exhibit 4.3
to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.13* Revised Warrant Agreement issued to Tim Heath dated February 1, 2004 filed as Exhibit 4.4 to
the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
5.1* Consent of Miles Garnett, Esq.
- ----------------- ------------------------------------------------------------------------------------------------
10.1 Distribution Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.1 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.2 Security Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.3 Consulting Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.3 to the Company's Registration Statement on Form
II-4
SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.4 Consulting and Non-Compete Agreement dated February 1, 2004 between Glenn Paul and Aptus Corp.
(Incorporated by reference to Exhibit 10.4 to the Company's Registration Statement)
- ----------------- ------------------------------------------------------------------------------------------------
10.5 Consulting and Non-Compete Agreement dated February 1, 2004 between Alan Katz and Aptus Corp.
(Incorporated by reference to Exhibit 10.5 to the Company's Registration Statement as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.6 Consulting and Non-Compete Agreement dated February 1, 2004 between Win Straube. (Incorporated
by reference to Exhibit 10.6 to the Company's Registration on Form SB-2 as filed February 25,
2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.7* Lease Agreement dated November 17, 2003 between Simon-Marten, LLC and Aptus Corp.
- ----------------- ------------------------------------------------------------------------------------------------
10.8* Lease Agreement dated December 1, 2003 between HQ Global Workplace and Aptus Corp.
- ----------------- ------------------------------------------------------------------------------------------------
23.1* Consent of Arthur De Joya and Company
- ----------------- ------------------------------------------------------------------------------------------------
23.2 Consent of legal counsel. (See Exhibit 5)
- ----------------- ------------------------------------------------------------------------------------------------
II-5
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, as amended;
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, as amended, 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, as amended 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-6
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 $0.001 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-7
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.
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-8
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
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, Pierce County, State of Washington, on April 16, 2004.
(Registrant) APTUS CORP.
By: /s/ John P. Gorst
John P. Gorst
Chairman of the Board of Directors
In accordance with the Securities Act of 1933, as amended this registration was
signed by the following persons in the capacities and on the dates indicated.
/s/ John P. Gorst Chief Executive Officer April 16, 2004
John P. Gorst Chairman of the Board
and Director (Principal
Executive Officer)
/s/ M. Carroll Benton Chief Administrative Officer April 16, 2004
M. Carroll Benton Secretary, Treasurer and
Director, Principal Accounting
Officer and Principal Financial Officer
II-9