As filed with the Securities and Exchange Commission on June 23, 2005
Commission File No. 333 -121347
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. FOUR TO
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ASSURE DATA, INC.
(Name of Small Business Issuer as Specified in its Charter)
Nevada 7375 06-1678089
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification Number)
Organization) Code Number)
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6680 Yosemite
Dallas, Texas 75214
(972) 963-0007
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
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Robert Lisle
6680 Yosemite
Dallas, Texas 75214
(972) 963-0007
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public:
As soon as this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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. [ ]
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.
Subject to Completion dated June 23, 2005
PROSPECTUS
ASSURE DATA, INC.
600,000 Shares of Common Stock
Price per share: $0.50
Total proceeds to Assure Data, Inc. If maximum sold by us: $300,000.
This prospectus relates to 600,000 shares of common stock offered by Assure
Data, Inc., a Nevada corporation.
Because this is our initial public offering, there is no public market for our
shares. However, we will attempt to have prices for our shares quoted on the
Over-the-Counter Bulletin Board maintained by the National Association of
Securities Dealers, Inc. after we complete our offering.
Investment in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF OUR SHARES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Underwriting Discount
Price to Public and Commissions Proceeds to Issuer
To be sold by the Company:
Per Share $0.50 None $0.50
Total Maximum $300,000.00 None $300,000.00
We will sell the shares ourselves and do not plan to use underwriters or pay any
commissions. We will be selling our shares on a direct basis, and no one has
agreed to buy any of our shares. There is no minimum amount of shares we must
sell, so no money raised from the sale of our stock will go into escrow, trust
or another similar arrangement. We expect to end our offering on the earlier of
the sale of all of the shares offered by us or 90 days after the date of this
prospectus. The information in this prospectus is not complete and may be
changed. We may not sell our shares until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell our shares and it is not soliciting an offer to buy our shares in
any state where the offer or sale is not permitted.
______________________, 2005
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary does not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including the information under "Risk Factors" beginning
on page 5 and the financial statements, before making an investment decision.
Risk Factors Include:
o We are a development stage company that has generated very little
revenue and no profits, and has an accumulated deficit of $90,988
through March 31, 2005.
o Competition in our industry is intense, and we may not be able to
compete effectively, in which case our business will not be developed
in accordance with our plan.
o We have no underwriters and offer no assurance that our stock will be
sold.
o We determined the offering price of the shares arbitrarily.
o Our success depends greatly on our management, neither of which is
employed by us full time.
o Our management will have voting control of the company and will
comprise of the initial Board of Directors.
o Dilution will occur to purchasers of stock.
o A large amount of stock may be sold in the future, which could depress
our stock price and create more dilution.
o We do not expect to pay dividends on our common stock in the
foreseeable future.
o There is no public market for our shares and it is possible one will
not develop.
The Company
Assure Data, Inc. is a development stage corporation that was formed under the
laws of Nevada on November 18, 2002, and commenced operations in April 2003. Our
principal offices are located in a home office at 6680 Yosemite, Dallas, Texas
75214, and our computer storage equipment is in a leased location in downtown
Dallas.
Our business is to provide equipment, software and services in connection with
remote data backup of clients' business data. Businesses of all sizes store
critical information on workstations and servers on both local and wide area
networks. Loss of this information can cause disruption of business and in some
circumstances force a company out of business. Our process automatically creates
a backup of customer selected computers, directories and files and makes copies
of them on a local server, connected directly to their network. This information
is then transferred, via the Internet, to our remote location, separate and
apart from where their workstations and servers are located. No human
intervention is required. No media, such as tapes, need to be loaded for use or
removed and placed into a secure location, such as a fire proof safe. Emails are
automatically sent to company-selected individuals, as well as to our personnel,
to notify them that the backup process has completed successfully or failed.
Some of the types of data types that can be backed up are:
o Data Base files such as DB2, Access, SQL and Multi Valued based
systems
o Word processing documents, Microsoft Word and Word Perfect
o Computer Aided Drawings (CAD)
o Image files of any format including jpg, tiff, gif and PDF
o Spread sheet files, such as Excel
o Text files
Our primary activities to date have consisted of organizing our company and
conducting an initial round of private financing to obtain "seed" capital to
develop the remote backup service. We have purchased and installed the remote
server in a secure facility, monitored twenty-four hours a day. We have
installed our process for seven customers.
Through the proceeds raised from this offering and our prior private placement
of stock, we expect to be able to expand our business. See "Use of Proceeds".
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Additionally a web site (www.assuredata.com) has been created and is currently
on line. The information contained on our web site does not constitute a part of
this prospectus and is not incorporated by reference into this prospectus.
Securities Offered
We are offering up to a maximum of 600,000 shares of common stock, at $0.50 per
share, for total gross offering proceeds of $300,000, assuming the maximum
amount is sold.
Shares of common stock outstanding
as of the date of this prospectus:
1,000,000 shares
Shares of common stock outstanding
after offering, assuming maximum
amount sold: 1,600,000 shares
Terms of the Offering:
There is no minimum offering. Accordingly, as shares are sold, we will use the
money raised from the sales of shares for the activities described in this
prospectus. We expect that the offering will remain open until the earlier of
the sale of all of the shares offered by us or 90 days after the date of this
prospectus, unless we decide to cease selling efforts prior to this date.
Use of Proceeds:
If we sell all 600,000 shares we are offering, we will receive gross proceeds of
$300,000. We expect to use the net proceeds from the sale of the shares we are
offering, after offering expenses estimated to be $50,000, to supply working
capital to continue our marketing and development of our remote backup software
and related services. See "Use of Proceeds."
Plan of Distribution:
This is a self-underwritten, direct public offering, with no commitment by
anyone to purchase any shares. The shares offered by us will be offered and sold
by our principal executive officers and directors, who will be considered to be
underwriters. The offering will be made only to accredited investors and only in
states in which there is an exemption for sales to accredited investors.
Financial Data
Summary Operations Data
April 28, 2003 Three months
(commencement) Year Ended ended March 31,
to December 31, 2003 December 31, 2004 2005
-------------------- ----------------- ---------------
Revenues $ 3,280 $ 27,599 $ 9,680
Expenses 89,570 33,981 7,996
Net income (loss) (86,290) (6,382) 1,684
Basic and diluted loss per share (0.10) (0.01) --
3
Balance Sheet Data
March 31, 2005
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Current assets $26,238
Net property and equipment 6,376
Accounts payable and accrued expenses 3,000
Total liabilities 22,802
Stockholders' equity 9,812
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RISK FACTORS
An investment in the shares involves a high degree of risk, including a risk of
loss of an investor's entire investment in Assure Data, Inc. Prospective
investors should consider carefully, in addition to the other information
contained in this prospectus, the following risk factors before purchasing any
shares.
RISKS RELATED TO OUR BUSINESS
We have a limited operating history, and our business is unproven.
We are a development stage company, with no significant history of operations.
Our accumulated deficit though March 31, 2005, is $90,988. We were incorporated
on November 18, 2002, commenced operations in April 2003 and are a start-up
company with very little operating history or revenues. We have never achieved a
profitable level of operations and have depended upon limited investment in our
securities and a reduced level of operations to survive. We need to receive
substantially all of the maximum proceeds of the shares offered by us in this
offering to proceed with our business plan. Should we fail to raise the required
funds, the business will expand more slowly, if at all, using its current small
cash flow from its current seven customers.
We will require additional capital beyond the proceeds of this offering.
Even if we sell all of the shares offered, we will not have significant funds
for further expansion and will likely need to obtain additional funding to
realize our full potential. We are only seeking to raise $300,000. As a result,
we will still be considered an extremely small company, even if we sell all of
the stock we are trying to sell. Because we will have so little money, any
negative financial event could totally deplete any reserve we had hoped to have.
We may not become a going concern.
Our independent certified public accountants have included a paragraph in their
opinion that notes that we have generated little revenue, have an accumulated
deficit and have limited working capital such that our ability to continue as a
going concern is dependent upon obtaining additional capital and financing for
our business plan. This condition will likely continue until we can achieve a
level of profitable operations, which we believe will occur sooner if we can
receive significant proceeds from this offering or raise additional funds.
Our process could fail due to a software defect, and we might be held liable for
a customer's loss.
Our process is running live on seven customer sites, and has been tested for
over eighteen months. Tests are run daily to make sure that the process is
working correctly. But even with a high level of testing and continued
monitoring our system could fail, and a customer could bring legal action
against us. Our contracts do not guarantee that a customer will never lose their
data, but that may not stop a customer who has incurred a loss from trying to
recover the costs related to the loss of their data.
We must maintain our key managers.
Our success will depend greatly upon our President and Vice-President. Robert
Lisle serves as President, Treasurer and Director. Max Kipness serves as
Vice-President, Secretary and Director. The loss of either of their services
would hamper our ability to implement our business plan, and could cause our
stock to become worthless. We will be heavily dependent upon Mr. Lisle's
entrepreneurial skills and experience to implement our business plan and Mr.
Kipness' technical expertise to continue the development of the services we
provide. At present, together they only contribute approximately 20 hours per
week to the company, and their inability to devote greater time and attention to
the affairs of the company could hinder our growth. We do not have an employment
agreement with either Robert Lisle or Max Kipness and there is no assurance that
either will continue to manage our affairs in the future. We could lose the
services of either or both parties, and the services of either Robert Lisle or
Max Kipness would be difficult to replace. Both intend to work greater time for
the company if the offering is closed near the maximum, and our ability to
provide effective management also depends upon the success of the offering.
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Three shareholders effectively control the company and will continue to do so
after the offering.
Robert Lisle and Max Kipness, our principal executive officers, hold 533,334
restricted shares for which the one-year holding period expired on May 30, 2004,
and which will be available for resale under Rule 144 90 days after we become a
reporting company. Patricia Gunter currently holds 416,666 shares of restricted
shares for which the one year holding period expired in 2004. These three
individuals control the company and possess the voting power to elect the board
of directors. An additional 200,000 restricted shares had a one-year holding
period that expired on September 30, 2004. In addition, all of our other shares
of common stock will also be eligible to use Rule 144 after expiration of their
respective holding periods. A sale of shares by such security holders, whether
pursuant to Rule 144 or otherwise, may have a depressing effect upon the price
of our common stock in any market that might develop.
We depend on short-term customer contracts, the loss of which will adversely
affect our business.
We currently provide services to seven customers under contracts that are
terminable upon 30 days' notice. Our customer base must increase substantially
in order to provide increased revenues and a stable base of customers, so that
the loss of one or more will be absorbed across the entire base. It is not
feasible to require customers to commit to longer term agreements, and our
success will depend upon providing service that creates a high level of customer
satisfaction.
RISKS RELATED TO OUR INDUSTRY
We face significant competition in our industry, which may threaten our future.
Competition in the remote data backup services business is intense, and we may
not be able to compete effectively and survive. New or different technologies
may come into existence and be brought to market by companies larger and more
able to market their services. We expect the competition in this business to
increase. If we fail to attract and retain a customer base, we will not develop
significant revenues or market share. Companies that already have a large
customer base for some other computer based products or services would have a
very large advantage over us should they decide to enter this market. Our market
is likely to witness consolidation of smaller providers with large,
well-financed competitors.
We will have to create a market for our products by educating our potential
customers.
This is a new market, and most potential customers do not know that these types
of data storage services exist. Marketing will be a large factor in our success,
and we may not obtain the funding needed to conduct effective marketing. A large
company with greater resources will have an advantage.
Rapid technology changes could occur, and with our limited resources we may not
be able to adapt.
Backup products, services, and technologies are constantly changing. We are
bringing a new remote backup concept to the market. If the technologies that we
use in providing our remote backup services should suddenly change, we could
find ourselves unable to adapt. If a totally new concept were to be brought to
market by some other company, our process may be viewed as "old technology," and
we could lose our customer base, as well as be unable to attract new customers.
Our process uses technologies that are considered to be in the public domain,
and therefore we are unable to obtain meaningful protection for our intellectual
property.
Our process uses technologies, such as the Internet, encryption and the Linux
operating system, which are used by the general public and, are, to our best
knowledge, considered in the public domain. We are therefore unable to obtain
patent or copyright protection for our products. In addition, it is possible
that a competitor could decide to claim a specific concept or process as their
intellectual property. They could demand compensation of some type or amount for
the use of that intellectual property. We have no agreements that give us
specific rights to use any specific technology or intellectual property.
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Changes in the regulation of the Internet could undermine the basis of our
business world.
We rely on the Internet for transmission of data from our customers to our
off-site servers. In general, existing laws and regulations apply to
transactions and other activity on the Internet; however, the precise
applicability of these laws and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the advent of
the Internet and, as a result, do not deal with the unique issues of the
Internet or electronic commerce. Nevertheless, numerous federal and state
government agencies have already demonstrated significant activity in promoting
consumer protection and enforcing other regulatory and disclosure statutes on
the Internet.
Due to the increasing use of the Internet as a medium for commerce and
communication, it is possible that new laws and regulations may be enacted with
respect to the Internet and electronic commerce covering issues such as user
privacy, freedom of expression, advertising, pricing, content and quality of
products and services, taxation, intellectual property rights and information
security. The adoption of such laws or regulations and the applicability of
existing laws and regulations to the Internet may impair the growth of Internet
use and result in a decline in our sales.
A number of legislative proposals have been made at the federal, state and local
level, and by foreign governments, that would impose additional taxes on the
sale of goods and services over the Internet, and certain states have taken
measures to tax Internet-related activities. Although Congress recently placed a
three- year moratorium on new state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were
expressly exempted from this moratorium. Further, once this moratorium is
lifted, some type of federal and/or state taxes may be imposed upon Internet
commerce. Such legislation or other attempts at regulating commerce over the
Internet may substantially impair the growth of commerce on the Internet and, as
a result, adversely affect our opportunity to derive financial benefit from such
activities.
RISKS RELATED TO OUR STOCK
Received funds are not being placed in escrow and can be used immediately; thus,
there is no minimum offering that might offer greater protection to investors if
only a small amount is raised.
Because this is a self-underwritten offering, we offer no assurances that any of
our stock will be sold. This offering is being conducted on a direct basis by
our officers, who will be considered to be statutory underwriters. As such, no
assurances are given as to what level of proceeds, if any, will be obtained from
the sale of shares offered by us. In the event we fail to obtain all or
substantially all of the proceeds sought from the sales of shares by us in this
offering, our ability to implement our business plan will be materially and
adversely affected, and investors may lose all or substantially all of their
investment. We can provide no assurances that the subscription proceeds that may
be received by us will be sufficient to sustain our operations prior to the
receipt of enhanced revenues from customers. Because this is a direct, no
minimum offering and because we are not using an escrow agent, we will be able
to use any funds received in this offering as soon as we receive the funds.
Accordingly, even if we sell only a nominal amount of shares in this offering,
we will be able to use those funds and the funds will not be returned to the
investor or investors. In this event, and if we are unable to raise funds from
another source, the investor or investors who purchased the nominal amount of
shares would likely lose their entire investment because we would have
insufficient funds to generate sustainable cash flow from operations. If we
receive less than the maximum amount of the offer we will have fewer funds to
meet our business objectives and fewer shares will be available for the trading
market and float.
The offering price was established arbitrarily.
We determined the offering price for the shares being offered arbitrarily, and
the eventual market price, if any, may be much lower. We chose the offering
price for these shares without basing the price on our assets, book value, net
worth or any other recognized criteria of value. If a public market for our
common stock ever does develop, the value of our securities could be
substantially less than the $0.50 per share offering price. This could result in
an immediate and significant per-share reduction in the value of your
investment.
7
Shareholders will face immediate dilution in the book value of their shares.
The 1,000,000 outstanding shares of common stock were sold for an average of
$0.10 per share. If all 600,000 shares are sold in the offering for a price of
$0.50 per share, the new investors will realize an immediate dilution in the
book value of their shares in the amount of $0.25 per share, or 50% of the value
thereof. If only 50% of the number of shares being offered are sold (300,000
shares), the purchasers would realize an immediate dilution of their book value
per share of approximately $0.31 per share. If only 25% of the number of shares
being offered is sold (150,000 shares), the dilution per share would be
approximately $0.35 per share. Thus, the smaller the number of shares sold in
the offering, the greater will be the dilution to the investors' book value per
share.
Stock prices could be depressed if a large amount of stock is sold after the
offering, reducing the value of your shares of stock.
Because we have issued shares that may become eligible for resale under Rule
144, a large amount of our stock could be sold, potentially depressing our stock
price. Presently 1,000,000 outstanding shares of common stock are "restricted
securities" as defined under Rule 144 promulgated under the Securities Act and
may only be sold pursuant thereto or otherwise pursuant to an effective
registration statement or an exemption from registration, if available. Rule
144, as amended, generally provides that a person who has satisfied a one year
holding period for such restricted securities may sell, within any three-month
period (provided we are current in our reporting obligations under the Exchange
Act) subject to certain manner of resale provisions, an amount of restricted
securities which does not exceed 1% of a company's outstanding common stock.
Selling shares of our stock could be difficult, making your investment in the
company illiquid.
There is no public market for our shares, and an investment in the company
should be considered an illiquid investment. There is currently no market for
any of our shares and no assurances are given that a public market for such
securities will develop or be sustained if developed. While we plan, in
connection with this offering, to take affirmative steps to request or encourage
one or more broker/dealers to act as market makers for our securities, and to
cause such stock to be traded on the OTCBB, no such efforts have yet been
undertaken and no assurances are given that any such efforts will prove
successful. As such, investors may not be able to readily dispose of any shares
purchased hereby.
We may not remain a reporting company upon the conclusion of the offering, and
your access to information about the company would be limited.
Upon conclusion of the offering, we will be required to file disclosure reports
with the Securities and Exchange Commission for a period of one year. At the end
of one year, we may discontinue such reports if there are not 300 stockholders
of record. If the company is not successful in executing its business plan, we
may choose to discontinue SEC reporting if there are fewer than 300 stockholders
as a measure to cut costs, in which case investors will have little or no
current information on which to make investment decisions, our securities would
be excluded from the OTCBB, and much of SEC Rule 144 would cease to be
available.
Our stock will be subject to the penny stock regulations, which will further
degrade the market for one stock.
Because our stock will be subject to the penny stock regulations and may be more
difficult to sell than other registered stock. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stocks
generally are equity securities with a price of less than $5.00. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a risk disclosure document that
provides information about penny stocks and the risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock, the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
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stock that becomes subject to the penny stock rules. As our shares immediately
following this offering will be subject to these penny stock rules, investors in
this offering will in all likelihood find it more difficult to sell their
securities.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Business", and elsewhere in this prospectus constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such
as "may", "will", "should", "expects", "plans", "anticipates", "believes",
"estimates", "predicts", "potential", "continue" or the negative of these terms
or other comparable terminology. 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.
USE OF PROCEEDS
Our net proceeds from this offering will vary depending upon the total number of
shares sold by us. Regardless of the number of shares sold, we expect to incur
offering expenses estimated at approximately $50,000 for legal, accounting,
printing and other costs in connection with the offering. We wish to remind
investors that there is no guarantee that we will fully complete this offering
or obtain any amount, and that the actual proceeds we receive from the offering
could be substantially less than $300,000. Our receipt of no or nominal proceeds
will have a material adverse effect upon our investors and us and require us to
continue part-time operations and grow only very slowly, if at all. If we obtain
only nominal proceeds, most or all amounts raised will be used to pay for the
costs of the offering. (If no shares are sold, management has advised the
Company that they have committed to advance the offering costs.) However, in
such event we plan to remain in business and seek other means to obtain the
capital to implement our business plan, we believe that with the seven customers
we provide services to, we can remain in business in a reduced mode
indefinitely.
The table below shows how proceeds from this offering would be used for
scenarios where we sell various amounts of the shares and the priority of the
use of net proceeds in the event actual proceeds are not sufficient to
accomplish the uses set forth.
% of total shares offered 25% 50% 75% 100%
------------------------- -------- -------- -------- --------
Shares sold 150,000 300,000 450,000 600,000
Gross Proceeds from offering $ 75,000 $150,000 $225,000 $300,000
Less offering expenses 50,000 50,000 50,000 50,000
Net proceeds from offering 25,000 100,000 175,000 250,000
Use of net proceeds
Marketing expenses 5,000 7,500 10,000 20,000
Upgrade of web site 10,000 10,000 10,000 10,000
Equipment upgrades 0 7,500 7,500 7,500
Office Lease 0 0 0 15,000
Office equipment and furniture 0 0 0 5,000
Salaries 0 65,000 130,000 170,000
Working Capital 10,000 10,000 17,500 22,500
While management has developed the following estimates to the best of its
ability, there can be no assurance that we will spend the use of proceeds
exactly as laid out in the table. Accordingly, management will have significant
flexibility in applying the net proceeds of the offering. Proceeds not
immediately required for the foregoing purposes will be invested principally in
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federal and/or state government securities, short-term certificates of deposit,
money market funds or other short term interest-bearing investments.
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no established public market for the
shares of our common stock. As a result, the offering price and other terms and
conditions relative to the shares of common stock offered hereby have been
arbitrarily determined by us and do not bear any relationship to assets,
earnings, book value, net worth, actual results of operations, or any other
established objective investment criteria. There is no relationship between the
offering price of the common stock and our assets, earnings, book value or any
other objective criteria of value. In addition, no investment banker, appraiser
or other independent, third party has been consulted concerning the offering
price for the shares or the fairness of the price for the shares.
DESCRIPTION OF BUSINESS
General
Assure Data, Inc. was incorporated under the laws of Nevada, on November 18,
2002, commenced operations in April 2003 and is in its early developmental and
promotional stages. Our general plan is to provide comprehensive automated data
backup and retrieval services for small to medium sized businesses, up to $250
million in annual sales, both in the United States as well as foreign countries.
Our service is believed to be unique in that we maintain two separate data
backup repositories, one local to the customer and the second in a secure
off-site facility. The updates from the local server are transferred from the
local backup server to the off-site facility via high speed Internet
connectivity. We also plan to provide customers with multi-level email virus
protection, and `SPAM' filtering.
Assure Data Remote Backup Service
Customers choose what data on their servers and workstations that they wish to
have backed up. This is accomplished using a web-browser based `client' provided
by Assure Data. This `client' provides a secure connection to both the local
Assure Data Remote Backup Server, and the off-site secure server. The automated
backup runs at the specified time and creates a copy of any newly created files,
and changes to any old files. This backup data is then transmitted via the
Internet to the off-site secure facility. Thus, companies have two full data
backups available in case of an equipment failure or a disaster to their
facilities. The retrieval of the data is also accomplished via the web-based
browser `client'. End user companies are assured of having all data available to
be reviewed by opening the web-based browser and following the data hierarchy
and selecting what data is to be restored.
Assure Data Virus And Spam Protection Services
We also plan to provide virus protection services using the latest available
virus detection processes. Assure Data will track no less than three separate
virus checking processes. All in-coming emails and attachments are checked prior
to them being routed to the customers systems. Assure Data charges setup fees,
based on the services required by the customer, including helping with the data
selection, and any special security required by the customer. Once the setup is
complete the backup service runs with no human intervention required. Assure
Data then changes a monthly fee based on the total amount of data the customer
backs up, the amount of data transferred each night, plus a standard base
minimum. This creates a continuing revenue stream that does not require direct
or daily attention from the Assure Data staff. To date, none of our customers
has signed up for SPAM or VIRUS protection services.
The data is backed up and email reports are automatically sent to the customer
as well as Assure Data staff. If a service fails, additional notification to
Assure Data staff via cell phone text messages are sent to alert the Assure Data
staff prior to receiving a call from the customer. When a failure does occur,
for whatever reason, including the loss of Internet connectivity, Assure Data
makes calls to the customer to notify them of the failure. Even though our
management is only available part-time, they have been able to respond to the
low volume of failure notices thus far.
10
All backed up data is maintained on computer hard disk. This is more reliable
than tape or other linear processes. In addition, the retrieving of a single
file or small number of files becomes almost effortless. If a file or series of
files requires restoring, the data is normally retrieved from the Assure Data
Remote Backup Server. This is the server that is directly attached to the
customer's network, and the data is transferred at higher network data transfer
rates. The only time the off-site facility is used for data retrieval is when
the Assure Data Remote Backup Server is not available. The most likely situation
for this is when a system wide disaster has occurred such as a fire or natural
disaster.
The Primary Manner In Which We Expect To Conduct Business
Assure Data has contacted a vendor that is willing that is willing to provide a
select email listing of information technology employees and consultants. The
list is available with the price being 13 percent of the net sales derived from
the direct use of the list. As of June 20, 2005 this purchase has not been
completed, but upon completion of this offering, Assure Data intends to complete
this transaction. This email list will be used to contact people who are
directly responsible or involved in the maintaining of business data. These are
people who have the responsibility of making sure that the critical business
data they have been entrusted with is safe and available in case of disaster
including server and workstation failures, as well as equipment or facility
losses. These individuals will receive emails describing our services and a link
to the Assure Data Inc. web site.
Web Site
We currently have one domain name registered, www.assuredata.com. This site
describes our services and provides contact information. The web site will be
updated on a continuing basis to better inform potential customers of our
services. We will post all of our SEC filings on our web site.
Customers
As of June 20, 2005, we have signed seven customers to data storage contracts.
Revenues from such accounts range from $225 - $300 per month, and thus no one
customer is dominant. Charges are made based upon a $70 - $75 per month base
charge, a charge for data transmission over a 30-day average, at the rate of
$0.092 per average transmitted megabyte per month, and a charge for off-site
storage based upon a sliding scale for gigabyte storage consumed. All contracts
for service are terminable upon 30 days notice by either party.
Data Backup Industry In General
The data backup industry is filled with many companies that use various backup
methodologies. The most common method is some form of magnetic tape as the
backup media. Tape backup comes in many different forms and has advanced over
the years in its capacity and speed in backing up data. We believe that the
restore process for tape has improved little in comparison, and that the
inherent problems with tape failures have not been solved. Tape backup is a
manual process involving loading and replacing tapes, and storing them in some
safe environment. Tape is linear, and the process to verify that the data has
been correctly backed up can take as much time as the backup itself.
The total amount of data that small businesses maintain has grown substantially
over the last 10 years. Companies have gigabytes of information that needs to be
backed up. Larger tape capacity tapes have been developed, but the cost for
those solutions has increased as well.
Hard Disk
Hard disk backup has become a viable alternative to tape, as the price of hard
disc storage has dropped. There are solutions available based on using external
large capacity hard drives attached directly to a network. In many cases a copy
of the data is made, and in case of a failure of the main storage occurs, the
data is available on the external hard drive. This process has the advantage of
being a faster and potentially more accurate backup process. It does not however
protect a company if the main computer location, room or building is damaged.
11
Software Solutions Using Off-Site Storage Of Data
There are software solutions that track changes to data and upload that
information via the Internet to a system in a facility in another physical
location. This method keeps a current backup in a secondary location that can be
retrieved if the main storage is unavailable do to system failure. The problem
with this process is that bandwidth usage of a company's Internet connection is
in constant use and frequently unavailable for storing data. Many companies have
the minimum bandwidth they can survive with, due to the cost of high speed
Internet connectivity. This additional usage can have a large effect on other
Internet usage, slowing down users during normal business hours. Also, the
software running on each server and workstation that monitors the data being
changed and transmitted it to the off-site location can place a significant load
on the computer and slow its processing of the normal work being performed.
Our Concept And Technology
Our founders have over 35 years of computer industry related experience. Dealing
with daily data backup, recovery and retrieval issues has been a large part of
their experience. As consultants to companies, and as data processing managers
for companies, they made recommendations on how a company should back up their
critical data.
With the advent of more reasonably priced high-speed Internet connectivity, and
the dramatic increase of hard disk capacity, and decreased relative cost, a
different overall methodology developed to take advantage of the following
technologies.
o Hard disk is more reliable than tape. It constantly self checks, and
redundant data checks are automatically performed when any data is
written to the disk. Hard disk is not linear, and therefore random
data retrieval for testing purposes can be accomplished more quickly
and easily.
o The use of high-speed Internet connections in small business has
become commonplace. Most companies have DSL or ISDN connections. Many
have partial T1 connections with even greater bandwidth available.
o The use of the Internet has made most computer users comfortable using
a `browser' such as Internet Explorer or Netscape.
o Computer software algorithms that allow data compression and soft data
pointers that can mark changes in a data file at a very low level have
been developed.
o Open source operating systems, such as Linux, are available at almost
no cost, and can be configured to be virtually hack proof and virus
proof.
o Custom computer configurations can be created, reducing the cost of a
single computer system.
o Backup services are but one service that the backup server can
perform.
o Large secure site facilities for co-location are available in most
major cities. These facilities have redundant power supplies,
emergency power generators and multiple connections directly to the
Internet Back Bone infrastructure.
Based on the above technologies, we developed the Assure Data Remote Backup
Service. We believe our advantages are as follows.
o We maintain two sets of backed up data, with 30 days of information.
We use compression and soft pointers to reduce the total amount of
data that needs to be stored and transferred. This reduces the total
cost of maintaining multiple copies of the data.
o The local copy is maintained on a `Locked Down' Linux based system.
This system is directly connected to the local network. It performs
the initial daily backup of all selected computers, directories and
files. Then it transfers, via an encrypted transmission over the
Internet, the backed up data to a secure server in a secure facility.
This insures that a complete second copy of the backed up data is
available in case of damage to the original facility. Our secure
server is located in a shared-use facility in Dallas, Texas dedicated
to off-site computer applications, which we rent for $249 per month.
o The process is totally automated. No human intervention is required.
Our system is self-monitoring, and emails for success and failures are
sent to both the Assure Data staff, and selected individuals of the
12
client company. This insures that if a failure does occur, immediate
action is taken to insure that the problem is resolved, and the data
is backed up as soon as possible.
o If a complete local failure occurs, do to a facility loss, such as
fire or a natural disaster, we load a complete copy of the client's
data onto a new backup server and ship it over night to the facility
the company will be using for its new computer location. We then help
them restore the lost data to the new hardware.
o If the loss of data is only on a single computer, and our local backup
system is functioning normally, the customer can retrieve the data
directly from the local backup system, without having to transfer
large amounts of data across the Internet. If a customer needs to
retrieve a single file or directory from any time in the last 30 days,
the customer uses the web based `Assure Data Client Interface' and
restores the correct data from the local unit. At any time the
customer can access the data on the Remote Secure Server, via the
Internet to restore data for testing or any other reason they may
have.
o The pricing is based on the actual storage and bandwidth usage. This
makes the service available and cost effective for varying clients
that need to backup different amounts of data.
o The system can be managed from any location where a connection to the
Internet is available. This includes the customer selection of data to
be backed up as well and the restoration of the data. Our staff can
manage the entire process remotely, including our on-site local backup
systems located on the customer site, and the secure server located in
the secure facility located in Dallas, Texas.
Marketing Our Services
Our marketing plan will use four main concepts.
o Internet marketing using Google Smart Pages and other Internet search
engines. We are currently getting several hundred hits per month and
have developed customers from these leads. As we progress we expect to
develop an online demo of our product.
o We can acquire the rights to an extensive list of email addresses for
IT and Network administrators in the US, Canada and Europe. We are
developing an email campaign to market directly to these decision
makers who are directly involved with the maintenance and security of
the data on the networks and computer systems they are responsible
for. Our initial marketing and surveys pointed to these types of
individuals as the primary point of contact for our marketing efforts.
They understand the need for insuring the safety of their companies'
data.
o Currently we have no strategic marketing partners. But as we have
purchased goods and services from other companies, we have discussed
our services with them, and we have offered specific commission-based
programs to those that are potentially interested in re-marketing our
services.
o Our officers have contacts and have developed those into customers. In
addition, referrals from current customers have resulted in leads to
other possible customers.
Expected Employee Requirements
Initially, all work for Assure Data will be performed by Messrs. Lisle and
Kipness, spending approximately 10 hours each per week. As the company expands,
it is our intention to employ Robert Lisle and Max Kipness on a full-time basis.
If the full amount of the offering is raised, Max Kipness will become employed
on a full-time basis. Depending on additional customers being added, Robert
Lisle will eventually become employed on a full-time basis. Our projections for
employees being added are that for approximately each 200 customers we will
generally require a new employee. This ratio will be monitored and adjusted as
needed. Our process is totally automated, but we need to insure that if a
customer requires help, or just wants to talk to a live Assure Data
representative, they will be able to do so quickly. Each employee will be
responsible for approximately $500,000 in annual revenue. We plan to bring on
the first additional employee as soon as the revenue stream allows us to do so.
The fourth employee will not be hired until we reach the required six hundred
customers.
13
Competition
Our competition will come from companies that use software, hardware or a
combination of both. In our review of the industry, we located via the Internet
approximately 40 companies that supply some type of backup service. The largest
of these companies has just over 6,000 customers worldwide. They use a software
only solution, and the process runs on a customer's server and transmits changes
to a secure location on a continuous basis. Other providers we reviewed had as
few as 25 customers online. Our research was limited in scope, but indicated
that many of these companies did not provide a complete solution to what we
believe customers need to properly secure and retrieve their critical data.
Based upon our research through Dun & Bradstreet of companies with gross sales
of more than $100,000 or more than 15 employees, we believe the number of
potential customers in North America is over 2.2 million. Based upon our
knowledge of the industry, we believe that there is no single large company with
a significant share of the market. There will therefore be intense competition
for these customers.
Our backup process uses a different standard approach. We supply dual backups on
all of our sites to provide quick restoration of even large amounts of data,
without the need to transfer that information across the Internet. This dual
location concept also protects in case of any single location being destroyed,
including the secure server location. The customer does not purchase any
equipment, or supplies. The equipment installation is a simple connection to
their network, and then the setup is accomplished remotely, with Assure Data
personnel assisting the customer to correctly choose the data to be saved. The
pricing is modest, based upon the actual amount of data to be saved. The backups
are totally automated, and require no human interaction.
We believe we will be able to compete on the basis of a wide-open market that is
not being adequately served, and the price and effectiveness of our service.
Facilities And Offices
Our current office address is at Robert Lisle's home office. Max Kipness also
works from his computer at home. Our off-site storage server is in a rack at a
secure, shared-use facility in Dallas, Texas. Such space is provided to us on a
month-to-month basis for $249 per month in rent. Other such sites are readily
available if we need to move for any reason. No other office space or facilities
are required at this time, and we do not expect to require them in the near
future. Administrative offices will be established when we have full-time
employees. However, we will continue to use secure co-location facilities
available across the country and in Europe, rather than create our own
facilities. Using these co-location facilities is far more cost effective, and
allows us to put customer's data in locations that make logical sense from the
prospective of the customer.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
General
Assure Data began operations in 2003 offering the data backup services described
under "Business." We obtained $100,000 of initial funding from a private
placement in mid-2003. We have originated seven customers since inception, and
following is a summary of our financial results and condition since inception.
Summary Operations Data
April 28, 2003 Year Three months Three months
(commencement) ended ended ended
to December 31, 2003 December 31, 2004 March 31, 2004 March 31, 2005
-------------------- ----------------- -------------- --------------
Revenues $ 3,280 $27,599 $1,664 $9,680
Expenses 89,570 33,981 3,274 7,996
Net income (loss) (86,290) (6,382) (1,610) 1,684
Basic and diluted loss
per share (0.10) (0.01) -- --
14
Balance Sheet Data
March 31, 2005
--------------
Current Assets $26,238
Net property and equipment 6,376
Accounts payable and accrued expenses 3,000
Total liabilities 22,802
Stockholders' equity 9,812
Results of Operations
Year ended December 31, 2004
For the year ended December 31,2004, we had revenues of $27,599 from our seven
active customers, as compared to $3,280 of revenues from the period in 2003 from
inception on April 28, 2003. Our customers pay approximately $1,775 per month.
Our cost of revenues were $18,593 during 2004, resulting in a gross profit of
$9,000, which was offset by general and administrative expenses of $15,388.
Three months ended March 31, 2005
For the three months ended March 31, 2005, we had revenues of $9,680, compared
to $1,664 for the same period in 2004. Cost of revenues was $6,105, representing
a decrease in gross margin to 37% versus the 55% experienced in the same period
of 2004. The margin will begin to improve as sales increase. The gross profit of
$3,575 was offset by operating expenses of $1,891. The improvement in general
and administrative expenses resulted from efforts to reduce expenses while
operations are at their current low level. These costs will resume as sales
increase and upon becoming a reporting company following the offering. We
estimate the initial costs of being a public company to be $25,000 during 2005.
If we are unable to increase our sales to cover these charges , we will be
forced to seek additional financing either through loans from affiliates or
additional sales of equity securities. The proceeds of this offering will not be
sufficient to cover any of these costs unless we are successful in obtaining at
least $225,000.
Resources
All of our cash needs have been met from the results of our limited operations
and the sale of our equity securities. Our cash flow statement and statement of
operations are essentially the same.
Given our low monthly cash flow requirement and the agreement of our officers to
forego salaries until such time as the operating income increases, we believe
that, even though our auditors have expressed substantial doubt about our
ability to continue as a going concern, we have sufficient financial resources
to meet our obligations for at least the next twelve months and beyond even
without the proceeds of this offering. Assuming that we do not increase our
current capacity to provide services, our primary cash requirements would be
those associated with maintaining our current customer base and maintaining our
status as a reporting entity. We believe that on an annual basis those costs
would not exceed an average of $3,000 per month. For the three months ended
March 31, 2005, our monthly revenues were $1,775. We have commitments from
additional companies that will be active customers by June 30, 2005 that will
add an additional $1,050 per month in revenues. This leaves a prospective short
fall of $170 per month. Based on this belief, we would have adequate financial
resources to meet our financial obligations as we currently conduct business for
at least twelve months following the date of this prospectus. In addition, we
currently have the capacity to add 36 more customers with an average monthly
service charge of $250 without increasing our current monthly expenses. If all
36 customers were added this would increase our monthly revenues by $9,000 per
month and allow continued growth with no requirement for additional funding. The
time necessary to grow the company without the capital raised from this offering
will be much longer than if the capital is available to start marketing of
Assure Data services.
15
Plan Of Development
If we obtain funding from the sale of shares in this offering, we will be able
to move forward with our business plan. Executing our business plan will
significantly change our cash needs and monthly expenses. We will apply the
proceeds from the offering in the following order of priority. At each level of
funding, our business plan can be developed more rapidly and effectively.
Level of funding $75,000 $150,000 $225,000 $300,000
Offering costs 50,000 50,000 50,000 50,000
Marketing expenses 5,000 7,500 10,000 20,000
Website improvements 10,000 10,000 10,000 10,000
Salaries and taxes 0 65,000 130,000 170,000
Working capital and other uses 10,000 17,500 25,000 50,000
The early stages of our business plan are complete. We have a functional service
with paying customers and a small monthly revenue stream. We have a web site
that is listed with a number of search engines, and have a specific `Add Words'
agreement in place with Google, from which we receive phone calls from potential
customers weekly as well as `hits' that are turning into customers and potential
customers. This site needs to be expanded and the mass marketing portion of our
business plan will be started. We intend to have Mr. Lisle and Mr. Kipness spend
full time on our business, principally in marketing new customers. Mr. Kipness
will add additional functionality to our current services and add new services
that are related to the remote backup process now in place. Low cost office
space is available and all other expenses will be monitored closely to assure
that the focus of the next phase of the business plan moves ahead as planed.
Over the next twelve months we expect our primary expenses to be associated with
new customer acquisition, customer support, upgrades to our current services and
development of new related services. Our business plan is such that if we are
successful in generating net profits from our activities and raising additional
funds, we will acquire more customers, engage in more advertising, hire
additional staff and attempt to grow our company in an orderly way. If we are
unable to execute our business plan, our ability to grow would be limited.
Current cash flow is sufficient to maintain our current customers, but limits
our ability to market our services to potential customers. Without growth we may
be required to cease conducting operations. We wish to remind investors that
there is no guarantee that we will be able to secure any new customers.
Our challenge in 2005 will be to use the proceeds of this offering to provide
working capital for marketing to promote our product and salaries of our
officers to enable them to spend more time on growing our business. We have a
very low level of fixed costs and are able to operate above break-even as we add
customers.
Currently our officers are not charging any hourly fees, except where directly
related to revenue generation that is not part of the standard backup services.
The Company provided network consulting services to clients, and the actual
services were provided by the officers. The Company was billed by a company
owned by one of the officers which then paid the officers for their professional
services. Other than services related to the production of revenue, only actual
expenses being incurred are being reimbursed at this time, including accounting,
legal, co-location fees, outside programming and other expenses required to
operate the Company. In the future when operating income increases or sufficient
capital is raised from this offering Mr. Lisle may choose to charge for his
services. In addition, as soon as operating income increases or sufficient
capital is raised from this offering, Mr. Kipness may choose to charge for his
services.
We are conducting this offering, in part, because we believe that an early
registration of our equity securities will minimize some of the barriers to
capital formation that otherwise exist. By having a registration statement in
place, we believe that we will be in a better position, either to conduct a
future public offering of our securities or to undertake a private placement
with registration rights, than if we were a privately held company. Registering
our shares may help minimize the liquidity discounts we may otherwise have to
take in a future financing because investors may have confidence that the Rule
144(c)(1) public information requirement will be satisfied and a public market
will exist to effect Rule 144 broker transactions. We believe that the cost of
registering our securities and undertaking the required disclosure obligations
will be more than offset by being able to get better terms for future financing
efforts. No specific investors have been identified.
16
Capital Expenditures
As our business grows, we will have to acquire additional servers to accommodate
the growing disk storage capacity. Our current equipment can handle the needs of
200-300 customers. A new server will be required for each additional 200-300
customers. We believe we will be able to add such equipment and finance it from
customer charges and will not require debt or equity financing for our
anticipated capital expenditures.
Accounting Policies
Revenue Recognition
We expect to generate revenue from providing automated data backup and retrieval
services, virus protection services and `spam' blocking services. Our current
clients have been very satisfied with our services and contacts with potential
customers are ongoing. The Company charges its customers monthly fees for its
services. Revenues are recognized in the month the services are provided. The
monthly fees consist of a base fee, a data transfer fee, based on the volume of
data transferred, and a data storage fee, based on the volume of data stored.
Stock-Based Compensation
We account for stock-based employee compensation arrangements in accordance with
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and comply with the disclosure provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation" as amended by SFAS No.
148, "Accounting for Stock-Based Compensation-Transition and Disclosure, an
amendment of FASB Statement No. 123". Under APB Opinion No. 25, compensation
expense for employees is based on the excess, if any, on the date of grant,
between the fair value of our stock over the exercise price.
We account for equity instruments issued to non-employees in accordance with the
provisions of SFAS No. 123 and SFAS No. 148 and Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services." All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of the date on
which the counterparty's performance is complete or the date on which it is
probable that performance will occur.
Future Obligations
We have no indebtedness or other continuing financial commitments.
MANAGEMENT
Directors And Executive Officers
Mr. Robert Lisle, age 56, is our President, Treasurer and a Director and
functions as our chief executive officer and chief financial and accounting
officer. Mr. Lisle has 25 years' of experience in the computer and computer
consulting fields. He has been the President of Information Technology Systems
Inc. and Lisle & Associates for the past 24 years. Previous to that he spent
three years as a systems analyst and programmer for Century 21 Real Estate in
Irvine, California and the Data Processing Manger for JSH Electronics in Culver
City, California. .
Mr. Max Kipness, age 37, is our Vice President, Secretary, and a Director. Mr.
Kipness is a Certified Microsoft Engineer as well as a Cisco Certified Engineer.
Currently he is the ITM manager for a large manufacturing company with offices
and manufacturing plants across the country. Previous to that, he spent six
years as a senior network consultant with a large network consulting firm in
17
Dallas, Texas. For the year prior to that, he was in the sales department of a
national computer and peripheral distribution company. Prior to working in
direct sales, he was a partner for five years in a retail computer sales and
repair operation in Dallas, Texas. During the last eight years, Mr. Kipness has
consulted on network and infrastructure operation for small and medium
companies. Mr. Kipness will serve as the Chief Technology Officer of the
Company.
We presently expect to conduct our first annual meetings of stockholders and
directors in late-2005 at which time directors will be elected. All directors
will serve for a period of one year unless removed in accordance with our
bylaws.
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation earned by the Company's Chief
Executive Officer for the year ended December 31, 2004, in consulting fees for
services rendered in all capacities to the Company for the fiscal years ended
December 31, 2003 and 2002.
Annual Compensation Long-Term Compensation
------------------- ----------------------
Securities
Underlying
Other Annual Options or All Other
Name/Principal Position Year Salary Bonus Compensation Warrants Compensation
- ----------------------- ---- ------ ----- ------------ -------- ------------
Robert Lisle, CEO(1) 2004 $16,355 $0 $0 0 0
2003 63,785 0 0 0 0
2002 0 0 0 0 0
Max Kipness(2) 2004 0 0 0 0 0
2003 1,969 0 0 0 0
2002 0 0 0 0 0
Even though Mr. Lisle and Mr. Kipness are officers of Assure Data, they are not
employed by Assure Data. Nevada does not require officers of Nevada corporations
to be employees.
(1) Mr. Lisle has been compensated by Information Technology Systems Inc. which
has invoiced Assure Data for his services, during 2003 and 2004.
(2) Mr. Kipness was reimbursed for direct expenses, services, as well as
supplies and equipment purchased on behalf of Assure Data for this amount during
2003.
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options at
Stock Options Options at Fiscal Year End Fiscal Year End
- ------------- -------------------------- ---------------
Number of
Shares
Acquired or Realized
Name Exercised Value Exercisable Unexercisable Exercisable Unexercisable
---- --------- ----- ----------- ------------- ----------- -------------
None
18
Long-term Estimated Future Payments Under
Incentive Plans Non-Stock Price-Based Plans
- --------------- ---------------------------
Performance or
Other Period
Number of Until
Shares, Under or Maturation or Threshold Target Maximum
Name Other Rights # Payout ($ or #) ($ or #) ($ or #)
---- -------------- ------ -------- -------- --------
None
No stock has been issued to any officer, employee or director of the company
except in their capacity as investors. Although we have no current plan in
existence, we may adopt a plan to pay or accrue cash compensation to our
officers and directors for services rendered. We currently do not have a stock
incentive plan for the benefit of officers, directors or employees, but our
Board of Directors may recommend the adoption of such programs in the future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Lisle loaned us $1,000 in April 2003 to open a checking account and start
the basic operations. That loan was repaid from the initial dollars received
from a private offering.
Mr. Lisle is the president of Information Technology Systems Inc. ("ITS"), and
performed consulting services on behalf of Assure Data through ITS. All related
fees were invoiced by and paid to ITS. There is no relationship between Assure
Data and ITS other than for ITS to provide Mr. Lisle to perform consulting
services to Assure Data, avoiding the need at this time for Assure Data to have
employees. The total amount for 2003 and 2004 for services, excluding reimbursed
actual expenses, is $63,785 and $16,355, respectively.
Mr. Kipness has a consulting service and has invoiced and been paid for services
performed for Assure Data consisting of marketing and technical services. The
total amount for 2003 and 2004 for services, excluding reimbursed actual
expenses, is $1,969.
Promoters
Mr. Lisle and Mr. Kipness developed the processes and services provided by
Assure Data. They each purchased 266,667 shares of stock at $.001 per share. In
addition, all rights to the processes developed have been granted to Assure
Data. The processes granted to Assure Data. took in excess of one year to
develop, and were operating fully at the time of incorporation. No specific
value was set on the intellectual property provided by Mr. Lisle and Mr.
Kipness. The rights were granted with the full intent that Mr. Lisle and Mr.
Kipness would be major stock holders in the company and use this technology to
build the company into a large and highly profitable company.
Patricia Gunter also provided $75,267 of initial seed capital to the Company in
exchange for 416,666 shares of common stock and may be considered a promoter of
the Company. She provided no other services to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 20, 2005, the Company has issued and outstanding 1,000,000 shares of
Common Stock. There is no other class of voting security of the Company issued
or outstanding. The following table sets forth the number of shares of Common
Stock beneficially owned as of March 31, 2005, by (i) each director, (ii) each
executive officer named in the Summary Compensation Table and (iii) each person
known to own beneficially more than 5% of our stock and (iv) all directors,
named executive officers and other executive officers as a group. We calculated
beneficial ownership according to Rule 13d-3 of the Securities Exchange Act as
of that date.
Beneficial ownership generally includes voting and investment power with respect
to securities. Unless otherwise indicated below, the persons and entities named
in the table have sole voting and sole investment power with respect to all
shares beneficially owned.
19
Shares of Common Stock
Name Number of Shares Owned % Total Outstanding Shares
---- ---------------------- --------------------------
Robert Lisle 266,667 26.7%
6680 Yosemite Ln.
Dallas, Texas 75214
Max Kipness 266,667 26.7%
549 Valley View Dr.
Lewisville, Texas 75067
Patricia Gunter 416,666 41.6%
174 FM 1830
Argyle, Texas 76226
All officers and directors as a group 533,334 53.3%
(2 persons)
DESCRIPTION OF SECURITIES
Common Stock
Assure Data, Inc. is authorized to issue 100,000,000 shares of common stock,
$.001 par value per share, of which 1,000,000 shares were issued and outstanding
as of the date of this Prospectus. The holders of common stock are entitled to
one vote per share for the election of directors and with respect to all other
matters submitted to a vote of stockholders. Shares of common stock do not have
cumulative voting rights, which mean that the holders of more than 50% of such
shares voting for the election of directors can elect 100% of the directors if
they choose to do so. Our common stock does not have preemptive rights, meaning
that our common shareholders' ownership interest would be diluted if additional
shares of common stock are subsequently issued and the existing shareholders are
not granted the right, in the discretion of the Board of Directors, to maintain
their ownership interest in our company.
Upon any liquidation, dissolution or winding-up of our company, our assets,
after the payment of debts and liabilities, will be distributed pro-rata to the
holders of the common stock. The holders of the common stock do not have
preemptive or conversion rights to subscribe for any of our securities and have
no right to require us to redeem or purchase their shares. No holder of common
stock may be assessed for future capital contributions.
The holders of Common Stock are entitled to share equally in dividends, if and
when declared by our Board of Directors, out of funds legally available
therefore, subject to the priorities given to any class of preferred stock which
may be issued.
Stock Options
As of the date of this Prospectus, no stock option plan is in effect and no
options have been granted by the board of directors.
Transfer Agent And Registrar
Securities Transfer Corporation, Frisco, Texas, serves as the transfer agent and
registrar for our shares of common stock.
Market For Common Equity And Related Shareholder Matters
This is our initial public offering so there is currently no public trading
market for our common stock. We hope to have our common stock prices listed on
the bulletin board maintained by the National Association of Securities Dealers.
To be eligible to have our common stock quoted on the bulletin board, we will be
required to file with the Securities and Exchange Commission periodic reports
20
required by the Securities and Exchange Act of 1934 and thus be a "reporting"
company, a step we will attempt to accomplish after the effective date of this
registration statement.
As of May 1, 2005, there were 1,000,000 common shares issued and outstanding.
All of these common shares were issued under Section 4(2) of the Securities Act,
and are restricted shares.
We have never paid dividends and do not expect to declare any in the foreseeable
future. Instead, we expect to retain all earnings for our growth. Although we
have no specific limitations on our ability to pay dividends. The corporate law
of Nevada, the State under which we are organized, limits our ability to pay
dividends to those instances in which such dividends would not prevent us from
paying our debts or satisfying preferential share rights. If we are unable to
achieve earnings and profits in a sufficient amount to satisfy the statutory
requirements of Nevada, no dividends will be made, even if our Board of
Directors wanted to pay dividends. Investors should not purchase shares in this
offering if their intent is to receive dividends.
PLAN OF DISTRIBUTION
We are offering up to a maximum of 600,000 shares at a price of $0.50 per share
to be sold by us through the efforts of our executive officers. Since our shares
are sold through our executive officers, no compensation will be paid with
respect to such sales. In addition, because the offering is conducted on a
"direct sale" basis, there is no assurance that any of the shares offered hereby
will be sold.
The offering will remain open until the earlier of the sale of all of the shares
offered by us or 90 days after the date of the prospectus, or unless we
determine, in our discretion, to cease the selling efforts prospectus. Our
officers, directors and stockholders and their affiliates may purchase shares in
this offering.
All sales will be made on a direct basis by our officers, who will be considered
to be underwriters. No advertising or distribution of prospectuses will be made
via the Internet.
There is no minimum number of shares that must be sold to complete the offering.
As a result, there will be no escrow of any of the proceeds of this offering.
Accordingly, we will have use of such funds once we accept a subscription and
funds have cleared. Such funds shall be non-refundable except as may be required
by applicable law.
Upon effectiveness of this registration statement, we will conduct the sale of
the shares we are offering on a self-underwritten, direct basis. This means that
we do not have an underwriter and that we will sell the shares directly to
investors. Participating on our behalf in the distribution is Robert Lisle, our
Principal Executive Officer, who is exempt from registration as a broker-dealer
under Rule 3a4-1 of the Securities Exchange Act on the basis that he is not
affiliated with a registered broker-dealer, he will receive no compensation for
his efforts, is not subject to any statutory disqualification and primarily
performs duties for the Company, other than selling securities. All shares of
our common stock that we are registering for sale by the company that we are
able to sell will be sold at a price per share of $0.50. There can be no
assurance that we will sell all or any of the shares offered. We have no
arrangement or guarantee that we will sell any shares. All subscription checks
shall be made to the order of Assure Data.
We will pay all the expenses incident to the registration, offering and sale of
the shares to the public.
Under the penny stock regulations, a broker-dealer selling penny stocks to
anyone other than an established customer or "accredited investor" (generally,
an individual with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with his or her spouse) must make a
special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. In addition, unless the broker-dealer or the
transaction is otherwise exempt, the penny stock regulations require the
broker-dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Securities and Exchange Commission relating
to the penny stock. A broker-dealer is also required to disclose commissions
payable to the broker-dealer and the Registered Representative and current
quotations for the securities. A broker-dealer is additionally required to send
21
monthly statements disclosing recent price information with respect to the penny
stock held in a customer's account and information with respect to the limited
market in penny stocks.
INVESTOR SUITABILITY REQUIREMENTS
This offering is limited to "accredited investors" who are high net worth and/or
sophisticated investors as more fully described below.
Accreditation Requirements
An investor is an "accredited investor" only if such investor meets one or more
of the following:
(i) the investor is a natural person who has a net worth , or joint
net worth with that person's spouse exceeding $1,000,000 at the
time of purchase;
(ii) the investor is a natural person who individually had income in
excess of $200,000 in each of the two most recent years, or joint
income with that person's spouse in excess of $300,000 in each of
those years, and who reasonably expects income in excess of those
levels in the current year;
(iii) the investor is a director or executive officer Assure Data,
Inc.;
(iv) the investor is either (a) a bank defined in Section 3(a)(2) of
the securities Act, or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual of fiduciary capacity; (b)
any broker or dealer registered pursuant to Section 15 of the
Securities Act of 1934 as amended; (c) an insurance company as
defined in Section 2(13) of the Securities Act; (d) an investment
company registered under the Investment Company Securities Act;
(e) a Small Business Investment Company licensed by the United
States Small Business Administration under Section 301(d) or (d)
of the Small Business Investment Securities Act of 1958; (f) a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
a plan has total assets in excess of $7,000,000; (g) an employee
benefit plan within the meaning of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended, if the
investment decision is made by a plan fiduciary, which is either
a bank, a savings and loan association, insurance company, or
registered investment advisor, or if the plan has assets in
excess of $7,000,000, or if a self-directed plan, with the
investment decisions made solely by persons that are accredited
investor;
(v) the investor is a private business development company under
Section 202(a)(22) of the Investment Advisers Securities Act of
1940;
(vi) the investor is any organization described in Section 501(c)(3)
of the Internal Revenue Code and certain other corporations,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $7,000,000;
(vii) the investor is any trust with total assets in excess of
$7,000,000 not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a sophisticated
person as defined in Section 230.506(b)(2)(ii) of Regulation D
promulgated under the Securities Act; or
(viii) the investor is any entity in which all of the equity owners are
accredited investors.
In the case if a husband and wife subscribing jointly, satisfaction of the net
worth standards must be determined by aggregating their net worth and
satisfaction of the income standards must be determined by joint or individual
tax returns, as the case may be. Any other persons subscribing for shares
jointly, including members of partnerships formed for the purpose of purchasing
shares, must each satisfy the applicable net worth and income standards without
regard to the other joint purchasers. In the case if a subscriber that is itself
a partnership (other than a partnership formed for the purpose of purchasing
shares) of a trust, the applicable net worth income standards must be satisfied
by the entity. In the case of a subscriber purchasing as custodian for a minor,
the applicable net worth standards must be satisfied by the custodian.
Each subscriber will be required to satisfy the investor suitability standards
set forth above. An investment in the shares is only suitable for those
investors who have adequate means to provide for their current needs and
personal contingencies and who have no need for liquidity in this investment.
Furthermore, investors must demonstrate an appropriate level of financial
sophistication. Investors should recognize that the suitability standards set
forth above are minimum requirements and that the satisfaction of these
22
standards does not necessarily mean that investment in the shares is suitable
for an investor meeting these standards. We reserve the right to reject any
subscription for any reason whatsoever.
We will require each investor to make representations and warranties relating to
the suitability of an investment in the shares for each investor as set forth in
the form of subscription agreement to accompany this prospectus. We may also
make or cause to be made such further inquiry as we deem appropriate. We may, in
our absolute discretion, reject subscriptions, in whole or in part, or allot to
a particular investor fewer that the number of shares for which the investor
subscribed. We reserve the right to modify or increase the suitability standards
with respect to certain investors, in order to comply with any applicable state
or local laws, rules or regulations or otherwise. Shares will be offered only to
accredited investors in Florida, Texas and California.
LEGAL MATTERS
Legal matters in connection with the common stock being offered hereby will be
passed upon for the Company by Lionel, Sawyer & Collins, Reno, Nevada.
EXPERTS
The financial statements of Assure Data Inc. as of December 31, 2004 and 2003,
and for the year ended December 31, 2004 and the period from April 28, 2003,
(commencement) to December 31, 2003 and the cumulative period from April 28,
2003 (commencement) to December 31, 2004, appearing in this prospectus have been
audited by the firm of Tschopp, Whitcomb & Orr, P.A., independent registered
accounting firm, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement under the Securities Act with respect to
the securities offered hereby with the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. This prospectus, which is a part of the registration
statement, does not contain all of the information contained in the registration
statement and the exhibits and schedules thereto, certain items of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to Assure Data, Inc. and the securities offered
hereby, reference is made to the registration statement, including all exhibits
and schedules thereto, which may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N. W., Room 1024,
Washington, D.C. 20549 at prescribed rates during regular business hours. You
may obtain information on the operation of the public reference facilities by
calling the Commission at 1-800-SEC-0330. Also, the SEC maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission at
http://www.sec.gov. Statements contained in this prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the registration statement, each such statement being qualified in
its entirety by such reference. We will provide, without charge upon oral or
written request of any person, a copy of any information incorporated by
reference herein. Such request should be directed to us at Assure Data, Inc.,
2591 Dallas Parkway, Suite 102 Frisco, Texas 75034, Attention: Robert Lisle,
President.
Following the effectiveness of this registration statement, we will file reports
and other information with the Commission. All of such reports and other
information may be inspected and copied at the Commission's public reference
facilities described above. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission. The address of such site
is http://www.sec.gov. In addition, we intend to make available to our
shareholders annual reports, including audited financial statements, un-audited
quarterly reports and such other reports as we may determine.
23
ASSURE DATA, INC.
(A Development Stage Company)
Table of Contents
Report of Independent Registered Accounting Firm..............................F2
Financial Statements:
Balance Sheets as of December 31, 2004 and 2003..........................F3
Statements of Operations for the year ended December 31, 2004,
the period from April 28, 2003 (commencement) to December 31,
2003 and the cumulative period from April 28, 2003 (commencement)
to December 31, 2004.....................................................F4
Statements of Stockholders' Equity for the cumulative period
from April 28, 2003 (commencement) to December 31, 2004..................F5
Statements of Cash Flows for the year ended December 31, 2004, the
period from April 28, 2003 (commencement) to December 31, 2003,and the
cumulative period from April 28, 2003 (commencement) to
December 31, 2004........................................................F6
Notes to Financial Statements............................................F7
Unaudited Interim Financial Statements:
Balance Sheets as of March 31, 2005 and December 31, 2004...............F10
Statements of Operations for the year the period from April 28,
2003 (commencement) to March 31, 2005 and the three months
ended March 31, 2005 and 2004...........................................F11
Statements of Stockholders' Equity for the cumulative period
from April 28, 2003 (commencement) to March 31, 2005....................F12
Statements of Cash Flows for the period from April 28, 2003
(commencement) to March 31, 2005 and the three months ended
March 31, 2005 and 2004.................................................F13
Notes to Financial Statements...........................................F14
F-1
Report of Independent Registered Accounting Firm
------------------------------------------------
The Board of Directors
Assure Data, Inc.:
We have audited the accompanying balance sheet of Assure Data, Inc. (a
development stage company) as of December 31, 2004 and 2003 and the related
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 2004, for the period from April 28, 2003 (commencement) to December
31, 2003, and for the cumulative period from April 28, 2003 (commencement) to
December 31, 2004. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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
audits provide 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 Assure Data, Inc. (a
development stage company), as of December 31, 2004 and 2003 and the results of
its operations and its cash flows for the year ended December 31, 2004, for the
period from April 28, 2003 (commencement) to December 31, 2003 and for the
cumulative period from April 28, 2003 (commencement) to December 31, 2004, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 3 to the
financial statements, the Company has generated minimal revenues and experienced
an accumulated deficit of approximately $93,000 through December 31, 2004. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are described in
note 4. The accompanying financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
/s/ Tschopp, Whitcomb & Orr, P.A.
March 31, 2005
Maitland, Florida
F-2
ASSURE DATA, INC.
(A Development Stage Company)
Balance Sheets
Assets
------
December 31, December 31,
2004 2003
------------ ------------
Current assets:
Cash $ 445 4,999
Accounts receivable 12,674 1,775
Other current assets 1,539 --
------------ ------------
Total current assets 14,658 6,774
Computer equipment, net of accumulated
depreciation of $3,255 and $389 6,771 7,736
------------ ------------
Total assets $ 21,429 14,510
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 4,539 --
Due to related party (note 2) 6,425 --
Deferred revenue 2,337 --
------------ ------------
Total current liabilities 13,301 --
------------ ------------
Stockholders' equity:
Common stock: $.001 par value. Authorized: 100,000,000
shares; issued and outstanding: 1,000,000 shares 1,000 1,000
Additional paid-in capital 99,800 99,800
Deficit accumulated during the development stage (92,672) (86,290)
------------ ------------
Total stockholders' equity 8,128 14,510
------------ ------------
Total liabilities and stockholders' equity $ 21,429 14,510
============ ============
See accompanying notes to financial statements.
F-3
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Operations
Cumulative
Period from Period from
April 28, 2003 April 28, 2003
Year Ended (commencement) (commencement)
December 31, to December 31, to December 31,
2004 2003 2004
--------------- --------------- ---------------
Revenues $ 27,599 3,280 30,879
Cost of revenues (note 2) 18,593 1,245 19,838
--------------- --------------- ---------------
Gross profit 9,006 2,035 11,041
--------------- --------------- ---------------
Operating expenses:
Product development and marketing -- 10,150 10,150
General and administrative (note 2) 15,388 78,175 93,563
--------------- --------------- ---------------
Total operating expenses 15,388 88,325 103,713
--------------- --------------- ---------------
Net loss $ (6,382) (86,290) (92,672)
=============== =============== ===============
Basic and diluted loss per share $ (0.01) (0.10) (0.10)
=============== =============== ===============
Weighted average number of shares
outstanding - basic and diluted 1,000,000 894,889 970,952
=============== =============== ===============
See accompanying notes to financial statements.
F-4
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
Cumulative Period from April 28, 2003 (commencement) through December 31, 2004
Deficit
Accumulated
Common Stock Additional During the Total
----------------------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------- ------------- ------------- ------------- -------------
Common stock issued at commencement 800,000 $ 800 -- -- 800
Common stock issued in private placement 200,000 200 99,800 -- 100,000
Net loss -- -- -- (86,290) (86,290)
------------- ------------- ------------- ------------- -------------
Balances at December 31, 2003 1,000,000 1,000 99,800 (86,290) 14,510
Net loss -- -- (6,382) (6,382)
------------- ------------- ------------- ------------- -------------
Balances at December 31, 2004 1,000,000 $ 1,000 99,800 (92,672) 8,128
============= ============= ============= ============= =============
See accompanying notes to financial statements.
F-5
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Cash Flows
Cumulative
Period from
Period from April 28, 2003
April 28, 2003 (commencement)
Year Ended (commencement) to December 31,
December 31, to December 31, 2004
2004 2003 (Unaudited)
--------------- --------------- ---------------
Cash flows from operating activities:
Net loss $ (6,382) $ (86,290) $ (92,672)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 2,866 389 3,255
Changes in assets and liabilities:
Accounts receivable (10,899) (1,775) (12,674)
Other current assets (1,539) -- (1,539)
Accounts payable and accrued expenses 4,539 -- 4,539
Due to related party (note 2) 6,425 -- 6,425
Deferred revenue 2,337 -- 2,337
--------------- --------------- ---------------
Net cash used in operating activities (2,653) (87,676) (90,329)
--------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from notes payable to related party -- 1,000 1,000
Repayment of notes payable to related party -- (1,000) (1,000)
--------------- --------------- ---------------
Net cash provided by financing activities -- -- --
--------------- --------------- ---------------
Cash flows from investing activities:
Purchase of computer equipment (note 2) (1,901) (8,125) (10,026)
Proceeds from issuance of common stock -- 100,800 100,800
--------------- --------------- ---------------
Net cash provided by (used in )
investing activities (1,901) 92,675 90,774
--------------- --------------- ---------------
Net increase (decrease) in cash (4,554) 4,999 445
Cash at beginning of period 4,999 -- --
--------------- --------------- ---------------
Cash at end of period $ 445 $ 4,999 $ 445
=============== =============== ===============
See accompanying notes to financial statements.
F-6
ASSURE DATA, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2004
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
(a) Organization
------------
Assure Data, Inc. (the "Company") is a Nevada corporation which was formed
in November, 2002 and commenced operations in April 2003. The Company
provides fully automated remote data backup services for small to medium
sized businesses.
(b) Accounts Receivable
-------------------
Accounts receivable are stated at the amount management expects to collect
from outstanding balances. Management provides for probable uncollectible
amounts using the reserve method based on its assessment of the current
status of the individual receivables and after using reasonable collection
efforts. As of December 31, 2004, no allowance for doubtful accounts has
been provided and no bad debt expense has been recorded for the year then
ended.
(c) Computer Equipment
------------------
Computer equipment is recorded at cost and depreciated over the estimated
useful lives of the assets which are three years, using the straight-line
method.
(d) Income Taxes
------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss 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. Changes in tax rates
are recognized in the period that includes the enactment date.
(e) Financial Instruments Fair Value, Concentration of Business and Credit
Risks
---------------------------------------------------------------------------
The carrying amounts reported in the balance sheet for cash, accounts
receivable and accounts payable and accrued expenses approximate fair value
because of the immediate or short-term maturity of these financial
instruments.
(Continued)
F-7
ASSURE DATA, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2004
(1) Organization and Summary of Significant Accounting Policies (Continued)
-----------------------------------------------------------------------
(f) Use of Estimates
----------------
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with accounting principles generally accepted in the United
States of America. Actual results could differ from those estimates.
(g) Revenue Recognition
-------------------
The Company charges its customers monthly fees for its services based on
the provisions of each customer's contract. The monthly fees consist of a
base fee, a volume based data transfer fee and a volume based data storage
fee. Revenues are recognized in the month the services are provided in
accordance with the criteria set forth in Statement of Financial Accounting
Concepts No. 5 "Recognition and Measurement in Financial Statements of
Business Enterprises."
The Company also charges its customers an initial set-up fee which is
refundable for a 30 day period. The revenues from set up fees are deferred
and recognized over the expected period of performance based on the
guidance provided in SEC Staff Accounting Bulletin 104 - Revenue
Recognition. In addition, all remaining deferred set-up fee revenue is
recognized upon cancellation of the corresponding service agreement.
(h) Earnings or Loss per Common Share
---------------------------------
Basic and diluted loss per common share have been computed based upon the
weighted average number of common shares outstanding during the period
presented. At December 31, 2004 and 2003, there were no common stock
equivalents outstanding.
(i) Cash Flows
----------
For purposes of cash flows, the Company considers all highly liquid
investments with original maturities of three months of less to be cash
equivalents.
F-8
ASSURE DATA, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2004
(2) Related Party Transactions
--------------------------
The Company paid consulting fees to a company (affiliate) controlled by one
of its officers and stockholders of approximately $750 and $64,000 during
2004 and 2003, respectively, which are included in general and
administrative expenses in the accompanying statements of operations. The
affiliate also provided services related to the production of revenue of
approximately $16,000 during 2004, which is included in cost of revenues in
the statement of operations. Approximately $10,000 of this amount was paid
during 2004 and approximately $6,000 is included in due to related party on
the accompanying balance sheet at December 31, 2004. This obligation is
non-interest bearing, due on demand and is unsecured. The affiliate also
sold approximately $2,000 of computer equipment to the Company during 2004.
(3) Sales of Common Stock
---------------------
In April 2003, the Company sold 800,000 shares of its common stock to the
founding stockholders for net proceeds of $800. This resale of the common
stock is restricted for a period of one year under Rule 144 of the
Securities and Exchange Act of 1933 ("Rule 144").
In September 2003, the Company completed a private placement offering in
which 200,000 shares of its common stock were sold for net proceeds of
$100,000. These shares are also subject to the restrictions of Rule 144.
(4) Going Concern and Management's Plans
------------------------------------
The Company's financial statements have been presented on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As described herein, the
Company has generated minimal revenues and experienced an accumulated
deficit of approximately $93,000 through December 31, 2004. These matters
raise substantial doubt about the Company's ability to continue as a going
concern.
Management's plans with regard to these matters include the following:
o The aggressive marketing of the Company's products and services.
o Obtaining additional capital through the sale of common stock to
existing and new stockholders.
Accordingly, management is of the opinion that aggressive marketing
combined with additional capital will result in improved operations and
cash flow in 2005 and beyond. However, there can be no assurance that
management will be successful in obtaining additional funding or in
attaining profitable operations.
F-9
ASSURE DATA, INC.
(A Development Stage Company)
Balance Sheets
Assets
------
March 31,
2005 December 31,
(Unaudited) 2004
------------ ------------
Current assets:
Cash $ 593 445
Accounts receivable 12,702 12,674
Common stock offering costs 12,943 1,539
------------ ------------
Total current assets 26,238 14,658
Computer equipment, net of accumulated
depreciation of $4,103 and $3,255 6,376 6,771
------------ ------------
Total assets $ 32,614 21,429
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 3,000 4,539
Due to related party 17,736 6,425
Deferred revenue 2,066 2,337
------------ ------------
Total current liabilities 22,802 13,301
------------ ------------
Stockholders' equity:
Common stock: $.001 par value. Authorized: 100,000,000
shares; issued and outstanding: 1,000,000 shares 1,000 1,000
Additional paid-in capital 99,800 99,800
Deficit accumulated during the development stage (90,988) (92,672)
------------ ------------
Total stockholders' equity 9,812 8,128
------------ ------------
Total liabilities and stockholders' equity $ 32,614 21,429
============ ============
See accompanying notes to financial statements.
F-10
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Operations
Cumulative
Period from
Three Months Three Months April 28, 2003
Ended Ended (commencement)
March 31, March 31, to March 31,
2005 2004 2005
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- --------------
Revenues $ 9,680 1,664 40,559
Cost of revenues 6,105 747 25,943
-------------- -------------- --------------
Gross profit 3,575 917 14,616
-------------- -------------- --------------
Operating expenses:
Product development and marketing 308 -- 10,458
General and administrative 1,583 2,527 95,146
-------------- -------------- --------------
Total operating expenses 1,891 2,527 105,604
-------------- -------------- --------------
Net income (loss) $ 1,684 (1,610) (90,988)
============== ============== ==============
Basic and diluted income (loss) per share $ -- -- (0.09)
============== ============== ==============
Weighted average number of shares
outstanding - basic and diluted 1,000,000 1,000,000 974,583
============== ============== ==============
See accompanying notes to financial statements.
F-11
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
Cumulative Period from April 28, 2003 (commencement) through March 31, 2005
Deficit
Accumulated
Common Stock Additional During the Total
----------------------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------- ------------- ------------- ------------- -------------
Common stock issued at commencement 800,000 $ 800 -- -- 800
Common stock issued in private placement 200,000 200 99,800 -- 100,000
Net loss -- -- -- (86,290) (86,290)
------------- ------------- ------------- ------------- -------------
Balances at December 31, 2003 1,000,000 1,000 99,800 (86,290) 14,510
Net loss -- -- -- (6,382) (6,382)
------------- ------------- ------------- ------------- -------------
Balances at December 31, 2004 1,000,000 1,000 99,800 (92,672) 8,128
Net income (unaudited) -- -- -- 1,684 1,684
------------- ------------- ------------- ------------- -------------
Balances at March 31, 2005 (unaudited) 1,000,000 $ 1,000 99,800 (90,988) 9,812
============= ============= ============= ============= =============
See accompanying notes to financial statements.
F-12
ASSURE DATA, INC.
(A Development Stage Company)
Statements of Cash Flows
Cumulative
Period from
Three Months Three Months April 28, 2003
Ended Ended (commencement)
March 31, March 31, to March 31,
2005 2004 2005
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- --------------
Cash flows from operating activities:
Net income (loss) $ 1,684 (1,610) (90,988)
Adjustments to reconcile net income (loss) to
net cash provide by (used in) operating
activities:
Depreciation 848 677 4,103
Changes in assets and liabilities:
Accounts receivable (28) (1,244) (12,702)
Accounts payable and accrued expenses (1,539) 850 3,000
Due to related party 11,311 747 17,736
Deferred revenue (271) 1,655 2,066
-------------- -------------- --------------
Net cash provided by (used in)
operating activities 12,005 1,075 (76,785)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from notes payable to related party -- -- 1,000
Repayment of notes payable to related party -- -- (1,000)
-------------- -------------- --------------
Net cash provided by financing activities -- -- --
-------------- -------------- --------------
Cash flows from investing activities:
Purchase of computer equipment (453) -- (10,479)
Proceeds from issuance of common stock -- -- 100,800
Common stock offering costs (11,404) -- (12,943)
-------------- -------------- --------------
Net cash provided by (used in )
investing activities (11,857) -- 77,378
-------------- -------------- --------------
Net increase in cash 148 1,075 593
Cash at beginning of period 445 4,999 --
-------------- -------------- --------------
Cash at end of period $ 593 6,074 593
============== ============== ==============
See accompanying notes to financial statements.
F-13
ASSURE DATA, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2005
(1) Organization
------------
Assure Data, Inc. (the "Company") is a Nevada corporation which was formed
in November, 2002 and commenced operations in April 2003. The Company
provides fully automated remote data backup services for small to medium
sized businesses.
(2) Presentation of Unaudited Financial Statements
----------------------------------------------
The unaudited financial statements have been prepared in accordance with
rules of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes required by accounting principles
generally accepted in the United States of America. The information
furnished, in the opinion of management, reflects all adjustments
(consisting only of normal recurring accruals) considered necessary to
present fairly the financial position as of March 31, 2005, and results of
operations and cash flows for the three month periods ended March 31, 2005
and 2004. The results of operations are not necessarily indicative of
results which may be expected for any other interim period, or for the year
as a whole. For further information, refer to the financial statements and
footnotes thereto for the year ended December 31, 2004 included elsewhere
in this filing.
F-14
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ASSURE DATA,
INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF ASSURE DATA, INC. SINCE ANY OF THE DATES AS OF WHICH
INFORMATION IS FURNISHED HEREIN OR SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................2
RISK FACTORS...................................................................5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................9
USE OF PROCEEDS................................................................9
DETERMINATION OF OFFERING PRICE...............................................10
DESCRIPTION OF BUSINESS.......................................................10
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS....................14
MANAGEMENT....................................................................17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................19
DESCRIPTION OF SECURITIES.....................................................20
PLAN OF DISTRIBUTION..........................................................21
INVESTOR SUITABILITY REQUIREMENTS.............................................22
LEGAL MATTERS.................................................................23
WHERE YOU CAN FIND MORE INFORMATION...........................................23
DEALER PROSPECTUS DELIVERY OBLIGATIONS
Until _________, 2005, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ---------------------------------------------------
Article Twelve of the Articles of Incorporation of the Company provide that the
Company shall indemnify, to the maximum extent allowed by Nevada law, any person
who is or was a Director, Officer, agent or employee of the corporation, and any
person who serves or served at the Company's request as a Director, Officer,
agent, employee, partner or trustee of another corporation, partnership, joint
venture, trust or other enterprise. An officer or director of the Company could
take the position that this duty on behalf of the Company to indemnify the
director or officer may include the duty to indemnify the officer or director
for the violation of securities laws. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the Company pursuant to the
Company's Articles of Incorporation, Bylaws, Nevada law or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company and the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by a controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 25 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- -----------------------------------------------------
The following is an itemized list of the estimate by the Company of the expenses
of the offering:
SEC registration fee $ 50
Accounting fees and expenses* 20,000
Legal* 15,000
Miscellaneous* 4,950
Printing* 10,000
--------
Total $50,000
*estimates
ITEM 26 - RECENT SALES OF UNREGISTERED SECURITIES
- -------------------------------------------------
The following information is furnished with regard to all securities sold by us
within the past three years that were not registered under the Securities Act.
The issuances described hereunder were made in reliance upon the exemptions from
registration set forth in Section 4(2) and Regulation D of the Securities Act
relating to sales by an issuer not involving any public offering. None of the
foregoing transactions involved a distribution or public offering.
In November 2002, the Company was incorporated under the laws of the State of
Nevada. In April 2003, 266,667 shares of common stock were issued to Robert
Lisle for $267, 266,667 shares of common stock were issued to Max Kipness for
$267, and 266,666 shares of common stock were issued to Patrica Gunter for $267.
The federal exemption we relied upon in issuing the securities was Section 4(2)
of the Securities Act. The Section 4(2) exemption was available to us because we
did not solicit any purchasers to invest in the company and instead issued
shares to our founders, Mr. Lisle, Mr. Kipness and Patrica Gunter. In addition,
given our founders' involvement in the establishment of the company, they had
access to such information as they deemed necessary to fully evaluate an
investment in our company. No underwriters were used in the offering.
Beginning in April 2003, we conducted a private offering of 200,000 shares of
Common Stock of our company at a purchase price of $0.50 per share. These shares
were offered and sold to a limited number of accredited investors, without
public solicitation. A total of five individuals purchased shares from us for a
total of $100,000.
II-1
The offering was completed on September 30, 2003. The federal exemption we
relied upon in issuing these securities was Rule 506 under of the Securities
Act. The Rule 506 exemption was available to us because we did not publicly
solicit any investment in the company. We also gave all of these investors the
opportunity to review documents, ask questions of and receive answers from us as
to all aspects of our business as well as access to such information as they
deemed necessary to fully evaluate an investment in our company.
All shares issued under the private placement and all shares issued to Mr.
Lisle, Mr. Kipness and Mrs. Gunter have been and will remain restricted and may
not be transferred unless and until the effectiveness of this registration
statement or pursuant to another applicable exemption.
ITEM 27 - EXHIBITS
- ------------------
(1) 1.1 Subscription Agreement
(1) 2.1 Secretary of State Certificate
(1) 3.1 Articles of Incorporation
(1) 3.2 Bylaws
(1) 4.1 Specimen Stock Certificate
(1) 5.1 Opinion on legality of shares
(1) 10.1 Form of Data Protection Agreement
(2) 23.1 Consent of Auditors
(1) 23.2 Consent of legal counsel
- ---------------------------------------
(1) Previously filed
(2) Filed herewith
ITEM 28 - UNDERTAKINGS
- ----------------------
The Company does not presently anticipate using an underwriter in conducting
this offering; if the company changes its plan and utilizes an underwriter, the
Company will provide to the underwriter, at the closing specified in any
underwriting agreement, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Company pursuant to the Company's Articles of Incorporation, Bylaws,
Nevada law or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company and the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by a controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue. The
undersigned registrant hereby undertakes that it will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(a) Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(b) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and include any additional
or changed material information on the plan of distribution.
II-2
2. For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-3
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB- 2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Frisco,
State of Texas on June 20, 2005.
Assure Data Inc.
By: /s/ Robert M. Lisle
--------------------------------------------------------
Robert M. Lisle, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
(Signature)
/s/ Robert M. Lisle
--------------------------------------------
Robert M. Lisle
(Title) President, Treasurer, Chief Executive Officer, Chief Financial
and Accounting Officer, Director
(Date) June 20, 2005
(Signature)
/s/ Max M. Kipness
--------------------------------------------
Max M. Kipness
(Title) Secretary and Director
(Date) June 20, 2005
II-4