2
As filed with the Securities and Exchange Commission on Nov. 15, 2000
Commission File Number
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under The Securities Act of 1933
InstantRX.com, Inc.
DELAWARE Applied For
(State or other (Primary Standard Industrial (I.R.S. Employer)
jurisdictions Classification Code Number) Identification number)
of incorporation
or organization)
6620 West Irving Park Road
Chicago, IL 60634
Telephone: 877-848-5976
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Deron Smallcomb
3567 Benton #344
Santa Clara, Ca 95051
Telephone: 877-848-5976
(Name, address and telephone number of agent for service.)
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
Telephone: 303-850-7637
Facsimile: 303-220-9902
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, check the following box: |x|
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee
Common stock 1,000,000 $1.00 $1,000,000 $278.00
The registrant amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment, which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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PRELIMINARY PROSPECTUS DATED NOVEMBER 5, 2000
SUBJECT TO COMPLETION
Up to a maximum of 1,000,000 common shares
at $1.00 per common share
InstantRx.com, Inc.
We shall receive $865,222 of the proceeds from the sale of the
common shares after paying the selected broker dealer discounts, if
any and commissions of $100,000 and before expenses estimated at
$34,778.
The offering is on a self-underwritten basis with no minimum offering
amount. We have made no escrow arrangements for any funds received.
We will pay the $100,000 commission fee only if we engage a broker-
dealer.
We have had no significant revenues. We have never had more than minimal
operations or assets.
You will not get your money back, even if we raise insufficient capital
to accomplish our business plan.
This is our initial public offering, and no public market currently
exists for our shares.
The offering terminates on June 30, 2001.
Consider carefully the risk factors beginning on page 6 in the
prospectus.
Neither the SEC nor state securities commission has approved these
certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The information in this prospectus is not complete and we may change
it. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY 5
RISK FACTORS 6
- Success dependent on growth of internet
- Inability to acquire and maintain web
domain names
- Obsolence of products and services
- Security breached and other unexpected
problems
- Failure to protect intellectual property rights
- Infringement of others proprietary rights
- Liability regarding information we provide
- Increased marketing costs
- Heavy regulation may increase costs
AVAILABLE INFORMATION 8
TERMS OF THE OFFERING 9
SOURCE AND USE OF PROCEEDS 10
DILUTION 10
INSTANTRX 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 18
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
MANAGEMENT 19
Officers and Directors
Remuneration
Indemnification
CERTAIN TRANSACTIONS 21
PRINCIPAL SHAREHOLDERS 21
SHARES ELIGIBLE FOR FUTURE SALE 21
MARKET FOR REGISTRANT'S COMMON EQUITY 22
DESCRIPTION OF SECURITIES 23
LEGAL MATTERS 23
LEGAL PROCEEDINGS 24
EXPERTS 24
INTERESTS OF NAMED EXPERTS AND COUNSEL 24
ADDITIONAL INFORMATION 24
5
PROSPECTUS SUMMARY
The following summary contains basic information about this offering.
It likely does not contain all the information that is important to
you. For a more complete understanding of this offering, we
encourage you to read this entire document and the documents we have
referred you to.
InstantRx. InstantRx.com is a Internet portal site that provides
customers the means to have prescriptions filled at their local
pharmacy. The InstantRx network will enable same day delivery
services and easy pickup. InstantRx.com is striving to create a
virtual network of community drugstores.
The Offering. InstantRx is offering
up to 1,000,000 common
shares at $1.00 per
common share. There is
no minimum investment and
no minimum offering amount
Common shares outstanding
prior to this offering 7,316,966
Percent of common shares owned by
current shareholders after maximum
offering 87.98%
Gross proceeds after maximum offering $1,000,000
Use of proceeds from sale of
common shares InstantRx intends to use
the funds from the sale of
our common shares primarily
for sales and marketing,
consulting fees, Internet
Drugstore, PCS Internet, NCPA
convention, public relations
and working capital.
Market For the Common Stock
Prior to the date of this
prospectus, we have had no
trading market for our common
stock. We will apply for
the quotation of our common
stock on the OTC Bulletin
Board.
We cannot offer assurance that
the NASD will quote our common
stock, that an active trading
and/or a liquid market will
develop or, if developed, that
we can maintain it.
Absence of Dividends; Dividend Policy We do not currently
intend to pay regular cash
dividends on its common stock.
Our board of directors will
review this policy from time
to time in light of,
among other things, our
earnings and financial
position. We do not
anticipate paying dividends on
our common stock in the
foreseeable future.
Transfer Agent We currently act as our own
transfer agent.
6
- ----------------------------------------------------------
RISK FACTORS
- ----------------------------------------------------------
In analyzing this offering, you should read this entire prospectus and
carefully consider, among other things, the following risk factors:
1. The success of our business model is dependent on continued
growth and acceptance of the Internet and growth of the online market
for healthcare information, products and services.
Our business model assumes that consumers will be attracted to and use
healthcare information and related content available on our Internet-
based consumer healthcare network which will, in turn, allow us the
opportunity to sell advertising and sponsorships designed to reach
those consumers.
Our business model also assumes that those consumers will purchase
health-related products online using our website and that healthcare
organizations and other Internet healthcare companies will partner
with us to reach these consumers. This business model is not yet
proven and may not be successful.
Our future revenues and profits, if any, substantially depend upon the
widespread acceptance and use of the Internet as an important channel
for the delivery of healthcare information, products and services. The
Internet may not prove to be a viable commercial medium due to
inadequate development of a reliable network, delays in development of
high speed modems, or delays in the adoption of new standards required
to handle increased levels of Internet activity.
2. If we are unable to acquire and maintain the necessary web domain
names, our brands and reputation could be damaged, and we could lose
customers.
We currently hold several Internet domain names. The regulation of
domain names in the United States and in foreign countries is subject
to change. Regulatory bodies could establish additional top-level
domains, appoint additional domain name registrars or modify the
requirements for holding domain names. As a result, we may not acquire
or maintain the domain names in all of the countries in which we
conduct business.
The relationship between regulations governing domain names and laws
protecting trademarks and similar proprietary rights is unclear. We
could be unable to prevent third parties from acquiring domain names
that infringe or otherwise decrease the value of our brands,
trademarks and other proprietary rights. In addition, we may be unable
to prevent third parties from acquiring and using domain names
relating to our brands. Any confusion that may result from information
on or related to any websites with domain names relating to our brands
could impair both our ability to capitalize upon our brands and our
marketing strategy.
3. If we do not respond to rapid technological changes affecting the
Internet healthcare industry, our products and services could become
obsolete.
Our ability to attract and retain customers will be adversely affected
by any failure to respond to technological advances and emerging
industry standards. As the Internet and online commerce industry
evolve, we must address the increasingly sophisticated and varied
needs of our prospective customers and respond to technological
advances and emerging industry standards and practices on a cost-
effective and timely basis. We may not be able to successfully
implement new technologies or adapt our network, proprietary
technology and transaction-processing systems to customer requirements
or emerging industry standards.
4. Breaches in our security and other unexpected problems could
result in lawsuits by customers and a violation of federal law
We retain confidential customer and patient information on our
servers. Any breach of security from a physical break-in, computer
virus, programming error or attack by a third party or an unexpected
natural disaster could subject us to a lawsuit. We may be required to
expend significant sums to protect against security breaches or to
alleviate problems caused by breaches. In addition, a breach of
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privacy of patient health records could constitute a violation of
federal law. We do not have full redundancy for all of our computer
and telecommunications facilities and do not maintain a back-up data
facility.
5. Any failure to protect our intellectual property rights could
impair our ability to establish our brands
If we fail to adequately protect our proprietary rights in our
content, technology, products and services, our competitors could use
the intellectual property that we have developed to enhance their
products and services, which could harm our business. We rely on a
combination of copyright and trademark laws, trade secrets,
confidentiality provisions and other contractual provisions to protect
our proprietary rights, but these legal means afford only limited
protection. Unauthorized parties may attempt to copy aspects of our
websites or to obtain and use information that we regard as
proprietary.
We are applying for a U.S. trademark registration but we may be unable
to secure this registration. In addition, our competitors or others
may adopt service names similar to ours, thereby impeding our ability
to build our brand identity and potentially confusing consumers. We
also rely on a variety of technologies that are licensed from third
parties, including our database and Internet server software. These
third-party licenses may not be available to us on commercially
reasonable terms in the future.
6. We may be sued by third parties for infringement of their
proprietary rights
The healthcare and Internet industries are characterized by the
existence of a large number of patents and frequent litigation based
on allegations of patent infringement or other violations of
intellectual property rights. As the number of entrants into our
market increases, the possibility of an intellectual property claim
against us grows. Our content, technology, products and services may
not be able to sustain any third party claims or rights against their
use. Some of the information in our drug database regarding drug
descriptions, clinical pharmacology, indications and usage, warnings
and the like is copied from package inserts, which accompany the
particular drug.
We have not obtained licenses to reproduce this information from the
various pharmaceutical companies. Although we have not received a
copyright claim to date, we could face potential copyright
infringement claims in this regard. Any intellectual property claims,
with or without merit, could be time-consuming and expensive to
litigate or settle and could divert management attention from
administering our core business.
7. As a publisher of online content, we may have liability for
information we provide on, or which is accessed from, the
InstantRx.com network.
Because users of our network and the websites of our institutional
licensees access health-related information, including with regard to
possible adverse reactions or side effects from medications or a
particular medical condition they may have, or may distribute our
content to others, we may be sued by third parties for various causes
of action based on the nature and content of materials that we
publish.
We could also become liable if confidential information is disclosed
inappropriately. These types of claims have been brought successfully
against online services in the past. Others could also sue us for the
content and services that are accessible from our network through
links to other websites or through content and materials that may be
posted by our users in chat rooms or bulletin boards, none of which we
edit.
Any indemnification provisions that we may have in agreements may not
be adequate to protect us. Our insurance may not adequately protect us
against these types of claims. Further, our business is based on
establishing the InstantRx.com network as a trustworthy and dependable
provider of health care information and services. Allegations of
impropriety, even if unfounded, could therefore harm our reputation
and business.
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8. We face special advertising issues that may increase marketing
costs when we buy advertising for healthcare products over the
Internet.
Health-related companies, which comprise our advertising and
sponsorship target market, face special problems with regard to
Internet advertising. Historically, these companies have marketed
their products through physicians and pharmacologists. Our direct-to-
consumer marketing, whether on the Internet or in traditional media,
is relatively new and unproven. In addition, advertising and product
claims of companies marketing or selling drugs and cosmetics,
including over-the-counter drugs and nutritional supplements, are
subject to regulation and enforcement by the FDA, FTC and similar
state agencies. We could incur substantial costs in compliance with
advertising regulations.
9. Our business is heavily regulated by state and federal laws.
We may not be able to comply in a cost effective way and our business
could be adversely affected.
Numerous state and federal laws regulate our health business.
Generally, the laws and regulations governing the healthcare industry
have not been tested in relation to e-commerce in healthcare products
and/or the provision of healthcare information on the Internet. The
laws may be interpreted in such a way that we may not be permitted to
conduct our business in a cost effective manner.
The requirement that we comply with any new legislation or
regulations, or any unanticipated application or interpretation of
existing laws or regulations, may decrease the growth in the use of
the Internet, which could in turn decrease the demand for our
products, services and information offered through our InstantRx.com
network, increase our cost of doing business or otherwise harm our
business.
The following areas are heavily regulated or may become regulated.
- Practice of medicine
- Practive of pharmacology, nutrition and mental health
- Pharmacy prescription drug activities
- Health information and health products
transmitted from our site
- Storage transmissions and disclosure of medical
information and data
- Physician referral for designated health services to any
entity with which the physician or an immediate family
member has a financial relationship
- FDA Regulation of Medical Devices
- Use of the Internet
- Online content
- Privacy concerns
- Data protection
- Internet taxation
- State insurance regulation
- Domain name infringement
- Marketing insurance online
We may be affected by regulation in any of the listed areas that
relate to our current or proposed activities. Compliance with these
regulations could result in increase costs in compliance and
litigation and increased costs in obtaining services.
- -----------------------------------------
AVAILABLE INFORMATION
- -----------------------------------------
InstantRx has filed with the Securities and Exchange Commission
a registration statement including all amendments and required
exhibits under the Act with respect to the securities offered by
InstantRx. This prospectus does not contain all of the information
set forth in the registration statement. Certain parts of the
registration statement are omitted pursuant to the rules and
regulations of the Commission.
For further information with respect to InstantRx and the
securities offered by InstantRx, shareholders should examine the
registration statement. Copies of such materials may be examined
9
without charge at, or obtained upon payment of prescribed fees from,
the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, telephone number
1-800-SEC-0330, at the Chicago Regional Office, Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and the
New York Regional Office, 7 World Trade Center, New York, New York
10048.
InstantRx will voluntarily file periodic reports in the event our
obligation to file such reports is suspended under Section 15(d) of
the Exchange Act.
InstantRx will provide without charge to each person who receives a
prospectus, upon written or oral request of such person, a copy of any
of the information that was incorporated by reference in the
prospectus not including exhibits to the information that is
incorporated by reference unless the exhibits are themselves
specifically incorporated by reference. Requests for copies of said
documents should be directed to Deron Smallcomb at InstantRx.
The Commission maintains a Web site -- //www.sec.gov -- that contains
reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.
- ----------------------------------------------------------
TERMS OF THE OFFERING
- ----------------------------------------------------------
Plan of Distribution. InstantRx is offering up to 1,000,000 common
shares at the purchase price of $1.00 per common share. We are
offering the common shares on a direct participation basis by our
officers and directors and possibly selected broker-dealers. Deron
Smallcomb and Samuel J. Dalesandro, our officers and directors will
sell the offering on our behalf. They will be relying on the safe
harbor in Rule 3a4-1 of the Securities Exchange Act of 1934 to sell
InstantRx's securities. None of these individuals are subject to a
statutory disqualification, are not associated person of a broker or
dealer and meet all of the following conditions of 3a4-1(a)(4)(ii).
- they each primarily performs, or is intended primarily to
perform at the end of the offering, substantial duties for or on
behalf of InstantRx otherwise than in connection with transactions in
securities; and
- they were not a broker or dealer, or an associated person of a
broker or dealer, within the preceding 12 months; and
- They have not participated in selling an offering of securities
for any issuer more than once in the last 12 months.
No sales commission will be paid for common shares sold by InstantRx.
Selected broker-dealers shall receive a sales commission of up to 10%
for any common shares sold by them.
InstantRx reserves the right to withdraw, cancel or reject an offer
in whole or in part. The common shares offered hereby will not be
sold to insiders, control persons, or affiliates of our company.
We have made no plans, proposals, arrangements or understandings with
any potential sales agent with respect to participating in the
distribution of our securities. When, in the future, assuming such
participation develops, the registration statement will be amended to
identify such persons.
Offering Period. Our offering will terminate on June 30, 2001.
Determination of Offering Price. The offering price and other terms
of the total offering amount needed and the possible dilution to
existing and new shareholders has been arbitrarily determined by our
directors with no relationship to any book or market value.
Subscription Procedure. The full amount of each subscription will be
required to be paid with a check payable to InstantRx in the amount
of the subscription. Purchasers or soliciting broker/dealers should
remit payment directly to InstantRx before 12:00 noon, on the
following business day, together with a list showing the names and
addresses of the person subscribing for the offered common shares or
copies of subscriber's confirmations.
10
No Escrow Account. There is no minimum offering amount and no escrow
account. As a result, we will deposit any and all offering proceeds
directly into our operating account.
- --------------------------------------------------------------
SOURCE AND USE OF PROCEEDS
- --------------------------------------------------------------
Assuming successful completion of the offering, we shall receive net
proceeds of $865,222 after payment of commissions of $100,000 and
offering expenses of approximately $34,778. The commission amount
would only be payable if a broker-dealer is engaged. If we raise
significantly less than the maximum amount, we will be able to pay
operational expenses but will have less working capital to expand
operations. We shall utilize the net proceeds from the sale
of our common shares as described below. The proceeds are to be
utilized over a six-month period.
$1,000,000 $500,000
Raised Raised
---------- ----------
Gross Proceeds $1,000,000 $500,000
less commissions 100,000 50,000
offering expenses 34,778 34,778
---------- ----------
Net Proceeds $ 865,222 $415,222
Internet Drugstore 106,320 53,160
PCS Internet 136,800 68,400
Sales and Marketing 246,102 100,000
Healthgate Content 21,000 8,750
IBC Consulting 150,000 75,000
NCPA Convention 35,000 35,000
Public Relations 20,000 10,000
Working Capital 150,000 64,912
--------- ---------
Net Proceeds used $ 865,222 $415,222
In the event that the minimal amount is not received, we will have to
scale back operations and may pursue other equity or debt offerings,
not yet determined.
- ------------------------------------------------------
DILUTION
- ------------------------------------------------------
Dilution. Common shares outstanding will be a total of 8,316,966 or
7,816,966 if $1,000,000 or $500,000 is raised. The net tangible book
value as of July 31, 2000 is $83,589 and the net tangible book value
per share as of July 31, 2000 is $.0114. The following table
illustrates the per share dilution as of the date of this prospectus,
which investors may experience if we reach the various levels listed
below.
$1,000,000 $500,000
Raised Raised
---------- ----------
Offering price $1.00 $1.00
Net tangible book value per
share before offering $.0114 $.0114
Increase per share
attributable to investors .1027 .0524
------ ------
Pro Forma net tangible
book value per common
share after offering $.1141 $.0638
----- -----
Dilution to investors $.8859 $.9362
Dilution as a percent of
offering price 88.59% 93.62%
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Further Dilution. We may issue additional restricted common shares
pursuant to private business transactions. We do not currently have
any plans, arrangements or commitments regarding any private business
transactions. Any sales under Rule 144 after the applicable holding
period may have a depressive effect upon the market price of our
common shares and investors in this offering.
- -------------------------------------------------------
INSTANTRX
- -------------------------------------------------------
InstantRx was originally formed on October 1999 as a Delaware limited
liability company. On October 6, 2000, InstantRx filed a certificate
of conversion to convert from a limited liability company to a
corporation under the laws of Delaware.
InstantRx.com is an Internet portal site that allows customers to fill
prescriptions at a local pharmacy. The InstantRx network will enable
same-day delivery services and easy pickup. InstantRx.com intend to
create a virtual network of community drugstores.
InstantRx.com provides the added convenience of e-commerce shopping,
easy access to health information, and prescription fulfillment
online. To create this network, Instantrx.com has developed
business-to-business e-commerce solutions supporting and enhancing
pharmacy and drugstore online development. InstantRx provides
business customers with the components they need to compete in the
online marketplace. To accomplish this goal, InstantRx and its
partners will market turnkey e-commerce solutions to the 30,000
community pharmacies and drugstores across America.
Additionally, InstantRx operates Womansdrugstore.com, an e-commerce
and pharmacy website focused on attracting women customers who need
prescription and non-prescription products as well as information
about contraception, fertility, weight control, skin care, and
depression. The operation of Womansdrugstore.com plays an important
role in effective niche marketing. In the near future we will release
- PharmacistsOnly.com,
- SportsDrugstore.com
- PetsDrugstore, and
- several other consumer specific websites
to fully enhance our niche marketing strategy.
We shall derive revenue from multiple sources. Business-to-business
turnkey web development solutions and business-to-consumer shopping
and prescription fulfillment are InstantRx's primary platform for the
online marketplace.
Additionally, InstantRx will utilize our pharmacy licenses to bid on
and fulfill government contracts for prescription medications. We
believe these government contracts will generate revenue and bring a
large new customer base online. Customers acquired through government
contracts will
- create and maintain customer accounts,
- refill prescriptions, and
- shop at InstantRx.com community websites.
We will fulfill government contracts in an attempt to drive new
customers to the website, generate revenue, and save valuable
marketing dollars.
Organizational Objectives
Business-to-Business E-commerce
- To market, build, host, and maintain e-commerce websites for
our business clients. These clients include, but are not limited to,
North American pharmacies and drugstores.
- To create, maintain, and promote a virtual network of
pharmacies that will fill prescriptions at the request of our clients.
- To establish and maintain an Electronic Prescription System.
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Business-to-Consumer E-commerce
- Increase the value of our Business-to-Business division by
bringing new customers to our member pharmacies and drugstores.
- Effectively use original, thorough, and personalized content
from HealthGate Data Corp. to attract new customers and aide our
patients.
- Offer approximately 12,000 OTC products including
- health and beauty aids,
- medical supplies,
- personal care items, and
- prescription medications through our online drugstore.
- Utilize a cross-media promotion strategy involving exposure in
television, radio, and print media.
- Build brand name recognition and positive brand affinity.
- Offer the most expeditious method of fulfilling acute
prescriptions.
- Allow customers to access their medical records online.
The Online Pharmacy and Healthcare Industry
Internet and e-Commerce Growth
The Internet has changed the way in which people obtain and exchange
information and transact business. International Data Corporation, or
IDC, estimates that the number of Internet users will increase from
142 million at the end of 1998 to 500 million by the end of 2003.
IDC estimates that worldwide business-to-consumer sales over the
Internet will increase from approximately $11 billion in 1998 to
approximately $93 billion by 2002.
E-Health Growth
The Internet has become an increasingly popular source for healthcare
information and products. Consumer research conducted by Cyber
Dialogue in 1999 found that 24.8 million U.S. adults search for health
information on the Internet, with the number of people retrieving
health-related information projected to grow to 30 million in 2000.
Consumers are also increasingly purchasing healthcare products online.
Forrester Research reports that almost one third of a surveyed group
of Internet users shopped for health and personal care products online
during the six months prior to the survey. According to Jupiter
Communications, the total online and offline market for health goods,
which includes over-the-counter as well as prescription drugs, is
expected to grow from $133.6 billion in 1998 to $205.2 billion in
2003, while the dollar value of online consumer purchases of
healthcare goods is expected to grow from $2.4 million in 1998 to $1.7
billion in 2003.
The Online Pharmacy Market
Jupiter Communications, which conducts market research for online
industries, projects $1.7 billion in online sales of prescription and
over-the-counter drugs and other products by 2003. For managed care
organizations, physicians, and customers, potential benefits include
- automated prescription-checking against the formulary,
- accurate transcription of the physician's prescription,
- automated checks for contraindications, and
- a mechanism to address noncompliance.
The downside of current online pharmacies is that patients cannot
quickly obtain medications like antibiotics to treat the crying
child's ear infection or an emergency supply of insulin for the
diabetic. Also, current online pharmacies do not have the ability to:
- work with a customer's insurance plan,
- automatically verify a prescription,
- review potential contraindications, or
- provide real-time consultations.
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The InstantRx.com pharmacy and healthcare network will make these
options available while enhancing not only consumer use, but
pharmacist and physician use as well.
The role of the community pharmacist in the InstantRx.com network
includes:
- Timely dispensing of necessary medications.
- Providing a pickup location for a medication.
- Giving personalized education.
- The ability to address medication compliance issues.
Physicians can now enter prescriptions online which reduces the
likelihood of physicians prescribing :
- an incorrect dosage,
- the wrong drug, or
- one with contraindications.
The online pharmacy network now has incentives to ensure that the
customer not only picks up the prescription, but also maintains
compliance by picking up refills.
Healthcare Industry Trends
Based on in-house research, we believe consumers are taking it upon
themselves to seek more information about their healthcare needs for
the following reasons:
- Patients' access to their physicians has become significantly
reduced due to managed care.
- Employers are increasingly shifting healthcare costs and
decisions to their employees.
- Insurance plans allow individuals greater choice in healthcare
options, at increased personal costs.
- Advances in medicine have broadened treatment options for many
medical conditions.
The advent of the Internet has provided a medium for consumers to seek
this information. Moreover, the Internet allows consumers to seek
information on sensitive or embarrassing health issues while
maintaining anonymity and confidentiality.
Based on in-house research, payors and providers, who are faced with
increasing economic pressures as an outcome of managed care, are
increasingly competing for consumers. These physician groups compete
to increase their patient bases to spread their administrative costs
and increase their negotiating leverage with payors. This
competition in the provider market is exacerbated by an oversupply of
specialist physicians in many markets and underutilization in many
hospitals.
Due to this increased competition for members and patients, we have
found that both payors and providers are looking for ways to develop
and maintain the loyalty of their existing members and patients and
attract new members and patients. We believe Internet-based services
enable health plans and providers to
- differentiate their services,
- decrease their customer support costs, and
- improve ties with their members or patients.
Based on our in-house research, we believe the consumer has also
become the marketing focus of commercial healthcare enterprises like
pharmaceutical and other healthcare products companies. While
pharmaceutical manufacturers have traditionally marketed their
prescription products to physicians, these companies have recognized
that consumers want to learn about and exercise greater control over
their drug therapies across an ever-widening list of conditions.
Pharmaceutical companies have begun advertising their products
directly to consumers, most notably through television advertising.
This direct-to-consumer, or DTC, advertising is increasing rapidly.
Jupiter Communications projects that overall health-related
advertising spending in all forms of media will increase to $10.8
billion by 2003, while DTC advertising for pharmaceutical products
will grow to almost $3.8 billion. Advertisers are also increasingly
turning to the Internet as a medium to deliver their message. Jupiter
14
Communications projects that overall online health and medical
advertising spending, including online DTC advertising, will increase
to $356 million by 2003, up from $12.3 million in 1998.
BUSINESS MODEL
InstantRx.com will generate revenue in several ways. Revenue will be
generated immediately from prescriptions and over the counter products
from InstantRx.com's fully integrated and functional online pharmacy.
Also, implementing and constructing the InstantRx.com pharmacy network
will open the gateway to several other revenue streams. These revenue
streams include
- local pharmacy web development
- monthly subscription fees paid by the pharmacies to belong to
our network
- site advertising fees and
- transactional charges attached to purchases made through our
pharmacy network.
All of our business-to-business transaction charges, membership fees,
and product prices are competitively priced to compete in our market.
Our consumer site provides the resources found at other online
pharmacies with the benefit of a virtual network of community
pharmacies. As site traffic increases, we believe our advertising
revenue, monthly service fees, and transactional revenue will grow
exponentially. Fulfilling government contracts for prescription
medications will also generate revenue.
Business-to-Business Revenue Streams
Web Development
InstantRx will market and sell template and customized web pages to
the 30,000 community drugstores and pharmacies across America.
Membership Fees
Participating pharmacies and drugstores will pay a monthly InstantRx
network membership fee. The yet to be determined membership fee
includes:
- hosting,
- website maintenance, and
- membership in the InstantRx virtual network of community
pharmacies.
Transaction Charge
The consumer can either have their order filled by InstantRx or their
community pharmacy. The yet to be determined transaction charge is a
convenience fee for the filling of a prescription or the placing of an
order at member community pharmacy. This charge ensures that
InstantRx will generate revenue from every purchase made through the
InstantRx virtual network of community pharmacies. There will not be
any transaction charges for purchases made directly from InstantRx.
OTC Revenue Share
OTC orders placed at member pharmacies and drugstores that elect to
only sell prescription medications from their website will default to
InstantRx. InstantRx will fill the OTC order and the member pharmacy
will take a yet to be determined share of the revenue.
Network Licensing
InstantRx will license the network of community pharmacies and
drugstores to other companies needing an acute fulfillment source for
a yet to be determined considerable fee.
We currently have two consumer sites, InstantRx.com and
WomansDrugstore.com. Over the coming months we will be releasing
SportsDrugstore.com, PetsDrugstore.com, and MansDrugstore.com. All of
these sites will utilize the InstantRx community pharmacy network.
15
Business-to-Consumer Revenue Streams
Prescription Fulfillment
We anticipate a 20% profit margin on all prescriptions filled directly
by InstantRx.com and WomansDrugstore.com.
E-Commerce Shopping for 12,000 products
12,000 products will be available at InstantRx.com with promotions on
high margin products.
Niche Products
Niche products for fertility, weight loss, contraception, skin care,
and depression will be sold through WomansDrugstore.com.
Private Label Sales
We will sell our own brand of health-related products such as
vitamins.
Affiliate Revenue
InstantRx will develop an affiliate program thereby taking advantage
of other online retailers' market share.
Pharmaceutical Sponsorships
InstantRx will generate revenue from pharmaceutical company
sponsorships of chat forums.
Advertising
InstantRx will sell traditional advertising space for banners and
logos at InstantRx.com and WomansDrugstore.com. Forrester Research
reports e-commerce, strong capital markets, and funds from non-
advertising marketing budgets will push worldwide Internet ad spending
to $33 billion by 2004.
Government Prescription Fulfillment
We will also use our assets as a licensed mail order pharmacy
throughout the United States, InstantRx will fulfill government
contracts as a mail order pharmacy. The government division will
generate revenue from bidding on and fulfilling government requests
for prescription medications. The government requests will come
from:
- hospitals,
- nursing homes,
- detention facilities,
- veterans associations,
- AIDS clinics, and
- other government agencies.
The typical contract will range from approximately 10,000-500,000
prescriptions over a course of a year or more. Our average margin
will range from $3-5 per prescription Additional capital resources
will allow InstantRx to fulfill many of these contracts that will
generate revenue and bring a large new customer base to our online
websites.
Customers acquired through government contracts will:
- create and maintain customer accounts,
- refill prescriptions, and
- shop at the InstantRx community websites.
Competition
The InstantRx business model is an approach to online pharmacy
development that combines both business-to-business and business-to-
consumer markets in building an Internet network of community
pharmacies. InstantRx offers pharmacies an individualized solution
that enables them to price and stock items as they choose. At the
1999 National Community Pharmacy Association (NCPA) conference,
pharmacists and drugstore owners stressed the importance of remaining
independent.
16
Since InstantRx offers the only completely independent solution,
there is no identical competitor in our market. Our closest
competitor in the business-to-business pharmacy network market is
Corner Drugstore.com. Other e-commerce online pharmacies include
Drugstore.com and PlanetRx.com.
Competitive Analysis
Based on our in-house research, InstantRx offers the only
individualized and flexible turnkey website solution for building a
network of virtual community pharmacies and drugstores.
Cornerdrugstore, our closest competitor, is a privately funded company
that offers a very different solution. Cornerdrugstore requires its
member pharmacies to adhere to strict pricing and stocking guidelines,
along with numerous other regulations. In effect, Cornerdrugstore
requires its members to assimilate to a standardized model, thereby
taking away the community pharmacies independence. This could create
problems because income levels vary across the country and community
pharmacies need to be able to adjust to their own market.
Cornerdrugstore has indiciated that they signed up 4,000 pharmacies
across the United States. However, they have only been able to bring
800 of those pharmacies online. Of the 30,000 community pharmacies
across the country, Cornderdrugstore's network makes up less than 3%
of our target market.
PROMOTION
Sales and Marketing Strategy
Marketing Strategy
InstantRx will market and sell our web development solutions with a
direct sales force and through our strategic partner PCS Internet.
InstantRx will begin to build the community pharmacy network with two
steps.
- Step 1 consists of PCS Internet giving away 150 websites to
specially selected pharmacies in specific regions.
- Step 2 consists of marketing template web pages and customizing
turnkey solutions to the remaining 30,000 community pharmacies across
the nation.
Target Markets
Women. We believe women today are empowered Internet users who
take control of family health care needs and decision-making regarding
the health of their loved ones. Accordingly, InstantRx has developed
two websites, InstantRx.com and WomansDrugstore.com, for everyone from
18-year-old female Internet enthusiasts to the average 45-year-old
working mother.
A study unveiled at Women's Global Business Summit in Washington, DC,
Dulles, Virginia, and Washington (Business Wire) on Oct. 18, 1999
revealed that the Internet is having a large impact on the lives of
working women and that those who are online are using it to get ahead
and save time. Working women use the Internet more than 14 hours per
week, and more than half log on at least once a day. The summit also
announced that 84% of working women online said that using the
Internet saves them time in every aspect of their lives. In fact, when
it comes to e-commerce, 96% have researched products online and 64%
have made purchases online.
Our target market of women age 18 to 45 will need prescriptions for:
- contraceptives,
- fertility,
- skin care,
- depression,
- weight control, and
- much more.
Furthermore, medications for these conditions are not generally
covered by insurance. Additionally, these medications generally
require repeat purchases, presenting us with merchandising
opportunities for returning customers.
17
InstantRx.com features an aging and health section and has developed
an easy-to-use prescription delivery system that inexperienced
Internet users will appreciate and enjoy. Consumer research
conducted by Cyber Dialogue in 1999 found that 24.8 million U.S.
adults search for health information on the Internet, with the number
of people retrieving health-related information projected to grow to
30 million in 2000.
Corporate and Group Customers. InstantRx will market and give
discounts to entities with large pools of individuals. These entities
will have their own back office area for their group to order from,
with special pricing or a discount negotiated for that group. The
back office can be customized to the look and feel of the corporation
or group's web site. This is InstantRx's "Vortal" or vertical portal
plan. The InstantRx vertical portal plan is a business-to-business-
to-consumer strategy that allows InstantRx to niche market and access
entire groups of people at one time versus marketing to people
individually. March 2000, Forrester Research reports only 16% of
companies buy any infrastructure online. While 58% of firms plan to
have integrated online procurement by 2002, most of those purchases
will be through eMarketplaces.
Building a Community. Utilizing the community is a core
component of the InstantRx pharmacy network. We believe a community
of online and offline customers is a powerful constituency resulting
in valuable repeat purchases. The InstantRx website provides forums
like:
- bulletin boards,
- chat rooms, and
- moderated discussion groups online where users can discuss
concerns and relate to other such users.
Our offline community of drugstores will provide:
- first hand care,
- acute prescription fulfillment, and
- a relationship that families can only have with their
neighborhood pharmacist.
Convenience and Personalization
We strive to offer a personalized and convenient shopping experience
for our customers. The convenience and personalization advantages of
our online stores include:
- Access 365 days a year, 24 hours a day
- Online search capabilities for products
- The ability to store the customer's prescription history in a secure and
private environment
- The ability to view order tracking information on our site
- E-mail reminders for prescription refills
- Ability to subscribe to multiple refills on an automatic basis
- Allow customers to store product preferences for easy reordering.
InstantRx.com will debut its business-to-business community pharmacy
web solution at the National Community Pharmacists Association's
(NCPA) 102nd annual convention in San Antonio, Texas. At the
convention, InstantRx.com will begin signing up pharmacies into the
InstantRx community pharmacy network. The template websites are
quickly and easily customized to the participating pharmacy's
specification.
New pharmacy members can sign up at the convention, online, or by
taking home an interactive CD. The interactive CD, like the online
form, is a short series of point and click questions that changes the
InstantRx.com template site into a unique website for the community
pharmacy. All forms filled out online will be instantly entered into
the InstantRx.com database. Forms filled out using the interactive CD
will launch the user's web browser and enter the information into the
InstantRx.com database when the submit button is clicked.
To ensure that community pharmacies will be become part on the
network, InstantRx.com is offering the community pharmacists free
websites, free sign up, free three month membership, and a revenue
sharing program on mail order over the counter products filled at
InstantRx.com. This offer allows new members to join the network
18
quickly with no upfront costs. Furthermore, new members can begin
generating revenue immediately from their new website and the
InstantRx.com mail order revenue share.
Once we have built a sufficient community pharmacy network base, we
will begin to pursue the InstantRx.com business-to-consumer sales and
marketing strategy. Our B2C sales and marketing strategy is to
establish brand awareness and build brand loyalty of the InstantRx.com
pharmacy network in order to drive sales of prescription and non-
prescription items to our online pharmacy.
Our advertising and promotional activities will target both online and
offline audiences and are initially designed to attract first-time
customers. We plan to target people who suffer from chronic
conditions by offering disease-specific information and building
communities around common health concerns and prevention and health
management topics using health chat forums and bulletin boards. We
also intend to develop more consumer specific needs such as our online
pharmacy dedicated entirely to women.
Our online marketing efforts are focused on identifying and marketing
to early adopters of healthcare e-commerce, who we believe are
typically women and Internet users 45 years or older. We intend to
reach these groups through co-marketing initiatives with affiliate
websites targeting female and mature demographics, e.g., women's
interests, parenting and family, investing, travel planning, real
estate, and senior-oriented sites.
We intend to employ incentive programs for affiliate sites to co-
register users for our newsletter, as well as reward affiliates for
directing traffic to our site that results in purchases. We also
intend to acquire or rent opt-in e-mail lists to market through e-mail
based communications. We also plan to reinforce our online marketing
efforts through branded giveaway items with our specifically selected
InstantRx.com promotional products.
- ----------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------
Trends and Uncertainties. Demand for InstantRx's services will be
dependent on, among other things, general economic conditions which
are cyclical in nature. Inasmuch as a major portion of InstantRx's
activities is the sales and marketing of dental application products,
InstantRx's business operations may be adversely affected by
InstantRx's competitors and prolonged recessionary periods.
Capital and Source of Liquidity
We expect that the net proceeds from our recent offering and the cash
flow from future operations, if any, will be sufficient to allow us to
meet the expected growth in demand for our products and services.
However, we cannot be assured that our sales will meet our growth
expectations. Should either of these fail to occur, we may elect to
- reduce the planned expansion of operations or
- pursue other financing alternatives such as a rights offering,
warrant exercise or borrowings.
Our planned growth and profitability could be delayed or diminished if
we cannot implement the two options listed above.
Over the next two years, our liquidity is dependent on increased
revenues from operations, additional infusions of capital and debt
financing. We believes that additional capital and debt financing in
the next six months will allow us to commence its marketing and sales
efforts and thereafter result in revenue and greater liquidity in the
long term. However, we cannot be assured that we will be able to
obtain additional equity or debt financing in the future, if at all.
Results of Operations. InstantRx incurred net losses of $203,432
since inception. InstantRx's current losses exceed its current
liabilities by $123,123, and InstantRx is experiencing liquidity
problems. These factors create substantial doubt about the Company's
19
ability to continue as a going concern. The financial statements do
not include any adjustments that might be necessary if InstantRx is
unable to continue as a going concern.
InstantRx incurred operating expenses of $165,862 for the seven months
ended July 31, 2000. Operating expenses include licensing fees of
$37,050, office expenses of $20,353, legal and accounting of $19,037,
office salaries of $18,200, web development of $17,212, director fees
of $16,000, amortization and depreciation of $12,910, travel of
$11,344 rent of $8,206 and consulting of $5,550.
Plan of Operation. Management possesses the experience to expand
marketing and distribution of its products. No significant equipment
purchases are planned over the next twelve months.
InstantRx shall seek to maintain low operating expenses while
commencing operations and increasing operating revenues. We are
focusing on maintaining a low cost administrative approach.
However, increased marketing expenses will probably occur in future
periods as we attempt to further increase our marketing and sales
efforts.
Recent Accounting Pronouncements - During 1998, the FASB issued
statement of Financial Accounting Standards No. 131 (SFAS No. 131),
"Disclosure About Segments of an Enterprise and Related Information"
which changes the way public companies report information about
segments. SFAS No. 131 establishes standards for the way public
companies report information about operating segments in annual
financial statements and requires reporting of selected information
about operating segments in interim financial statements issued to the
public. We do not have any disclosure requirements under this
standard.
Concentration of Credit Risk - InstantRx's financial instruments
that are exposed to concentrations of credit risk consist of cash,
which includes checking accounts placed with federally insured
financial institutions. Such accounts may at times exceed federally
insured limits. We have not experienced any losses on such accounts.
- ---------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------
Officers and Directors. Pursuant to our articles of incorporation,
each director shall serve until the annual meeting of the
stockholders, or until his successor is elected and qualified.
InstantRx's basic philosophy requires the inclusion of directors who
will be representative of management, employees and the minority
shareholders of InstantRx. Directors may only be removed for cause.
The term of office of each officer of InstantRx is at the pleasure of
InstantRx's board.
The principal executive officers and directors of InstantRx are as
follows:
Name Position
Deron Edward Smallcomb, age 24 Chief Executive Officer
President/Director
Secretary/Treasurer
Samuel J. Dalesandro, age 24 Executive Vice President
/Director
All of the above officers and directors began their term at inception.
Deron Edward Smallcomb. Mr. Smallcomb has been chairman of the
board, chief executive officer and president of InstantRx since
inception. He is also the secretary/treasurer. In 1998, Mr.
Smallcomb co-founded the business-to-business division of The Grid,
Inc., a company that at the time was the largest territorial internet
service provider in California. From 1997 to 1999, Mr. Smallcomb was
president of Central Coast Wine Consortium. Mr. Smallcomb's duties
20
included e-commerce development, supervising daily operations,
directional leadership, raising capital, license procurement, creating
promotional material and marketing. .
From 1998 to present, Mr. Smallcomb has been a Juris Doctor/Masters of
Business Administration candidate at Santa Clara University. In
1998, Mr. Smallcomb graduated with a Bachelor of Science in Business
Administration from Cal Poly State University.
Samuel J. Dalesandro. Mr. Dalesandro has been executive vice
president and a director of InstantRx since inception. His duties
include management, project development, investor relations, raising
capital, company relations, procuring contracts, market research,
website development and business plan writing. In March 1999, Mr.
Dalesandro worked as a volunteer at the East San Jose Community Law
Clinic. He interviewed clients, examined contracts, conducted
research and assisted the onsite attorney on matters of consumers'
rights.
Mr. Dalesandro is a Juris Doctor Candidate at Santa Clara University
School of Law. He received his Bachelor of Arts Degree in June 1998
from the University of California, Santa Barbara majoring in Business
Economics and minoring in Professional Writing. Mr. Dalesandro met
Mr. Smallcomb while studying abroad at Oxford University
Remuneration: To date, the officers have received minimal
compensation amounting to less than $15,000 combined. InstantRx has
not negotiated any employment agreement with its officers.
Board of Directors Compensation. Members of the board of directors
will receive a yet to be determined per meeting if these directors are
not separately compensated by InstantRx and will be required to
attend a minimum of four meetings per fiscal year. All expenses for
meeting attendance or out of pocket expenses connected directly with
their board representation will be reimbursed by InstantRx.
Director liability insurance may be provided to all members of the
board of directors. InstantRx has not yet obtained such insurance
and does not have any specifics for available cost and coverage.
InstantRx does not have a specific time frame to obtain the
insurance. No differentiation is made in the compensation of
"outside directors" and those officers of InstantRx serving in that
capacity.
Conflicts of Interest Policy. InstantRx has adopted a policy that
any transactions with directors, officers or entities of which they
are also officers or directors or in which they have a financial
interest, will only be on terms consistent with industry standards and
approved by a majority of the disinterested directors of InstantRx's
board of directors.
The bylaws of InstantRx provide that no such transactions by
InstantRx shall be either void or voidable solely because of such
relationship or interest of directors or officers or solely because
such directors are present at the meeting of the board of directors of
InstantRx or a committee thereof which approves such transactions,
or solely because their votes are counted for such purpose if:
- - the fact of such common directorship or financial interest is
disclosed or known by the board of directors or committee and noted in
the minutes, and the board or committee authorizes, approves or
ratifies the contract or transaction in good faith by a vote for that
purpose without counting the vote or votes of these interested
directors; or
- - the fact of the common directorship or financial interest is
disclosed to or known by the shareholders entitled to vote and they
approve or ratify the contract or transaction in good faith by a
majority vote or written consent of shareholders holding a majority of
the common shares entitled to vote (the votes of the common or
interested directors or officers shall be counted in any such vote of
shareholders), or
- - the contract or transaction is fair and reasonable to InstantRx
at the time it is authorized or approved. In addition, interested
directors may be counted in determining the presence of a quorum at a
meeting of the board of directors of InstantRx or a committee thereof
which approves such transactions.
21
- ----------------------------------------------------------------
CERTAIN TRANSACTIONS
- ----------------------------------------------------------------
None
- ----------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ----------------------------------------------------------------
There are currently 7,316,988 common shares outstanding. The following
tabulates holdings of shares of InstantRx by each person who, at the
date of this prospectus, holds of record or is known by management to
own beneficially more than 5.0% of the common shares and, in addition,
by all directors and officers of InstantRx individually and as a
group.
Shareholdings at Date of
This Prospectus
Percentage of
Outstanding
Shares as
Adjusted
to Reflect
Percentage Shares Conclusion
Number Prior to Owned After of the
Name and Address of Shares(1) Offering Offering(2) Offering
Deron E. Smallcomb 2,200,000 30.07% 2,200,000 26.45%
1750 Stokes #96
San Jose, CA 95126
Samuel J. Dalesandro 1,700,000 23.23% 1.700,000 20.44%
2650 Keystone
Apartment 107
Santa Clara, CA 95051
Harry Friedman 500,000 6.83% 500,000 6.01%
4800 Skycrest Way
Santa Rosa, CA 95404
PCS Internet 657,133 13.08% 657,133 7.90%
1122 E. Lincoln Avenue
Suite B200
Orange, CA 92865
Officers and Directors 3,900,000 53.30% 3,900,000 46.89%
As a Group (2 persons)
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
beneficial ownership of a security consists of sole or shared voting
power, including the power to vote or direct the voting, and/or sole
or shared investment power, including the power to dispose or direct
the disposition, with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned except if applicable community property laws apply.
- ----------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
- ----------------------------------------------------------
InstantRx currently has 7,316,966 shares of common stock outstanding.
Of these, 7,316,966 common shares will be restricted securities after
the offering and may be sold in compliance with Rule 144 adopted under
the Securities Act of 1933. Other securities may be issued, in the
future, in private transactions pursuant to an exemption from the
Securities Act. Rule 144 provides, in essence, that a person who has
held restricted securities for a period of one year may sell every
three months in a brokerage transaction or with a market maker an
22
amount equal to the greater of 1% of InstantRx's outstanding shares or
the average weekly trading volume, if any, of the shares during the
four calendar weeks preceding the sale.
The amount of restricted securities which a person who is not an
affiliate of InstantRx may sell is not so limited. Non-affiliates
may each sell without limitation shares held for twoyears. InstantRx
will make application for the listing of ourshares in the over-the-
counter market. Sales under Rule 144 may, in the future, depress the
price of InstantRx's shares in the over-the-counter market, should a
market develop. Prior to this offering we have not had a market for
our common shares. The effect, if any, of a public trading market or
the availability of shares for sale at prevailing market prices cannot
be predicted. Nevertheless, sales of substantial amounts of shares
in the public market could adversely effect prevailing market prices.
- ----------------------------------------------------------
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
- ----------------------------------------------------------
Prior to this offering, we have had no market for our common stock and
warrants. Subsequent to successful completion of the offering, we
will apply to have our common stock quoted on the OTC Bulletin Board.
If InstantRx is not accepted on the OTC Bulletin Board, InstantRx will
apply to have our common shares traded on the pink sheets.
Dividends. Holders of InstantRx's common stock are entitled to
receive such dividends as may be declared by our board of directors.
Broker-Dealer Sales of InstantRx Securities. InstantRx's securities
may be covered by Rule 15g-2 under the Securities Exchange Act of 1934
that imposes additional sales practice requirements on broker-dealers
who sell such securities to persons other than established customers
and accredited investors. Accredited investors are generally:
- institutions with assets in excess of $5,000,000 or
- individuals:
- with net worth in excess of $1,000,000 or
- annual income exceeding $200,000 or $300,000
- jointly with their spouse
For transactions covered by the rule, the broker-dealer must make a
special suitability determination of the purchaser and have received
the purchaser's written agreement to the transaction prior to the
sale.
In order to approve a person's account for transactions in designated
securities, the broker or dealer must
- - obtain information concerning the person's financial
situation, investment experience and investment objectives;
- - reasonably determine, based on the information required by the
first paragraph that transactions in designated securities are
suitable for the person and that the person has sufficient knowledge
and experience in financial matters that the person reasonably may be
expected to be capable of evaluating the rights of transactions in
designated securities; and
- - deliver to the person a written statement setting forth the
basis on which the broker or dealer made the determination required by
the second paragraph in this section, stating in a highlighted format
that it is unlawful for the broker or dealer to effect a transaction
in a designated security the provisions of the second paragraph of
this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person;
and stating in a highlighted format immediately preceding the customer
signature line that the broker or dealer is required to provide the
person with the written statement and the person should not sign and
return the written statement to the broker or dealer if it does not
accurately reflect the person's financial situation, investment
experience and investment objectives and obtain from the person a
manually signed and dated copy of the written statement.
23
A designated security means any equity security other than a security
- - registered, or approved for registration upon notice of
issuance on a national securities exchange that makes transaction
reports available pursuant to 17 CFR 11Aa3-1
- - authorized or approved for authorization upon notice of
issuance, for quotation in the NASDAQ system;
- - that has a price of five dollars or more or . . .
- - whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months
previously that the broker or dealer has reviewed and has a reasonable
basis to believe are true and complete in relation to the date of the
transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to
sell InstantRx's securities and also may affect the ability of
purchasers in this offering to sell their shares in the secondary
market.
InstantRx's securities will likely trade below $5.00 and the penny
stock rules discussed above will apply.
As of the date of the prospectus, there are 49 shareholders
- --------------------------------------------------------------
DESCRIPTION OF SECURITIES
- ---------------------------------------------------------------
Our articles of incorporation authorize the issuance of up to
60,000,000 common shares, par value $.001 per common shares and
15,000,000 preferred shares, par value $.001 per preferred share.
Common shares purchased in this offering will be fully paid and non-
assessable.
Common Stock. Each record holder of common stock is entitled to one
vote for each share held on all matters properly submitted to the
stockholders for their vote. Cumulative voting for the election of
directors is not permitted by the articles of incorporation. The
holders of outstanding shares of common stock are entitled to such
dividends as may be declared from time to time by the board of
directors out of legally available funds; and, in the event of
liquidation, dissolution or winding up of the affairs of InstantRx,
holders are entitled to receive, ratably, the net assets of
InstantRx available to stockholders after distribution is made to
the preferred stockholders, if any, who are given preferred rights
upon liquidation.
Holders of outstanding common shares are, and all unissued shares when
offered and sold will be, duly authorized, validly issued, fully paid,
and nonassessable. To the extent that additional common shares are
issued, the relative interest of then existing stockholders may be
diluted.
Preferred Stock. The board of directors of InstantRx is authorized
to issue the preferred stock from time to time in series and is
further authorized to establish such series, to fix and determine the
variations in the relative rights and preferences as between series,
to fix voting rights, if any, for each series, and to allow for the
conversion of preferred stock into common stock.
No preferred stock is currently issued.
Transfer Agent. Instantrx.com, Inc. currently acts as its own
transfer agent.
- -----------------------------------------------------------
LEGAL MATTERS
- -----------------------------------------------------------
Certain legal matters with respect to the issuance of the securities
offered in this prospectus will be passed upon by Jody M. Walker,
Attorney-At-Law, Denver Colorado.
24
- --------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------
We are not involved in any legal proceedings as of the date of this
prospectus.
- --------------------------------------------------------
EXPERTS
- --------------------------------------------------------
The financial statements as of July 31, 2000 included in this
prospectus, have been audited by Kabani & Company, Inc. independent
auditors, as stated in their report appearing herein and have been so
included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
- --------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- --------------------------------------------------------
None of the experts or counsel named in the prospectus is affiliated
with InstantRx.
- --------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------
Until , 2001 (90 days after the date of the prospectus), all
persons making transactions in the registered securities, whether or
not participating in the offering, may be required to deliver a
prospectus. This is in addition to the obligation of these persons
to deliver a prospectus when acting as underwriters and when utilizing
their unsold allotments or subscriptions.
No dealer, salesman, agent or any other person has been authorized to
give any information or to make any representation other than those
contained in this prospectus. If given or made, this information or
representation must not be relied upon as having been authorized by
InstantRx, or the underwriter, if an underwriter assists in the sale
of the securities.
This prospectus is not an offer or a solicitation by anyone to any
person in any state, territory or possession of the United States in
which an offer or solicitation is not authorized by the laws of a
state, territory or possession of the United States, or to any person
to whom it is unlawful to make an offer or solicitation.
Neither the delivery of this prospectus or any sale made hereunder
shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this prospectus or in
the affairs of InstantRx since the date of this prospectus.
25
- --------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------
Index to Financial Statements
Independent Auditor's Report dated October 26, 2000 F-2
Consolidated Balance Sheet as of July 31, 2000 F-3
Consolidated Statement of Operations for the seven
months ended July 31, 2000 and for the period
from October 1, 1999 (inception ) to July 31, 2000 F-4
Consolidated Statements of Cash Flows for the seven
months ended July 31, 2000 and for the period from
October 1, 1999 (inception ) to July 31, 2000 F-5
Consolidated Statement of Changes in Members'
Equity For The seven months ended July 31, 2000 F-6
Notes to Financial Statements F-7
26
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
InstantRX.com, LLC:
We have audited the accompanying consolidated balance sheet of
InstantRX.com, LLC (a Delaware Corporation) and subsidiaries (the
"Company") as of July 31, 2000, and the related consolidated
statements of operations, changes in members' equity and cash flows
for the period ended July 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of InstantRX.com, LLC and subsidiaries as of July 31, 2000, and the
results of its operations and its cash flows for the period ended July
31, 2000, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As shown
in the consolidated financial statements, the Company has incurred a
net loss of $165,255 during the seven months period ended July 31,
2000. The total deficit accumulated during development stage amounted
to $202,825. These factors, among others, as discussed in Note 3 to
the consolidated financial statements, raise substantial doubt about
the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The
consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley, California
October 26, 2000
F-2
27
InstantRX.com, LLC
And Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheet
July 31, 2000
ASSETS
-------
Current Assets:
Cash $ 1,497
----------
Property and Equipment
Equipment and furniture 9,191
Software 35,500
Pharmaceutical licenses 15,000
Website development 87,460
Good will 28,086
Less accumulated depreciation (13,119)
----------
162,118
----------
$ 163,615
==========
LIABILITIES AND MEMBERS' EQUITY
----------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 39,864
Note payable 40,000
----------
Total Current Liability 79,864
Commitments (See notes)
Members' equity:
Members' contributed capital 286,576
Deficit accumulated during the development stage (202,825)
----------
Total members' equity 83,751
----------
$ 163,615
==========
The accompanying notes are an integral part
of these financial statements.
F-3
28
InstantRX.com, LLC
And Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
Seven Months October 1, 1999
Ended (Inception) to
July 31,2000 July 31, 2000
-------------- ----------------
Revenue $ - $ -
Operating expenses 165,886 203,456
-------- --------
Loss from operations (165,886) (203,456)
Other income
Interest income 631 631
--------- --------
Net loss $ (165,255) $ (202,825)
============ ============
The accompanying notes are an integral
part of these consolidated financial statements
F-4
29
InstantRX.com, LLC
And Subsidiaries
(A Development Stage Company)
Statement of Changes in Members' Equity
Seven Months Ended July 31, 2000 and the
period from October 1, 1999 (Inception) to July 31, 2000
Members'
Contributed Accumulated
Capital Deficit Total
Capital contributed in 1999 $57,500 $ - $57,500
Net Loss - (37,570) (37,570)
-------- -------- -------
Balance, December 31, 1999 57,500 (37,570) 19,930
Capital contributed in 2000 229,076 - 229,076
Net Loss - (165,255) (165,255)
-------- -------- -------
Balance, July 31, 2000 $2816,576 $(202,825) $83,751
========= ========= ========
The accompanying notes are an integral
part of these financial statements
F-5
30
InstantRX.com, LLC
And Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
Seven months ended July 31, 2000
and the period from October 1, 1999 (Inception)
to July 31, 2000
Seven months October 1, 1999
Ended (Inception) to
July 31, 2000 July 31, 2000
-------------- ---------------
Cash flows from operating activities:
Net loss $(165,255) $(202,825)
Adjustments to reconcile net income to net
Cash used in operating activities:
Depreciation and amortization 12,910 13,118
Increase in current liabilities:
Accounts payable and accrued expenses 23,778 23,839
-------- ---------
Net cash used in operating activities (128,567) (165,868)
Cash flows from investing activities:
Web site development (55,000) (55,000)
Purchase of subsidiary (55,000) (55,000)
Purchase of equipment and furniture (711) (3,210)
-------- ---------
Net cash used in investing activities (110,711) (113,211)
Cash flows from financing activities:
Payment of Notes payable (5,000) -
Proceeds from members' contributed capital 223,076 280,576
-------- ---------
Net cash provided by financing activities 218,076 280,076
-------- ---------
Net Increase (Decrease) in cash (21,202) 1,497
Cash at beginning of year 22,699 -
-------- ---------
Cash at end of period $ 1,497 $ 1,497
======== ========
The accompanying notes are an integral part
Of these consolidated financial statements
F-6
31
InstantRX.com, LLC
And Subsidiaries
(A Development Stage Company)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
InstantRX, Inc. (formerly InstantRX.com, LLC) ("the Company"), was a
limited liability company incorporated in the state of Delaware on
October 1, 1999. The Company changed its name from InstantRX.com, LLC
to InstantRX, Inc and converted to a Corporation effective October 5,
2000. The Company is a development stage enterprise. The Company has
undertaken the development of an Internet portal site that provides
customers e-commerce shopping, and the means to have prescriptions
filled at their local pharmacy. The Company is developing business-to-
business e-commerce solutions that support and enhance pharmacy and
drugstore online development. The Company is managed in California,
with a facility in Illinois. The accounting policies of the Company
are in accordance with generally accepted accounting principles and
conform to the standards applicable to development stage companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principals of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Internet Drugstore, Inc.,
an Illinois corporation and Internet Drugstore, LLC, a limited
liability Company formed under the laws of Delaware. All significant
inter-company balances and transactions have been eliminated in
consolidation.
Cash and cash equivalents
The Company considers all liquid investments with a maturity of three
months or less from the date of purchase that are readily convertible
into cash to be cash equivalents.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Property & Equipment
Property and equipment is carried at cost. Depreciation and
amortization of property and equipment is provided using the straight-
line method over the estimated useful lives of the assets.
Expenditures for maintenance and repairs are charged to expense as
incurred.
Income taxes
The financial statements do not include a provision of income taxes.
The parent and one of the subsidiaries are limited liability
companies, and the other subsidiary is an S-Corporation. Earnings and
losses are included in the members' personal income tax returns.
Basic and diluted net loss per share
Net earnings (loss) per share is calculated in accordance with the
Statement of financial accounting standards No. 128 (SFAS No. 128),
"Earnings per share". SFAS No. 128 superseded Accounting Principles
Board Opinion No.15 (APB 15). Net loss per share for all periods
presented has been restated to reflect the adoption of SFAS No. 128.
Basic net loss per share is based upon the weighted average number of
common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to
F-7
32
be exercised at the beginning of the period (or at the time of
issuance, if later), and as if funds obtained thereby were used to
purchase common stock at the average market price during the period.
Stock-based compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-
Based Compensation". SFAS No. 123 prescribes accounting and reporting
standards for all stock-based compensation plans, including employee
stock options, restricted stock, employee stock purchase plans and
stock appreciation rights. SFAS No. 123 requires compensation expense
to be recorded (i) using the new fair value method or (ii) using the
existing accounting rules prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for stock issued to employees" (APB 25)
and related interpretations with proforma disclosure of what net
income and earnings per share would have been had the Company adopted
the new fair value method. The implementation of this standard did not
have any impact on the Company's financial statements.
Fair value of financial instruments
Statement of financial accounting standard No. 107, Disclosures about
fair value of financial instruments, requires that the Company
disclose estimated fair values of financial instruments. The carrying
amounts reported in the statements of financial position for current
assets and current liabilities qualifying as financial instruments are
a reasonable estimate of fair value.
Comprehensive income
Statement of financial accounting standards No. 130, Reporting
comprehensive income (SFAS No. 130), establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all
changes in equity, except those resulting from investments by owners
and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be
reported in financial statements that are displayed with the same
prominence as other financial statements. The implementation of this
standard did not have a material impact on the Company's financial
statements.
Reporting segments
Statement of financial accounting standards No. 131, Disclosures about
segments of an enterprise and related information (SFAS No. 131),
which superceded statement of financial accounting standards No. 14,
Financial reporting for segments of a business enterprise, establishes
standards for the way that public enterprises report information about
operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim
financial statements regarding products and services, geographic areas
and major customers. SFAS No. 131 defines operating segments as
components of an enterprise about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performances. The implementation of this standard did not have a
material impact on the Company's financial statements.
Pension and other benefits
In February 1998, the Financing accounting standards board issued
statement of financial accounting standards No. 132, Employers'
disclosures about pension and other post-retirement benefits (SFAS No.
132), which standardizes the disclosure requirements for pension and
other post -retirement benefits. The implementation of this standard
did not have any impact on the Company's financial statements.
Accounting for the costs of computer software developed or obtained
for internal use
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants (ASEC of AICPA)
issued Statement of position (SOP) No. 98-1, "Accounting for the costs
F-8
33
of computer software developed or obtained for internal use",
effective for fiscal years beginning after December 15, 1998. SOP N0.
98-1 requires that certain costs of computer software developed or
obtained for internal use be capitalized and amortized over the useful
life of the related software.
Web site development costs
In March 2000, the Emergency Issues Task Force (EITF) of FASB issued
its consensus under EITF-00-02. Per the consensus, certain costs
incurred in the development of a Web site should be capitalized.
According to the EITF, those costs incurred in developing a software
program should be capitalized in accordance with Statement of Position
(SOP) 98-1, "Accounting for the costs of Computer Software Developed
or obtained for internal use". The costs of web site development
incurred primarily for conducting electronic commerce are capitalized.
Capitalization of software development costs begins upon the
establishment of technological feasibility. The establishment of
technological feasibility and the ongoing assessment of recoverability
of capitalized software development costs require considerable
judgment by management with respect to certain external factors,
including, but not limited to, anticipated future revenues, estimated
economic life, and changes in software and hardware technologies. The
Company expenses web site development costs, which are allocated for
preliminary project development, web site general and health
information, and maintenance.
Research and Development
Expenditures for software development costs and research are expensed
as incurred. Such costs are required to be expensed until the point
that technological feasibility is established. The period between
achieving technological feasibility and the general availability of
such software has been short. Consequently, costs otherwise
capitalizable after technological feasibility is achieved are
generally expensed because they are insignificant.
Costs of start-up activities
In April 1998, the ASEC of AICPA issued SOP No. 98-5, "Reporting on
the costs of start-up activities", effective for fiscal years
beginning after December 15, 1998. SOP 98-5 requires the costs of
start-up activities and organization costs to be expensed as incurred.
The implementation of this standard did not have a material impact on
the Company's financial statements.
Revenue Recognition
Revenue Recognition Revenue is recognized when earned. The Company's
revenue recognition policies are in compliance with all applicable
accounting regulations, including American Institute of Certified
Public Accountants (AICPA) Statement of Position (SOP) 97-2, Software
Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With
Respect to Certain Transactions. The company did not earn revenue in
the years ended July 31, 2000.
Advertising
The Company expenses advertising costs as incurred.
Licensing
The Company expenses licensing costs as incurred. Licensing acquired
through the acquisitions of companies are amortized over the remaining
lives of licenses.
Accounting developments
In June 1998, the FASB issued SFAS No. 133, "Accounting for derivative
instruments and hedging activities", effective for fiscal years
beginning after June 15, 1999, which has been deferred to June 30,
2000 by publishing of SFAS No. 137. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
F-9
34
(collectively referred to as derivatives), and for hedging activities.
This statement requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial condition
and measure those instruments at fair value. The accounting for
changes in the fair value of a derivative instrument depends on its
intended use and the resulting designation. The Company does not
expect that the adoption of this standard will have a material impact
on its financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines
the basic criteria that must be met to recognize revenue and provides
guidance for presentation of revenue and for disclosure related to
revenue recognition policies in financial statements filed with the
Securities and Exchange Commission. The effective date of this
pronouncement is the fourth quarter of the fiscal year beginning after
December 15, 1999. The Company believes that adopting SAB 101 will not
have a material impact on its financial position and results of
operations.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44")
"Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25". FIN 44 clarifies the
application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence for various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of
stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain provisions cover specific events
that occur after either December 15, 1998,or January 12, 2000. The
adoption of certain other provisions of FIN 44 prior to July 31, 2000
did not have a material effect on the financial statements. The
Company does not expect that the adoption of the remaining provisions
will have a material effect on the financial statements.
Reclassifications
Certain prior period amounts have been reclassified to conform with
the current period presentation.
3. GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. However, the
Company's did not earn any revenue during the period ended July 31,
2000 and the Company has incurred net losses from inception to July
31, 2000 of $202,825 including net losses of $165,255 during the
period ended July 31, 2000. The continuing losses have adversely
affected the liquidity of the Company. Losses are expected to
continue for the immediate future.
In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown
in the accompanying balance sheet is dependent upon continued
operations of the Company, which in turn is dependent upon the
Company's ability to raise additional capital, obtain financing and to
succeed in its future operations. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification
of liabilities that might be necessary should the Company be unable to
continue as a going concern.
Management has taken the following steps to revise its operating and
financial requirements, which it believes are sufficient to provide
the Company with the ability to continue as a going concern.
Management devoted considerable effort during the period ended July
31, 2000 towards (i) obtaining additional equity (ii) management of
accrued expenses and accounts payable (iii) Development of the web
site and (vi) evaluation of its marketing methods.
Management believes that the above actions will allow the Company to
continue operations through the next fiscal year.
F-10
35
4. ACQUISITIONS AND NOTE PAYABLE
Effective May 26, 2000 the Company acquired the stock of Instant
Drugstore, Inc. and Instant Drugstore, LLC for $101,000, The Company
paid $45,000 in cash and gave 300,000 shares valued at $6,000. The
balance of $50,000 is payable over 10 months. The note is unsecured,
interest free. As of July 31, 2000 the remaining note balance amounted
to $40,000.
The acquisitions were recorded under the purchase method of
accounting. Accordingly, the operating results of the acquired
business are included in the statements of operations from the date of
acquisition, May 26, 2000. The purchase price has been allocated to
assets and liabilities assumed as follows:
Non current assets acquired $88,940
Accounts payable assumed (16,026)
Goodwill on acquisition 28,086
--------
Purchase price 101,000
========
Non current assets were recorded at estimated fair values. Goodwill
represents the excess of purchase price over the fair value of assets
acquired.
5. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect
method as defined under the Financial Accounting Standard No. 95.
The Company did not pay any amount for income tax or interest during
the period ended July 31, 2000 or from October 1, 1999 (inception)
through July 31, 2000.
The cash flows statement does not include non-cash transaction of
acquisition subsidiary on May 26, 2000.
6. COMMITMENT
The Company conducted its operations from leased facilities under a
one-year operating lease requiring twelve monthly lease payments of
$1,080, which was to expire February 28, 2001. The Company opted out
of lease in July 2000 and vacated the premises in September 2000.
Operating lease payments for the seven months ended July 31, 2000 were
$3,240.
Subsequently, the Company entered into a two year operating lease
requiring twelve monthly payments of $1,950 and twelve monthly
payments of $2,009, which expires August 31, 2002. Future minimum
lease payments associated with the lease is as follow:
Twelve months ended July 31, Amount
---------------------------- ------
2001 $ 21,450
2002 24,049
2003 2,009
---- ----------
Total $ 47,508
===== ==========
The Company has commitments for medical content licensing and web site
development services of approximately $25,000 at July 31, 2000.
F-11
36
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 24. Indemnification of Officers and Directors.
The bylaws of InstantRx provides that a director of the registrant
shall have no personal liability to the Registrant or its stockholders
for monetary damages for breach of a fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (b) for acts and
omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, and (c) pursuant to Colorado law for any
transaction from which the director derived an improper personal
benefit. Registrant's bylaws exculpates and indemnifies the
directors, officers, employees, and agents of the registrant from and
against certain liabilities. Further the bylaws also provides that
the Registrant shall indemnify to the full extent permitted under
Delaware law any director, officer employee or agent of Registrant who
has served as a director, officer, employee or agent or the Registrant
or, at the Registrant's request, has served as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING INSTANTRX FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by InstantRx are estimated to be substantially as follows:
Amount
Payable
Item By InstantRx
S.E.C. Registration Fees $ 278.00
Printing and Engraving Fees $2,500.00
Legal Fees and expenses $18,000.00
Accounting Fees and Expenses $10,000.00
Transfer Agent's Fees $1,500.00
Miscellaneous $2,500.00
Total $34,778.00
Item 26. Recent Sales of Unregistered Securities.
At inception, InstantRX issued a total of 3,900,000 member units which
were subsequently converted into 3,900,000 common shares to our
officers and directors for services valued at $3,900. These
issuances were made pursuant to Section 4(2) of the Securities Act of
1933.
During the fourth quarter of 1999 and the first two quarters of 2000,
InstantRx issued a total of 2,495,550 member units (common shares
after conversion to corporation) to nonaffiliates for an aggregate of
$316,700. Price per share ranged from $.03 per common share to $.75
per common share. These issuances were made to sophisticated
investors pursuant to Section 4(2) and/or Rule 506 of the Securities
Act of 1933. These issuance were not made to more than 35
nonaccredited investors, no general solicitation was utilized.
InstantRx.com has recently issued 757,133 common shares to PCS
Internet and affiliates and 164,283 common shares to IBC Ventures for
marketing and consulting services. These issuances were made to
sophisticated investors pursuant to Section 4(2) of the Securities Act
of 1933.
37
Item 27. Exhibit Index.
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation
(3.1) Certificate of Conversion
(3.2) Bylaws
(4) Specimen certificate for common stock
(5) Consent and Opinion of Jody M. Walker regarding
legality of securities registered under this
Registration Statement and to the
references to such attorney in the prospectus filed
as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Kabani & Company, Inc.
Certified Public Accountants
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule
(28) Not Applicable
Item 28. Undertaking.
The undersigned registrant undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(I) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the formation set forth
in the registration statement.
(iii) To include any additional or changed material information on the
plan of distribution.
38
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Delivery of Certificates. The undersigned registrant undertakes
to provide to the Transfer Agent at the closing, certificates in such
denominations and registered in such names as are required by the
Transfer Agent to permit prompt delivery to each purchaser.
(c) Indemnification. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant
to the provisions set forth in InstantRx's articles of incorporation
or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
39
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 San Jose, State of California on the 5th
day of November, 2000.
InstantRx.
/s/ Deron E. Smallcomb
------------------------------
By Deron E. Smallcomb
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 Capacity Date
/s/Deron E. Smallcomb Chief Executive Officer November 5, 2000
- ----------------------- Chief Financial Officer,
Deron E. Smallcom Controller, Director
/s/Samuel J. Dalesandro Director November 5, 2000
- -----------------------
Samuel J. Dalesandro