As filed with the Securities and Exchange Commission on February 9, 2001
Registration Statement No. 333- _____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
VentureDrive, Inc.
(Name of Small Business Issuer in its Charter)
-----------------------
Delaware 541611 N/A
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Number) Identification No.)
----------------------------
2275 Lakeshore Boulevard West, Suite 304
Toronto, Ontario, Canada M8V 3Y3
(416) 255-5113
(Address and telephone number of principal executive offices)
--------------------------
Peter J. Hamilton, President
VentureDrive, Inc.
2275 Lakeshore Boulevard West, Suite 304
Toronto, Ontario, Canada M8V 3Y3
(416) 255-5113
(Name, address and telephone number of agent for service)
----------------------------
Copies to:
Andrew D. Hudders, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016
Telephone: (212) 818-8800
Facsmile: (212) 818-8881
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
-------------------------------------
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis under Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering:
[ ]
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------
Title of each Amount Proposed Maximum Proposed Maximum Amount of
Class of Securities To Be Offering Price Per Aggregate Offering Registration
To Be Registered Registered Security Price Fee
- -----------------------------------------------------------------------------------------------
Common Stock, $.001 2,000,000 $1.00 $2,000,000.00 $500.00
Par value
- -----------------------------------------------------------------------------------------------
Total Amount Due $500.00
- -----------------------------------------------------------------------------------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Commission, acting under Section 8(a), may determine.
Information in this prospectus is not complete and may be changed. 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 or would be
unlawful prior to registration or qualification under the securities laws of any
state.
SUBJECT TO COMPLETION
PRIMARY PROSPECTUS DATED FEBRUARY 9, 2001
VentureDrive, Inc.
Up to 2,000,000 shares of our common stock are being sold by the
officers of VentureDrive on a self-underwritten, best efforts basis, with no
minimum. The offering will commence on the date of this prospectus and will
continue for nine months or until all the shares offered are sold, if earlier.
We will not escrow the funds received in the purchase of our common stock. We
will issue certificates for common stock purchased within ten business days
after receipt of a fully executed subscription agreement that is accepted by us
and good funds for the purchase are in our account.
No public market exists for our common stock. A public market may not
develop after the sale of the shares.
We are dependent on the proceeds of this offering to fund our
operations.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Per Share Total
--------- -----------------
Public offering price..... $1.00 $2,000,0001
1 Assumes all 2,000,000 shares offered are sold. The expenses of
this offering, estimated at $75,000, will be deducted from the
total proceeds to VentureDrive.
The date of this prospectus is _____________, 2001.
34
44882.2
TABLE OF CONTENTS
Summary................................................................2
Risk Factors...........................................................4
Use of Proceeds........................................................8
Dividend Policy........................................................9
Determination of Offering Price........................................9
Dilution of the Price Paid for the Shares..............................9
Capitalization........................................................11
Plan of Operations....................................................12
Business..............................................................15
Management............................................................25
Executive Compensation................................................27
Principal Stockholders................................................29
Certain Transactions..................................................30
Description of Securities.............................................30
Shares Eligible for Future Sale.......................................31
Plan of Distribution..................................................32
Legal Matters.........................................................33
Experts...............................................................33
Where You Can Find Additional Information.............................33
Index to Financial Statements of VentureDrive, Inc...................F-1
VentureDrive, Inc., and our wholly owned subsidiary, Venture Drive.com
Inc. is an Internet based venture catalyst company. The company is referred to
as VentureDrive, we or us. We were incorporated in Delaware in April 24, 2000.
Our executive offices are located at 2275 Lakeshore Boulevard West, Suite 304,
Toronto, Ontario, M8V 3Y3, Canada. Our telephone number is (416) 255-5113. We
refer to prospective investors as "you" or the "investor".
Summary
This summary highlights information contained elsewhere in this
prospectus. You should read the entire prospectus carefully, paying particular
attention to the section entitled Risk Factors.
Generally about us
VentureDrive is an Internet based venture catalyst company that has
created a methodology and network to develop and process high volumes of early
stage business plans and investor solicitation documentation for client
companies in an efficient and cost effective manner. The VentureDrive business
model is that of an on-line early stage capital development process which
facilitates matching and linking entrepreneurial companies seeking funds to grow
their businesses with qualified investors looking to have greater choice in
early stage investment opportunities.
We anticipate that our revenues will be derived from the following
activities:
o Companies will register with VentureDrive and pay process fees
for the services rendered in developing or improving written
business plans and investor materials and for advertising the
client company investment opportunities on our website to
registered, qualified investors.
o Qualified investors will register with VentureDrive and pay
registration and access fees to obtain information about
potential investment opportunities.
o Fees from processing investment documentation and company
communications on behalf of the registered companies.
o Fees from registered business partners in exchange for
referrals of entrepreneur's seeking mentoring assistance under
VentureDrive's certification program.
o Advertising and other service revenues from registered
partners of VentureDrive and other entities seeking to
advertise to those markets.
o Registration fees and sponsorship revenue from entrepreneur
and investor marketing events.
Strategy
We believe that there is a large and renewable volume of early stage
business entities attempting to obtain equity financing. The market space for
introducing qualified investors to these entities is fragmented and often
informal. We believe that a large number of business opportunities are lost from
a lack of financing because they are not seen by appropriate investors.
Alternatively, they may be seen but do not attract interest because their
business plans and investor solicitation documents are poorly formulated.
VentureDrive had developed, through the use of the Internet and a local
business partner network, a business methodology to mentor entrepreneurs and
their companies. VentureDrive will help them develop and document their business
plans with appropriate business, legal and accounting information. Then
VentureDrive will deliver this documentation on behalf of registered clients and
related investment paperwork to qualified investors who are registered with
VentureDrive.
2
VentureDrive seeks to reduce the time and expense of early capital
rising for entrepreneurial companies. VentureDrive aggregates both investors and
businesses into a "brick and click" market space by adding structure and
organization to the informal and unstructured market for early stage investment.
The Offering
Securities offered.............. 2,000,000 shares of common stock.
Common Stock outstanding
Prior to the Offering........... 3,653,750 shares
Common Stock to be outstanding
after the Offering.............. 5,653,750 shares
Use of proceeds................. We intend to use the net proceeds of this
offering as follows:
o Establishment of regional offices
o Marketing, public relations, and
awareness programs
o Working capital and general
purposes.
3
Risk Factors
You should consider carefully the following risks before you decide to
invest in our common stock. Our business, financial condition or results of
operations could be materially adversely affected by any of these risks. Any of
these risks could cause the trading price of our common stock to decline, and
you could lose all or part of your investment.
Risks Relating to Our Business
We have no long-term history of operations upon which investors may evaluate our
business plan and performance.
We are in the early stages of developing and implementing our business
plan. We have not engaged in any substantive operations to date. Therefore,
investors will not have a track record with which to judge our ability to
achieve our business objectives. Investors must evaluate an investment in
VentureDrive based on management's expectations and their own evaluation of our
prospects.
Our ability to operate will depend on our ability to face all the challenges of
a new business.
We expect to face many challenges in the development of our business.
An investment in VentureDrive must be considered in light of the risks, expenses
and difficulties of companies in the early stage. These will include:
o Engaging in a business model that has not been fully implemented;
o Managing growth of the client base and internal staff;
o Locating and managing authorized mentoring partners to advise the
entrepreneurial business clients;
o Managing entrepreneur and investor marketing/education events in
various major cities to act as an intake mechanism for client
entrepreneurs and registered investors;
o Implementing appropriate financial controls;
o Continuing to develop and upgrade our technology and improve our
website;
o Responding to competitive developments; and
o Attracting and retaining qualified personnel.
The failure to address one or more of these may impair our ability to carry out
our business plan.
We will be dependent on others for the implementation of parts of our business
plan.
VentureDrive will rely on the authorized mentoring partners to provide
much of the counseling to the entrepreneurial entities that are its clients.
This will include business presentation, legal counseling and accounting
services necessary to prepare documentation that will properly present the
business opportunity for investor review. VentureDrive will be actively involved
in providing models and reviewing the work product. If, however, the authorized
mentoring partners fail to act in a timely manner or in a manner meeting the
standards of VentureDrive, the presentation that VentureDrive seeks to establish
may be impaired and its goodwill and intellectual property impaired.
4
The market for online services is rapidly evolving which requires us to maintain
currency and adjust our business model as changes occur.
As is typical for new and rapidly evolving industries, demand and
market acceptance for recently introduced services in online commerce are
subject to a high level of uncertainty. Our success will depend on the
willingness of entrepreneurs and investors to use a mixture of local face to
face and online services as a method to aid in the process of seeking capital
and investment opportunities. Our failure to attract sufficient numbers of
clients on both sides of the equation will impair our growth and our overall
prospects of success in establishing brand identity.
Although our activities are not regulated, changes in government regulation may
impact our business.
We do not engage in a business that is regulated by the various
governmental entities that have authority over the purchase and sale of
securities. However, the business that we do conduct is subject to scrutiny by
securities regulators from time to time and may become subject to varying
degrees of regulatory control in the future. The purchase and sale of securities
is subject to extensive regulation. It is possible that in the future, as the
Internet based market in the securities industry develops, regulation of certain
activities on the Internet may be devised and imposed on our business, which may
have an adverse impact.
The capital funding services industry is extremely competitive.
VentureDrive competes with a significant number of traditional matching
companies and fund-raising enterprises. These competitors operate in the
traditional bricks and mortar and in the on-line environments. We believe that
the market for these services will see additional entrants in the future because
the barriers to entry are not significant. Many of our competitors are better
funded. A large number of our competitors are established providers of venture
capital finance, which have market awareness and marketing resources and
established investor pools. Moreover, many of them are licensed broker-dealers
with authority to do more activities and earn more than VentureDrive. Although
we believe we have competitive advantages, it is possible that we will not be
able to establish a market share and be sufficiently competitive to generate
revenues to be profitable.
We are dependent on our intellectual resources and intellectual property.
We believe that the experience and background of our management
personnel has created significant branding and intellectual property. Our
inability to continue to differentiate ourselves and to protect our intellectual
property assets to the extent they exist will impair our business plan and
development.
5
Risks Relating to this Offering
This offering is being made without an underwriter; therefore, it is possible
that VentureDrive will not sell all the shares offered.
The offering is self-underwritten. This means VentureDrive will not
engage the services of an underwriter to sell the shares. We intend to sell the
shares through the efforts of our officers, and we will not pay them any
commissions. Without the services of a professional finance firm, it is possible
that we will not sell all the shares offered. If VentureDrive does not raise the
full amount being sought, it will have to modify its business plan to reduce its
proposed expenditures. A substantial reduction in the business plan may impair
the business and financial ability of VentureDrive, and it may be required to
cease operations.
This offering is being made without any escrow of investor funds or provisions
to return funds.
When investors make a subscription for our common stock, the purchase
price will not be place in any escrow account and will become a general asset of
VentureDrive. There is no minimum offering amount. Subscriptions will be
accepted on a rolling basis. There are no investor protections for the return of
invested monies.
Because there is no minimum offering requirement, early investors in this
offering bear a disproportionate risk of VentureDrive being able to operate on
the funds raised.
This offering is made on a rolling basis with no minimum amount having
to be raised. Therefore, early investors will participate in the offering with
no assurance that a sufficient amount of funds will be raised for the intended
use of proceeds. If insufficient funds are the result of this offering,
VentureDrive may have to limit the extent to which it will be able to implement
its business plan, but investors will not be able to get their investment funds
back.
The offering price has been arbitrarily established.
The offering price has been arbitrarily established by the board of
directors. It is not based on market factors, business appraisal or other
established criteria of business valuation. We have not consulted with any
finance professionals to determine the offering price.
The officers will have broad discretion in the use of proceeds from this
offering.
Although we have allocated the proceeds from this offering among
several categories of uses, they may be changed by management at any time. The
amount allocated to a use also may be changed depending on management's
determination about the best use of the funds at a particular time. Therefore,
investors must rely entirely on the business judgment of management in the use
of the offering proceeds and to determine how and what portions of the business
plan will be implemented.
There has been no prior market for our common stock and the market price of the
shares may fluctuate.
There has been no market for our common stock prior to this offering.
The price of our common stock after the offering may fluctuate widely and may
trade at prices significantly below its initial public offering price. We cannot
6
guarantee that a trading market for our common stock will develop or, if a
market does develop, that the depth of the trading market for the common stock
or the prices at which the common stock will trade.
There can be no assurance that a public market will develop for the common
stock.
We plan to take action so that our common stock will trade on the
Over-the-Counter Bulletin Board, operated by NASDAQ. Because the OTC BB is a
broker driven market, before our stock may be listed and quoted, brokers must
apply for it to be listed and then establish market levels for it to trade. We
must wait until brokers take the appropriate action before our common stock will
trade in that market. There can be no assurance that a market will develop for
the common stock.
Investors may not be able to resell the shares acquired in the offering in the
public markets.
The shares are defined as penny stock under the Securities and Exchange
Act of 1934 and rules of the SEC. These rules impose additional sales practice
and disclosure requirements on broker-dealers who sell our shares to persons
other than certain accredited investors. For covered transactions, a
broker-dealer must make a suitability determination for each purchaser and
receive a purchaser's written agreement prior to sale. In addition, the
broker-dealer must make certain mandated disclosures in transactions of penny
stocks. Consequently, these rules may affect the ability of broker-dealers to
make a market in our common stock and may affect the investors ability to resell
shares purchased in this offering.
Our directors and officers will have substantial ability to control our business
direction.
Because our directors and officers own a substantial number of shares
of common stock, they are in a position to control, or at least, influence the
election of our directors. Therefore, they are able to influence the business
operation of VentureDrive.
Future sales of shares by our principal stockholders could adversely affect the
market price of our common stock.
After completion of this offering, there will be 5,650,750 shares of
our common stock outstanding. The 3,653,750 shares of common stock outstanding
before this offering were sold at various times during the calendar year 2000
and may be sold in the public market from time to time, in calendar year 2001,
subject to volume and holding period limitations and method of sale
requirements, after they have been held for one year. You should be aware that
the possibility of these sales may, in the future, have a depressive effect on
the price of the common stock in any market which may develop and, therefore,
the ability of any investor to publicly sell his shares may depend upon the
number of shares that are offered and sold. Moreover, the perception in the
public markets that these sales by prior stockholders might occur could also
adversely affect the market price of our common stock.
7
Use of Proceeds
The offering is on a best-efforts basis, no minimum basis. Below are
three alternatives of the application of proceeds that may be received on the
offering. In each instance, the applications assume net proceeds after offering
expenses estimated at $75,000.
Activity Net Proceed Amounts
-------- -------------------------------------
Establishment of Regional offices $ 200,000 $ 500,000 $ 700,000
Marketing, public relations and
other forms of awareness programs 100,000 200,000 625,000
Working capital 200,000 300,000 600,000
---------- ---------- ----------
TOTAL $ 500,000 $1,000,000 1,925,000
VentureDrive plans to have regional offices in the United States and
Canada. The proceeds will be used to pay the salaries of the representatives and
the office rental and operating expenses. The staff in these offices will be
responsible for:
o creating a local network of authorized mentoring partners;
o attracting entrepreneurial investment opportunities;
o attracting local accredited investors to review suitable early
stage entrepreneurial opportunities;
o managing local entrepreneur and investor marketing events to
create prospective clients;
o liaising with preferred service providers to advertise on the
VentureDrive website; and
o creating a series of local strategic partners that will supply
and receive referrals of investment opportunities.
VentureDrive plans on using the services of public relations firms to
build media exposure in local markets and with local groups. Local groups to be
targeted will be industry groups, trade organizations and forums, special
interest business organizations and other business and capital raising groups.
Marketing may also include participation in entrepreneurial and venture capital
forums. Marketing will be oriented towards attracting clients and registered
investors and towards building brand identification of VentureDrive as an
efficient on-line forum for early stage investment opportunities.
The working capital requirements of VentureDrive will include general
administrative expenses, website maintenance, senior executive compensation,
corporate overhead, accounting and professional expenses and similar general
corporate expenses.
Proceeds not immediately required for the purposes described above will
be invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.
Although we have made allocations for the use of the net proceeds of
the offering, management many change the allocations in its sole discretion
based on the amount of funds actually received. Generally, if lesser amounts of
8
shares are sold, we correspondingly will limit our activities to fewer regional
offices and reduced marketing efforts. We also would reduce the working capital
allocation in favor of the other uses and try to limit the anticipated expenses
of general corporate overhead. Significant reductions in the overall business
plan or delays in taking action to implement the business plan may impair our
ability to achieve our business goals or cause us to curtail all or substantial
parts of our proposed business operations.
In addition to changing allocations among the proposed uses, we may
change the different uses of the proceeds because of required changes in our
business plan or management decisions based on arbitrary decisions. Investors
should understand that our management will have wide discretion over the use of
proceeds which may be made without consultation with investors or notice to our
stockholders. Therefore, our decisions may not be in line with the initial
objectives of investors who will have little ability to influence these
decisions other than through the process of changing the directors of
VentureDrive by stockholder action.
Dividend Policy
We expect to retain all earnings generated by our operations, if any,
for the development and growth of our business. We do not anticipate paying any
cash dividends to our stockholders in the foreseeable future. The payment of
future dividends on the common stock and the rate of dividends, if any, will be
determined by our board of directors in light of our earnings, financial
condition, capital requirements and other factors.
Determination of Offering Price
The price of the shares was arbitrarily determined in order for
VentureDrive to raise up to a total of $2,000,000 in this offering. The offering
price bears no relationship whatsoever to our assets, earnings, book value,
business prospects, or other established criteria of value. We also did not
consult finance professionals to help establish the offering price. There is no
assurance that the price paid for a share in the offering will be recoverable by
a sale of the shares in the public market, or that a public market will value
the company as we have determined its value.
Dilution of the Price Paid for the Shares
The difference between the offering price of the common stock and the
net tangible book value of a share of common stock after the offering is the
dilution in the value of the offered common stock to investors. Net tangible
book value for each share of common stock is determined by dividing the net
tangible book value of VentureDrive by the number of shares of common stock
outstanding. The net tangible book value is determined by calculating the total
tangible assets and then subtracting the total liabilities of VentureDrive.
At September 30, 2000, the net tangible book value of VentureDrive was
$235,688 or $.067 per share of common stock. If you give effect to the sale of
the 2,000,000 shares of common stock in this entire offering at the initial
public offering price of $1.00 per share and the receipt of the net proceeds of
this entire offering, based on the net tangible book value shown above, the
adjusted net tangible book value of VentureDrive at September 30, 2000 would be
$2,160,688 or $.39 per share. The dilution would be $.61 per share, or
approximately 60.9%, less than the price you are paying per share in the
offering. The following table illustrates this dilution.
9
Assumed public offering price per share .......................$ 1.00
Net tangible book value before offering (approximate)..$.07
Increase attributable to current investors.............$.32
Adjusted net tangible book value after offering................$ .39
-------
Dilution to investors in this offering.........................$ .61
=======
The public offering price is substantially higher than the net tangible
book value per share. Investors will incur immediate and substantial dilution.
The following table summarizes the number and percentage of shares
purchased, the amount and percentage of consideration paid and the average price
per share of common stock paid by all our existing stockholders and by new
investors in this offering assuming all the shares are sold:
Total
Price Pe Number of Percent of Consideration Percentage of
Share Shares Held Ownership Paid Consideration
-------- ----------- ---------- ------------- -------------
Existing Stockholders $ .16 3,653,750 64.6% $ 577,000 22.4%
Investors in this
offering $1.00 2,000,000 35.4% $2,000,000 77.6%
----------- ------- ---------- -----
Total 5,653,750 100.0% $2,577,000 100%
10
Capitalization
The following table sets forth our capitalization as at September 30,
2000:
September 30, 2000
------------------
Short-term debt...................................... $ 58,795
Stockholders' equity:
Preferred stock, par value $0.001 per share,
2,000,000 shares authorized; no shares
issued............................................. --
Common stock, par value $0.001 per share,
20,000,000 shares authorized; 3,528,750 shares
issued and outstanding; ........................... 2,381
Additional paid-in capital........................... 544,288
Deficit accumulated during development stage......... 311,964
Transaction Adjustment............................... 1,163
Total stockholders' equity (deficit)............... 235,868
Total capitalization............................... 294,663
11
Plan of Operations
Background
The predominant nature of the early stage finance market is that it is
local. Local angel investors finance local entrepreneurs. The process by which
local entrepreneurs gain access and support from local angel investors, however
is not organized and is almost totally dependant on informal relationships.
Angel investors are also subject to this unorganized market and are unable to
choose from all the potential available investment opportunities within the
local market because there is no facility to bring all the opportunities
together.
VentureDrive uses its Internet based software application as a vehicle
to aggregate both registered investors and registered entrepreneurs that are
seeking angel investment funds and expertise. Coupled with the Internet
application, VentureDrive solicits authorized mentoring partners in various
local areas to work with entrepreneurs who approach VentureDrive in their search
for financing. These local authorized mentoring partners, investors and
entrepreneurs become part of the local VentureDrive network. By attracting a
number of partners in each locale the network is able to leverage the skills,
contacts, business premises, and relationships that groups of business partners
possess.
The success of VentureDrive is dependent upon attracting entrepreneurs
looking for financing, attracting investors looking to invest and attracting
business partners that will assist entrepreneurs in improving their business
plans and proposals.
Operations
During fiscal year 2000, VentureDrive focused on development of its
business plan, website development and initial capitalization. VentureDrive also
began the process of seeking and entering into agreements with accounting and
consulting firms to act as authorized mentors. VentureDrive has recruited 16
authorized mentoring partners in four Canadian provinces and has opened an
office in New York City where it has recruited four authorized mentoring
partners. In addition, VentureDrive began its recruitment of preferred service
providers and registering potential investors. Entrepreneurs have been accessing
the site and a number of financing proposals have been submitted to investors.
VentureDrive believes that active due diligence has been conducted for several
financing proposals and some of those proposals are in the process of being
financed.
During fiscal year 2001, VentureDrive will continue the development and
maintenance of its website and expanding its operations, growing its
entrepreneur base and registering investors. VentureDrive plans to expand its
operations to Los Angeles, Chicago and several other large United States
metropolitan areas. These future offices will likely be staffed with two or
three persons who will recruit and develop the local networks and manage them.
In fiscal year 2001, VentureDrive plans to increase its marketing
efforts to establish greater market presence and brand identification.
VentureDrive plans to have regular meetings in local venues where panelists
consisting of angel investors, successful entrepreneurs, venture capitalists,
VentureDrive staff, authorized mentoring partners and other associated
individuals will meet with prospective clients, entrepreneurs and investors to
provide information about the VentureDrive process. VentureDrive also intends to
arrange and host two-day boot camps. These will consists of intensive sessions
to explain to startup and early stage entrepreneurs the complete process leading
to successful angel investment. When possible, the boot camps will be sponsored
by local banking and financial institutions and others seeking to market their
services to entrepreneurs and angel investors in general. Attendees will be
charged a registration fee. VentureDrive will also use other conventional means
of marketing, such as local advertising and attending angel investor and
entrepreneurial forums.
12
VentureDrive had working capital of $96,501 as at September 30, 2000.
Those funds, together with the full proceeds of this offering, will be
sufficient to operate the current offices and complete the planned rollout of
its currently proposed regional offices in Los Angeles, and Chicago. Because the
VentureDrive model is variable cost oriented, if the complete offering is not
sold or expenses increase in some areas, management may adjust the plan to
maintain budgets without necessarily affecting the delivery of its services.
Moreover, VentureDrive will be able to anticipate revenues against some costs
because entrepreneurs and angel investors will be paying advance registration
fees and mentoring fees while authorized mentoring partners will be paid after
they have provided services.
VentureDrive created the processes utilizing web applications together
with the intellectual property resident on the website. Ongoing product and
process design continues to take place as VentureDrive experiences the full
range of interactions with various entrepreneurs and authorized mentoring
partners. New content for the website also is continually being developed from
the network events that the company sponsors. Additional products that
VentureDrive is continuing to develop are reseller relationships with such
companies as VC Experts, a New York based company specializing in providing
training and educational materials to investors.
The Company has signed a development and license agreement for the
software used for its VentureDrive.com website whereby it owns the intellectual
property attached to the website while licensing the registration and product
delivery software from the software developer. VentureDrive is amortizing the
original cost of the site over 48 months. Subsequent changes to the website are
being expensed as incurred.
VentureDrive leases virtually all of its computer and
telecommunications equipment on a month-to-month basis. It is our intention to
use serviced offices in regional centers as experience has proven that serviced
offices provide improved cost control for rental space for smaller staff
requirements. VentureDrive signed a one-year lease on its Toronto office
premises and rents its New York office on a month-to-month basis.
VentureDrive has been able to outsource its information technology
services to Springboard Technology Solutions Inc., which is owned by some of the
shareholders of VentureDrive. Springboard is located in the same building as
VentureDrive and hosts the company's website and provides for support of all
facets of the company's hardware and software needs. All purchases of services
from Springboard are governed by a professional services agreement which
outlines the cost for each service consumed. All rates and fees are at or below
market rates.
Results of operations
We have a very limited operating history and our activities to date
have been limited to launching our services which were formally launched on May
16, 2000 with the activation of our website. As a result, our historical
financial information is not necessarily indicative of our future financial
performance.
We have generated nominal revenue to date. Since the inception of
VentureDrive, we have incurred operating expenses of $150,504 for the period
from inception to the end of the stub year end of June 30, 2000 which were
comprised of the following:
13
o Marketing and Promotional Expenses $24,948
o Consulting and Business Partner Support (Salaries) $58,016
o Office, Rent and System Support Expenses $41,176
o Depreciation and Amortization on Software and Equipment $13,390
Since the inception of VentureDrive, we have incurred an aggregate net
loss of $316,596. We have cash commitments of $58,795. These consist of normal
trade payables. Our near term losses will be increased by costs associated with
the roll out of the regional offices and the attendant lag that occurs between
office opening and the attraction of entrepreneurs to our processes and the
financing that occur between angel investors and early stage entrepreneurs.
Liquidity and capital resources
Since inception, our working capital requirements have been satisfied
through the sale of securities. During fiscal year 2000, we raised a total of
$576,000 from the sale of 3,520,000 shares of common stock in these sales. In
connection with the private placement of our securities in 2000, VentureDrive
issued 23,750 shares of common stock as a commission valued at $7,955.
On April 3, 2000, VentureDrive issued 100,000 shares of common stock in
partial payment of services rendered in connection with the development of its
website. The value of these services was $7,955.
On April 3, 2000, VentureDrive issued 10,000 shares of common stock in
partial payment of rent for its executive offices. The value of the shares was
$3,385.
Our working capital at September 30, 2000 was $96,501.
We anticipate that the net proceeds of this offering will satisfy our
capital requirements for at least the18-month period following the consummation
of this offering. Thereafter, we must either generate cash from our operations
sufficient to fund our continued operations and further growth or obtain capital
from external sources. These sources could include the public or private markets
for our equity or debt securities. Additionally, the VentureDrive model of
processing early stage companies could form a valuable front end deal flow
engine for other venture capital or financial firms which may be a source of
strategic investment. Specific external sources of capital, however, have not
been identified and capital may not be available when needed or in the amounts
desired. In addition, the terms may not be acceptable.
Any issuance of equity securities would dilute the interest of our
stockholders. If we incur debt, our cash flow may be insufficient to pay the
principal and interest due. Further, instruments governing debt will typically
contain extensive covenants restricting our financial and business activities.
These restrictions could have important consequences for our business,
including:
o limiting our ability to access the additional capital we will
need to sustain and grow our business;
o limiting our flexibility in planning for, or reacting to,
changes in our business; and
o placing us at a competitive disadvantage to less leveraged
competitors, which could have more capital to invest in their
operations.
Business
General
VentureDrive has developed an innovative strategy for improving a high
volume of early stage business and investment propositions at the local level
through use of authorized mentoring partners, typically small CPA firms or
business consulting firms. The communication and delivery mechanism for the
improved investment documentation that is output from local mentoring partners
and entrepreneurs, is managed through the VentureDrive website and network
presence. VentureDrive will realize on the groundbreaking opportunity to use the
Internet as an innovative communication tool for its deal development process
for entities seeking funding, by facilitating review of entrepreneur proposals
by qualified angel investors. Angel investors will have an opportunity to
finance business propositions as an early entry point.
As a venture catalyst network, VentureDrive consists of:
o entrepreneurs seeking guidance and financing to develop their
early stage businesses;
o qualified investors, such as high net worth investors, venture
capital fund managers, and institutions, looking to invest in
early stage business opportunities;
o authorized mentoring partners selected by VentureDrive and
located throughout the United States and Canada, who will
mentor entrepreneurs through VentureDrive's deal development
process, provide additional services and support and
facilitate financing;
o referral services between the registered entrepreneurs and the
registered qualified angel investors;
o preferred service providers that provide skills, ancillary
products and services for both investors and entrepreneurs in
the conduct of their businesses;
o VentureDrive's back office processing system and overall
direction of the network; and;
o Monthly and quarterly events that facilitate exposure of
entrepreneurs, mentoring partners and investors to the
VentureDrive network.
VentureDrive has identified that there is a large and renewable volume
of early stage business entities attempting to obtain financing that are not
finding potential investors or alternatively limited to those that are within
their range of acquaintances and professional advisors. In short, the market
space for introducing angel investors to developing entities is fragmented and
often informal. We believe that a large number of business opportunities are
lost from a lack of financing because they are either not seen by appropriate
investors or are seen but do not attract interest because they are poorly
formulated and documented.
VentureDrive offers a solution to this problem of early stage capital
raising. Through the avenue of the VentureDrive website, the local authorized
mentoring partner network, a methodology and framework to mentor entrepreneurs
and their companies, a system to catalogue and coordinate documents of companies
seeking funding, and an efficient delivery methodology, VentureDrive is able to
clarify a businesses description and business plan and describe its requirements
so that qualified investors will have the information they need to pursue an
investment opportunity. The use of VentureDrive is intended to reduce the time
14
and expense of early capital funding. Venture Drive aggregates both investors
and businesses into a "brick and click" market space by adding structure and
organization to the informal and unstructured market for early stage financing.
The VentureDrive Process
We believe our approach to developing an entrepreneur's business
proposition is unique. VentureDrive is based upon an effective network created
from ongoing interaction amongst authorized mentoring partners, qualified
investors, entrepreneurs and our local staff in each regional office. We
consider this interaction to be a complete and proprietary business process
designed for cost effective, efficient deal development. We believe that our
methodology will result in more investment for start-up businesses than the
current means.
The steps in the process are as follows.
o Entrepreneurs are exposed to the capabilities of the
VentureDrive network through public relations activities and
early stage business events in local cities. These activities
are designed to build the intake funnel to provide volume and
entrepreneur "flow" for VentureDrive.
o Entrepreneurs are encouraged to take the free "Test Drive"
option on the website if they are interested in starting the
process towards finding early stage capital.
o A local VentureDrive entrepreneur relationship manger reads
the entrepreneur's test drive submission and contacts the
entrepreneur to suggest which of the available VentureDrive
process options would be appropriate for the particular
entrepreneur given the stage of development of the
entrepreneur's business proposal.
o The entrepreneur pays a fee, charged by credit card via the
website, dependent on the path chosen to enter one of the
three VentureDrive deal development processes:
|_| "The Expressway" path may be chosen if the
entrepreneur's proposal lacks some significant
development that would cause qualified investors to
discount or doubt the businesses' viability.
|_| The "Direct to Certification" path may be chosen if
the entrepreneur appears to have a well thought out
business plan, has a cogent proposal, and needs to be
certified as "due diligence ready" and have a
"certified investment opportunity" proposal prepared.
|_| The "Uncertified Investment Opportunity" path may be
chosen if the entrepreneur wishes only to post his
investment opportunity in "The Driveway" portion of
the website where uncertified deals may be reviewed
by qualified investors. This would be similar to
posting an advertisement; however, it is in a
standardized format for ease of review by qualified
investors.
o If either the Direct to Certification or Expressway path is
chosen, the local VentureDrive office arranges for the
entrepreneur to meet with a local authorized mentoring
partner.
o The authorized mentoring partner reviews the "Test Drive"
form, business plan materials if any, or a business summary
review in the case of the Expressway.
16
o Based on the results of the meeting and analysis of the
transaction contemplated, together with a risk analysis, the
mentor may recommend certification in the case of the Direct
to Certification path and the entrepreneur and the mentoring
partner complete a comprehensive due diligence check list and
questionnaire. In the case of the Expressway, the mentor will
recommend one or more of four modules that will need to be
successfully completed by the entrepreneur prior to being
considered for certification. In both cases if an entrepreneur
is to be considered for certification, a standardized
"certified investment opportunity form needs to be completed
and approved for posting to "The Showroom" where certified
deals may be reviewed by qualified investors.
o In the case of all certified and uncertified proposals posted
to the website, all identifying information is removed to
eliminate the possibility that the transaction could be
considered a public offering of securities.
o If an investor is interested in one or more business positions
posted to the website, the investor sends an email to the
VentureDrive head office which in turn alerts the local
partner relationship manager office that there is an
interested party.
o The mentor is provided with some information from the
qualified investor's profile to ascertain if the investor and
the entrepreneur would make a suitable combination based on
the mentor's knowledge of the entrepreneur and the business
position.
o In the case of uncertified investment opportunities when an
enquiry is received, the local VentureDrive office will assign
the entrepreneur to a local mentor and facilitate a meeting in
order to ascertain the entrepreneur's interest and
capabilities prior to relaying the results of the meeting to
the VentureDrive local office.
o If the mentor believes that a meeting is appropriate, the
local VentureDrive office arranges a meeting between the
mentor, the entrepreneur and the investor.
o In all cases, the meetings between the entrepreneur and the
mentors facilitate the eventual goal of achieving financing as
the negotiation between entrepreneur and investor can be led
to a successful conclusion if an experienced mentor has
prepared the entrepreneur for the negotiation process.
o In those cases where a mentor may not be sufficiently versed
in assisting the interaction between investors and
entrepreneurs, VentureDrive will maintain a local investment
manager whose role is to assist in structuring early stage
investments.
Authorized mentoring partners
VentureDrive believes that authorized mentoring partners are a critical
component of its delivery system. These partners are independent business
persons that are currently involved in financial services in so far as they tend
to deal directly with some entrepreneurs in some capacity. They are located in
major cities and surrounding areas. VentureDrive will train these partners in
its procedures and use their existing locations and facilities to deploy its
products and processes to entrepreneurs.
Authorized business mentoring will most likely come from the following
categories:
o accounting and law firms with practice orientations towards
entrepreneurial businesses and venture capitalists;
17
o consulting and financial service firms which have accounting
and consulting skills and are currently dealing with small to
mid-size businesses;
o Venture capital firms and institutional investors that invest
in startup and growth stage businesses; and
o financial planning firms which have relationships with high
net worth individuals.
The primary role of the authorized mentoring partner is:
o to be a local mentor and consultant to both the entrepreneur
and the qualified investor;
o provide the pre-existing bricks and mortar for the
VentureDrive network;
o deliver many of the services necessary for deal development in
conjunction with The Expressway process;
o be available to recommend other authorized business partners
and preferred service providers and build those networks; and
o be a part of the larger network of deal and investment fund
flows to fuel the growth of VentureDrive.
Authorized mentoring partners will not have defined territories, and
there is no exclusivity by sector. The reason for this is that VentureDrive will
try to match the best certified mentoring partner for the entrepreneur depending
on the stage of development, mentoring needed and services to be provided.
Because the diversity of the mentoring partners is expected to increase as we
grow, there will be the opportunity to assess the mentoring prospects of a
client and bring together many skill sets and disciplines through VentureDrive
to achieve optimal results.
We have identified an initial group of authorized mentoring partners
which have been assessed through interviews, referrals and focus groups. Most of
these persons are located in Ontario and New York. We will continue to add to
this group by increasing the number of geographic locations throughout North
America where we will have members of the authorized mentoring partner pool.
Initially, additional offices are targeted for Los Angeles and Chicago. We have
commenced hiring mentoring partner relations managers. Their chief functions
will include acting as a liaison between VentureDrive corporate offices and the
partners, facilitating entrepreneur and partner relationships, conducting
marketing programs for new participants, engaging additional partners to provide
services and certifying the skill set of the partners.
Authorized mentoring partners will be compensated by the person using
their services at regular rates. One of the important elements for success of
the VentureDrive model will be keeping costs within reason for the early stage
company so that investments will provide meaningful amounts of working capital.
VentureDrive Website
The VentureDrive website will perform two primary roles. Both these
roles are independent of one another. The first is the business presentation and
matching function. This function will support the core business of introducing
the entrepreneur to the VentureDrive process, facilitating his deal development,
and then posting the business summary for the matching process with qualified
investors. This is described above. The second function will be providing
content relevant to the various registered users of VentureDrive and visitors to
our website. This will include the offering of products and services, useful
18
information and communication opportunities. In the future, we may expand to
include a third function of advertising by and referral to preferred product and
service providers for our registered users and visitors to our website.
The content element can be broken down into two segments, a
publications segment and an uncertified business opportunity segment.
Concomitant to these segments will be related advertising space and advertising
revenue opportunities.
VentureDrive believes there are over 50 nationally distributed print
media magazines and other publications in North America aimed at the start up
and developing business market. We believe that entrepreneurs and qualified
investors, even if they do not take part in The Expressway process, will want to
visit a site that has content tailored to their interests. Much of the content
from these sources is free and may be reproduced or hyperlinked to our website.
Because much of this is general or non-specific material, we plan on hiring a
webmaster to add new feeds and search for appropriate content tailored to the
interests of our audience. We may also commission content to complement what we
are otherwise able to obtain.
The uncertified business opportunity segment is important to the
concept of the VentureDrive website as a destination site. We believe that the
greater the number of certified and uncertified business opportunities placed on
the website, the greater will be the ability of the website to attract investors
as viewers, subscribers and finance participants in the network.
We have developed a procedure whereby a potential uncertified business
opportunity posting is reviewed by our staff, prior to being placed on the
website for viewing. Any inquiries being received on this segment are referred
to an authorized mentoring partner in proximity to the entrepreneur posting the
opportunity, as best as possible. The mentoring partner will act as the agent
and facilitator to assist where possible between the entrepreneur and the
prospective investors. We believe that this process will maintain the integrity
and inclusiveness of the network for all website users.
We foresee that as a result of the core activities of VentureDrive,
there will be opportunities to secure adverting on the site. The most likely
group of advertisers will be those who provide products and services to our two
groups of registered users and those wanting exposure on financial oriented
websites. We have received a number of inquiries from insurance brokers,
financial advisors, real estate brokers, accountants and lawyers. We also think
that financial printers, shareholder relations firms, transfer agents and the
like would also want exposure on our type of website. We anticipate that our
authorized business partners will participate in adverting on our website. In
addition to direct advertising revenues, we would expect to generate revenues
from hyperlinked site referrals. Although we expect some advertising revenues,
rates for banner ad placement and various other kinds of advertisements on
websites have been falling dramatically over the last two years, therefore we do
not expect that advertising will be an important source of revenues for
VentureDrive.
In the future, we may add a segment that provides retail products and
services that would be of interest to our registered user groups. We have not
extensively explored this and anticipate doing further market research once our
website is more fully functional and we have a critical mass of registered
users. To date, we have no agreements for any activities in this area of
endeavor.
Marketing
We present VentureDrive as a venture catalyst company that has
developed a unique set of methodologies and products and services that will
support a rapid growth, high margin business, focused on deal development for
early stage entrepreneurs. We operate in the very large, informal, and
19
fragmented industry of capital formation. We believe that the industry is
focused on deal selection as opposed to deal development.
We plan to continue gaining exposure for VentureDrive in each of our
local markets and build brand recognition by continuing to implement the
following marketing strategy and campaigns. We anticipate using the following
techniques:
o operate third party sponsored boot camps once every four
months in each local city where the topic is "how to obtain
private equity investment for your business" or "preparing
your early stage company for private capital";
o operate a monthly networking meetings that contain content
specifically aimed to the early stage entrepreneur market,
including valuation mechanism, preparing cogent investment
proposals, structuring investment opportunities, protecting
intellectual property, and the like;
o email and trigger based marketing software to target trade
associations, usually in conjunction with association
leadership;
o identify, create and maintain all appropriate links to other
websites that would generate additional traffic on
www.VentureDrive.com;
o contact search engines to obtain inclusion of our website in
their responses to relevant searches;
o place print media advertisements and classified ads in
appropriate periodicals and local newspapers directed at
attracting entrepreneurs and investors to the VentureDrive
website;
o use the Napoleon software activity marketing program to target
entrepreneurial organizations and associations to elicit
website visits by their members or to prompt orders of our
marketing CD-ROM;
o use the Napoleon software activity marketing program to target
universities, colleges and for-profit schools to attract
potential new entrepreneurs to the VentureDrive website and
our program;
o distribute our marketing CD-ROM explaining the VentureDrive
process and operation at no cost through referral services,
authorized mentoring partners and selected direct mail
avenues; and
o conduct a public relations program through effective media
relationship management to target entrepreneurial
organizations, business schools, newspapers and business
magazines to clearly articulate VentureDrive's programs and
support the network; and
o attend and offer investor/entrepreneur forums.
To establish the authorized mentoring partner network, our strategy is
to employ the Napoleon software activity marketing program to generate leads for
our managers by an advertising and direct mail campaign to the target groups. We
also plan to host seminars from time to time in urban centers with attendance
generated from blitz advertising and outsourced telemarketing.
20
Competition
VentureDrive faces widespread competition from many sources. These
include:
o internet and bricks and mortar incubator companies and
organizations looking for start-up companies to nurture or
match to investors;
o national accounting and financial advisory firms which have
developed business divisions that are business incubators;
o venture capital firms whose primary business is attracting
capital to participate in deals that they have selected;
o investment banks and broker-dealers, including national firms,
smallcap firms, and niche investment banking houses; and
o state and local agencies, educational organizations and
industry associations that to varying degrees facilitate the
capital formation process for start-up companies.
Our competitors often have greater financial resources with which to
sustain their operations. Generally too, they have seasoned personnel,
established reputations and verified marketing channels. We believe that many of
our competitors have established market positions and market shares. These
factors tend to give our competitors substantial deal flow and access to a large
pool of qualified investors.
We also believe that this industry will become more competitive because
the Internet offers others the same opportunities it offers VentureDrive.
Moreover, the barriers to entry in this industry generally are not substantial.
We believe that VentureDrive will have competitive advantage with many
of its competitors. Principally, we will focus on deal development rather than
deal selection. We believe that presenting as many deals as possible, at both
our certified and uncertified levels, will provide the opportunity to raise
capital to more entrepreneurs and yield more investment possibilities to more
qualified investors. We believe that our registered groups are seeking choice
and opportunity more than anything else. We also will compete with comparable
services on the basis of providing a more comprehensive, hands-on service of
business plan and deal development. Our authorized mentoring partners will add
significant value to the overall presentations and consummation of transactions
because of their expertise and advice. Overall, we believe that our business
presentations will be of a higher caliber than those of our competition which
will attract significant numbers of entrepreneurs and investors.
Proprietary Rights
We regard the protection of our intellectual property, including our
URL "www.VentureDrive.com" and our "The Expressway" and "VentureDrive
Accelerator Model" trademarks, as critical to our success. A URL is a website's
address, which when entered by a user into a web browser, takes the user to the
desired website. We also rely on the proprietary models we developed for The
Expressway. Unauthorized use of the intellectual property used in our business
by third parties may damage our brand and our reputation. We rely on
intellectual property laws and confidentiality and license agreements with our
employees, customers, partners and others to protect our intellectual property
rights.
21
If we are unable to protect our VentureDrive.com domain name our
business could be harmed. We may be unable to prevent third parties from
acquiring Internet domain names that are similar to ours. We anticipate that
many websites will use the words "venture" and/ or "drive" as part of their URL
or brand name. Creating brand awareness for a brand containing the terms
"venture" or "drive" may prove difficult if the markets confuse or are unable to
differentiate among the numerous websites using these words.
Government Regulation
We are not subject to any particular set of laws regulating our
business as a whole. There may be specific activities from time to time or
business aspects we develop in the future that will be regulated businesses.
Few laws or regulations are directly applicable to access to the
Internet. However, because of the Internet's popularity and increasing use, new
laws and regulations may be adopted. These laws and regulations may cover issues
that include:
o user privacy;
o pricing;
o tax;
o content;
o copyright and trademark and trade dress; and
o characteristics and quality of product and services.
In addition, the growth of the Internet and e-commerce, coupled with
publicity regarding Internet fraud, may lead to the enactment of more stringent
consumer protection laws. These laws may impose additional burdens on our
business. The enactment of any additional laws or regulations may impede the
growth of the Internet, which could decrease our potential revenues or otherwise
adversely affect our business, financial condition and operating results.
Because our business is in the area of financial services, we believe
that from time to time our industry will be subject to scrutiny by securities
regulators. As a result of review, our business segment may become subject to
varying degrees of regulatory control. The purchase and sale of securities is
subject to extensive regulation. It is possible that in the future, as the
Internet based market in the securities industry develops, regulation of certain
activities on the Internet may be devised and imposed on our business which may
have an adverse impact.
Our ability to generate revenues from the sale of advertising on our
website depends on demonstrating to advertisers that our web site traffic is
comprised of users that are demographically attractive to them. These are groups
of users having common characteristics, including similar buying habits and
similar income levels, or which reside in the same geographic locations. If we
are not able to legally share information regarding our customers with potential
advertisers, our ability to generate advertising revenues will suffer. The
public is becoming increasingly concerned about issues relating to privacy on
the Internet. This increased sensitivity could result in the adoption of
stringent legislation that prevents or limits our ability to use personal and
other data about our website users and visitors.
Laws and regulations directly applicable to e-commerce or Internet
communications are becoming more prevalent. Congress has passed Internet laws
regarding online copyright infringement. Although not yet enacted, Congress also
22
is considering laws regarding Internet taxation. These are all recent actions,
and there is uncertainty regarding their market place impact. In addition,
various jurisdictions already have enacted laws that are not specifically
directed to e-commerce but that could affect our business. The applicability of
many of these laws to the Internet is uncertain and could expose us to
substantial liability.
Any new legislation or regulation regarding the Internet, or the
application of existing laws and regulations to the Internet, could materially
adversely affect us. If we were alleged to violate federal, state or foreign,
civil or criminal law, even if we could successfully defend the claims, it could
materially adversely affect us.
We believe that our use of third-party material on our web site is
permitted under current provisions of copyright law. However, because legal
rights relating to Internet content and commerce are not clearly settled, our
ability to rely upon exemptions or defenses under copyright law is uncertain.
Several telecommunications carriers are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission in the same manner as other telecommunications services.
Additionally, local telephone carriers have petitioned the Federal
Communications Commission to regulate Internet providers and online service
providers in a manner similar to long distance telephone carriers and to impose
access fees on these providers. If either of these petitions is granted, the
costs of communicating on the Internet could increase substantially. This, in
turn, could slow the growth of use of the Internet. Any legislation or
regulation of this type could materially adversely affect our business,
financial condition and operating results.
Technology
We have entered, and continue to seek to enter into relationships with
technology providers in connection with the development, operation and
maintenance of our web site. We rely on Springboard Technology Solutions Inc.
for the design, development, operation and maintenance and hosting of our web
site. As part of this relationship, we also have use of Springboard's state of
the art data center and its experienced staff of software and e-commerce
technology developers.
Springboard Technology Solutions Inc. is a Canadian private company
incorporated under the Ontario Companies Act. All but one of the shareholders of
Springboard own shares in VentureDrive, and the officers and directors of
VentureDrive control Springboard. The relationship between VentureDrive and
Springboard is governed by a professional services agreement dated February 12,
2000 that sets out the rates for various services. The agreement has a
three-year service term, which is cancelable with 60 days written notice prior
to the expiry of the agreement.
The relationship between Springboard and VentureDrive has meant that
VentureDrive has not had to go to the expense of creating its own technical
operations group thereby allowing VentureDrive to purchase technical expertise
as required and eliminating many fixed costs. Springboard has a number of other
clients and is not dependent on VentureDrive for its day-to-day operations or
cash flow.
In November 2000, VentureDrive moved its head office location to take
space in the same building as Springboard which move allows VentureDrive
increased access to Springboard's technical expertise.
Springboard's technical staff updates the VentureDrive website content
at regular intervals and is on call to facilitate VentureDrive's non-technical
staff with their requirements for content changes. We believe that Springboard's
23
technical staff will enable us to address specific customer requirements, should
they arise, as well as handle custom integration issues which may arise from
expansion of the website for additional product and services offerings.
Development of the website and use of the various applications embedded
within the website is governed by a development and license agreement between
Springboard and VentureDrive. The agreement allows VentureDrive to license
certain computer applications and code created by Springboard while preserving
for VentureDrive the ownership and title to VentureDrive content.
In structuring our technology backbone, we ensure that the resulting
platform has the following characteristics:
Scalability. We require our backbone to be scalable for the rapid
deployment of functions, features and content as required to meet the demand
while maintaining desired performance standards. In the rapidly changing
Internet environment, the ability to update an application to stay current with
new technologies is important. Our site system and related technologies allow
for the addition, modification or replacement of web site based applications in
a cost-efficient and expeditious manner.
Reliability and security. We use leading-edge software to protect our
web servers. The majority of our hardware and software is maintained by
Springboard, which provides us with professional data center hosting facilities
and redundant high-speed Internet connectivity. Springboard monitors and
supports our systems 24 hours a day, seven days a week. We also are currently
developing our own content and web site management tools to facilitate the
maintenance and updating of our web site.
We must ensure that we do not experience significant or frequent
disruptions in access to our web site. Web site failures could result in loss of
existing customers and opportunities to garner additional customers. Our
business also is highly dependent on our systems to process, on a daily basis,
many transactions. We rely heavily on our data processing systems and our
telecommunications systems. If any of these systems do not operate properly or
are unavailable due to problems with our physical infrastructure, we could
suffer disruptions to our business. These disruptions could expose us to
liabilities to clients, regulatory interventions or damage to our reputation and
the development of our brand name.
The need to securely transmit confidential information over the
Internet has been a significant issue in e-commerce and communications. We are
potentially vulnerable to attempts by unauthorized computer users to penetrate
network security. If successful, those individuals could cause serious
interruptions in services. We may be required to expend significant capital and
resources to protect against the threat of security breaches or to alleviate
resulting problems. Despite efforts we make to maintain network security, we may
not be successful.
If third parties are able to successfully penetrate our network
security and misappropriate our customers' information, we could be subject to
liability. We could be subject to claims for violation of data protection
rights, impersonation or other fraud claims. Any of these claims could result in
litigation. Publicized acts of misappropriation of our customers' information
would also likely harm our reputation.
Employees
As of January 31, 2001, we had six full-time employees and one
part-time employee/consultant. We also use five independent contractors on a
project-to-project basis. In addition, we will have relationships with numerous
authorized mentoring partners whose numbers will increase and decrease from
quarter to quarter. We consider our relationships with our employees to be good.
None of our employees are covered by collective bargaining agreements.
24
Properties
Our corporate headquarters are located in approximately 2,500 square
feet of space at 2275 Lakeshore Boulevard West, Suite 304, Toronto, Ontario. We
lease these premises at a monthly rental of $2,500.
Currently all servers utilized in the operation of our website are
managed by Springboard and housed at their data center in Toronto. Our server
location is monitored 24 hours a day, seven days per week, and connected to
multiple, redundant Internet access points and power sources.
Management
Our directors and executive officers are as follows:
Name Age Position
Gordon W. Walker 58 Chairman of the Board
Peter J. Hamilton 53 President, Chief Executive Officer and Director
Brian J. MacDonald 52 Executive Vice President, Chief Financial
Officer, Secretary, Treasurer and Director
Richard Cuthbert 62 Director
Mr. Gordon Walker has been the chairman of the board from the inception
of VentureDrive in February 2000. From July, 1998 he has also been a principal
of Gordon Walker Consulting Associates. From March 1996 to July 1998, he was VP
and Chief Financial Officer of Merritt Corporation. From December, 1991 to
March, 1996, Mr. Walker was retired. From 1978 to December, 1991 he was an
executive with Imperial Oil Limited where he was the chairman of the Syncrude
Finance Committee from 1978 to 1980. Prior to 1978, Mr. Walker was employed by
Allstate Insurance Company in its venture capital department. Mr. Walker holds a
B.A. in Economics from the University of Toronto, an M.B.A. in Marketing from
Northwestern University and an M.B.A. (summa cum laude) in Finance from the
University of Chicago.
Mr. Peter J. Hamilton has been the president, chief executive officer
and a director of VentureDrive since its inception in February, 2000. From
January 1, 1999 onward he remains a co-owner with Mr. Brian MacDonald in
Springboard Technology Solutions Inc. which company supports the information
technology infrastructure of VentureDrive Inc. From December 1995 to December
1998, Mr. Hamilton was the President, CEO and Chairman of Lava Systems Inc., a
software distribution company and Toronto Stock Exchange publicly listed company
operating in Canada, the United States, the United Kingdom and Australia. Lava
Systems was the result of the reacquisition in 1993 of Insight Business
Consultants Inc, a company co-founded by Mr. Hamilton in 1984 and sold to
SoftKey Software Products in 1989, and the merger of several companies. From
1989 to 1995 Mr. Hamilton was Vice President Operations with SoftKey (later The
Learning Company).
Mr. Brian J. MacDonald has been the executive vice president, chief
financial officer, secretary, treasurer, and a director of VentureDrive since
its inception. From January 1, 1999 onward he remains a co-owner with Mr. Peter
Hamilton in Springboard Technology Solutions Inc. which company supports the
25
information technology infrastructure of VentureDrive Inc. From June 1995 to
December 1998, Mr. MacDonald was the Senior Vice President Corporate
Development, and at times also the Chief Financial Officer of Lava Systems Inc.,
a software distribution company and Toronto Stock Exchange publicly listed
company operating in Canada, the United States, the United Kingdom and
Australia. Lava Systems was the result of the reacquisition in 1993 of Insight
Business Consultants Inc, a company co-founded by Mr. Hamilton in 1984 and sold
to SoftKey Software Products in 1989, and the merger of several companies. From
1992 to May, 1995 Mr. MacDonald was the Assistant Vice President Investment Risk
Management of Confederation Life Insurance and was responsible for selling off
many of the assets of Confederation Life Insurance through its wind up. Prior to
1992 Mr. MacDonald was employed by ABN Armo Bank from 1989 to 1992, Banque
Nationale de Paris from 1984 to 1989 and The Toronto Dominion Bank from 1976
until 1984. Mr. MacDonald holds a Masters of Arts degree in Political Science
and Public Policy from the University of British Columbia in Vancouver British
Columbia and a Honours Bachelor of Arts (Magna cum Laude) from the University of
Alberta, in Edmonton Alberta.
Mr. Richard D. Cuthbert has been a director since the inception of
VentureDrive in February 2000, however, does not perform in an officer capacity.
Mr. Cuthebert is since 1998 has been employed by the Canadian Imperial Bank of
Commerce as a Senior Technology Advisor in its knowledge based business finance
department. Mr. Cuthebert from 1993 to 1997 was on the Board of Directors of
Bridge-it, Tele-Partners, and CdC and on the Management Advisory Board Shamrock
Corporation. Mr. Cuthbert was also a Consulting Associate RKA, Pacomm Consulting
and Shamrock. From 1991 to 1992 he was the founder and owner/operator of
ACCU-TEL (Now Tele-Partners). From 1983 to 1990 he occupied the following
positions 1989-1990 Vice-President, Plans and Controls, Unitel Communications
1987-1988 Vice-President, Marketing, CNCP Telecommunications (Now Unitel)
1983-1986 General Manager, Data Services Division CNCP. From 1959 to 1982 he
occupied the following positions 1981-1982 Director of Office Automation
Planning, Bell Northern Research 1979-1980, Vice-President, Planning Bell
Northern Software Research 1976-1979 Marketing Applications Mgr., Texas
Instruments Professional Products 1962-1975 Operations Research Manager and
Analyst, Xerox, Midwest Research Institute and Technical Operations
Inc.1959-1961 Physicist, U.S. Weather Bureau and U.S. Naval Research Lab. Mr.
Cuthbert has a M.B.A. from the University of Rochester and an A.B. Physics and
Mathematics, from the Catholic University of America.
26
Board of directors and committees
Each director will hold office until the next meeting of stockholders
or until his successor is duly appointed and qualified.
Non-employees directors will be reimbursed for reasonable travel and
lodging expenses incurred in attending meetings of the board of directors. They
currently do not receive compensation.
There are no committees of the board of directors of VentureDrive.
Limitation on Directors' Liabilities
Our certificate of incorporation limits, to the maximum extent
permitted under Delaware law, the personal liability of directors and officers
for monetary damages for breach of their fiduciary duties as directors and
officers, except in certain circumstances involving certain wrongful acts, such
as a breach of the director's duty of loyalty or acts of omission which involve
intentional misconduct or a knowing violation of law.
Delaware Law permits us to indemnify officers, directors or employees
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement in connection with legal proceedings if the officer, director or
employee acted in good faith and in a manner he reasonably believed to be in or
not opposed to our best interest, and, with respect to any criminal act or
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Indemnification is not permitted as to any matter as to which the person is
adjudged to be liable unless, and only to the extent that, the court in which
such action or suit was brought upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper. Individuals who successfully defend this type of action are entitled to
indemnification against expenses reasonably incurred in connection therewith.
Our by-laws require us to indemnify directors and officers against, to
the fullest extent permitted by law, liability which they may incur under the
circumstances described in the preceding paragraph.
Executive Compensation
VentureDrive has consulting agreements with each of Messrs. Gordon
Walker, Peter J. Hamilton and Brian J. MacDonald. Each agreement is for a
one-year term ending May 1, 2001, which may be renewed upon mutual agreement of
VentureDrive and the executives. Each agreement may be terminated on seven days
advance notice. The agreements do not require the consultant to devote a
specific amount of time to the affairs of the company. There are no severance
arrangements in the event of early termination under the agreements. Each
agreement has standard non-competitive, confidentiality and assignment of
intellectual property rights provisions to protect VentureDrive. Each agreement
provides for an annual fee, the amounts of which are as follows: Mr. Walker:
$21,435; Mr. Hamilton: $64,320 and Mr. MacDonald: $64,320.
The table below summarizes the compensation for each of the executive
officers for the fiscal year ended December 31, 2000 for all his services to us
and our subsidiaries.
27
Summary Compensation Table
Name and Annual Long-Term
Position Fiscal Year Compensation Compensation
- ----------- ------------ ------------- -------------
Gordon Walker,1
Chairman of the Board 2000 $ 16,075 --
Peter J. Hamilton1
President, and chief executive
officer 2000 46,900 --
Brian J. MacDonald1
Executive vice president, chief
financial officer, secretary and
treasurer 2000 46,900 --
1 The salary amount is for the period inception through December 31,
2000.
VentureDrive is still in the early stages of its development and will
review its compensation arrangements at regular intervals as it achieves its
growth and revenue targets.
VentureDrive does not currently have an equity based performance plan.
However, it intends to implement such a plan, which will include stock options,
in the future to provide incentives to attract performance-oriented employees
whose interests are in line with those of the stockholders.
28
Principal Stockholders
The following table sets forth the beneficial ownership of our common
stock by all stockholders that hold 5% or more of the outstanding shares of our
common stock, each director and executive officer. Each stockholder named has
sole voting and investment power with respect to his or its shares. As of the
date of this prospectus, there were shares of common stock issued and
outstanding.
Number of Percentage
Name and Address or Shares Beneficially Before
Identity of Group Owned Before Offering Offering
- -------------------- --------------------- -----------
Peter J. Hamilton 500,000 13.7%
Brian J. MacDonald 500,000 13.7%
Andrew Stevenson 400,000 10.9%
c/o Dundas St. West
Suite 700
Toronto, Ontario, Canada
M5T 2Z5
Gordon Walker400,000 10.9%
Richard Cutbert 200,000 5.4%
1382108 Ontario Ltd. 200,000 5.4%
Unit 4
109 Woodbine Downs Blvd.
Etobicole, Ontario, Canada
M9W 6Y1
John Vandyk 200,000 5.4%
2377 Prince John Blvd.
Mississauga, Ontario, Canada
L5K 2J2
The Rider Group, Inc. 400,000 10.9%
370 King Street West,
Suite 700
Toronto, Ontario, Canada
M5V 1J9
All officers and directors 1,600,000 43.8%
as a group (6 persons)
The address for each specified person, if not included under each
person's name, is care of VentureDrive, Inc., 2275 Lakeshore Boulevard West,
Suite 304,Toronto, Ontario, Canada M8V 3Y3.
A person is deemed to beneficially own voting securities that can be
acquired by that person with 60 days from the date of this prospectus upon the
29
exercise of options. Each beneficial owner's percentage ownership is determined
by assuming that the options held by that person, but not those held by any
other person, and which are exercisable within 60 days of the date of this
prospectus have been exercised. Unless otherwise noted, we believe that all
persons named in the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them.
Certain Transactions
During the period ending June 30, 2000, VentureDrive, through its
subsidiary, paid the officers and directors of VentureDrive or Springboard
Technology Solutions Inc., a company controlled by such officers and directors,
an aggregate sum of $208,641. This amount was for consulting expenses, promotion
expenses, system support expenses and acquisition of an Internet portal system.
For the three months ending September 30, 2000, the same subsidiary paid the
officers and directors of VentureDrive or Springboard an aggregate sum of
$106,375. This amount was for consulting expenses, promotion expenses, promotion
expenses, system support expenses and acquisition of computer equipment.
Description of Securities
General
Our authorized capital stock consists of 20,000,000 shares of common
stock, $.001 par value per share, and 2,000,000 shares of preferred stock, $.001
par value per share. Upon consummation of this offering, there will be
outstanding 5,653,000 shares of common stock and no shares of preferred stock.
Common stock
Holders of common stock are entitled to receive dividends as may be
declared by our board of directors from funds legally available for these
dividends. Upon liquidation, holders of shares of common stock are entitled to a
pro rata share in any distribution available to holders of common stock. The
holders of common stock have one vote per share on each matter to be voted on by
stockholders, but are not entitled to vote cumulatively. Holders of common stock
have no preemptive rights or conversion rights. All of the outstanding shares of
common stock are, and all of the shares of common stock to be issued in
connection with this offering will be, validly issued, fully paid and
non-assessable.
Prior to this offering, there has been no public market for our shares.
Our common stock is not approved for listing on any trading medium or exchange.
After the offering, we plan to take such action as may permit a broker-dealer to
apply for quotation of the common stock on the Over-the-Counter Bulletin Board.
The OTC BB is a broker driven market. VentureDrive is not able to make an
application for listing itself on that market. Therefore, it is dependant on an
application being made and market quotes being supplied by a broker-dealer. If
no broker-dealer takes action in respect of the common stock, there will be no
trading on that market. Prior to any listing on the OTC BB, we anticipate there
may be trading of the common stock on the "pink sheets."
Even if there is a quote for the common stock, there can be no
assurance that an active market will develop. If an active trading market is not
developed or maintained, the liquidity and trading price of our common stock
could be adversely affected. The per-share price in this offering was determined
by the management of VentureDrive. It may bear no relationship to the price at
which the shares will trade upon completion of this offering. It also is not
indicative of the future market performance of our common stock.
30
Preferred stock
We are authorized to issue preferred stock, which may be issue from
time to time in one or more series upon authorization by the board of directors.
The board of directors, without further approval of the stockholders, is
authorized to fix the dividend rights, voting rights redemption rights and any
other rights, preferences, privileges and restrictions applicable to each series
of preferred stock. The issuance of preferred stock while providing flexibility
in connection with possible acquisitions and other corporate purposes, could,
among other things, adversely affect the voting position of the holders of
common stock and, in some cases, make it more difficult for a third party to
gain control of VentureDrive, discourage bids for our common stock at a premium
or otherwise adversely affect the market price of the common stock.
Anti-takeover provisions in our charter documents
Provisions in our certificate of incorporation and bylaws may have the
effect of delaying or preventing a change of control or change in our management
that a stockholder might consider favorable. These provisions include:
o the ability of the board of directors to issue series of
preferred stock without stockholder approval;
o the inability of stockholders to call a special meeting of the
stockholders;
o written consent action by the stockholders may be taken only
if all the stockholders give their written consent within 60
days of each other; and
o the requirement that stockholders proposals and nominations of
directors by stockholders be made in advance to the board of
directors with not less than 70 days notice prior to the date
of the stockholders meeting.
Because VentureDrive is incorporated in Delaware, we are subject to the
provisions of Section 203 of the Delaware General Corporation Law. These
provisions prohibit some stockholders, including those owning 15% or more of the
outstanding voting stock, from consummating a merger or combination with a
corporation unless:
o 66 2/3 of the shares of voting stock not owned by the
significant stockholder approve the merger or combination, or
o the board of directors approves the merger or combination or
the transaction which resulted in the significant stockholder
owning 15% or more of our voting stock.
Transfer Agent
The transfer agent and registrar for common stock is {Olde Monmouth
Stock Transfer Co. Inc., 77 Memorial Parkway, Suite 101, Atlantic Highlands, New
Jersey, 07716}.
Shares Eligible for Future Sale
Immediately after the completion of this offering, we will have
5,653,750 shares of common stock outstanding. All shares sold in the offering
will be freely tradeable without restriction under the Securities Act of 1933.
There will be 3,653,750shares of restricted securities as defined in Rule 144
under the Securities Act and are currently subject to the restrictions of Rule
144.
31
Under Rule 144, a person, or persons whose shares are aggregated, who
has beneficially owned restricted securities for at least one year, including
the holding period of any prior owner except an affiliate, would be generally
entitled to sell within any three month period a number of shares that does not
exceed the greater of 1% of the number of then outstanding shares of the common
stock or the average weekly trading volume of the common stock in the public
market during the four calendar weeks preceding the sale. Sales under Rule 144
are also subject to manner of sale provisions, notice requirements and the
availability of current public information about the company. Any person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
of the company at any time during the three months preceding a sale, and who has
beneficially owned shares for at least two years including any period of
ownership of preceding nonaffiliated holders, would be entitled to sell shares
under Rule 144(k) without regard to the volume limitations, manner-of-sale
provisions, public information requirements or notice requirements.
Plan of Distribution
The shares in this offering will be sold by the efforts of the officers
of VentureDrive. None of these persons will receive a commission from the sale
of any shares. These persons will not register as broker-dealers pursuant to
Section 15 of the Securities and Exchange Act of 1934 in reliance upon Rule
3a4-1, which sets forth those conditions under which a person associated with an
issuer may participate in the offering of the issuer's securities and not be
deemed to be a broker-dealer. These conditions included the following.
1. None of the selling persons are subject to a statutory
disqualification, as that term is defined in Section 3(a)(39) of the Exchange
Act, at the time of participation.
2. None of such persons are compensated in connection with his
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities.
3. None of the selling persons are, at the time of participation, an
associated person of a broker-dealer.
4. All of the selling persons meet the conditions of paragraph (a)(4)
(ii) of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform or
are intending primarily to perform at the end of the offering, substantial
duties for or on behalf of the issuer otherwise than in connection with
transactions in securities, and (B) are not a broker or dealer, or an associated
person of a broker or dealer, within the preceding twelve months, and (C) do not
participate in selling and offering of securities for any issuer more than once
every twelve months other than in reliance on this rule.
Since the offering is self-underwritten, we intend to advertise and
hold investment meetings in various states where the offering will be registered
and will distribute this prospectus to potential investors at the meetings and
to persons with whom management is acquainted who are interested in VentureDrive
and a possible investment in the offering.
We are offering the shares subject to prior sale and subject to
approval of certain matters by our legal counsel.
This offering will commence on the date of this prospectus and continue
for a period of nine months, unless we sell all the shares prior to that final
date. We may terminate this offering at any time, for any reason; thus not
selling any or all of the shares offered. There is no minimum number of shares
that we are required to sell.
32
Procedure of Subscription
If you decide to subscribe for shares in this offering, you will be
required to execute a subscription agreement and tender it, together with a
check or wired funds to us, for acceptance or rejection. All checks should be
made payable to VentureDrive, Inc. A copy of this agreement will accompany a
prospectus or may be obtained from us by persons who have received a prospectus
and requested the agreement.
We have the right to accept or reject subscriptions in whole or in
part, for any reason or for no reason. All monies from rejected subscriptions
will be returned immediately by us to the subscriber, without interest or
deductions.
Subscriptions for securities will be accepted or rejected promptly.
Once accepted, the funds will be deposited in an account maintained by
VentureDrive and considered property of VentureDrive once cleared by our bank.
Subscription funds will not be deposited in an escrow account. Certificates for
the shares purchased will be issued and distributed by our transfer agent,
within ten business days after a subscription is accepted and "good funds" are
received in our account. Certificates will be sent to the address supplied in
the investor subscription agreement by regular mail.
Legal Matters
Graubard Mollen & Miller, will opine as to the validity of the common
stock offered by this prospectus and legal matters for us.
Experts
Our financial statements have been included in the registration
statement in reliance upon the report of Simon Krowitz Bolin & Associates, P.A.,
independent certified public accountants, appearing in the registration
statement, and upon the authority of this firm as experts in accounting and
auditing.
Where You Can Find Additional Information
We intend to furnish our stockholders with annual reports, which will
include financial statements audited by our independent accountants, and all
other periodic reports as we may determine to furnish or as may be required by
law, including Sections 13(a) and 15(d) of the Exchange Act.
We have filed with the SEC a registration statement on Form SB-2 under
the Securities Act with respect to the securities offered by this prospectus.
This prospectus does not contain all the information set forth in the
registration statement and the accompanying exhibits, as permitted by the rules
and regulations of the SEC. For further information, please see the registration
statement and accompanying exhibits. Statements contained in this prospectus
regarding any contract or other document which has been filed as an exhibit to
the registration statement are qualified in their entirety by reference to these
exhibits for a complete statement of their terms and conditions. The
registration statement and the accompanying exhibits may be inspected without
charge at the offices of the SEC and copies may be obtained from the SEC's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549 or at of its
regional offices located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon
payment of the fees prescribed by the SEC. Electronic reports and other
information filed through the Electronic Data Gathering, Analysis, and Retrieval
System, known as EDGAR, are publicly available on the SEC's website,
http://www.sec.gov.
33
Index to Financial Statements of VentureDrive, Inc.
Report of Independent Certified
Public Accountants.................................................... F-2
Financial Statements:
Consolidated Balance Sheets................................... F-3
Consolidated Statements of Operations
And (Deficit Accumulated During
Development Stages)....................................... F-4
Consolidated Statement of Stockholders' Equity................ F-5
Consolidated Statements of Cash Flows......................... F-6
Notes to Consolidated Financial Statements.................... F-7
F-1
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE, SUITE 800
ROCKVILLE, MARYLAND 20852
Independent Auditors' Report
To the Board of Directors and Stockholders
VentureDrive, Inc.
We have audited the accompanying consolidated balance sheet of VentureDrive,
Inc. and Subsidiary (a development stage company) as of June 30, 2000 and the
related consolidated statements of operations and deficit accumulated during
development stage, consolidated statement of stockholders' equity and cash flows
for the period February 12, 2000 (inception) to June 30, 2000. These
consolidated 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 did not audit the financial statements of
VentureDrive.com, which statements reflect total assets of $160,471 as of June
30, 2000, and total revenues of $1,761 for the period February 12, 2000
(inception) to June 30, 2000. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts included for VentureDrive.com is based solely on the report of the
other auditors.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined 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 and the report of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of VentureDrive and Subsidiary (a
development stage company) as of June 30, 2000 and the results of their
operations and their cash flows for the period ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Simon Krowitz Bolin & Associates, P.A.
December 5, 2000
F - 2
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED BALANCE SHEET
================================================================================
September 30,
June 2000
30, 2000 (Unaudited)
---------- ------------
ASSETS
Current Assets
Cash $ 272,346 $ 129,914
Accounts Receivable 17,522 25,382
---------- ------------
Total Current Assets 289,868 155,296
---------- ------------
Property and Equipment
Office Furniture and Equipment 1,260 1,246
Computer Equipment 0 10,452
Internet Portal System 141,624 140,007
Accumulated Depreciation and Amortization (3,109) (12,338)
---------- ------------
Net Property and Equipment 139,775 139,367
---------- ------------
TOTAL ASSETS $ 429,643 $ 294,663
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 131,241 $ 58,795
---------- ------------
Total Liabilities 131,241 58,975
---------- ------------
Stockholders' Equity
Common Stock - Authorized 20,000,000
Shares $.001 Par Value; 3,528,750 and
3,225,000 Issued and Outstanding 2,177 2,381
Additional Paid in Capital 442,276 544,288
(Deficit) Accumulated During
Development Stage (150,501) (311,964)
Translation Adjustment 4,450 1,163
---------- ------------
Total Stockholders' Equity 298,402 235,868
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 429,643 $ 294,663
========== ===========
F - 3
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS AND
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
================================================================================
February 12,
2000
(inception) to
February 12, July 1, September 30,
2000 2000, to 2000
(inception) September 30, September 30,
to June 30, 2000 2000
2000 (Unaudited) (Unaudited)
----------- ----------- -------------
REVENUE
Sales $ 1,761 $ 1,584 $ 3,345
----------- ----------- -----------
EXPENSES
Consulting 47,772 53,580 101,352
Office 30,034 20,143 50,177
Promotion 24,948 21,946 46,894
Professional Fees 24,976 20,342 45,318
Internet Systems Support 11,142 27,938 39,080
Business Partners' Support 10,244 11,058 21,302
Depreciation and Amortization 3,146 9,327 12,473
----------- ----------- -----------
TOTAL EXPENSES 152,262 164,334 316,596
OTHER INCOME
Interest Income 0 1,287 1,287
----------- ----------- -----------
NET (LOSS) $ (150,501) $ (161,463) $ (311,964)
=========== =========== ===========
EARNING PER COMMON SHARE - BASIC $ (.06) $ (.05) $ (.11)
WEIGHTED AVERAGE SHARES - BASIC 2,319,700 3,485,688 2,758,013
F - 4
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
==================================================================================================================================
Acumulated
Additional Other
Par Paid-In Accumulated Comprehensive
Shares Value Capital (Deficit) Income/(Expense) Total
- -------------------------------- ----------- ------------ ------------ ------------- --------------- ------------
Balance - February 12, 2000
(inception)
Sale of Stock 3,115,000 $ 2,102 $ 405,044 $ $ $ 407,146
Stock Issued for
Professional Fees 10,000 7 3,385 3,392
Stock Issued for Partial
Payment on Internet 100,000 68 33,847 33,915
Comprehensive Loss:
Net Loss (150,501) (150,501)
Other Comprehensive
Income/(Expense):
Translation Adjustment 4,450 4,450
---------- ---------- ---------- ---------- ---------- ----------
Total Comprehensive Loss (146,051)
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2000 3,225,000 2,177 442,276 (150,501) 4,450 298,402
Sale of Stock 280,000 189 94,057 94,246
Stock Issued for
Professional Fees 23,750 15 7,955 7,970
Comprehensive Loss:
Net Loss (161,463) (161,463)
Other Comprehensive
Income/(Expense):
Translation Adjustment (3,287) (3,287)
---------- ---------- ---------- ---------- ---------- ----------
Total Comprehensive Loss (164,750)
---------- ---------- ---------- ---------- ---------- ----------
Balance - September 30, 2000
(Unaudited) 3,528,750 $ 2,381 $ 544,288 $ (311,964) $ 1,163 $ 235,868
---------- ---------- ---------- ---------- ---------- ----------
F - 5
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
====================================================================================================================
February 12, 2000
(Inception) to
February 12, July 1, 2000 to September 30,
2000 (Inception) September 30, 2000 (Unaudited)
to June 30, 2000 2000 (Unaudited)
------------------ ----------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (150,501) $ (161,463) $ (311,964)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 3,146 9,327 12,473
Stock Issuance in Exchange for Professional
Services and Internet Portal System 3,753 7,971 11,724
(Increase) in Accounts Receivable (17,522) (7,860) (25,382)
Increase/(Decrease) in Accounts Payable 131,242 (72,447) 58,794
------------------ ----------------- -------------------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (29,883) (224,472) (254,355)
------------------ ----------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Office Furniture and Equipment (1,260) 0 (1,260)
Purchase of Internet Portal System (141,624) 0 (141,624)
Purchase of Computer Equipment 0 (10,452) (10,452)
------------------ ----------------- -------------------
NET CASH (USED) BY INVESTING
ACTIVITIES (142,884) (10,452) (153,336)
------------------ ----------------- -------------------
CASH FLOWS FROM BY FINANCING ACTIVITIES
Sale of Common Stock 440,700 94,245 534,945
------------------ ----------------- -------------------
EFFECT OF EXCHANGE RATE ON CASH 4,413 (1,753) 2,660
------------------ ----------------- -------------------
NET INCREASE (DECREASE) IN CASH 272,346 (142,432) 129,914
CASH - Beginning 0 272,346 0
------------------ ----------------- -------------------
CASH - Ending $ 272,346 $ 129,914 $ 129,914
================== ================= ===================
F - 6
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and September 30, 2000 (Unaudited)
===============================================================================
NOTE 1 - BUSINESS ACTIVITIES
VentureDrive, Inc. (the Company) was formed in April, 2000 as a
Delaware corporation and is a Company in the development stage. Prior
to April 2000 the founding shareholders of the company formed a
Canadian company in February 2000 which company was combined with the
Delaware company in May 2000. The Company operates a venture
accelerator network through local communities of entrepreneurs,
investors, mentors and service providers that enable entrepreneurs and
investors to leverage an internet based system to accelerate the
development and financing of early stage enterprises. The Company helps
entrepreneurs develop investment proposals that meet investors
criteria. In the process both entrepreneurs and investors obtain access
to each other and improve the chances of obtaining financing,
development funds and increased selection of transactions for
investors.
The above services are provided through the Company's wholly owned
subsidiary, VentureDrive.com, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of VentureDrive, Inc. and its wholly
owned subsidiary, VentureDrive.com, Inc. All significant intercompany
transactions have been eliminated in consolidation.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles required
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results may differ from those estimates.
Foreign Currency Translation - For international operations, local
currency is considered the functional currency. We translated assets
and liabilities to their U.S. dollar equivalents at rates in effect at
the combined balance sheet date and contributed capital at their
historical rate. Translation adjustments are recorded in Stockholders'
Equity. We translate combined statement of operations and accumulated
deficit at average rates for the period.
Cash Equivalents - The Company considers securities with maturities of
three months or less, when purchased, to be cash equivalents.
Accounts Receivable - The Company considers accounts receivable to be
fully collectible; accordingly, no allowance for doubtful accounts is
required. If amounts become uncollectible, they will be charged to
operations when that determination is made.
F - 7
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and September 30, 2000 (Unaudited)
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
Property and Equipment - Property and equipment is stated at cost.
Depreciation and amortization is calculated using the straight-line
method over the estimated useful lives of the respective assets as
follows:
Office Furniture and Equipment 4 Years
Computer Equipment 3 Years
Internet Portal System 48 Months
NOTE 3 - POOLING-OF-INTEREST MERGER
On May 1, 2000, VentureDrive, Inc. (the "Company") merged with
VentureDrive.com, Inc. Each share of VentureDrive.com common stock was
converted into one share of VentureDrive common stock. VentureDrive
issued 2,110,000 shares in exchange for all of the outstanding shares
of VentureDrive.com. The merger was accounted for as pooling of
interest under Accounting Principles Board Opinion No. 16 and
accordingly, VentureDrive's consolidated financial statements have been
restated for all periods prior to the merger to include the results of
operations; financial position and cash flows of VentureDrive.com as
though it had always been a part of VentureDrive. Intercompany
transactions from February 12, 2000 (inception) to September 30, 2000
have been eliminated.
The results of operations for the separate companies and the combined
amounts presented in the consolidated financial statements are as
follows:
February 12, 2000
(inception) to
April 30, 2000
---------------
REVENUES
VentureDrive $ 0
VentureDrive.com 0
------------
COMBINED $ 0
------------
NET (LOSS)
VentureDrive $ 0
VentureDrive.com (61,195)
------------
COMBINED $ (61,195)
------------
F - 8
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and September 30, 2000 (Unaudited)
================================================================================
NOTE 4 - CONCENTRATION OF CREDIT RISK
The Company maintains cash balances at one Canadian chartered bank in
Toronto, Ontario. The Canada Deposit Insurance Corporation (CDIC)
insures checking accounts and deposits held in savings accounts or in
term deposits with a maturity date not exceeding five years, payable in
Canadian currency to a maximum of $60,000 of funds at member banks.
U.S. currency accounts kept in Canada are not insured by CDIC. Cash
exceeded the insured amount by:
September 30,
2000 June 30,
(Unaudited) 2000
---------- ---------
VentureDrive, Inc. - Canadian Dollar Accounts $123,341 $347,430
VentureDrive.com, Inc. - U.S. Dollar Account 1,390 1,549
NOTE 5 - EARNINGS PER COMMON SHARE
Basic earnings per common share was calculated by dividing net loss by
the weighted average number of common shares outstanding during the
period.
NOTE 6 - COMPREHENSIVE INCOME
VentureDrive has adopted SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130 requires new standards for reporting and displaying
foreign translation adjustments that VentureDrive has displayed in its
Combined Statements of Changes in Shareowners' Equity. However, it
does not affect net income or total shareowners' equity.
Translation Adjustment
Balance February 12, 2000 (Inception) $ 0
Period Change 4,450
-------
Balance June 30, 2000 4,450
Period Change (3,287)
--------
Balance September 30, 2000 $1,163
========
NOTE 7 - INCOME TAXES
No provision for income taxes is required, as the Company has incurred
losses during its development stage. These losses are available to
offset taxable years in the future. The losses expire from 2007 until
2020.
F - 9
VENTUREDRIVE, INC. AND SUBSIDIARY
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and September 30, 2000 (Unaudited)
================================================================================
NOTE 8 - RELATED PARTY TRANSACTIONS
During the period, the subsidiary entered into the following
transactions with some of the shareholders of VentureDrive, Inc. who
are also officers and directors of the subsidiary, or with another
company controlled by some of them:
September 30,
2000
June 30, 2000 (Unaudited)
------------- ------------
Consulting Expense $ 47,772 $ 53,580
Promotion Expense 11,056 14,421
System Support Expense 8,189 27,922
Acquisition of Internet Portal System 141,624 0
Acquisition of Computer Equipment 0 10,452
F - 10
[back cover page]
You should rely only on the information contained in this prospectus.
This prospectus is not an offer to sell nor is it seeking an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted. The
information contained in this prospectus is correct only as of the date of this
prospectus, regardless of the time of the delivery of this prospectus or any
sale of these securities.
VentureDrive, Inc.
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the Delaware permit the indemnification of directors,
employees, officers and agents of Delaware corporations. Our articles of
incorporation and bylaws provide that we shall indemnify to the fullest extent
permitted by Delaware law any person whom we indemnify under that law.
The provisions of Delaware law that authorize indemnification do not
eliminate the duty of care of a director. In appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available. In addition, each director will continue to be subject to
liability for (a) violations of criminal laws, unless the director has
reasonable cause to believe that his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution and (d) willful misconduct or conscious disregard for our best
interests in a proceeding by or in our right to procure a judgment in its favor
or in a proceeding by or in the right of a stockholder. The statute does not
affect a director's responsibilities under any other law, such as the federal
securities laws.
The effect of the foregoing is to require us to indemnify our officers
and directors for any claim arising against such persons in their official
capacities if such person acted in good faith and in a manner that he or she
reasonably believed to be in or not contrary to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
To the extent that we indemnify our management for liabilities arising
under securities laws, we have been informed by the SEC that this
indemnification is against public policy and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by us in connection with the
distribution of the securities being registered are as follows:
SEC Registration and Filing Fee............................. $ 500.00
Legal Fees and Expenses..................................... 30,000.00
Accounting Fees and Expenses................................ 20,000.00
Financial Printing and Engraving............................ 5,000.00
Blue Sky Fees and Expenses.................................. 10,000.00
Miscellaneous............................................... 9,500.00
TOTAL.......................................... 75,000.00
II-1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
1. On February 11, 2000 and March 9, 2000 the registrant issued to
five persons an aggregate of 2,000,000 shares of common stock as founder shares.
The exemption under United States federal securities laws for the issuance was
Section 4(2) of the Securities Act of 1933. The total consideration paid was
$67,000.
2. On April 3, 2000, the registrant issued to two persons as a
service providers 100,000 shares of common stock for an assigned value of
$33,847. The exemption for the issuance was section 4(2) of the Securities Act
of 1933.
3. On April 3, 2000, the registrant issued to a landlord 10,000
shares common stock as partial payment for rent due in the amount of $3,385. The
exemption for the issuance was Section 4(2) of the Securities Act of 1933.
4. During the period June - August 2000, the registrant conducted a
private placement. In connection with the private placement, the registrant sold
1,520,000 shares of common stock for gross proceeds of $510,000. There were
fifteen purchasers, none of whom is a resident of the United States. Each
purchaser was determined to be either an accredited investor or sophisticated
investor under United States securities law and an exempted purchaser under the
laws of the jurisdiction in which the purchaser resides or is an entity. The
proceeds of the offering have been used for working capital. In connection with
this offering, the registrant issued 23,750 shares of common stock to an
individual as a commission. The value assigned to these shares was $7,955. The
recipient of the shares was determined to be a sophisticated investor. The
exemption for the issuance of these shares by the registrant was Section 4(2) of
the Securities Act of 1933.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description of Document
----------- ------------------------
3.1 Certificate of Incorporation of VentureDrive, Inc.
3.2 Bylaws of VentureDrive, Inc.
4.1 Specimen Common Stock Certificate*
5.1 Opinion of Graubard Mollen & Miller*
10.1 Professional Service Agreement between Springboard
Technologies Solutions Inc. and the Registrant
10.2 Development and License Agreement between Springboard
Technology Solutions Inc. and Registrant
10.3 Consulting Agreement between Registrant and Gordon Walker
10.4 Consulting Agreement between Registrant and Peter J.
Hamilton
10.5 Consulting Agreement between Registrant and Brian J.
MacDonald
23.1 Consent of Simon Krowitz Bolin & Associates, P.A.
23.2 Consent of Graubard Mollen & Miller (Contained in
Exhibit 5.1)*
II-2
24.1 Powers of Attorney (included on signature page)
- ----------------------
*To be filed by amendment
ITEM 28. UNDERTAKINGS
The undersigned issuer undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
(1) include any prospectus required by section 10(a)(3) of the
Securities Act;
(2) reflect in the prospectus any facts or events arising
after the effective date of the registration statement;
(3) include any additional or changed material information
regarding the plan of distribution;
(4) for determining liability under the Securities Act, we
will treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering; and
(5) file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) As indemnification for liability arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant under the above provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by any director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(c) We undertake:
(1) For the purpose of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by us under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered in the prospectus and the offering of such securities at that time shall
be deemed to be the initial bona fide offering of the securities.
II-3
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in Toronto, Ontario on February 9, 2001.
VENTUREDRIVE, INC.
By: /s/ Peter J. Hamilton
Peter J. Hamilton
President and Chief Executive Officer
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brian J. MacDonald and Peter J. Hamilton,
and each of them, with full power to act without the other, such person's true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement, any and all amendments thereto
(including post-effective amendments), any subsequent Registration Statements
pursuant to Rule 462 of the Securities Act of 1933, as amended, and any
amendments thereto and to file the same, with exhibits and schedules thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
necessary or desirable to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Form
SB-2 registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
- ----------------- Chairman of the Board ___________, 2001
Gordon W. Walker
/s/ Peter J. Hamilton President, Chief February 9, 2001
- --------------------- Executive Officer
Peter J. Hamilton and Director
/s/ Brian J. MacDonald Chief Financial Officer, February 9, 2001
- ---------------------- Executive Vice President,
Brian J. MacDonald Secretary, Treasurer and
Director (Principal Financial
Officer and Principal
Accounting Officer)
/s/ Richard Cuthbert Director February 9, 2001
- --------------------
Richard Cuthbert
II-4
Exhibit Index
Exhibit No. Description of Document
----------- ------------------------
3.1 Certificate of Incorporation of VentureDrive, Inc.
3.2 Bylaws of VentureDrive, Inc.
4.1 Specimen Common Stock Certificate*
5.1 Opinion of Graubard Mollen & Miller*
10.1 Professional Service Agreement between Springboard
Technologies Solutions Inc. and the Registrant
10.2 Development and License Agreement between Springboard
Technology Solutions Inc. and Registrant
10.3 Consulting Agreement between Registrant and Gordon Walker
10.4 Consulting Agreement between Registrant and Peter J.
Hamilton
10.5 Consulting Agreement between Registrant and Brian J.
MacDonald
23.1 Consent of Simon Krowitz Bolin & Associates, P.A.
23.2 Consent of Graubard Mollen & Miller (Contained in
Exhibit 5.1)*
24.1 Powers of Attorney (included on signature page)
- ----------------------
*To be filed by amendment