AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 25, 2004
Registration No. 333-111419
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. 1)
APTUS CORP.
(Exact name of small business issuer in its charter)
DELAWARE 7372 72-1528259
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 691-1531
(Address and telephone number of principal executive offices)
1127 BROADWAY PLAZA, SUITE 203,
TACOMA, WA 98402 (Address of principal place of
business or intended principal place of business)
JOHN P. GORST, 1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 677-6649
- --------------------------------------------------------------------------------
(Name, Address and telephone number of agent for service)
COPIES TO:
MILES GARNETT, ESQ., 66 WAYNE AVENUE, ATLANTIC BEACH, NY 11509 (516) 371-4598
Approximate date of proposed sale to the public: AS SOON AS PRACTICABLE AFTER
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box: [ X ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. ________________
CALCULATION OF REGISTRATION FEE
Common Stock 10,000,000 $0.50 $5,000,000 $460
Title of each share Proposed maximum Proposed offering Maximum aggregate Amount of
class of securities to amount to be price per unit offering registration fee
be registered registered
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (ss.230.457
of this chapter) relied upon, if the basis of the calculation is not otherwise
evident from the information presented in the table. If the filing fee is
calculated pursuant to Rule 457(o) under the Securities Act, only the title of
the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
need to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
2
PROSPECTUS
APTUS CORP.
10,000,000 SHARES OF
COMMON STOCK
This is our initial public offering of common stock. The initial public offering
price is $0.50 per share. No public market currently exists for our common
stock. We are selling 10,000,000 shares of common stock, which have $0.001 par
value per share. This represents 45.5% of the total outstanding shares based on
the maximum amount of the offering. We are a software Application Service
Provider (ASP). Prior to this offering there has been no public market for the
shares.
We will sell the shares ourselves through our officers and directors. We do not
plan to use underwriters or pay any commissions. We will be selling our shares
in a direct participation offering and no one has agreed to buy any of our
shares. The offering will terminate no later than November 30, 2004, and unless
a minimum of 1,000,000 shares are sold by that time the proceeds will be
returned with interest. We will escrow the proceeds with National City Bank, NA
until the minimum is reached.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 9.
TOTAL TOTAL
PER SHARE MINIMUM MAXIMUM
----------------------- -------------------- --------------
Public offering price (1) $0.50 $500,000 $5,000,000
Underwriting discounts and commissions None None None
Proceeds, before expenses, to us (2) $0.50 $500,000 $5,000,000
(1) We plan to offer and sale the shares directly to investors and have not
retained any underwriters, brokers or placement agents in connection with
this offering. However, we reserve the right to use brokers or placement
agents and could pay commissions equal to as much as 10 percent of the
gross proceeds and 3% non-accountable expenses.
(2) Before deduction of offering expenses estimated to be $36,000.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE DATE OF THIS PROSPECTUS IS , 2004
3
TABLE OF CONTENTS
<c>
Summary................................................................................5
Risk Factors...........................................................................9
Use of Proceeds.......................................................................12
Dilution..............................................................................13
Dividend Policy.......................................................................14
Capitalization........................................................................14
Our Business..........................................................................14
Management Discussion of Analysis of Condition and Results of Operations..............22
Principal Shareholders................................................................25
Management............................................................................26
Certain Relationships and Related Transactions........................................29
Description of Securities.............................................................30
Shares Eligible for Future Sale.......................................................31
Available Information.................................................................32
Special Note Regarding Forward-Looking Statements.....................................32
Stock Transfer Agent..................................................................33
Escrow Agent..........................................................................33
Experts...............................................................................33
Legal matters.........................................................................33
Index to Financial Statements.........................................................F-1
</table>
4
SUMMARY
This summary highlights selected information from elsewhere in this prospectus.
It is not complete and may not contain all of the information that is important
to you. To understand this offering fully, you should read the entire prospectus
carefully, including the risk factors and financial statements and the related
notes to those statements included in this prospectus.
OUR COMPANY
Aptus Corp. is an Application Service Provider ("ASP"). An ASP offers hosted
proprietary software along with other hosted software business solutions
distributed over broadband services and the ASP customer uses a web browser to
run software products, any where at anytime, without the need to download or
install the software application. Our goal is to become a reliable and secure
on-demand computing platform. We are engaged and have begun implementation of a
targeted and stragically defined plan to purchase selected assets from within
the highly fragmented application service provider and software development
industries. As a result of our implementation efforts, we recently acquired two
business software applications.
o On January 23, 2004, we acquired certain assets of Appgen Technologies,
Inc. (Appgen) and Mark Andre, which includes the Appgen Custom Suite and
MyBooks Professional, both are software applications.
o On February 1, 2004, we acquired certain assets of QwikQuote, Inc, which
includes QwikQuote, a sales order quoting application.
We will provide hosting for either leased applications or customer owned
software on leased servers located in leased data centers, rent computing
services to our customers for a monthly fee, and perform remote management and
maintenance of our customers' servers from our network operations center.
We focus on the small office/home office ("SOHO") and small/medium enterprise
("SME") markets. See "Risk Factors." We are in the development stage and have no
operating history. No representation is made or implied that we will be able to
carry on our activities profitably. Our subsistence is dependent initially upon
sufficient proceeds being realized by us from this offering, of which there is
no assurance. Proceeds of this offering may be insufficient to enable us to
conduct potentially profitable operations or otherwise to engage in any business
endeavors. The likelihood of our success must be considered in light of the
expenses, difficulties and delays frequently encountered in connection with the
formation of any new business. Further, no assurance can be given that we will
have the ability to acquire assets, businesses or properties with any value to
us.
We were incorporated on April 4, 2002 under the laws of the State of Delaware.
Our offices are located at 1127 Broadway Plaza, Suite 203, Tacoma, WA 98402, and
the telephone number is (253) 691-1531.
THE OFFERING
Unless otherwise indicated, the
information in this prospectus,
irrespective of the date referenced,
assumes that there is no exercise of
outstanding options or warrants to
purchase additional shares. We intend to
use the net proceeds of this offering to
market the services we currently offer
and initiate new business development
and relationships. Additionally,
management will use a small portion of
these funds to settle outstanding
liabilities. We shall seek to employ
qualified, but as yet unidentified,
individuals to be employeed in such
business. No assurance can be given that
the net proceeds of the maximum number
of shares offered in this offering or
any lesser net amount will be sufficient
to accomplish our goals. In the event
that substantially less than the net
proceeds from the maximum offering are
raised, our plans may be materially and
adversely affected in that we may find
it even more difficult, if not
impossible, to realize our goals.
Investors will be
5
providing their funds to management who
will have complete discretion as to
their expenditure. See "Risk Factors."
The minimum required amount of shares to
be sold is 1,000,000 shares and the
maximum amount is 10,000,000 shares.
Prior to this offering, there has been
no public market for the shares and
there can be no assurance that a regular
trading market will develop for the
shares after this offering or that, if
developed, any such market will be
sustained. We anticipate that trading of
the shares will be conducted on the
Over-The-Counter Electronic Bulletin
Board (the "Bulletin Board") referred to
as OTCBB, which is maintained by the
NASD. There is no guarantee that we will
be able to trade on the Bulletin Board.
Any market for the shares, which may
result, will likely be less well
developed than if the shares were traded
on NASDAQ or on an exchange. See "Risk
Factors."
If proceeds from this offering are
insufficient, we may be required to seek
additional capital. No assurance can be
given that we will be able to obtain
such additional capital, or even if
available, that such additional capital
will be available on terms acceptable to
us.
COMMON STOCK OFFERED
FOR SALE HEREBY Up to a maximum of 10,000,000 shares by
us.
OFFERING PRICE $0.50 per share offered to the public.
The initial public offering price of the
shares has been arbitrarily determined
by us and does not bear any relationship
to such established valuation criteria
as assets, book value or prospective
earnings. We are a Delaware corporation.
TERMS OF THE OFFERING The offering will remain open until
November 30, 2004, unless we decide to
terminate the selling efforts prior to
this date. The minimum investment by
each investor is 1,000 shares.
AUTHORIZED AND OUTSTANDING
COMMON PROCEEDS CLASS A PREFERRED PREFERRED
STOCK FROM OFFERING COMMON CLASS A CLASS B
- ----------------- ----------------- --------------- -------------- ------------- ----------------- ----------------
SHARES OF STOCK:
Authorized 250,000,000 5,000,000 10,000,000 10,000,000
Outstanding
prior to
Offering 12,000,000 1,200,000 -0- -0-
After minimum
of Offering is
Sold 13,000,000 $500,000 1,200,000 -0- -0-
After maximum
Offering is sold 22,000,000 $5,000,000 1,200,000 -0- -0-
PLAN OF DISTRIBUTION This is a direct participation, and with
no commitment by anyone to purchase any
shares. None of the officers and
directors (a) is subject to a statutory
disqualification (as defined in Sec.
3(a)(35), (b) is paid commissions or
other remuneration for securities
transactions, or (c) is
6
an associated person of a broker or
dealer. The shares will be offered and
sold by our principal executive officers
and directors. We will file a post
effective registration statement of
which this Prospectus is a part to
identify a selected broker-dealer at
such time as such broker-dealer intends
to sell shares offered in this offering
and prior to such sale. All proceeds
from subscriptions to purchase shares
will be transmitted by us and any
participating dealer to the escrow
account by noon of the next business day
after receipt. The shares are offered by
us with 1,000,000 shares required to be
sold before any funds can be released
from escrow and with a 10,000,000 share
maximum, basis. In the event that the
minimum of 1,000,000 shares is not sold
by November 30, 2004, all proceeds
raised will be returned promptly to
subscribers in full with interest
thereon. Subscribers will not be
entitled to a return of funds from the
escrow account during the offering
period.
Our officers, directors and major
shareholders are the only persons who
have been instrumental in arranging our
capitalization to date. Neither of our
officers or directors are acting as
nominee for any persons or is otherwise
under the control of any person or
persons. There are no agreements,
agreements in principle, or
understandings with regard to
compensation to be paid by us to any of
our officers or directors.
It is anticipated we may make sales of
shares to officers and directors. Such
purchases shall be made for investment
purposes only and in a manner consistent
with a public offering of our shares.
Such purchases may be used to reach the
amount required for closing in the event
such amount is not reached as a result
of purchases by the general public. Thus
the officers and directors could
purchase up to 100% of the amount
required for closing if no sales are
made to new shareholders. Such purchases
will increase the equity interests
already owned by the officers and
directors.
Investors should carefully review the
financial statements, which are an
integral part of this prospectus.
Dealers participating in this offering
are required to deliver a copy of the
final prospectus to any person who is
expected to receive a confirmation of
the sale at least 48 hours prior to the
mailing of the confirmation.
USE OF PROCEEDS Assuming that the entire offering will
be sold, then up to the last $36,000
that we raise will be used to pay the
expenses of the offering after the
escrow is released. This is the only
amount raised in the offering that will
be applied to outstanding liabilities.
We intend to apply substantially all of
the net proceeds of this offering (after
the minimum amount to be raised is
released from escrow) to market the
services we currently offer and initiate
new business development and
relationships as an ASP focused on the
small office/home office and
small/medium enterprise.
ESCROWED FUNDS NOT TO BE USED FOR
ACCRUED SALARIES OR PRIOR REIMBURSABLE
EXPENSES
No funds (including any interest earned
thereon) will be disbursed from the
escrow account for the payment of
accrued salaries or reimbursement of
expenses incurred on our behalf prior to
the effective date of this
7
offering by our officers and directors.
Other than the foregoing, there is a
limit of $36,000 on the total amount of
such reimburseable expenses, and there
will be no review of the reasonableness
of such expenses by anyone other than
our board of directors, all of whom are
officers. In no event will the escrowed
funds (including any interest earned
thereon) be used for any purpose other
than implementation of our business
plan. See "Risk Factors."
RISK FACTORS The shares offered hereby involve a high
degree of risk and immediate substantial
dilution and should not be purchased by
investors who cannot afford the loss of
their entire investment. Such risks
include, among others: our short term
existence and limited resources; the
discretionary use of proceeds; and
intense competition in effecting our
business strategy. See "Risk Factors."
8
RISK FACTORS
The securities offered hereby are highly speculative and involve substantial
risks. You should carefully consider the risks and uncertainties described below
and the other information in this prospectus before deciding whether to invest
in shares of our common stock. Any of the following risks could cause the value
of our common stock to decline.
OUR FINANCIAL STATUS CREATES A DOUBT WHETHER WE WILL CONTINUE AS A GOING
CONCERN FOR MORE THAN 12 MONTHS FROM THE DATE OF THIS PROSPECTUS, AND, IF WE
DO NOT CONTINUE AS A GOING CONCERN, INVESTORS MAY LOSE THEIR ENTIRE
INVESTMENT.
We have nominal assets and limited operations with which to create operating
capital. We seek to raise additional capital to promote and advertise our
services in an offering of our common stock on Form SB-2. If all the shares
offered are sold, we will receive up to $4,964,000 net proceeds to pay for our
estimated operating expenses. There can be no assurance that such offering will
be successful. In its audit report dated December 17, 2003, our auditors
indicated that there was substantial doubt as to our ability to continue as a
going concern due to on going losses since inception to November 30, 2003, and,
that our ability to continue as a going concern is dependant upon our obtaining
additional financing for our operations or reaching profitability. There can be
no assurance that we will be able to achieve either of these.
OUR CHIEF EXECUTIVE OFFICER WILL CONDUCT OUR ACTIVITIES ON A PART TIME BASIS.
AS A RESULT OF HIS PARTICIPATION IN BUSINESS ACTIVITIES OF OTHER COMPANIES,
HIS LIMITED ATTENTION TO APTUS MAY DELAY THE DEVELOPMENT OF OUR BUSINESS.
Our chief executive officer, John P. Gorst, is the president and chairman of the
board of Insynq, Inc., a public company.
WE HAVE NO CUSTOMERS AND GENERATE NO REVENUES AND IF WE FAIL TO SUCCESSFULLY
IMPLEMENT OUR BUSINESS PLAN BY DEVELOPING A SOLID CUSTOMER BASE AND GENERATING
REVENUES WE WILL GO OUT OF BUSINESS.
Our success is dependent on successful implementation of our business plan. This
involves developing and expanding our operations on a profitable basis and
developing marketing and promotional channels to promote our services on a
regular basis. We have not entered into any agreements to utilize our services
with any company. We do not believe that we will generate significant revenues
in the immediate future. We will not generate any meaningful revenues unless we
obtain contracts with a significant number of customers. If we fail to obtain
contracts with a significant number of customers to generate meaningful
revenues, we may not achieve profitability and may go out of business.
WE FACE INTENSE COMPETITION FROM OTHER ASP PROVIDERS WITH SIMILAR APPLICATION
SERVICES, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND PROFITABILITY.
A large number of ASP's offer similar services that we plan to offer. Most of
these companies have greater resources in terms of people, money and experience.
If we cannot successfully compete with these firms, the future of our business
and results of operations will be adversely affected in terms of little or no
revenue and profitability.
OUR EXECUTIVE MANAGEMENT TEAM IS CRITICAL TO THE EXECUTION OF OUR BUSINESS
PLAN AND THE LOSS OF EITHER ONES' SERVICE COULD SEVERELY IMPACT NEGATIVELY ON
OUR BUSINESS.
Our success depends significantly on the continued services of our management
personnel, John P. Gorst, our chairman of the board, president and chief
executive officer, M. Carroll Benton secretary and treasurer, chief
administrative officer and interim chief financial officer and Joanie C. Mann
executive vice president. Losing any one of them could seriously harm our
business. Competition for executives is intense. If we had to replace either
one, we would not be able to replace the significant amount of knowledge that
they have about our operations. We do not maintain "key man" insurance policies
on anyone. We do not have employment contracts with John P. Gorst, M. Carroll
Benton and Joanie C. Mann.
9
OTHER BUSINESS VENTURES OF OUR EXECUTIVE OFFICERS MAY PRESENT A POTENTIAL
CONFLICT OF INTEREST, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND
PROFITABILITY.
John P. Gorst and M. Carroll Benton are two of our three officers and sole
directors and have control in directing our activities. They are involved in
other business activities, including Insynq Inc., and may, in the future, become
involved in additional business opportunities. If a specific business
opportunity becomes available, they may face a conflict of interest. Either one
may take advantage of this business opportunity through other companies with
whom they work. In such event, we may loose potential revenue, which will
negatively affect the value of shares of our common stock.
Although both current business activities that our officers are involved with
are ASP's, we have different service offerings. We primarily will be selling our
propriety software applications, either for local installation or as a hosted
technology alternative. In addition, we are negotiating the sole and exclusive
use of a propriety brand of Insynq, Inc. called e-Accounting. This affiliation
should benefit both companies in that the licensing agreements will be at no
less favorable terms than if negotiated between an unrelated party.
In order to maintain independence, it is anticipated, pending the growth of our
business, certain key management will be become full-time in our business
activities.
WE ARE CURRENTLY NEGOTIATING LEASES FOR DATA CENTER FACILITIES AND THE
REQUIRED SERVER INFRASTRUCTURE. IF WE ARE UNABLE TO ACQUIRE LEASES, WE WILL BE
UNABLE TO EXECUTE ON OUR BUSINESS PLAN.
We currently do not own or lease server infrastructure or data center facilities
and we are negotiating with a third party for these requirements. We cannot be
assured that we can negotiate favorable leases for us, or if at all. If we are
unable to accomplish this, we will be unable to execute on our business plan.
WE ARE CURRENTLY NEGOTIATING WITH INSYNQ, INC. FOR A SOLE AND EXCLUSIVE AND
EXCLUSIVE NON-COMPETE LICENSING AGREEMENT FOR THE BRAND E-ACCOUNTING. IF WE
ARE UNSUCCESSFUL IN NEGOTIATING A LEASE ON FAVORABLE TERMS, OR IFF AT ALL, WE
WILL BE UNABLE TO EXECUTE ON OUR BUSINESS PLAN.
We are negotiating a sole and exclusive, non-compete, licensing agreement with
Insynq, Inc., for the e-Accounting business model and brand. Insynq, Inc. has
developed the e-Accounting brand of services and bundled third party products
that directly address the needs of one our target markets, that of the
accounting and bookkeeping professionals. If we are unsuccessful in negotiating
a lease on favorable terms, or it at all, we will be unable to execute on our
business plan.
IF WE ARE UNABLE TO OBTAIN KEY SOFTWARE APPLICATIONS FROM CERTAIN VENDORS, WE
WILL BE UNABLE TO DELIVER OUR SERVICES, WHICH MAY RESULT IN THE TERMINATION OF
OUR OPERATIONS.
We rely will on third-party suppliers, including Microsoft and Citrix to provide
us with key software applications for our infrastructure and our hosted
application rental model. Certain components or applications are only available
from limited sources. If we are unable to obtain these products or other
services, including connectivity services, in a timely manner at an acceptable
cost or at all, it may substantially inhibit our ability to deliver our
services, which may result in the termination of our operations.
IF WE FAIL TO PROTECT OUR PROPRIETARY PRODUCTS FROM INFRINGEMENT THROUGH
PATENTS, COPYRIGHTS, TRADEMARKS AND PROPRIETARY AND/OR NON-PROPRIETARY
TECHNOLOGY, AND IF WE INADVERTENTLY INFRINGE UPON THE PATENTS, COPYRIGHTS,
TRADEMARKS AND PROPRIETARY RIGHTS OF OTHERS, WE COULD AFFECT OUR ABILITY TO
COMPETE EFFECTIVELY AND OUR RESULTS OF OPERATIONS.
Our services are highly dependent upon proprietary technology, such as the
Appgen Custom Suite and the QwikQuote software. Currently, we rely on contracts,
confidentiality agreements, and trade-secrecy laws to protect our proprietary
rights in our technology. We will be pursuing several trademark, copyright, and
patent registrations for our various products and their names. The protective
steps we have taken may not be adequate to deter
10
misappropriation of our proprietary information. In addition, some end-user
license provisions protecting against unauthorized use, copying, transfer and
disclosure of a licensed program may be unenforceable under the laws of certain
jurisdictions and foreign countries. In addition, the laws of some foreign
countries do not protect proprietary rights to the same extent as the laws of
the United States. Failure to adequately protect our intellectual property could
harm our brand name, devalue our proprietary content, and affect our ability to
compete effectively. Furthermore, defending our intellectual property rights
could result in the expenditure of significant financial and managerial
resources, which could materially adversely affect our business, results of
operations and financial condition. Also, it is possible that our competitors or
others will adopt product or service brands similar to ours, possibly leading to
customer confusion.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.
After this offering there will be outstanding 22,000,000 shares of our common
stock. Of these shares, the 10,000,000 shares sold in this offering will be
freely tradable except for any shares purchased by our "affiliates" as defined
in Rule 144 under the Securities Act. The remaining 12,000,000 shares will be
"restricted securities," subject to the volume limitations and other conditions
of Rule 144 under the Securities Act. These restricted securities will first
become eligible for resale under Rule 144 on November 7, 2004.
We cannot predict if future sales of our common stock, or the availability of
our common stock for sale, will materially and adversely affect the market price
for our common stock or our ability to raise capital by offering equity
securities. Our stock price may decline if the resale of shares under Rule 144
in addition to the resale of registered shares at certain time in the future
exceeds the market demand for our stock.
Market conditions and market makers may cause your investment in our common
stock and may be very illiquid. Unless a trading market for our shares is
developed, you will not be able to resell your stock, and, market makers may
influence the stock price.
WE PLAN TO HAVE OUR SHARES TRADE ON THE NASD OVER-THE-COUNTER BULLETIN BOARD.
THERE IS NO TRADING MARKET FOR OUR SHARES, AND WE CANNOT ASSURE YOU THAT ANY
SUCH MARKET WILL EVER DEVELOP OR BE MAINTAINED. THE ABSENCE OF AN ACTIVE
TRADING MARKET WOULD REDUCE THE LIQUIDITY OF AN INVESTMENT IN OUR SHARES.
To the extent that brokerage firms act as market makers for our shares on the
NASD over-the-counter bulletin board, they may be a dominating influence in any
market that might develop, and the degree of participation by such firms may
significantly affect the price and liquidity of our shares. These firms may
discontinue their market making activities at any time. The prices at which our
shares are traded in the market will be determined by these firms and by the
purchasers and sellers of our shares, but such prices may not necessarily relate
to our assets, book value, results of operations or other established and
quantifiable criteria of value.
OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS CONTROL US. THIS MIGHT LEAD
THEM TO MAKE DECISIONS THAT DO NOT BENEFIT THE SHAREHOLDER INTERESTS.
John P. Gorst, M. Carroll Benton, Mark Levin, Clifford Mastricola and Clayton
Chase will beneficially own approximately 55% of the outstanding stock upon
completion of this offering. As a result, these persons, acting together, will
have the ability to control substantially all matters submitted to our
stockholders for approval (including the election and removal of directors and
any merger, consolidation or sale of all or substantially all of our assets) and
to control our management and affairs. Accordingly, this concentration of
ownership may have the effect of delaying, deferring or preventing a change in
control of us, impeding a merger, consolidation, takeover or other business
combination involving us or discouraging a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could materially and adversely affect the market price of the common stock.
WE HAVE A NEED FOR SUBSEQUENT FUNDING. IF WE DO NOT GET SUCH FUNDING WE MIGHT
NOT BE ABLE TO CONTINUE OPERATIONS.
We may need further funding to proceed with our proposed plan of business. We
believe that we will be able to fund our planned operations from the proceeds of
this offering for twelve months from the date of this prospectus, even if
11
we only raised a nominal amount of additional capital. We do not have a
commitment with respect to any additional capital. We have no loan commitments
from, or lines of credit with, banks or other financial institutions. Therefore,
the continuation of our business will depend on our ability to raise additional
funds through equity and/or debt financing. We can not assure you that we will
be able to obtain additional funding when it is needed, or that such funding, if
available, will be obtainable on terms favorable to and affordable by us. Our
inability to obtain additional funding, as required, would impair severely our
business operations.
This prospectus contains certain forward-looking statements based on our current
expectations, assumptions, estimates and projections about our industry and us.
These forward-looking statements involve risks and uncertainties. Our actual
results could differ materially from those anticipated in such forward-looking
statements as a result of certain factors, as more fully described in this
section and elsewhere in this prospectus. We undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future. Such factors include
those set forth in this section and elsewhere in this prospectus.
USE OF PROCEEDS
Because market conditions cannot be accurately predicted, management is unable
to indicate precisely categories for the use of proceeds from this offering. In
the table below, we have detailed the minimum amount of capital required for us
to operate our business as currently planned. The table also shows how we will
use the proceeds of the offering.
AMOUNT OF NET PROCEEDS
AT 10% AT 25% AT 50% AT 75% AT 100%
<s> <c> <c> <c> <c> <c>
Proceeds from the Offering $500,000 $1,250,000 $2,500,000 $3,750,000 $5,000,000
Less: Offering Expenses 36,000 36,000 36,000 36,000 36,000
------------ ------------- --------------- --------------- --------------
Net Proceeds from Offering $464,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
============ ============= =============== =============== ==============
Use of Net Proceeds:
General Working Capital
Acquisitions $140,000 $520,000 $1,414,000 $2,241,000 $3,000,000
Infrastructure 25,000 62,500 125,000 187,500 250,000
Research and Development 25,000 62,500 125,000 187,500 250,000
Sales and Marketing 65,000 186,500 350,000 562,500 750,000
Operations 209,000 382,500 450,000 535,500 714,000
------------ ------------- --------------- --------------- --------------
Total Use of Net Proceeds $464,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
============ ============= =============== =============== ==============
</table>
We intend to utilize the proceeds from this offering in the priority set forth
in this column whether or not such gross proceeds or a lesser amount are raised.
No assurances are given that we will sell any shares.
The working capital, monies to be used, includes but not limited to, due
diligence, travel and related out-of-pocket expenses, and consulting fees, if
any. Working capital also will be used to pay other costs of our operations,
including legal fees and costs incurred in filing periodic reports under the
federal securities laws. A portion of the gross proceeds raised hereby may be
paid to officers, directors and promoters, and their affiliates or associates,
for any of their out-of-pocket expenses relating to this offering, not to exceed
$36,000. However, no portion of the proceeds raised hereby will be paid to those
persons, directly or indirectly, as, officers' accrued salaries, directors'
fees, and
12
purchase of shares or other payments, in accordance with an informal
understanding among management. Management is not aware of any circumstances
under which such policy may be changed.
We have not and do not presently intend to impose any limits or other
restrictions on the amount or circumstances under which any of such transactions
may occur, except that none of our officers, directors or their affiliates shall
receive any personal financial gain from the proceeds of this offering, except
for reimbursement of out-of-pocket offering expenses as aforementioned. No
assurance can be given that any of such potential conflicts of interest will be
resolved in our favor or will otherwise not cause us to lose potential
opportunities.
None of the proceeds raised hereby will be used to make any loans to our
promoters, management or their affiliates or associates of any of our
shareholders. Further, we may not borrow funds and use the proceeds therefrom to
make payments to our promoters, management or their affiliates or associates.
DILUTION
We were initially capitalized by the sale of common stock to our founders. The
following table sets forth the difference between our founders and purchasers of
the shares in this offering with respect to the number of shares purchased from
us, the total consideration paid and the average price per share paid.
THE TABLE BELOW ASSUMES THAT THE MINIMUM (10%) OF THE AMOUNT OF COMMON SHARES
OFFERED HEREBY ARE SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<c> <c> <c> <c> <c>
Founders 12,000,000 92% $30,000 5.7% $0.0025
New Investors 1,000,000 8 500,000 94.3 $0.50
-------------- -------------- ------------- ------------
Total 13,000,000 100% $530,000 100% $0.041
============== ============== ============= ============
</table>
THE TABLE BELOW ASSUMES THE MAXIMUM (100%) AMOUNT OF THE COMMON SHARES OFFERED
HEREBY ARE SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 54.5% $30,000 0.6% $0.0025
New Investors 10,000,000 45.5 5,000,000 99.4 $0.50
-------------- -------------- ------------- ------------
Total 22,000,000 100% $5,030,000 100% $0.23
============== ============== ============= ============
</table>
THE FOLLOWING TABLE REPRESENTS THE DILUTION PER SHARE BASED ON THE PERCENTAGE
SOLD OF THE TOTAL AMOUNT OF SHARES BEING OFFERED.
COMMON SHARES COMMON SHARES
10% sold 100% sold
---------------- ---------------
Offering price $0.50 $0.50
Net tangible book value before offering $0.00098 $0.00098
Increase attributable to the offering $0.036 $0.225
Net tangible book value after giving effect
to the offering $0.037 $0.226
Per share dilution to new investors $0.463 $0.274
Percent dilution per share 93% 55%
</table>
13
As of November 30, 2003, the net tangible book value of our common stock was
$11,727 or $.00098 per share based on the 12,000,000 shares outstanding. "Net
tangible book value" per share represents the amount of total tangible assets
less total liabilities, divided by the number of shares. After giving effect to
the sale by us of 10,000,000 shares at an offering price of $0.50 per share and
after deducting estimated expenses, our pro-forma net tangible book value as of
that date would be $4,975,727 or $0.226 per share, based on the 22,000,000
shares outstanding at that time. This represents an immediate dilution (i.e. the
difference between the offering price per share of common stock and the net
tangible book value per share of common stock after the offering) of $0.274 per
share to the new investors who purchase shares in the offering ("New
Investors"), as illustrated in the table above (amounts are expressed on a per
share basis).
DIVIDEND POLICY
We do not intend to pay any cash dividends with respect to our
common stock in the foreseeable future. We intend to retain any
earnings for use in the operation of our business. Our Board of
Directors will determine dividend policy in the future based upon,
among other things, our results of operations, financial condition,
contractual restrictions and other factors deemed relevant at the
time. We intend to retain appropriate levels of our earnings, if
any, to support our business activities.
CAPITALIZATION
This table represents our capitalization as of November 30, 2003 as
adjusted to give effect to this offering.
ACTUAL SHARES SHARES
Stockholders' Equity At 10% At 100%
----------------------------------------------------------------------------------------------------
Common stock, $0.001 par
value, authorized 250,000,000
shares
Issued and outstanding -
12,000,000 shares at
par value $12,000 $12,000 $12,000
Additional paid in capital 18,000 18,000 18,000
@10% 1,000,000 shares at
par value 1,000
Additional paid in capital 499,000
@100% 10,000,000 shares at
par value 10,000
Additional paid in capital 4,990,000
Sales expense (36,000) (36,000)
Accumulated deficit (18,273) (18,273) (18,273)
-------------- -------------- --------------
Total stockholders' equity $11,727 $475,727 $4,975,727
============== ============== ==============
PLAN OF DISTRIBUTION
This is a direct participation with no commitment by anyone to purchase any
shares. The shares will be offered and sold on by our principal executive
officers and directors at $.50 per share until all shares are sold or until the
offering is terminated on or November 30, 2004.
OUR BUSINESS
14
Except for historical information, the following description of our business
contains forward-looking statements based on current expectations that involve
risks and uncertainties. Our actual results could differ materially from those
set forth in these forward-looking statements as a result of a number of
factors, including those set forth in this prospectus under the heading "Risk
Factors.
HISTORY OF APTUS
Unless the context requires otherwise, the terms "We", "Our" and "Us" refer to
Aptus Corp. which was incorporated under the laws of the State of Delaware on
April 4, 2002, and in November 2003 we began the early stage of implementation
of our business plan.
BUSINESS OF APTUS
GENERAL
- -------
We are engaged and have begun implementation of a targeted and strategically
defined plan to purchase selected assets from within the highly fragmented
application service provider and software development industries. Our
acquisitions will enable us to offer hosted proprietary software along with
other hosted software business solutions distributed over broadband services. As
a result of our implementation efforts, we recently acquired two business
software applications.
o On January 23, 2004, we acquired certain assets of Appgen Technologies,
Inc. (Appgen) and Mark Andre, which includes the Appgen Custom Suite and
MyBooks Professional, both software applications.
o On February 1, 2004, we acquired certain assets of QwikQuote, Inc, which
includes QwikQuote, a sales order quoting application.
We will provide hosting for either leased applications or customer owned
software on leased servers located in leased data centers, rent computing
services to our customers for a monthly fee, and perform remote management and
maintenance of our customers' servers from our network operations center.
We will develop and provide the necessary tools to our customers enabling them
to implement business workflow and process ideas quickly and cost effectively.
We will make it possible for many businesses to take advantage of technology
solutions that have typically been reserved for larger business enterprises.
These solutions will enable our customers to benefit from reliable and secure
technology operations, which can grow or contract to accommodate changing
business needs. These services can be delivered without undertaking the
difficulty and expense associated with acquiring, disposing, building and
maintaining the required in-house expertise and infrastructure.
The ASP or utility computing model of distributing computer processing services
or software over the Internet has generally proven itself to deliver a lower
total cost of operations as compared to building and maintaining physically
separated information technology systems. This is due in part to the increasing
complexities of successfully deploying and maintaining the various components of
software solutions, as well as the hardware and connectivity required for a
successful Internet business operation. In addition, the in-house expertise
required to meet these challenges is significant and typically requires a host
of technical specialists.
Our customers will connect to leased data center facilities over the Internet,
through a broadband connection. We intend to provide our services with the
speed, simplicity and reliability of a traditional utility-like service. Like a
utility company, we will allow business customers to "turn on", or access, their
software applications and data instantly, on-demand, through any web enabled
computer, regardless of operating system.
With the customer utilizing our on-demand computing platform, we can
consistently deploy our customers' operations across multiple locations while
maintaining those services through a centralized operations center. Among other
things, our services will enable our customers to:
o Quickly expand their Internet presence as business opportunities arise in
new geographies and markets; and
15
o Efficiently incorporate new and evolving technologies into their existing
business operations.
The ASP concept reduces the risk of computer viruses, allows for ongoing backup
of user data and important information, disaster recovery and security. The ASP
model also reduces the phenomena of software piracy, as the software title is no
longer downloaded or installed on the user's computer.
BUSINESS STRATEGY
We target selected assets of ASP companies that are at or below the
1,500-subscriber level. The software targets are those that have developed
messaging, disaster recovery, accounting and finance, sales force management,
enterprise resource planning, customer relationship management, manufacturing
resource planning, or human resources applications. Our strategy is to apply
basic consolidation practices, which should reduce overhead and increase net
margins.
We will acquire the assets of these businesses, through a variety of means, such
as the bankruptcy courts, referrals, and trade publications. These companies
will have target markets and the prospects of a well-defined and long-term
revenue stream. While we recognize some companies may not be currently
profitable, they may still be suitable candidates because we would be able to
consolidate many common expenses. Through the consolidation of operating and
hosting costs we believe we can achieve a larger base of users, reduce expenses
and generate more profitable revenues.
Target organizations for acquisition will meet the following service
mix criteria:
Windows or Unix application hosting services utilizing either of
the following technologies
Citrix Metaframe, Tarantella Enterprise, Microsoft
Terminal Services, or New Moon Canaveral
Mission critical vertical or horizontal
applications such as:
Messaging, Disaster Recovery, Accounting and Finance,
Sales Force Management, Enterprise Resource Planning, Customer Relationship
Management, Manufacturing Resource Planning, or Human Resources
KEY VERTICAL
MARKET PRODUCTS
Due to management's experience and in-depth knowledge of the ASP
industry and the recognition of the various pitfalls and opportunities that
exist in the market, we strongly believe that an ASP eventually should own
and/or control its core content (Intellectual Property) just as the cable
industry has done. With the cable industry now maturing, content has become
strategically vital to the equally important distribution network.
The ASP industry and Internet delivery model has reached a similar level of
maturity. Website development and hosting services has become commonplace and
has fueled the need to replace unproductive static content with bundled
interactive business applications and processes. With that in mind, it is our
intention to acquire several more business niched software applications that are
either Web- or Windows-based that can be added to our Appgen Custom Suite of
accounting applications. The modular nature of the Appgen Custom Suite allows us
to bundle the application functionality into a single package, or deliver
specific modules individually.
Accounting and bookkeeping practices spend tremendous amounts of time traveling
to client offices and manipulating and transporting electronic and paper media.
Many view this as the "necessary evil" of the service they provide, particularly
when the desire is to have access to the same accounting data using the same
applications. By proxy, the financial professional has evolved as their clients'
software and information technology consultant.
Unfortunately, this progression into technology consulting does not work for
everyone. Many accounting and bookkeeping practices continue to find it
difficult to express their value to their client base, to grow their practice
through value-added service opportunities, and while keeping their costs of
doing business down. Competencies in accounting and finance may become clouded
with the perceived additional competencies in technology, thereby
16
causing many professionals to hesitate in becoming more involved with technology
for fear of losing client credibility. As the primary outside influencer to most
businesses, and working in an increasingly competitive industry, the accountant
cannot afford to make serious business mistakes involving his clients.
The professional accountant - often acting as the small business CFO - is
generally the one from whom a business owner takes advice. Yet, in the Internet
and e-business economy, the accountant's position may be weakened by not clearly
understanding the importance and appropriate uses for technology.We believe our
following computing models or business solutions will assist a wide range of
businesses to close the technology gap.
ALWAYS-ON UTILITY COMPUTING
- ---------------------------
This level of service provides for either leased or customer owned standard
Windows applications, such as MS Office, Intuit's QuickBooks or other Windows
based products to the SME and SOHO customers on a subscription basis alleviating
the need for the customer to purchase servers, anti-virus software, information
technology consultant services or other items needed to maintain a Windows
network.
Always-On allows for secured storage of data and information at leased data
centers. This service, Always-On, also provides the customer with the added
value and features of a wide-area network, allowing remote access to
applications and data anytime, anywhere.
ENTERPRISE UTILITY COMPUTING
- ----------------------------
Our Appgen Custom Suite is a collection of collaborative commerce modules from
which a customer may select to form a total business computing environment for
the small to mid-sized business. These modules are designed specifically for use
by mid-sized businesses of all types, and may be assembled in any way that suits
their business needs. The modules include general ledger, accounts receivable,
accounts payable, payroll processing, billing, bank reconciliation, sales order
processing, purchase order processing, inventory control, job cost tracking,
bill of materials, and others. The business accounting modules are modifiable
and grow with the customer's business. The Appgen Custom Suite may be deployed
on Unix, Windows, Mac OS X, and Linux operating systems in stand-alone,
peer-to-peer, and client/server configurations. A Developer's Kit for
customizations is available to tailor the modules to specific needs and is
provided by a worldwide network of developers and value-added resellers (VAR's).
This service is targeted at the VAR's and dealers of the more complex line of
business applications such as accounting, sales management, contact management,
and human resources that require a more involved and complex back office
functionality. By providing their applications in an ASP model, the reseller can
increase new sales and reduce sales cycles by off-loading the back office
technical complexities to Aptus. The service is provided to the medium
enterprise exclusively through resellers and dealers, and when appropriate these
software packages will be offered to the existing Always-On users.
Aptus intends to develop long-term relationships with resellers
and dealers and together market the service to the end-users. Revenues will be
generated from the direct sales of local installations and/or software hosting
fees, and additional value added offerings such as thin clients, online training
and E-commerce references. Aptus will support and promote the ongoing software
industry trend toward renting software.
E-ACCOUNTING
- ------------
Aptus is negotiating an sole and exclusive, non-compete, licensing agreement
with Insynq, Inc., an ASP provider, for the e-Accounting business model and
brand. Insynq, Inc. has provided hosted business solution applications since
1997. During this time, Insynq, Inc. developed the e-Accounting brand of
services and bundled third party products that directly address the needs of the
accounting and bookkeeping professionals. Aptus will have the right to further
enhance the offerings of e-Accounting as the market dictates. Currently,
products include the proprietary software interfaces, such as The Executive
Digital Dashboard and e-Workplace, to accounting applications such as Intuit
Quickbooks and Peachtree. These interfaces are document management and work flow
process applications. Other
17
third party products, such as eFileShare, are offered in conjunction with a
variety of third party service providers, such as BizActions and bSyTech, all
designed to assist the in growth of the professional practice from lead
generation to web site development. In addition, the e-Accounting brand
anticipates developing a set of business processes that speak to the growing
interest in back office transaction processing by the third party, commonly
called outsourcing.
Aptus, with the licensed business model, the online technology delivery, and the
application environment, bundled together, address the specific needs of the
financial professional. Through the increased efficiencies experienced with our
e-Accounting services, professional accountants and bookkeepers will find that
they will be able to realize increased revenues by billing for additional value
added services. We will provide our customers with the opportunity and tools
necessary to broaden their scope of professional services and involvement with
their clients' business, and we believe we have the expertise and resources to
help those businesses transition to or incorporate e-business technologies. The
professional now has the opportunity to develop new competencies in business
technologies without having to invest the entire practice and put the client
base at risk. Therefore, e-Accounting allows the professional to establish a
position more closely to the top of the business value chain, and also creates
additional business opportunities for bookkeeping and data processing services.
This value opportunity is directly extended to client businesses and outsourcing
agencies, as well. The efficiency and flexibility of this delivery model solves
many technology and business problems common to the professional and client that
a more conventional technology approach only exacerbates.
Our online technology delivery allows both the professional and the client to
access and work simultaneously on the same data file. This business solution
delivers financial information in "real time".
While Aptus currently does not have any third party
software vendor agreements, we will actively seek licensing agreements for those
applications that will allow us to provide our services and those which will
enhance the value of the e-Accounting services to the customer.
MYBOOKS PROFESSIONAL
- --------------------
MyBooks Professional is a collaborative accounting system for small
to mid-sized businesses that is designed to simplify the approach to accounting
with jargon-free menus that make it easy to manage a users business. A single
application interface for either a service-based or product-based company helps
grow the business by gaining control over information regarding sales,
customers, vendors, purchases, bank accounts, inventory, billing, payroll, and
financial statements, with complete sales order and purchase order subsystems
and a separate Accountant's Page that includes the functions of the underlying
general ledger system. MyBooks Professional is a true double-entry, fully
auditable accounting system and is modifiable, scalable, and portable. The
ten-user license is installable on Unix, Apple Mac OS X, Linux, and Microsoft
Windows, requiring little or no technical assistance. It may be used by a single
user on a stand-alone machine, or by multiple users in a network Windows
environment or other operating systems such as Macintosh or Linux server with
any combination. MyBooks Professional is modifiable by its worldwide network of
developers and VAR's.
MARKETING AND SALES
ALWAYS-ON
- ---------
We will sell to small and medium enterprises and the high-end segment of the
small office and home office market for the sale of hosted leased or owned
software and access to Internet-related services. We will sell products and
services to our customer subscriber base that allows our customers to adopt
"Web-based" computing that serves as an alternative to both traditional local
area networks and wide area networks implementations. The Always-On service will
be marketed and sold through direct telesales for the smaller (10 - 50 user)
customers, and through face-to-face sales for the larger clients that have more
complex needs.
ENTERPRISE UTILITY COMPUTING
- ----------------------------
Existing reseller and channels are preferred, though strong direct sales
organizations will be considered. Our first acquisition, Appgen Custom Suite,
has given us 300 dealers and 80 VARs to begin the sales process and initiate
cross
18
selling of other products and services that we may offer. The advantage to these
resellers is not simply the profit on the sale of the product, but more
importantly, the ongoing revenue streams they create with their services. By
properly servicing their customers, the resellers retain them for life. Services
they offer include delivery and setup, training, technical support, software
tailoring, and custom programming. These resellers often develop their own
applications around the Appgen Custom Suite and open whole new vertical markets
for themselves while easily integrating the new packages with the accounting
software. Our second acquisition, QwikQuote, is sold direct over the Internet
and we intend to enhance its on-line presence to drive additional direct sales
and generate new lead opportunities through the dealer and VAR channels.
Rather than selling the applications in the form of a one-time license fee, we
will market and sell the applications as a subscription-based service,
generating monthly recurring revenues.
E-ACCOUNTING
- ------------
Our target is the small to medium sized financial professional firm whose client
base primarily uses accounting software, such as QuickBooks and requires
assistance from the professional in the maintenance of the data file. We will
market to those financial professionals by employing the functions of direct
telemarketing, e-marketing, direct mail, seminars and trade shows. The target
market for the software products is all small-to-midsize for-profit businesses.
There are approximately 20 million such companies in this country alone.
QuickBooks is a product that may be sold and implemented by consultants, VARs,
and CPAs.
The success of our marketing and sales activities is dependent, among other
things, on our ability to retain and attract qualified resellers and
telemarketers, as well as overall market perception of our products and
services.
COMPETITION
The market for Internet based data processing, information technology
services and hosted business solutions are rapidly evolving and intensely
competitive. In addition to a customer's internally built and supported
operations, our primary current and prospective competitors include:
o Providers of computer equipment;
o Providers of co-location, web site hosting and related services;
o Providers of technology that have recently announced their intentions to
offer some of the services that we may offer to a portion of our targeted
customer base; and
o Providers of Internet based systems integration or professional services.
Many of our competitors have been in business longer than us, have significantly
greater financial, technical, and other resources, or greater name recognition.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements. Competition could negatively
impact our ability to sell additional services on terms favorable to us.
Competitive pressures could cause us to lose market share or to reduce the price
of our services, either of which could harm our business, financial condition
and operating results.
RESEARCH AND DEVELOPMENT ACTIVITIES
From inception to-date, we have not expended any financial resources on research
and development. Our activities have been organizational in nature, and
targeting potential software application purchases.
GOVERNMENT REGULATION
Due to the increasing popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect to the Internet
generally, covering issues such as user privacy. Development of the market for
Internet commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens
19
on those companies conducting business over the Internet. The adoption of any
such laws or regulations may decrease the growth of commerce over the Internet,
which could have a harmful effect on our business.
To date, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New and existing laws may
cover issues that include:
o Sales and other taxes;
o User privacy;
o Pricing controls;
o Characteristics and quality of products and services;
o Consumer protections;
o Cross-border commerce;
o Libel and defamation;
o Copyright, trademark and patent infringement; and
o Other claims based on the nature and content of the Internet materials.
Such new laws may impact our ability to market our products and services offered
on our web site in accordance with our business plan.
We may have to qualify to do business in other jurisdictions. If we make sales
of our products or services, we anticipate that sales and our customers will be
in multiple states and foreign countries. As our customers may reside in such
state and foreign countries, such jurisdictions may claim that we are required
to qualify to do business as a foreign company in each such state and foreign
country. We are qualified to do business only in the state of Washington.
Failure to qualify as a foreign company in a jurisdiction where required to do
so could subject us to taxes and penalties.
At present, we do not collect sales or other similar taxes in respect of sales
and shipments of our products through Internet purchases. However, various
states have sought to impose state sales tax collection obligations on
out-of-state direct marketing companies similar to us. A successful assertion by
one or more of these states that it should have collected or be collecting sales
tax on the sale of our products could result in additional costs and
corresponding price increases to its customers.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
We currently own two software applications, which are not protected by
copyrights or patents, and anticipate acquiring the appropriate protections at a
later date. We regard service marks, domain names, and similar intellectual
property as critical to our success. We will rely on trademark, unfair
competition and copyright laws, trade secret protection and contracts such as
confidentiality and license agreements with our employees, customers, partners,
and others to protect our proprietary rights. Despite precautions, it may be
possible for competitors to obtain and/or use the proprietary information
without authorization, or to develop technologies similar to ours and
independently create a similarly functioning infrastructure. Furthermore, the
protection of proprietary rights in Internet-related industries is uncertain and
still evolving. The laws of some foreign countries do not protect proprietary
rights to the same extent, as do the laws of the United States. Protection for
proprietary rights in the United States or abroad may not be adequate.
We intend to license certain technology from third parties such as Citrix,
Microsoft, and others, for our technologies that support business systems. The
market is evolving and we may need to license additional technologies to remain
competitive. We may not be able to license these technologies on commercially
reasonable terms or at all. In addition, we may fail to successfully integrate
licensed technology into our operations.
Although we are not aware of any infringement or misappropriation of our
intellectual property or similar proprietary rights, it may be anticipated that
infringements and misappropriations will occur as our business grows and there
is more brand loyalty attaching to our trade names and domain names.We intend to
police against infringement or
20
misappropriation. However, we cannot guarantee that we will be able to enforce
our rights and enjoin the alleged infringers from their use of confusingly
similar trademarks, service marks, telephone numbers, and domain names.
In addition, third parties may assert infringement claims against us. We cannot
be certain that our technologies or service marks do not infringe on valid
patents, trademarks, copyrights, or other proprietary rights held by third
parties. We may be subject to legal proceedings and claims from time to time
relating to the intellectual property of others in the ordinary course of our
business. Intellectual property litigation is expensive and time-consuming and
could divert management resources away from running the business.
DESCRIPTION OF PROPERTY
Aptus leases approximately 750 square feet of office space located at 1127
Broadway Plaza #203, Tacoma, Washington 98402. The monthly rent is $550.00 and
can be cancelled by either party with thirty (30) days notice. While we
currently do not have a data center and infrastructure, we are negotiating with
a third party to provide these components. If we are unable to negotiate
favorable leases we will be unable to execute on our business plan.
CUSTOMER SERVICE AND SUPPORT
Customer Service will be responsible for analyzing customer service delivery
requirements, provides for determining account support resource needs,
developing service deployment processes, managing service deployment processes,
administering level I technical support, surveying customer needs and
satisfaction, and estimating account support costs.
Customer Support will be available to subscribers in a number of ways:
o E-MAIL. 24x7x365 Monitored email support accounts with 15 minute response
time.
o TOLL-FREE PHONE. 24x7x365 Manned call center with basic support and
immediate escalation as needed.
o LIVE CHAT. Chat real-time with an Aptus Customer Service Representative in
support centers 24x7x365. Access chat anywhere from the Always-On and EUC
sites by clicking on the "Support Chat" button.
o SELF-SERVICE. Self-service support options to clients and resellers
including administration tools to resellers, and Internet connectivity test
tools.
o ONLINE TRAINING. Customer Service Representatives to provide online
training for clients four (4) times per week utilizing a web based
conferencing tool, technical engineers provide support to resellers
utilizing both web based and Citrix management tools.
EMPLOYEES
As of February 17, 2004, we employ three part-time, and, at present, do not
receive compensation. Aptus' staffing plan is built around meeting demand. As
demand grows from the sale the products and services, staff will be added to
meet that demand, and not before. Aptus intends to employ approximately fifteen
people located in Tacoma, Washington and five on the East Coast.
21
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CASH REQUIREMENTs
In order to finance acquisition of companies, and fund projects, it is our
intent to raise proceeds of $5,000,000 less expenses of approximately $36,000
from this public offering. This will allow us to reduce the time frame to become
fully operational from several years to less than one year. The following
summarizes anticipated cash requirements to achieve these goals. Should we not
raise the proceeds from this offering we would have to acquire debt to fund
the aforementioned cash requirements.
NEED FOR ADDITIONAL PERSONNEL
It is anticipated that the number of employees may increase to twenty during
the next twelve months, even with our outsourcing many tasks.
LIQUIDITY AND CAPITAL RESOURCES
We remain in the development stage and, since inception, have experienced no
significant change in liquidity or capital resources or stockholders' equity.
Concerning the costs of the offering, we have paid all the attorney's legal
fees. The invoice for the services was received in December 2003 and
subsequently paid in December 2003 and January 2004. We acknowledge that as
of November 30, 2003 we still had accounts payable concerning the costs of the
offering as well as a cash balance enough to satisfy any such outstanding costs.
The application of funds to the total costs of the offering will not exceed the
$36,000 allocated.
We will carry out our plan of business as discussed above. We cannot predict to
what extent our liquidity and capital resources will be diminished prior to the
consummation of a business combination or whether our capital will be further
depleted by the operating losses (if any) of the business entity which we may
eventually acquire.
As of February 17, 2004 we have purchased certain assets from Mark Andre and
Appgen Technologies, Inc. The purchase price to Mark Andre is made up of:
o $500,000 payable in common stock valued at $1.00 per share of common stock.
o 5.5% distribution of gross revenues received of all sales of Appgen
products up to a maximum of $1,500,000.
o Consulting Agreement for the term of two (2) years with monthly
compensation in the amount of $5,000.
o A cash payment at closing of $8,500.00.
o Warrants for common stock up to 500,000 for a purchase price of $0.50 per
share.
o Assumption of development support of the software code.
The purchase price to Appgen Technologies, Inc. is in the form of a cash payment
in the amount of $9,000.00.
On February 1, 2004 we purchased certain assets from
QwikQuote, Inc. The purchase price to QwikQuote, Inc.
is made up of:
o $25,000 payable in cash of which $3,090 exercised warrants to purchase
420,000 shares of common stock at a value of $0.0095 per share.
o Consulting and Non-Compete Agreement with Alan Katz in the amount $17,000
for a term of 12 months.
o Consulting and Non-Compete Agreement with Glenn Paul in the amount of
$17,000 for a term of 12 months.
22
o Consulting and Non-Compete Agreement with Straube Health in the amount of
$17,000 for a term on 12 months.
o Payment of a transition bonus to Tim Heath in the amount of $9,000
o Finders fee to Mark Levin in the amount of $9,000.
With our recent acquisitions, we have begun to sell our products through our
Appgen VAR and dealer channel and through our QwikQuote dealer channel and our
web site located at WWW.QWIKQUOTE.COM. We have begun to implement, on a limited
basis, our marketing plan for these products.
RESULTS OF OPERATIONS
We have engaged in no significant operations other than organizational
activities, acquisition of capital and preparation for registration of our
securities under the Securities Exchange Act of 1934, as amended. Since our
inception to date we have received nominal revenues.
For the current fiscal year, we anticipate incurring a loss as a result of
organizational expenses, expenses associated with registration under the
Securities Exchange Act of 1934. Although no assurances can be made, we believe
we can satisfy our cash requirements with 10% of the $5 million, net of offering
expenses, derived hereby. Prior to the conclusion of this offering we currently
anticipate our expenses to be limited to accounting fees, legal fees, telephone,
mailing, filing fees, escrow agent fees and transfer agent fees. See "Risk
Factors."
With our recent acquisition of the Appgen Custom Suite, we will begin to market
and sell to our VAR and dealer channel. Marketing to this channel will be
nominal, as they are already familiar with and working with the product. They
will be provided with technical development assistance when requested. We will
assist the VAR's in cooperative marketing to each of their niche markets by
using telemarketing, e-marketing and direct mail. With our other recent
acquisition, we will introduce our QwikQuote application to the VAR channel for
cross-selling and increase our web presence to drive an increase in sales.
PLAN OF OPERATION
If we succeed in raising the maximum proceeds from this offering, we will apply
$4,964,000 to our plan of operations for the next twelve months is to complete
the following objectives within the time period specified, subject to our
obtaining financing for the continued development of our business.
o We plan to undertake the continuation of our target acquisitions of ASP's
and software applications at an approximate cost of $3,000,000.
o We plan to purchase and/or lease additional equipment for server
infrastructure at an approximate cost of $250,000.
o We will continue to develop arrangements with third parties through whom we
will be able to bundle other products and services with our proprietary
software and ASP capabilities.
o We will continue to develop and execute on our strategic marketing plan,
which will consist mainly of telemarketing, e-marketing, direct mail and
seminars at an approximate cost of $750,000.
o We will, during the next 12 months, convert our existing software
applications from Windows based code to that of Web-based code, as well as
development of Web-based software tools as the market demand at an
approximate cost of $250,000.
o We will use the remaining balance of approximately $714,000 to fund the
day-to-day operations.
With additional revenues and/or capital infusions, we plan to retain staffing
levels sufficient to achieve our goals. This additional staffing may include
full-time and part-time employees, and consultants. Without sufficient revenues,
23
we will continue limiting our employees to our chief executive officer, chief
administrative officer and executive vice president.
Completion of our plan of operation is subject to securing adequate financing
and generating revenues through our products and services. In the absence of our
projected revenues, we may be unable to proceed with our plan of operation. Even
without significant revenues with the next twelve months, we still anticipate
being able to continue with our present activities. Management believes that the
sources of potential funds needed to maintain current limited operations will be
available to us during the year from the sale of our products and services and
the net proceeds from this offering, and that this amount of funding is expected
to be sufficient to fund our operations for the next year.
In the event we are not successful in reaching our initial revenue targets,
additional funds may be required and we would then not be able to proceed with
our business plan for the development marketing of our products and services.
Should this occur, we would likely seek additional financing to support the
continued operation of our business.
Our significant facility and equipment requirements will be met through various
lease agreements, including one with Insynq, Inc. We cannot be sure that we will
have successful negotiations to secure such leases with third party vendors.
NEED FOR ADDITIONAL FINANCING
We believe that the minimum offering for capital will be sufficient to meet our
cash needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934, as amended, for a period of
approximately one year.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to us to cover our expenses.
Irrespective of whether our cash assets prove to be inadequate to meet our
operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash after first adopting a stock option plan.
THE APPLICATION OF THE "PENNY STOCK" RULES
The Securities and Exchange Act of 1934 requires additional disclosure relating
to the market for "penny stocks." A penny stock is generally defined to be any
equity security not listed on NASDAQ or a national securities exchange that has
a market price of less than $5.00 per share, subject to certain exceptions.
Among these exceptions are shares issued by companies that have:
o net tangible assets of at least $2 million, if the issuer has been in
continuous operation for three years;
o net tangible assets of at least $5 million, if the issuer has been in
continuous operation for less than three years; or
o average annual revenue of at least $6 million for each of the last three
years.
We do not currently meet the requirements of these exceptions and, therefore,
our shares would be deemed penny stocks for purposes of the Exchange Act if and
at any time while our common stock trades below $5.00 per share. In such case,
trading in our shares would be regulated pursuant to Rules 15-g-1 through 15-g-6
and 15-g-9 of the Exchange Act. Under these rules, brokers or dealers
recommending our shares to prospective buyers would be required, unless an
exemption is available, to:
o deliver a lengthy disclosure statement in a form designated by the SEC
relating to the penny stock market to any potential buyers, and obtain a
written acknowledgement from each buyer that such disclosure statement has
been received by the buyer prior to any transaction involving our shares;
24
o provide detailed written disclosure to buyers of current price quotations
for our shares, and of any sales commissions or other compensation payable
to any broker or dealer, or any other related person, involved in the
transaction;
o send monthly statements to buyers disclosing updated price information for
any penny stocks held in their accounts, and these monthly statements must
include specified information on the limited market for penny stocks.
In addition, if we are subject to the penny stock rules, all brokers or dealers
involved in a transaction in which our shares are sold to any buyer, other than
an established customer or "accredited investor," must make a special written
determination that our shares would be a suitable investment for the buyer. The
brokers or dealers must receive the buyer's written agreement to purchase our
shares, as well as the buyer's written acknowledgement that the suitability
determination made by the broker or dealer accurately reflects the buyer's
financial situation, investment experience and investment objectives, prior to
completing any transaction in our shares.
These Exchange Act rules may limit the ability or willingness of brokers and
other market participants to make a market in our shares and may limit the
ability of our shareholders to sell in the secondary market, through brokers,
dealers or otherwise. We also understand that many brokerage firms will
discourage their customers from trading in shares falling within the "penny
stock" definition due to the added regulatory and disclosure burdens imposed by
these Exchange Act rules.
The SEC from time to time may propose and implement even more stringent
regulatory or disclosure requirements on shares not listed on NASDAQ or on a
national securities exchange. The adoption of the proposed changes that may be
made in the future could have an adverse effect on the trading market for our
shares.
FORWARD-LOOKING INFORMATION
Certain statements in this document are forward-looking in nature and relate to
trends and events that may affect our future financial position and operating
results. The words "expect" "anticipate" and similar words or expressions are to
identify forward-looking statements. These statements speak only as of the date
of the document; those statements are based on current expectations, are
inherently uncertain and should be viewed with caution. Actual results may
differ materially from the forward-looking statements as a result of many
factors, including changes in economic conditions and other unanticipated events
and conditions. It is not possible to foresee or to identify all such factors.
We make no commitment to update any forward-looking statement or to disclose any
facts, events or circumstances after the date of this document that may affect
the accuracy of any forward-looking statement.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of
our common stock as of February 17, 2004, for:
o Each person or group who is known by us to beneficially own more than 5% of
the outstanding shares of our common stock;
o Each of our directors;
o Each of our named executive officers; and
o All of our directors and executive officers as a group.
The percentage of shares owned provided in the table is based on 12,000,000
shares of common stock outstanding as of February 17, 2004 and a maximum amount
of sales from this offering. Beneficial ownership is determined in
accordance with the rules of Section 13(d)(3) of the Securities Act of 1934 (the
"Exchange Act") and generally includes voting or investment power with respect
to securities. Except as indicated by footnote, the persons named in the table
have sole voting and investment power with respect to all shares of common stock
shown as beneficially
25
owned by them. The determination of whether these persons have sole voting and
investment power is based on information provided by them.
Common Shares Beneficially Common Shares Beneficially
Owned Prior to Offering Owned After Offering
Number Percent Number Percent
<s> <c> <c> <c> <c>
John P. Gorst (1) 3,300,000 27.50% 3,300,000 15.00%
1127 Broadway Plaza #203
Tacoma, WA 98402
M. Carroll Benton (1) 3,300,000 27.50% 3,300,000 15.00%
1127 Broadway Plaza #203
Tacoma, WA 98402
Clifford Mastricola (2) 1,650,000 13.75% 1,650,000 7.50%
2190 Carmel Valley Rd
Delmar, CA. 92014
Clayton Chase (2) 1,650,000 13.75% 1,650,000 7.50%
2190 Carmel Valley Rd
Delmar, CA. 92014
Mark Levin (1) 3,300,000 27.50% 3,300,000 15.00%
9812 Falls Rd, Suite 198
Potomac, MD. 20854
Directors and Officers as a group 6,600,000 55.00% 6,600,000 30.00%
(2 persons) (3)
(1) This includes 300,000 shares of class A common stock outstanding which may
be converted to common stock.
(2) This includes 150,000 shares of class A common stock outstanding which may
be converted to common stock.
(3) This includes 600,000 shares of class A common stock which may be converted
to common stock.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
There are currently two (2) occupied seats on the Board of Directors. The
following table sets forth information with respect to the directors and
executive officers.
26
NAME AGE OFFICE DATE OF SERVICE OFFICER AND/OR
- ---- --- ------ --------------- --------------
DIRECTOR OF OTHER
-----------------
PUBLIC COMPANIES
----------------
<s>
John P. Gorst 36 Chairman of the Board, Chief November 2003 Insynq, Inc.*
Executive Officer and President
M. Carroll Benton 59 Secretary, Treasurer, Chief November 2003 Insynq, Inc.*
Administrative Officer and
Director
Joanie C. Mann 42 Executive Vice President November 2003 Insynq, Inc.
</table>
*Indicates a board member
All directors will hold office until the next annual stockholder's meeting and
until their successors have been elected or qualified or until death,
resignation, retirement, removal, or disqualification. Vacancies on the board
will be filled by a majority vote of the remaining directors. Our officers serve
at the discretion of the board of directors. We intend to increase the board
from its present two members to a minimum of six members by adding outside
directors at our next shareholders meeting.
Where executive management is employed by another public company, time will be
allocated between the two corporations by each of the aforementioned executive
management team in such a manner that least one of those officers will be active
for Aptus at all times. In order to maintain independence, it is anticipated,
pending the growth of our business, certain key management will be become
full-time in our business activities.
Our executive management team brings more that seventy-six years of combined
experience in the fields critical to the success of the corporation. They
involve but are not limited to management, finance, compliance, technology,
sales and marketing and mergers and acquisitions.
The officers and directors are set forth below.
JOHN P. GORST - Co-Founder, Chairman of the Board, President and Chief Executive
Officer.
Mr. John P. Gorst is a co-founder of Aptus and has directed all development and
business efforts for Aptus since November 2003. Mr. Gorst has over 14 years
experience in founding entrepreneurial technology ventures, specifically in the
development of software and data services for business. His experience includes
serving as Chief Executive Officer and board chairman of Insynq, Inc., an
application service provider, from August 1998 to present, Vice President &
General Manager for a computer integration company, Interactive Information
Systems Corp., from July 1996 to August 1998, and a training/IS consulting
business in conjunction with Nynex Business Centers of New York. Mr. Gorst's
primary responsibility shall be Chairman of the Board and Chief Executive
Officer and President. Mr. Gorst will be directing Aptus' strategy, and
positioning Aptus in the business marketplace by forging strategic business
alliances and mergers and acquisitions. Mr. Gorst will also serve as company and
technology evangelist at tradeshows, press conferences and industry analyst
meetings in order to increase awareness for the Aptus brand. Mr. Gorst graduated
top of his class as an Electronic Design Engineer from one of the top trade
schools in Arizona, and is currently pursing his MBA at Villanova University.
Mr. Gorst was also awarded a medal of honor for business leadership in 2001 from
the National Republican Congress.
M. CARROLL BENTON, - Co-Founder, Secretary/Treasurer, Chief Administrative
Officer, Interim Chief Financial Officer and Director.
Ms. M. Carroll Benton is a co-founder of Aptus and has directed and managed the
fiscal responsibilities of the enterprise since November 2003. Ms. Benton's
early career spanned both the public and private sectors working largely with
the banking systems and higher education institutions where she assisted in the
development and
27
deployment strategies necessary for computerization of these and other entities.
Ms. Benton has successfully managed a 13 state insurance brokerage firm and has
been a consultant to the small to medium business markets via accounting system
design, implementation, support, and business practice analysis. She also taught
undergraduate accounting courses at several Puget Sound colleges and
universities. With an in-depth understanding of Aptus' finances, accounting
infrastructure and compliance issues, Ms. Benton directs the current
administrative and financial practices. From December 1995 through December 1999
Ms. Benton was President of a computer integration company, Interactive
Information Systems, Corp. Her public sector experience includes serving as
Chief Administrative Officer, Secretary, Treasurer, Interim Chief Finacial
Officer and Director for Insynq, Inc. a Pacific Northwest application service
provider, from August 1998 through to present. Formerly with a local CPA firm,
Ms. Benton brings over 37 years of financial and business expertise to the
management team.
JOANIE C. MANN - Executive Vice President
Beginning in November 2003, Ms. Joanie Mann brings to the Aptus management team
as Executive Vice President over 25 years of experience in multi-user system
design and implementation, voice and data networking, and advanced network
integrations. Ms. Mann also has extensive experience in business process
automation and a strong background in business accounting principles. Previous
positions held include formation, in January 1985, of Com-Pacific Resources,
Inc. a network integration firm, which was successfully sold to Communications
World International, a telephone sales and service provider, in September 1994.
From July 1998 to December 1999, Ms Mann was an Information Systems Management
Consultant for Interactive Information Systems Corp., a Pacific Northwest
regional network integration company. Her public experience includes serving as
the Vice President of Strategic Alliances for Insynq, Inc., a Pacific Northwest
application service provider from January 2000 to present.
There are no family relationships among any of our directors or executive
officers. See "Certain Relationships and Related Transactions" for a description
of transactions between our directors, executive officers and/or their
affiliates.
STAFFING PLAN
Aptus' staffing plan is built around meeting demand. As demand grows for the
products and services, staff will be added to meet that demand, and not before.
Aptus intends to employ approximately fifteen people located in Tacoma,
Washington and five people on the East Coast.
EXECUTIVE COMPENSATION
No officer or director has received any compensation. Until we acquire
additional capital, it is not intended that any officer or director will receive
compensation from Aptus other than reimbursement for out-of-pocket expenses
incurred on behalf of Aptus. See "Certain Relationships and Related
Transactions." No officer and/or director will receive any renumeration out of
the proceeds of this offering. They will be compensated only from revenue
generated from operations. We have no stock option, retirement, pension, or
profit-sharing programs for the benefit of directors, officers or other
employees, but the Board of Directors may recommend adoption of one or more such
programs in the future.
Aptus has employed the law firm of Miles Garnett, Esq. for providing legal
services in connection with registration of our shares. It may also employ the
same law firm to provide legal services in connection with the acquisition of a
business. Mr. Garnett, if employed, would be paid his normal hourly rate for
legal services provided.
STOCK OPTIONS
We have not adopted any formal stock option plans to reward and provide
incentives to our officers, directors, employees, consultants and other eligible
participants.
OTHER TRANSACTIONS
All transactions between Aptus and its officers, directors and 5% or more
shareholders will be on terms no less favorable to Aptus than that which could
be obtained from independent third parties.
28
DIRECTORS' COMPENSATION
Our directors receive no compensation for their services as directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
At present we have not entered into individual indemnity agreements with our
officers or directors. However, our by-laws contain a provision which requires
us to indemnify any director or officer or former director or officer against
actual expenses incurred in defending any legal action where they are a party by
reason of being or having been a director or officer. However we are not
required to indemnify any such person who is found to be liable for negligence
or misconduct in their performance of their duty.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel, the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and we will be governed by the final adjudication of
such case.
DIRECTORS' AND OFFICERS' INSURANCE
We are exploring the possibility of obtaining directors' and officers' ("D & O")
liability insurance. We anticipate obtaining several premium quotations. We have
not entered into any contract with any insurance company to provide said
coverages as of the date of this offering. There is no assurance that we will be
able to obtain such insurance.
KEYMAN LIFE INSURANCE
Life insurance on key personnel is expected to be purchased after the effective
date of this offering in amounts up to $1 million, 50% payable to Aptus and 50%
payable to family beneficiaries. We are planning to purchase such insurance
towards the purchase of shares from the estate of an officer or director and to
provide us with the capital to replace the executive loss (executive search for
successor, etc.). The costs of such insurance is not expected to be material.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We shall not make any loans to any officers or directors following this
offering. Further, we shall not borrow funds for the purpose of making payments
to our officers, directors, promoters, management or their affiliates or
associates.
None of our officers, directors, or affiliates has or proposes to have any
direct or indirect material interest in any asset proposed to be acquired by us
through security holdings, contracts, options, or otherwise, although this
situation could arise.
It is not currently anticipated that any salary, consulting fee, or finder's fee
shall be paid to any of our directors or executive officers, or to any other
affiliate of Aptus except as described under "Executive Compensation" above.
We are currently negotiating an exclusive master licensing arrangement with
Insynq, Inc. for the use of its proprietary brand of bundled services and either
third party or owned software applications as described under "Risk Factors" and
Management Discussion and Analysis of Financial Condition and Results.
29
DESCRIPTION OF SECURITIES
All material provisions of our capital stock are summarized in this prospectus.
However the following description is not complete and is subject to applicable
Delaware law and to the provisions of our articles of incorporation and bylaws.
We have filed copies of these documents as exhibits to the registration
statement related to this prospectus.
Our authorized capital stock consists of 250,000,000 shares of common stock,
$0.001 par value per share, 10,000,000 shares of class A common stock, $0.001
par value per share, and 10,000,000 shares of Class A preferred stock and
10,000,000 Class B preferred stock, each with $0.001 par value per share. On
December 15, 2003, by majority vote of the shareholders, we were authorized an
additional 200,000,000 shares of common stock, increasing the total number to
250,000,000 of authorized shares of common stock. On December 17, 2003, by
majority vote of the shareholders, we were authorized to issue up to 10,000,000
shares of class A common stock.
COMMON STOCK
There were 12,000,000 shares of our common stock outstanding and held of record
by 5 stockholders as of November 30, 2003. After giving effect to the offering,
the issued and outstanding capital stock of Aptus will consist of 22,000,000
shares.
The holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Because the shares of common stock
do not have cumulative voting rights, the holders of more than 50 percent of the
shares voting for the election of directors can elect all the directors if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the board of directors. Subject to preferences
that may be applicable to the holders of outstanding shares of preferred stock,
if any, the holders of our common stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the board of
directors out of funds legally available therefore. In the event of liquidation,
dissolution or winding-up, and subject to the prior distribution rights of the
holders of outstanding shares of preferred stock, if any, the holders of shares
of our common stock shall be entitled to receive pro rata all the remaining
assets available for distribution to our stockholders. Our common stock has no
preemptive or conversion rights or other subscription rights.
Our board of directors is authorized to issue additional shares of common stock,
not to exceed the amount authorized by our Certificate of Incorporation, and to
issue options and warrants for the purchase of such shares, on such terms and
conditions and for such consideration as the board may deem appropriate without
further stockholder action.
CLASS A COMMON STOCK
The holders of our class A common stock are entitled to three votes per share on
all matters to be voted upon by the stockholders. Because the shares of common
stock do not have cumulative voting rights, the holders of more than 50 percent
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the board of directors. The holders of
our class A common stock are not entitled to receive cash dividends, if any, as
may be declared from time to time by the board of directors. In the event of
liquidation, dissolution or winding-up, and subject to the prior distribution
rights of the holders of outstanding shares of preferred stock, if any, the
holders of shares of our class A common stock shall be entitled to receive pro
rata all the remaining assets available for distribution to our stockholders.
Our class A common stock has no preemptive rights. The holders of class A common
stock may at any time or from time to time, at their discretion, convert any
whole number or all of the class A common stock held into fully paid and
non-assessable common stock at the rate (subject to adjustment) of one share of
common stock for each share of class A common stock. There are no redemption or
sinking fund provisions applicable to our class A common stock.
Our board of directors is authorized to issue additional shares of class A
common stock, not to exceed the amount authorized by our Certificate of
Incorporation, and to issue options and warrants for the purchase of such
shares, on such terms and conditions and for such consideration as the board may
deem appropriate without further stockholder action.
30
PREFERRED STOCK
We currently have no outstanding shares of preferred stock. The board of
directors has the authority, without further action by our stockholders, to
issue up to ten million shares of preferred stock in one or more series and to
fix the rights, preferences and privileges thereof, including dividend rates and
preferences, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any series
or the designation of such series, without further vote or action by the
stockholders. The board of directors, without stockholder approval, could issue
preferred stock with voting and conversion rights, which could adversely affect
the voting power of the holders of common stock. The issuance of preferred stock
may also have the effect of delaying or preventing a change of control of us.
Prior to this offering, there has been no trading market for the shares of
common stock offered. Consequently, the initial public offering price of the
shares of common stock was arbitrarily determined. The factors considered in
determining the offering price were our financial condition and prospects, our
limited operating history and the general condition of the securities market.
The offering price is not an indication of and is not based upon our actual
value. The offering price bears no relationship to our book value, assets or
earnings or any other recognized criteria of value. The offering price should
not be regarded as an indicator of the future market price of the securities.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 22,000,000 shares of common stock
issued and outstanding assuming all the shares offered herein are sold. The
10,000,000 shares of common stock sold in this offering will be freely
transferable without restrictions or further registration under the Securities
Act, except for any of our shares purchased by an "affiliate" (as that term is
defined under the Act) who will be subject to the resale limitations of Rule 144
promulgated under the Act.
There will be approximately 12,000,000 shares outstanding that are "restricted
securities" as that term is defined in Rule 144 promulgated under the Securities
Act.
The common stock owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and in
the future may be sold under Rule 144, which provides, in essence, that a person
holding restricted securities for a period of one (1) year may sell every three
(3) months, in brokerage transactions and/or market maker transactions, an
amount equal to the greater of (a) one percent (1%) of our issued and
outstanding common stock or (b) the average weekly trading volume of the common
stock during the four (4) calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of common stock without any
quantity limitation by a person who is not an affiliate of Aptus and who has
satisfied a two (2) year holding period. Additionally, common stock underlying
employee stock options granted, to the extent vested and exercised, may be
resold beginning on the ninety-first day after the effective date of a
prospectus, or offering memorandum pursuant to Rule 701 promulgated under the
Securities Act.
As of the date hereof and upon completion of the offering, none of our common
stock (other than those which are qualified by the SEC in connection with this
offering) are available for sale under Rule 144. Future sales under Rule 144 may
have an adverse effect on the market price of the common stock. Our officers,
directors and certain of our security holders have agreed not to sell, transfer
or otherwise dispose of their common stock or any securities convertible into
common stock for a period of 12 months from the date hereof.
Under Rule 701 of the Securities Act, persons who purchase shares upon exercise
of options granted prior to the date of this Prospectus are entitled to sell
such common stock after the 90th day following the date of this Prospectus in
reliance on Rule 144, without having to comply with the holding period
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after this 90-day
period, but without a holding period.
31
There has been no public market for our common stock. With a relatively minimal
public float and without a professional underwriter, there is little or no
likelihood that an active and liquid public trading market, as that term is
commonly understood, will develop, or if developed that it will be sustained,
and accordingly, an investment in our common stock should be considered highly
illiquid. Although we believe a public market will be established in the future,
there can be no assurance that a public market for the common stock will
develop. If a public market for our common stock does develop at a future time,
sales by shareholders of substantial amounts of our common stock in the public
market could adversely affect the prevailing market price and could impair our
future ability to raise capital through the sale of our equity securities.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form SB-2 relating to the common stock offered hereby.
This prospectus, which is part of the Registration Statement, does not contain
all of the information included in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to us, the common
stock offered hereby, reference is made to the Registration Statement, including
the exhibits and schedules thereto. Statements contained in this Prospectus
concerning the provisions or contents of any contract, agreement or any other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or document filed as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description of
the matters involved.
The Registration Statement, including the exhibits and schedules thereto, may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, DC 20549.
The Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including Aptus. The address of such site is
www.sec.gov.
We intend to furnish to our shareowners annual reports containing audited
financial statements certified by independent public accountants for each fiscal
year and quarterly reports containing unaudited financial statements for the
first three quarters of each fiscal year.
We will provide without charge to each person who receives a Prospectus, upon
written or oral request of such person, a copy of any of the information that
was incorporated by reference in the Prospectus (not including Exhibits to the
information that is incorporated by reference unless the Exhibits are themselves
specifically incorporated by reference). Any such request shall be directed to
the Financial Officer of Aptus Corp., M. Carroll Benton, 1127 Broadway Plaza,
Suite 203, Tacoma, WA 98402, Tel.# (253) 691-1531.
Within five days of our receipt of a subscription agreement accompanied by a
check for the purchase price, we will send by first class mail a written
confirmation to notify the subscriber of the extent, if any, to which such
subscription has been accepted. We reserve the right to reject orders for the
purchase of shares in whole or in part. Upon acceptance of each subscriber, we
will promptly provide our stock transfer agent the information to issue shares.
You can also call or write us at any time with any questions you may have. We
would be pleased to speak with you about any aspect of this offering.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our views about
future events and financial performance. Our actual results, performance or
achievements could differ materially from those expressed or implied in these
forward-looking statements for various reasons, including those in the "Risk
Factors" section beginning on page 9. Therefore, you should not place undue
reliance upon these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
32
STOCK TRANSFER AGENT
Our transfer agent and registrar of the Common Stock is Colonial Stock Transfer,
66 Exchange Place, Salt Lake City, Utah, 84111, Tel. (801) 355-5740.
ESCROW AGENT
All securities issued in connection with this offering and the gross proceeds
from the offering shall be deposited promptly into an escrow account. Wire
transfer instructions are shown in the subscription documents.
EXPERTS
Our financial statements of Aptus Corp., as of and for the periods, December 31,
2002 and November 30, 2003, have been audited by De Joya & Company, independent
auditors, as set forth in their report included herein and incorporated herein
by reference. Such financial statements have been included in reliance upon such
report given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
There is no past, pending or, to our knowledge, threatened litigation or
administrative action which has or is expected by our management to have a
material effect upon our business, financial condition or operations, including
any litigation or action involving our officers, directors, or other key
personnel.
The Law Offices of Miles Garnett, Esq., 66 Wayne Avenue, Atlantic Beach,
N.Y.11509, Tel. #(516) 371-4598, will pass upon certain legal matters relating
to the Offering.
33
INDEX TO FINANCIAL STATEMENTS
Page
No.
Report of Independent Certified Public Accountants F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Aptus Corp.
(A Development Stage Company)
Tacoma, Washington
We have audited the accompanying balance sheets of Aptus Corp. (A Development
Stage Company) as of November 30, 2003 and December 31, 2002, and the related
statements of operations, stockholders' equity, and cash flows for the eleven
months ended November 30, 2003, the period from April 4, 2002 (Date of
Inception) through December 31, 2002 and the period from April 4, 2002 (Date of
Inception) through November 30, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aptus Corp. (A Development
Stage Company) as of November 30, 2003 and December 31, 2002, and the results of
its operations and cash flows for the eleven months ended November 30, 2003, the
period from April 4, 2002 (Date of Inception) through December 31, 2002 and the
period from April 4, 2002 (Date of Inception) through November 30, 2003 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered losses from operations, all of
which raise substantial doubt about its ability to continue as a going concern.
Management's plans in regards to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
De Joya & Company
December 17, 2003
Las Vegas, Nevada
F-2
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
NOVEMBER 30, 2003 AND DECEMBER 31, 2002
November 30, December 31,
2003 2002
------------------- -------------------
ASSETS
Current assets
Cash $30,000 $ --
------------------- -------------------
Total current assets 30,000 --
------------------- -------------------
Total assets $30,000 $--
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $18,273 $273
------------------- -------------------
Total current liabilities 18,273 273
------------------- -------------------
Total liabilities 18,273 273
Commitments and contingencies -- --
Stockholders' equity
Class A preferred stock; $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Class B preferred stock; $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock; $.001 par value; 50,000,000 shares
authorized, 12,000,000 shares issued and outstanding 12,000 --
Additional paid-in capital 18,000 --
Accumulated deficit (18,273) (273)
------------------- -------------------
Total stockholders' equity (deficit) 11,727 (273)
------------------- -------------------
Total liabilities and stockholders' equity $30,000 $ --
=================== ===================
See Accompanying Notes to Financial Statements.
F-3
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Period from Period from
April 4, 2002 April 4, 2002
Eleven months (Date of inception) (Date of inception)
ended through through
November 30,
2003 December 31, 2002 November 30, 2003
----------------- ---------------------- ----------------------
Revenue $ -- $ -- $ --
Operating expenses
General and administrative 18,000 273 18,273
----------------- ---------------------- ----------------------
Total operating expenses 18,000 273 18,273
----------------- ---------------------- ----------------------
Loss before provision for income
taxes (18,000) (273) (18,273)
Provision for income taxes -- -- --
----------------- ---------------------- ----------------------
Net loss $ (18,000) $ (273) $ (18,273)
================= ====================== ======================
Basic and diluted loss per common
share $ (0.02) $ -- $ (0.03)
================= ====================== ======================
Basic and diluted weighted average
common shares outstanding 862,275 -- 547,248
================= ====================== ======================
See Accompanying Notes to Financial Statements.
F-4
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
Additional Total
Outstanding Shares of Stock Preferred Common Paid-in Accumulated Stockholders'
Preferred Common Stock Stock Capital Deficit Equity
-------------- --------------- ---------------------------- ---------------- --------------- -------------
Balance at April 4, 2002
(Date of inception) -- -- $ -- $ -- $ -- $ -- $ --
Net loss for period ended -- -- -- -- -- (273) (273)
-------------- --------------- ----------------- --------- ---------------- --------------- -------------
Balance, December 31, -- -- -- (273) (273)
2002 -- --
Issuance of founders' -- -- 18,000 --
common stock in November
2003 for cash, at
$0.0025 per share 12,000,000 12,000 30,000
Net loss for the eleven -- -- -- -- (18,000) (18,000)
months ended --
-------------- --------------- ---------------------------- ---------------- --------------- -------------
Balance, November 30,
2003 -- 12,000,000 $ -- $12,000 $18,000 $ (18,273) $11,727
============== =============== ================ ========== ================ =============== =============
</table>
See Accompanying Notes to Financial Statements.
F-5
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Period from Period from
April 4, 2002 April 4, 2002
Eleven months (Date of inception) (Date of inception)
ended through through
November 30, 2003 December 31, 2002 November 30, 2003
-------------------------- -------------------------- ------------------------
Cash flows from operating activities:
Net loss $ (18,000) $ (273) $ (18,273)
Changes in operating assets and liabilities:
Increase in accounts payable 18,000 273 18,273
-------------------------- -------------------------- ------------------------
Net cash used by operating
activities -- -- --
Cash flows from financing activities:
Proceeds from issuance of common stock 30,000 -- 30,000
-------------------------- -------------------------- ------------------------
Net cash provided by financing
activities 30,000 -- 30,000
-------------------------- -------------------------- ------------------------
Net increase in cash 30,000 -- 30,000
Cash, beginning of period -- -- --
-------------------------- -------------------------- ------------------------
Cash, end of period $ 30,000 $ -- $ 30,000
========================== ========================== ========================
</table>
See Accompanying Notes to Financial Statements.
F-6
APTUS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
DESCRIPTION OF BUSINESS - Aptus Corp. (hereinafter referred to as the
"Company") is seeking merger and asset-purchase activity to pursue
application service providers and small-niche software companies. The
Company has minimal operations and is considered a development stage
company in accordance with Statement of Financial Accounting Standards No.
7. The Company was incorporated in the State of Delaware on April 4, 2002.
GOING CONCERN - The Company incurred net losses of $18,273 from the period
of April 4, 2002 (Date of Inception) through November 30, 2003 and has not
commenced its business operations, raising substantial doubt about the
Company's ability to continue as a going concern. The Company plans to
identify a suitable business to commence or acquire. The Company will seek
additional sources of capital through the issuance of debt or equity
financing, but there can be no assurance the Company will be successful in
accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
YEAR END - The Company's year end is December 31.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
FIXED ASSETS - Fixed assets will be stated at cost less accumulated
depreciation. Depreciation will be provided principally on the
straight-line method over the estimated useful lives of the assets. The
cost of repairs and maintenance will be charged to expense as incurred.
Expenditures for property betterments and renewals will be capitalized.
Upon sale or other disposition of a depreciable asset, cost and accumulated
depreciation will be removed from the accounts and any gain or loss will be
reflected in other income (expense). Currently, the Company has no fixed
assets.
INCOME TAXES - The Company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards No. 109, which requires
recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in operations in the period that includes the
enactment date.
As of November 30, 2003, the Company has available net operating loss
carryovers of approximately $18,000 that will expire in various periods
through 2023. Such losses may not be fully deductible due to the
significant amounts of non-cash service costs. The Company has established
a valuation allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.
F-7
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)
NEW ACCOUNTING PRONOUNCEMENTS - In September 2001, the Financial Accounting
Standards Board (FASB) issued Statement No. 143, Asset Retirement
Obligations. This statement addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The statement will be
effective for the Company's fiscal year ending 2003. Management does not
expect the adoption of this standard to have a material impact on the
Company's financial statements.
In April 2002, the FASB issued Statement No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendments of FASB Statement No. 13, and
Technical Corrections. The Company does not believe that the adoption of
this pronouncement will have a material effect on its financial statements.
In June 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated With Exit or Disposal Activities. This statement requires the
recognition of a liability for a cost associated with an exit or disposal
activity when the liability is incurred versus the date the Company commits
to an exit plan. In addition, this statement states the liability should be
initially measured at fair value. The statement is effective for exit or
disposal activities that are initiated after December 31, 2002. The Company
does not believe that the adoption of this pronouncement will have a
material effect on its financial statements.
In January 2003, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure. This statement provides
alternative methods of transition for a voluntary change to the fair
value-based method of accounting for stock-based employee compensation. In
addition, this statement also amends the disclosure requirements of SFAS
No. 123 to require more prominent and frequent disclosures in the financial
statements about the effects of stock-based compensation. Because the
Company continues to account for employee stock-based compensation under
APB Opinion No. 25, the transitional guidance of SFAS No. 148 has no effect
on the financial statements at this time.
In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45 ("FIN No. 45"), Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others an interpretation of SFAS No. 5, 57, and 107 and rescission of
FASB Interpretation No. 34, was issued. FIN No. 45 clarifies the
requirements of SFAS No. 5, Accounting for Contingencies, relating to a
guarantor's accounting for, and disclosure of, the issuance of certain
types of guarantees. The adoption of the provisions of FIN No. 45 did not
have a material impact on the Company's results of operations, financial
position or cash flows.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation establishes standards for
identifying a variable interest entity and for determining under what
circumstances a variable interest entity should be consolidated with its
primary beneficiary. Until now, a company generally has included another
entity in its consolidated financial statements only if it controlled the
entity through voting interests. Interpretation No. 46 changes that by
requiring a variable interest entity to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable
interest entity's activities or is entitled to receive a majority of the
entity's residual returns or both. The Company does not believe that the
adoption of this pronouncement will have a material effect on its financial
statements.
F-8
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)
NET LOSS PER COMMON SHARE - The Company computes net loss per share in
accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff
Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB
98, basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is antidilutive. For the eleven months ended
November 30, 2003 and for the period from April 4, 2002 (Date of Inception)
through December 31, 2002, no options and warrants were excluded from the
computation of diluted earnings per share because their effect would be
antidilutive.
COMPREHENSIVE INCOME (LOSS) - The Company has no components of other
comprehensive loss. Accordingly, net loss equals comprehensive loss for all
periods.
ADVERTISING COSTS - The Company recognizes advertising expenses in accordance
with Statement of Position 93-7 "Reporting on Advertising Costs." Accordingly,
the Company expenses the costs of producing advertisements at the time
production occurs, and expenses the costs of communicating advertisements in the
period in which the advertising space or airtime is used. The Company has
recorded no significant advertising costs for the eleven months ended November
30, 2003 and the period from April 4, 2002 (Date of Inception) through December
31, 2002.
RESEARCH AND DEVELOPMENT COSTS - Research and development costs are charged to
expense as incurred.
STOCK-BASED COMPENSATION - The Company applies Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related
Interpretations, in accounting for stock options issued to employees. Under APB
No. 25, employee compensation cost is recognized when estimated fair value of
the underlying stock on date of the grant exceeds exercise price of the stock
option. For stock options and warrants issued to non-employees, the Company
applies SFAS No. 123, Accounting for Stock-Based Compensation, which requires
the recognition of compensation cost based upon the fair value of stock options
at the grant date using the Black-Scholes option pricing model.
The Company issued no stock, neither granted warrants or options, to employees
for compensation for the eleven months ended November 30, 2003 and the period
from April 4, 2002 (Date of Inception) through December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS
No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock
options using the fair value method and, if so, when to begin transition to that
method.
2. STOCKHOLDERS' EQUITY
November, 2003, the Company issued 12,000,000 shares of its common stock for
cash in the amount of $30,000 ($0.0025 per share) to five individuals.
3. LETTERS OF INTENT
On September 29, 2003, the Company entered into a letter of intent with
QwikQuote, Inc. ("QwikQuote") to purchase all of its assets in consideration of
$300,000. The purchase price shall be paid with $90,000 in cash and $210,000 in
the Company's common stock. The anticipated closing date for this transaction is
on or about January 2004.
On November 3, 2003, the Company entered into a binding letter of intent with
Appgen, Inc. ("Appgen") and Mark Andre ("Andre") to purchase certain assets from
Appgen and Andre in consideration of $500,000. The purchase price of $500,000
shall be paid with the Company's common stock. Additionally, a 5.5% royalty on
all revenues earned on such assets purchased in perpetuity and a consulting
agreement in the amount of $5,000
F-9
monthly for a period of two years will be paid to Andre. The anticipated closing
date for this transaction is on or about January 2004.
4. SUBSEQUENT EVENT
On December 15, 2003, the Company increased the authorized number of shares of
common stock to 250,000,000.
On December 17, 2003, the company authorized 5,000,000 shares of class A common
stock. par value $0.001 per share of which 1,200,000 shares are issued at a
value of $0.001 per share and are outstanding.
F-10
No dealer, salesperson or any other person is authorized to give any
information or to make any representations in connection with this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by Aptus Corp.
us. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the
securities offered by this Prospectus, or an offer to sell or
solicitation of an offer to buy any securities by anyone in any
jurisdiction in which such offer or solicitation is not authorized
or is unlawful. 10,000,000
- ---------------------------------------------
SHARES OF COMMON STOCK
Until November 30, 2004 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
TABLE OF CONTENTS
Aptus Corp.
Summary..........................................................5 1127 Broadway Plaza, #203
Risk Factors.....................................................9 Tacoma, Washington 98402
Use of Proceeds.................................................12
Dilution........................................................13 ________, 2004
Dividend Policy.................................................14
Capitalization..................................................14
Our Business....................................................14
Management Discussion of Analysis of Condition and Results of ---------------------------------------
Operations......................................................22
Principal Shareholders..........................................25
Management......................................................26
Certain Relationships and Related Transactions..................29
Description of Securities.......................................30
Shares Eligible for Future Sale.................................31
Available Information...........................................32
Special Note Regarding Forward-Looking Statements...............32
Stock Transfer Agent............................................33
Escrow Agent....................................................33
Experts.........................................................33
Legal Matters...................................................33
Index to Financial Statements...................................F-1
</table>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The information required by this item is incorporated by reference to
"indemnification" in the prospectus herein.
At present we have not entered into individual indemnity agreements with our
Officers or Directors. However, our By-Laws and Certificate of Incorporation
provide a blanket indemnification that we shall indemnify, to the fullest extent
under Delaware law, our directors and officers against certain liabilities
incurred with respect to their service in such capabilities. In addition, the
Certificate of Incorporation provides that the personal liability of our
directors and officers and our stockholders for monetary damages will be
limited.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and we will be governed by the final adjudication of
such case.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 460.00
Blue Sky Fees and Expenses 10,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 5,000.00
Accountant's Fees and Expenses 2,500.00
-------------------
Total $ 35,960.00
===================
The foregoing expenses, except for the SEC fees, are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Unregistered Securities Sold within the past three years
The following sets forth information relating to all previous sales of common
stock by the Registrant which sales were not registered under the Securities Act
of 1933,as amended.
On November 7, 2003, the board of directors authorized and issued the initial
issuance of an aggregate of 12,000,000 shares as founder's stock at a price of
$0.025 per share totaling $7,500 each to John P. Gorst, M. Carroll Benton, Mark
Levin, and $3,750 each to Clifford Mastricola and Clayton Chase. The stock was
purchased and the remaining balance of 238,000,000 shares of authorized common
stock remained unissued.
On December 17, 2003, the board of directors authorized the purchase of an
aggregate of 1,200,000 shares of class A common stock at a price of $0.001 per
share, totaling $300.00 each to John P. Gorst, M. Carroll Benton and Mark Levin,
and $150.00 to Clifford Mastricola and Clayton Chase. The stock has been
purchased and the remaining balance of 3,800,000 shares of authorized class A
common stock remained unissued.
In the past, executive management of Insynq, Inc. has engaged Mark Levin,
Clifford Mastricola and Clayton Chase as consultants regarding possible merger
and acquisition targets. Their contributions to Aptus as founders
II-1
were in the
form of capital investment for common stock and business planning and advice.
These individuals will be consultants to assist us in executing that portion of
our business plan relating to mergers and acquisitions.
These issuances were made in reliance on Section 4(2) of the Securities Act of
1933, as amended, and we did not seek information whether the acquirers were
accredited or sophisticated investors. The purchasers all were members of the
incorporator group and not solicited.
II-2
ITEM 27. EXHIBITS
Index to Exhibits
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
3.1 Articles of Incorporation Previously filed
3.2 Amended Articles of Incorporation
Changing authorized common
shares to 250,000,000 Previously filed
3.3 Amended Articles of Incorporation
Adding Class A common shares
With super voting rights Previously filed
3.4 Bylaws Previously filed
4.1 Warrant Agreement w/Mark Levin This filing page
4.2 Warrant Agreement w/Glenn Paul This filing page
4.3 Warrant Agreement w/Straube Health This filing page
4.4 Warrant Agreement w/Tim Heath This filing page
4.5 Asset Purchase Agreement w/QwikQuote This filing page
4.6 Asset Purchase Agreement w/Mark Andre This filing page
4.7 Asset Purchase Agreement w/Appgen
Technologies, Inc. This Filing Page
5.1 Consent of Miles Garnett, Esq. This filing page
10.1 Distribution Agreement w/Mark Andre This filing page
10.2 Security Agreement w/Mark Andre This filing page
10.3 Consulting Agreement w/Mark Andre This filing page
10.4 Consulting and Non-Compete Agreement
w/Glenn Paul This filing page
10.5 Consulting and Non-Compete Agreement
w/Alan Katz This filing page
10.6 Consulting and Non-Compete Agreement
w/ Win Straube This filing page
23.1 Consent of Accountants This filing page
II-3
ITEM 28. UNDERTAKINGS
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement
To include any prospectus required by section I O(a)(3) of the Securities Act of
1933, as amended;
To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment) which, individually or in the aggregate,
represent a fundamental change in the information in the registration
statement;
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to the information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of securities at that time shall be
deemed to be the initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission any supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
to that section.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to our certificate of incorporation or
provisions of Delaware law, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission the indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
If a claim for indemnification against liabilities (other than the payment by
the Registrant) of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding is asserted by a director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether the
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of the issue.
II-4
APPENDIX
FOR OFFICE USE ONLY:
SUBSCRIPTION AGREEMENT
FOR
APTUS CORP.
COMMON STOCK ($0.50 PER SHARE)
Persons interested in purchasing common stock of Aptus Corp. must complete and
return this Subscription Agreement along with their check or money order to:
Aptus Corp.
1127 Broadway Plaza, #203
Tacoma, Washington 98402, ("the Issuer") ("the Company")
Subject only to acceptance hereof by the issuer, in its discretion, the
undersigned hereby subscribes for the number of common shares and at the
aggregate subscription price set forth below.
An accepted copy of this Agreement will be returned to the Subscriber as a
receipt, and the physical stock certificates shall be delivered to each Investor
within thirty (30) days of the Close of this Offering.
SECURITIES OFFERED - The Company is offering 10,000,000 shares (par
value $0.001 per share) at $0.50 per share. The minimum subscription is 1,000
shares.
SUBSCRIPTION - In connection with this subscription the undersigned
hereby subscribes to the number of common shares shown in the following table.
NUMBER OF COMMON SHARES = ___________________
Multiply by Price of Shares x $.50 per Share
Aggregate Subscription Price = $___________________
Check or money order shall be made payable to APTUS CORP. ESCROW ACCOUNT
II-5
In connection with this investment in the Company, I represent and warrant as
follows:
a) Prior to tendering payment for the shares, I received a copy of and read your
prospectus dated ______________, 2004.
b) I am a bona fide resident of the state of ________________________________.
c) The Issuer and the other purchasers are relying on the truth and accuracy of
the declarations, representations and warranties herein made by the undersigned.
Accordingly, the foregoing representations and warranties and undertakings are
made by the undersigned with the intent that they may be relied upon in
determining his/her suitability as a purchaser. Investor agrees that such
representations and warranties shall survive the acceptance of Investor as a
purchaser.
Please register the shares, which I am purchasing as follows:
Name: _____________________________________ Date: ___________________
As (check one)
Individual Tenants in Common Existing Partnership
Joint Tenants Corporation Trust
Minor with adult custodian under the Uniform Gift to Minors Act IRA
For the person(s) who will be registered shareholder(s):
- ------------------------------------------- ------------------------------
Signature of Subscriber Residence Address
- ------------------------------------------ --------------------------------
Name of Subscriber (Printed) City or Town
- ------------------------------------------- -------------------------------
Signature of Co-Subscriber State Zip Code
- ------------------------------------------- --------------------------------
Name of Co-Subscriber (Printed) Telephone
- ------------------------------------------- --------------------------------
Subscriber Tax I.D. or Co-Subscriber Tax I.D. or
Social Security Number Social Security Number
- ------------------------------------------- ------------------------------
E-mail Address (if available)
ACCEPTED BY: APTUS CORP.
By: _______________________________________ Date: ______________________________
Officer
II-6
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, in the City of Tacoma,
Pierce County, State of Washington, on February 25, 2004.
(Registrant) APTUS CORP.
By: /s/ John P. Gorst
John P. Gorst
Chairman of the Board of Directors
In accordance with the Securities Act of 1933 this registration was signed by
the following persons in the capacities and on the dates indicated.
/s/ John P. Gorst Chief Executive Officer February 25, 2004
John P. Gorst Chairman of the Board
and Director (Principal
Executive Officer)
/s/ M. Carroll Benton Chief Administrative Officer February 25, 2004
M. Carroll Benton Secretary, Treasurer and
Director
II-7