AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON June 30, 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. 4)
APTUS CORP.
(Exact name of small business issuer in its charter)
DELAWARE 7372 72-1528259
(State or jurisdiction of (Primary Standard Industrial (I.R.S.Employer
incorporation or organization) Classification Code Number) Identification No.)
1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 691-1531
(Address and telephone number of principal executive offices)
1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA
98402 (Address of principal place of business or intended
principal place of business)
JOHN P. GORST, 1127 BROADWAY PLAZA, SUITE 203, TACOMA, WA 98402 (253) 677-6649
- --------------------------------------------------------------------------------
(Name, Address and telephone number of agent for service)
COPIES TO:
MILES GARNETT, ESQ., 66 WAYNE AVENUE, ATLANTIC BEACH, NY 11509 (516) 371-4598
Approximate date of proposed sale to the public: AS SOON AS PRACTICABLE AFTER
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box: [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 registration
class of securities to amount to be price per unit offering fee
be registered registered
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (ss.230.457
of this chapter) relied upon, if the basis of the calculation is not otherwise
evident from the information presented in the table. If the filing fee is
calculated pursuant to Rule 457(o) under the Securities Act, only the title of
the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
need to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
APTUS CORP.
10,000,000 SHARES OF COMMON STOCK
This is our initial public offering of common stock. The initial public offering
price is $0.50 per share. No public market currently exists for our common
stock. We are selling 10,000,000 shares of common stock, which have a par value
$0.001 per share. This represents 44.44% of the total outstanding shares based
on the maximum amount of the offering. We are a software Application Service
Provider (ASP). Prior to this offering there has been no public market for the
shares. We are a Delaware corporation.
We will sell the shares ourselves through our officers and directors. We do not
plan to use underwriters or pay any commissions. We will be selling our shares
in a direct participation offering and no one has agreed to buy any of our
shares. The offering will terminate no later than March 31, 2005, and unless a
minimum of 500,000 shares are sold by that time the proceeds will be returned
with interest. We will escrow the proceeds with National City Bank, NA until the
minimum is reached.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 9.
TOTAL TOTAL
PER SHARE MINIMUM MAXIMUM
----------------------------------------------------
Public offering price (1) $0.50 $250,000 $5,000,000
Underwriting discounts and commissions None None None
Proceeds, before expenses, to us (2) $0.50 $250,000 $5,000,000
</table>
(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
TABLE OF CONTENTS
SUMMARY..............................................................................................5
RISK FACTORS.........................................................................................9
USE OF PROCEEDS.....................................................................................13
DILUTION............................................................................................14
DIVIDEND POLICY.....................................................................................15
CAPITALIZATION......................................................................................16
PLAN OF DISTRIBUTION................................................................................17
OUR BUSINESS........................................................................................17
PLAN OF OPERATION...................................................................................27
PRINCIPAL SHAREHOLDERS..............................................................................34
MANAGEMENT..........................................................................................38
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................41
DESCRIPTION OF SECURITIES...........................................................................42
SHARES ELIGIBLE FOR FUTURE SALE.....................................................................44
AVAILABLE INFORMATION...............................................................................46
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...................................................46
STOCK TRANSFER AGENT................................................................................47
EXPERTS.............................................................................................47
LEGAL MATTERS.......................................................................................47
INDEX TO FINANCIAL STATEMENTS......................................................................F-1
SUMMARY
This summary highlights selected information from elsewhere in this prospectus.
It is not complete and may not contain all of the information that is important
to you. To understand this offering fully, you should read the entire prospectus
carefully, including the risk factors and the financial statements and the
related notes to these statements included in this prospectus.
OUR COMPANY
We are an Application Service Provider ("ASP"). An ASP offers hosted proprietary
software along with other hosted software business solutions distributed over
Internet ready computers. The ASP customer uses a web browser to run software
products, anywhere at anytime, without the need to download or install the
software application. Our goal is to become a reliable and secure on-demand
computing platform.
We are engaged and have begun implementation of a targeted and strategically
defined plan to purchase selected assets or businesses from within the highly
fragmented application service provider and software development industries. As
a result of our implementation efforts, we recently acquired four business
software applications.
o On January 23, 2004, we acquired certain assets of Appgen Technologies,
Inc. (Appgen) and Mark Andre, which includes the Appgen Custom Suite and
MyBooks Professional, both are software applications.
o On February 1, 2004, we acquired certain assets of QwikQuote, Inc, which
includes QwikQuote Sales and QwikQuote Professional Sales, sales quote
applications.
We will provide hosting for either leased applications or customer owned
software on leased servers located in leased data centers, rent computing
services to our customers for a monthly fee, and perform remote management and
maintenance of our customers' servers from our network operations center.
We focus on the small office/home office ("SOHO") and small/medium enterprise
("SME") markets. See "Risk Factors." We are in the development stage and have a
limited operating history. No representation is made or implied that we will be
able to carry on our activities profitably. Our subsistence is dependent
initially upon sufficient proceeds being realized by us from this offering, of
which there is no assurance. Proceeds of this offering may be insufficient to
enable us to conduct potentially profitable operations or otherwise to engage in
any business endeavors. The likelihood of our success must be considered in
light of the expenses, difficulties and delays often encountered in connection
with the formation of any new business. Further, no assurance can be given that
we will have the ability to acquire additional assets, businesses or properties.
We were incorporated on April 4, 2002 under the laws of the State of Delaware.
Our offices are located at 1127 Broadway Plaza, Suite 203, Tacoma, WA 98402, and
the telephone number is (253) 691-1531.
THE OFFERING
Unless otherwise indicated, the
information in this prospectus,
irrespective of the date referenced,
assumes that there is no exercise of
outstanding options or warrants to
purchase additional shares. We
intend to use the net proceeds of
this offering to market the services
we currently offer and initiate new
business development and
relationships. We shall seek to
employ qualified, but as yet
unidentified, individuals to be
employed in our business. No
assurance can be given that the net
proceeds from the sale of the
maximum number of shares offered in
this offering or any lesser net
amount will be sufficient to
accomplish our goals. In the event
that substantially less than the net
proceeds from the maximum offering
are raised, our plans may be
materially and adversely
5
affected in
that we may find it even more
difficult, if not impossible, to
realize our goals. See "Risk
Factors."
The minimum required amount of
shares to be sold is 500,000 shares
and the maximum amount is 10,000,000
shares. Prior to this offering,
there has been no public market for
the shares and there can be no
assurance that a regular trading
market will develop for the shares
after this offering or that, if
developed, any such market will be
sustained. We anticipate that
trading of the shares will be
conducted on the Over-The-Counter
Electronic Bulletin Board (the
"Bulletin Board") referred to as
OTCBB, which is maintained by the
NASD. There is no guarantee that we
will be able to trade on the
Bulletin Board. Any market for the
shares, which may result, will
likely be less well developed than
if our shares were traded on NASDAQ
or on an exchange. See "Risk
Factors."
If proceeds from this offering are
insufficient, we may be required to
seek additional capital. No
assurance can be given that we will
be able to obtain such additional
capital, or even if available, that
such additional capital will be
available on terms acceptable to us.
COMMON STOCK OFFERED
FOR SALE HEREBY Up to a maximum of 10,000,000 shares
by us.
OFFERING PRICE $0.50 per share offered to the
public. The initial public offering
price of the shares has been
arbitrarily determined by us and
does not bear any relationship to
such established valuation criteria
as assets, book value or prospective
earnings.
TERMS OF THE OFFERING The offering will remain open until
March 31, 2005, unless we decide to
terminate the selling efforts prior
to this date. The minimum investment
by each investor is 1,000 shares.
AUTHORIZED AND OUTSTANDING
COMMON PROCEEDS CLASS A CLASS A CLASS B
STOCK FROM COMMON PREFERRED PREFERRED
OFFERING STOCK STOCK STOCK
- ----------------- ----------------- ----------------- ------------- ------------- ----------------- -----------------
SHARES OF STOCK:
Authorized 250,000,000 5,000,000 10,000,000 10,000,000
Outstanding
prior to
offering 12,500,000 1,200,000 -0- -0-
After minimum
of offering
is sold 13,000,000 $250,000 1,200,000 -0- -0-
After maximum
offering is
sold 22,500,000 $5,000,000 1,200,000 -0- -0-
In connection with our recent
purchases of certain assets, we have
issued a warrant to purchase 500,000
shares of common stock with an
exercise price of $0.50 per share
and warrants to purchase 420,000
shares of common stock with an
exercise price of $0.0095 per share.
6
PLAN OF DISTRIBUTION This is a direct participation, and
with no commitment by anyone to
purchase any shares. The minimum
required subscription is 1,000
shares. In the event that the
minimum of 500,000 shares is not
sold by March 31, 2005, all proceeds
raised will be returned promptly to
subscribers in full with interest
thereon. Subscribers will not be
entitled to a return of funds from
the escrow account during the
offering period.
USE OF PROCEEDS In the event that the
minimum of 500,000 shares are sold,
then the last $36,000 that we raise
will be used to pay the expenses of
the offering after the escrow is
released. Our expenses are expected
to be $36,000 regardless of the
amount sold over our minimum.
SEC Registration Fee $ 460.00
Blue Sky Fees and Expenses 6,000.00
Trustee's and Transfer Agent Fees 4,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 3,500.00
Accountant's Fees and Expenses 4,000.00
-------------------
Total $ 35,960.00
===================
</table>
This is the only amount raised in
the offering that will be applied to
outstanding expenses. We intend to
apply substantially all of the net
proceeds of this offering (after the
minimum amount raised is released
from escrow) to market the services
we currently offer and initiate new
business development and
relationships as an ASP focused on
the SOHO and SME business.
ESCROWED FUNDS NOT TO BE
USED FOR ACCRUED SALARIES
OR PRIOR REIMBURSABLE
EXPENSES
No funds (including any interest
earned thereon) will be disbursed
from the escrow account for the
payment of accrued salaries or
reimbursement of expenses incurred
on our behalf prior to the effective
date of this offering by our
officers and directors. Other than
the foregoing, there is a limit of
$36,000 on the total amount of such
reimbursable expenses, and there
will be no review of the
reasonableness of such expenses by
anyone other than our board of
directors, all of whom are officers.
In no event will the escrowed funds
(including any interest earned
thereon) be used for any purpose
other than implementation of our
business plan. See "Risk Factors."
RISK FACTORS The shares offered hereby
involve a high degree of risk and
immediate substantial dilution and
should not be purchased by investors
who cannot afford the loss of their
entire investment. Such risks
include, among others: our
short-term existence and limited
resources, the discretionary use of
proceeds, and the intense
competition in effecting our
business strategy. See "Risk
Factors."
7
SUMMARY FINANCIAL INFORMATION
SUMMARY BALANCE SHEETS
March 31, 2004 December 31,
(unaudited) 2003
---------------- --------------
Assets
Current assets
$ 83,140 $ 24,227
Other assets 584,687 1,170
---------------- --------------
Total assets $ 667,827 $ 25,397
================ ==============
Liabilities
and
Stockholders'
Equity (Deficit)
Current
liabilities $ 214,551 $ 33,927
---------------- --------------
Total
liabilities 214,551 33,927
Total
stockholders'
equity (deficit) 453,276 (8,530)
---------------- --------------
Total
liabilities and
stockholders'
equity (deficit)
$ 667,827 $ 25,397
================ ==============
SUMMARY STATEMENTS OF OPERATIONS (unaudited)
Period from
April 4, 2002
For the three (Date of
months ended inception)
March 31, 2004 through March
31, 2004
------------------ ------------------
Revenue $ 78,979 $ 78,979
Total
operating
expenses (100,213) (138,743)
------------------ ------------------
Other (1,256) (1,256)
expense
------------------ ------------------
Net loss $ (22,490) $ (61,020)
================== ==================
RISK FACTORS
The securities offered hereby are highly speculative and involve substantial
risks. You should carefully consider the risks and uncertainties described below
and the other information in this prospectus before deciding whether to invest
in shares of our common stock. Any of the following risks could cause the value
of our common stock to decline.
OUR FINANCIAL STATUS CREATES A DOUBT WHETHER WE WILL CONTINUE AS A GOING
CONCERN FOR MORE THAN 12 MONTHS FROM THE DATE OF THIS PROSPECTUS, AND, IF WE
DO NOT CONTINUE AS A GOING CONCERN, INVESTORS WILL LOSE THEIR ENTIRE
INVESTMENT.
We have nominal assets and limited operations with which to create operating
capital. We seek to raise additional capital to promote and advertise our
services in an offering of our common stock on Form SB-2. If all the shares
offered are sold, we will receive up to $4,964,000 net proceeds to pay for our
estimated operating expenses. Depending on the number of shares sold from this
offering, we may receive significantly less than the maximum proceeds or as
little as $214,000 of net proceeds. There can be no assurance that such offering
will be successful. In their review report dated June 25, 2004, our reviewers
indicated that there was substantial doubt as to our ability to continue as a
going concern due to on going losses since inception to March 31, 2004, and,
that our ability to continue as a going concern is dependant upon our obtaining
additional financing for our operations or reaching profitability. There can be
no assurance that we will be able to achieve either of these.
ALL OF OUR DIRECTORS AND OFFICERS WILL CONDUCT OUR ACTIVITIES ON A PART TIME
BASIS. AS A RESULT OF THEIR PARTICIPATION IN BUSINESS ACTIVITIES OF OTHER
COMPANIES, THEIR LIMITED ATTENTION TO US MAY DELAY THE DEVELOPMENT OF OUR
BUSINESS.
Our chief executive officer, John P. Gorst, is the president and chairman of the
board of Insynq, Inc. (Insynq), a public company. M. Carroll Benton, our chief
administrative officer, secretary and treasurer is also chief administrative
officer, secretary and treasurer of Insynq, and Joanie C. Mann, vice president
of strategic alliances for Insynq is our executive vice president.
WE HAVE FEW CUSTOMERS AND GENERATE LIMITED REVENUES AND IF WE FAIL TO
SUCCESSFULLY IMPLEMENT OUR BUSINESS PLAN BY DEVELOPING A SOLID CUSTOMER BASE
AND GENERATING REVENUES WE WILL GO OUT OF BUSINESS.
Our success is dependent on successful implementation of our business plan. This
involves developing and expanding our operations on a profitable basis and
developing marketing and promotional channels to promote our services on a
regular basis. We have not entered into any customer agreements to utilize our
services with any company. We do not believe that we will generate significant
revenues in the immediate future. We will not generate any meaningful revenues
unless we obtain contracts with a significant number of customers. If we fail to
obtain contracts with a significant number of customers to generate meaningful
revenues, we may not achieve profitability and may go out of business.
WE FACE INTENSE COMPETITION FROM OTHER ASP PROVIDERS WITH SIMILAR APPLICATION
SERVICES, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND PROFITABILITY.
A large number of ASPs offer similar services that we plan to offer. Most of
these companies have greater resources in terms of people, money and experience.
If we cannot successfully compete with these firms, the future of our business
and of operations will be adversely affected in terms of little or no revenue
and profitability.
OUR EXECUTIVE MANAGEMENT TEAM IS CRITICAL TO THE EXECUTION OF OUR BUSINESS
PLAN AND THE LOSS OF EITHER ONES' SERVICE COULD SEVERELY IMPACT NEGATIVELY ON
OUR BUSINESS.
Our success depends significantly on the continued services of our management
personnel, John P. Gorst, chairman of the board, president and chief executive
officer, M. Carroll Benton, secretary and treasurer, chief administrative
officer and interim chief financial officer and Joanie C. Mann, executive vice
president. Losing any one of them could seriously harm our business. Competition
for executives is intense. If we had to replace either one, we would not be able
to replace the significant amount of knowledge that they have about our
operations. We do not maintain key man insurance policies on anyone. We do not
have employment contracts with John P. Gorst, M. Carroll Benton and Joanie C.
Mann.
OTHER BUSINESS VENTURES OF OUR EXECUTIVE OFFICERS MAY PRESENT A POTENTIAL
CONFLICT OF INTEREST, WHICH MAY ADVERSELY AFFECT OUR REVENUE AND
PROFITABILITY.
John P. Gorst and M. Carroll Benton are two of our three officers and the sole
directors and have substantial control in directing our activities. They are
involved in other business activities, including Insynq, and may, in the future,
become involved in additional business opportunities. If a specific business
opportunity becomes available, they may face a conflict of interest. Either one
may take advantage of this business opportunity through other companies with
whom they work. In such event, we may lose potential revenue, which will
negatively affect the value of shares of our common stock.
Although both current business activities that our officers are involved with
are ASPs, we have different service offerings. We primarily will be selling our
propriety software applications, either for local installation or as a hosted
technology alternative through our value added resellers and dealer channels and
integrating any future business or asset acquisitions into our business. Insynq
services are to provide content to the telephone, cable and data-line
industries, by offering virus protection, data storage, email management,
marketing services, and hosted QuickBooks for their business customers by
developing relationships within those industries. Sales will be generated by
utilization of their own inside sales organizations.
WE CURRENTLY DO NOT HAVE A DATA CENTER AND SERVER INFRASTRUCTURE REQUIREMENT,
HOWEVER, WHEN WE DO, WE WILL NEED TO NEGOTIATE LEASES AND/OR PURCHASE. IF WE
ARE UNABLE TO NEGOTIATE FAVORABLE LEASES OR PURCHASE WITHIN OUR BUDGET
ALLOWANCE, WE WILL NOT BE ABLE TO EXECUTE A SIGNIFICANT PORTION OF OUR
BUSINESS PLAN.
We currently do not own or lease server infrastructure or data center
facilities, nor do we currently have a requirement for these components. When
demand is created from our sales growth or future business or asset
acquisitions, we will be required to meet these needs through a combination or
leases and/or purchases. We cannot be assured that we can negotiate favorable
leases, or if at all, or purchase within our budget allowance. If we are unable
to accomplish this, we will be unable to execute on a significant portion of our
business plan.
SUBJECT TO OUR RAISING THE MINIMUM AMOUNT OF PROCEEDS FROM OUR OFFERING, WE
WILL NEGOTIATE WITH INSYNQ FOR A SOLE AND EXCLUSIVE NON-COMPETE LICENSING
AGREEMENT FOR THE BRAND E-ACCOUNTING. IF WE ARE UNSUCCESSFUL IN OBTAINING AN
AGREEMENT ON FAVORABLE TERMS, OR IF AT ALL, WE WILL BE UNABLE TO EXECUTE ON A
SIGNIFICANT PORTION OF OUR BUSINESS PLAN.
Subject to our raising the minimum amount of proceeds from our offering, we will
negotiate with Insynq, a sole and exclusive, non-compete, licensing agreement
for the e-Accounting business model and brand. Insynq has developed the
e-Accounting brand of services and bundled third party products that directly
address the needs of one our target markets, that of the accounting and
bookkeeping professionals. If we are unsuccessful in obtaining an agreement on
favorable terms, or it at all, we will be unable to execute on a significant
portion of our business plan.
IF WE ARE UNABLE TO OBTAIN KEY SOFTWARE APPLICATIONS FROM CERTAIN VENDORS, WE
WILL BE UNABLE TO DELIVER OUR SERVICES, WHICH MAY RESULT IN THE TERMINATION OF
OUR OPERATIONS.
We will rely on third-party suppliers, including Microsoft and Citrix to provide
us with key software applications for our infrastructure and our hosted
application rental model. Certain components or applications are only available
from limited sources. If we are unable to obtain these products or other
services, including connectivity services, in a timely manner at an acceptable
cost or at all, it may substantially inhibit our ability to deliver our
services, which may result in the termination of our operations. We may not be
able to license these technologies on commercially reasonable terms or at all,
and, if we fail to successfully integrate licensed technology into our
operations, we may be forced to cease doing business.
IF WE FAIL TO PROTECT OUR PROPRIETARY PRODUCTS FROM INFRINGEMENT THROUGH
PATENTS, AND TRADEMARKS WE COULD AFFECT OUR ABILITY TO COMPETE EFFECTIVELY AND
OUR RESULTS OF OPERATIONS.
Our services are highly dependent upon proprietary technology, such as the
Appgen Custom Suite, MyBooks Professional and the QwikQuote software. These
applications and trade names are copyrighted but not protected by registered
trademarks or patent rights. Currently, we rely on contracts, confidentiality
agreements, and trade-secrecy laws to protect our proprietary rights in our
technology. We will be pursuing several trademark, copyright, and patent
registrations for our various products and their names. The protective steps we
have taken may not be adequate to deter misappropriation of our proprietary
information. In addition, some end-user license provisions protecting against
unauthorized use, copying, transfer and disclosure of a licensed program may be
unenforceable under the laws of certain jurisdictions and foreign countries. In
addition, the laws of some foreign countries do not protect proprietary rights
to the same extent as the laws of the United States. Failure to adequately
protect our intellectual property could harm our brand name, devalue our
proprietary content, and affect our ability to compete effectively. Furthermore,
defending our intellectual property rights could result in the expenditure of
significant financial and managerial resources, which could materially and
adversely affect our business, results of operations and financial condition.
Also, it is possible that our competitors or others will adopt product or
service brands similar to ours, possibly leading to customer confusion.
DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT AND OTHER CLAIMS COULD BE
TIME CONSUMING AND EXPENSIVE, AND, IF WE ARE NOT SUCCESSFUL, COULD SUBJECT US
TO SIGNIFICANT DAMAGES AND DISRUPT OUR BUSINESS.
Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit or interfere with our ability to
make, use or sell our services. As a result, we may be found to infringe on the
proprietary rights of others. In the event of a successful claim of infringement
against us and our failure or inability to license the disputed technology, our
business and operating results would be significantly harmed. Intellectual
property litigation has become prevalent in the Internet and software fields.
Any litigation or claims, whether or not valid, could result in substantial
costs and diversion of resources.
INSYNQ DOES NOT HOLD ANY PATENTS OR REGISTERED TRADEMARK RIGHTS TO THEIR
E-ACCOUNTING BRAND AND PROPRIETARY SOFTWARE, AND, IF OUR COMPETITORS WERE TO
IMITATE OUR LICENSED E-ACCOUNTING MODEL WE WOULD, IF WE HAD AN EXECUTED
LICENSING AGREEMENT WITH INSYNQ, EXPERIENCE ADVERSE REVENUES AND
PROFITABILITY.
Insynq has developed the e-Accounting brand and business model consisting of
proprietary marketing materials and software, and, together are bundled with
other third party services or products, which are directed, primarily, to the
financial professional such as certified pubic accountants, bookkeepers and tax
professionals. Insynq has not obtained any patents or registered trademarks for
the brand e-Accounting or for their proprietary software. We will negotiate with
Insynq for a master license agreement, subject to our raising the minimum
proceeds from this offering, which would allow us the sole and exclusive use and
development of this brand. Assuming we are successful in obtaining an agreement
with Insynq that does not include protective rights, and, our competitors were
to imitate this brand, we would experience adverse revenues and profitability.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.
After this offering, if we are successful in raising the maximum amount of
proceeds, there will be issued and outstanding 22,500,000 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 12,500,000 shares will be
"restricted securities," subject to the volume limitations and other conditions
of Rule 144 under the Securities Act. These restricted securities will first
become eligible for resale under Rule 144 on November 7, 2004.
We cannot predict if future sales of our common stock, or the availability of
our common stock held for sale, will materially and adversely affect the market
price for our common stock or our ability to raise capital by offering equity
securities. Our stock price may decline if the resale of shares under Rule 144,
in addition to the resale of registered shares, at certain time in the future,
exceeds the market demand for our stock.
Unless a trading market for our shares is developed, you will not be able to
resell your stock, and, market makers may influence the stock price. Market
conditions and market makers may cause your investment in our common stock to
significantly diminish and may become very illiquid.
WE PLAN TO HAVE OUR SHARES TRADE ON THE NASD OVER-THE-COUNTER BULLETIN BOARD.
THERE IS NO TRADING MARKET FOR OUR SHARES, AND WE CANNOT ASSURE YOU THAT ANY
SUCH MARKET WILL EVER DEVELOP OR BE MAINTAINED. THE ABSENCE OF AN ACTIVE
TRADING MARKET WOULD REDUCE THE LIQUIDITY OF AN INVESTMENT IN OUR SHARES.
To the extent that brokerage firms act as market makers for our shares on the
NASD over-the-counter bulletin board, they may be a dominating influence in any
market that might develop, and the degree of participation by such firms may
significantly affect the price and liquidity of our shares. These firms may
discontinue their market making activities at any time. The prices at which our
shares are traded in the market will be determined by these firms and by the
purchasers and sellers of our shares, but such prices may not necessarily relate
to our assets, book value, results of operations or other established and
quantifiable criteria of value.
OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS CONTROL US. THIS MIGHT LEAD
THEM TO MAKE DECISIONS THAT DO NOT BENEFIT THE SHAREHOLDER INTERESTS.
John P. Gorst, M. Carroll Benton, Mark Levin, Clifford Mastricola and Clayton
Chase will beneficially own approximately 54.9% of the outstanding stock upon
completion of this offering. As a result, these persons, acting together, will
have the ability to control substantially all matters submitted to our
stockholders for approval (including the election and removal of directors and
any merger, consolidation or sale of all or substantially all of our assets) and
to control our management and affairs. Accordingly, this concentration of
ownership may have the effect of delaying, deferring or preventing a change in
control of us, impeding a merger, consolidation, takeover or other business
combination involving us or discouraging a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could materially and adversely affect the market price of the common stock.
OFFICERS, DIRECTOR AND PRINCIPAL SHAREHOLDERS OWN SHARES OF OUR CLASS A COMMON
STOCK WITH SUPERIOR VOTING RIGHTS. CONTROL BY THESE SHAREHOLDERS COULD HAVE AN
ADVERSE EFFECT ON OUR STOCKHOLDERS.
Our board of directors is authorized to issue up to 5,000,000 shares of class A
common stock pursuant to which the holders of such stock are entitled to one
hundred (100) votes for each share held, on all matters submitted to
stockholders, which voting power may be used by the holders of such stock to
create voting impediments or otherwise delay or prevent a change in control or
to modify the rights of holders of our common stock. As of June 30, 2004, we
have issued 1,200,000 shares of our class A common stock to two of our officers
and directors and three other principal shareholders.
WE HAVE FOURTEEN UNSECURED SHORT-TERM PROMISSORY NOTES PAYABLE IN THE AMOUNT
OF $172,500. IF WE ARE UNABLE TO REPAY THESE NOTES WHEN DUE, WE COULD INCUR
JUDGMENTS AND EXPENSIVE LEGAL FEES.
We have fourteen unsecured promissory notes payable in the amount of $172,500,
which are due July 10, 2004. These notes bear interest at the rate of prime plus
1%. If we are unable to raise adequate net proceeds from this offering to
payback the note holders, and if we are unable to negotiate an extension of the
original note term, and if we are unable to secure new loans to payback the
original notes, we may incur judgments and expensive legal fees.
WE MAY HAVE A NEED FOR SUBSEQUENT FUNDING. IF WE DO NOT GET SUCH FUNDING WE
MIGHT NOT BE ABLE TO CONTINUE OPERATIONS.
We may need further funding to proceed with our proposed plan of business. We do
not have a commitment with respect to any additional capital. We have no loan
commitments or lines of credit with banks or other financial institutions.
Therefore, the continuation of our business will depend on our ability to raise
additional funds through equity and/or debt financing. We cannot assure you that
we will be able to obtain additional funding when or if it is needed, or that
such funding, if available, will be obtainable on terms favorable to and
affordable by us. Our inability to obtain additional funding, when required,
would impair severely our business operations.
This prospectus contains certain forward-looking statements based on our current
expectations, assumptions, estimates and projections about our industry and us.
These forward-looking statements involve risks and uncertainties. Our actual
results could differ materially from those anticipated in such forward-looking
statements as a result of certain factors, as more fully described in this
section and elsewhere in this prospectus. Such factors include those set forth
in this section and elsewhere in this prospectus.
USE OF PROCEEDS
In the table below, we have detailed the minimum amount of capital required for
us to operate our business as currently planned. The table also shows how we
plan to use the proceeds of the offering.
AMOUNT OF NET PROCEEDS
AT 5% AT 25% AT 50% AT 75% AT 100%
----- ------ ------ ------ -------
Proceeds from the Offering $250,000 $1,250,000 $2,500,000 $3,750,000 $5,000,000
Less: Offering Expenses 36,000 36,000 36,000 36,000 36,000
------------ ------------- --------------- -- --------------- -- --------------
Net Proceeds from Offering $214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
============ ============= =============== == =============== == ==============
Use of Net Proceeds:
Repayment of Loans $- $176,500 $176,500 $176,500 $176,500
Acquisitions - 333,500 1,177,500 1,914,500 2,573,500
Acquisition/Finder Fees - 10,000 60,000 150,000 250,000
Infrastructure - 62,500 125,000 187,500 250,000
Research and Development - 62,500 125,000 187,500 250,000
Sales and Marketing 50,000 186,500 350,000 562,500 750,000
Operations 58,600 131,100 381,940 456,600 631,850
Consultants 105,400 251,400 68,060 78,900 82,150
------------ ------------- --------------- -- --------------- -- --------------
Total Use of Net Proceeds $214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
============ ============= =============== == =============== == ==============
</table>
We intend to utilize the proceeds from this offering as set forth in the above
columns. No assurances are given that we will sell any shares.
The net proceeds, monies to be used, include but are not limited to, due
diligence, travel and related out-of-pocket expenses, and consulting fees, if
any. Proceeds will also be used to pay other costs of our operations, including
legal fees and costs incurred in filing periodic reports under the federal
securities laws and the repayment of outstanding loans. A portion of the gross
proceeds raised hereby may be paid to officers, directors and promoters, and
their affiliates or associates, for any of their out-of-pocket expenses relating
to this offering, not to exceed $500 per individual, including travel. However,
no portion of the proceeds raised hereby will be paid to those persons, directly
or indirectly, as, officers' accrued salaries, directors' fees, and purchase of
shares or other payments, in accordance with an informal understanding among
management. Management is not aware of any circumstances under which such policy
may be changed.
We have not and do not presently intend to impose any limits or other
restrictions on the amount or circumstances under which any of such transactions
may occur, except that none of our officers, directors or their affiliates shall
receive any personal financial gain from the proceeds of this offering, except
for reimbursement of out-of-pocket offering expenses as aforementioned. No
assurance can be given that any of such potential conflicts of interest will be
resolved in our favor or will otherwise not cause us to lose potential
opportunities.
None of the proceeds raised hereby will be used to make any loans to our
promoters, management or their affiliates or associates of any of our
shareholders. Further, we may not borrow funds and use the proceeds therefrom to
make payments to our promoters, management or their affiliates or associates.
DILUTION
We were initially capitalized by the sale of common stock to our founders. As of
March 31, 2004, (unaudited) the following table sets forth the difference
between our issued and outstanding shares and purchasers of the shares in this
offering with respect to the number of shares purchased from us, the total
consideration paid and the average price per share paid.
THE TABLE BELOW, AS OF MARCH 31, 2004 (UNAUDITED), ASSUMES THAT THE MINIMUM (5%)
OF THE AMOUNT OF COMMON SHARES OFFERED HEREBY IS SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 92.4% $30,000 5.6% $0.0025
Asset Purchase Issuance 500,000 3.8 250,000 47.2 $0.50
---------------- -------------- ------------------ ------------
Total before offering 12,500,000 96.2 280,000 52.8
New Investors 500,000 3.8 250,000 47.2 $0.50
---------------- -------------- ------------------ ------------
Total 13,000,000 100% $530,000 100% $0.041
================ ============== ================== ============
THE TABLE BELOW, AS OF MARCH 31, 2004 (UNAUDITED), ASSUMES THE MAXIMUM (100%)
AMOUNT OF THE COMMON SHARES OFFERED HEREBY IS SOLD.
COMMON SHARES ISSUED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Founders 12,000,000 53.4% $30,000 0.6% $0.0025
Asset Purchase Issuance 500,000 .2 250,000 4.7 $0.50
---------------- -------------- ------------------ -----------
Total before offering 12,500,000 55.6 280,000 5.3
New Investors 10,000,000 44.4 5,000,000 94.7 $0.50
---------------- -------------- ------------------ -----------
Total 22,500,000 100% $5,280,000 100% $0.235
================ ============== ================== ===========
</table>
AS OF MARCH 31, 2004 (UNAUDITED) THE FOLLOWING TABLE REPRESENTS THE DILUTION PER
SHARE BASED ON THE PERCENTAGE SOLD OF THE TOTAL AMOUNT OF COMMON SHARES BEING
OFFERED.
COMMON SHARES COMMON SHARES
5% sold 100% sold
---------------- ---------------
Offering price $0.500 $0.500
Net tangible book value before offering $0.036 $0.036
Increase attributable to the offering $0.015 $0.205
Net tangible book value after giving effect
to the offering $0.051 $0.241
Per share dilution to new investors $0.449 $0.259
Percent dilution per share 89.73% 51.85%
</table>
As of March 31, 2004, the net tangible book value, "unaudited", of our common
stock was $453,276 or $.036 per share based on the 12,500,000 shares
outstanding. Net tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the number of outstanding
shares of common stock. After giving effect to the sale by us of 10,000,000
common shares at an offering price of $0.50 per share and after deducting
estimated expenses, our pro-forma net tangible book value as of that date would
be $5,417,276 or $0.241 per share, based on the 22,500,000 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 $0.259 per share to the new
investors who purchase shares in the offering ("New Investors"), as illustrated
in the table above. (Amounts are expressed on a per share basis.)
DIVIDEND POLICY
We do not intend to pay any cash dividends with respect to our common stock in
the foreseeable future. We intend to retain any earnings for use in the
operation of our business. Our board of directors will determine dividend policy
in the future based upon, among other things, our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
at the time. We intend to retain appropriate levels of our earnings, if any, to
support our business activities.
CAPITALIZATION
This table represents our capitalization as of March 31, 2004, (unaudited), as
adjusted to give effect to this offering.
ACTUAL SHARES SHARES
STOCKHOLDERS' EQUITY at 5% at 100%
------------------- --------------------- -----------------------
Class A common stock, $0.001 par
value, authorized 5,000,000 shares
Issued and outstanding 1,200,000
shares at par value $1,200 $1,200 $1,200
Common stock, $0.001 par
value, authorized
250,000,000 shares
Issued and outstanding
12,500,000 shares at
par value 12,500 12,500 12,500
Additional paid in
capital 267,500 267,500 267,500
Additional paid in
capital for issuance
of warrants 233,096 233,096 233,096
Offering at 5% 500,000 shares at
par value 500
Additional paid in
capital 249,500
Offering at 100% 10,000,000 shares at
par value 10,000
Additional paid in
capital 4,990,000
Offering expenses (36,000) (36,000)
Accumulated deficit (61,020) (61,020) (61,020)
------------------- --------------------- -----------------------
Total stockholders' equity $453,276 $667,276 $5,417,276
=================== ===================== =======================
PLAN OF DISTRIBUTION
The shares will be offered and sold by our principal executive officers and
directors. None of the officers and directors (a) is subject to a statutory
disqualification (as defined in Sec. 3(a)(35), (b) is paid commissions or other
remuneration for securities transactions, or (c) is an associated person of a
broker or dealer. The shares are offered by us at $.50 per share with 500,000
shares required to be sold before any funds can be released from escrow and with
a 10,000,000 share maximum basis. Our officers and directors will offer the
shares to vendors doing business with the corporation and to persons using the
software when such persons are able to be identified as users. We expect to also
advertise the sale of our securities in financial publications such as Forbes
magazine in their display-classified section. We currently do not intend to
select a broker-dealer to sell our securities. However, if we were to select a
broker-dealer, then we will file a post effective registration statement of
which this Prospectus will be a part to identify the selected broker-dealer at
such time as such broker-dealer intends to sell shares offered in this offering
and prior to such sale. All proceeds from subscriptions to purchase shares will
be transmitted by us and any participating dealer to the escrow account by noon
of the next business day after receipt.
Our officers, directors and major shareholders are the only persons who have
been instrumental in arranging our capitalization to date. Neither of our
officers nor our directors are acting as a nominee for any person or is
otherwise under the control of any person or persons. There are no agreements,
agreements in principle, or understandings with regard to compensation to be
paid by us to any of our officers or directors.
It is anticipated we may make sales of shares to officers and directors. These
purchases shall be made for investment purposes only and in a manner consistent
with a public offering of our shares. Such purchases may be used to reach the
amount required for the purpose of closing of our offering in the event such
amount is not reached as a result of lack of purchases by the general public.
Thus, the officers and directors could purchase up to 100% of the amount
required for closing if no sales are made to new shareholders. Such purchases
will increase the equity interests already owned by the officers and directors.
Investors should carefully review the financial statements, which are an
integral part of this prospectus.
If we file a post effective registration statement identifying selected
broker/dealers, these dealers participating in this offering are required to
deliver a copy of the final prospectus to any person who is expected to receive
a confirmation of the sale at least 48 hours prior to the mailing of the
confirmation.
ESCROW AGENT
All securities issued in connection with first 500,000 shares of this offering
and the gross proceeds from the offering shall be deposited promptly into an
escrow account with National City Bank, NA. Wire transfer instructions are shown
in the subscription documents.
OUR BUSINESS
Except for historical information, the following description of our business
contains forward-looking statements based on current expectations that involve
risks and uncertainties. Our actual results could differ materially from those
set forth in these forward-looking statements as a result of a number of
factors, including those set forth in this prospectus under the heading "Risk
Factors."OUR HISTORYUnless 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.
OUR BUSINESSGENERALWe are engaged and have begun implementation of a targeted
and strategically defined plan to purchase selected assets or businesses from
within the highly fragmented application service provider and software
development industries. Our acquisitions will enable us to offer hosted
proprietary software along with other hosted software business solutions
distributed over Internet provider services. As a result of our implementation
efforts, we recently acquired four business software applications from unrelated
parties, along with other related intellectual property and miscellaneous
furniture and equipment.
On January 23, 2004, we acquired certain assets of Appgen Technologies,
Inc. (Appgen) and Mark Andre, which include:
o The Appgen Custom Suite and MyBooks Professional, both accounting software
applications,
o A limited amount of used computer equipment and a limited amount of used
office furniture and equipment,
o Trade and company name(s),
o Web site "WWW.APPGEN.COM" and the domain name "appgen.com",
o Customer lists,
o Marketing materials,
o Software documentation and manuals, and
o VAR and dealer lists.
On February 1, 2004, we acquired certain assets of QwikQuote, Inc, which
include:
o QwikQuote Sales and QwikQuote Professional Sales, sales quote applications,
o A limited amount of used computer equipment and a limited amount of used
office furniture and equipment,
o The QwikQuote name,
o Web site "WWW.QWIKQUOTE.COM" and the domain name "qwikquote.com"
None of the trade names have been registered for trademarks and none of the
software applications have had patents applied for, however, they do have
unregistered copyright protection.
We will provide hosting for either leased applications or customer owned
software, rent computing services to our customers for a monthly fee, and
perform remote management, support and maintenance of our customers' servers
from our network operations center.
We will develop and provide the necessary tools to our customers enabling them
to implement business workflow and process ideas quickly and cost effectively.
We will make it possible for many businesses to take advantage of technology
solutions that have typically been reserved for larger business enterprises.
These solutions will enable our customers to benefit from reliable and secure
technology operations, which can grow or contract to accommodate changing
business needs. These services can be delivered without undertaking the
difficulty and expense associated with acquiring, disposing, building and
maintaining the required in-house expertise and infrastructure.
Due to management's experience and in-depth knowledge of the ASP industry, we
believe that the ASP or utility computing model of distributing computer
processing services or software over the Internet has generally proven itself to
deliver a lower total cost of operations as compared to building and maintaining
physically separated information technology systems. This is due in part to the
increasing complexities and significant financial investment of successfully
deploying and maintaining the various components of software solutions, as well
as the hardware and connectivity required for a successful Internet business
operation. In addition, the operation must have the in-house expertise required
to meet these challenges is significant and typically requires a host of
technical specialists.
Our customers will connect to leased data center facilities over the Internet,
through an Internet connection, such as a telephone line or a digital cable
line. We intend to provide our services with the speed, simplicity and
reliability of a traditional utility-like service. Like a utility company, we
will allow business customers to "turn on", or access, their software
applications and data instantly, on-demand, through any web enabled computer,
regardless of operating system.
With the customer utilizing our on-demand computing platform, we can
consistently deploy our customers' operations across multiple locations while
maintaining those services through a centralized operations center. Among other
things, our services will enable our customers to:
o Quickly expand their Internet presence as business opportunities arise in
new geographies and markets, and
o Efficiently incorporate new and evolving technologies into their existing
business operations.
The ASP concept reduces the risk of computer viruses, allows for
ongoing backup of user data and important information, disaster recovery and
security. The ASP model also reduces the phenomena of software piracy, as the
software title is no longer downloaded or installed on the user's computer.
BUSINESS STRATEGY
We target selected assets or businesses of ASP companies that are at or below
the 1,500-subscriber level. These targets are those that have developed
messaging, disaster recovery, accounting and finance, sales force management,
enterprise resource planning, customer relationship management, manufacturing
resource planning, or human resources applications. Our strategy is to apply
basic consolidation practices, which should reduce overhead and increase net
margins.
We will identify these targeted assets or businesses, through a variety of
means, such as the bankruptcy courts, referrals, independent research and trade
publications. These companies will, at a minimum, have target markets and the
prospects of a well-defined and long-term revenue stream. While we recognize
some companies may not be currently profitable, they may still be suitable
candidates because we would be able to consolidate many common expenses. Through
this consolidation principle we believe we can achieve a larger base of users,
reduce expenses and generate more profitable revenues.
Target organizations or selected assets for acquisition will meet the
following service mix criteria:
Windows or Unix application hosting services utilizing either of the following
technologies
Citrix Metaframe, Tarantella Enterprise, Microsoft Terminal Services, or New
Moon Canaveral
Mission critical applications such as:
Messaging, Disaster Recovery, Accounting and Finance, Sales Force Management,
Enterprise Resource Planning, Customer Relationship Management, Manufacturing
Resource Planning, or Human Resources
KEY VERTICAL MARKET PRODUCTS
Due to management's experience and in-depth knowledge of the ASP industry and
the recognition of the various pitfalls and opportunities that exist in the
market, we strongly believe that an ASP eventually should own and/or control its
core content (Intellectual Property) just as the cable industry has done. With
the cable industry now maturing, content has become strategically vital to the
equally important distribution network.
The ASP industry and Internet delivery model has reached a similar level of
maturity. Website development and hosting services has become commonplace and
has fueled the need to replace unproductive static content with bundled
interactive business applications and processes. With that in mind, it is our
intention to acquire several more business niche software applications that are
either Web- or Windows-based that can be added to our Appgen Custom Suite of
accounting applications. The modular nature of the Appgen Custom Suite allows us
to bundle the application functionality into a single package, or deliver
specific modules individually.
Accounting and bookkeeping practices spend tremendous amounts of time traveling
to client offices and manipulating and transporting electronic and paper media.
Many view this as the "necessary evil" of the service they provide, particularly
when the desire is to have access to the same accounting data using the same
applications.
By proxy, the financial professional has evolved as their clients' software and
information technology consultant. In addition, the professional, often acts as
the small business CFO, and is generally the one from whom a business owner
takes advice. Yet, in the Internet and e-business economy, the accountant's
position may be weakened by not clearly understanding the importance and
appropriate uses for technology.
Unfortunately, this progression into technology consulting does not work for
everyone. Many accounting and bookkeeping practices continue to find it
difficult to express their value to their client base, to grow their practice
through value-added service opportunities, all while keeping their costs of
doing business down. Competencies in accounting and finance may become clouded
with the perceived additional competencies in technology, thereby causing many
professionals to hesitate in becoming more involved with technology for fear of
losing client credibility. As the primary outside influencer to most businesses,
and working in an increasingly competitive industry, the accountant cannot
afford to make serious business mistakes involving his clients.
We believe our computing models or business solutions will assist a wide range
of businesses financial professionals to close the technology gap. Our business
computing solutions are as follows:
QWIKQUOTE SOFTWARE
Our four versions of QwikQuote Software are QwikQuote Sales, single user, and
network version, and QwikQuote Professional Sales single user and network
version, and, are designed for the electronic business processes, such as
emailing the quote directly from our software. Our software allows for the
generation of customized sales quotations and assists sales people by managing
their company's inventory or products. QwikQuote can also link to popular
contact manager applications, such as ACT!, Goldmine, Outlook, TeleMagic and
Maximizer, so that quotes can be synchronized and attached to the customer
contact record. It is our opinion, for a sales force to succeed, they should be
equipped with current and accurate product and pricing information that quickly
satisfies the modern customer's demands and time constraints. QwikQuote can
assist them with this problem by providing an electronic means of storing
product information in the form of picture, video, database, and free text that
is instantly available when a customer asks a question. Installed, using our
on-demand model, sales people can access and record their sales quote anytime,
anywhere.
Our QwikQuote software is copyrighted, but not registered, and, is not protected
by patent rights.
ALWAYS-ON UTILITY COMPUTING
This level of service provides for either leased or customer owned standard
Windows applications, such as MS Office, Intuit's QuickBooks or other Windows
based products to the SME and SOHO customers on a subscription basis alleviating
the need for the customer to purchase servers, anti-virus software, information
technology consultant services or other items needed to maintain a Windows
network.
Always-On allows for secured storage of data and information at leased data
centers. This service, Always-On, also provides the customer with the added
value and features of a wide-area network, allowing remote access to
applications and data anytime, anywhere.
APPGEN CUSTOM SUITE
Our Appgen Custom Suite software is a collection of collaborative commerce
modules from which a customer may select to form a total business computing
environment for the mid-sized business. These modules are designed specifically
for use by mid-sized enterprises of all types, and may be assembled in any way
that suits their business needs. The modules include general ledger, accounts
receivable, accounts payable, payroll processing, billing, bank reconciliation,
sales order processing, purchase order processing, inventory control, job cost
tracking, bill of materials, and others. The business accounting modules are
modifiable and grow with the customer's business. The Appgen Custom Suite may be
deployed on Unix, Windows, Mac OS X, and Linux operating systems on a single
computer or any other type of networked configuration.
The Appgen Custom Suite of applications are copyrighted, but not registered,
and, are not protected by patent rights.
MYBOOKS PROFESSIONAL
MyBooks Professional is a collaborative
accounting system for small to mid-sized businesses that is designed to simplify
the approach to accounting with jargon-free menus that make it easy to manage a
user's business. A single application interface for either a service-based or
product-based company helps grow the business by gaining control over
information regarding sales, customers, vendors, purchases, bank accounts,
inventory, billing, payroll, and financial statements, with complete sales order
and purchase order subsystems and a separate accountant's page that includes the
functions of the underlying general ledger system. MyBooks Professional is a
true double entry, fully auditable accounting system and is modifiable and
scalable. The application can accommodate one to ten simultaneous users and is
installable on Unix, Apple Mac OS X, Linux, and Microsoft Windows, requiring
little or no technical assistance. It may be used by a single user on a single
machine, or by multiple users in a network Windows environment or other
operating systems such as Macintosh or Linux server with any combination.
MyBooks Professional is modifiable by its worldwide network of developers and
VARs.
MyBooks Professional is copyrighted, but not registered, and, is not
protected by patent rights.
PLANNED PRODUCTS AND SERVICES
E-ACCOUNTING
We will negotiate with Insynq, subject to our raising the minimum
amount of proceeds from our offering, a sole and exclusive, non-compete, master
licensing agreement, for the e-Accounting business model and brand. Insynq, an
ASP, has provided hosted business solution applications since 1997. During this
time, Insynq developed the e-Accounting brand of services and bundled third
party products that directly address the needs of the accounting and bookkeeping
professionals. We will have the right to further enhance the offerings of the
e-Accounting model as the market dictates.
Currently, e-Accounting products and services include:
o E-COLLABORATE AND E-WORKPLACE - proprietary document management and
work flow process software applications, owned by Insynq. These
applications are copyrighted, but not registered, and, are not
protected by patent rights.
Insynq has obtained the permission from third party vendors to add
their services from which our customers may choose to purchase
directly:
o EFILESHARE - is a document storage service which allow our customers to
create a shared file system on the Internet, assign users and
permissions, and allow people inside and outside of their company to
interact and collaborate in real-time. Automatic data backup included.
o CONSTANT CONTACT - is a web-based email marketing service. Small- and
mid-sized businesses build their email list, create and send
professional email newsletters and promotions, and track results with
this self-service solution. No technical expertise required.
o BIZACTIONS - is a weekly email communication system that keeps our
customers connected with their clients, prospects and referral sources.
Our customers may get more business by providing valuable ideas, making
timely announcements and accessing online reports that discover key
information and needs about their clients and prospects.
o BSYTECH - is a provider of template or custom web sites for
professional service firms and businesses that want affordable
websites.
o J2 GLOBAL COMMUNICATIONS - has developed a way to receive faxes and
voicemail from anywhere. People send faxes and voicemail to our
customer's j2 fax number and receive them by email.
In addition, the e-Accounting brand anticipates developing a set of business
processes that speak to the growing interest in back office transaction
processing by the third party, commonly called outsourcing.
We intend, with the licensed business model, the online technology delivery, and
the application environment, bundled together, to address the specific needs of
the financial professional. Through the increased efficiencies experienced with
the e-Accounting services, professional accountants and bookkeepers will find
that they will be able to realize increased revenues by billing for additional
value added services. We will provide our customers with the opportunity and
tools necessary to broaden their scope of professional services and involvement
with their clients' business, and we believe we have the expertise and resources
to help those businesses transition to or incorporate Internet business
technologies. The professional now has the opportunity to develop new
competencies in business technologies without having to invest the entire
practice and put the client base at risk. Therefore, e-Accounting allows the
professional to establish a position more closely to the top of the business
value chain, and also creates additional business opportunities for bookkeeping
and data processing services. This value opportunity is directly extended to
client businesses and outsourcing agencies, as well.
Our online technology delivery model will allow both the professional and the
client to access and work simultaneously and interactively ("real time") on the
same data file. This business solution, therefore, employs and delivers the most
recent, up-to-date financial information to its user(s), whether it is the
accountant, the business owner or management. As a real time solution, this
model provides the most recent data immediately and allows its users to make
informed decisions based on current financial data, statements and analyses.
Our target will be the small to medium sized financial professional firm whose
client base primarily uses accounting software, such as QuickBooks and requires
assistance from the professional in the maintenance of the data. We will market
to those financial professionals by employing the functions of direct
telemarketing, e-marketing, direct mail, seminars and trade shows.
The target market for the software products will also be the small-to-midsize
for-profit businesses. QuickBooks is a product that may be sold and implemented
by consultants, VARs, and CPAs.
While we currently do not have any third party software vendor agreements, we
will actively seek licensing agreements for those applications that will allow
us to provide our services and those which will enhance the value of the
e-Accounting services to the customer.
MARKETING AND SALES
QWIKQUOTE SOFTWARE
We sell our QwikQuote Sales and QwikQuote Professional Sales through our web
site, WWW.QWIKQUOTE.COM. The information on this web site is not part of this
prospectus. Interested potential customers, after providing their name and
contact information, may download a copy of the software for testing. We then
call the potential customer to determine if there are any specific questions or
requirements. The customer may then purchase the downloaded software and have it
registered for full use. These companies are usually the small to medium sized
enterprise.
We also, for a fee, distribute our software through a third party vendor,
Digital River. This vendor is an e-commerce platform designed specifically to
reduce costs and streamline digital software sales. Customers can search their
web site, www.digitalriver.com, for our software by title or functionality and
download to their computer and call us for registration.
We have four versions of our QwikQuote Software:
QwikQuote Sales Software - single user, retail price is $199.00
QwikQuote Sales Software - one to ten concurrent users, retail price
is $649.00
QwikQuote Professional Sales Software - single user, retail price is
$249.00
QwikQuote Professional Sales Software - one to ten users, retail price
is $1,475.00
Sales of our QwikQuote Software, prior to our purchase, from January 2003
through January 2004 were approximately $171,500. The number of units sold was
1,062. To-date, our sales for the month of February 2004 are approximately
$11,600 for 82 units; for the month of March 2004 sales are approximately
$14,300 for 88 units; for the month of April 2004 sales are approximately
$11,674 for 85 units, and; for the month of May 2004 sales approximately $14,840
for 113 units.
ALWAYS-ON
We will sell to small and medium enterprises and the high-end segment
of the small office and home office market for the sale of hosted leased or
owned software and access to Internet-related services. We will sell products
and services to our customer subscriber base that allows our customers to adopt
"Web-based" computing that serves as an alternative to both traditional local
area networks and wide area networks implementations. The Always-On service will
be marketed and sold through direct telesales for the smaller (10 - 50 user)
customers, and through face-to-face sales for the larger clients that have more
complex needs.
APPGEN CUSTOM SUITE
Existing reseller and channels are preferred, though strong direct sales
organizations will be considered. Our first acquisition, Appgen Custom Suite,
has given us a historical sales database of approximately 300 prior dealers and
80 prior value added resellers (VARs). These dealers and VARs are located
throughout the world. Our marketing plan includes the re-introduction of our
Appgen software products to these potential resellers. 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 or
modules and customizations with the accounting software. Other services they may
offer include delivery and setup, training, technical support, software
tailoring, and custom programming.
Our resellers of the Appgen software are:
Platinum Level - Currently we have nine Platinum Level VARs. A Platinum Level
VAR is a business authorized by us to sell our software products, namely the
Appgen Custom Suite and the MyBooks Professional. This level VAR will generally
target various vertical segmented markets, such as automobile dealerships, the
large retailer, the "chain retailer", the motor transportation and distribution
industry, staffing agencies or the lumber industry. Typically, this VAR, or any
of the following VARs, will customize the Appgen Custom Suite software specific
to meet the exacting and industry needs of its customer.
Our Platinum VAR may market the customized software under its own proprietary
brand name or our un-customized brand, much the same as a Developer or VAR would
with other software manufacturers, such as Microsoft. The Platinum VAR, rather
than staffing its own sales force, may enter into agreements with other
independent contractors who also have expertise in the same vertical markets of
the Platinum VAR. As such, these sub-contractors then become a Gold or Dealer
Level VAR. Neither Aptus nor the Platinum Level VAR make any payments to the
Gold or Dealer Level VAR.
We charge the Platinum VAR a fixed fee and for that fee it is entitled to
purchase from us, at a discount, the software application, Appgen Custom Suite,
and user licenses for their resale. In addition, the Platinum VAR will receive a
commission from us in consideration of the support and reporting requirements of
the subcontractor Gold and Dealer Level resellers. The negotiated commission is
based on the retail value of the licenses purchased and re-sold through these
two other level resellers. To date, we do not have Platinum VARs with
subcontractors.
The Platinum VAR essentially bundles the Appgen Custom Suite or the MyBooks
Professional software, customized or un-customized, with other services or
products that they may provide and sell to their customers. In order to
customize the software to meet their customer's requirements, the VAR will
purchase a Developer's Kit. We copy the application from the master copy of the
software on to installation media, such as a compact disk (CD) and ship to the
VAR for installation at the customer site. User licenses are issued upon
registration by us. Support for the Appgen and MyBooks software is also included
in the Platinum Level.
Gold Level - We have one Gold Level VAR. The difference between the Platinum
Level and the Gold Level VAR is that the Gold VAR is not authorized to have
subcontractors and the level of discount on purchases of our products and
licenses. We charge the Gold Level VAR a fixed fee, and, for that fee it is
entitled to purchase the software and end user licenses at a discount. A Gold
Level reseller may bundle the Appgen Custom Suite or MyBooks Professional,
customized or un-customized, with other services or products that it may provide
and sell to their customers. A Developer's Kit is available to the VAR with
which to customize the base software to meet their customer's requirements. We
copy the application from the master copy of the software on to installation
media, such as a CD and ship to the VAR for installation at the customer site.
User licenses are considered delivered upon registration by us. Support for the
Appgen software is also included in the Gold Level.
Dealer Level - We have seven Dealer Level VARs. The distinguishing feature of
Dealer Level VAR and the Platinum and Gold Level VARs is the rate of discount
involved with purchases of our products and licenses. A Dealer Level reseller
may bundle the Appgen Custom Suite or MyBooks Professional, customized or
un-customized, with other services or products that they may provide and sell to
their customers. A Developer's Kit is available to the VAR with which to
customize the base software to meet their customer's requirements. We copy the
application from the master copy of the software on to installation media, such
as a CD and ship to the VAR for installation at the customer site. User licenses
are considered delivered upon registration by us. Support for the Appgen
software is also included in the Dealer Level.
Each potential VAR is free to choose the level of involvement in purchase
discounts for the software purchased for resale and any volume pricing. A Gold
or Dealer Level VAR may wish to associate with a Platinum VAR to take advantage
of certain technical and vertical marketing expertise.
We target the VARs and dealers of the more complex line of business applications
such as accounting, sales management, contact management, and human resources
that require a more involved and complex back office functionality. By providing
their applications in an ASP model, the reseller can increase new sales and
reduce sales cycles by off-loading the back office technical complexities to us.
The service is provided to the medium enterprise exclusively through resellers
and dealers, and when appropriate these software packages may be offered to the
existing Always-On users.
We intend to develop long-term relationships with VARs and dealers and together
market the service to the end-users. Revenues will be generated from the direct
sales of local installations and/or software hosting fees, and additional value
added offerings such as online training and E-commerce references. We will
support and promote the ongoing software industry trend toward renting software.
Sales of the Appgen software products, from January 2003 to October 2003 prior
to our purchase were approximately $336,800. The wholesale prices for our
products range from $50 to $3,500 and may purchased by a VAR with a variety of
discounts and volume pricing. Our sales for the month of February 2004 were
approximately $33,500 for 66 units and for the month of March 2004 sales were
$11,900 for 14 units; for the month of April 2004 sales were approximately
$13,690 for 20 units, and; for the month of May 2004 sales were approximately
$15,925 for 22 units.
The success of our marketing and sales activities is dependent, among other
things, on our ability to retain and attract qualified resellers and
telemarketers, as well as positive overall market perception of our products and
services.
COMPETITION
The market for Internet based data processing, information technology
services, hosted business solutions, and software applications are rapidly
evolving and intensely competitive. In addition to a customer's internally built
and supported operations, our primary current and prospective competitors
include:
o Providers of computer equipment,
o Providers of co-location, web site hosting and related services,
o Providers of technology that have recently announced their intentions to
offer some of the services that we may offer to a portion of our targeted
customer base,
o Providers of Internet based systems integration or professional services,
and
o Developers of software similar to ours.
Many of our competitors have been in business longer than us, have significantly
greater financial, technical, and other resources, or greater name recognition.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements. Competition could negatively
impact our ability to sell additional services on terms favorable to us.
Competitive pressures could cause us to lose market share or to reduce the price
of our services, either of which could harm our business, financial condition
and operating results.
RESEARCH AND DEVELOPMENT ACTIVITIES
To remain competitive, we must continually enhance and improve the functionality
and features of our software. Through a combination of outsourced developers and
programmers and employees, each with differing coding skills, we will convert
our Windows based accounting and quoting software applications to that which
functions totally in an Internet environment. We will develop further Web-based
software tools as the market demands.
PRODUCT MANUFACTURING AND DISTRIBUTION
We prepare a set of master program copies for our products for each respective
computer operating system, such as Unix, Windows, Mac OS X, and Linux.
Documentation is included in the master program. We do not package, warehouse or
assemble our products for the general retailer of software applications. We
deliver, upon each paid order, a copy of the program(s) on CD to the VAR for
installation and registration at the customer site, or directly to the customer
by request. Our product(s) may also be downloaded from our website and
registered for full use. User licenses are considered delivered upon
registration by us.
In connection with assets purchased on January 23, 2004 from Mark Andre, we
executed a Distribution Agreement We will pay 5.5%, in perpetuity, on all gross
proceeds from the sales of the Appgen Custom Suite and MyBooks Professional
products. On April 15, 2004 we amended the Distribution Agreement to include a
buyout provision in the amount of $1,250,000, which we may execute at any time
at our discretion. We have not budgeted for this buyout provision during the
next twelve-month period as our decision to execute the buyout would be, among
other factors, available cash reserves from operations, future sales potential,
and amounts previously paid under the Agreement.
GOVERNMENT REGULATION
Due to the increasing popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect to the Internet
generally, covering issues such as user privacy. Development of the market for
Internet commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business over
the Internet. The adoption of any such laws or regulations may decrease the
growth of commerce over the Internet, which could have a harmful effect on our
business.
To date, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New and existing laws may
cover issues that include:
o Sales and other taxes,
o User privacy,
o Pricing controls,
o Characteristics and quality of products and services,
o Consumer protections,
o Cross-border commerce,
o Libel and defamation,
o Copyright, trademark and patent infringement, and
o Other claims based on the nature and content of the Internet materials.
Such new laws may impact our ability to market our products and services offered
on our web site in accordance with our business plan.
We may have to qualify to do business in other jurisdictions. If we make sales
of our products or services, we anticipate that sales and our customers will be
in multiple states and foreign countries. As our customers may reside in such
state and foreign countries, such jurisdictions may claim that we are required
to qualify to do business as a foreign company in each such state and foreign
country. We are qualified to do business only in the state of Washington.
Failure to qualify as a foreign company in a jurisdiction where required to do
so could subject us to taxes and penalties.
At present, we do not collect sales or other similar taxes in respect of sales
and shipments of our products through Internet purchases. However, various
states have sought to impose state sales tax collection obligations on
out-of-state direct marketing companies similar to us. A successful assertion by
one or more of these states that it should have collected or be collecting sales
tax on the sale of our products could result in additional costs and
corresponding price increases to its customers.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
We currently own four software applications Appgen Custom Suite, MyBooks
Professional and QwikQuote Sales and QwikQuote Professional Sales, which are
copyrighted, but not registered, and, are not protected by trademark and patent
rights. However, we would anticipate acquiring the appropriate protections at a
later date. We regard service marks, domain names, and similar intellectual
property as critical to our success. We will rely on trademark, unfair
competition and copyright laws, trade secret protection and contracts such as
confidentiality and license agreements with our employees, customers, partners,
and others to protect our proprietary rights. Despite precautions, it may be
possible for competitors to obtain and/or use the proprietary information
without authorization, or to develop technologies similar to ours and
independently create a similarly functioning infrastructure. Furthermore, the
protection of proprietary rights in Internet-related industries is uncertain and
still evolving. The laws of some foreign countries do not protect proprietary
rights to the same extent, as do the laws of the United States. Protection for
proprietary rights in the United States or abroad may not be adequate.
We intend to license certain technology from third parties such as Citrix,
Microsoft, and others, for our technologies that support business systems. The
market is evolving and we may need to license additional technologies to remain
competitive. We may not be able to license these technologies on commercially
reasonable terms or at all. In addition, we may fail to successfully integrate
licensed technology into our operations.
Although we are not aware of any infringement or misappropriation of our
intellectual property or similar proprietary rights, it may be anticipated that
infringements and misappropriations will occur as our business grows and there
is more brand loyalty attaching to our trade names and domain names. We intend
to police against infringement or misappropriation. However, we cannot guarantee
that we will be able to enforce our rights and enjoin the alleged infringers
from their use of confusingly similar trademarks, service marks, telephone
numbers, and domain names.
We intend to police against infringement or misappropriation. However, we cannot
guarantee that we will be able to enforce our rights and enjoin the alleged
infringers from their use of confusingly similar trademarks, service marks,
telephone numbers, and domain names. In addition, third parties may assert
infringement claims against us. We cannot be certain that our technologies or
service marks do not infringe on valid patents, trademarks, copyrights, or other
proprietary rights held by third parties. We may be subject to legal proceedings
and claims from time to time relating to the intellectual property of others in
the ordinary course of our business. Intellectual property litigation is
expensive and time-consuming and could divert management resources away from
running the business as forecasted.
In addition, third parties may assert infringement claims against us. We cannot
be certain that our technologies or service marks do not infringe valid patents,
trademarks, copyrights, or other proprietary rights held by third parties. We
may be subject to legal proceedings and claims from time to time relating to the
intellectual property of others in the ordinary course of our business.
Intellectual property litigation is expensive and time-consuming and could
divert management resources away from running the business as planned.
DESCRIPTION OF PROPERTY
We lease approximately 750 square feet of office space located at 1127 Broadway
Plaza #203, Tacoma, Washington 98402. The monthly rent is $550.00 and can be
cancelled by either party with thirty (30) days notice. We also lease office
space located at 300 Vanderbilt Motor Parkway, Hauppauge, NY 11788. The monthly
rent is $750 and is renewable every two months and may be cancelled with sixty
(60) days notice. We currently do not have a data center and nor an
infrastructure requirement. We will acquire these components, either purchased
or leased, as sales and business demands grow. We cannot be certain that we will
have successful negotiations to secure such leases with third party vendors.
CUSTOMER SERVICE AND SUPPORT
In order to support our new software applications, we outsourced all customer
service and support functions. It is our intention to cease outsourcing this
operation when our sales reach approximately $2,000,000. At present the customer
service and support are limited to e-mail and toll-free telephone calls.
When we achieve our projected revenues, we plan to bring in house the customer
service functions and completely supported by our own trained employees. These
customer service employees will be responsible for analyzing customer service
delivery requirements, provide for determining account support resource needs,
developing service deployment processes, managing service deployment processes,
administering level I technical support, surveying customer needs and
satisfaction, and estimating account support costs.
Customer support will be available to subscribers in a number of ways:
o E-MAIL. 24x7x365 Monitored email support accounts with 15-minute
response time.
o TOLL-FREE PHONE. 24x7x365 Manned call center with basic support and
immediate escalation as needed.
o LIVE CHAT. 24x7x365 Chat with our customer service representative in a
support center. Access chat anywhere from our web sites by clicking on
the "Support Chat" button.
o SELF-SERVICE. Self-service support options to clients and resellers
including administration tools to resellers, and Internet connectivity
test tools.
o ONLINE TRAINING. Customer service representatives to provide online
training for clients utilizing web based conferencing and Citrix
management tools.
EMPLOYEES
As of June 30, 2004, we employ three part-time, and, at present, do not receive
compensation. Our staffing plan is built around meeting demand. As demand grows
from the sale of our products and services, staff will be added to meet that
demand, and not before. We intend to employ approximately fifteen people located
in Tacoma, Washington and five on the East Coast.
PLAN OF OPERATION
We have engaged in no significant operations other than organizational
activities, acquisition of capital and assets and preparation for the
registration of our securities under the Securities Act of 1933. Since our
inception to date, we have received nominal revenues, and we remain in the
development stage and, have experienced no significant change in liquidity or
capital resources or stockholders' equity. We anticipate incurring a loss as a
result of organizational expenses, expenses associated with registration. We
currently anticipate our offering expenses to be limited to accounting fees,
legal fees, telephone, mailing, filing fees, escrow agent fees and transfer
agent fees. See "Risk Factors."
With our recent acquisition of the Appgen Custom Suite, we have begun to market
and sell to our VAR and dealer channel. They will be provided with technical
development assistance when requested. We will assist the VARs in cooperative
marketing to each of their niche markets by using telemarketing, e-marketing and
direct mail. With our other recent acquisition, we will introduce our QwikQuote
applications to the VAR channel for cross selling and increase our web presence
to drive an increase in sales.
CASH REQUIREMENTs
In order to finance future acquisitions of assets and companies, and fund
operations, it is our intent to raise gross proceeds of $5,000,000 less expenses
of approximately $36,000 from this public offering. If we succeed in raising the
maximum proceeds from this offering, we will apply $4,964,000 to our plan of
operations over the next twelve months. This will allow us to reduce the time
frame to become fully operational from several years to less than one year. The
following summarizes our anticipated cash requirements to achieve these goals.
Should we not raise the net minimum proceeds from this offering we will have to
acquire debt to fund the aforementioned operating requirements.
The following table and discussion summarizes our planned use of cash under our
different funding levels.
Percent of Maximum Proceeds at 5% at 25% at 50% at 75% at 100%
------------- -------------- --------------- --------------- ---------------
Net Proceeds from Offering $214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
Principal Use of Net Proceeds:
1. Repayment of Loans $- $176,500 $176,500 $176,500 $176,500
2. Acquisitions - 333,500 1,177,500 1,914,500 2,573,500
3. Acquisition/Finder Fees - 10,000 60,000 150,000 250,000
4. Infrastructure - 62,500 125,000 187,500 250,000
5. Research and Development - 62,500 125,000 187,500 250,000
6. Sales and Marketing 50,000 186,500 350,000 562,500 750,000
7. Operations 58,600 131,100 381,940 456,600 631,850
8. Consultants 105,400 251,400 68,060 78,900 82,150
------------- -------------- --------------- --------------- ---------------
Total Use of Net Proceeds $214,000 $1,214,000 $2,464,000 $3,714,000 $4,964,000
============= ============== =============== =============== ===============
1. We owe $172,500 as evidenced by fourteen unsecured promissory notes to
thirteen individuals. These notes are due July 10, 2004 plus accrued interest
estimated at $4,000. If we only raise the minimum level of funds, we will not
have adequate net proceeds to payback the creditors. It is conceivable that
under the minimum funding level we will need to request an extension of each
loan into terms of one year or longer or seek new loans to replace the existing
debt. If we are unable to negotiate an extension of terms or secure new loans to
payback the original note holders, then we could incur judgments against us and
expensive legal fees. However, if we are able raise proceeds at any level
greater than the minimum funding level, our first use of the net proceeds will
be to pay back the principal and interest of approximately $176,500 to the
individuals.
2. We will spend approximately $2,573,500 to acquire assets or businesses if we
are successful in raising the maximum amount of proceeds from our offering. We
will target selected assets or businesses that integrate into the on-line
delivery model utilizing Citrix Metaframe, Tarantella Enterprise, Microsoft
Terminal Services, or New Moon Canaveral. Such applications may include
messaging, disaster recovery, accounting and finance, manufacturing resource
planning or human resources. We will employ a variety of means to seek out these
business opportunities such as referrals, independent research and trade
publications.
If we receive proceeds from any of the three mid-level offerings we will seek to
purchase other, less impacting, opportunities, and obviously of lesser value,
either in the form of asset purchases or business combinations, at approximate
costs ranging between $333,500 (25% level) to $1,914,500 (75% level).
Acquisitions of businesses and/or selected assets are critical to the overall
success of our business. For this reason, we are committing substantial funds,
approximately 28% to 52% of net proceeds, depending on the level of funds raised
in order to achieve the first phase of our business plan. However, if we raise
only our minimum amount of proceeds we will have to cease our acquisition
activities until such time discretionary funds are available for executing this
phase of our plan.
3. We estimate our Acquisition/Finder Fees to range from 3% to 10% of the total
purchase price of the selected asset(s) or business(es).
4. We currently do not have a data center and an infrastructure requirement. We
will acquire these components, either purchased or leased, as sales and business
demands grow. Our intention is to add server equipment to that of any already
leased equipment, as demand for computing is required. This need will be
entirely dependent on sales and market demand for our new products. However,
certain new customers may require special computing equipment. If we are
unsuccessful in raising the maximum proceeds from our offering, we will limit
the purchase of any equipment and accordingly look to leasing equipment to meet
our short-term needs while relying on our projected revenues. It is our intent
to lease as much of our equipment as possible in order to preserve cash.
Depending on our success in selling our securities, our twelve-month budget for
this infrastructure is estimated to range between $0.00 to $250,000.
5. To remain competitive, we must continually enhance and improve the
functionality and features of our software. Through a combination of outsourced
developers and programmers and employees, each with differing coding skills, we
will convert our Windows based accounting and quoting software applications to
that which function totally in an Internet environment. We expect, subject to
our success in raising the maximum proceeds from our offering, it would take
approximately 5,500 hours to complete the various conversions. If we raise funds
at the 25% to 75% levels, we have committed approximately 5% of net proceeds to
complete certain phases of the continued development, maintenance and
enhancement of our products. We expect the hourly rate to remain constant
regardless of funding. However, for each level of funding total hours are scaled
accordingly to meet our cash requirement budget. If we raise only the minimum
proceeds from our offering, we would have to curtail our conversion activity
until at such time we have adequate funds reserved or committed from operating
revenues.
6. We will continue to develop and execute on our strategic marketing plan,
which will consist mainly of telemarketing, e-marketing, direct mail, trade
shows and seminars at an approximate cost of $750,000. Subject to our raising
the maximum proceeds from our offering, we plan to do the following:
o Issue newsletters, which will be emailed to the finance professional,
which outlines current developments and articles of interest. We also
anticipate a bi-weekly supplemental newsletter promoting our products
and services.
o Mail marketing pieces to approximately 68,000 small to medium sized
accounting and bookkeeping firms over the next year on a monthly
basis. Any follow up on inquiries will be conducted by our inside
sales team.
o Purchase advertising space in a variety of trade magazine aimed at the
financial professional and the various niche markets of the VARs'
customers.
o Target appropriate trade show events, and, subject to our raising the
maximum proceeds from our offering, we anticipate attending one per
month. If our minimum proceeds are raised from our offering, we will
curtail our efforts and rely on our forecasted revenues.
o Initiate a series of targeted seminars to the financial professional,
which will explain our services and products and the on-line computing
model. Seminars of this nature will also be targeted to the small to
medium sized business. We intend to hold such seminars timed around
the business cycle of the financial professional.
o Enhance contact on our various web sites, such as WWW.QWIKQUOTE.COM,
WWW.APPGEN.COM, and WWW.APTUS-3C.COM by increasing our product name
recognition on the various search engines, such as WWW.GOOGLE.COM,
WWW.YAHOO.COM and WWW.MSN.COM. We believe this is essential in gaining
awareness of our services and software.
o Conduct targeted telemarketing campaigns to the niche based financial
professionals and the small to medium sized companies.
Should we raise less than the maximum proceeds, we are still committed to a
budget ranging between 23% (at the 5% funding level) to 15% (at the 75% funding
level) of net proceeds raised. However, we will not initiate direct mailings of
our marketing brochures nor purchase advertising space in the various
professional and trade magazines. We will direct our primary marketing efforts
via Internet links and electronic newsletters. We also plan to eliminate our
planned attendance at the national and regional CPA conferences and limit
ourselves to only the local and western state conferences. We also will not
attend other various trade business shows and forums. We will instead present
our story by pre-registering interested parties for teleconferences. By these
efforts, we believe that we can still achieve a high level of interest in our
products regardless of the funding level. Other factors inclusive of marketing
will be contingent upon opportunities not yet identified. Therefore, we plan to
keep a small portion of these budgeted funds, regardless of the funding level,
available for such occurrences. If we raise only the minimum proceeds from our
offering, we will strictly limit our marketing efforts to the Internet and web
site presence. We, however, strongly believe that a committed and strong
marketing plan will reward us with increased sales and brand recognition.
7. We plan to use a portion of our proceeds to supplement our general and
administrative operations. How we allocate the use of our proceeds is completely
contingent upon the level of proceeds raised and the level of sales achieved. We
believe that the following table best illustrates our estimate of how we plan to
expend funds based on each respective level of net proceeds. There can be no
assurance that even if a certain level of funds is raised, that the allocation
of the net proceeds will be exact. These classifications are a result of
managements' analyses of operations in order to meet minimum number of sales and
are summarized below:
Use of proceeds for operations: AT 5% AT 25% AT 50% AT 75% AT 100%
1. Salaries and burden $- $- $224,840 $286,000 $442,750
2. Rent and utilities 16,100 16,100 17,100 18,100 19,100
3. Licensing and taxes 22,500 90,000 105,000 112,500 120,000
5. Professional fees 20,000 25,000 35,000 40,000 50,000
------------- -------------- --------------- --------------- ---------------
Total estimated operations $58,600 $131,100 $381,940 $456,600 $631,850
============= ============== =============== =============== ===============
o We do not plan to pay wages and related payroll burden under the 5%
and 25% funding levels. Under these two levels we intend to continue
with certain independent contractors under existing consulting
agreements. As such, we have budgeted for these individuals under the
consultant classification. If we raise 50% or more of the offering, we
may offer employment to some of these contractors, and, as such, we
have classified a portion of the related expenses associated with
these individuals as payroll and burden. If we raise 50% or more of
our offering, we plan to add three full-time equivalent employees. We
will retain staffing levels sufficient to sustain our momentum in
achieving our goals. Staffing, other than the conversion of the
contractors to an employee status, is expected to be a gradual
process, justified only by an incremental increase in sales and the
added administrative responsibilities resulting from more customers
and reporting requirements. If we are unsuccessful in raising the
minimum proceeds from this offering, and, without sufficient revenues,
we will continue limiting our part-time employees to our chief
executive officer, chief administrative officer and executive vice
president.
o Rents and utilities are planned to be relatively constant regardless
of the funding levels. We do not anticipate a requirement for us to
purchase office facilities, as it is our intention to lease these
facilities when required. The only variable in this classification is
an estimate on the increase use of utilities due to increasingly
greater operations. We believe we have sufficient office space to
handle our growth over the next twelve months.
o Licensing and taxes is an overhead cost based on projected sales under
each funding level. We have estimated the calculation of licenses at
7.5% of licensed product sales and taxes at 1.5% of gross sales.
Licensed sales are estimated to range between $250,000 at the minimum
funding level to $1,000,000 at the maximum funding level. Gross sales,
which include the licensed product sales, are estimated to range
between $250,000 at the minimum funding level and $3,000,000 at the
maximum funding level.
8. Consultants are individuals that will add value to the overall operations. We
may offer full time employment to certain of the independent contractors if we
raise 50% of more of the maximum offering of shares.
While currently we do not have any agreements with third parties, we intend to
develop arrangements to bundle other products and services with our proprietary
software and ASP capabilities as the market demands. We will continue to search
the market for new and innovative products and services to offer to our
customers.
WORKING CAPITAL REQUIREMENTS
We have a deficit in working capital at December 31, 2003 (audited) of $ 8,530
and as of March 31, 2004 (unaudited) of $131,411. The deficit is primarily a
result of borrowing short-term money to fund the initial stages of our operation
from Insynq, Inc. and from thirteen creditors for a total $172,500 as evidenced
by fourteen unsecured promissory notes. We plan to pay back the fourteen
promissory notes either from proceeds from our offering or from reserved cash
flow from operations. However, if we are unable to raise adequate net proceeds
from our offering, we will need to negotiate an extension of terms, or secure
new loans to payback our note holders. If we are unsuccessful in our offering,
the extension of new loan terms, or securing new loans, we could incur judgments
against us and expensive and unbudgeted legal fees. The terms of the unsecured
promissory notes are:
o Due July 10, 2004
o Interest accrues at a rate of prime plus 1% per annum
We intend to pay back our debt to Insynq, Inc. with cash flow from operations.
As of June 30, 2004 we owe Insynq, Inc. approximately from $51,600 on an open
and unsecured account. This amount is not part of our cash requirements or use
of net proceeds from our offering. We plan to pay Insynq with funds generated
from our fees assessed to our VARs.
We will carry out our plan of business as discussed above. We cannot predict to
what extent our liquidity and capital resources will be diminished prior to the
consummation of a business combination or asset purchase or whether our capital
will be further depleted by the operating losses (if any) of the business entity
or assets which we may eventually acquire.
RECENT ACQUISITIONS
On January 23, 2004 we have purchased certain assets from Mark Andre and Appgen
Technologies, Inc. The purchase price to Mark Andre is made up of:
o $500,000 payable in common stock valued at $1.00 per share of common
stock.
o A cash payment at closing of $8,500.
o A Warrant to purchase common stock up to 500,000 with an exercise
price of $0.50 per share.
o Assumption of development support of the software code.
The purchase price to Appgen Technologies, Inc. is in the form of a cash payment
in the amount of $9,000.00.
In connection with our purchase of the Appgen Custom Suite, we entered into two
separate agreements with Mark Andre described as follows:
o Distribution Agreement under which Mark Andre will receive 5.5%, in
perpetuity, distribution of gross revenues received of all sales of
Appgen products. On April 15, 2004 we amended the Distribution
Agreement to include a buyout provision in the amount of $1,250,000,
which we may execute at any time.
o Consulting Agreement for the term of two (2) years with monthly
compensation in the amount of $5,000.
On February 1, 2004 we purchased certain assets from QwikQuote, Inc. The
purchase price to QwikQuote, Inc. is made up of:
o $21,000 payable in cash.
o Consulting and Non-Compete Agreement with Alan Katz in the amount
$17,000 for a term of 12 months and a warrant to purchase 58,147
shares of common stock with an exercise price of $0.0095 per share.
o Consulting and Non-Compete Agreement with Glenn Paul in the amount of
$17,000 for a term of 12 months and a warrant to purchase 219,706
shares of common stock with an exercise price of $0.0095 per share.
o Consulting and Non-Compete Agreement with Win Straube (The Straube
Foundation) in the amount of $17,000 for a term on 12 months and a
warrant to purchase 58,147 shares of common stock with an exercise
price of $0.0095 per share.
o Payment of a transition bonus to Tim Heath in the amount of $9,000 and
a warrant to purchase 42,000 shares of common stock with an exercise
price of $0.0095 per share.
o Finders fee to Mark Levin in the amount of $9,000 and a warrant to
purchase 42,000 shares of common stock with an exercise price of
$0.0095 per share.
With our recent acquisitions, we have begun to sell our products through our
Appgen VAR and dealer channel and through our QwikQuote dealer channel and our
web site located at WWW.QWIKQUOTE.COM. We have begun to implement, on a limited
basis, our marketing plan for these products.
REVENUES
We anticipate our revenues will be generated from sales of our software or
on-line subscription-based hosting fees from:
o Our Appgen Custom Suite accounting modules and user licenses, version
upgrades, and developer's tools, among others.
o MyBooks Professional.
o QwikQuote Sales and QwikQuote Professional Sales software, licenses,
maintenance and support.
Initially, these applications will be sold as non-recurring revenue, however,
with the introduction of the on-line application hosting services, we will
market and sell the applications as subscription-based service, generating
monthly recurring revenue. We will also continue the sale of the applications to
the end user for installation on their computer or in-house computer network.
e-Accounting services and bundled offerings will be sold on a subscription
basis, which is expected to generate monthly recurring revenue.
In the event we are not successful in reaching certain levels of our initial
revenue targets from the sales of our products and services, additional capital
or debt funds may be required. In this event, we would then restrict the
expenditures for the development and marketing of our products and services,
until such funds have been raised to supplant this portion of the budget.
AGREEMENTS
We have consulting agreements with the following:
o In connection with our purchase of the Appgen Custom Suite and MyBooks
Professional, we executed a consulting agreement with Mark Andre, for
him to provide consulting services on projects as consultant and we
mutually agreement upon. The term of the agreement is for two years
and monthly compensation in the amount of $5,000 will commence the
earlier of April 15, 2004 or when our gross revenues exceed $40,000
per month.
o In connection with our purchase of the Appgen Custom Suite and MyBooks
Professional, we executed a distribution agreement with Mark Andre,
under the terms of which we will pay 5.5%, in perpetuity, on gross
sales of the acquired software. Payments will commence thirty (30)
days after the end of the second quarter, 2004.
o We executed a three month independent consulting agreement with Errol
Alahverdi for him to act as consultant on such projects as we shall
mutually determine and shall receive monthly compensation in the
amount of $7,000 and is automatically renewable unless notified by
either party thirty days (30) prior of intent not to renew.
o We executed a three month independent consulting agreement with
Marianne Grimaldi for her to act as consultant on such projects as we
shall mutually determine and shall receive monthly compensation in the
amount of $5,500 and is automatically renewable unless notified by
either party thirty days (30) prior of intent not to renew.
o We executed a three month independent consulting agreement with Sylvia
Sze for her to act as consultant on such projects as we shall mutually
determine and shall receive monthly compensation in the amount of
$5,750 and is automatically renewable unless notified by either party
thirty days (30) prior of intent not to renew.
In connection with our purchase of the QwikQuote Software, we executed:
o A consulting and non-compete agreement with Glenn Paul, for him to
provide advice and consulting services related to the selling and
marketing of the applications. In addition, for the term of one year,
consultant will refrain from creating, marketing or reselling sales
quoting software or services. Compensation for the consulting portion
of the agreement was a cash payment in the amount $10,000 and a $7,000
cash payment for the non-compete portion of the agreement.
o A consulting and non-compete agreement with Alan Katz, for him to
provide advice and consulting services related to the selling and
marketing of the applications. In addition, for the term of one year,
consultant will refrain from creating, marketing or reselling sales
quoting software or services. Compensation for the consulting portion
of the agreement was a cash payment in the amount of $10,000 and a
$7,000 cash payment for the non-compete portion of the agreement.
o A consulting and non-compete agreement with Win Straube (The Straube
Foundation), for him to provide advice and consulting services related
to the selling and marketing of the applications. In addition, for the
term of one year, consultant will refrain from creating, marketing or
reselling sales quoting software or services. Compensation for the
consulting portion of the agreement was a cash payment in the amount
of $10,000 and a $7,000 cash payment for the non-compete portion of
the agreement.
Irrespective of whether our cash assets prove to be inadequate to meet our
operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash after first adopting a stock option plan.
NEED FOR ADDITIONAL FINANCING
Completion of our plan of operations is subject to securing adequate financing
and generating minimum revenues through the sales our products and services.
Management believes that the sources of the forecasted funds, both from the
maximum net proceeds from this offering and from the operations needed to
maintain current limited operations will be to sufficient to pay our forecasted
operating expenses for the next twelve months. If we are successful in raising
50% of the proceeds from our offering and our forecasted revenues are
substantially less than planned, we may have to raise additional funds to
support our operation for another twelve months. In the absence of our projected
revenues, and, if we were to raise only the minimum proceeds from our offering,
we will have to raise additional funds in order to proceed with our plan of
operations. We do not have a commitment with respect to any additional capital.
We have no loan commitments from, or lines of credit with, banks or other
financial institutions. Therefore, the continuation of our business will depend
on our ability to raise additional funds through equity and/or debt financing.
We cannot assure you that we will be able to obtain additional funding when or
if it is needed, or that such funding, if available, will be obtainable on terms
favorable to and affordable by us. Our inability to obtain additional funding,
when required, would impair severely our business operations.
In connection with assets purchased on January 23, 2004 from Mark Andre, we
executed a Distribution Agreement We will pay 5.5%, in perpetuity, on all gross
proceeds from the sales of the Appgen Custom Suite and MyBooks Professional
products. On April 15, 2004 we amended the Distribution Agreement to include a
buyout provision in the amount of $1,250,000, which we may execute at any time
at our discretion. We have not budgeted for this buyout provision during the
next twelve-month period as our decision to execute the buyout would be, among
other factors, available cash reserves from operations, future sales potential,
and amounts previously paid under the Agreement.
FORWARD-LOOKING INFORMATION
Certain statements in this document are forward-looking in nature and relate to
trends and events that may affect our future financial position and operating
results. The words "expect" "anticipate" and similar words or expressions are to
identify forward-looking statements. These statements speak only as of the date
of the document; those statements are based on current expectations, are
inherently uncertain and should be viewed with caution. Actual results may
differ materially from the forward-looking statements as a result of many
factors, including changes in economic conditions and other unanticipated events
and conditions. It is not possible to foresee or to identify all such factors.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership
of our common stock as of June 30, 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 12,500,000
shares of common stock outstanding as of June 30, 2004 and a maximum amount of
sales from this offering. Beneficial ownership is determined in accordance
with the rules of Section 13(d)(3) of the Securities Act of 1934 (the
"Exchange Act") and generally includes voting or investment power with respect
to securities. Except as indicated by footnote, the persons named in the table
have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. The determination of whether these
persons have sole voting and investment power is based on information provided
by them.
Common Shares Beneficially Common Shares Beneficially
Owned Prior to Offering Owned After Offering
----------------------------------------- ----------------------------------------
NUMBER PERCENT NUMBER PERCENT
------ ------- ------ -------
John P. Gorst (1) 3,300,000 25.78% 3,300,000 14.74%
1127 Broadway Plaza #203
Tacoma, WA 98402
M. Carroll Benton (1) 3,300,000 25.78% 3,300,000 14.74%
1127 Broadway Plaza #203
Tacoma, WA 98402
Clifford Mastricola (2) 1,650,000 13.04% 1,650,000 7.28%
2190 Carmel Valley Rd
Delmar, CA. 92014
Clayton Chase (2) 1,650,000 13.04% 1,650,000 7.28%
2190 Carmel Valley Rd
Delmar, CA. 92014
Mark Levin (1) 3,300,000 25.78% 3,300,000 14.74%
9812 Falls Rd, Suite 198
Potomac, MD. 20854
Mark Andre (4) 1,000,000 7.69% 1,000,000 4.35%
PO Box 86
Great River, NY 11739
Directors and Officers as a group 6,600,000 50.38% 6,600,000 28.57%
(2 persons) (3)
(1) This includes 300,000 shares of class A common stock outstanding, which may
be converted to common stock within 60 days of June 30, 2004.
(2) This includes 150,000 shares of class A common stock outstanding, which may
be converted to common stock within 60 days of June 30, 2004.
(3) This includes 600,000 shares of class A common stock outstanding, which may
be converted to common stock within 60 days of June 30, 2004.
(4) This includes a warrant to purchase 500,000 shares of common stock, which
may be exercised at $0.50 per share within 60 days
of June 30, 2004.
Class A Common Stock
The percentage of shares owned provided in the table is based on 1,200,000
shares of class A common stock outstanding as of June 30, 2004 and a maximum
amount of sales from this offering. Except as indicated by footnote, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them. The determination of
whether these persons have sole voting and investment power is based on
information provided by them.
Class A Common Shares Beneficially Class A Common Shares Beneficially
Owned Prior to Offering Owned After Offering
----------------------------------------- ------------------------------------------
NUMBER PERCENT NUMBER PERCENT
------ ------- ------ -------
John P. Gorst
1127 Broadway Plaza #203
Tacoma, WA 98402 300,000 25% 300,000 25%
M. Carroll Benton
35
1127 Broadway Plaza #203
Tacoma, WA 98402 300,000 25% 300,000 25%
Clifford Mastricola
2190 Carmel Valley Rd
Delmar, CA. 92014 150,000 12.5% 150,000 12.5%
Clayton Chase
2190 Carmel Valley Rd
Delmar, CA. 92014 150,000 12.5% 150,000 12.5%
Mark Levin
9812 Falls Rd, Suite 198
Potomac, MD. 20854 300,000 25.0% 300,000 25%
The aggregate percentage of votes held be each member of management and persons
holding more than 5% of total votes is based on 12,500,000 shares of common
stock and 1,200,000 shares of class A common stock, which are entitled to one
hundred (100) votes for each share held, outstanding as of June 30, 2004 and the
maximum amount of proceeds from this offering. Except as indicated by footnote,
the persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them. The
determination of whether these persons have sole voting and investment power is
based on information provided by them.
Beneficially Owned Percentage Vote Prior Beneficially Owned Percentage Vote After
to Offering Offering
------------------------------------------- ---------------------------------------------
Percentage Percentage Aggregated Percentage Percentage Aggregated
Voted of Voted of Percentage Voted of Voted of Percentage
Common Stock Class A Voted Common Stock Class A Voted
Common Stock Common Stock
------------- --------------- ------------- --------------- --------------- -------------
John P. Gorst
1127 Broadway Plaza #203
Tacoma, WA 98402 24% 25% 24.9% 13.3% 25% 23.2%
M. Carroll Benton
1127 Broadway Plaza #203
Tacoma, WA 98402 24% 25% 24.9% 13.3% 25% 23.2%
Clifford Mastricola
2190 Carmel Valley Rd
Delmar, CA. 92014 12% 12.5% 12.5% 6.7% 12.5% 11.6%
Clayton Chase
2190 Carmel Valley Rd
Delmar, CA. 92014 12% 12.5% 12.5% 6.7% 12.5% 11.6%
Mark Levin
9812 Falls Rd, Suite 198
Potomac, MD. 20854 24% 25% 24.9% 13.3% 25% 23.2%
Mark Andre (4)
PO Box 86
Great River, NY 11739 4% -0- 0.3% 2.2% -0- 0.4%
---- ----- ---- ---- ----- -----
Total Percentage Voted 100% 100% 100% 55.5% 100% 93.2%
==== ===== ==== ===== ===== =====
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.
NAME AGE OFFICE DATE OF SERVICE OFFICER AND/OR
DIRECTOR OF OTHER
PUBLIC COMPANIES
----------------
John P. Gorst 36 Chairman of the Board, Chief November 2003 Insynq*
Executive Officer and President
M. Carroll Benton 59 Secretary, Treasurer, Chief November 2003 Insynq*
Administrative Officer and
Director
Joanie C. Mann 42 Executive Vice President November 2003 Insynq
*Indicates a board member
All directors will hold office until the next annual stockholder's meeting and
until their successors have been elected or qualified or until death,
resignation, retirement, removal, or disqualification. Vacancies on the board
will be filled by a majority vote of the remaining directors. Our officers serve
at the discretion of the board of directors. We intend to increase the board
from its present two members to a minimum of six members by adding outside
directors at our next shareholders meeting.
Where executive management is employed by another public company, Insynq, time
will be allocated between the two corporations by each of the aforementioned
executive management team in such a manner and combination that least one of
those officers will be active for us at all times. In order to maintain
independence, it is anticipated, pending the growth of our business, certain key
management will be become full-time in our business activities. Any agreements
entered into by us and Insynq will be reviewed by an independent third party,
such as a law firm specializing in intellectual property rights or an
independent business valuation firm to determine if there is a conflict of
interest and will be provided on terms no less favorable to us than that which
could be obtained from independent third parties. If it is determined that such
conditions of conflict of interest or more favorable terms exist we will submit
to binding arbitration. Such arbitration shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association in
effect at that time.
Our executive management team brings more that seventy-six years of combined
experience in the fields critical to the success of the corporation. They
involve but are not limited to management, finance, compliance, technology,
sales and marketing and mergers and acquisitions.
The officers and directors are set forth below.
JOHN P. GORST - Co-Founder, Chairman of the Board, President and Chief Executive
Officer.
Mr. John P. Gorst is one of our co-founders and has directed all development and
business efforts for us since November 2003. Mr. Gorst has over 14 years
experience in founding entrepreneurial technology ventures, specifically in the
development of software and data services for business. His experience includes
serving as chief executive officer and board chairman of Insynq, an application
service provider, from August 1998 to present, vice president & general manager
for a computer integration company, Interactive Information Systems Corp., from
July 1996 to August 1998, and a training/IS consulting business in conjunction
with Nynex Business Centers of New York. Mr. Gorst's primary responsibility
shall be chairman of the board and chief executive officer and president. Mr.
Gorst will be directing our strategy, and positioning us in the business
marketplace by forging strategic business alliances and mergers and
acquisitions. Mr. Gorst will also serve as company and technology evangelist at
tradeshows, press conferences and industry analyst meetings in order to increase
awareness for our brand. Mr. Gorst graduated top of his class as an Electronic
Design Engineer from one of the top trade schools in Arizona, and is currently
pursing his MBA at Villanova University. Mr. Gorst was also awarded a medal of
honor for business leadership in 2001 from the National Republican Congress.
M. CARROLL BENTON, - Co-Founder, Secretary/Treasurer, Chief Administrative
Officer, Interim Chief Financial Officer and Director.
Ms. M. Carroll Benton is one of our co-founders and has directed and managed the
fiscal responsibilities of the enterprise since November 2003. Ms. Benton's
early career spanned both the public and private sectors working largely with
the banking systems and higher education institutions where she assisted in the
development and deployment strategies necessary for computerization of these and
other entities. Ms. Benton has successfully managed a 13 state insurance
brokerage firm and has been a consultant to the small to medium business markets
via accounting system design, implementation, support, and business practice
analysis. She also taught undergraduate accounting courses at several Puget
Sound colleges and universities. With an in-depth understanding of our finances,
accounting infrastructure and compliance issues, Ms. Benton oversees the current
administrative and financial operations. From December 1995 through December
1999 Ms. Benton was president of a computer integration company, Interactive
Information Systems, Corp. Her public sector experience includes serving as
chief administrative officer, secretary, treasurer, interim chief financial
officer and director for Insynq a Pacific Northwest application service
provider, from August 1998 to present. Formerly with a local CPA firm, Ms.
Benton brings over 37 years of financial expertise to the business.
JOANIE C. MANN - Executive Vice President.
Beginning in November 2003, Ms. Joanie Mann brings to our management team, as
the executive vice president over 25 years of experience in multi-user system
design and implementation, voice and data networking, and advanced network
integrations. Ms. Mann also has extensive experience in business process
automation and a strong background in business accounting principles. Previous
positions held include formation, in January 1985, of Com-Pacific Resources,
Inc. a network integration firm, which was successfully sold to Communications
World International, a telephone sales and service provider, in September 1994.
From July 1998 to December 1999, Ms Mann was an information systems management
consultant for Interactive Information Systems Corp., a Pacific Northwest
regional network integration company. Her public experience includes serving as
the vice president of strategic alliances for Insynq, a Pacific Northwest
application service provider from January 2000 to present.
There are no family relationships among any of our directors or executive
officers. See "Certain Relationships and Related Transactions" for a description
of transactions between our directors, executive officers and/or their
affiliates.
STAFFING PLAN
Our staffing plan is built around meeting demand. As demand grows for our
products and services, staff will be added to meet that demand, and not before.
We intend to employ approximately fifteen people located in Tacoma, Washington
and five people on the East Coast.
EXECUTIVE COMPENSATION
No officer or director has received any compensation. Until we acquire
additional capital, it is not intended that any officer or director will receive
compensation from us other than reimbursement for out-of-pocket expenses, up to
$500 per individual, including travel, incurred on our behalf. See "Certain
Relationships and Related Transactions." No officer and/or director will receive
any remuneration out of the proceeds of this offering. They will be compensated
only from revenue generated from operations. We have no stock option,
retirement, pension, or profit-sharing plans for the benefit of directors,
officers or other employees, but the Board of Directors may recommend adoption
of one or more such plans in the future.
We have employed the law firm of Miles Garnett, Esq. for providing legal
services in connection with registration of our shares. We may also employ the
same law firm to provide legal services in connection with the acquisition of a
business. Mr. Garnett, if employed, would be paid his normal hourly rate for
legal services provided.
STOCK OPTIONS
We have not adopted any formal stock option plans to reward and provide
incentives to our officers, directors, employees, consultants and other eligible
participants.
OTHER TRANSACTIONS
All transactions between us and our officers, directors and 5% or more
shareholders will be on terms no less favorable to us than that which could be
obtained from independent third parties.
DIRECTORS' COMPENSATION
Our directors receive no compensation for their services as directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
At present we have not entered into individual indemnity agreements with our
officers or directors. However, our by-laws contain a provision which requires
us to indemnify any director or officer or former director or officer against
actual expenses incurred in defending any legal action where they are a party by
reason of being or having been a director or officer. However we are not
required to indemnify any such person who is found to be liable for negligence
or misconduct in their performance of their duty.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel, the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and we will be governed by the final adjudication of such
case.
DIRECTORS' AND OFFICERS' INSURANCE
We are exploring the possibility of obtaining directors' and officers' ("D & O")
liability insurance. We anticipate obtaining several premium quotations. We have
not entered into any contract with any insurance company to provide said
coverages as of the date of this offering. There is no assurance that we will be
able to afford such insurance.
KEYMAN LIFE INSURANCE
Life insurance on key personnel will be purchased after the effective date of
this offering in amounts up to $1 million, 50% payable to us and 50% payable to
family beneficiaries. We are planning to purchase such insurance towards the
purchase of shares from the estate of an officer or director and to provide us
with the capital to replace the executive loss (executive search for successor,
etc.). The costs of such insurance are not expected to be material.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We shall not make any loans to any officers or directors following this
offering. Further, we shall not borrow funds for the purpose of making payments
to our officers, directors, promoters, management or their affiliates or
associates.
None of our officers, directors, or affiliates has or proposes to have any
direct or indirect material interest in any asset proposed to be acquired by us
through security holdings, contracts, options, or otherwise, although this
situation could arise.
Our chief executive officer, John P. Gorst, is the president and chairman of the
board of Insynq, a public company. M. Carroll Benton, our chief administrative
officer, secretary and treasurer is also chief administrative officer, secretary
and treasurer of Insynq, Joanie C. Mann, vice president of strategic alliances
for Insynq is our executive vice president.
It is not currently anticipated that any salary, consulting fee, or finder's fee
shall be paid to any of our directors or executive officers, or to any other
affiliate of ours except as described under "Executive Compensation" above.
Subject to our raising the minimum amount of proceeds from our offering, we will
negotiate an exclusive master licensing arrangement with Insynq, for the use of
its proprietary brand of bundled services and either third party or owned
software applications as described under "Risk Factors" and Plan of Operation.
On November 7, 2003, our board of directors authorized and issued the initial
issuance of an aggregate of 12,000,000 shares as founder's stock at a price of
$0.025 per share of which 3,000,000 shares were issued to each John P. Gorst and
M. Carroll Benton totaling $7,500 each, which was paid for in cash; 3,000,000
shares were issued to Mark Levin totaling $7,500, which was paid for in cash;
and 1,500,000 shares were issued to each Clifford Mastricola and Clayton Chase
totaling $3,750 each, which was paid for in cash. In the past, executive
management of Insynq had engaged Mark Levin, Clifford Mastricola and Clayton
Chase as consultants regarding possible merger and acquisition targets and other
business advice. Their contributions to us as founders were in the form of cash
investment for common stock. These individuals may be consultants to assist us
in executing that portion of our business plan relating to mergers and
acquisitions and other business advice.
In connection with our purchase of the QwikQuote software, the purchase price
included a finder's fee of $9,000, paid in cash and a warrant to purchase 42,000
shares of common stock at a purchase price of $0.0095 per share, to Mark Levin
for his services in locating the then potential business opportunity.
No promoter was compensated in connection with our purchase of the Appgen Custom
Suite.
Insynq, Inc. is providing administrative and financial assistance to us during
this offering period. Insynq is partially owned by two of our officers,
directors and stockholders. As of June 30, 2004, Insynq has advanced us
approximately $104,850 and we have paid them $53,250, leaving a net amount due
them of approximately $51,600. In addition, we intend, subject to the minimum
proceeds raised from this offering, to negotiate a sole and exclusive master
licensing agreement with Insynq for its e-Accounting business model. We believe
that there is an overall, long-term and mutual benefit derived from this
relationship. If deemed feasible by our management, a licensing agreement such
as this, will permit us to accelerate our business plan goals by immediately
cross selling and marketing additional related business solutions to our
customers. As direct result of a master licensing agreement such as this, we
anticipate we will be able to directly impact our total revenues because we have
potential access to 300 Dealers and 80 VARs worldwide to sell our core products.
Meanwhile, we believe Insynq would then be able to focus its marketing efforts
as a content provider to the telecommunications, cable and Internet service
provider industries instead of dividing its resources among the many divergent
ASP initiatives it already serves.
In January 2004 and March 2004, we received funds, totaling $172,500 from 13
individuals or entities who are close family or friends of the original
incorporators, and as such the transactions were treated informally. In order to
protect their monetary assistance early in the development stage of our Company,
we issued stock as an accommodation between close friends not as an offer to
sell securities. No exemption from registration was relied upon at the time of
the stock issuance. By Board action, on May 11, 2004, we rescinded the stock
issuances and simultaneously executed unsecured short-term promissory notes.
This rescission was viewed as an accommodation between close friends and family
and not as an offer to sell securities. Therefore, no exemption from
registration was relied upon. All 13 individuals or entities have returned their
stock certificates to the stock transfer agent and upon which the certificates
were immediately cancelled.
The following is a list of the friends and family of the original incorporators
and the amount of financial assistance to whom we had initially issued the stock
certificates and subsequently rescinded on May 11, 2004. The monetary amounts
received were executed into promissory notes of equal value effective on the
date of receipt of funds:
Note Value
Total at May 11,
Name Price per Share Date of Issuance Shares Value 2004
- ------------------------------------ ---------------- --------------------- ------------- ------------ ------------
David Fargo $0.50 January 8, 2004 20,000 $10,000 $10,000
Kristina and Joseph O'Brien $0.50 January 9, 2004 20,000 $10,000 $10,000
Anthony Edlin $0.50 January 9, 2004 20,000 $10,000 $10,000
Marview Holdings $0.50 January 14, 2004 40,000 $20,000 $20,000
Mary and Norman Dyer $0.50 January 14, 2004 30,000 $15,000 $15,000
Jeffery Salomon $0.50 January 24, 2004 80,000 $40,000 $40,000
Mary and Norman Dyer $0.50 January 27, 2004 30,000 $15,000 $15,000
The Chase Family Trust $0.50 March 2, 2004 10,000 $5,000 $5,000
Kenneth Green $0.50 March 18, 2004 10,000 $5,000 $5,000
Juan Gamez $0.50 March 18, 2004 10,000 $5,000 $5,000
Marvin Sauter $0.50 March 19, 2004 20,000 $10,000 $10,000
Daniel Lauter $0.50 March 23, 2004 30,000 $15,000 $15,000
D. Alan Dillenberg III $0.50 March 24, 2004 20,000 $10,000 $10,000
Absolute Internet Service, Inc. $0.50 March 24, 2004 5,000 $2,500 $2,500
Aptus shares some office space located at 1127 Broadway Plaza, Suite #203,
Tacoma, WA 98402 with Insynq and Insynq has not shared in the expense.
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, 5,000,000 shares of class A common stock, $0.001 par
value per share, and 10,000,000 shares of class A preferred stock and 10,000,000
class B preferred stock, each with $0.001 par value per share. On December 15,
2003, by majority vote of the shareholders, we were authorized an additional
200,000,000 shares of common stock, increasing the total number to 250,000,000
of authorized shares of common stock. On December 17, 2003, by majority vote of
the shareholders, we were authorized to issue up to 5,000,000 shares of class A
common stock.
COMMON STOCK
There were 12,500,000 shares of our common stock outstanding and held of record
by 6 stockholders as of June 30, 2004. After giving effect to the maximum
offering, the issued and outstanding common stock will consist of 22,500,000
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.
In connection with our purchase on January 23, 2004, of certain assets from Mark
Andre and Appgen Technologies, Inc., we issued a warrant to purchase 500,000
shares of common stock at a purchase price of $0.50 per share.
In connection with the purchase of the QwikQuote Software, we issued to Win
Straube (The Straube Foundation) a warrant to purchase 58,147 shares of our
common stock with an exercise price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Tim
Heath a warrant to purchase 42,000 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Glenn
Paul a warrant to purchase 219,706 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Alan
Katz a warrant to purchase 58,147 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Mark
Levin a warrant to purchase 42,000 shares of common stock with an exercise price
of $0.0095 per share.
CLASS A COMMON STOCK
As of June 30, 2004 there were 1,200,000 shares issued and outstanding of our
class A common stock to five stockholders of record. The holders of our class A
common stock are entitled to one hundred votes per share on all matters to be
voted upon by the stockholders. Because the shares of common stock do not have
cumulative voting rights, the holders of more than 50 percent of the shares
voting for the election of directors can elect all the directors if they choose
to do so and, in such event, the holders of the remaining shares will not be
able to elect any person to the board of directors. The holders of our class A
common stock are not entitled to receive cash dividends, if any, as may be
declared from time to time by the board of directors. In the event of
liquidation, dissolution or winding-up, and subject to the prior distribution
rights of the holders of outstanding shares of preferred stock, if any, the
holders of shares of our class A common stock shall be entitled to receive pro
rata all the remaining assets available for distribution to our stockholders.
Our class A common stock has no preemptive rights. The holders of class A common
stock may at any time or from time to time, at their discretion, convert any
whole number or all of the class A common stock held into fully paid and
non-assessable common stock at the rate (subject to adjustment) of one share of
common stock for each share of class A common stock. There are no redemption or
sinking fund provisions applicable to our class A common stock.
Our board of directors is authorized to issue additional shares of class A
common stock, not to exceed the amount authorized by our Certificate of
Incorporation, and to issue options and warrants for the purchase of such
shares, on such terms and conditions and for such consideration as the board may
deem appropriate without further stockholder action.
PREFERRED STOCK
We currently have no outstanding shares of preferred stock. The board of
directors has the authority, without further action by our stockholders, to
issue up to ten million shares of preferred stock in one or more series and to
fix the rights, preferences and privileges thereof, including dividend rates and
preferences, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any series
or the designation of such series, without further vote or action by the
stockholders. The board of directors, without stockholder approval, could issue
preferred stock with voting and conversion rights, which could adversely affect
the voting power of the holders of common stock. The issuance of preferred stock
may also have the effect of delaying or preventing a change of control of us.
Prior to this offering, there has been no trading market for the shares of
common stock offered. Consequently, the initial public offering price of the
shares of common stock was arbitrarily determined. The factors considered in
determining the offering price were our financial condition and prospects, our
limited operating history and the general condition of the securities market.
The offering price is not an indication of and is not based upon our actual
value. The offering price bears no relationship to our book value, assets or
earnings or any other recognized criteria of value. The offering price should
not be regarded as an indicator of the future market price of the securities.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 22,500,000 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 12,500,000 shares outstanding that are "restricted
securities" as that term is defined in Rule 144 promulgated under the Securities
Act.
The common stock owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and in
the future may be sold under Rule 144, which provides, in essence, that a person
holding restricted securities for a period of one (1) year may sell every three
(3) months, in brokerage transactions and/or market maker transactions, an
amount equal to the greater of (a) one percent (1%) of our issued and
outstanding common stock or (b) the average weekly trading volume of the common
stock during the four (4) calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of common stock without any
quantity limitation by a person who is not an affiliate of ours and who has
satisfied a two (2) year holding period. Additionally, common stock underlying
employee stock options granted, to the extent vested and exercised, may be
resold beginning on the ninety-first day after the effective date of a
prospectus, or offering memorandum pursuant to Rule 701 promulgated under the
Securities Act.
As of the date hereof and upon completion of the offering, none of our common
stock (other than those which are qualified by the SEC in connection with this
offering) are available for sale under Rule 144. Future sales under Rule 144 may
have an adverse effect on the market price of the common stock. Our officers,
directors and certain of our security holders have agreed not to sell, transfer
or otherwise dispose of their common stock or any securities convertible into
common stock for a period of 12 months from the date hereof.
Under Rule 701 of the Securities Act, persons who purchase shares upon exercise
of options granted prior to the date of this Prospectus are entitled to sell
such common stock after the 90th day following the date of this Prospectus in
reliance on Rule 144, without having to comply with the holding period
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after this 90-day
period, but without a holding period.
There has been no public market for our common stock. With a relatively minimal
public float and without a professional underwriter, there is little or no
likelihood that an active and liquid public trading market, as that term is
commonly understood, will develop, or if developed that it will be sustained,
and accordingly, an investment in our common stock should be considered highly
illiquid. Although we believe a public market will be established in the future,
there can be no assurance that a public market for the common stock will
develop. If a public market for our common stock does develop at a future time,
sales by shareholders of substantial amounts of our common stock in the public
market could adversely affect the prevailing market price and could impair our
future ability to raise capital through the sale of our equity securities.
THE APPLICATION OF THE "PENNY STOCK" RULES
The Securities and Exchange Act of 1934 requires additional disclosure relating
to the market for "penny stocks." A penny stock is generally defined to be any
equity security not listed on NASDAQ or a national securities exchange that has
a market price of less than $5.00 per share, subject to certain exceptions.
Among these exceptions are shares issued by companies that have:
o net tangible assets of at least $2 million, if the issuer has been in
continuous operation for three years; o net tangible assets of at least $5
million, if the issuer has been in continuous operation for less than three
years; or o average annual revenue of at least $6 million for each of the last
three years.
We do not currently meet the requirements of these exceptions and, therefore,
our shares would be deemed penny stocks for purposes of the Exchange Act if and
at any time while our common stock trades below $5.00 per share. In such case,
trading in our shares would be regulated pursuant to Rules 15-g-1 through 15-g-6
and 15-g-9 of the Exchange Act. Under these rules, brokers or dealers
recommending our shares to prospective buyers would be required, unless an
exemption is available, to:
o deliver a lengthy disclosure statement in a form designated by the SEC
relating to the penny stock market to any potential buyers, and obtain
a written acknowledgement from each buyer that such disclosure
statement has been received by the buyer prior to any transaction
involving our shares;
o provide detailed written disclosure to buyers of current price
quotations for our shares, and of any sales commissions or other
compensation payable to any broker or dealer, or any other related
person, involved in the transaction; and,
o send monthly statements to buyers disclosing updated price information
for any penny stocks held in their accounts, and these monthly
statements must include specified information on the limited market for
penny stocks.
In addition, if we are subject to the penny stock rules, all brokers or dealers
involved in a transaction in which our shares are sold to any buyer, other than
an established customer or "accredited investor," must make a special written
determination that our shares would be a suitable investment for the buyer. The
brokers or dealers must receive the buyer's written agreement to purchase our
shares, as well as the buyer's written acknowledgement that the suitability
determination made by the broker or dealer accurately reflects the buyer's
financial situation, investment experience and investment objectives, prior to
completing any transaction in our shares.
These Exchange Act rules may limit the ability or willingness of brokers and
other market participants to make a market in our shares and may limit the
ability of our shareholders to sell in the secondary market, through brokers,
dealers or otherwise. We also understand that many brokerage firms will
discourage their customers from trading in shares falling within the "penny
stock" definition due to the added regulatory and disclosure burdens imposed by
these Exchange Act rules.
The SEC from time to time may propose and implement even more stringent
regulatory or disclosure requirements on shares not listed on NASDAQ or on a
national securities exchange. The adoption of the proposed changes that may be
made in the future could have an adverse effect on the trading market for our
shares.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form SB-2 relating to the common stock offered hereby.
This prospectus, which is part of the Registration Statement, does not contain
all of the information included in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to us, the common
stock offered hereby, reference is made to the Registration Statement, including
the exhibits and schedules thereto. Statements contained in this Prospectus
concerning the provisions or contents of any contract, agreement or any other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or document filed as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description of
the matters involved.
The Registration Statement, including the exhibits and schedules thereto, may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, DC 20549.
The Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including us. The address of such site is
http://www.sec.gov.
We intend to furnish to our shareowners annual reports containing audited
financial statements certified by independent public accountants for each fiscal
year and quarterly reports containing unaudited financial statements for the
first three quarters of each fiscal year.
We will provide without charge to each person who receives a Prospectus, upon
written or oral request of such person, a copy of any of the information that
was incorporated by reference in the Prospectus (not including Exhibits to the
information that is incorporated by reference unless the Exhibits are themselves
specifically incorporated by reference). Any such request shall be directed to
the Interim Financial Officer of Aptus Corp., M. Carroll Benton, 1127 Broadway
Plaza, Suite 203, Tacoma, WA 98402, Tel.# (253) 691-1531.
Within five days of our receipt of a subscription agreement accompanied by a
check for the purchase price, we will send by first class mail a written
confirmation to notify the subscriber of the extent, if any, to which such
subscription has been accepted. We reserve the right to reject orders for the
purchase of shares in whole or in part. Upon acceptance of each subscriber, we
will promptly provide our stock transfer agent the information to issue shares.
You can also call or write us at any time with any questions you may have. We
would be pleased to speak with you about any aspect of this offering.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our views about
future events and financial performance. Our actual results, performance or
achievements could differ materially from those expressed or implied in these
forward-looking statements for various reasons, including those in the "Risk
Factors" section beginning on page 9. Therefore, you should not place undue
reliance upon these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
STOCK TRANSFER AGENT
Our transfer agent and registrar of the Common Stock is Colonial Stock Transfer,
66 Exchange Place, Salt Lake City, Utah, 84111, Tel. (801) 355-5740.
EXPERTS
Our financial statements, as of and for the periods, December 31, 2002 and
December 31, 2003, have been audited by De Joya & Company, independent auditors,
as set forth in their report included herein and incorporated herein by
reference. Such financial statements have been included in reliance upon such
report given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
There is no past, pending or, to our knowledge, threatened litigation or
administrative action which has or is expected by our management to have a
material effect upon our business, financial condition or operations, including
any litigation or action involving our officers, directors, or other key
personnel.
The Law Offices of Miles Garnett, Esq., 66 Wayne Avenue, Atlantic Beach,
N.Y.11509, Tel. #(516) 371-4598, will pass upon certain legal matters relating
to the Offering.
INDEX TO FINANCIAL STATEMENTS
As of and for the three months ended March 31, 2004
and
As of and for the period from April 4, 2002 (Date of Inception)
through March 31, 2004
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
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Aptus, Corp.
(A Development Stage Company)
Tacoma, Washington
We have reviewed the accompanying balance sheet of Aptus, Corp. (A Development
Stage Company) as of March 31, 2004, and the related statements of operations,
stockholders' equity, and cash flows for the three months ended March 31, 2004
and the period from April 4, 2002 (Date of Inception) through March 31, 2004, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Aptus, Corp. (A Development Stage Company).
A review consists principally of inquiries of the company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with Public Company Accounting Oversight Board
standards, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has 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 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ De Joya & Company
De Joya & Company
June 25, 2004
Las Vegas, Nevada
Aptus Corp.
(A Development Stage Company)
Balance Sheets
March 31, 2004 December 31, 2003
(unaudited)
-----------------------------------
Assets
Current assets
Cash $ 50,873 $ 9,227
Accounts receivable, net of allowance for doubtful
accounts of $1,000 at March 31, 2004 and $0.00 at
December 31, 2003 22,171 --
Related party receivable 10,096 --
Deposits -- 15,000
--------- ---------
Total current assets 83,140 24,227
--------- ---------
Other assets
Intellectual property, net of $7,079 accumulated 583,517 --
amortization
Deposits 1,170 1,170
--------- ---------
Total other assets 584,687 1,170
--------- ---------
Total assets $ 667,827 $ 25,397
========= =========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Notes payable $ 172,500 $ --
Accounts payable 841 --
Accrued liabilities 2,670 --
Amounts due to related parties 38,540 33,927
--------- ---------
Total current liabilities 214,551 33,927
--------- ---------
Commitments and contingencies -- --
Stockholders' equity (deficit)
Class A preferred stock, $0.001 par value, 10,000,000
shares authorized, no shares issued and outstanding -- --
Class B preferred stock, $0.001 par value, 10,000,000
shares authorized, no shares issued and outstanding -- --
Class A common stock, $0.001 par value, 5,000,000 shares
authorized, 1,200,000 shares issued and outstanding 1,200 1,200
Common stock, $0.001 par value, 250,000,000 shares
authorized, 12,500,000 shares issued and outstanding at
March 31, 2004, and 12,000,000 shares issued and
outstanding at December 31, 2003 12,500 12,000
Additional paid-in capital 500,596 18,000
Stock subscriptions receivable -- (1,200)
Accumulated deficit (61,020) (38,530)
--------- ---------
Total stockholders' equity (deficit) 453,276 (8,530)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 667,827 $ 25,397
========= =========
The accompanying notes are an integral part of these financial statements.
Aptus Corp.
(A Development Stage Company)
Statements of Operations
(unaudited)
Period from April
For the three 4,2002 (Date of
months ended March Inception) through
31, 2004 March 31, 2004
------------------ ------------------
Revenues $ 78,979 $ 78,979
------------ ------------
Costs and expenses
Direct costs 74,381 87,919
Marketing, selling and advertising 12,497 12,737
General and administrative 13,335 38,087
------------ ------------
Total costs and expenses 100,213 138,743
------------ ------------
Loss from operations (21,234) (59,764)
------------ ------------
Interest expense (1,256) (1,256)
------------ ------------
Loss before provision for income taxes (22,490) (61,020)
Provision for income taxes -- --
------------ ------------
Net loss $ (22,490) $ (61,020)
============ ============
Net loss per share, basic and diluted $ (0.00) $ (0.03)
============ ============
Weighted average of common shares,
basic and diluted 12,379,121 2,176,005
============ ============
The accompanying notes are an integral part of these financial statements.
11
Aptus Corp.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
(unaudited)
Class A Common Stock Common Stock Additional Stock Accumulated Total
Paid-In- Subscriptions Deficit Stockholders'
Capital Receivable Equity
Shares Amount Shares Amount
---------- ---------- ----------- ---------- ---------- ------------ ------------- --------------
Balance, April 4, 2002
(Date of Inception) -- $ -- -- $ -- $ -- $ -- $ -- $ --
Net loss for period
ended December 31, 2002 -- -- -- -- -- -- (273) (273)
---------- ---------- ----------- ---------- ---------- ------------ ------------- --------------
Balance, December 31,
2002 -- -- -- -- -- -- (273) (273)
Issuance of common stock
for cash at $0.0025 per
share in November 2003 -- -- 12,000,000 12,000 18,000 -- -- 30,000
Issuance of class A
common stock for
subscriptions receivable
at $0.001 per share in
December 2003 1,200,000 1,200 -- -- -- (1,200) -- --
Net loss for the year
ended, December 31, 2003 -- -- -- -- -- -- (38,257) (38,257)
---------- ---------- ----------- ---------- ---------- ------------ ------------- --------------
Balance, December 31,
2003 1,200,000 1,200 12,000,000 12,000 18,000 (1,200) (38,530) (8,530)
Issuance of common stock
in conjunction with the
purchase of assets in
January 2004, valued at
$.50 per share -- -- 500,000 500 249,500 -- -- 250,000
Issuance of warrants in
conjunction with the
purchase of assets in
January 2004 -- -- -- -- 26,750 -- -- 26,750
Issuance of warrants in
conjunction with the
purchase of assets in
February 2004 -- -- -- -- 206,346 -- -- 206,346
Principal received on
stock subscriptions in
January 2004 -- -- -- -- -- 600 -- 600
Principal received on
stock subscriptions in
March 2004 -- -- -- -- -- 600 -- 600
Net loss for the three
months ended March 31,
2004 -- -- -- -- -- -- (22,490) (22,490)
---------- ---------- ----------- ---------- ---------- ------------ ------------- --------------
Balance, March 31, 2004 1,200,000 $1,200 12,500,000 $12,500 $500,596 $ -- $(61,020) $453,276
========== ========== =========== ========== ========== ============ ============= ==============
The accompanying notes are an integral part of this financial statement.
Aptus Corp.
(A Development Stage Company)
Statements of Cash Flows
(unaudited)
Period from
April 4,
2002 (Date
For the of
three months Inception)
ended March through
31, 2004 March 31,
2004
---------------- ----------------
Cash flows from operating activities
Net loss $ (22,490) $ (61,020)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization 7,079 7,079
Bad debts 1,000 1,000
Changes in operating assets and liabilities:
Accounts receivable - trade (23,171) (23,171)
Other receivables - related party (10,096) 4,904
Accounts payable 840 1,113
Accrued liabilities 2,670 2,670
Account payable - related party 19,614 38,268
Deposits -- (16,170)
--------- ---------
Net cash used in operating activities (24,554) (45,327)
--------- ---------
Cash flows from investing activities:
Purchase of intellectual property (99,000) (99,000)
Purchase trademarks (8,500) (8,500)
--------- ---------
Net cash used in investing activities (107,500) (107,500)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable 172,500 172,500
Proceeds from issuance of common stock -- 30,000
Proceeds from stock subscriptions receivable 1,200 1,200
--------- ---------
Net cash provided by financing activities 173,700 203,700
--------- ---------
Net increase in cash 41,646 50,873
Cash at beginning of period 9,227 --
--------- ---------
Cash at end of period $ 50,873 $ 50,873
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
Aptus Corp.
(A Development Stage Company)
Notes To Financial Statements
March 31, 2004
(unaudited)
Note 1 - Business
BUSINESS
Aptus Corp. (the Company), a Delaware corporation, is headquartered in Tacoma,
Washington USA. The Company is an Application Service Provider (ASP) seeking and
pursuing merger and acquisition companies and/or certain related industry assets
in the application service provider and small - niche software industries.
Note 2 -Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The Company's operating revenue has been minimal and is insufficient to maintain
the Company as a going concern. The Company is continuing to develop its
products and business plan. In accordance with Statement of Financial Accounting
Standards ("SFAS") No.7, the Company is considered a Development Stage Company.
Summary of Significant Accounting Policies
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements is as follows:
REVENUE RECOGNITION
The Company's principal source of revenue is generated from fees billed to our
value added reseller dealers and from the sales software applications. Discounts
are recorded as a reduction of revenue.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist principally of cash, accounts and related party
receivables, trade and related party payables, accrued liabilities, and short
and long-term debt obligations. The carrying amounts of such financial
instruments in the accompanying balance sheets approximate their fair values due
to their relatively short-term nature. It is management's opinion that the
Company is not exposed to significant currency or credit risks arising from
these financial instruments.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
INTANGIBLE ASSETS
Intellectual Property - In accordance with Statement of Financial Accounting
Standards ("SFAS") No.86, "Accounting Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," the Company capitalizes software and product
rights (intellectual property) as allocated within the purchase agreements.
Capitalized costs are recorded at the lower of cost, or net realizable value and
are amortized straight-line over the estimated economic life of the products,
generally fifteen years.
Trademarks - Trademarks are recorded at cost and are amortized over fifteen
years.
FIXED ASSETS - Fixed assets are stated at cost less accumulated depreciation.
Depreciation is provided principally on the straight-line method over the
estimated useful lives of the assets. The cost of repairs and maintenance is
charged to expense as incurred. Expenditures for property betterments and
renewals are capitalized. Upon sale or other disposition of a depreciable asset,
cost and accumulated depreciation are removed from the accounts and any gain or
loss is reflected in other income (expense). As of March 31, 2004, 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 March 31, 2004, the Company has available net operating loss carryovers of
approximately $61,000 that will expire in various periods through 2024. 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.
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 advertising costs of approximately $12,000 for the three months ended
March 31, 2004 and approximately $12,300 for the period from April 4, 2002 (Date
of Inception) through March 31, 2004.
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
or warrants 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 three months ended March 31, 2004 and the period from
April 4, 2002 (Date of Inception) through March 31, 2004. As of March 31, 2004,
the Company has not adopted an employee incentive plan.
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. The Company applies the provisions of SFAS No. 123 for stock-based
awards to those other than employees. Stock-based compensation expense for these
awards is calculated over related service or vesting periods. Companies choosing
the intrinsic-value method are required to disclose the proforma impact of the
fair value method on net income or net loss.
RECLASSIFICATIONS
Certain reclassifications have been made to the previously reported amounts to
conform to the Company's current interim period presentation.
RECENT AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
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 December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, "Accounting for Stock-Based Compensation -Transition and Disclosure -
an amendment of SFAS Statement No. 123, "Accounting for Stock Based
Compensation" which provides alternative methods for accounting for a change by
registrants to the fair value method of accounting for stock-based compensation.
Additionally, SFAS No. 148 amends the disclosure requirements to SFAS No. 123 to
require disclosure in the significant accounting policy footnote of both annual
and interim financial statements of the method of accounting for stock- based
compensation and the related proforma disclosures when the intrinsic value
method continues to be used. The statement is effective for fiscal years
beginning after December 15, 2002, and disclosures are effective for the first
fiscal quarter beginning after December 15, 2002.
In January 2003, (as revised in December 2003) The Financial Accounting
Standards Board ("FASB") issued Interpretation No. 46, "Consolidation of
Variable Interest Entities", an interpretation of Accounting Research Bulletin
("ARB") No. 51, "Consolidated Financial Statements". Interpretation No. 46
addresses consolidation by business enterprises of variable interest entities,
which have one or both of the following characteristics: (i) the equity
investment at risk is not sufficient to permit the entity to finance its
activities without additional subordinated support from other parties, which is
provided through other interest that will absorb some or all of the expected
losses of the entity; (ii) the equity investors lack one or more of the
following essential characteristics of a controlling financial interest: the
direct or indirect ability to make decisions about the entities activities
through voting rights or similar rights; or the obligation to absorb the
expected losses of the entity if they occur, which makes it possible for the
entity to finance its activities; the right to receive the expected residual
returns of the entity if they occur, which is the compensation for the risk of
absorbing the expected losses.
Interpretation No. 46, as revised, also requires expanded disclosures by the
primary beneficiary (as defined) of a variable interest entity and by an
enterprise that holds a significant variable interest in a variable interest
entity but is not the primary beneficiary.
Interpretation No. 46, as revised, applies to small business issuers no later
than the end of the first reporting period that ends after December 15, 2004.
This effective date includes those entities to which Interpretation 46 had
previously been applied. However, prior to the required application of
Interpretation No. 46, a public entity that is a small business issuer shall
apply Interpretation 46 or this Interpretation to those entities that are
considered to be special-purpose entities no later than as of the end of the
first reporting period that ends after December 15, 2003
Interpretation No. 46 may be applied prospectively with a cumulative-effect
adjustment as of the date on which it is first applied or by restating
previously issued financial statements for one or more years with a
cumulative-effect adjustment as of the beginning of the first year restated.
The implementation of the provisions of Interpretation No. 46 is not expected to
have a significant effect on the Company's financial statement presentation or
disclosures.
In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 150, "Accounting For Certain
Financial Instruments with Characteristics of both Liabilities and Equity". SFAS
No. 150 changes the accounting for certain financial instruments with
characteristics of both liabilities and equity that, under previous
pronouncements, issuers could account for as equity. The new accounting guidance
contained in SFAS No. 150 requires that those instruments be classified as
liabilities in the balance sheet.
SFAS No. 150 affects the issuer's accounting for three types of freestanding
financial instruments. One type is mandatorily redeemable shares, which the
issuing company is obligated to buy back in exchange for cash or other assets. A
second type includes put options and forward purchase contracts, which involves
instruments that do or may require the issuer to buy back some of its shares in
exchange for cash or other assets. The third type of instruments that are
liabilities under this Statement is obligations that can be settled with shares,
the monetary value of which is fixed, tied solely or predominantly to a variable
such as a market index, or varies inversely with the value of the issuers'
shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety.
Most of the provisions of Statement 150 are consistent with the existing
definition of liabilities in FASB Concepts Statement No. 6, "Elements of
Financial Statements". The remaining provisions of this Statement are consistent
with the FASB's proposal to revise that definition to encompass certain
obligations that a reporting entity can or must settle by issuing its own
shares. This Statement shall be effective for financial instruments entered into
or modified after May 31, 2003 and otherwise shall be effective at the beginning
of the first interim period beginning after June 15, 2003, except for
mandatorily redeemable financial instruments of a non-public entity, as to which
the effective date is for fiscal periods beginning after December 15, 2004.
The implementation of the provisions of SFAS No. 150 is not expected to have a
significant effect on the Company's financial statement presentation or
disclosures.
Note 3 - Going Concern and Management's Plans
The Company's financial statements as of and for the three months ended March
31, 2004 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. For the three months ended March 31, 2004, the
Company had a net loss of $22,490 and a negative cash flow from operations of
$24,554. The Company had a working capital deficit of $131,411. The Company's
working capital deficit as of March 31, 2004 may not enable it to meet certain
financial objectives as presently structured.
The rate at which the Company expends its resources is variable, may be
accelerated, and will depend on many factors. The Company will need to raise
substantial capital to finance its operations and may seek such additional
funding through public or private equity or new debt. There can be no assurance
that such additional funding, if any, will be available on acceptable terms. The
Company's continued existence as a going concern is ultimately dependent upon
its ability to secure additional financing. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
Note 4 - Loss Per Common Share
Basic and diluted loss per share of common stock is computed by dividing the net
loss by the weighted average number of common shares outstanding available to
common stockholders during the period. However, common stock equivalents have
been excluded from the computation of diluted loss per share of common stock for
the three months ended March 31, 2004, as their effect would be anti-dilutive.
Note 5 - Purchase of Assets
On January 23, 2004, the Company consummated an asset purchase agreement for the
purchase of proprietary software, proprietary rights, source codes and
trademarks totaling $294,250 in consideration for $17,500 in cash, 500,000
shares of the Company's common stock valued at $250,000 ($0.50 per share based
on current market price), and stock warrants for 500,000 shares of the Company's
common stock at strike price of $0.50 per share valued under the Black-Scholes
pricing model at $26,750. Additionally, the Company will (a.) assume existing
obligations of the sellers specifically related to providing continuous customer
service and support to the existing licensees of the acquired proprietary
software in accordance with the existing license agreements between such
licensees and the sellers, (b.) pay a distribution fee of 5.5% on all revenues
in perpetuity, and, (c.) pay $5,000 per month pursuant to a two year consulting
agreement (See also Note 8). The entire purchase cost is allocated to: (a.)
intellectual property - $285,750 and, (b.) trademarks -$8,500. An amended
distribution agreement was executed on April 15, 2004 to provide the buyer for a
$1,250,000 buyout at anytime.
On February 1, 2004, the Company consummated its second asset purchase agreement
for its proprietary sales quoting software approximating $296,000 in
consideration of $90,000 in cash and stock warrants for 420,000 shares of the
Company's common stock at strike price of $0.0095 per share valued under the
Black-Scholes pricing model at approximately $206,000. The purchase cost is
recorded on the balance sheet as intellectual property.
The $15,000 deposit recorded as of December 31, 2003, was applied at the time of
closing toward the total acquisition costs of the sales quoting software.
Note 6 - Promissory Notes Payable
As of March 31, 2004, the Company has fourteen short-term promissory notes
totaling $172,500 with thirteen individuals and/or entities, and has related
accrued interest totaling $1,256. All promissory notes, plus accrued interest,
are due July 10, 2004. The notes are unsecured and bear interest at prime plus
one percent. Prime rate of interest at March 31, 2004 was 4.0%.
Note 7 - Related Party Payable
As of December 31, 2003, the related party payable is comprised of advances from
another public entity, located in Tacoma, WA, also partially owned and managed
by two Aptus' officers, directors and stockholders. The payable is due on
demand, unsecured and bears no interest. This other company has provided, and
continues to provide Aptus Corp., with administrative and financial assistance.
From the inception date of April 4, 2002 through March 31, 2004, a total of
$90,540 has been advanced to Aptus and Aptus has paid back a total of $52,000,
leaving a balance of $38,540. As of June 30, 2004 the balance due this related
party was approximately $51,600.
Note 8 - Commitments and Contingencies
Consulting Agreements
The Company has entered into one long-term and three short-term consulting
agreements with individuals who provide technical expertise and skills in
connection with the respective assets purchased in January and February 2004.
The long-term agreement calls for twenty-four successive monthly payments of
$5,000 beginning April 2004 and ending March 2006. The Company has three
short-term (three-months) consulting agreements, subject to automatic renewal.
The cost of the three agreements aggregate approximately $18,750 each month.
Distribution Agreement
The Company has a distribution agreement (See also Note 5) with the seller of
certain assets, as executed on January 23, 2004, and amended on April 15, 2004,
that stipulates Aptus will pay 5.5%, in perpetuity, on all gross proceeds from
the sales of certain software products beginning June 2004. Terms of the amended
distribution agreement also include a buyout provision, not to exceed
$1,250,000, at any time by the buyer.
Note 10 - Other Disclosure
Non-cash investing and financing activities included the following:
For the three Period from
months ended April 4, 2004
March 31, 2004 (Date of
Inception)
through March
31, 2004
----------------- -----------------
Issuance of common stock for assets purchased $250,000 $250,000
Valuation of warrants issued in conjunction with assets 233,096 233,096
purchased
<c>
No dealer, salesperson or any other person is authorized to give any
information or to make any representations in connection with this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by Aptus Corp.
us. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the
securities offered by this Prospectus, or an offer to sell or
solicitation of an offer to buy any securities by anyone in any
jurisdiction in which such offer or solicitation is not authorized
or is unlawful. 10,000,000
_____________________________________________
SHARES OF COMMON STOCK
Until March 31, 2005 all dealers effecting transactions in the
(par value $.001 per share) registered securities, whether or not
participating in this distribution, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
TABLE OF CONTENTS
Aptus Corp.
1127 Broadway Plaza, #203
Tacoma, Washington 98402
Summary .................................................5
Risk Factors.............................................9
Use of Proceeds..........................................13 ________, 2004
Dilution.................................................14
Dividend Policy..........................................15
Capitalization...........................................16
Plan of Distribution.....................................17
Our Business.............................................17 ---------------------------------------
Plan of Operation........................................27
Principal Shareholders...................................34
Management...............................................38
Certain Relationships and Related Transactions...........41
Description of Securities................................42
Shares Eligible for Future Sale..........................44
Available Information....................................46
Special Note Regarding Forward-Looking
Statements...............................................46
Stock Transfer Agent.....................................47
Experts..................................................47
Legal Matters............................................47
Index to Financial Statements............................F-1
======================================================================
II-7
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The information required by this item is incorporated by reference to
"indemnification" in the prospectus herein.
At present we have not entered into individual indemnity agreements with our
Officers or Directors. However, our By-Laws and Certificate of Incorporation
provide a blanket indemnification that we shall indemnify, to the fullest extent
under Delaware law, our directors and officers against certain liabilities
incurred with respect to their service in such capabilities. In addition, the
Certificate of Incorporation provides that the personal liability of our
directors and officers and our stockholders for monetary damages will be
limited.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and we will be governed by the final adjudication of
such case.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 460.00
Blue Sky Fees and Expenses 6,000.00
Trustee's and Transfer Agent Fees 4,000.00
Legal Fees and Expenses 18,000.00
Printing and Engraving Expenses 3,500.00
Accountant's Fees and Expenses 4,000.00
-------------------
Total $ 35,960.00
===================
The foregoing expenses, except for the SEC fees, are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Unregistered Securities Sold within the past three years
The following sets forth information relating to all previous sales of common
stock by the Registrant, which sales were not registered under the Securities
Act of 1933, as amended.
On November 7, 2003, our board of directors authorized the initial issuance of
an aggregate of 12,000,000 shares as founder's stock at a price of $0.0025 per
share totaling $7,500 each to John P. Gorst, M. Carroll Benton, Mark Levin, and
$3,750 each to Clifford Mastricola and Clayton Chase. The stock was purchased
and the remaining balance as of November 7, 2003 was 238,000,000 shares of
authorized common stock remained unissued.
On December 17, 2003, our board of directors authorized the purchase of an
aggregate of 1,200,000 shares of class A common stock at a price of $0.001 per
share, totaling $300.00 each to John P. Gorst, M. Carroll Benton and Mark Levin,
and $150.00 each to Clifford Mastricola and Clayton Chase. The stock has been
purchased and the remaining balance of 3,800,000 shares of authorized class A
common stock remained unissued.
In the past, executive management of Insynq has engaged Mark Levin, Clifford
Mastricola and Clayton Chase as consultants regarding possible merger and
acquisition targets. Their contributions to Aptus as founders were in the form
of cash investment for common stock. These individuals may be, in the future,
consultants to assist us in executing that portion of our business plan relating
to mergers and acquisitions.
The above 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. These purchasers all were members of the
incorporator group and not solicited.
Prior to the filing of our Registration Statement on Form SB-2, there were two
letters of intent for the acquisition of certain assets from three unrelated
third parties dated Sept 4, 2003 and November 3, 2003, respectively. The
securities were issued in consideration of the acquisition transactions, which
were a culmination of private agreements dated January 23 and February 1, 2004,
respectively, as discussed below. As these were acquisition transactions, and
not a public offering, we did not seek information whether the third parties
were accredited or sophisticated investors.
On January 23, 2004, we purchased certain assets from Mark Andre and Appgen
Technologies, Inc. The purchase price to Mark Andre was made up of:
o $500,000 payable in common stock valued at $1.00 per share of common stock.
o A cash payment at closing of $8,500.
o A warrant to purchase up to 500,000 shares of common stock at an exercise
price of $0.50 per share anytime from January 23, 2004 through January 22,
2014.
o Assumption of development support of the software code.
In connection with the purchase of the Appgen Custom Suite, we executed a
Consulting Agreement with Mark Andre for the term of two years with monthly
compensation in the amount of $5,000.
In addition, we executed a Distribution Agreement with Mark Andre. We will pay
5.5%, in perpetuity, on all gross proceeds from the sales of the Appgen Custom
Suite and MyBooks Professional products. On April 15, 2004 we amended the
Distribution Agreement to include a buyout provision in the amount of
$1,250,000, which we may execute at any time.
The purchase price to Appgen Technologies was in the form of a cash payment in
the amount of $9,000.
The purchase price was negotiated between John P. Gorst, our chief executive
officer and Mark Andre and Mark Andre for Appgen Technologies, Inc., using past
revenue streams and applying the industry guidelines as provided by Tripletree
Investments Banking (www.triple-tree.com).
On February 1, 2004 we purchased certain assets from QwikQuote, Inc. The
purchase price was made up of:
o $21,000 payable in cash at closing.
o Payment of a transition bonus to Tim Heath in the amount of $9,000.
o Payment of a finders' fee to Mark Levin, a founding stockholder, in the
amount of $9,000.
o Consulting and Non-Compete Agreement with Alan Katz in the amount of
$17,000 for a term of 12 months.
o Consulting and Non-Compete Agreement with Glenn Paul in the amount of
$17,000 for a term of 12 months.
o Consulting and Non-Compete Agreement with Win Straube (The Straube
Foundation) in the amount of $17,000 for a term of 12 months.
The purchase price was determined by John Gorst, our chief executive officer and
Glenn Paul, the owner of the QwikQuote Software by applying industry guidelines
provided by Tripletree Investment Banking (www.triple-tree.com).
In connection with the purchase of the QwikQuote Software, we issued to Win
Straube (The Straube Foundation) a warrant to purchase 58,147 shares of our
common stock with an exercise price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Tim
Heath a warrant to purchase 42,000 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Glenn
Paul a warrant to purchase 219,706 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Alan
Katz a warrant to purchase 58,147 shares of our common stock with an exercise
price of $0.0095 per share.
In connection with the purchase of the QwikQuote Software, we issued to Mark
Levin a warrant to purchase 42,000 shares of common stock with an exercise price
of $0.0095 per share.
In January 2004 and March 2004, we received funds, totaling $172,500 from 13
individuals or entities who are close family or friends of the original
incorporators, and as such the transactions were treated informally. In order to
protect their monetary assistance early in the development stage of our Company,
we issued stock as an accommodation between close friends not as an offer to
sell securities. No exemption from registration was relied upon at the time of
the stock issuance. By Board action, on May 11, 2004, we rescinded the stock
issuances and simultaneously executed unsecured short-term promissory notes.
This rescission was viewed as an accommodation between close friends and family
and not as an offer to sell securities. Therefore, no exemption from
registration was relied upon. All 13 individuals or entities have returned their
stock certificates to the stock transfer agent upon which the certificates
were immediately cancelled.
The following is a list of the friends and family of the original incorporators
and the amount of financial assistance to whom we had initially issued the stock
certificates and subsequently rescinded on May 11, 2004. The monetary amounts
received were executed into promissory notes of equal value effective on the
date of receipt of funds::
Note Value
Total at May 11,
Name Price per Share Date of Issuance Shares Value 2004
- ------------------------------------ ---------------- --------------------- ------------- ------------ ------------
David Fargo $0.50 January 8, 2004 20,000 $10,000 $10,000
Kristina and Joseph O'Brien $0.50 January 9, 2004 20,000 $10,000 $10,000
Anthony Edlin $0.50 January 9, 2004 20,000 $10,000 $10,000
Marview Holdings $0.50 January 14, 2004 40,000 $20,000 $20,000
Mary and Norman Dyer $0.50 January 14, 2004 30,000 $15,000 $15,000
Jeffery Salomon $0.50 January 24, 2004 80,000 $40,000 $40,000
Mary and Norman Dyer $0.50 January 27, 2004 30,000 $15,000 $15,000
The Chase Family Trust $0.50 March 2, 2004 10,000 $5,000 $5,000
Kenneth Green $0.50 March 18, 2004 10,000 $5,000 $5,000
Juan Gamez $0.50 March 18, 2004 10,000 $5,000 $5,000
Marvin Sauter $0.50 March 19, 2004 20,000 $10,000 $10,000
Daniel Lauter $0.50 March 23, 2004 30,000 $15,000 $15,000
D. Alan Dillenberg III $0.50 March 24, 2004 20,000 $10,000 $10,000
Absolute Internet Service, Inc. $0.50 March 24, 2004 5,000 $2,500 $2,500
ITEM 27. EXHIBITS
Index to Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form SB-2 as filed December 19, 2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.2 Amended Articles of Incorporation changing authorized common shares to 250,000,000.
(Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form SB-2 as filed December 19,
2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.3 Amended Articles of Incorporation adding class A common shares with super voting rights.
(Incorporated by reference to Exhibit 3.3 to the Company's
Registration Statement on Form SB-2 as filed December 19,
2003)
- ----------------- ------------------------------------------------------------------------------------------------
3.4 Bylaws (Incorporated by reference to the Company's Registration Statement on Form SB-2 as
filed December 19, 2003)
- ----------------- ------------------------------------------------------------------------------------------------
4.1 Warrant Agreement issued to Mark Levin dated February 1, 2004. (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.2 Warrant Agreement issued to Glenn Paul dated February 1, 2004. (Incorporated by reference to
Exhibit 4.2 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.3 Warrant Agreement issued to Straube Foundation dated February 1, 2004. (Incorporated by
reference to Exhibit 4.3 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.4 Warrant Agreement issued to Tim Heath dated February 1, 2004. (Incorporated by reference to
Exhibit 4.4 to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.5 Asset Purchase Agreement dated February 1, 2004 between QwikQuote, Inc. and Aptus Corp.
(Incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form SB-2
as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.6 Asset Purchase Agreement dated January 23, 2004 between Mark Andre and Aptus Corp.
(Incorporated by reference to Exhibit 4.6 to the Company's
Registration Statement on Form SB-2 as filed February 25,
2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.7 Asset Purchase Agreement dated January 23, 2004 between Appgen Technologies, Inc. and Aptus
Corp. (Incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on
Form SB-2 as filed February 25,2004)
- ----------------- ------------------------------------------------------------------------------------------------
4.8* Warrant Agreement issued to Mark Andre dated January 23, 2004.
- ----------------- ------------------------------------------------------------------------------------------------
4.9* Amendment to Asset Purchase Agreement between Mark Andre and Aptus Corp. dated April 5, 2004.
- ----------------- ------------------------------------------------------------------------------------------------
4.10* Revised Warrant Agreement issued to Mark Levin dated February 1, 2004 filed as Exhibit 4.1 to
the Company's Registration Statement on Form SB-2 as filed February 25, 2004
- ----------------- ------------------------------------------------------------------------------------------------
4.11* Revised Warrant Agreement issued to Glenn Paul dated February 1, 2004 filed as Exhibit 4.2 to
the Company's Registration Statement on Form SB-2 as filed February 25, 2004
- ----------------- ------------------------------------------------------------------------------------------------
4.12 Revised Warrant Agreement issued to Straube Foundation dated
February 1, 2004 filed as Exhibit 4.3 to the Company's
Registration Statement on Form SB-2 as filed February 25, 2004
- ----------------- ------------------------------------------------------------------------------------------------
4.13 Revised Warrant Agreement issued to Tim Heath dated February 1, 2004 as filed as Exhibit 4.4
to the Company's Registration Statement on Form SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
5.1* Consent of Miles Garnett, Esq.
- ----------------- ------------------------------------------------------------------------------------------------
10.1 Distribution Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.1 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.2 Security Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on Form
II-4
SB-2 as filed February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.3 Consulting Agreement dated January 23, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.3 to the Company's Registration Statement on Form SB-2 as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.4 Consulting and Non-Compete Agreement dated February 1, 2004 between Glenn Paul and Aptus Corp.
(Incorporated by reference to Exhibit 10.4 to the Company's Registration Statement)
- ----------------- ------------------------------------------------------------------------------------------------
10.5 Consulting and Non-Compete Agreement dated February 1, 2004 between Alan Katz and Aptus Corp.
(Incorporated by reference to Exhibit 10.5 to the Company's Registration Statement as filed
February 25, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.6 Consulting and Non-Compete Agreement dated February 1, 2004 between Win Straube. (Incorporated
by reference to Exhibit 10.6 to the Company's Registration on Form SB-2 as filed February 25,
2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.7 Lease Agreement dated November 17, 2003 between Simon-Marten, LLC and Aptus Corp.
(Incorporated by reference to Exhibit 10.7 to the Company's
Registration on Form SB-2/A as filed on April 16, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.8 Lease Agreement dated December 1, 2003 between HQ Global Workplace and Aptus Corp.
(Incorporated by reference to Exhibit 10.8 to the Company's
Registration on Form SB-2/A as filed April 16, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.9 Form of Platinum Level Dealer VAR Agreement.(Incorporated by reference to Exhibit 10.9 to the Company's
Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.10 Form of Gold Level Dealer VAR Agreement.(Incorporated by reference to Exhibit 10.10 to the Company's
Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.11 Form of Dealer Level VAR Agreement. (Incorporated by reference to Exhibit 10.11 to the Company's
Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.12 Promissory Note dated January 8, 2004 between David Fargo and Aptus Corp.(Incorporated by reference
to Exhibit 10.12 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.13 Promissory Note dated January 9, 2004 between Anthony Edlin and Aptus Corp. (Incorporated by
reference to Exhibit 10.13 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.14 Promissory Note dated January 9, 2004 between Joseph and Kristina O'Brien and Aptus Corp. (Incorporated
by reference to Exhibit 10.14 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.15 Promissory Note dated January 14, 2004 between Marview Holdings and Aptus Corp. (Incorporated by
reference to Exhibit 10.15 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.16 Promissory Note dated January 27, 2004 between Norman Dyer and Aptus Corp.(Incorporated by reference
to Exhibit 10.16 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.17 Promissory Note dated January 29, 2004 between Jeffery Salomon and Aptus Corp. (Incorporated by
reference to Exhibit 10.17 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.18 Promissory Note dated January 29, 2004 between Norman Dyer and Aptus Corp.(Incorporated by reference
to Exhibit 10.18 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.19 Promissory Note dated March 4, 2004 between the Chase Family Trust and Aptus Corp. (Incorporated by
reference to Exhibit 10.19 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.20 Promissory Note dated March 18, 2004 between Kenneth Green and Aptus Corp. (Incorporated by reference
to Exhibit 10.20 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.21 Promissory Note dated March 19, 2004 between Juan Gamez and Aptus Corp. (Incorporated by reference
to Exhibit 10.21 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.22 Promissory Note dated March 24, 2004 between D. Alan Dellenberg and Aptus Corp. (Incorporated by
reference to Exhibit 10.22 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.23 Promissory Note dated March 23, 2004 between Daniel Lauter and Aptus Corp. (Incorporated by
reference to Exhibit 10.23 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.24 Promissory Note dated March 19, 2004 between Marvin Sauter and Aptus Corp. (Incorporated by reference
to Exhibit 10.24 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.25 Promissory Note dated March 24, 2004 between Absolute Internet Service, Inc. and Aptus Corp. (Incorporated
by reference to Exhibit 10.25 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.26 Amendment #1 to Security Agreement dated April 15, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.26 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.27 Amendment #1 to Consulting Agreement dated April 15, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.27 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.28 Amendment #1 to Asset Purchase Agreement dated April 15, 2004 between Mark Andre and Aptus
Corp. (Incorporated by reference to Exhibit 10.28 to the Company's
Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.29 Amendment #1 to Distribution Agreement dated April 15, 2004 between Mark Andre and Aptus Corp. (Incorporated
by reference to Exhibit 10.29 to the Company's Registration on Form SB-2/A as filed May 21, 2004)
- ----------------- ------------------------------------------------------------------------------------------------
10.30* Letter of Intent dated September 4, 2003 between QwikQuote, Inc. and Aptus Corp.
- ----------------- ------------------------------------------------------------------------------------------------
10.31* Letter of Intent dated November 3, 2003 between Mark Andre, Appgen, Inc. and Aptus Corp.
- ----------------- ------------------------------------------------------------------------------------------------
23.1* Consent of Arthur De Joya and Company
- ----------------- ------------------------------------------------------------------------------------------------
23.2 Consent of legal counsel. (See Exhibit 5)
- ----------------- ------------------------------------------------------------------------------------------------
</table>
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.
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.
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
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
this registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on our behalf by the undersigned, in the
City of Tacoma, Pierce County, State of Washington, on June 30, 2004.
(Registrant) APTUS CORP.
By: /s/ John P. Gorst
John P. Gorst
Chairman of the Board of Directors
In accordance with the Securities Act of 1933, as amended this registration was
signed by the following persons in the capacities and on the dates indicated.
/s/ John P. Gorst Chief Executive Officer June 30, 2004
John P. Gorst Chairman of the Board
and Director (Principal
Executive Officer)
/s/ M. Carroll Benton Chief Administrative Officer June 30, 2004
M. Carroll Benton Secretary, Treasurer and
Director, Principal Accounting
Officer and Principal Financial Officer