As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
VENTURETECH, INC.
(Exact name of registrant as specified in its charter)
Idaho 7999 87-0462258
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification
Number)
11480 Sunset Hills Road, Suite 110E, Reston, Virginia 22090
(703) 471-5623
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
Arthur Rosenberg
11480 Sunset Hills Road, Suite 110E, Reston, Virginia 22090
(703) 471-5623
(Name, address, including zip code, telephone number,
including area code, of agent for service)
Copies to:
Leonard E. Neilson, P.C.
1121 East 3900 South, Suite C-200
Salt Lake City, Utah 84124
Telephone: (801) 288-2855
Attn: Leonard E. Neilson, Esq.
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount to be Offering Aggregate Amount of
Securities to be Registered Price Offering Registration
Registered Per Share(1) Price (1) Fee
Common Stock, $.001 6,000,000 $13.625 $81,750,000 $ 26,190
par value
TOTAL FEE $ 28,190
(1)Estimated solely for the purpose of calculating the registration
fee. Registration Statement. The fee with respect to these share
has been calculated pursuant to and 457(c) under the Securities Act
of 1933, as amended, and based upon the average of the bid and ask
prices per share of the Issuer's common stock on a date within five
(5) days prior to the date of filing this Registration Statement,
as reported by the OTC Bulletin Board.
(2)Represents 6,000,000 shares of Common Stock previously issued by
the Company for cash.
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.
<PAGE>
VENTURETECH, INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Form S-1 Location in Prospectus
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus . . . Forepart of the
Registration Statement
and Outside Front Cover
Page
2. Inside Front and Outside Back
Cover Pages of Prospectus . . Inside Front Cover Page;
Outside Back Cover Page
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges . . . . . . . Prospectus Summary; Risk
Factors
4. Use of Proceeds . . . . . . . . Use of Proceeds
5. Determination of Offering Price *
6. Dilution. . . . . . . . . . . . Risk Factors; Dilution
7. Selling Security Holders. . . . Selling Stockholders
8. Plan of Distribution. . . . . . Outside Front Cover Page;
Plan of Distribution;
Selling Stockholders
9. Description of Securities to be
Registered . . . . . . . . . . Outside Front Cover Page;
Description of Securities
10.Interests of Named Experts and
Counsel . . . . . . . . . . . . Legal Matters; Experts
11.Information With Respect to the
Registrant . . . . . . . . . . Outside Front Cover Page;
Prospectus Summary; The
Company; Risk Factors; Use
of Proceeds; Dividend
Policy; Capitalization;
Selected Financial Data;
Management's Discussion
and Analysis of Financial
Condition and Results of
Operations; Business;
Management; Certain
Transactions; Principal
Stockholders; Description
of Securities; Shares
Eligible for Future Sale;
Financial Statements
12.Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities *
* Not Applicable
<PAGE>
PROSPECTUS
VentureTech, Inc.
6,000,000 Shares of Common Stock
This Prospectus relates to the sale by certain selling
stockholders (the "Selling Stockholders") of 6,000,000 shares of
Common Stock, par value $.001 per share (the "Common Stock"), of
VentureTech, Inc. ("VentureTech" or the "Company"). The Shares of
Common Stock being offered by the Selling Stockholders were
previously issued by the Company in a private transactions on
April 29, 1996 and are being held in escrow pending the
effectiveness of this Prospectus. See "Description of Securities."
The Company is not offering any shares of Common Stock hereunder
and will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders. The Company will receive
from the Selling Stockholders $10.00 per share as payment for the
Shares. It is anticipated that the Selling Stockholders will
offer such shares of Common Stock from time to time in market
transactions at the then prevailing market price and terms, or in
negotiated transactions or otherwise, and without the payment of
any underwriting discount or commission, except for usual and
customary selling commissions paid to brokers or dealers. The
Selling stockholders also may sell such shares of Common Stock from
time to time, as might be permitted under Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act").
The Company has applied to have its Common Stock approved for
quotation through the Nasdaq Stock Market System subject to listing
guidelines. Currently, the Common Stock is traded in the over-the-
counter market. On June ____, 1996, the bid and asked prices of
the Common Stock as reported by the OTC Bulletin Board were $_____
and $_____, respectively. See "Market Information." Prior to this
Offering, there has been a limited public trading market for the
Common Stock and there can be no assurance that a significant
public market will develop after the completion of the Offering or,
if developed, that it will be sustained.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE
"RISK FACTORS" AND "DILUTION."
THESE SECURITIES 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 Company intends to furnish to the holders of the Common Stock
annual reports containing audited financial statements with a
report thereon by independent certified public accountants and
quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year.
The date of this Prospectus is June ____, 1996.
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Unless the context indicates
otherwise, all references in this Prospectus to "VentureTech" or the
"Company" include its predecessors and subsidiaries.
The Company
VentureTech, Inc. ("VentureTech" or the "Company") is engaged in
the development, acquisition and licensing of certain computer
based technology designed to ultimately offer a full range of
casino style gaming, entertainment, information and financial
transaction services over the worldwide Internet. Through its
technology agreements and licenses, the Company intends to
establish a series of multi-cultural / multi-ethnic virtual casinos
over the Internet from authorized locations around the world. A
casino is deemed to be "virtual" when it emulates actual casino
style games offered in existing land-based casinos, but provides
such gaming services via computer software and hardware as opposed
to actual gaming equipment such as slot machines and blackjack
tables.
The Internet is generally defined as a hierarchical collection
of interconnected computer networks throughout the world.
Individual websites, a collection of files and applications on a
specific computer system, are established by individuals or
organizations that seek to provide information and/or services to
the general public. Interested parties access a particular website
at a unique Internet address, typically by way of an off-site
computer and modem, and through the services of a local Internet
service provider. The Company intends to establish unique Internet
addresses for its virtual casinos to clearly distinguish them from
others that may be established by competitors.
The Company has created two wholly owned subsidiaries, EuroAsian
E-Casinos, Inc. (hereinafter E-Casinos ), and Cybernet Currency
Clearing, Inc. (hereinafter CCCI ) to facilitate the distinct
operations of its business. E-Casinos was established as a foreign
corporation in the Marshall Islands to own, either solely or in
partnership with joint venturers, and operate multiple full service
virtual gambling casinos over the Internet. CCCI was established
as a Nevada corporation to function as an international currency
converter of world currency in various international business
transactions.
In developing its Internet gaming and financial transaction
services, the Company intends to acquire or otherwise obtain, by
license or other agreement, access to newly emerging Internet
security and gaming technologies. The Company has entered into
separate agreements with CasinoWorld Holdings, Ltd ( CWH ), a
Delaware corporation, and Alphacom Data Security Services, Inc.
( Alphacom ), a Nevada corporation, to supply the necessary
technology and related services to conduct the Company's business
operations. Operating through its newly created subsidiaries and in
reliance upon its agreements with CWH and Alphacom, the Company is
preparing to commence substantive operations of its gaming services
over the Internet during the second half of 1996.
The Company plans to establish its virtual casinos by creating
partnerships and join ventures whereby the venture partners will
share revenues with the Company pursuant to revenue sharing
agreements to be negotiated and executed. The Company's primary
strategy is to fully use the CWH technology to establish its
virtual casinos. Management believes, however, that it may improve
its percentages of revenue sharing in the virtual casinos by
establishing various gaming technology license agreements with
multiple third parties, although there can be no assurance that
such agreements can be finalized.
In anticipation of entering into the Internet gaming services
business, the Company has effected the sale of its wholly owned
subsidiary, Tessier Resources, Ltd. ("Tessier"), to Kaniksu
Ventures, Inc. ("Kaniksu") in exchange for a $3,000,000 debenture
convertible into 2,000,000 shares of Kaniksu common stock.
Additional consideration, in the form of stock and rights in
Kaniksu stock, will also be provided to stockholders of
VentureTech. Tessier is in the business of developing and
supplying snow and ice removal technology to the commercial market.
Management believes that the attention required by this subsidiary
would detract from the potentially more lucrative business of
Internet gaming and it is in the best interest of the Company to
divest itself of this subsidiary.
In April 1996, the Company incorporated E-Casinos in the Republic
of the Marshall Islands primarily to take advantage of favorable
tax laws and to avoid possible conflicts with United States ("US")
laws in regard to Internet gaming. Although the Company does not
believe that its intended business actions violate any existing
regulations of the US, management intends to focus primarily on the
market outside of the US until such time as US laws, specifically
in regard to Internet gaming, are clarified. A bill to create a
national commission to study gambling in the US (including
interactive virtual wagering) was tentatively approved by a Senate
committee in May of 1996. As of the date hereof, there is no
indication as to any potential legislation or new laws that may
result from this committee. See "Business Government
Regulations."
Through E-Casinos, the Company intends to establish its first
virtual casino in affiliation with CWH. On March 4, 1996, the
Company entered into a definitive non-exclusive license agreement
(the License Agreement ) with CWH for CWH s proprietary technology
and a non-exclusive sublicense to use Durand Communications
Network s ( Durand ) MindWireTM software technology. Durand is a
privately held corporation founded in 1993 in Santa Barbara,
California and is a software developer of client - server
technologies for real time electronic commerce and other
applications. In consideration of a $2,000,000 license fee, the
Company was granted a non-exclusive license to CWH s revolutionary
new Virtual CasinoWorldTM software application, an interactive
service bureau (gaming service and multimedia virtual casino on the
Internet). In addition, with a non-exclusive sublicense to the
MindWireTM proprietary technology, the Company will be able to
provide its customers with realistic casino wagering games with
high-level 3-D graphics, player interactivity in real-time
scenarios and with automatic updating of applications and graphics
during online sessions. E-Casinos also intends to ultimately offer
a Sportsbook, capable of providing wagering opportunities on
sporting events, as well as access to various international lottery
purchases. It is expected that these supplemental services will be
provided in association with third parties already engaged and
knowledgeable in these business areas.
On April 19, 1996 the Company also entered into an Operating,
Revenue Sharing and Management Services Agreement (the Operating
Agreement ) with CWH. This Operating Agreement provides the
Company with a new interactive platform that will combine Monacall
s.a.m. L Univers Telematique s ( Monacall ) Interactive Voice
Response software with CWH s Virtual CasinoWorldTM application. The
integrated technologies will provide secured transaction
processing, gaming, international bank account management and
technical administration, via Monte Carlo, Monaco, of the Virtual
CasinoWorldTM application. E-Casinos has contracted with CWH
whereby CWH will provide, pursuant to a joint venture between CWH
and Monacall, facilities in Monaco, telecom bandwith, Tandem
banking services, business licenses, Monaco operating approvals,
banking relationships and expertise. Monacall, a Monegasque
corporation with headquarters in Monte Carlo, has been authorized
by the Principality of Monaco by way of an approval letter executed
by the Department of Finances and Economy, to provide a platform
for interactive wagering and gaming for telecom and Internet
activities. This will allow transaction processing for Internet
gaming that is legally initiated outside of Monaco and provide a
safe and plausible operation of its online interactive gaming
activities.
The Company will market and focus its casino operations primarily
in Europe, Asia, and the Middle East offering a full range of
gambling, information and other entertainment services over the
Internet. E-Casinos will operate under strict guidelines and laws
to assure fair opportunities for its Internet clients. The Company
is currently engaged in discussions and negotiations with
interested parties and potential partners and joint venturers in
various parts of the world. Based on the success of these
discussions, of which there can be no assurance, the Company
intends to establish multi cultural/multi-ethnic casinos around the
world over the next several years as satisfactory agreements can be
entered into.
Presently, US laws are vague on the matter of Internet wagering
within the US. Management believes that until such time as new
legislation is passed or current statutes are adequately defined,
it is in the Company's best interest to delay marketing its
Internet gaming services within the US. Thus, all of the Company's
initial marketing will be directed outside the US.
In March 1996, the Company entered into an agreement with
Alphacom Data Security Services, Inc., a Nevada corporation
("Alphacom"), for a license to use and to further sublicense
Alphacom's Internet gaming software integrated with the Alpha Guard
computer security application. The Company has paid an aggregate
of $250,000 toward an exclusive license for the software technology
as it relates to the Internet gaming industry. In further
consideration for the license, E-Casinos will pay an additional
license fee (royalty) based on a percentage of the net revenues
generated from casino operations utilizing the Alphacom software.
In September 1995, the Company entered into a letter of
understanding with CD Max, Inc. ("CD-Max"), a Delaware corporation,
to license CD-Max's propriety software encoding, encryption and
billing system for exclusive use within the Internet gaming
industry. Management anticipates using CD-Max s encryption
expertise with both of its subsidiaries, E-Casinos and CCCI, as a
supplement or an alternative to other security measures. The CD-
Max technology will likely be integrated with the Company s other
licensed technology to offer maximum security and provide users
anonymity and financial protection in banking, currency exchanges
and playing the full range of casino games. The CD-Max system is
not expected to require any additional hardware devices and can be
automatically installed at the initial service log on.
In August 1995, the Company created Cybernet Currency Clearing,
Inc. ( CCCI ) to become engaged in the business of providing
international business services, primarily the conversion of
international currency into e-cash or e-dollars on a fee basis.
Once operational, CCCI will perform conversions of world currencies
into e-cash and then back to hard currency, for associated
Internet casinos. Further, management intends to align CCCI with
major banks to provide a secure conversion service for exchanging
their client s money to and from e-cash . The Company intends to
use a portion of the proceeds from the sale of Common Stock to the
Selling Stockholders to commence CCCI's operations.
Through its subsidiary, E-Casinos, the Company intends to offer
a full range of Internet gaming, information and entertainment
services in the form of virtual casinos on the Internet, open to
all individuals interested in playing casino style games for real
money on a worldwide basis, subject to local laws and regulations.
E-Casinos must adhere to the legal requirements of each
jurisdiction in which it operates from or offers it services. The
virtual casinos will initially offer a cross-section of casino
style games including, but not limited to, blackjack, craps,
roulette, poker, keno and slots. Other casino games, such as
baccarat, will be added over time consistent with the cultural and
regional demands of the clientele. In addition, E-Casinos, most
likely through a partnership and/or joint venture, intends to
ultimately offer a Sportsbook for wagering on international
sporting events and access to international lottery ticket
purchases.
CCCI, when fully operational, will secure the currency
transactions for E-Casinos by using the security technologies
licensed with its affiliates. The primary focus of CCCI is to
convert the electronic money, known as e-cash , into real dollars
(or other appropriate currency). CCCI will perform the conversion
of currencies, for transaction fees, into e-cash and then back to
dollars for its associated virtual casinos. The actual financial
transactions will be handled by a major bank(s) affiliated with the
Company that will provide the administrative expertise and
credibility required by customers when dealing in personal
financial transactions.
<PAGE>
The Offering
Securities Offered . . . . 6,000,000 shares of Common Stock
sold by Selling Stockholders.
Shares of Common Stock
Outstanding:
Before Offering (1). . . 16,431,100 shares
After Offering (1) . . . 16,431,100 shares
Proposed Nasdaq Symbol(2). "VTEH"
Use of Proceeds. . . . . . Although the Company will not
receive any proceeds from the
sale of shares of Common Stock by
the Selling Stockholders pursuant
to this Prospectus, the Company
will receive $60,000,000 ($10.00
per share) from the private sale
of 6,000,000 shares to the
Selling Stockholders. Net
proceeds after deducting all
costs associated with the sale
and placement of the Shares and
preparation of the registration
statement to which this
Prospectus relates, is estimated
to be $47,850,000 and will be
used for research and
development, marketing and
advertising, licensing and
acquisition of related
technology, licensing fees to
various government agencies, and
working capital and other general
corporate purposes. See "Use of
Proceeds."
Risk Factors . . . . . . . The Offering involves a high
degree of risk as well as
immediate and substantial
dilution. See "Risk Factors" and
"Dilution."
(1)The Common Stock being offered hereby has been issued to the
Selling Stockholders and is being held in escrow pending completion
of the registration statement to which this Prospectus relates and
receipt of payment for the Shares. Purchasers pursuant to this
Offering will purchase from the Selling Stockholders and not from
the Company. Amounts shown do not include (a) 2,761,054 shares of
Common Stock issuable upon exercise of certain warrants and stock
options held by certain individuals at present exercise prices per
share of $1.70 to $6.00 per share, (b) 15,200,000 shares of Common
Stock issuable upon conversion of certain convertible debentures at
the present exercise price of $.03 per share, and (c) additional
shares of Common Stock that may be issued upon conversion of
certain other convertible securities that are either presently
outstanding or may be issued in the future. See ""Description of
Securities", and "Risk Factors Additional Dilution."
(2)Concurrent with the filing of the registration statement to
which this Prospectus relates, the Company has applied to have its
Common Stock approved for quotation through the Nasdaq Stock Market
System. Currently, the Common Stock is traded in the
over-the-counter market. See "Risk Factors - Limited Public Market
for Shares; Possible Volatility of Price of Shares" and "Market
Information."
<PAGE>
Summary Financial Information
Statement of Operations Data:
From
Inception on
Three Months January 1,
Ended Years Ended 1986 Through
March 31, December 31, March 31,
1996 1995 1994 1993 1996
Revenue. . . . . . $ - $ - $ - $ - $ 5,645
Expenses
Research and development 50,215
General and administrative 494,402 906,518 29,190 15,200 1,728,464
Depreciation . . 3,316 - - - 3,316
Total Expenses . . 497,718 906,518 29,190 15,200 1,781,995
Net income (loss)
from operations . . . .(497,718) (906,518) (29,190) (15,200) (1,776,350)
Other income / expense
Interest expense . . . . . (4,375) (27,709) - - (32,084)
Total other income / expense (4,375) (27,709) - - (32,084)
Income (loss) before loss
from discontinued operations
and provisions for income
tax . . . . (502,093) (934,227) (29,190) (15,200) (1,808,434)
Loss from discontinued
operations. . . (34,207) (103,008) - - (137,215)
Income taxes (benefit) . . . - - - - -
Net income (loss). $(536,300)$(1,037,235)$(29,190) $(15,200)$(1,945,649)
Income (loss) per share. . $ (0.07)$ (0.25)$ (0.01) $ (0.01)$ (0.37)
Weighted average number of
shares outstanding. . 7,591,928 4,177,136 3,695,920 1,960,154 2,161,325
Balance Sheet Data:
March 31, 1996
Actual Pro Forma(1)
Working capital. . . . . . . . . . . . . . . $ (2,042,683) $45,807,317
Total assets . . . . . . . . . . . . . . . . 2,758,904 50,608,904
Total stockholders' equity . . . . . . . . . 326,484 48,245,484
(1) Adjusted to give effect to the private sale of the 6,000,000 shares of
Common Stock to the Selling Stockholders and hereby offered for resale
by the Selling Stockholders to the public, and the initial application
of the estimated net proceeds from the sale to the Selling Stockholders.
See "Use of Proceeds." Further adjusted to reflect the issuance by the
Company of 2,300,000 shares of Common Stock subsequent to March 31,
1996 upon the conversion of a certain convertible debenture at the
conversion price of $.03 per share.
<PAGE>
THE COMPANY
The Company was organized on July 19, 1948 under the laws of the
State of Idaho as Giant Ledge Mining Company, with the stated
purpose of , acquiring, exploring and developing mineral ore
prospects and operating mining and milling facilities. The Company
initially engaged in sporadic mining operations and, from the time
after its inception, the Company has undergone several name changes
and business changes. During 1988, the Company became engaged in
arranging for funding for certain medical research, particularly
certain cancer research being conducted at the Harvard School of
Dental Medicine. However, none of the projects in which the
Company was involved proved to be economically successful and no
commercially viable products resulted from the research. The
Company ultimately assigned or transferred any potential marketing
rights to its research products.
In approximately 1992, the Company was engaged in only minimal
activities and the Board of Directors determined that the Company
should become active in seeking potential operating businesses and
business opportunities with the intent to acquire or merge with
such businesses. To better reflect the Company's business, the
Company adopted its current corporate name, VentureTech, Inc., in
April 1995.
During 1995, the Company became engaged in the development of
certain computer technology designed to ultimately offer a full
range of gaming services and casino style games over the worldwide
Internet. The Company created two new wholly owned subsidiaries,
EuroAsian E-Casinos, Inc. ("E-Casinos"), and Cybernet Currency
Clearing, Inc. ("CCCI"), for the development of certain
technologies applicable to the Internet. E-Casinos was created to
establish a foreign corporation to own and operate full service
gambling casinos on the Internet. CCCI was established to focus on
acting as an international currency converter of wold currency into
"e-cash" or "e-dollars", which is used as a monetary instrument in
many international business transactions. See "Business-Business
of Issuer."
On March 4, 1996, the Company entered into a licensing agreement
with CasinoWorld Holdings, Ltd. ("CWH") whereby CWH granted to the
Company a nonexclusive license to use and market its Virtual
CasinoWorld software and hardware applications, know-how, trade
secrets, copyrights and trademarks. The Company is obligated to
market, bankroll and to contribute one or more foreign gaming
licenses under a separate operating agreement with CWH. Operating
though its newly created subsidiaries and in reliance upon its
licensing agreement with CWH, the Company is preparing to commence
operations of its gaming services over the Internet during the
second half of 1996.
The Company's principal executive offices are located at 11480
Sunset Hills Road, Suite 110E, Reston, Virginia 22090, and its
telephone number is (703) 471-5623.
RISK FACTORS
An investment in the Common Stock offered hereby is speculative
in nature and involves a high degree of risk. In addition to the
other information in this Prospectus, the following factors should
be considered carefully in evaluating the Company and its business.
History of Losses / No Assurance of Future Profitability The Company
has not generated any revenues from its present and proposed
business, and had not generated any revenue and operated at a net
loss for the past several fiscal years. The accumulated deficit of
the Company as of March 31, 1996 was $1,945,649. There can be no
assurance that the Company will be able to realize revenues and
attain profitability in the future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Limited Operating History / Sole Product in Development Stage. The
Company is in the development stage and its proposed operations are
subject to all of the risks inherent in light of the expenses,
difficulties, complications and delays frequently encountered in
connection with the formation of any new business. The Company has
not realized operating revenues to date from its proposed
operations. The Company is currently engaged in the development of
certain computer technology designed to ultimately offer a full
range of gaming services and casino style games over the Internet
and the likelihood of success of the Company must be considered in
light of the many unforeseen costs, expenses, problems,
difficulties and delays frequently associated with product
development and with new business ventures. To date, the Company
has no experience in marketing its products and services, and there
can be no assurance of market acceptance of the Company's proposed
gaming services or that the Company will be able to operate
profitably. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."
Uncertain Market Acceptance. The Company's proposed gaming services
over the Internet is a relatively new industry and the Company will
compete with existing and more established recreational services
and products now being offered over the Internet, in addition to
certain other forms of entertainment. There can be no assurance
that the Company's gaming services or any other products currently
being developed will be successfully marketed by the Company or
will become widely accepted.
Technological Changes / Competition. The Company's proposed computer
technology designed to offer a full range of gaming services and
casino style games over the Internet is characterized by rapid and
significant technological change in the computer, software and
telephony industries. Many entities are engaged in research and
development with respect to offering gaming services on the
Internet. There can be no assurance that the Company's competitors
will not develop technologies and products that are more effective
and efficient than the Company's products or that the Company's
technology and products will not be rendered obsolete by such
developments. There can be no assurance that other companies with
greater financial and technological resources will not develop
gaming services over the Internet with better capabilities than the
Company's.
Presently, the Company is aware of several companies,
organizations and individuals currently offering or purporting to
offer on the Internet similar gaming services as that of the
Company. Those organizations with the greatest visibility to date
include, but are not limited to, Internet Casinos, Interactive
Gaming & Communications Corp. (formerly Sports International -
USA), Casinos of the South Pacific, and Virtual Vegas. As of this
date, to the best knowledge of the Company, no entity is offering
casino style gambling for other than fun on the Internet.
The Company is aware of several firms currently offering actual
wagering on various sporting events with financial transactions
being administered from off-shore (outside the US) accounts. In
addition, several organizations currently offer lottery tickets for
sale from international lotteries. One particular organization,
Interlotto, operates an Internet lottery authorized by the
Liechtenstein Government. The barrier to entry to most Internet
markets, including the gambling segment, is relatively low making
its accessible to a wide number of entities and individuals. Thus,
in addition to those known competitors of the Company, it is most
likely several new competitors may be established in the immediate
future. There is no assurance that the Company will be able to
compete successfully with any existing or newly developed entity
offering the same or similar services of those of the Company. See
"Business- Technological Change and Competition."
Risks Associated with Foreign Sales. Initially, it is anticipated
that practically all of the Company's revenues will be derived from
sales in foreign countries. The Company will have to comply with
the local laws and regulations in those foreign jurisdictions in
which the Company elects to offers its services. There can be no
assurance that the Company will be able to comply with such laws
and regulations. See "Business Government Regulations." Because
the Company's virtual casinos will require advance payments by
players either by cash or by recognized credit card, the Company
does not anticipate difficulties in collecting accounts receivable.
In the past, there have been significant fluctuations in the
exchange rates between the dollar and the currencies in many of the
countries the Company anticipates doing business in. Further,
foreign countries may impose limitations in the amount of currency
that may be withdrawn from such countries. Such limitations, if
imposed, could adversely affect the Company's liquidity and
business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Dependence on Key Personnel. The Company's future success is
dependent on certain key management and technical personnel.
Presently the Company employs one person who functions as the
Company's Chief Operating Officer and Chief Financial Officer. The
Company primarily relies upon consultants and advisors who are not
employees of the Company. The loss of key personnel or the
inability to attract and retain highly qualified personnel,
consultants or advisors could adversely affect the Company's
business. The Company faces competition for such personnel from
other companies and organizations. There can be no assurance that
the Company will be successful in hiring or retaining qualified
personnel. The Company has not obtained keyman insurance on any of
its key personnel or management nor has the Company entered into
employment agreements with any employee. See
"Management Employment Agreements."
Uncertainty of Protection Afforded by Patents, Copyrights and/or
Proprietary Rights. The Company's current business is based on
technologies acquired or otherwise licensed from third parties.
The Company does not own or otherwise control any patents,
copyrights or trademarks. However, those third parties from which
the Company does license its technology have taken the appropriate
steps to protect the intellectual property rights of the
technology. CasinoWorld Holdings, Inc. has copyrighted and
trademarked the Virtual CasinoWorldTM software application. Also,
Durand has copyrighted and trademarked the MindWireTM application.
Further, certain modules of the MindWireTM application are currently
patent pending. Certain software code developed through Alphacom
has been copyrighted through its affiliate developer, World Star
Holdings, Ltd., a Canadian corporation. The system security
software application, developed by CD-Max, Inc., has been
copyrighted and trademarked and CD-Max intends to expand its
current patents to include additional security applications. There
can be no assurance that any remaining patent [or copyright]
applications relating to the Company's licensed technology will
result in patents being granted or that, if granted, such patents
will afford protection against competitors with similar technology.
Also there can be no assurance that those entities licensing the
Company's technology will have the financial resources necessary to
enforce any patent or copyright rights it may hold. Although the
Company is not aware of any infringement claim against its
technology, in the event that a future claim against the developer
and/or the Company is successful, it may be necessary for the
Company to obtain additional licenses to such patents or to other
patents or proprietary technology. There can be no assurance that
the Company will be able to obtain any such additional licenses on
commercially reasonable terms. Any disclosure of such technology
or development of substantially equivalent technology could result
in increased competition that might materially and adversely affect
the Company's revenues and cost of sales.
The Company will attempt to protect its own proprietary
technology by relying on trade secret laws and non-disclosure and
confidentiality agreements with its employees who have access to
its proprietary technology. To date, the Company has not entered
into any such agreements. Despite these protections, no assurance
can be given that others will not independently develop or obtain
access to such technology or that the Company's competitive
position will not be adversely affected thereby. See
"Business Patents, Trademarks and Copyrights."
Government Regulation. The ownership and operation of land-based
gaming facilities in the United States, in particular, and
elsewhere in the world, is normally subject to extensive state and
federal government regulations. However, the Company intends to
offer its casino gaming services over the Internet via facilities
located in Monte Carlo, Monaco and initiated from various
authorized locations. Due to the relatively recent development of
casino wagering over the Internet, there are few direct
regulations that deal with this application. Although management
believes that the Company is in compliance with all applicable
existing regulations in those countries which it intends to offer
its services, there can be no assurance that the Company can remain
in compliance with existing and new regulations at a reasonable
cost. Failure to comply with all such regulations may have a
material adverse effect on the Company. The Company is presently
in the process of obtaining licenses from those jurisdictions in
which it intends to operate in order to satisfy its contractual
requirements with the Monacall facility in Monaco. See
"Business-Business of Issuer." The Company is fully cognizant of
the fact that Internet related laws and regulations are just
beginning to emerge and that such national and international
legislation is expected to develop over the next few years. Such
legislation could negatively impact the Company or hinder its
ability to offer its services in the futures. There can be no
assurance that the Company's gaming services over the Internet will
continue to be accepted in those jurisdictions in which they are
presently accepted, or that a government or court system will not
disallow the use of Internet gaming services.
See "Business Government Regulation."
Control of the Company. As of the date hereof and assuming certain
convertible securities held by the Company's executive officers,
directors and other principal stockholders are exercised and shares
of Common Stock are issued, the Company's executive officers,
directors and other principal stockholders will beneficially own
approximately 87.7% of the outstanding Common Stock. In addition,
if certain other convertible securities currently outstanding and
held by other persons are converted to Common Stock, the executive
officers, directors and other principal stockholders will
beneficially own approximately 82.0% of the outstanding Common
Stock. These stockholders will be able to effectively control the
outcome of all issues submitted to a vote of stockholders,
including the election of a significant number of the Company's
directors. See "Principal Stockholders" and "Description of
Securities."
Dilution. Purchasers from the Selling Stockholders pursuant to
this Offering, assuming that they acquire the Shares at the current
market price, will incur immediate and substantial dilution in that
the net tangible book value of each outstanding share of Common
Stock immediately after the Offering will be significantly less
than the current public market price of the shares. See
"Dilution."
Additional Dilution. Presently the Company has outstanding certain
convertible debentures and other warrants and stock options all of
which are convertible into shares of the Company's Common Stock.
Upon the conversion of certain convertible debentures, the Company
would issue up to a maximum of 15,200,000 shares of Common Stock at
the conversion price of $.03 per share. Further, other warrants
and stock options currently outstanding could be converted into a
maximum of 2,761,054 shares of Common Stock at conversion prices of
from $1.70 to $6.00 per share. The conversion of all or a portion
of these convertible securities at prices below the current market
price and presumably below the price that purchasers in this
offering will pay, will result in immediate and further dilution to
the purchasers of those Shares offered hereby. Prospective
purchasers should review thoroughly those sections of this
prospectus relating to the Company's convertible securities. See
"Dilution" and "Description of Securities."
No Dividends. The Company has not paid any cash or other
dividends or made distributions on its Common Stock and the Company
does not anticipate paying cash dividends or making distributions
in the foreseeable future. See "Dividend Policy."
Shares Eligible for Future Sale. Sale of substantial amounts of
Common Stock in the public market by existing stockholders
(including shares issued upon the exercise of stock options,
warrants and convertible debentures), or the perception that such
sales could occur, could materially and adversely affect the
prevailing market price for such shares. Actual sales, or the
prospect of sales by the present stockholders of the Company, or by
future holders of restricted securities under Rule 144 of the Act
or otherwise, may, in the future, have a depressive effect upon the
price of the Common Stock in the public trading market. See
"Principal Stockholders," "Shares Eligible for Future Sale." In
addition to the above, the holder of certain Convertible Debentures
may, at its sole discretion, presently convert the Debentures into
an aggregate of 15,200,000 shares of the Company's Common Stock,
which shares would be immediately tradeable in the public market
subject to all the terms and volume limitations of Rule 144. See
"Description of Securities."
Management's Discretion Over Use of Proceeds. Although none of the
proceeds from the sale of the Shares offered hereby will go to the
Company, approximately 18% of the estimated net proceeds from the
private sale of the Shares to the Selling Stockholders will be
applied to working capital and other general corporate purposes.
Accordingly, the Company's management will have broad discretion as
to the application of such proceeds. See "Use of Proceeds."
Limited Public Market for Shares; Possible Volatility of Price of
Securities. Presently, the Company's Common Stock is traded in the
over-the-counter market and is included on the OTC Bulletin Board.
There can be no assurance that a significant public market for the
Company's securities will develop or be sustained following this
Offering. See "Market Information." The Company has applied to
have its Common Stock approved for quotation through the Nasdaq
Market System. There can be no assurance that such application to
Nasdaq will be approved or be maintained. Because the shares of
Common Stock are being offered by the Selling Stockholders at their
discretion, the price any potential investor will pay for the
Shares will be based on the prevailing market price at the time of
purchase. The trading prices of the Company's securities may
respond to quarterly variations in operating results, announcements
of innovations or new products by the Company or its competitors,
and other events or factors including the sale or attempted sale of
a large amount of the Company's securities into the market. These
broad market fluctuations may adversely affect the market price of
the Company's securities. The price paid by any public investor
for the Shares offered hereby may be significantly higher or lower
that the current market price.
DILUTION
The Pro Forma net tangible book value of the Company as of March
31, 1996, after giving effect to the private sale of the 6,000,000
shares to the Selling Stockholders and without taking into account
the exercise of any outstanding convertible securities or any other
change in the net tangible book value of the Company subsequent to
March 31, 1996, would have been $48,245,484 or $2.94 per share of
Common Stock. "Net tangible book value" per share of Common Stock
represents the tangible assets of the Company less total
liabilities, divided by the number of shares of Common Stock
outstanding. Because the Company will not receive any proceeds
from the purchases of the Shares offered hereby, current
stockholders will not realize an increase in the net tangible book
value. Assuming purchasers of the Shares offered hereby ("New
Investors") acquire the Shares at the current market price of
$13.62 per share, those purchasers will experience an immediate
dilution of from their purchase price to net tangible book value of
$10.68 per share. The following table illustrates this dilution on
a per Share basis:
Shares of
Common Stock
Current market price. . . . . . . . $ 13.62
Pro Forma net tangible book
value per share before offering . $ 2.94
Dilution to New Investors . . . . . $ 10.68 (78%)
The information presented above does not take into account (a)
2,761,054 shares of Common Stock issuable upon exercise of certain
warrants and stock options held by certain individuals at present
exercise prices per share of $1.70 to $6.00 per share,
(b) 15,200,000 shares of Common Stock issuable upon conversion of
certain convertible debentures at the present exercise price of
$.03 per share, and (c) additional shares of Common Stock that may
be issued upon conversion of certain other convertible securities
that are either presently outstanding or may be issued in the
future. Thus, in the event that these additional shares are issue,
it is likely that purchasers of the Shares offered hereby at the
prevailing market price will experience even greater dilution that
set forth above. See ""Description of Securities", and "Risk
Factors Additional Dilution."
The following table sets forth as of June 21, 1996 the number of
shares of Common Stock purchased for cash from the Company by
officers, directors, promoters and affiliates during the past five
years, the total consideration paid and the average price per share
paid by these existing stockholders and by New Investors in this
Offering, assuming purchases by New Investors are at the current
market price. Included in the number of shares purchased by
officers, directors, promoters and affiliates are the conversion of
certain options, warrants and convertible debentures.
Shares Purchased Total Consideration
Average
Price
Number Percent(2) Amount Percent Per Share
Existing stockholders acquiring
shares for cash within past
five years . . . . . . 24,030,000(1) 75% $62,613,750 43% $ 2.61
New Investors. . . . . . 6,000,000 19% $81,750,000(3) 57% $13.625
(1)Included in the determination of the number of shares purchased
by officers, directors, promoters and affiliates are (a) 6,000,000
shares issued to the Selling Stockholders, (b) 2,300,000 shares
issued upon conversion of certain convertible debentures, (c)
530,000 shares issuable to officers and directors upon conversion
of certain warrants and stock options, and (d) 15,200,000 shares of
Common Stock issuable upon conversion of certain convertible
debentures.
(2)Percent of total shares outstanding following the Offering
includes those items set forth in footnote (1) above but does not
include (a) 2,231,054 shares of Common Stock issuable upon exercise
of certain warrants and stock options held by certain individuals
at present exercise prices per share of $1.70 to $6.00 per share,
and (b) additional shares of Common Stock that may be issued upon
conversion of certain other convertible securities that are either
presently outstanding or may be issued in the future.
(3)Based on the current market price per share of the Common Stock.
USE OF PROCEEDS
Although the Company will not receive any proceeds from the sale
of Shares by the Selling Stockholders pursuant to this Prospectus,
the Company will receive a total of $60,000,000 for the sale of the
Shares to the Selling Stockholders. Net proceeds to the Company
from the private sale of the 6,000,000 Shares to the Selling
Stockholders are estimated to be $47,850,000 after deducting the
estimated expenses of $150,000 associated with the Registration
Statement concerning this Offering by the Selling Stockholders, and
$12,000,000 in costs associated with the private sale and placement
of the Shares to the Selling Stockholders. It is presently
anticipated that the estimated net proceeds will be used by the
Company substantially as follows:
Percentage of
Amount Net Proceeds
Product development and research and development,
including capital equipment, additional
engineering personnel, virtual casino unique
graphics, and multiple language translation
(See "Business - Business of Issuer"). . . $ 5,000,000 10 %
Marketing and sales activities, including
advertising and international marketing
representatives (See "Business Marketing"). 10,000,000 21 %
Further licensing and acquisition of related
technologies and/or facilities to support,
enhance and/or supplement service
offerings(1)(See "Business-Business
of Issuer") . . . . . . . . . . . . . . . . 18,000,000 38 %
Payment of applicable license fees to
various international government
agencies. . . . . . . . . . . . . . . . . . 3,500,000 7 %
Bankroll requirements for various
virtual casinos . . . . . . . . . . . . . . 3,000,000 6 %
Working capital and other general
corporate purposes. . . . . . . . . . . . . 8,350,000 18 %
Total . . . . . . . . . . . . . . $ 47,850,000 100 %
(1) The Company intends to use a portion of the proceeds from the
sale of the Shares to the Selling Stockholders for the
possible future acquisition of facilities, related
technologies, and/or additional businesses that might broaden
the Company's services and possibly reduce potential license
and revenue share fees payable by the Company. Currently, the
Company has no agreement, understanding or commitment with
respect to any possible future acquisition.
Although the above table sets forth the proposed expenditures
based upon current business plans and current cost estimates,
future events may require a change in the allocation of funds or in
their order of priority. The Company's management is afforded
broad discretion as to the application of net proceeds from the
sale of the Shares to the Selling Stockholders. See "Risk
Factors Management's Discretion Over Use of Proceeds."
The Company anticipates that the estimated net proceeds from the
private sale of the 6,000,000 Shares to the Selling Stockholders
and its cash flow from operations will sustain the Company's
operating needs for a period of at least 24 months from the date
hereof. Pending use of the net proceeds, the funds will be
invested in short-term interest-bearing securities or their
equivalent.
MARKET INFORMATION
The Company's Common Stock has been traded in the
over-the-counter market since 1994 and quotations are published on
the OTC Bulletin Board under the current symbol VTEH, and in the
National Quotation Bureau, Inc. "pink sheets" under VentureTech,
Inc. There has not been an established trading market for the
Common Stock and the below-described quotations, when available, do
not constitute a reliable indication of the price that a holder of
the Common Stock could expect to receive upon a sale of any
particular quantity thereof. The Company has applied to have its
securities approved for quotation through the Nasdaq Stock Market
System upon official notice of issuance. The proposed Nasdaq
symbols for the Common is VTEH.
The Company is aware that between December 1993 and June 1994,
the Common Stock traded periodically in the over-the-counter market
as Spartan Funding Company under the symbol "SPFU." However, such
trading was only on a sporadic basis and no price information is
being presented for this time period or for any previously time
period when the Common Stock may have traded. The Company's Common
Stock traded under the symbol "SPFU" until June 1995 at which time
the symbol was changed to "VTEK." Between June 1995 and October
1995, trades were reported under both symbols, "SPFU" and VTEK."
In October 1995, the symbol was changed to the present "VTEH."
The following table sets forth the range of high and low bid
prices of the Common Stock for each quarterly period since the
third quarter of 1994 as reported by the National Quotation Bureau,
Inc. Prices reported by the National Quotation Bureau, Inc.
represent prices between dealers, do not include retail markups,
markdowns or commissions and do not necessarily represent actual
transactions.
High Low
1994
Third Quarter . . . . . . . . . . $ 6.75 $ 2.00
Fourth Quarter. . . . . . . . . . 8.62 6.50
1995
First Quarter . . . . . . . . . $ 7.50 $ 1.87
Second Quarter. . . . . . . . . . 4.25 2.25
Third Quarter . . . . . . . . . . 5.50 4.50
Fourth Quarter. . . . . . . . . . 7.25 5.50
1996
First Quarter . . . . . . . . . . $ 18.25 $ 6.25
Second Quarter(1) . . . . . . . . 18.00 11.88
(1) Through June 25, 1996
As of June 21, 1996, there were approximately 187 holders of
record of the Common Stock, which figure does not take into account
those stockholders whose certificates may be held in the name of
broker-dealers and/or nominees. On June ____, 1996, the closing
high bid and asked prices of the Common Stock were $____ and $____,
respectively.
DIVIDEND POLICY
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future. The Company currently intends to retain any future
earnings to finance its operations.
CAPITALIZATION
The following table sets forth the capitalization of the Company
as of March 31, 1996, and the pro forma capitalization giving
effect to the private sale of the 6,000,000 shares of Common Stock
to the Selling Stockholders at the price of $10.00 per share and
the receipt of the estimated proceeds therefrom, less estimated
offering expenses payable by the Company. See "Use of Proceeds."
March 31, 1996
Actual Pro Forma(3)
Long-term debt (excluding current maturities). . . $ 175,000 $ 106,000
Stockholders' equity:
Common Stock, $.001 par value, 100,000,000
shares authorized and 8,131,100 shares
issued(1), and 16,431,100 issued
pro forma(2). . . . . . . . . . . . . . 8,131 16,431
Additional paid-in capital. . . . . . . . . . 2,264,002 50,174,702
Accumulated deficit . . . . . . . . . . . . . (1,945,649) (1,945,649)
Total stockholders' equity. . . . . . . . . . 326,484 48,245,484
Total capitalization . . . . . . . . . . . . $ 501,484 $ 48,351,484
(1)Does not include 2,300,000 shares issued since March 31, 1996
for the conversion of convertible debentures and 6,000,000 shares
issued to the Selling Stockholders.
(2)Include the 8,300,000 shares issued since March 31, 1996, but
does not include (a) 2,761,054 shares of Common Stock issuable upon
exercise of certain warrants and stock options held by certain
individuals at a present exercise prices per share of from $1.70 to
$6.00 per share, (b) 15,200,000 shares of Common Stock issuable
upon conversion of certain "Convertible Debentures" at present
exercise price of $.03 per share, and (c) additional shares of
Common Stock that may be issued upon conversion of certain other
convertible securities that are either presently outstanding or may
be issued in the future. See ""Description of Securities", and
"Risk Factors Additional Dilution."
(3)Includes the 2,300,000 shares issued since March 31, 1996 for
the conversion of convertible debentures and 6,000,000 shares
issued to the Selling Stockholders.
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below have
been derived from the Company's consolidated financial statements.
Such consolidated financial statements for the three month period
ended March 31, 1996 and for the years ended December 31, 1995,
1994 and 1993, have been audited by Jones, Jensen and Company,
independent certified public accountants. Financial information
for the period prior to 1993 has been omitted because the Company
was engaged in only minimal operations and the financial data is
deemed not to be material. The selected consolidated financial
data set forth below should be read in conjunction with the
Company's consolidated financial statements and notes thereto, with
Management's Discussion and Analysis of Financial Condition, and
with the other financial information of the Company included
elsewhere in this Prospectus.
Statement of Operations Data:
From
Inception on
Three Months January 1,
Ended Years Ended 1986 Through
March 31, December 31, March 31,
1996 1995 1994 1993 1996
Revenue. . . . . . . . . . $ - $ - $ - $ - $ 5,645
Expenses
Research and development 50,215
General and administrative 494,402 906,518 29,190 15,200 1,728,464
Depreciation . . . . . . 3,316 - - - 3,316
Total Expenses . . 497,718 906,518 29,190 15,200 1,781,995
Net income (loss)
from operations . . . (497,718) (906,518) (29,190) (15,200) (1,776,350)
Other income / expense
Interest expense . . . . (4,375) (27,709) - - (32,084)
Total other income / expense (4,375) (27,709) - - (32,084)
Income (loss) before loss
from discontinued
operations and provisions
for income tax . . . . 502,093) (934,227) (29,190) (15,200) (1,808,434)
Loss from discontinued
operations. . . . . . . (34,207) (103,008) - - (137,215)
Income taxes (benefit) . . - - - - -
Net income (loss). . . . . $(536,300) $(1,037,235)$(29,190)$(15,200)$(1,945,649)
Income (loss) per share. . $ (0.07) $ (0.25)$ (0.01)$ (0.01)$ (0.37)
Weighted average number of
shares outstanding. . 7,591,928 4,177,136 3,695,920 1,960,154 2,161,325
Balance Sheet Data:
December 31,
March 31, 1996 1995 1994 1993
Actual Pro Forma(1)
Working Capital. . . $ (2,042,683) $45,807,317 $ (73,134) $ (30,419) $(28,729)
Total assets . . . . 2,758,904 50,608,904 112,987 251,120 121
Total stockholders'
equity . . . . . . 326,484 48,245,484 (143,954) 44,581 (28,729)
(1) Adjusted to give effect to the private sale of the 6,000,000 shares of
Common Stock to the Selling Stockholders and hereby offered for resale
by the Selling Stockholders to the public, and the initial application
of the estimated net proceeds from the sale to the Selling Stockholders.
See "Use of Proceeds." Further adjusted to reflect the issuance by the
Company of 2,300,000 shares of Common Stock subsequent to March 31, 1996
upon the conversion of a certain convertible debenture at the
conversion price of $.03 per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Recent Accounting Pronouncements
The Financial Accounting Standards Board has recently issued
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets," and SFAS No.
123, "Accounting for Stock Based Compensation." SFAS No. 121
requires that long-lived assets and certain identifiable
intangibles be reported at the lower of the carrying amount or
their estimated recoverable amount and the adoption of this
statement by the Company is not expected to have an impact on the
Company's financial statements. SFAS No. 123 encourages the
accounting for stock-based employee compensation programs to be
reported within the financial statements on a fair value based
method. If the fair value based method is not adopted, then the
statement requires pro-forma disclosure of net income and earnings
per share as if the fair value based method had been adopted. The
Company has not yet determined how SFAS No. 123 will be adopted nor
its impact on the Company's financial statements. Both statements
are effective for years beginning after December 15, 1995.
Results of Operations
The Company is a development stage company and has had only
minimal operations for the most recent three years. Since 1995,
the Company has been engaged in the development, acquisition and
licensing of certain computer based technology designed to
ultimately offer a full range of casino style gaming,
entertainment, information and financial transaction services over
the Internet. As of the date hereof, the Company has not begun
operations of any of its anticipated virtual casinos and is in the
alpha testing stage of development. Information is presented for
the Company's most recent three fiscal years and the three month
period ended March 31, 1996.
Three Months Ended March 31, 1996
The Company did not have revenues for the three month period
ended March 31, 1996 ("first quarter of 1996") as management
continued to work towards attaining operational status of the
Company's gaming services on the Internet. General and
administrative expenses for the first quarter of 1996 were
approximately 55% of total general and administrative expenses for
the entire 1995 fiscal year. This increased rate of expense is due
to the enhanced activities related to securing agreements with CWH
and in additional expenses being paid to advisors and consultants
in connection therewith. Increases were also experienced in
marketing, advertising and promotional expenses related to the
Company's new gaming services, and in legal and professional fees.
The only other material expenses for the first quarter of 1996 were
depreciation of $3,316 related to furniture and fixtures, and
interest expense of $4,375 attributed to a convertible debenture .
The Company's loss for the first quarter of 1996 before deducting
loss from discontinued operations and provisions for income tax was
$502,093 and, after recognition of a $34,207 loss from discontinued
operations related to the sale of Tessier Resources, Ltd., the
Company's net loss for the first quarter of 1996 was $536,300, or
$0.07 per share. Because of the developmental nature of the
Company, management cannot accurately predict future revenues or
expenses or the impact on these items by the sale of the Common
Stock to the Selling Stockholders.
Fiscal Year Ended December 31, 1995 Compared To Fiscal Year Ended December
31, 1994
The Company did not have any revenues for either of its fiscal
years ended December 31, 1995 ("1995") or December 31, 1994
("1994"). General and administrative expenses increased form
$29,190 in 1994 to $906,518 in 1995 primarily due to the Company's
implementation of its new business plan related to its Internet
gaming system. Also during 1995, the Company had interest expenses
of $27,709 compared to $-0- for 1994 attributed to the interest on
the outstanding convertible debenture being recorded in 1995. Thus
the Company's loss for 1995 before deducting the loss from
discontinued operations and provisions for income tax was $934,227
compared to a loss of $29,190 for 1994. During 1995, the Company
recognized a $103,008 loss from discontinued operations attributed
to the sale of Tessier. The Company's net loss for 1995 was
$1,037,235, or $0.25 per share, compared with the 1994 loss of
$29,190, or $0.01 per share.
Fiscal Year Ended December 31, 1994 Compared To Fiscal Year Ended December
31, 1993
The Company did not have any revenues for either of its fiscal
years ended December 31, 1994 ("1994") or December 31, 1993
("1993"). General and administrative expenses increased
approximately 92% from $15,200 in 1993 to $29,190 in 1994 primarily
due to the Company's reorganization in 1994. The Company did not
have any interest expense in either 1993 or 1994. Thus the
Company's loss for 1994 was $29,190, or $0.01 per share, compared
to a loss of $15,200, or $0.01 per share for 1993.
Research and Development Costs
The Company has relied upon the developers of the technology
which it has acquired or licensed to carry out the research and
development related to the particular technology. Thus, during the
most recent three fiscal years and for the three month period ended
March 31, 1996, the Company did not expend any funds directly on
research and development related to the Company's entry into the
Internet gaming business. The Company did expend a total of
$19,121 in 1995 through its discontinued subsidiary, Tessier
Resources, Ltd., towards the development of Tessier's snow and ice
removal equipment. Management anticipates that as the Company
begins operation of its virtual casinos, it will likely begin to
expend some funds for ongoing research and development for new
products and for enhance existing ones. However, at this time
management has made no estimates as to the extent of any future
research and development expenditures.
Net Operating Losses
The Company has accumulated approximately $1,842,000 of net
operating loss carryforwards as of March 31, 1996, which may be
offset against future taxable income through the year 2010 when the
carryforwards expire. The use of these losses to reduce future
income taxes will depend on the generation of sufficient taxable
income prior to the expiration of the net operating loss
carryforwards. In the event of certain changes in control of the
Company, there will be an annual limitation on the amount of net
operating loss carryforwards which can be used. No tax benefit has
been reported in the Company's financial statements because the
Company believes there is a 50% or greater chance the carryforward
will expire unused. Accordingly, the potential tax benefits of the
loss carryforward is offset by valuation allowance of the same
amount.
Liquidity and Capital Resources
Historically, the Company's working capital needs have been
satisfied primarily through the Company's private placement of
securities and through borrowing and reasonably expects to do so in
the future. At March 31, 1996, the Company had working capital of
a negative $2,042,683, compared to working capital at December 31,
1995 of a negative $73,134 and a negative $30,419 at December 31,
1994. This decline in working capital is directly attributable to
the Company's acquisitions of technology and the payment for
services performed and expenses incurred by consultants. At March
13, 1996, the Company had $14,737 in cash compared to $2,782 at
December 31, 1995 and $1,120 at December 31, 1994. Also at March
31, 1996, the Company had a note receivable for $200,000 which has
subsequently been repaid to the Company.
As of March 31, 1996, the Company had total assets of $2,758,904
and total stockholders' equity of $326,484 compared with total
assets of $112,987 and total stockholders' equity of a negative
$143,954 at December 31, 1995, and total assets of $251,120 and
total stockholders' equity of $44,581 at December 31, 1994. The
improvement during the first quarter of 1996 is directly attributed
to the Company's acquisition of license fees and the right to use
certain related software during this period. The Company also
recorded an investment of $158,112 related to its minority
ownership of Kaniksu Ventures, Inc. following the sale of Tessier
Resources, Ltd. to Kaniksu. For the three months ended March 31,
1996 and the year ended December 31, 1995, the Company realized
cash from financing activities of $916,660 and $1,006,016,
respectively, related to the issuance of debt for cash. Also,
during the first three months of 1996, the Company realized
$550,000 from an advance payment for future services to be
rendered.
During the remainder of fiscal year 1996 and into 1997, the
Company anticipates meeting is cash and working capital needs
primarily from the proceeds of the sale of its shares to the
Selling Stockholders and from expected revenues from operations,
which the Company expects to commence during the second half of
1996. Following the sale of its shares to the Selling
Stockholders, the Company does not anticipate the need for
additional capital in the foreseeable future.
Effect of Inflation
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
BUSINESS
Background
VentureTech, Inc. (the Company ) is engaged in the development,
acquisition and licensing of certain computer based technology
designed to ultimately offer a full range of casino style gaming,
entertainment, information and financial transaction services over
the Internet. Through its technology agreements and licenses, the
Company intends to establish a series of multi-cultural / multi-
ethnic virtual casinos over the Internet from authorized locations
around the world. A casino is deemed to be "virtual" when it
emulates actual casino style games offered in existing land-based
casinos, but provides such gaming services via computer software
and hardware, as opposed to actual gaming equipment such as slot
machines and blackjack tables.
The Internet is generally defined as a hierarchical collection
of interconnected computer networks throughout the world.
Individual websites, a collection of files and applications on a
specific computer system, are established by individuals or
organizations that seek to provide information and/or services to
the general public. Interested parties access a particular website
at a unique Internet address, typically through an off-site
computer and modem, and through the services of a local Internet
service provider. The Company intends to establish unique Internet
addresses for its virtual casinos to clearly distinguish them from
others that may be established by potential competitors.
The Company plans to establish its virtual casinos by creating
partnerships and joint ventures pursuant to revenue sharing
agreements to be negotiated and executed, or funded solely by the
Company for its own benefit. Management believes that it can
improve its percentages of revenue sharing in the virtual casinos
by establishing various gaming technology license agreements with
multiple third parties, although there can be no assurance that
such agreements can be finalized.
The Company has created two new wholly owned subsidiaries,
EuroAsian E-Casinos, Inc. (hereinafter E-Casinos ), and Cybernet
Currency Clearing, Inc. (hereinafter CCCI ) to facilitate the
distinct operations of its business. E-Casinos was established as
a foreign corporation in the Marshall Islands to own, either solely
or in partnership with joint venturers, and operate multiple full
service virtual gambling casinos over the Internet. CCCI was
established as a Nevada corporation to function as an international
currency converter of world currency in various international
business transactions.
In order to establish the Company as a leading provider of
Internet related gaming and financial transaction services,
management s strategy is to acquire or otherwise obtain, by license
or other agreement, access to newly emerging Internet security and
gaming technologies. To this end, the Company has entered into
separate agreements with CasinoWorld Holdings, Ltd ( CWH ), a
Delaware corporation, and Alphacom Data Security Services, Inc.
( Alphacom ), a Nevada corporation, to supply the necessary
technology and services to conduct its business operations.
Operating through its newly created subsidiaries and in reliance
upon its agreements with CWH and Alphacom, the Company is preparing
to commence substantive operations of its gaming services over the
Internet during the second half of 1996.
In a further effort to focus its strategy on the computer and
Internet related service industry, in March 1996 management
effected the sale of its wholly owned subsidiary, Tessier
Resources, Ltd. ("Tessier") to Kaniksu Ventures, Inc. (Kaniksu) in
exchange for a $3,000,000 debenture convertible into 2,000,000
shares of Kaniksu common stock. Additional consideration, in the
form of stock and rights in Kaniksu stock, will also be provided to
stockholders of VentureTech. Tessier is in the business of
developing and supplying snow and ice removal technology to the
commercial market. Management believes that the attention required
by this subsidiary would detract from the potentially more
lucrative business of Internet gaming and it is in the best
interest of the Company to divest itself of this subsidiary.
Business of Issuer
Euro Asian E-Casinos, Inc.
E-Casinos was incorporated in April, 1996 in the Republic of the
Marshall Islands primarily to take advantage of favorable tax laws
and to avoid possible conflicts with United States ("US") laws in
regard to Internet gaming. Although the Company does not believe
that its intended business actions violate any existing regulations
of the US, management intends to focus primarily on the market
outside of the US until such time as US laws, specifically in
regard to this Internet gaming, are clarified. A bill to create a
national commission to study gambling in the US (including
interactive virtual wagering) was tentatively approved by a Senate
committee in May of 1996. As of the date hereof, there is no
indication as to any potential legislation or new laws that may
result from this committee. See "Business Government Regulations."
Presently, the Company s primary focus, through its subsidiary
E-Casinos, is on the establishment of its first virtual casino in
affiliation with CWH. On March 4, 1996, pursuant to a previously
executed letter of intent, the Company entered into a definitive
non-exclusive license agreement (the License Agreement ) with CWH
for CWH s proprietary technology and a non-exclusive sublicense to
use Durand Communications Network s ( Durand ) MindWireTM software
technology. Durand is a privately held corporation founded in 1993
in Santa Barbara, California and is a software developer of client
- - server technologies for real time electronic commerce and other
applications. In consideration of the $2,000,000 license fee, the
Company was granted a non-exclusive license to CWH s revolutionary
new Virtual CasinoWorldTM software application, an interactive
service bureau, gaming service and multimedia virtual casino on the
Internet. In addition, with a non-exclusive sublicense to the
MindWireTM proprietary technology, the Company will be able to
provide its customers with realistic casino wagering games with
high-level 3-D graphics, player interactivity in real-time
scenarios and with automatic updating of applications and graphics
during online sessions. E-Casinos also intends to ultimately offer
a Sportsbook, capable of providing wagering opportunities on
sporting events, as well as access to various international lottery
purchases. It is expected that these supplemental services will be
provided in association with third parties already engaged and
knowledgeable in these business areas. The Company intends to
assign its rights, duties and obligations under the License
Agreement to E-Casinos.
The total license fee payable by the Company to CWH is
$2,000,000, of which $250,000 was paid upon the execution of the
Letter of Intent in January 1996, with the balance to paid in
installments commencing with the execution of the License
Agreement. As of the date hereof, the Company has made various
payments to CWH totaling $1,200,000. The full payment of the
license fee is a condition precedent to the Company s exercise of
its rights under the License Agreement.
As a further provision of the License Agreement, the Company is
required to complete certain due diligence obligations and other
undertakings as additional conditions precedent to the Company's
enforcement of the terms of the License Agreement. These
conditions precedent include, but are not limited to, certification
of corporate good standing, certification of board of directors
authorization of the License Agreement, evidence that the Company
holds a valid gaming license from an authorized jurisdiction, a
$1,000,000 deposit toward a virtual casino bankroll, a marketing
plan with a budget of $1,000,000, and a final opinion from general
counsel.
On April 19, 1996 the Company also entered into an Operating,
Revenue Sharing and Management Services Agreement (the Operating
Agreement ) with CWH. This Operating Agreement provides the
Company with a new interactive platform that will combine Monacall
s.a.m. L Univers Telematique s ( Monacall ) Interactive Voice
Response (IVR) software with CWH s Virtual CasinoWorldTM
application. The integrated technologies will provide secured
transaction processing, international bank account management and
technical administration, via Monte Carlo, Monaco, of the Virtual
CasinoWorldTM application. E-Casinos has contracted with CWH
whereby CWH will provide, pursuant to a joint venture between CWH
and Monacall, facilities in Monaco, telecom bandwith, Tandem
banking services, business licenses, Monaco operating approvals,
banking relationships and expertise. Monacall, a Monegasque
corporation with headquarters in Monte Carlo, has been authorized
by the Principality of Monaco, by way of an approval letter
executed by the Department of Finances and Economy, to provide a
platform for interactive wagering and gaming for telecom and
Internet activities. This will allow transaction processing for
Internet gaming that is legally initiated outside of Monaco and
provide a safe and plausible operation of its online interactive
gaming activities.
The License Agreement and Operating Agreement (collectively
the Agreements ) were granted for an initial term of 10 years and
are renewable thereafter, year-to-year, for an additional five year
term. The Company has agreed to comply with specific provisions
under the Agreements, including but not limited to the protection
of CWH s trade secrets and other technology, as well as the
submission of one or more gaming licenses in certain jurisdictions
where such gaming is not illegal. Under the terms of the revenue
sharing portion of the Operating Agreement, the parties, including
E-Casinos, CWH and Monacall, will share in the net revenue proceeds
of the virtual casino(s). The Company has also agreed to market the
virtual casino(s) pursuant to a mutually agreed to marketing plan
and provide a minimum $1,000,000 casino bankroll for each virtual
casino initiated. Under certain conditions, the Company may be
obliged to pay additional licensing fees in jurisdictions where a
separately controlled virtual casino is established.
On May 16, 1996, CWH successfully completed the integration of
the Virtual CasinoWorld application based upon MindWireTM technology
with the Monacall Interactive Voice Response ("IVR") telephony
software. This combined platform represents an integrated solution
for online virtual casinos and interactive wagering via either the
Internet or the telephone. CWH, in conjunction with Monacall, is
currently going through alpha testing of its system at file servers
located in Monaco and expects to launch a beta program starting in
September 1996. On June 1, 1996, the system successfully logged-in
its very first customer, credited their Monacard account (an audio
smartcard system that electronically debits a user's account), and
played thirty-five hands of blackjack. The system recorded a
revenue of 118 French Francs from this first session of alpha
testing.
The Company intends to market and focus its casino operations
primarily in Europe, Asia, and the Middle East offering a full
range of gambling, information and other entertainment services
over the Internet. E-Casinos will operate under strict guidelines
and laws to assure fair opportunities for its Internet clients.
The Company is currently engaged in discussions and negotiations
with interested parties and potential partners and joint venturers
in various parts of the world. Based on the success of these
discussions, of which there can be no assurance, the Company
intends to establish muti cultural/multi-ethnic casinos around the
world over the next several years as satisfactory agreements can be
entered into. Presently the Company has not finalized any
agreements with any third parties for the formation of
partnerships or joint ventures to operate its virtual casinos and
there can be no assurance that the Company will be successful in
entering into any such agreements.
Presently, US laws are vague on the matter of Internet wagering
within the US. Management believes that until such time as new
legislation is passed or current statutes are adequately defined,
it is in the Company's best interest to delay marketing its
Internet gaming services within the US. Thus, all of the Company's
initial marketing will be directed outside the US.
Management s strategy is to develop or otherwise acquire or
license newly emerging technology in the Internet related gaming
and financial transaction area. This strategy is expected to
minimize any potential dependence on a single source of technology
and service. The Company is also evaluating other sources of
telephony services other than Monacall in the geographical areas
under consideration for virtual casinos. Management believes that
establishing a local service facility for telephony and online
transaction processing may facilitate obtaining local license
authorizations and maximize E-Casinos portion of any revenue
sharing arrangements.
Alphacom Data Security Services, Inc.
In March of 1996, the Company entered into an agreement with
Alphacom Data Security Services, Inc., a Nevada corporation
("Alphacom"), for a license to use and to further sublicense
Alphacom's Internet gaming software integrated with the Alpha Guard
computer security application. The Company has paid an aggregate
of $250,000 toward an exclusive license for the software technology
as it relates to the Internet gaming industry. In further
consideration of the license, E-Casinos will pay to Alphacom a
license fee (royalty) of ten percent (10%) of the net revenues
generated from casino operations using the Alphacom software.
Alphacom is a recently formed company with minimal business
experience. The Alpha Guard technology is a customized version of
World Star Holdings Ltd.'s Gatekeeper technology and is in its
alpha stage of testing. Gatekeeper based technology is in use by
AmeritelTM OnLine Services' worldwide online reservation services
and the Saskatchewan Canada Government's Department of Tourism.
The Gatekeeper has also been used on a limited basis by the Manitoba
Canada Telephone System.
CD-Max
The Company has also entered into a letter of understanding in
September 1995 with CD Max, Inc. (CD-Max), a Delaware corporation,
to license CD-Max's propriety software encoding, encryption and
billing system for exclusive use within the Internet gaming
industry. Management anticipate using CD-Max s encryption
expertise with both of its subsidiaries, E-Casinos and CCCI, as a
supplement or an alternative to other security measures.
Management anticipates that the CD-Max technology will be
integrated with the Company s other licensed technology to offer
maximum security and provide users anonymity and financial
protection in banking, currency exchanges and playing the full
range of casino games. The CD-Max system is not expected to
require any additional hardware devices and can be automatically
installed at the initial service log on.
Cybernet Currency Clearing, Inc.
In August 1995, the Company created as a wholly owned subsidiary,
Cybernet Currency Clearing, Inc., a Nevada corporation ( CCCI ).
CCCI was formed to become engaged in the business of providing
international business services, primarily the conversion of
international currency into e-cash or e-dollars on a fee basis.
Once operational, CCCI will perform conversions of world currencies
into e-cash and then back to hard currency, for associated
Internet casinos. Further, management intends to align CCCI with
major banks to provide a secure conversion service for exchanging
their client s money to and from e-cash . The Company intends
to use a portion of the proceeds from the sale of Common Stock to
the Selling Stockholders to commence CCCI's operations.
E-cash is electronic (digital) money that moves along multiple
channels largely outside the established network of banks, checks,
and paper currency overseen by the Federal Reserve. These channels
enable consumers and businesses to send money to each other more
conveniently and quickly and less expensively than through the
conventional banking system. E-cash comes in many forms such as
"smart cards" (plastic cards embedded with microchips that have the
ability to load up preset values or download transactions over
phone lines from your bank or issuer of e-money onto a computer).
E-cash can be created by various individual parties, and can be
backed by anything customers demand as an accepted medium of
exchange such as gold, dollars, yen or similar asset instrument.
Its diversity and philosophy is well suited to the Internet and its
evolving web of networks around the world.
Products and Services
E-Casinos intends to offer a full range of Internet gaming,
information and entertainment services in the form of virtual
casinos on the Internet, open to all individuals interested in
playing casino style games for real money on a worldwide basis,
subject to local laws and regulations. E-Casinos must adhere to
the legal requirements of each jurisdiction in which it operates
from or offers it services. For example, in areas where there are
legal age restrictions, E-Casinos will adopt similar restrictions
in signing up prospective players. The virtual casinos will
initially offer a cross-section of casino style games including,
but not limited to, blackjack, craps, roulette, poker, keno and
slots. Other casino games, such as baccarat, will be added over
time consistent with the cultural and regional demands of the
clientele. In addition, E-Casinos intends to ultimately offer a
Sportsbook for wagering on international sporting events and
access to international lottery ticket purchases. The Sportsbook
and lottery application are likely to be offered in conjunction
with third parties pursuant to partnerships and/or joint ventures.
E-Casinos virtual casinos will offer its player many features
beyond that of actual wagering applications. Prospective players
will be provided with a simple electronic means to view the virtual
casino and its associated rules and terms, and them register
directly online. At all reasonable times players will have the
ability to communicate with customer assurance on a real-time
online basis. Players will also have the ability to communicate
online with other registered members of the virtual casino through
e-mail , live chat-rooms and classified ad posting . Players
will have access to online applications for electronic banking,
virtual shopping, and connections with affiliated hotels and
resorts. E-Casinos will to provide its players with a unique
virtual experience intended to transcend a mere gaming application.
CCCI, when fully operational, is expected to secure the financial
transactions for E-Casinos by using the security technologies
licensed with its affiliates. The primary focus of CCCI is to
convert the electronic money, known as e-cash , into real dollars
(or other appropriate currency). CCCI will perform the conversion
of currencies, for transaction fees, into e-cash and then back to
requested currencies for its associated virtual casinos. The
actual financial transactions will be handled by a major bank(s)
affiliated with the Company that will provide the administrative
expertise and credibility required by customers when dealing in
personal financial transactions.
Product Research and Development
The Company has relied upon the developers of the technology
which the Company has acquired or licensed to carry out the
research and development related to the development of the
particular technology. Thus, during the most recent three fiscal
years and for the three month period ended March 31, 1996, the
Company did not expend any funds on research and development
related to the Company's entry into the Internet gaming business.
The Company did expend a total of $19,121 in 1995 through its
discontinued subsidiary, Tessier Resources, Ltd., towards the
development of Tessier's snow and ice removal equipment.
Management anticipates that as the Company begins operation of its
virtual casinos, it will likely begin to expend some funds for
ongoing research and development for new products and for enhance
existing ones. However, at this time management has made no
estimates as to the extent of any future research and development
expenditures.
Marketing, Distribution and Customers
The Company s marketing strategy is focused on a two pronged
approach to meet the requirements of its bi-level targeted market.
First, the Company will seek potential partners and joint venturers
interested in providing, jointly with the Company, a unique virtual
casino, and second, the end-users (players) of that virtual casino.
The Company will necessarily employ different methodologies for
soliciting these distinctive market segments.
In seeking venture partners for operating the virtual casinos,
the Company's management is expected to continue to take advantage
of publicity it has received in the international community
regarding its Internet gaming activities. In June 1996, the
magazine International Gaming & Wagering Business published a brief
notice of he Company's press release regarding its licensing
arrangements with CWH and Monacall. In addition, Virtual Reality
News, a United Kingdom publication, published a similar news report
on the Company's gaming activities in its May 1996 edition. Also,
management expects to continue to avail itself of its personal
international contacts with potential qualified venture partners
and government representatives.
The potential market for end-users (players) in the virtual
casinos is difficult, if not impossible, to accurately estimate.
This potential market is made up of such factors as the dollar
volume of current worldwide gaming, both legitimate and illegal
gaming, the current market for computer ownership, the volume of
current Internet subscribers, and predictions of growth in these
three sectors. Management believes that the three primary issues
that must be effectively addressed to maximize its marketing
efforts for the Company's online gaming venture are (i) proper
identification of target demographics and psychographics; (ii) the
use of a blend of traditional marketing and new media marketing
techniques such as marketing via the Internet itself; and (iii) the
ability to capture and retain the subscribers.
Management further believes that two distinct populations,
gamblers and Internet users, are potential users of a virtual
casino on the Internet. Within this demographic, the Company will
look to define three major target groups; (i) Internet users with
a propensity to gamble; (ii) Internet users that could be induced
to gamble with a viable, credible and secure online application;
and (iii) gamblers with little or no Internet experience that might
want to take advantage of online gambling. Management intends to
investigate thoroughly the demographics, psychographics and
attitudinal preferences of all three consumer groups. The
Company's ultimate ongoing marketing plans will evolve from these
investigations.
Management is confident that existing evidence suggests that a
significant market exists for providing gaming activities and
services over the Internet and thus justifies the Company's entry
into this business. A sample of the research and forecasts that
management has reviewed is as follows:
Worldwide sales of lottery tickets exceeded $115 Billion in 1995
as stated in International Gaming and Wagering Business in May 1996.
During 1995, the Internet consisted of 7,000,000 host computers
integrated internationally via 60,000 mostly private networks.
Based upon the 1995 growth rate, there will be 124 million hosts
by the year 2000. Source: The Internet Gambling Report, 1996
edition.
Liechtenstein s Internet Lottery can draw potential players from
nearly 50,000,000 Internet users across the globe. Source:
International Gaming & Wagering Business, November 1995.
As of 1994, gross wagering in the US totaled $482 billion.
Source: U.S. News & World Report, January 15, 1996.
Approximately 40% of gaming revenues in the future may be from
virtual casinos, Internet lotteries, Bingo, sports wagering and
other online gaming locations. Source: The Internet Gaming Report,
1996 edition.
The above information is presented for informational purposes
only and has been derived from sources believed to be reliable,
although some information is based on estimates. It should be
noted that the sources relied upon are various publications which
may or may not have provided supporting validation for their
estimates. Actual results may not be closely related to forecasts
made. There can be no assurance that the information presented
above will approximate actual results.
The Company is currently in the process of soliciting marketing
proposals from recognized international marketing, advertising,
consulting firms and individuals, such as KPMG Pete Marwick, Asia
Pacific Ventures, Time International and the Asia Times.
Management intends to develop distinct targeted marketing
strategies in conjunction with these expert sources. Further, once
the Company has entered into an agreement with a venture partner,
it intends to rely upon the direct experience of that partner
related to a specific target market for the area intended. The
Company will also actively promote its virtual casinos through the
Internet itself and promote and advertise its services through that
medium. Presently, management expects that CD-ROMs will be the
primary source of distribution of the company s software
application, with diskettes and online download secondary
considerations.
Technological Change and Competition
The offering of casino gambling services on the Internet,
although relatively new, is characterized by rapid and significant
technological change corresponding to similar technology
enhancements in the computer, software and telephony industries. A
significant number of companies, organizations and individuals are
currently offering or purporting to offer on the Internet similar
gambling services as that of the Company. The organizations with
the greatest visibility to date include, but are not limited to
Internet Casinos, Interactive Gaming & Communications Corp.
(formerly Sports International - USA), Casinos of the South
Pacific, and Virtual Vegas.
As of this date, however, to the best knowledge of the Company,
no firm is offering casino style gambling for other than fun on the
Internet. The Company is aware of several firms currently offering
actual wagering on various sporting events with financial
transactions being administered from off-shore (outside the US)
accounts. In addition, several organizations currently offer
lottery tickets for sale from International Lotteries. One
specific organization, Interlotto, operates an Internet lottery
authorized by the Liechtenstein Government.
There are also a significant number of organizations and
companies interested in pursuing the business of providing currency
change using e-cash. Some of the competitors currently offering
e-cash services include, but are not limited to, start-up firms
such as DigiCash and CyberCash, as well as more notable corporate
names such as Microsoft, Xerox, Visa and Citicorp. The Company
intends to ultimately leverage the financial transactions of E-
Casinos through CCCI in order to further establish visibility and
credibility of CCCI s operation. The Company intends to use a
portion of the proceeds from the sale of Common Stock to the
Selling Stockholders to commence CCCI's operations.
The barrier to entry to most Internet markets, including the
gambling segment, is relatively low making its accessible to a wide
number of entities and individuals. The Company believes, however,
that there are substantial supplemental market barriers that will
ultimately preclude the vast majority of prospective providers from
maintaining a material or successful Internet operation and provide
an advantage to the Company. These barriers include, but are not
limited to the following:
Credibility and Integrity. At present, there are no official
regulators of gambling services on the Internet and many of the
companies offering gambling services are located in remote spots in
the Caribbean Islands such as Antigua or St. Martin. Prospective
gamblers want some assurance that they are dealing with credible
organizations that will adhere to stated payout percentages and
make distributions of any winnings to the player. Management's
goal is that once operational, E-Casinos will give credibility
through its association with prominent business partners, such as
Monacall, located in Monte Carlo, Monaco. Also, Ecasinos' expected
use of state-of-the-art security technology is intended to instill
confidence for prospective players to provide funds on account and
wager at the virtual casino. In addition, E-Casinos will retain a
recognized international auditing firm to audit the operations of
the virtual casinos to assure integrity of its activities, although
no such arrangements have been made as of the date hereof.
Technology. Although most all of the prospective providers of
gaming services on the Internet offer some form of casino style
wagering games to the public, they are typically based on a HTML
(HyperText Markup Language) format that is transmitted and
emulated or viewed by a web browser (such as Netscape). Thus,
the transmission and viewing of these sites is rooted in
Terminal/Host architecture where the terminal or web browser
views HTML just like a terminal would emulate traditional
mainframe protocols. Consequently, the animation and graphic
viewing esthetics of the gambling action are typically of a simple
nature. E-Casinos' use of the CWH and MindWireTM technology
combines the best elements of terminal/host software design and
client/server design for the purposes of disseminating information.
The Company believes that this technology will provide robust
graphics and animation, as well as supplemental features such as e-
mail, online shopping, chat rooms and bulletin boards. The Company
recognizes, however, that with the rate of technological change
currently in effect, it must continue to evaluate and develop new
technologies to maintain any expected competitive edge.
Adequate Financing. As stated previously, the cost to set up and
maintain a low quality casino website is relatively small.
However, the collateral expenses associated with marketing the
website and system support remains substantially high. E-Casinos
projects that it will initially spend a minimum of $1 million to
market and promote its initial virtual casino to targeted markets.
As the number of virtual casinos grows and the targeted markets are
expanded worldwide, the marketing costs are expected to increase
proportionally. In addition, the Company s affiliated partners
have incurred multi-million dollar expenses to develop the unique
software application and build the telephony and transaction
processing facilities necessary to handle the large volume of
accesses to its website. The Company believes that with the
financing obtained from the Selling Stockholders in the purchase of
the securities that are the subject of this Prospectus and related
registration statement, it can reasonably compete with anticipated
competitors.
Patents, Copyrights and Trade Secrets
The Company's current business is based on technologies acquired
or otherwise licensed from third parties. The Company does not own
or otherwise control any patents, copyrights or trademarks.
However, those third parties from which the Company does license
its technology have taken the appropriate steps to protect the
intellectual property rights of the technology. CWH has
copyrighted and trademarked the Virtual CasinoWorldTM software
application. Also, Durand has copyrighted and trademarked the
MindWireTM application. Further, certain modules of the MindWireTM
application are currently patent pending. Certain software code
developed through Alphacom has been copyrighted through its
affiliate developer, World Star Holdings, Ltd., a Canadian
corporation. The system security software application, developed
by CD-Max, has been copyrighted and trademarked and CD-Max intends
to expand its current patents to include additional security
applications. There can be no assurance that any remaining patent
(or copyright) applications relating to the Company's licensed
technology will result in patents being granted or that, if
granted, such patents will afford protection against competitors
with similar technology. Also there can be no assurance that those
entities licensing the Company's technology will have the financial
resources necessary to enforce any patent or copyright rights it
may hold. Although the Company is not aware of any infringement
claim against this technology, in the event that a future claim
against the developer and/or the Company is successful, it may be
necessary for the Company to obtain additional licenses to such
patents or to other patents or proprietary technology. There can
be no assurance that the Company will be able to obtain any such
additional licenses on commercially reasonable terms. Any
disclosure of such technology or development of substantially
equivalent technology could result in increased competition that
might materially and adversely affect the Company's revenues and
cost of sales.
The Company will attempt to protect its own proprietary
technology by relying on trade secret laws and non-disclosure and
confidentiality agreements with its employees who have access to
its proprietary technology. To date, the Company has not entered
into any such agreements. Despite these protections, no assurance
can be given that others will not independently develop or obtain
access to such technology or that the Company's competitive
position will not be adversely affected thereby. See "Risk
Factors Patents, Trademarks and Copyrights."
Government Regulation
Ownership and operation of land-based gaming facilities in the
United States, in particular, and elsewhere in the world, is
normally subject to extensive state and federal government
regulations. However, the Company intends to offer its casino
gaming services over the Internet through facilities located in
Monte Carlo, Monaco and initiated from various authorized
locations. Due to the relatively recent development of casino
wagering over the Internet, there are few direct regulations that
deal with this application. Although management believes that the
Company is in compliance with all applicable existing regulations
in those countries which it intends to offer its services, there
can be no assurance that the Company can remain in compliance with
existing and new regulations at a reasonable cost. The Company is
presently in the process of obtaining licenses from those
jurisdictions in which it intends to initially operate in order to
satisfy its contractual requirements with the Monacall facility in
Monaco. The Company is fully cognizant of the fact that Internet
related laws and regulations are just beginning to emerge and that
such national and international legislation is expected to develop
over the next few years. Such legislation could negatively impact
the Company or hinder its ability to offer its services in the
futures. There can be no assurance that the Company's gaming
services over the Internet will continue to be accepted in those
jurisdictions in which they are presently accepted, or that a
government or court system will not disallow the use of Internet
gaming services. See "Risk Factors Government Regulation."
A bill to create a national commission to study gambling in the
US (including interactive virtual wagering) was tentatively
approved by a Senate committee in May of 1996. As of the date
hereof, there is no indication as to any potential legislation or
new laws that may result from this committee. Under the bill as
proposed, a nine member panel would be charged with conducting a
study on the social and economic impact of gambling on communities
and individuals and then issue a report within two years after the
commission was established. The commission would examine all forms
of gambling, including interactive technology and gambling over the
Internet, would hold public hearings and would have the power to
subpoena witnesses. A similar bill passed the House of
Representatives in March 1996 and is expected to come before the
full Senate during the current session of Congress.
Employees
As of the date hereof, the Company has one full time employee
functioning as the Company's Chief Operating Officer and Chief
Financial Officer. Because of the nature of the Company's business
at this time, management intends to primarily use consultants and
advisors to provide the interim services required for its
operations. Further, the Company has entered into certain
licensing agreements with third parties as an initial means of
developing its service offerings and, accordingly, relies upon the
work performed by its licensing partners. As the Company's virtual
casinos become operational, it is anticipated that the Company will
hire additional qualified personnel consistent with workload
requirements and as business conditions warrant.
Facilities
The Company's primary executive office is located at 11480 Sunset
Hills Road, Suite 100E , Reston, Virginia 22090. These facilities,
leased by CD-Max, Inc., are shared with the Company pursuant to a
sublease. Under its arrangement with CD-Max, the Company
reimburses CD-Max for its expenses related to the share use of the
space. Two of the Company's directors, Ken Fitzpatrick and Craig
Bampton, primarily use their own independent office space in San
Francisco, California and Winnipeg, Canada, respectively, to
conduct the business of the Company. The Company reimburses Messrs
Fitzpatrick and Bampton for "out-of-pocket expenses" related to the
Company's business. The Company also occupies approximately 7,000
square feet of office space located at 1055 West 14th Street,
Vancouver, British Columbia, which is sub-leased through Multiplex
Technologies. This facility is primarily used for the marketing
and investor relations requirements of the Company. The Company
believes that its current facilities are adequate for its current
needs and anticipates securing additional office space as business
conditions warrant.
Litigation
There are no material pending legal proceedings to which the
Company or its subsidiaries is a party or to which any of their
property is subject.
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company are as
follows:
Name Age Position
Kenneth F. Fitzpatrick 55 President, Chief Executive
Officer and Director
Craig J. Bampton . . . 42 Vice President and Director
G. Michael Cartmel . . 58 Vice President Public Relations
and Director
Arthur Rosenberg . . . 43 Chief Operating Officer, Chief
Financial Officer
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. As of March 31, 1996, the Company had not compensated
its directors for service on the Board of Directors or any
committee thereof. In addition, the Company reimburses each
Director's out of pocket expenses incurred in connection with their
duties as directors. Each officer of the Company serves at the
discretion of the Board of Directors.
Kenneth F. Fitzpatrick. Mr. Fitzpatrick joined the Company in
August 1995 as the President, Chief Executive Officer and Director.
Mr. Fitzpatrick has over 28 years of experience in the investment
business. For the past six years, Mr. Fitzpatrick has owned and
operated the VanSan Group of San Francisco, an investment banking
and corporate financing firm doing business in the United States
and Canada. Mr. Fitzpatrick holds a B.S. degree in Business from
Babson College in Wellsley, Massachusetts.
Craig J. Bampton. Mr. Bampton became the Vice President and a
director of the Company following the acquisition of Tessier
Resources, Ltd. ("Tessier") in 1994. Mr. Bampton has been the Vice
President of Tessier and President of its wholly owned subsidiary,
Pulverizer Systems, Inc., since 1991. Following the sale by the
Company of Tessier to Kaniksu Ventures, Inc., Mr. Bampton became
the President and a director of Kaniksu Ventures, Inc., a publicly
traded corporation. Prior to joining Tessier, Mr. Bampton was
employed from 1973 to 1991 by Burlington Northern Railways Manitoba
Ltd., where he was an agent / office manager for the Manitoba,
Canada region. Mr. Bampton attended Red River Community College.
G. Michael Cartmel. Mr. Cartmel became the Vice President of
public relations and a director of the Company in April 1994.
Following the sale by the Company of Tessier to Kaniksu Ventures,
Inc., Mr. Cartmel also became a director of Kaniksu Ventures, Inc.,
a publicly traded corporation. Mr. Cartmel has been self-employed
for several years as a consultant to the investment community
providing investor and public relations services to publicly held
companies. From 1991 to the present, Mr. Cartmel has been a
principal of BMB Holdings, Ltd., a provider of investor relations
and consulting services. Mr. Cartmel holds a a B.A. degree in
economics and psychology from the University of British Columbia.
Arthur Rosenberg. Mr. Rosenberg joined the Company in February
1996 as the Chief Operating Officer and Chief Financial Officer.
Since 1992, Mr. Rosenberg has been an independent corporate
consultant offering his clients advise on financial, strategic,
investment and operational matters. From 1992 to 1996, Mr.
Rosenberg was the Chief Operating Officer and Chief Financial
Officer of LottoFone Incorporated, a company located in Alexandria,
Virginia providing telephone based wagering capabilities to state
and international lotteries. From 1988 to 1992, Mr. Rosenberg was
the Vice President and Chief Financial Officer of Industrial
Training Corporation, multi-media training company located in
Herndon, Virginia. Mr. Rosenberg is a graduate of Northeastern
University with a B.A. degree in chemistry and also earned an
M.B.A. in marketing management from Boston College.
Executive Compensation
The following table sets forth a summary of cash and non-cash
compensation for each of the last three fiscal periods ended
December 31, 1995, 1994 and 1993, with respect to the Company's
Chief Executive Officer. No executive officer of the Company has
earned a salary greater than $100,000 annually for any of the
periods depicted.
Summary Compensation Table
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
Kenneth F. Fitzpatrick, 1996 $ - $ - $ - $ -
President and C.E.O. 1995 $ - $ - $ - 30,750(1)
(1) Mr. Fitzpatrick was paid primarily as a consultant in 1995.
The preceding table does not include any amounts for noncash
compensation, including personal benefits, paid to the Company's
C.E.O. The Company believes that the value of such noncash
benefits and compensation paid to Fitzpatrick during periods
presented did not exceed the lesser of $50,000 or 10% of the cash
compensation reported for him.
The following table includes those stock purchase warrants
(options) issued by the Company to its Chief Executive Officer
during the Company's last fiscal year. For purposes of calculating
the percent of the total options granted to employees, the
aggregate number issued to all officers, directors and employees is
used.
Options/SAR Grants in Last Fiscal Year
Percent of Total
Options/SARs Options/SARs Exercise or Base
Name and Principal Granted(#) Granted To Employees Price Per Share Expiration
Position Date
Kenneth F. Fitzpatrick, 75,000 13% $2.50 05/31/99
President, C.E.O. 100,000 18% $5.75 11/06/99
Barry Worshoufsky 100,000 18% $2.50 05/31/99
President, C.E.O.
Employment Agreements
As of the date hereof, the Company has not entered into any
employment contracts with any of its employees, officers or
directors, nor has the Company had a bonus, profit sharing, or
deferred compensation plan for the benefit of its employees,
officers or directors.
CERTAIN TRANSACTIONS
In March 1996 the Company effected the sale of its wholly owned
subsidiary, Tessier Resources, Inc. ("Tessier") to Kaniksu
Ventures, Inc. ("Kaniksu") in exchange for a $3,000,000 debenture
convertible into 2,000,000 shares of Kaniksu common stock.
Additional consideration, in the form of stock and rights in
Kaniksu stock, will also be provided to stockholders of
VentureTech. Following the sale of Tessier to Kaniksu, Craig J.
Bampton, Vice President and a director of the Company, became the
President and a director of Kaniksu, and G. Michael Cartmel, also
Vice President and a director of the Company, became a director of
Kaniksu. Prior to the sale of Tessier, Mr. Bampton was Vice
President of Tessier and President of its wholly owned subsidiary,
Pulverizer Systems, Inc. Mr. Bampton intends to devote the
majority of his time to the operations of Kaniksu. Because of the
Company's ongoing interest in Kaniksu, it is believed desirable to
have two of the Company's directors also serve as directors of
Kaniksu.
Since 1994, the Company has received advances from various
parties including officers, directors, stockholders and others in
exchange for shares of Common Stock, warrants, convertible notes
and debentures. On March 31, 1996, the Company issued 539,172
shares of Common Stock to a related party in consideration of money
owed. On December 31, 1995 and October 31, 1995, the Company
issued 210,888 shares of Common Stock and 380,886 shares of Common
Stock, respectively, to related parties in consideration of money
owed. These transaction were the result of repayment in the form
of shares of Common Stock of funds advanced to the Company by
related parties. Also in March 1996, the Company received a note
from a related party for $200,000 advanced to the party, which note
was subsequently repaid to the Company in April 1996.
PRINCIPAL STOCKHOLDERS
The following table sets forth information, to the best
knowledge of the Company, as of June 21, 1996, giving effect to the
issuance of 6,000,000 shares to the Selling Stockholders (See
"Selling Stockholders"), with respect to the beneficial ownership
of shares of the Company's Common Stock by (i) each person known by
the Company to be the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock, (ii) each director of
the Company, (iii) each executive officer of the Company, and (iv)
all directors and executive officers as a group.
Number of Shares Percentage
Name Beneficially Owned Ownership(1)
Craig J. Bampton * . . . . . . . 1,350,000(2) 8.2%
65 Fletcher Crescent
Winnipeg, Manitoba Canada R3T OK9
G. Michael Cartmel * . . . . . . 170,000(3) 1.0%
304-2170 West Third Avenue
Vancouver, B.C. Canada V6K 1L1
Kenneth F. Fitzpatrick * . . . . 175,000(4) 1.1%
1860 Jackson Street
San Francisco, California 94109
Arthur Rosenberg . . . . . . . . 135,000(5) .8%
11480 Sunset Hills Road, Suite 110E
Reston, Virginia 22090
Regis Investments Company Limited. 17,670,000(6) 55.9%
701 United Chinese Bank Building
Des Vouex Road Central
Hong Kong
Caledonian Trading Corporation . 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Eagle Technology Corporation . . 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Falcon Commercial Enterprises
Limited 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Falcon Sales Corporation . . . . 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Protex International Limited . . 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Westminster Computer Services
Limited. . . . . . . . . . . . 1,000,000(7) 6.1%
c/o Bank Sarasin & Company
62 Elisabethen Strasse CH-4002
Basil, Switzerland
Monique Tessier. . . . . . . . . 700,000 4.3%
65 Fletcher Crescent
Winnipeg, Manitoba Canada R3T OK9
Robert Tessier . . . . . . . . . 700,000 4.3%
65 Fletcher Crescent
Winnipeg, Manitoba Canada R3T OK9
Manatee Investments. . . . . . . 1,300,000 7.9%
P.O. Box 1790 Cayman Overseas
Bank & Trust
Grand Cayman BWI
All directors and executive officers
as a group (4 persons) . . . . 1,830,000(8) 10.8%
* Director
** Unless otherwise indicated in the footnotes below, the Company
has been advised that each person has sole voting power and
dispositive power over the shares indicated above.
(1) As of June 21, 1996, there were 16,431,100 shares of Common
Stock outstanding, which figure takes into consideration the
6,000,000 shares issued to the Selling Stockholders.
Additionally, certain officers and directors hold certain
warrants and/or stock options to purchase 530,000 shares of
Common Stock which are currently exercisable, subject only to
the Company being included on the Nasdaq Stock Market.
Further, certain principal stockholders hold certain
convertible debentures and warrants that may be converted
into 15,200,000 shares of Common Stock. Therefore, for
purposes of the table above, as of the date hereof, 32,161,100
shares of Common Stock are deemed to be issued and outstanding
in accordance with Rule 13d-3 adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
as amended. See "Prospectus Summary The Offering."
Percentage ownership is calculated separately for each person
on the basis of the actual number of outstanding shares as of
June 21, 1996 and assumes the exercise of warrants and/or
options held by such person (but not by anyone else)
exercisable within sixty days.
(2) Includes 50,000 shares which may be acquired by Mr. Bampton
pursuant to the exercise of warrants and/or stock options
exercisable within sixty days at the exercise price of $2.50
per share.
(3) Includes 170,000 shares which may be acquired by Mr. Cartmel
pursuant to the exercise of warrants and/or stock options
exercisable within sixty days at the exercise price of $2.50
per share.
(4) Includes 175,000 shares which may be acquired by Mr.
Fitzpatrick pursuant to the exercise of warrants and/or stock
options exercisable within sixty days at the exercise price
of $2.50 to $5.75 per share.
(5) Includes 135,000 shares which may be acquired by Mr. Rosenberg
pursuant to the exercise of warrants and/or stock options
exercisable within sixty days at the exercise price of $5.75
per share.
(6) Includes 15,200,000 shares which may be acquired by Regis
Investments Company Limited pursuant to the conversion of a
convertible debenture and exercise of related warrants
exercisable within sixty days at the exercise price of $.03
per share.
(7) A Selling Stockholder whose shares are held in escrow pending
the effectiveness of this Prospectus, at which time the
respective shares will be delivered to the stockholder upon
the payment to the Company of the purchase price of the
shares.
(8) Includes 530,000 shares which may be acquired by the Company's
directors or executive officers within sixty days pursuant to
the exercise of warrants and/or stock options at various
prices.
SELLING STOCKHOLDERS
On April 24, 1996, the Company entered into a private
transaction whereby the Company agreed to sell to six entities (the
"Selling Stockholders") an aggregate of 6,000,000 shares of
authorized but previously unissued shares of Common Stock for the
purchase price of $10.00 per share. This transaction was not
registered under the Securities Act of 1933, as amended, and
therefore the shares of Common Stock issued pursuant to this
transaction are deemed "restricted securities." As a provision of
the private sale of the 6,000,000 shares, the Company agreed to
file a registration statement with the Securities and Exchange
Commission for the purpose of registering the 6,000,000 shares.
This Prospectus, which is part of the Company's registration
statement, relates to the offer of the 6,000,000 shares by the
Selling Stockholders into the public market.
The 6,000,000 shares have been issued and delivered to an escrow
account to be held pending the effectiveness of the registration
statement to which this Prospectus is a part. Upon the
effectiveness of the registration statement and payment by the
Selling Stockholders to the Company of the $60,000,000 representing
the purchase price of the Shares, the 6,000,000 shares will be
delivered to the respective Selling Stockholders. In the event for
any reason that the registration statement does not become
effective or the Selling Stockholders do not deliver the
$60,000,000 to the Company, the 6,000,000 shares will be returned
to the Company for cancellation on the Company's stock transfer
records.
The following table sets forth as of the date hereof, certain
information regarding the beneficial ownership of the Company's
Common Stock by each Selling Stockholder. Except as otherwise
noted, the stockholders shown in the table have sole voting and
investment power with respect to the securities. These Selling
Stockholders are presented together in this table for convenience
of presentation only.
Securities Securities to be
Beneficially Owned Beneficially Owned
Prior to Offering(1) After Offering(1)
Securities
Name Number Percentage Offered Number Percentage
Caledonian Trading Corporation 1,000,000 6.1% 1,000,000 -0- 0%
Eagle Technology Corporation . 1,000,000 6.1% 1,000,000 -0- 0%
Falcon Commercial Enterprises
Limited . . . . . . . . . . 1,000,000 6.1% 1,000,000 -0- 0%
Falcon Sales Corporation . . . 1,000,000 6.1% 1,000,000 -0- 0%
Protex International Limited . 1,000,000 6.1% 1,000,000 -0- 0%
Westminster Computer Services
Limited . . . . . . . . . . 1,000,000 6.1% 1,000,000 -0- 0%
(1) Computations of percentages (i) do not give effect 2,761,054
shares of Common Stock issuable upon exercise of various
warrants and stock options held by certain individuals at
various prices, (b) 15,200,000 shares of Common Stock
issuable upon conversion of certain "Convertible Debentures"
at the present exercise price of $.03 per share, or (c)
additional shares of Common Stock that may be issued upon
conversion of certain other convertible securities that are
either presently outstanding or may be issued in the future.
See ""Description of Securities", and "Risk Factors -
Additional Dilution." Assumes maximum amount of securities
offered are sold.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000 shares of Common
Stock, par value $.001 per share, of which 16,431,100 shares are
issued and outstanding as of the date hereof, including the
6,000,000 shares of Common Stock being offered by the Selling
Stockholders.
All shares of Common Stock have equal rights and privileges with
respect to voting, liquidation and dividend rights. Each share of
Common Stock entitles the holder thereof to (i) one non-cumulative
vote for each share held of record on all matters submitted to a
vote of the stockholders; (ii) to participate equally and to
receive any and all such dividends as may be declared by the Board
of Directors out of funds legally available therefore; and (iii) to
participate pro rata in any distribution of assets available for
distribution upon liquidation of the Company.
Stockholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or any other securities. The
Common Stock is not subject to redemption and carries no
subscription or conversion rights. All outstanding shares of
Common Stock are, and all shares of Common Stock to be outstanding
upon completion of this Offering will be, fully paid and
non-assessable.
As permitted by the provisions of the Idaho General Business
Corporation Law (the "Idaho Code"), the Company has the power to
indemnify any officer or director who, in their capacity as such,
is made or threatened to be made a party to any suit or proceeding,
whether criminal, administrative or investigative, if such officer
or director acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the Company. An
officer or director shall be indemnified against expenses to the
extent they have been successful on the merits or otherwise in
defense of any action, suit or proceeding. Such indemnification is
not exclusive of any other rights to which those seeking
indemnification may be entitled under the By-Laws, any agreement,
vote of stockholders or disinterested directors or otherwise.
Further, the Idaho Code permits a corporation to purchase and
maintain liability insurance on behalf of its officers, directors,
employees and agents.
Also pursuant to the Idaho Code, a corporation may set forth in
its articles of incorporation a provision eliminating or limiting
in certain circumstances the personal liability of a director to
the corporation or its stockholders for monetary damages for breach
of fiduciary duty as director. These provisions do not eliminate
or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders;
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for
liability arising under Section 30-1-48 of the Idaho Code (relating
to the declaration of dividends and purchase or redemption of
shares in violation of the Idaho Code); or (iv) for any transaction
from which the director derived an improper personal benefit. In
addition, these provisions do not limit the right of the
corporation or its stockholders, in appropriate circumstances, to
seek equitable remedies such as injunctive or other forms of non-
monetary relief, which remedies may not be effective in all cases.
Convertible Debentures
In March 1994, the Company issued to Regis Investments Company
Limited ("Regis") a convertible debenture in the face amount of
$175,000 with an interest rate of ten percent (10%) per annum (the
"Debenture"). The Debenture was issued by the Company in
consideration for monies advanced to the Company by Regis. The
Debenture provides for the holder to convert up to the full face
amount of the Debenture into shares of the Company's authorized but
unissued Common Stock at the conversion price of Three Cents ($.03)
per share. Each share issued upon conversion of all or a portion
of the Debenture include an "A" and a "B" share purchase warrant.
Each "A" and each "B" share purchase warrant entitles the holder to
acquire one additional share of the Company's authorized but
unissued Common Stock at the conversion price of Three Cents ($.03)
per share. Each "A" and each "B" share purchase warrant is valid
and may be converted into Common Stock for a period of two years
following issuance. As of the date hereof, $69,000 of the
Debenture have been converted into a total of 2,300,000 shares of
Common Stock, 2,300,000 "A" share purchase warrants and 2,300,000
"B" share purchase warrants. If the balance of the Debenture and
all the "A" and "B" share purchase warrants are converted into
Common Stock, an additional 15,200,000 shares of Common Stock may
be issued at the price of $.03 per share. See "Risk
Factors Additional Dilution" and "Shares Eligible for Future
Sales."
Stock Purchase Warrants
From May 1994 through November 1995, the Company has granted an
aggregate of 1,532,000 stock purchase warrants to various
individuals, consultants, directors and officers of the Company.
None of these stock purchase warrants have been registered under
the Act. These warrants were granted in consideration for
services rendered or beneficial contributions provided to the
Company and/or for the expectation of future contributions to the
success of the Company. The stock purchase warrants were issued to
a total of thirty-six individuals or organizations at exercise
prices ranging from $2.50 to $6.00, which represented the fair
market value of the Common Stock at the time of grant, and for
periods ranging from four to five years. The stock purchase
warrants are conditional upon the Company having its Common Stock
listed on the Nasdaq Stock Market and the Company reserves the
right to include the shares underlying the warrants in a future
registration statement by the Company at such time Board of
Directors deems suitable. As of the date hereof, none of the stock
purchase warrants have been exercised. If all of the stock
purchase warrants are exercised, an additional shares of Common
Stock may be issued at prices ranging from $2.50 to $6.00 per
share. See "Risk Factors Additional Dilution" and "Principal
Stockholders."
Directors' Stock Options
In May, 1994, the Company issued an aggregate of 360,000 stock
options to three of its directors (120,000 options each). Each
option is exercisable at any time prior to May 2000, unless
extended by the Company for an additional five years, and entitles
the holder to purchase one share of the Company's authorized but
unissued Common Stock at the option price of $2.50 per share. As
of the date hereof, none of the options have been exercised. If
all of the options are exercised, an additional 360,000 shares of
Common Stock may be issued at the price of $2.50 per share. See
"Risk Factors Additional Dilution" and "Principal Stockholders."
Miscellaneous
All of the shares of Common Stock to be issued upon conversion
of the stock purchase warrants, directors' stock options and
convertible debentures will be deemed restricted securities as
defined by Rule 144 of the Act.
In June 1995, the Company initiated a private placement for
1,000,000 units at the offering price of $1.70 per unit, with each
unit consisting of one share of Common Stock and one warrant
entitling the holder to acquire one additional share of Common
Stock at the exercise price of $1.70 per share. It was the intent
of this private placement to raise funds periodically to finance
the development of the Company. All 1,000,000 shares have been
placed and a total of 130,946 additional shares have been issued
upon the exercise of warrants. As of March 31, 1996, 869,054
warrants are still outstanding, which warrants will expire in June
2000.
In November 1995, the Company initiated a second private
placement for 1,000,000 units at the offering price of $5.00 per
unit, each unit consisting of one shares of Common Stock and two
warrants entitling the holder to acquire two additional shares of
Common Stock at the exercise price of $5.00 per share for the first
two years after issuance, and $6.00 per share for the subsequent
three years. As of the date hereof, no shares have been issued
pursuant to this private placement.
In March 1996, the Company authorized 1,000,000 stock options for
the possible future allocation to an individual and his associates
for their services related to acquiring financing for the Company
and for assisting in the completion of certain projects on behalf
of the Company. These options are exercisable at $6.00 per share,
with no expiration date, and are issuable at the discretion of the
Board of Directors. As of the date hereof, no options have been
issued.
In October 1995, the Company authorized a convertible debenture
which allows for the issuance of up to 900,000 shares of Common
Stock and attached warrants to various individuals and companies in
connection with the acquisition of CWH technology, expertise and
operations. The conversion price is set at $3.00 per share and
warrant. As of March 31, 1996, no shares have been issued pursuant
to this debenture.
Transfer Agent and Warrant Agent
The transfer agent and registrar for the Common Stock is
Interstate Transfer Company, 56 West 400 South, Suite 260, Salt
Lake City, Utah 8410.
PLAN OF DISTRIBUTION
Following the date of this Prospectus, the Selling Stockholders
will be able to sell Common Stock covered hereunder from time to
time in one or more transaction in market transaction at the then
prevailing market prices and terms, or in negotiated transactions
or otherwise, and without the payment of any underwriting discounts
or commissions, except for usual and customary selling commissions
paid to brokers or dealers. The Selling Stockholders also may sell
such shares of Common Stock from time to time, as might be
permitted under Rule 144 promulgated under the Act. As of the date
hereof, the Company has not been advised when, or even whether the
Selling Stockholders intend to sell such securities.
SHARES ELIGIBLE FOR FUTURE SALE
The Shares Offered hereby will be freely tradeable without
restriction or further registration under the Act, except for any
Common Stock held by or purchased by an "affiliate" (as defined
under the Act) of the Company. As of the date hereof,
approximately 14,286,022 shares of Common Stock (including the
6,000,000 shares issued to the Selling Stockholders) held by the
Company's current stockholders will constitute "restricted
securities" within the meaning of Rule 144 under the Act and may be
sold only pursuant to an effective registration statement under the
Act or an applicable exemption, including an exemption under Rule 144.
In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated in accordance with Rule 144)
who has beneficially owned "restricted securities" (defined
generally as shares acquired from the issuer or an affiliate in a
non-public transaction) for at least two years, as well as any
person who purchases unrestricted shares in the open market who may
be deemed an "affiliate" of the issuer, is entitled to sell, within
any three-month period, a number of shares of Common Stock that
does not exceed the greater of (i) 1% of the then outstanding
shares, or (ii) the average weekly trading volume in the shares
during the four calendar weeks preceding each such sale. A person
who is not deemed to be an "affiliate" of the issuer and who has
held restricted shares for at least three years would be entitled
to sell such shares without regard to the volume limitations
described above. As defined in Rule 144, an "affiliate" of an
issuer is a person that directly or indirectly, through the use of
one or more intermediaries, controls, or is controlled by, or is
under common control with, such issuer. Sales of substantial
amounts of restricted shares, or the perception that such sales may
occur, could adversely affect prevailing market prices for the
Common Stock.
Beginning 90 days from the date of this Prospectus and during the
90 days immediately thereafter, in addition to the 6,000,000 shares
offered hereby and 2,145,078 tradeable shares of Common Stock
outstanding prior to the Offering, an additional 1,640,000 shares
of Common Stock may be sold under Rule 144 of the Act subject to
the volume and other restrictions of Rule 144. Beginning 180 days
from the date of this Prospectus and during the 180 days
immediately following, an additional 2,900,000 shares of Common
Stock may be sold subject to the volume and other restrictions of
Rule 144. The remaining 3,746,022 shares held by existing
stockholders will become eligible for sale at various times over a
period of less than two years, also under the provisions of Rule 144.
In addition to the above, holders of certain Convertible
Debentures may, at their discretion, currently convert their
Debentures into an aggregate of 15,200,000 shares of the Company's
Common Stock, which shares, commencing 90 days from the date of
this Prospectus, would be immediately tradeable in the public
market pursuant to the terms and volume limitations of Rule 144.
Prior to this Offering, there has been a limited public market
for the Common Stock and no predictions can be made of the effect,
if any, that sales of the Common Stock under Rule 144 or the
availability of the Common Stock for sale will have on the market
price prevailing from time to time. Sales of substantial amounts of
the Common Stock pursuant to Rule 144 could subsequently adversely
affect the market price of the Common Stock.
LEGAL MATTERS
Legal matters in connection with this Offering including the
validity of the Shares, offered hereby will be passed upon for the
Company by Leonard E. Neilson, Attorney at Law, P.C., 1121 East
3900 South, Suite C-200, Salt Lake City, Utah 84124. Mr. Neilson
is also the beneficial owner of 7,000 shares of the Company's
Common Stock, and 5,000 stock purchase warrants entitling him to
purchase up to 5,000 shares of Common Stock at the purchase price
of $2.50 per share prior to May 31, 1999.
EXPERTS
The financial statements and schedule included in this Prospectus
and in the Registration Statement have been audited by Jones,
Jensen and Company, independent certified public accountants, to
the extent and for the periods set forth in their report appearing
elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (herein,
together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as
amended, with respect to the securities being offered by this
Prospectus. As permitted by the rules and regulations of the
Commission, this Prospectus omits certain information contained in
the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the
securities offered, reference is hereby made to the Registration
Statement and the schedules and exhibits filed as a part thereof.
Statements contained in this Prospectus concerning the contents or
provisions of any contract, agreement or other document are not
necessarily complete, and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration
Statement. Each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement, including
the exhibits and schedules thereto, may be inspected, without
charge, at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices
located at 410 17th Street, Suite 700, Denver, Colorado 80202, 75
Park Place, 14th Floor, New York, New York 10007 and 500 West
Madison Street, Chicago, Illinois 60661. Copies of all or any
portion of the Registration Statement can be obtained from the
Commission, upon payment of prescribed fees.<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
VentureTech, Inc.
(A Development Stage Company)
San Francisco, California
We have audited the accompanying consolidated balance sheets of VentureTech,
Inc. (a development stage company) as of March 31, 1996 and December 31, 1995
and 1994, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the periods ended March 31, 1996 and
December 31, 1995, 1994, and 1993 and from inception on January 1, 1986
through March 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects the financial position of VentureTech, Inc.
(a development stage company) as of March 31, 1996 and December 31, 1995 and
1994 and the results of their operations and their cash flows for the periods
ended March 31, 1996 and December 31, 1995, 1994, and 1993 and from inception on
January 1, 1986 through March 31, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 5 to the
financial statements, the company is a development stage company with no
significant operating results to date, there is substantial doubt about its
ability to continue as a going concern. Management's plan in regard to these
matters are also described in Note 5. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
June 9, 1996
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
March 31, December 31, December 31,
1996 1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 14,737 $ 2,782 $ 1,120
Tax refund receivables (Note 6) - 6,025 -
Note receivable - related
party (Note 3) 200,000 - -
Total Current Assets 214,737 8,807 1,120
PROPERTY AND EQUIPMENT (Note 2) 136,055 104,180 -
OTHER ASSETS
Investment (Note 10) 158,112 - 250,000
License fees (Note 11) 2,250,000 - -
Total Other Assets 2,408,112 - 250,000
TOTAL ASSETS $2,758,904 $ 112,987 $ 251,120
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, December 31, December 31,
1996 1995 1994
CURRENT LIABILITIES
Accounts payable $ 25,336 $ 22,286 $ 11,122
Interest payable 32,084 27,709 -
Unearned revenue (Note 14) 550,000 - -
Related party payables (Note 3) - 31,946 20,417
License fees payable 1,650,000 - -
Total Current Liabilities 2,257,420 81,941 31,539
CONVERTIBLE DEBENTURE (Note 4) 175,000 175,000 175,000
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 100,000,000 shares
authorized of $0.001 par value,
8,131,100, 7,591,928 and
3,800,154 shares issued and
outstanding, respectively 8,131 7,592 3,800
Additional paid-in capital 2,264,002 1,347,881 412,896
Deficit accumulated during the
development stage (1,945,649) (1,409,349) (372,115)
Foreign currency translation
adjustment (Note 7) - (90,078) -
Total Stockholders'
Equity (Deficit) 326,484 (143,954) 44,581
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $2,758,904 $ 112,987 $ 251,120
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Statements of Operations
From
Inception on
For the Three January 1,
Months Ended For the Years Ended 1986 Through
March 31, December 31, March 31,
1996 1995 1994 1993 1996
REVENUE $ - $ - $ - $ - $ 5,645
EXPENSES
Research and
development - - - - 50,215
General and
administrative 494,402 906,518 29,190 15,200 1,728,464
Depreciation 3,316 - - - 3,316
Total Expenses 497,718 906,518 29,190 15,200 1,781,995
NET INCOME (LOSS)
FROM OPERATIONS
(497,718) (906,518) (29,190) (15,200) (1,776,350)
OTHER INCOME (EXPENSE)
Interest expense (4,375) (27,709) - - (32,084)
Total Other
Income (Expense) (4,375) (27,709) - - (32,084)
INCOME (LOSS) BEFORE LOSS
FROM DISCONTINUED
OPERATIONS AND PROVISION
FOR INCOME TAXES 502,093) (934,227) (29,190) (15,200) (1,808,434)
LOSS FROM DISCONTINUED
OPERATIONS (34,207) (103,008) - - (137,215)
INCOME TAXES (BENEFIT) - - - - -
NET INCOME (LOSS) $(536,300) $(1,037,235) $ (29,190) $ (15,200) $(1,945,649)
INCOME (LOSS) PER
SHARE $ (0.07) $ (0.25) $ (0.01) $ (0.01) $ (0.37)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 7,591,928 4,177,136 3,695,920 1,960,154 2,161,325
<PAGE>
VENTURETECH, INC.
(a Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance at
January 1, 1986 278,692 $ 279 $ (279) $ -
Assessment of existing
shareholders to increase
paid-in capital - - 8,722 -
Net loss for the year ended
December 31, 1987 - - - (8,722)
Balance,
December 31, 1987 278,692 279 8,443 (8,722)
Stock issued to an individual
who became an officer and
director for services
performed to acquire rights
to Harvard Medical Project
on July 13, 1988 recorded at
predecessor cost of $0.00 per
share 1,188,889 1,189 (1,189) -
Stock issued to Spartan
Medical Corporation to
acquire rights to the Harvard
Medical Project on
November 1, 1988 recorded at
predecessor cost of $0.00 per
share 200,000 200 (200) -
Net loss for the year ended
December 31, 1988 - - - (5,644)
Balance,
December 31, 1988 1,667,581 $ 1,668 $ 7,054 $ (14,366)
<PAGE>
VENTURETECH, INC.
(a Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance forward 1,667,581 $ 1,668 7,054 $ (14,366)
Stock issued for services
at an average price of
$0.21 per share 61,667 62 12,638 -
Stock issued for cash in
private placements at an
average price of $2.48 98,005 98 242,502 -
Stock offering costs offset
against paid-in capital - - (93,687) -
Net loss for the year ended
December 31, 1989 - - - (134,399)
Balance,
December 31, 1989 1,827,253 1,828 168,507 (148,765)
Stock issued for services
valued at $0.06 per share 19,301 19 1,140 -
Stock issued to an individual
for services valued at
$12.00 per share 1,667 1 19,999 -
Stock issued to individuals
for $3.92 per share 11,933 12 46,788 -
Net loss for the year ended
December 31, 1990 - - - (174,522)
Balance,
December 31, 1990 1,860,154 $ 1,860 $ 236,434 $(323,287)
<PAGE>
VENTURETECH, INC.
(a Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance forward 1,860,154 $ 1,860 $ 236,434 $(323,287)
Stock issued to Ballater, Ltd. in
exchange for services recorded
at predecessor cost of $0.00 per
share 100,000 100 (100) -
Net loss for the year ended
December 31, 1991 - - - (2,457)
Balance, December 31, 1991 1,960,154 1,960 236,334 (325,744)
Debt converted into additional
paid-in capital by
Park Avenue, Inc. - - 45,750 -
Debt converted into additional
paid-in capital by
stockholder - - 12,400 -
Net loss for the year ended
December 31, 1992 - - - (1,981)
Balance, December 31, 1992 1,960,154 1,960 294,484 (327,725)
Common stock issued in settlement
of debt at $0.012 per share 1,500,000 1,500 16,252 -
Net loss for the year ended
December 31, 1993 - - - (15,200)
Balance, December 31, 1993 3,460,154 3,460 310,736 (342,925)
Common stock issued for cash
at $0.50 per share 340,000 340 169,660 -
Stock issuance costs - - (67,500) -
Net loss for the year ended
December 31, 1994 - - - (29,190)
Balance, December 31, 1994 3,800,154 $ 3,800 $ 412,896 $(372,115)
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance, December 31, 1994 3,800,154 $ 3,800 $412,896 $ (372,115)
Common stock issued to acquire
Tessier Resources Ltd. 3,200,000 3,200 (80,856) -
Debt converted into additional
paid-in capital - - 10,417 -
Common stock issued in settlement
of debt at $1.70 per share 591,774 592 1,005,424 -
Net loss for the year ended
December 31, 1995 - - - (1,037,234)
Balance, December 31, 1995 7,591,928 7,592 1,347,881 (1,409,349)
Common stock issued in
settlement of debt at $1.70
per share 539,172 539 916,121 -
Net loss for the three months
ended March 31, 1996 - - - (536,300)
Balance, March 31, 1996 8,131,100 $ 8,131 $2,264,002 $(1,945,649)
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows From
Inception on
For the Three January 1,
Months Ended For the Years Ended 1986 Through
March 31, December 31, March 31,
1996 1995 1994 1993 1996
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) $ (536,300) $(1,037,234) $ (29,190) $(15,200) $(1,945,649)
Adjustments to
reconcile netIncome
(loss) to net cash:
Common stock issued
for services - 400 - - 34,259
Depreciation 3,316 25,783 - - 29,099
Loss on sale of
investments - - - - 20,390
Changes in assets and
liabilities: (Increase)
decrease in accounts
receivables and related
receivables - (6,025) - - (6,025)
(Increase) decrease
note receivable (200,000) - - - (200,000)
Increase (decrease)
deferred revenue 550,000 - - - 550,000
Increase (decrease) in
accounts payable and
other current
liabilities 24,710 60,819 2,689 (2,753) 114,873
Net Cash Used
by Operating
Activities (158,274) (956,257) (26,501) (17,953) (1,403,053)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of investments (7,061) - (250,000) - (282,366)
Sale of investments - - - - 7,110
Purchase of fixed
assets (139,370) (51,320) - - (190,690)
Disposal of fixed assets - 3,223 - - 3,223
Purchase of license
fees (600,000) - - - (600,000)
Net Cash Used by
Investing
Activities (746,431) (48,097) (250,000) - (1,062,723)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of convertible
debenture - - 175,000 - 175,000
Conversion of debt
to equity - - - 17,752 75,902
Proceeds from notes
payable 916,660 1,006,016 - - 1,922,676
Common stock issued
for cash - - 102,500 - 298,213
Shareholder assessment - - - - 8,722
Net Cash Provided by
Financing
Activities $916,660 $1,006,016 $ 277,500 $ 17,752 $ 2,480,513
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From
Inception on
For the Three January 1,
Months Ended For the Years Ended 1986 Through
March 31, December 31, March 31,
1996 1995 1994 1993 1996
NET INCREASE (DECREASE)
IN CASH $ 11,955 $ 1,662 $ 999 $ (201) $ 14,737
CASH AT BEGINNING OF
PERIOD 2,782 1,120 121 322 -
CASH AT END OF PERIOD $ 14,737 $ 2,782 $ 1,120 $ 121 $ 14,737
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
NON CASH FINANCING ACTIVITIES:
Conversion of debt into
additional paid-in
capital $ - $ 10,417 $ - $ - $ 75,902
Common stock issued in
settlement of debt $916,660 $1,006,016 $ - $17,752 $1,922,676
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements presented are those of VentureTech,
Inc.
VentureTech, Inc. (VTI) was incorporated on July 17, 1948 under the laws of
the State of Idaho. VTI has had limited activity since the mid 1950's and
is considered a development stage company because no significant revenues
have been realized and planned principal operations have not yet commenced.
The Company is engaged in the development, acquisition and licensing of
certain computer based technology designed to ultimately offer a full
range of casino style gaming, entertainment, information and financial
transaction services over the world-wide Internet. The Company intends to
establish a series of multi-cultural/multi-ethnic virtual casinos over the
Internet from authorized locations around the world.
Tessier Resources Ltd (TRL) was incorporated on September 24, 1990 under the
laws of the Province of Manitoba. TRL is currently engaged in the research
and development of an apparatus for removing ice and is considered a
development stage company because no significant revenues have been
realized and planned principal operations have not yet commenced.
On March 17, 1995, VentureTech, Inc. (VTI) acquired all of the outstanding
common stock of Tessier Resources Ltd. (TRL) in exchange for $250,000 and
3,200,000 shares of VTI's common stock.
Pulverizer Systems, Inc. (PSI) was incorporated on January 10, 1994 under
the laws of the Province of Manitoba. PSI was organized for the purpose of
marketing TRL's snow and ice removal machines. PSI is considered a
development stage company as no significant revenues have been realized and
planned principal operations have not yet commenced.
On March 13, 1996, VentureTech, Inc. (VTI) spun off Tessier Resources, Ltd,
to Kaniksu Ventures, Inc. (Kaniksu) retaining a minority interest in KVI.
The financial statements presented are consolidated at December 31, 1995
and show the investment in KVI at March 31, 1996 carried at cost.
Cybernet Currency Clearing, Inc. (CCC) was incorporated on August 23, 1995
as a foreign corporation to provide encoding protection for secure Internet
transactions. CCC is considered a development stage company because no
revenues have been realized and planned principal operations have not yet
begun.
Euro Asian E-Casinos, Inc (E-Casinos) was incorporated on April 18, 1996 as
a foreign corporation to own and operate full service gaming casinos on the
internationally accessible Internet. E-Casinos is considered a development
stage company because no revenues have been realized and planned principal
operations have not yet begun.
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
b. Loss Per Share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding at the date of the financial
statements. Common stock equivalents are anti-dilutive.
c. Provision for Taxes
At March 31, 1996, the Company has net operating loss carryforwards of
approximately $1,842,000 that may be offset against future taxable income
through 2010. No tax benefit has been reported in the 1996 financial
statements, because the Company believes there is a 50% or greater chance
the carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards will be offset by a valuation allowance
of the same amount.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
e. Principles of Consolidation
The December 31, 1995 and 1994 consolidated financial statements include
those of VentureTech, Inc. and its wholly-owned subsidiaries, Tessier
Resources Ltd. and Pulverizer Systems, Inc. All significant intercompany
accounts and transactions have been eliminated. The March 31, 1996
financial statements are consolidated with CCI and E-Casinos.
f. Property and Equipment
Office equipment is recorded at cost. Minor additions and renewals are
expensed in the year incurred. Major additions and renewals are capitalized
and depreciated over their estimated useful lives. Depreciation of
office equipment is computed using the declining balance method over the
estimated useful life of the asset. Depreciation expense for the period
ended March 31, 1996 and the years ended December 31, 1995 and 1994 was
$3,316 and $25,783 and $-0-, respectively.
Machinery and equipment consists of costs of materials and contract services
provided in connection with the construction of two snow and ice removal
machines. Depreciation of machinery and equipment is computed using the
straight line method over the estimated useful life of the asset.
Depreciation expense for the years ended December 31, 1995 and 1994 was
$25,245 and $569, respectively.
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and equipment consists of the following:
March 31, December 31, December 31,
1996 1995 1994
Machinery and equipment $ - $ 128,922 $ -
Office equipment 139,371 1,041 -
Accumulated depreciation (3,316) (25,783) -
Net Equipment $ 136,055 $ 104,180 $ -
NOTE 3 - RELATED PARTY TRANSACTIONS
On March 31, 1996, the Company issued 539,172 shares of its common stock in
consideration of money owed to a related party. At the date of issuance
$916,660 was owed (Note 13).
As of March 31, 1996, the Company was owed $200,000 from a related party.
The note is non-interest bearing and is due upon demand.
On December 31, 1995, the Company issued 210,888 shares of its common stock
in consideration of money owed to a related party. At the date of issuance
$358,510 was owed (Note 13).
On October 31, 1995, the Company issued 380,886 shares of its common stock
in consideration of money owed to a related party. At the date of issuance
$647,506 was owed (Note 13).
The Company has granted 570,000 of the 1,452,000 warrants to officers and
directors of the Company (Note 13).
The Company has received advances from certain officers, directors,
shareholders and others in order to pay operating expenses of the
Company. As of December 31, 1995, and December 31, 1994, $31,946 and
$49,741, respectively, was owed by the Company as a result of these
advances.
On May 14, 1994, officers and directors of the Company were issued stock
options to purchase 120,000 shares of the Company's common stock at $2.50
per share. No compensation expense has been recorded as the option price
exceeded the fair market value of the shares when the options were issued.
On November 1, 1993, the Company issued 1,500,000 shares of its common
stock in consideration of money owed to a related party. At the date of
conversion $17,752 was owed.
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 4 - CONVERTIBLE DEBENTURE
In March of 1994, the Company issued a $175,000 fixed and floating
convertible debenture. The debenture bears interest at 10% per annum.
The debenture is convertible into common stock at a rate of $0.03 per share.
The debenture carries "A" and "B" warrants to purchase additional shares of
the Company's common stock. The terms of the warrants are also $0.03 per
share. There is no time limit associated with the debenture; however,
the warrants are exercisable only within two years of the initial share
conversion.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred losses from its inception through
March 31, 1996. The Company does not have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. It is the intent of the Company to seek
additional financing through private placements of its common stock.
NOTE 6 - TAX REFUND RECEIVABLES
As of December 31, 1995 the Company had investment and goods and services
tax refund receivables of $6,025. The investment tax refunds are calculated
based on research and development costs incurred during the respective
period. The goods and services tax refunds are based on tax paid on goods
purchased and services provided during the respective period.
NOTE 7 - FOREIGN CURRENCY TRANSLATION ADJUSTMENT
Assets and liabilities of foreign operations have been translated into U.S.
dollars at current, weighted-average and historical rates of exchange.
Gains or losses on such translations are reflected as currency translation
adjustments in stockholders' equity. Income and expense accounts have been
translated into U.S. dollars at weighted-average rates of exchange.
NOTE 8 - STOCK TRANSACTIONS
On March 31, 1996, the Company issued 539,172 shares of its common stock in
settlement of debt, valued at $1.70 per share (Note 3, 13).
On December 31, 1995, the Company issued 210,888 shares of its common stock
in settlement of debt, valued at $1.70 per share (Note 3, 13).
On October 31, 1995, the Company issued 380,886 shares of its common stock
in settlement of debt, valued at $1.70 per share (Note 3, 13).
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 8 - STOCK TRANSACTIONS (Continued)
During 1994, the Company issued 340,000 shares of its common stock for cash,
at $0.50 per share. The Company incurred costs of $67,500 in connection
with the stock offering which were offset to additional paid-in capital
(Note 4).
In November 1993, the Company issued 1,500,000 shares of its common stock in
settlement of debt, valued at $0.012 per share (Note 3).
NOTE 9 - DISCONTINUED OPERATIONS
On March 14, 1996 the Company spun off its subsidiary, Tessier Resources,
LTD. to a public shell, Kaniksu Ventures, Inc. (Kaniksu). The financial
statements have been restated to reflect this transaction.
NOTE 10 - INVESTMENT
The investment represents a minority interest in Kaniksu after conversion of
the convertible debenture. This investment came as a result of the spin off
of Tessier Resources, Ltd. Kaniksu gave the Company a convertible
debenture valued at $3,000,000 in exchange for all of the issued and
outstanding stock of Tessier Resources, Ltd. The debenture will mature
in four (4) years and does not carry any interest. The debenture will be
convertible at anytime before repayment into an aggregate of 2,000,000
shares of authorized but previously issued unissued shares of Kaniksu common
stock at a conversion price of $1.50 per share. The investment is
being carried at its predecessor cost of $158,112.
NOTE 11 - LICENSE FEES
The fees are amounts paid for software licenses and the rights to use the
software related to the Company's conduct of its Internet related gaming.
CasinoWorld Holdings, Ltd. (CasinoWorld) $2,000,000
AlphaCom Data Security Services, Inc. (AlphaCom) 250,000
Total $2,250,000
The CasinoWorld fee will be amortized over a period of 10 years.
The AlphaCom fee will be amortized over a period of 30 years.
Amortization will begin when operations commence.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
The Company currently has signed license agreements with two companies
(See Note 11) which have revenue sharing provisions. The first, CasinoWorld
requires that the Company commit not less than $1,000,000 to promote its
web site to clients in jurisdictions where Internet-based gambling is
legal and pay CasinoWorld two thirds (2/3's) of the gross revenues
generated by the Company after winnings and payouts at its website.
The second, AlphaCom requires ongoing payments of 10% of the Company's net
revenues which will be generated using AlphaCom's security software.
Presently all building leases are month-to-month.
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 13 - DILUTIVE INSTRUMENTS
In June 1995 the Company initiated a private placement for 1,000,000 shares
of its common stock with accompanying 1,000,000 warrants at $1.70 per share
and warrant. As of March 31, 1996, the Company has issued 1,000,000
shares associated with this placement as well as 130,986 shares from the
exercise of the warrants. As of March 31, 1996, 869,014 warrants are
still outstanding. The remaining warrants expire in June 2000.
In November 1995, the Company initiated a private placement for 1,000,000
shares of its common stock at an issue price of $5.00 per share. There are
also 2,000,000 warrrants attached. The warrants are exercisable at $5.00
per share for the first two years, and $6.00 per share for the next three
years. As of March 31, 1996 no shares have been issued pursuant to this
private placement.
In October 1995, the Company authorized a debenture instrument which allows
for the issuance of up to 900,000 shares and attached warrants to various
individuals and companies in connection with the acquisition of CasinoWorld
technology, expertise and operations. The stock issuance price is set at
$3.00 per share and warrant. As of March 31, 1996, no shares have been
issued pursuant to this debenture.
In March 1996, the Company authorized 1,000,000 stock options for possible
future allocation to an individual and his associates for their services in
raising funds and completing projects for the Company. Issuance of these
stock options are at the discretion of the Company's Board of Directors.
The options are exercisable at $6.00 per share with no time limit associated
with the allocation.
Over the period of May 1994 through November 1995, the Company granted
1,532,000 warrants to certain individuals, consultants, Directors and
Officers of the Company. These warrants were granted for services or
beneficial contributions provided to the Company and/or for the
expectation of future contributions to the success of the Company. The
warrants were issued to thirty-five individuals or organizations at exercise
prices ranging from $2.50 to $5.75, which represented the fair market value
of the stock at the time of grant, and for periods ranging from four to
five years. The warrants will be issued to these individuals or
organizations pursuant to a warrant agreement with the Company. The
Company intends to register the shares underlying these warrants at a time
deemed suitable by management. The warrants are conditional upon the Company
achieving its listing with the NASDAQ stock exchange.
NOTE 14 - UNEARNED REVENUE
On February 15, 1996 the Company entered into an agreement to provide
research and development services related to its Internet expertise. In
connection with the agreement, the Company was paid $550,000. The
Company is required to report the results of its research within a one
(1) year period. As of March 31, 1996, the Company had not completed any of
the research and development, accordingly the revenue is deferred in the
accompanying financial statements.
<PAGE>
VENTURETECH, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1996 and December 31, 1995 and 1994
NOTE 15 - SUBSEQUENT EVENTS
On April 18, 1996, the Company established EuroAsian E-Casinos, Inc.
(E-Casinos) a fully owned subsidiary. E-Casinos was established in the
Marshall Islands to own and operate full service gambling casinos on the
internationally accessible Internets.
On April 23, 1996, 300,000 shares of common stock were issued as a partial
conversion of the convertible debenture. (See Note 4)
On April 26, 1996, 2,000,000 shares of common stock were issued as a partial
conversion of the convertible debenture. (See Note 4).
On May 6, 1996 the Company executed an escrow agreement which requires the
Company to file with the Securities and Exchange Commission a registration
statement relating to 6,000,000 shares of the Company's common stock. Upon
the effectiveness of the registration statement, the escrow agent is
obligated to deliver $60,000,000 to the Company and also to release the
6,000,000 shares of stock.
<PAGE>
[Back Cover]
No dealer, salesman or any other person has
been authorized to give any information or to make
any representations other than those contained in
this Prospectus, and, if given or made, such
information or representation must not be relied
upon as having been authorized by the Company.
Neither the delivery of this Prospectus nor any sale
made hereunder shall under any circumstances
create any implication that there has been no change
in the affairs of the Company since the date hereof.
This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any securities offered
hereby by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the
person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful
to make such offer or solicitation.
TABLE OF CONTENTS
Page
Prospectus Summary . . . . . .2
The Company. . . . . . . . . .8
Risk Factors . . . . . . . . .9
Dilution . . . . . . . . . . 13
Use of Proceeds. . . . . . . 15
Market Information . . . . . 16
Dividend Policy. . . . . . . 17
Capitalization . . . . . . . 17
Selected Financial Data. . . 18
Management's Discussion and
Analysis of Financial
Condition and Results
of Operations . . . . . 19
Business . . . . . . . . . . 22
Management . . . . . . . . . 33
Certain Transactions . . . . 35
Principal Stockholders . . . 35
Selling Stockholders . . . . 38
Description of Securities. . 39
Plan of Distribution . . . . 41
Shares Eligible for Future
Sale. . . . . . . . . . 42
Legal Matters. . . . . . . . 45
Experts. . . . . . . . . . . 45
Additional Information . . . 46
Consolidated Financial
Statements. . . . . . . F-1
VentureTech, Inc.
6,000,000 Shares of
Common Stock
PROSPECTUS
June ____, 1996
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other expenses of Issuance and Distribution.
The Company estimates that expenses in connection with the Offering will be
as follows:
Securities and Exchange Commission
registration fee. . . . . . . . . . . . . . $ 28,190
Nasdaq Stock Market Application Fee . . . . . 10,000
Accountants' fees and expenses. . . . . . . . 20,000
Legal fees and related expenses . . . . . . . 60,000
Printing. . . . . . . . . . . . . . . . . . . 10,000
Transfer agent and registrar fees and
expenses. . . . . . . . . . . . . . . . . . 5,000
Cost related to private sale to Selling
Stockholders. . . . . . . . . . . . . . . . 12,000,000
Miscellaneous . . . . . . . . . . . . . . . . 16,810
Total. . . . . . . . . . . . . . . . . . . $12,150,000
Item 14. Indemnification of Directors and Officers.
The Company is incorporated under the laws of the State of Idaho.
As permitted by the provisions of the Idaho General Business
Corporation Law (the "Idaho Code"), the Company has the power to
indemnify any officer or director who, in their capacity as such, is
made or threatened to be made a party to any suit or proceeding,
whether criminal, administrative or investigative, if such officer or
director acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interest of the Company. An officer or
director shall be indemnified against expenses to the extent they have
been successful on the merits or otherwise in defense of any action,
suit or proceeding. Such indemnification is not exclusive of any
other rights to which those seeking indemnification may be entitled
under the By-Laws, any agreement, vote of stockholders or
disinterested directors or otherwise. Further, the Idaho Code permits
a corporation to purchase and maintain liability insurance on behalf
of its officers, directors, employees and agents. Neither the
Company's Articles of Incorporation or By-Laws make provisions for the
indemnification of the Company's officers and directors nor for the
purchase of liability insurance on behalf of its officers, directors,
employees and agents. The Company does not maintain any such
liability insurance.
Also pursuant to the Idaho Code, a corporation may set forth in its
articles of incorporation a provision eliminating or limiting in
certain circumstances, the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. These provisions do not eliminate or
limit the liability of a director (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) for liability arising under
Section 30-1-48 of the Idaho Code (relating to the declaration of
dividends and purchase or redemption of shares in violation of the
Idaho Code); or (iv) for any transaction from which the director
derived an improper personal benefit. In addition, these provisions
do not limit the right of the corporation or its stockholders, in
appropriate circumstances, to seek equitable remedies such as
injunctive or other forms of non-monetary relief, which remedies may
not be effective in all cases.
The Company's Articles of Incorporation do not include a provision
to eliminate the personal liability for monetary damages for breach of
fiduciary duty by a director of the Company. If the Company does
adopt such a proposal in the future, it would not eliminate or limit
the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Item 15. Recent Sales of Unregistered Securities.
The following table sets forth information relating to all previous
sales of securities by the Registrant within the past three years that
were not registered under the Securities Act of 1933, as amended
(the "Act").
Date of Sale Name of Purchaser Type Number Consideration
12-28-93 Manatee Investments (a) 1,500,000 Settlement of debt valued by
the Company at $17,752
03-20-94 Regis Investment (b) 17,500,000 $ 175,000
Company Limited
05-18-94 to Thirty-six persons (c) 1,532,000 Services, not valued by
11-10-95 Company because exercise
prices of warrants equal to
current market price at
time of issuance
05-18-94 Three directors (d) 360,000 Services, not valued by
Company because exercise
price of options equal to
current market price at time
of issuance
08-29-94 Regis Investment (a) 170,000 $ 85,000
Company Limited
09-29-94 Barry Bampton (a) 170,000 $ 85,000
03-17-95 Shareholders and assigns (a) 3,200,000 Exchange of shares of Tessier
of Tessier Resources, Inc. Resources, Inc.
10-31-95 Enterprise Capital (a) 380,886 Settlement of debt at $1.70
International, Inc. per share (e)
12-31-95 Barry Worshoufsky (a) 210,888 Settlement of debt at $1.70
per share (e)
02-16-96 Barry Worshoufsky (a) 408,226 Settlement of debt at $1.70
per share (e)
03-31-96 Barry Worshoufsky (a) 130,946 Conversion of warrants at
$1.70 per share (e)
04-23-96 Regis Investment (a) 300,000 Conversion of debenture at
Company Limited $.03 per share
04-29-96 Regis Investment (a) 2,000,000 Conversion of debenture at
Company Limited $.03 per share
04-29-96 Six Selling Stockholders (a) 6,000,000 $60,000,000 upon
effectiveness of this
registration statement
(shares held in escrow)
(a)Common Stock.
(b)Convertible Debenture in the face amount of $175,000 which can ultimately
be converted into 17,500,000 shares of Common Stock.
(c)Stock purchase warrants issued with various exercise prices equal to
current market value of the Common Stock at time of issuance.
(d)Directors stock options with exercise price equal to current market
value of the Common Stock at time of issuance.
(e)A total of 1,000,000 units issued periodically, each unit consisting of one
shares of Common Stock and warrant, both the Common Stock and warrant
valued at $1.70 each. A total of 130,946 warrants have been converted into
shares of Common Stock.
With respect to the issuance and/or sale of the aforementioned
shares, the Registrant relied on the exemption from registration
provided by Section 4(2) of the Act. Issuances of Common Stock for
services were made in consideration for services rendered to the
Company by employees or services performed for the Company by persons
not otherwise affiliated with the Company. All of the shares issued
to the aforementioned persons bore restrictive legends preventing
their transfer except in accordance with the Act and the regulations
promulgated thereunder. In addition, stop transfer instructions
pertaining to these shares will be lodged with the Registrant's
transfer agent.
Item 16. Exhibits and Financial Statements Schedules.
(a) The following exhibits are filed with this Registration
Statement:
Exhibit No. Exhibit Name
3.1 Articles of Incorporation and Amendments ("P")
3.2 By-Laws ("P")
4.1 Specimen Common Stock Certificates of Registrant ("P")
5.1 Opinion of Leonard E. Neilson, P.C. ("P")
10.1 Non-Exclusive License Agreement ("P")
10.2 Operating, Revenue Sharing, and Management Services Agreement ("P")
10.3* Alphacom License Agreement
22.1 Subsidiaries of Registrant ("P")
24.1 Consent of Jones Jensen & Company, Independent Certified Public
Accountants ("P")
24.2 Consent of Leonard E. Neilson, P.C. (included in Exhibit 5.1) ("P")
(b) Financial Statement Schedules for Registrant.
Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or the required information
is shown in the financial statements or notes therein.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1)To file, during any period in which offer or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2)That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, the Registrant's Certificate of Incorporation or
provisions of Idaho law, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1)For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of a Registration Statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of the Registration Statement as
of the time it was declared effective.
(2)For the purpose of determining any liability under the
Securities Act of 1933, 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 such securities at that time shall be deemed to be the
initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Reston, State of Virginia, on this 27th day of June, 1996.
VentureTech, Inc.
(Registrant)
By: /S/ Kenneth F. Fitzpatrick
(Signature)
Kenneth F. Fitzpatrick, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/S/ Kenneth F. Fitzpatrick President, Chief Executive June 27, 1996
(Signature) Officer and Director
Kenneth F. Fitzpatrick
Craig J. Bampton Vice President and Director June 27, 1996
(Signature)
Craig J. Bampton
/S/ G. Michael Cartmel Vice President and Director June 27, 1996
(Signature)
G. Michael Cartmel
/S/ Arthur Rosenberg Chief Financial Officer and June 27, 1996
(Signature) Principal Accounting Officer
Arthur Rosenberg
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Document Description Number
3.1 Articles of Incorporation and Amendments ("P")
3.2 By-Laws ("P")
4.1 Specimen Stock Certificate ("P")
5.1 Opinion of Leonard E. Neilson, P.C. ("P")
10.1 Non-Exclusive License Agreement ("P")
10.2 Operating, Revenue Sharing, and Management Services Agreement ("P")
10.3*Alphacom License Agreement
22.1 Subsidiaries of Registrant ("P")
24.1 Consent of Jones, Jensen and Company, Independent Certified Public
Accountants ("P")
24.2 Consent of Leonard E. Neilson, P.C. (included in Exhibit 5.1) ("P")
_______________
* To be filed
<PAGE>
