SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 4, 1998
Date of Report
(Date of Earliest Event Reported)
AMERICOM USA, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-23769 52-2031531
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
124 South Halcyon Road
Arroyo Grande, California 93420
(Address of principal executive offices)
805/542-6700
Registrant's telephone number
CHATSWORTH ACQUISITION CORPORATION
1504 R Street, N.W.
Washington, D.C. 20009
Former name and former address
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Merger (the
"Agreement") between AmeriCom USA, Inc., a Delaware corporation
doing business as TeleSpace, and Chatsworth Acquisition Corporation
(hereinafter referred to either as the "Registrant" or the
"Company"), AmeriCom USA, Inc. ("AmeriCom") was merged with and into
the Registrant on December 4, 1998 (the "Merger"). The Agreement
was adopted by the unanimous consent of the Board of Directors of
the Registrant and approved by the unanimous consent of the
shareholders of the Registrant on December 3, 1998. The Agreement
was adopted by the unanimous consent of the Board of Directors of
AmeriCom and by the written consent of a majority of the
shareholders of AmeriCom on December 4, 1998.
Prior to the merger, the Registrant had 5,000,000 shares of
common stock outstanding. Pursuant to the Agreement, the Registrant
redeemed and retired 4,650,000 shares of its outstanding common
stock and issued 29,650,000 shares of its common stock, subject to
adjustments for fractional and dissenting shares, to the holders of
all the outstanding common stock of AmeriCom on a pro rata basis.
The Registrant has a total of 30,000,000 shares of its common stock
outstanding.
As a result of the Merger, the former shareholders of AmeriCom
hold 98.8% of the outstanding shares of the common stock of the
Registrant. The sole source of consideration used by the
shareholders of AmeriCom to acquire their respective interest in the
Registrant was the exchange of their outstanding common stock of
AmeriCom.
On the effective date of the Merger, the officer and director
of Chatsworth Acquisition Corporation resigned and the officers and
directors of AmeriCom became the officers and directors of the
Registrant. See "Management" below.
Effective as of the date of the Merger, the Registrant changed
its name to "AmeriCom USA, Inc."
Chatsworth Acquisition Corporation was formed to provide a
method for a foreign or domestic private company to become a
reporting company whose securities would be qualified for trading in
the United States secondary market. Chatsworth Acquisition
Corporation had no operations, revenues or liabilities.
A copy of the Agreement is filed as an exhibit to this Form
8-K and is incorporated in its entirety herein. The foregoing
description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of the Registrant's current directors and executive
officers and those persons or entities who beneficially own more
than 5% of the Registrant's common stock:
Amount of Common Percent of
Stock Beneficially Common Stock
Name Owned (1) Beneficially Owned
Robert Cezar (2) 17,445,070 58.1%
Chief Executive Officer, Director
124 South Halcyon Road
Arroyo Grande, California 93420
Malcolm Cullen 0 0%
President, Chief Operating Officer
124 South Halcyon Road
Arroyo Grande, California 93420
David Loomis 2,260,674 7.5%
Chief Financial Officer, Director
124 South Halcyon Road
Arroyo Grande, California 93420
Helen Cooper (3) 963,915 3.2%
Vice President of Administration, Secretary
124 South Halcyon Road
Arroyo Grande, California 93420
Craig Machado, Director 0 0%
21 La Gaviota
Pismo Beach, California 93449
All directors and 20,669,659 68.8%
executive officers as
a group (5 persons)
(1) Based upon 30,000,000 outstanding shares of common stock.
(2) Of which 7,069,668 is held in the Robert M. Cezar trust.
(3) Of which 665,687 is held in the Helen E. Cooper trust.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Agreement was
negotiated between the Registrant and AmeriCom. Prior to the
Merger, no relationship existed between any officer or director of
the Registrant or any officer, director or shareholder of AmeriCom.
The former shareholders and sole director of the Registrant had no
direct or indirect interest in AmeriCom. In evaluating AmeriCom as
a candidate for such merger, the Registrant used criteria such as
value of the assets of the Registrant and value of the assets of
AmeriCom, the business operations of AmeriCom, the business
potential of AmeriCom, and the benefit to the Registrant of such
Merger. The Registrant determined that the consideration for the
exchange was reasonable.
(b) The Registrant intends to continue the business
operations formerly conducted by AmeriCom.
BUSINESS
The information provided in this current report on Form 8-K
refers to AmeriCom USA, Inc. and its affiliates prior and
subsequent to the Merger, and not to Chatsworth Acquisition
Corporation unless stated or required by the context.
Overview. The Company is engaged in providing systems for the
delivery of advertisements and merchandising on Internet Web sites
through its proprietary technology systems, AdCast(R) and
TrueManagement(R). The AdCast system is the primary product offered
by the Company. The AdCast system is an advertising delivery system
which delivers to host Web sites non-scrollable advertisement frames
("billboards") in which two types of advertisements can be placed:
(i) animated ads lasting from 15 to 90 seconds in length with audio,
video and pop-up frame capability as well as hot links to other Web
sites or (ii) logo icon ads (referred to as sponsorship program ads)
which continuously display an advertisers logo on the bottom of the
host Web site page for the entire duration of a Web site visitor's
stay and provide a "clickable" link to the advertisers own Web site.
The AdCast advertisement space appears on a host Web site each
time a visitor to the Web site logs on. The ad appears as an
outlined frame in which an advertisement with audio and video
capabilities is run. Because the AdCast frame does not scroll,
complete viewing of the advertisement is likely despite the typical
paging and scrolling that occurs during a Web site visit.
The TrueManagement system provides management tools,
analytical reports, and operating control data pertaining to
advertising on the Internet for users of the AdCast system.
The Company contracts with Web site hosts to allow placement
of the AdCast billboards on the host Web sites and the Company sells
the billboard space to advertisers and sponsors. The host Web site
owners will receive a fee based on the number of visitors to the Web
site as well as participation in a program to earn advertising
credits to promote their Web site on other AdCast host Web sites.
The pricing structure for the AdCast advertising rates is
based on spot minute increments, similar to spot pricing on
television. Similar to television, billboard ads can vary in
length. Unlike television, however, AdCast billboard ads play only
when a viewer is watching e.g. a Web site visitor has logged on.
The billboard ad delivery is initiated by the act of a visitor to
the Web site.
The Company currently has 32 host Web sites to receive the
AdCast system and has obtained 10 advertisers for the billboard ads.
The Company has obtained one company sponsor in its sponsorship
program.
Background. The Company was incorporated in Delaware in 1994
to market, MyLine, a telecommunication system developed under
contract by Diversified Associates International ("DAI"), a
California company owned by Robert Cezar, Chief Executive Officer
and a director of the Company. In April, 1996, the Company sold its
international marketing rights to the MyLine technology to Enhanced
Service Providers LLC ("ESP"), a Massachusetts corporation, for
161,000 shares of ESP common stock. Following the sale of the
MyLine technology, the Company was inactive until July, 1998, when
it acquired, as a wholly-owned subsidiary, DAI, which had developed
the AdCast and TrueManagement technologies. Since the acquisition
of DAI, the Company has concentrated, through its subsidiary DAI, on
enhancement of these technologies.
During 1997 and 1998, the Company (and its subsidiary, DAI)
operated at a loss and financed its operations almost entirely from
the sale of convertible promissory notes and other debt instruments,
some of which notes have been converted into shares of the Company's
common stock. As of September 30, 1998, the Company had outstanding
short-term promissory notes aggregating $885,206. The Company's
operations have consisted primarily of organizational activities and
research and enhancement of the AdCast and TrueManagement systems.
There is no assurance that the Company will not continue to operate
at a loss and that it will be able to continue its operations.
Through Asia Pacific Finance Group, Ltd., a British Virgin
Island corporation, the Company is offering 1,520,000 shares of its
common stock for sale at a sales price of $2.00 per share to
potential investors located outside the United States. As of
December 17, 1998, the Company had received initial subscriptions
for 185,000 shares of its common stock for an aggregate subscription
price of $317,100. There is no assurance that the Company will be
able to sell any additional shares of its common stock or raise any
additional capital through such placement of its securities.
CURRENT TECHNOLOGY
AdCast. The AdCast system delivers to host Web sites
non-scrollable billboards in which either animated ads of 15 to 90
seconds in length with audio, video and pop-up frame capability or
logo icon ads from company sponsor advertisers may be placed. The
AdCast system also provides various audience measurements tools to
the host Web site owner and to the advertiser immediately
("real-time"). Measurements provided include such items as number
of click-throughs, number of times an advertisement is viewed, time
of day an advertisement is viewed, duration of stay on a Web site
and visitor type. This data is provided to both the advertiser and
the Web site host allowing them to make adjustments to their
advertisement or Web site to increase effectiveness.
AdCast is currently running on a single digital DS1 (T1)
connection to the Internet which, based on an average Web site visit
of 6 minutes, can support approximately 250,000 site visitors per
hour. The AdCast server delivers only the advertising frame
structure to the Web site visitor. The host's Web site's pages are
delivered to the Web site visitor by the host Web site's server and
the actual billboard advertising is stored elsewhere, usually on the
host's Web site server. Consequently, once the AdCast system
structure is downloaded to the Web site visitor's browser, that
browser then downloads the billboards from other server(s). This
method significantly reduces bandwidth requirements of any one
server.
TrueManagement. The TrueManagement system works in support of
the AdCast system.
For the AdCast host Web site owner, TrueManagement provides a
series of management tools that enable such site owner to maintain
interaction between the AdCast system and their Web site, such as
setting background colors, site titles, etc. In addition, host Web
site owners can use the TrueManagement system to manage their own
advertising campaigns, analyze specific billboard advertisement
performance, obtain real-time reports displaying new (and repeat)
visits to their site, by hour, day, month, or for the entire
advertisement campaign.
For the advertiser, TrueManagement provides a system to manage
all aspects of their advertisement campaign, including, among other
features, setting the advertisement length, selecting number of
times advertisement(s) are shown to a new visitor to the site, per
day, per month and or for the entire ad campaign. Advertisers can
monitor the results of their advertisements on a real-time basis and
can easily make adjustments to the ad itself or to the timing of its
display.
Benefits of the AdCast and TrueManagement Systems. The
Company believes that what differentiates the AdCast system from
other Internet advertising delivery systems is its ability to allow
advertisers to eliminate waste in advertising dollars by setting the
precise number of advertisements and click-throughs per visitor, on
a per day, per month, and/or per campaign basis. AdCast offers all
of the traditional features of existing Internet ad delivery systems
while offering real-time accountability presenting advertisers, site
owners and sponsors with detailed information concerning the
performance of advertising campaigns.
The benefits of the AdCast system include:
* Non-scrolling billboard ads which can be
set for durations from 15 to 90 seconds
featuring audio, video, pop-up animation
frames and hot links.
* Non-scrolling billboard company logo icon
ads appearing at the bottom of the Web
site page during a Web site visitor's
entire stay with a clickable link to that
company's Web site.
* Specified number of times that ads are
shown to each specific visitor, per day,
per month or for the entire ad campaign.
* Ability to provide hot-links to on-line
ordering, coupon printing, special offers
and more capabilities.
The TrueManagement system contains a series of tools
that enables host Web site owners and advertisers to control,
review, and manage certain standard features. Data capture occurs
every thirty seconds and can be viewed in real time (e.g.
concurrently) or by the hour, day, week or total ad campaign. Some
of the benefits of the TrueManagement system include:
* Reliable audience measurement in real time
as well as collecting historical data for
analysis and review.
* Free and easy access to the information
generated by TrueManagement and to AdCast
on-line to advertisers and Web site hosts.
* Ability of advertisers to easily change or
perfect their ad.
* Real-time information including total
number of new viewers, number of repeat
viewers, day's total of viewers,
cumulative repeat viewers, cumulated total
viewers.
MARKETING
The Company is marketing the AdCast system to domestic
and foreign businesses involved in publishing and commerce over the
Internet. Domestic and international marketing operations are
handled through the Company's California headquarters.
The Company has entered into a joint-development
agreement with Systeam, SpA, an Italian information technology
company. The Company anticipates that Systeam will participate in
the development and enhancement of the Company's products. The
terms of the agreement with Systeam provide that Systeam will
receive an 8% royalty on the net revenues of the Company with a
minimum royalty for 1999 of $125,000.
The Company intends to target manufacturers and
suppliers of products, goods and services that utilize the Internet
for dissemination and sales of their products. The Company intends
to advertise on large Internet sites such as Yahoo, Excite and
Netscape. The Company intends to participate in four major trade
shows in 1999 at which it can personally promote to the target
audience. The Company has targeted an email campaign to obtain
advertisers in the sponsorship (company logo icon ad) program.
The Company anticipates that the sponsorship program
will appeal to larger organizations that already have name and logo
recognition. A participant in the sponsorship program will receive
several host Web sites on which its logo will be placed. These Web
sites will be selected based on compatibility of interests from the
Company's pool of Web sites. The sponsor will compensate the
Company either on a commission basis based on the amount of sales
generated from viewers clicking on the sponsor's logo on a host Web
site or through advertising referral guarantees.
RESEARCH AND DEVELOPMENT
The Company has begun development of additional
products. There is no assurance that such products will ever become
viable products or that the Company will be able to market such
products. E-CommPlus is designed for the small and medium sized
business as a low-cost electronic commerce software program that
enables such business to take on-line orders for their products from
retailers and/or individual consumers.
PATENTS, TRADEMARKS AND COPYRIGHTS
The AdCast, TrueManagement, and MyChannel technology is
owned by the Company's wholly-owned subsidiary, DAI. DAI does not
have patent or trademark protection for any of its proprietary
technology. The Company intends to apply for such protection but
there can be no assurance that it will be able to obtain patent or
trademark protection for any of its products or technologies.
PROPERTY
The Company maintains its offices at 124 South Halcyon
Road, Arroyo Grande, California under a monthly lease of $2,600 per
month for approximately 3,500 square feet.
MANAGEMENT
Name Age Title
Robert M. Cezar 56 Director, Chief
Executive Officer
Malcolm G. Cullen 49 President
Helen E. Cooper 58 Secretary, Vice President
for Administration
David H. Loomis 60 Director, Chief Financial
Officer, Treasurer, Vice
President of Finance
Craig D. Machado 52 Director
Linda S. Walsh 40 Vice President, Marketing
and Business Development
Steven L. Green 46 Vice President, Operations
Winston Lee 44 Vice President, International
Corporate Development
ROBERT M. CEZAR, 56, serves as Chief Executive Officer
and a director of the Company. From 1966 to 1969, Mr. Cezar worked
with RCA Canada at various positions culminating as National Systems
Coordinator and, as such, he was responsible for all the technical
designs and installations at Expo-67 in Montreal, Canada. Since
1993, Mr. Cezar has served as a director, chief executive officer
and president of Diversified Associates International, now a
subsidiary of the Company. From 1994 to 1996, Mr. Cezar was chief
executive officer, director and chief engineering officer of
AmeriCom USA, Inc. From 1996 to 1998, Mr. Cezar was vice president
of engineering for Enhanced Service Providers, a telecommunications
company. In May 1998, Mr. Cezar joined the Company as its Chief
Executive Officer. In 1994, an article entitled "Personal
Numbering" written by Mr. Cezar appeared in the International
Telecommunications journal published by the Telecommunications
Managers Association.
MALCOLM G. CULLEN, 49, serves as President of the Company.
From 1992 to 1994, Mr. Cullen was the client services director for
Bates Canada, Toronto Canada and served as president and chief
operating officer of Bates Canada from 1994 to 1996. In 1997, Mr.
Cullen was employed by the Company as a consultant and subsequently
as its President. Mr. Cullen received his Bachelor of Arts degree
in Psychology from the University of Cape Town, Cape Town, South
Africa, in 1973. In 1988, Mr. Cullen received a B.Comm Hons in
Financial Management from the University of Cape Town, South Africa.
HELEN E. COOPER, 58, serves as Secretary and Vice President
for Administration of the Company. From 1993 to 1994, Ms. Cooper
served as a director, corporate secretary and vice president for
administration of Diversified Associates International. From 1994
to 1996, Ms. Cooper was director, corporate secretary and vice
president for administration of AmeriCom USA, Inc. From 1996 to
1998, Ms. Cooper served as an administrative assistant at Enhanced
Service Providers. Since April 1998, Ms. Cooper has been employed
by the Company. Ms. Cooper received her teaching degree in 1962
from Oxford University and Froebel Institute, United Kingdom.
DAVID H. LOOMIS, 60, serves as Vice President of
Finance and a director of the Company. From 1963 to 1991, Mr.
Loomis served in various positions at Loomix, a $23 million
agri-business company culminating as chief financial officer and a
director. From 1994 to 1996, Mr. Loomis served as chief financial
officer and a director of AmeriCom USA. From 1996 to 1998, Mr.
Loomis served as chief financial officer and a director of
Diversified Associates International, now a subsidiary of the
Company. In April, 1998, Mr. Loomis joined the Company as its
Chief Financial Officer, Treasurer, and Vice President for Finance.
Mr. Loomis received his Bachelor of Science degree in Social Science
from California State Polytechnic University in 1961.
CRAIG D. MACHADO, 52, serves as a director of the Company.
From 1991 to 1995, Mr. Machado served as vice president, marketing
and merchandising at Calgene Fresh, Inc., a genetically engineered
fresh tomato company. Since 1995, Mr. Machado has been the director
of marketing for APIO, Inc., an agro distribution and processing
company located in Guadalupe, California. Mr. Machado has served as
president of the Northern California Produce Council in 1976 and
1977 and was recognized by the Sacramento Bee as the Creative
Advertiser of the Year for 1987. Mr. Machado received his Bachelor
of Science degree in Architectural Engineering from California State
University, Sacramento, California in 1966.
LINDA S. WALSH, 40, serves as Vice President for Marketing and
Business Development for the Company. From 1997 to 1998, Ms. Walsh
was general manager and marketing director for Green Giant Fresh
Food, Philadelphia, Pennsylvania, a food technology firm. From 1991
to 1997, Ms. Walsh was founder and president of Food Marketing
Services, a food sales and marketing consulting firm with clients
including Calgene Fresh, Dole Fresh, Marie's Dressings, and others.
From 1990 to 1993, Ms. Walsh served as a director of United Fresh
Fruit & Vegetable Association and in 1991 she was Committee Chair
for the Produce Marketing Association Supplement in the Restaurant
Business Magazine. Ms. Walsh received he Bachelor of Science Degree
in Finance in 1980 from Rider University, Lawrenceville, New Jersey.
In May, 1998, Ms. Walsh joined the Company as its Vice President
for Marketing and Business Development.
STEVEN L. GREEN, 46, serves as Vice President of Operations
for the Company. From 1988 to 1992, Mr. Green served as head of the
engineering department of Flexalon, a water treatment and methane
gas control system company. From 1993 to 1998, Mr. Green was a
self-employed business, software and Web site development consultant
and was involved in the product development of the MyLine
telecommunications system by AmeriCom USA, Inc. In November, 1998,
Mr. Green joined the Company as its Vice President for Operations.
WINSTON LEE, 44, serves as Vice President of International
Corporate Development. In 1987 Mr. Lee founded Gateway
Communications Limited, Taipei, Taiwan, an international direct dial
rate arbitrage company which developed an automatic aggregation
system. From 1994 to 1998, Mr. Lee was managing director of Strait
Venture Inc., Taiwan, which company represents several large
telecommunications company in the Far East, including China. Mr.
Lee received his Bachelor of Architecture degree in 1997 from Rice
University and his Master of Business Administration from New York
University in 1982. In October, 1998, Mr. Lee joined the Company as
its Vice President for International Corporate Development.
RISK FACTORS
GOING CONCERN QUESTION; OPERATING LOSSES AND ACCUMULATED DEFICIT;
UNCERTAINTY OF FUTURE PROFITABILITY
The Company's losses from operations raise doubt about its
ability to continue as a going concern. The Company had accumulated
losses of $1,856,865 at September 30, 1998, and will be required to
make significant additional expenditures in connection with the
development and marketing of the AdCast system. At September 30,
1998, the Company had short-term promissory notes outstanding
aggregating $885,206. The Company's ability to continue its
operations is dependent upon its receiving funds through its current
offering of securities or such other equity or debt financing that
the Company may be able to arrange. The Company is currently
offering 1,520,000 shares of its common stock for sale at an
offering price of $2.00 per share. As of December 17, 1998, the
Company had received initial subscriptions for 185,000 shares for an
aggregate subscription price of $317,100. There is no assurance that
the Company will receive any additional subscriptions for its shares
of common stock or will be able to raise any additional capital
through such placement of its securities or from any other debt or
equity financing. If the Company is not able to raise such
financing or to obtain alternative sources of funding, management
will be required to curtail operations and there is no assurance
that the Company will be able to continue to operate.
NO SIGNIFICANT REVENUES
The Company has not received any significant revenues to date
and there is no assurance that it will be able to increase its
revenues in the future. The Company currently has only one sponsor
under contract. Currently the Company displays this sponsor's ads
on the Company's Web site, but intends to obtain additional AdCast
host Web sites and additional advertisers. There can be no
assurance that the Company will be able to obtain additional host
Web sites. In order to receive revenues, the Company must obtain
advertisers to run advertisements on the AdCast billboards and the
Company must obtain Web sites consenting to act as host Web sites
for the AdCast billboards. There is no assurance that the Company
will be able to obtain any additional advertisers; and if able to
obtain advertisers, there is no assurance that the Company will be
able to obtain AdCast host Web sites.
INTELLECTUAL PROPERTY PROTECTION
The AdCast, TrueManagement and MyChannel technology is owned
by the Company's wholly-owned subsidiary, DAI. DAI does not have
any copyrights, trademarks, patents or service marks for its
technology systems. The Company intends to apply for trademark
and/or patent protection for the technology and trade names from the
United States Patent and Trademark Office, but there is no assurance
that such protection will be granted or that such products or
similar products are not already in use and/or protected by United
States patents or trade marks or the trade mark laws of another
country. There is no assurance that any of the Company's rights in
protecting the technology or trade names will be enforceable even
if registered against any prior users of a similar name or
competitors of the Company who seek to utilize similar technology or
names in areas where the Company operates. The Company intends to
enforce all rights regarding such trademarks, patents and service
marks in regard to usage by others. There is no assurance that a
challenge to the Company's use of such marks will not result in
adverse consequences, including a judgment that would entail damages
and/or the discontinuation of the Company's use of the marks.
The failure to enforce any of the Company's rights could
have the effect of reducing the Company's ability to market the
technology and develop its operations if such technology becomes
available in the market through other sources. It is also possible
that the Company will encounter claims from prior users of a similar
technology and names in areas where the Company operates thereby
causing the Company to pay damages to a prior user.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000
Many existing computer programs use only two digits to
identify a year in such program's date field. These programs were
designed and developed without consideration of the impact of the
change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer
applications could fail or create erroneous results by or following
the year 2000 (the "Year 2000 problem"). Many of the computer
programs containing such date language problems have been corrected
by the companies or governments operating such programs. The
Company's operations are dependent upon the operations and computer
systems of its suppliers, Web site hosts, Internet users, Internet
providers, advertisers and sponsors. The Company does not know what
steps, if any, have been taken by any of these companies or any
governments in the countries in which the Company intends to
operate. The Company's operations will be severally curtailed if
one or more of these companies were to suffer Year 2000 problems.
Furthermore, it is impossible to predict how the Internet system
itself will survive the Year 2000 problem.
COMPETITION
The Internet advertising industry is highly competitive and
includes numerous competitors that have substantially greater
financial and marketing resources than the Company and may be better
able to attract and maintain customers. The computer business,
including Internet services and uses, software, hardware and
technology is characterized by rapid technology changes. Success of
the Company depends upon its ability to develop new and innovative
products and services and to update its AdCast system and other
systems to incorporate new technological advances.
DEPENDENCE ON THIRD-PARTY PROVIDERS
The Company is dependent upon the visitor's Internet
provider and server and the advertiser's and the Web site host's
Internet provider and server in order to generate a billboard or
sponsorship ad. Connections to the Internet will be supplied by
third-party network servers. The Company has no control over such
Internet providers or network servers and their ability to effect
the Internet connections on demand. Delay or failure of such
servers or providers to make correct and efficient connections could
result in the failure to display an advertiser's sponsorship logo or
billboard ad. Furthermore, continual or repeated delays or failures
could result in a loss of visitors to AdCast host Web sites and a
reduction in the number of AdCast host Web sites.
DEPENDENCE ON NETWORK INFRASTRUCTURE
The Company will be required to expand and improve its
network infrastructure as the number of its customers and the amount
and type of their advertisements over the Internet increases. Such
expansion and improvement may require substantial financial,
operational and managerial resources. There can be no assurance that
the Company will be able to expand or improve its network
infrastructure to meet any additional demand or changing customer
requirements on a timely basis or at a commercially reasonable cost,
if at all.
If the Company does not maintain sufficient capacity in its
network connections, customers will experience a general slowing of
all services on the Internet. Any of these events could cause
customers to terminate use of the Company's services. Accordingly,
any failure of the Company to expand or enhance its network
infrastructure on a timely basis, or to adapt it to an expanding
customer base, changing customer requirements or evolving industry
standards, could have a material adverse effect on the Company.
The Company engages in regular maintenance of its network
infrastructure to prevent security breaches and problems caused by
computer viruses and other attacks against the system. However, in
the event the entrance of such viruses or other similar disruptive
problems into the network infrastructure, whether caused by the
Company's customers, other Internet users or other third parties,
could lead to interruptions, delays in or cessation of service to
the Company's customers, as well as corruption of the Company's or
its customers' computer systems. Inappropriate use of the Internet
by third parties could also potentially jeopardize the security of
confidential information stored in the computer systems of the
Company or those of its customers, which may cause losses to the
Company or its customers, or deter certain persons from using the
Company's services. The Company expects that its customers may
increasingly use the Internet for commercial transactions in the
future. Any network malfunction or security breach could cause
these transactions to be delayed, not completed or completed with
compromised security. Alleviating problems caused by computer
viruses or other inappropriate uses or security breaches may cause
interruptions, delays or cessation in service to the Company's
customers, which could have a material adverse effect on the
Company.
DEPENDENCE ON TELECOMMUNICATIONS CARRIERS AND OTHER SUPPLIERS
The Company relies on local telephone companies and other
companies to provide data communications capacity via local
telecommunications lines and leased long distance lines. The
Company is subject to potential disruptions in these
telecommunications services and may have no means of replacing these
services, on a timely basis or at all, in the event of such
disruption. Any such disruptions could have a material adverse
effect on the Company.
UNCERTAIN ACCEPTANCE OF THE INTERNET
The Company's operations will depend largely on the
widespread acceptance and use of the Internet as a source of
multimedia information and entertainment and as a vehicle for
commerce in goods and services. The Internet may not be accepted as
a viable commercial medium for broadcasting multimedia content, if
at all, for a number of reasons, including (i) potentially
inadequate development of the necessary infrastructure, (ii)
inadequate development of enabling technologies, (iii) lack of
acceptance of the Internet as a medium for distributing content and
(iv) inadequate commercial support for Internet-based advertising.
To the extent that the Internet continues to experience an
increase in users, an increase in frequency of use or an increase in
the bandwidth requirements of users, there is no assurance that the
Internet infrastructure will be able to support the demands placed
upon it, specifically the demands of delivering high-quality audio
content. In addition, the Internet could lose its viability as a
commercial medium due to delays in the development or adoption of
new standards and protocols required to handle increased levels of
Internet activity, or due to increased government regulation.
Changes in or insufficient availability of telecommunications
services to support the Internet also could result in unacceptable
response times and could adversely affect use of the Internet
generally and of the Company Web site in particular. If use of the
Internet does not continue to grow or grows more slowly than
expected, or if the Internet infrastructure does not effectively
support the growth that may occur, the Company's business, results
of operations and financial condition could be materially adversely
affected.
ACCEPTANCE OF THE INTERNET AS AN ADVERTISING MEDIUM
The market for Internet advertising has only recently begun
to develop, is rapidly evolving and is characterized by an
increasing number of market entrants, although Internet advertising
continues to be dominated by the larger Web sites. It remains
unclear as to the success or popularity of Internet advertising or
the increased use of the Internet by potential purchasers. The
Company's ability to generate advertising revenue will depend on
many factors over which it has no control including: the continued
development of the Internet for personal and business use, the
acceptance of the Internet as an advertising medium, and pricing of
advertising on other Web sites.
There is no assurance that advertisers or advertising
agencies will be persuaded to allocate or continue to allocate
portions of their budgets to Internet-based advertising or, if so
persuaded, that they will find such advertising to be effective for
promoting their products and services relative to traditional print
and broadcast media.
No standards have yet been widely accepted for the
measurement of the effectiveness of Internet-based advertising, and
there is no assurance that such standards will develop sufficiently
to enable Internet-based advertising to become a significant
advertising medium. Acceptance of the Internet among advertisers and
advertising agencies will also depend, to a large extent, on the
level of use of the Internet by consumers and upon growth in the
commercial use of the Internet. If widespread commercial use of the
Internet does not develop, or if the Internet does not develop as an
effective and measurable medium for advertising, the Company's
business, results of operations and financial condition would be
materially adversely affected.
COMPANY'S SUCCESS DEPENDENT ON NUMBER OF INTERNET USERS
The Company's anticipated arrangements with advertisers call
for compensation based solely and directly on the number of
"impressions" recorded as Web site visitors call up a Web site page
on which the advertising is included or the number and duration of
ads delivered by the Company. The Company does not receive
compensation simply for providing the advertising space.
Accordingly, its revenues from advertising are entirely dependent on
the number of visitors accessing AdCast host Web sites, the time
spent by such visitors, and the number of advertisers using the
AdCast system. A reduction in the number of Internet users and
therefore in the number of visitors to AdCast host Web sites would
have a substantive negative impact on the Company's proposed
operations.
DEPENDENCE ON ADVERTISERS
The Company's advertising revenues will be derived from
short-term contracts from a limited number of advertisers. The
Company's advertising customers will be able to discontinue the
Company's services site quickly and without penalty. There is no
assurance that the Company will be able to secure advertising
contracts from existing or future customers at attractive rates or
at all. Any failure of the Company to achieve sufficient advertising
revenue could have a material adverse effect on its business,
results of operations and financial condition.
PRODUCT DEVELOPMENT AND TECHNOLOGICAL OBSOLESCENCE
The market for Internet information delivery is
characterized by extensive research and development and rapid
technological change, frequent new product introductions and
technological innovation, resulting in short product life cycles and
evolving industry standards. Development by others of new or
improved products, processes or technology may render the Company's
products and services less competitive or obsolete. The emerging
character of these products and services and their rapid evolution
will require the Company to effectively use leading technologies,
continue to develop its technological expertise, enhance its current
services and continue to improve the performance, features and
reliability of its network infrastructure.
Changes in network infrastructure, transmission and content
delivery methods and underlying software platforms and the emergence
of new technologies could dramatically change the structure and
competitive dynamics of the market for the Company's products and
services. There is no assurance that the Company will be successful
in responding quickly, cost effectively and sufficiently to these or
other such developments. In addition, the widespread adoption of new
Internet technologies or standards could require substantial
expenditures by the Company to modify or adapt its Web site and
services. A failure by the Company to rapidly respond to
technological developments could have a material adverse effect on
its business, results of operations and financial condition.
DEPENDENCE ON CONTENT PROVIDERS
The Company's future success depends in large part upon its
ability to obtain rights to and deliver content of sufficient
interest to users of the Internet. The Company does not create its
own content. The Company relies on third party content providers,
such as Web site publishers, news and financial information services
and music publishers for the content it makes available to users
visiting its host Web sites. The Company's ability to maintain its
existing relationships with such content providers and to build new
relationships with additional content providers is critical to the
success of its business. The Company's inability to secure content
providers or the termination of a significant number of content
provider agreements would decrease the availability of content that
the Company can offer users.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS SHARE VALUE
The Certificate of Incorporation of the Company authorizes the
issuance of a maximum of 100,000,000 shares of common stock and
20,000,000 shares of preferred stock. The future issuance of all or
part of the remaining authorized common stock may result in
substantial dilution in the percentage of the Company's common stock
held by the Company's then existing shareholders. Moreover, any
common stock issued in the future may be valued on an arbitrary
basis by the Company. The issuance of the Company's shares for
future services or acquisitions or other corporate actions may have
the effect of diluting the value of the shares held by investors,
and might have an adverse effect on any trading market, should a
trading market develop for the Company's common stock.
POTENTIAL ADVERSE EFFECTS OF AUTHORIZATION OF PREFERRED STOCK
The Company may, without further action or vote by
shareholders of the Company, designate and issue shares of preferred
stock. The terms of any series of preferred stock, which may
include priority claims to assets and dividends and special voting
rights, could adversely affect the rights of holders of the common
stock and thereby reduce the value of the common stock. The
designation and issuance of preferred stock favorable to current
management or shareholders could make the possible takeover of the
Company or the removal of management of the Company more difficult
and discourage hostile bids for control of the Company which bids
might have provided shareholders with premiums for their shares.
NO CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES
There is currently no established public trading market for
the securities of the Company. No assurance can be given that an
active trading market in the Company's securities will develop or,
if developed, that it will be sustained. The Company intends to
apply for admission to quotation of its securities on the NASD OTC
Bulletin Board and, if and when qualified, it intends to apply for
admission to quotation on the Nasdaq SmallCap Market. There can be
no assurance that a regular trading market for the common stock will
develop or that, if developed, it will be sustained. Various
factors, such as the Company's operating results, changes in laws,
rules or regulations, general market fluctuations, changes in
financial estimates by securities analysts and other factors may
have a significant impact on the market price of the Company's
securities. The market price for the securities of public companies
often experience wide fluctuations which are not necessarily related
to the operating performance of such public companies such as high
interest rates or impact of overseas markets.
PENNY STOCK REGULATION
Upon commencement of trading in the Company's stock, if such
occurs (of which there can be no assurance) the Company's common
stock may be deemed a penny stock. Penny stocks generally are
equity securities with a price of less than $5.00 per share other
than securities registered on certain national securities exchanges
or quoted on the Nasdaq Stock Market, provided that current price
and volume information with respect to transactions in such
securities is provided by the exchange or system. The Company's
securities may be subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and
accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the
purchase of such securities and have received the purchaser's
written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless
exempt, the "penny stock rules" require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission
relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently,
the "penny stock rules" may restrict the ability of broker-dealers
to sell the Company's securities. The foregoing required penny
stock restrictions will not apply to the Company's securities if
such securities maintain a market price of $5.00 or greater. There
can be no assurance that the price of the Company's securities will
reach or maintain such a level.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
As a result of the Merger and as of the date thereof,
December 4, 1998, the accountant to the Registrant was replaced with
the accountant for AmeriCom USA, Inc. The financial statements for
the Registrant since inception and prior to the change in such
accountants have not contained any adverse opinion or disclaimer or
were modified as to any uncertainty, audit scope or accounting
principles and there were not any disagreements or "reportable
events" with such former accountant.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Agreement, upon effectiveness of the Merger,
the sole director and officer of the Registrant resigned and the
officers and directors of AmeriCom USA, Inc. were designated to
serve in their same capacities for the Registrant until the next
annual meeting of stockholders and until their respective successors
are elected and qualified or until their prior resignation or
termination.
ITEM 7. FINANCIAL STATEMENTS
No financial statements are filed herewith. The Registrant
shall file the financial statements by amendment hereto not later
than 60 days after the date that this initial report on Form 8-K
must be filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
The Company has begun an offering of 1,520,000 shares of its
common stock to non-United States residents. As of December 17,
1998, the Company has received subscriptions for 185,000 shares for
an aggregate subscription price of $317,100.
EXHIBITS
1.1 Certificate of Merger
16.1 Accountant's Letter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AMERICOM USA, INC.
By /s/ Robert M. Cezar
Chief Executive Officer
Director
Date: December 18, 1998
CERTIFICATE OF MERGER
OF
AMERICOM USA, INC.
(A DELAWARE CORPORATION)
INTO
CHATSWORTH ACQUISITION CORPORATION
(A DELAWARE CORPORATION)
(Under to Section 251 of the General
Corporation Law of the State of Delaware)
CHATSWORTH ACQUISITION CORPORATION, a Delaware corporation,
hereby certifies that:
(1) The name and state of incorporation of each of the
constituent corporations are:
(a) AmeriCom USA, Inc.,a Delaware corporation
("AmeriCom"); and
(b) Chatsworth Acquisition Corporation, a Delaware
corporation ("Chatsworth").
(2) An Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by AmeriCom and
Chatsworth in accordance with the provisions of Subsection (c) of
Section 251 of the General Corporation Law of the State of Delaware.
(3) The name of the surviving corporation is Chatsworth.
(4) The Certificate of Incorporation of Chatsworth shall
be the Certificate of Incorporation of the surviving corporation,
provided that, as of and after the filing of this Certificate of
Merger in the Office of the Delaware Secretary of State, Article
"ONE" of said Certificate of Incorporation shall be amended in its
entirety to read as follows:
"The Name of the Corporation is AmeriCom USA, Inc."
(5) The surviving corporation is a corporation of the
State of Delaware.
(6) The executed Agreement and Plan of Merger is on file
at the principal place of business of Chatsworth at 1504 R Street,
NW, Washington, DC 20009.
(7) A copy of the Agreement and Plan of Merger will be
furnished by Chatsworth, on request and without cost, to any
stockholder of AmeriCom or Chatsworth.
IN WITNESS WHEREOF Chatsworth caused this Certificate to be
signed by its duly authorized officer this 4th day of December 1998.
Chatsworth Acquisition Corporation
By/s/ James M. Cassidy
Title: President
John P MacLean
Certified Public Accountant
15701 Alameda Drive
Bowie, Maryland 20716-1312
301/249-4900
Fax: 301/249-9296
December 15, 1998
Securities and Exchange Commission
450 Fifth Street NW
Washington DC 20549
I concur with the statements made in the December 4, 1998, 8-K
report filed by Chatsworth Acquisition Corporation.
Sincerely,
/s/ John P. MacLean, CPA, CFP
