U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM SB-2/A REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
NFOX.COM
---------------------------------------------
(Name of small business issuer in its charter)
Nevada 7372 88-0425098
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) Number)
organization)
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(702) 898-0456
(Address and telephone number of principal executive offices)
---------------------
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(Address of principal place of business or intended principal place of
business)
Karl Kraft, Chief Executive Officer
NFOX.COM
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(702) 898-0456
(Name, address and telephone number of agent for service)
--------------------
Copies of Communications to:
Donald J. Stoecklein, Esq.
Sperry Young & Stoecklein
1850 E. Flamingo Rd., Suite 111
Las Vegas, NV 89119
(702) 794-2590
<PAGE>
Approximate date of commencement of proposed sale to public:
As soon as practicable after the registration statement becomes effective
--------------------------
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]
<TABLE>
Calculation of Registration Fee
Proposed
Maximum Amount of
Title of Each Amount to Proposed Aggregate Registrati
Class of be Offering Offering Price on Fee
Securities to be Registered Price Per (1)
Registered Share (1)
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 2,250,000 $2.00 $4,500,000 $1,251
TOTAL 2,250,000 N/A $4,500,000 $1,251
</TABLE>
(1) The proposed maximum offering price is estimated solely for the
purpose of determining the registration fee and calculated pursuant to Rule
457(c).
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.
Subject to Completion, dated January 11, 2000
<PAGE>
Initial Public Offering
PROSPECTUS
2,250,000 Shares of Common Stock
$2.00 per share
NFOX.COM
6216 South Sandhill Road, Suite C
Las Vegas, Nevada 89120
<TABLE>
The Offering
Per Total
share
<S> <C> <C>
Public Price. $2.00 $4,500,000
Commissions. $0 $0
Proceeds to
NFOX. $2.00 $4,500,000
</TABLE>
We are offering to the public a minimum of 500,000 and a maximum of
2,250,000 shares of common stock on a "best efforts" basis through our
officers, directors and employees. If we do not sell at least the minimum
of 500,000 shares within 180 days after commencement of this offering, the
offering will terminate and all money paid for shares will be promptly
returned to the purchasers, with interest and without deduction.
This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price of our
shares after the offering.
Anticipated Over-the-Counter Bulletin Board symbol:
"NFOX"
________________________
An investment in our common stock involves a high degree of risk. You
should purchase our common stock only if you can afford a complete loss of
your purchase. See "Risk Factors" beginning on page 2 for a discussion of
certain matters that you should consider prior to purchasing any of our
common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
________________________
The information contained in this prospectus is subject to completion or
amendment. We have filed a registration statement with the Securities and
Exchange Commission relating to the securities offered in this prospectus.
These securities may not be sold by us nor may we accept any offers to buy
the securities prior to the time the registration statement becomes
effective. This prospectus is not an offer to sell or a solicitation of an
offer to buy any securities. We shall not sell these securities in any
state where such offer, solicitation or sale would be unlawful before we
register or qualify the securities for sale in any such State.
THE DATE OF THIS PROSPECTUS IS _________________, 2000.
<PAGE>
Table of Contents
Prospectus Summary 1
Risk Factors 2
Use of Proceeds 7
Determination of Offering Price 8
Plan of Distribution 8
Capitalization 9
Summary Financial Information 10
Dilution 11
Litigation 11
Management 12
Principal Stockholders 13
Description of Securities 13
Legal Matters 15
Experts 16
Our Business 16
Reports to Stockholders 19
Management Discussion and Analysis 19
Facilities 21
Certain Transactions 21
Market Price of Common Stock 21
Dividends 22
Executive Compensation 22
Shares Eligible for Future Sale 24
Changes in and Disagreements with Accountants 25
Independent Auditors Report F-1
Balance Sheet F-2
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
<PAGE>
Prospectus Summary
NFOX is a Development Stage Company, incorporated in the State of
Nevada in April of 1999. We develop portable software components which
allow multiple applications to run in one operating system. Additionally,
we develop frameworks for the transportation and management of information
over computer networks particularly the Internet and related networks.
Frameworks are a technology for placing vast amounts of complex information
and software routines in a storage library for later projects to use. Our
unique software framework is carefully designed for processor and interface
portability, low memory footprint, internationalization, and low CPU and
network impact. This will allow us to enter a section of the market that
has previously been ignored.
NFOX's principal offices are located at 6216 S. Sandhill Rd., Suite C,
Las Vegas, NV 89120 and its telephone number is (702) 898-0456.
Except as otherwise indicated the share and per share information and
data in this prospectus do not give effect to 1,500,000 shares of common
stock reserved for issuance under our 1999 Stock Option Plan. As of
December 27, 1999, we have granted 820,600 of the option shares with a
weighted average exercise price of $0.34 per share.
The net proceeds we will receive from this offering, after deducting
expenses of the offering, including copying, printing and advertising of
$2,500, legal fees of $15,000, and other expenses estimated at $2,500, will
be approximately $980,000 upon meeting the minimum offering and $4,480,000
upon meeting the maximum offering.
The Offering
Securities Offered. 500,000 shares minimum
2,250,000 shares maximum of common stock
Price Per Share. $2.00
Common Stock Outstanding
before Offering. 4,517,950 shares of common stock
Common Stock Outstanding
after Offering. 5,017,950 shares - minimum offering
6,767,950 shares - maximum offering
Estimated Net Proceeds. $4,500,000
Proposed OTCBB Symbol. NFOX
Use of Proceeds. The proceeds of the offering will
be used for working capital to initiate our
marketing and promotional program, salaries
and benefits for employees and consultants,
and to establish a liquidity base to
accommodate cash flow requirements. ummary
Financial Inforamtion
<PAGE>
Risk Factors
We are a development stage company with a limited operating history and
have had losses since our inception in April 1999.
We were organized in April of 1999. We have yet to generate revenues
from operations and have been focused on organizational and start-up
activities since we incorporated. Our future operating results will depend
on many factors, including our ability to raise adequate working capital,
demand for our products and services, the level of our competition and our
ability to attract and maintain key management and employees.
We may have insufficient capital to implement our operating strategy.
We believe that the proceeds of this prospectus, together with funds
from operations, will be sufficient to satisfy our anticipated cash
requirements for at least the 12 months following the completion of this
offering. We will require a minimum of $250,000 over the following 12
months. We currently have no constant and continual flow of revenues. Our
future liquidity and capital requirements will depend upon numerous
factors, including the success of existing and future services and the
success of our products. We may be required to seek additional capital in
the future to pay salaries, develop new products and fund future growth and
expansion through additional equity or debt financing or credit facilities.
We may need to raise additional funds through public or private financing,
strategic relationships or other arrangements. There can be no assurance
that such additional funding (if needed), will be available on acceptable
terms. Furthermore, debt financing (if available and undertaken) may
involve restrictions limiting our operating flexibility.
Moreover, if we were to issue equity securities to raise additional
funds, the following results may occur: the percentage ownership of the
existing stockholders will be reduced, our stockholders may experience
additional dilution in net book value per share, and the new equity
securities may have rights, preferences or privileges senior to those of
the holders of our common stock. We cannot predict any additional capital
requirements because of the uncertainty of our actual growth. However, in
order to pursue our business plan as desired we believe that future capital
requirements will exceed our current financial position.
We expect to finance operations for fiscal 2000 through cash flow from
operations, funds raised from this offering, and possible future private
placements of equity securities. If adequate funds are not available on
acceptable terms, we may be prevented from pursuing future opportunities or
responding to competitive pressures. The failure to pursue future
opportunities or respond properly to competitive pressures could materially
and adversely affect our business, results of operations and financial
condition.
We are dependent on our current officers, directors and key employees.
We are dependent upon our current officers and directors, Karl Kraft,
Charles Catania, and Ray Waddell; all of whom we have entered into five (5)
year contracts with. We substantially depend upon the efforts and skills
of Karl Kraft, our Chairman and President. The loss of Mr. Kraft's
services, or his inability to devote sufficient attention to our
operations, could materially and adversely affect our operations. We
currently do not maintain key man life insurance on Mr. Kraft. The loss of
Mr. Kraft, Mr. Catania, Mr. Waddell or our inability to attract and retain
other qualified employees could have a material adverse effect on us.
<PAGE>
Our future success also depends on our ability to attract and retain
highly qualified technical, sales and managerial personnel. Competition for
such personnel is intense, and we do not know if we can retain key
technical, sales and managerial employees or that we can attract,
assimilate or retain other highly qualified technical, sales and managerial
personnel in the future. In addition, we cannot assure purchasers that our
current level of management is sufficient to perform all responsibilities
necessary or beneficial for management to perform.
Our success in attracting additional qualified personnel will depend
on many factors, including our ability to provide them with competitive
compensation arrangements, equity participation and other benefits. We do
not know if we will be successful in attracting highly qualified
individuals in key management positions.
We believe that we have ample experience to design and refine our
products. However, marketing and general operations requires management
experience of a different nature. We expect that we will have little or no
direct experience in the management operations and marketing of the types
of products and services we intend to market. Because of our lack of
experience, we may be more vulnerable than others to certain risks. We
also may be more vulnerable to errors in judgment that could have been
prevented by more experienced management. As a result, lack of previous
experience could materially and adversely affect our future operations and
prospects.
Even after completion of this offering, our existing stockholders will
maintain the majority of votes.
Assuming we complete the maximum offering of 2,250,000 shares, our
existing stockholders will beneficially own 4,517,950 shares of common
stock, or approximately 67% of the outstanding voting stock. As a result,
our existing stockholders will continue to be able to elect a majority of
the board of directors, to dissolve, to merge, or to sell our assets, and
to direct and control our operations, policies and business decisions.
We may issue our preferred stock, which may reduce the value of our common
stock.
We are authorized to issue up to 10,000,000 shares of authorized but
unissued preferred stock. We may issue the preferred stock in one or more
series. Our board of directors, at the time of issuance, will determine
the terms of each series of preferred stock to be issued without further
action by stockholders. The preferred stock may include the following:
* voting rights (including the right to vote as a series on particular
matters);
* preferences as to dividends and liquidation;
* conversion and redemption rights; and
* sinking fund provisions.
We currently have no plans to issue any preferred stock. If, in the
future, we decide to issue preferred stock it could adversely affect the
rights of our stockholders, and reduce the value of our common stock and
make it less likely that our stockholders would receive a premium for the
sale of their shares. We could issue specific rights to future holders of
preferred stock to restrict our ability to merge with or sell our assets to
a third party, thereby preserving control of NFOX by present owners.
<PAGE>
Until we register our common stock for secondary trading our stockholders
may not be able to resale their shares.
Secondary trading in the common stock will not be possible in each
state until the shares of common stock are qualified for sale under the
applicable securities laws of that state or we verify that an exemption,
such as listing in certain recognized securities manuals, is available for
secondary trading in that state. We cannot assure that we will be
successful in registering or qualifying the common stock for secondary
trading, or availing ourselves of an exemption for secondary trading in the
common stock, in any state. If we fail to register or qualify, or obtain or
verify an exemption for the secondary trading of, the common stock in any
particular state, the shares of common stock could not be offered or sold
to, or purchased by, a resident of that state. In the event that a
significant number of states refuse to permit secondary trading in our
common stock, a public market for the common stock will fail to develop and
the shares could be deprived of any value.
If we become subject to SEC regulations relating to low-priced stocks, the
market for our common stock could be adversely effected.
The Securities and Exchange Commission has adopted regulations
concerning low-priced (or "penny") stocks. The regulations generally
define "penny stock" to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price less than $5.00 per
share, subject to certain exceptions. If our shares become offered at a
market price less than $5.00 per share, and do not qualify for any
exemption from the penny stock regulations, our shares may become subject
to these additional penny stock regulations. These regulations impose
additional sales practice requirements on broker-dealers who sell penny
stock to persons other than established customers and accredited investors.
The additional burdens imposed upon broker-dealers by these penny
stock requirements may discourage broker-dealers from effecting
transactions in the common stock, which could severely limit the market
liquidity of our common stock and your ability as purchasers to sell our
common stock in the secondary market. In addition, it is unlikely that any
bank or financial institution will accept such penny stock as collateral,
which could have an adverse effect in developing or sustaining any market
for our common stock.
We will retain the proceeds of this offering for 180 days unless the
minimum is reached earlier.
We will place the proceeds of sales of shares in an account to be held
until the earlier of the date on which the minimum offering is achieved or
180 days. During this time purchasers of shares will not be able to
request a return of their funds. Following the 180 day period, if the
minimum offering has not been reached, these funds will be promptly
returned directly to the purchasers, together with interest earned.
We may be effected by Year 2000 problems.
We did not experience any adverse effects from the Year 2000 problem
and believe that the costs associated with Year 2000 compliance, and the
consequences of incomplete or untimely resolution of the Year 2000 problem,
will not have a material adverse effect on our business, financial
condition and results of operations in any given year. However, even if our
internal systems are not materially affected by the Year 2000 problem, our
<PAGE>
business, financial condition and results of operations could be materially
adversely affected through disruption in the operation of the enterprises
with which we interact. We cannot accurately predict if third party
computer products used by us are Year 2000 compliant. Further, even though
we believe that our current products are Year 2000 compliant, we cannot
accurately predict that under actual conditions such products will perform
as expected or that future products will be Year 2000 compliant. Any
failure of our products to be Year 2000 compliant could result in the loss
of or delay in market acceptance of our products and services, increased
service and warranty costs to us or payment by us of compensatory or other
damages which could have a material adverse effect on our business,
financial condition and results of operations.
About this Prospectus
You should only rely on the information contained in this prospectus.
We have not authorized anyone to provide information different from that
contained in this prospectus. We are offering to sell, and seeking offers
to buy, shares of our common stock only in jurisdictions where offers and
sales are permitted.
Available Information
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our securities are registered under
the Securities Exchange Act of 1934, we will file reports and other
information with the Securities and Exchange Commission. We intend to
register our securities under Section 12(g) of the Exchange Act. Once our
registration statement becomes effective we shall file supplementary and
periodic information, documents and reports that are required under section
13 of the Securities Act of 1933, as amended. Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the commission at:
Public Reference Facilities at: Pacific Regional Office at:
450 Fifth Street, Room 1024 5670 Wilshire Boulevard
N.W. Judiciary Plaza 11th Floor
Washington, D.C. 20549 Los Angeles, California 90036
Chicago Regional Office at: New York Regional Office at:
Northwestern Atrium Center Seven World Trade Center
500 West Madison Street 13th Floor
Suite 1400 New York, New York 10048
Chicago, Illinois 60661
In addition, all of our reports can be reviewed through the SEC's
Electronic Data Gathering Analysis and Retrieval System which is publicly
available through the SEC's web site (http://www.sec.gov).
We intend to furnish to our stockholders annual reports containing
financial statements audited by our independent certified public
accountants and quarterly reports containing unaudited interim financial
statements for the first three-quarters of each fiscal year.
We have filed with the Commission a registration statement on Form SB-
2 under the Securities Act of 1933, as amended with respect to the
securities offered in this prospectus. This prospectus does not contain all
the information set forth in the registration statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC.
For further information with respect to us and the common stock offered in
this prospectus, reference is made to such registration statement, exhibits
<PAGE>
and schedules. Statements contained in this prospectus as to the contents
of any contract or other document referred to are not necessarily complete
and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. A copy of the
registration statement, including the exhibits and schedules, may be
inspected without charge at the SEC's public reference facilities at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at
the SEC regional offices and copies of all or any part thereof may be
obtained at prescribed rates from the public reference section of the SEC.
Such reports and other information can be reviewed through EDGAR.
<PAGE>
USE OF PROCEEDS
The amounts and timing of expenditures described in the table for each
purpose may vary significantly depending on numerous factors, including,
without limitation, the progress of our marketing, distribution and further
development of our products and services, competing technological and
market developments, changes in our existing research relationships, our
ability to establish collaborative arrangements, the initiation of
commercialization activities, the purchase of capital equipment and the
availability of other financing. We anticipate, based on currently proposed
plans and assumptions relating to our operations, that our available cash
and short-term investments, the proceeds of this offering and cash flow
from operations, if any, will be adequate to satisfy our capital needs for
at least 12 months following consummation of this offering.
The proceeds from the sale of the shares of common stock offered
hereby are estimated to be approximately $1,000,000 upon meeting the
minimum offering and approximately $4,500,000 upon meeting the maximum
offering. We intend to utilize the estimated net proceeds during the 12-
month period following the offering for the following purposes:
<TABLE>
Minimum Maximum
Amount Amount
<S> <C> <C>
Total Proceeds $1,000,000 $4,500,000
Less: Offering Expenses
Legal $15,000 $15,000
Copying, Printing & Advertising $2,500 $2,500
Other expenses $2,500 $2,500
------------------------
Net Proceeds from Offering $980,000 $4,480,000
========================
Use of Net Proceeds
Officer and Consultant Salaries $84,000 $216,000
Employee Salaries $180,000 $300,000
Research and Development $186,000 $484,000
General and Administrative fees $200,000 $1,000,000
Legal and Accounting fees $75,000 $150,000
Internet Server Hardware, Software, and
Services $50,000 $300,000
Advertising, Marketing, Promotion $50,000 $750,000
Building and equipment leases $50,000 $150,000
Network Hardware Production Equipment -- $400,000
Working Capital $105,000 $730,000
------------------------
Total Use of Proceeds $1,000,000 $4,500,000
</TABLE>
General and administrative expenses outlined in the table are comprised
of independent contractor fees, miscellaneous office expenses, auto
allowances and for general corporate purposes.
<PAGE>
We intend to apply the balance of the proceeds of the offering to working
capital. Our management will have broad discretion with respect to the use
of proceeds retained as working capital. Such proceeds may be used to
defray overhead expenses, purchase capital equipment, fund expansion and
negative cash flow positions and for future opportunities and contingencies
that may arise.
DETERMINATION OF OFFERING PRICE
We have arbitrarily determined the initial public offering price of
the shares. We considered several factors in such determination.
Including the following:
* prevailing market conditions, including the history and prospects for
the industry in which we compete;
* our future prospects;
* our capital structure; and
* certain other factors which we deemed relevant.
Therefore, the public offering price of the shares does not
necessarily bear any relationship to established valuation criteria and may
not be indicative of prices that may prevail at any time or from time to
time in the public market for the common stock. You cannot be sure that a
public market for any of our securities will develop and continue or that
the securities will ever trade at a price at or higher than the offering
price in this offering.
PLAN OF DISTRIBUTION AND TERMS OF THE OFFERING
This is a "direct public" offering. We will not receive any proceeds
of the offering unless we sell shares equal to the minimum offering amount.
If the minimum offering is not sold, subscribers will lose the use of their
funds for the offering period of up to 180 days; the funds invested by them
will be returned with interest.
We are offering a minimum five hundred thousand (500,000) shares and a
maximum of two million two hundred fifty thousand (2,250,000) shares, at
two dollars ($2.00) per share. We can give no assurance that the minimum
number of shares will be sold. If subscriptions are received for fewer
than 500,000 shares, no shares will be sold.
Funds received prior to reaching the 500,000 share minimum will be
held in an interest bearing money market account and will not be used until
the minimum offering is achieved. If we do not sell at least the minimum
of 500,000 shares within 180 days after commencement of this offering, the
offering will terminate and all money paid for shares will be promptly
returned to the purchasers, with interest and without deduction. Our
officers and directors will have sole authority over the funds raised,
including the funds prior to the achievement of the minimum offering. If
we were to be unsuccessful in achieving the minimum offering, funds, along
with any interest earned, will be redistributed to all investors who have
purchased the shares offered in this prospectus. Upon achieving the
minimum offering and the acceptance of a subscription for shares, our
transfer agent will issue the shares to the purchasers. We may continue to
offer shares for a period of 365 days after commencement of this offering
or until we have sold all of the securities offered in this prospectus.
During the offering period or any extension, no subscriber will be entitled
to any refund of any subscription.
<PAGE>
We will sell the shares pursuant to the exemption 3a4-1 on a "best
efforts basis" through our officers, directors and employees who will not
receive any compensation in connection with the sale of shares. You may
purchase shares by completing and manually executing a subscription
agreement and delivering it with your payment in full for all shares which
you wish to purchase to our offices. Your subscription shall not become
effective until accepted by us and approved by our counsel.
CAPITALIZATION
The following table sets forth our capitalization at September
30, 1999, after giving effect to and as adjusted to give effect to the sale
of the 500,000 shares minimum and 2,250,000 shares maximum offered in this
prospectus.
<TABLE>
ACTUAL AS
(unaudite ADJUSTED
d)
At
September Minimum Maximum
30, 1999 Offering Offering
<S> <C> <C> <C>
Current Liabilities: $39,084 $39,084 $39,084
Stockholders' Equity:
Common Stock, $0.001 par value;
25,000,000 shares
authorized;
4,517,950 shares issued and 4,518
outstanding
5,017,950 shares issued and 5,018
outstanding as
adjusted following 500,000 share
minimum
6,767,950 shares issued and 6,768
outstanding as
adjusted following 2,250,000 share
maximum
Additional paid-in capital 294,432 1,272,432 4,722,432
Deficit accumulated during
development stage (263,007) (263,007) (263,007)
----------- ---------- ----------
Stockholders' Equity 35,943 1,014,443 4,466,193
----------- ---------- ----------
Total Capitalization $75,027 $1,053,527 $4,505,277
=========== ========== ==========
</TABLE>
<PAGE>
Summary Financial Information
The following table sets forth summary financial data derived from our
financial statements. The data should be read in conjunction with the
financial statements, related notes and other financial information
included in this prospectus.
<TABLE>
Operating Statement Data:
For the
Period
April 14,
1999 For Three
(Inception) Months
to Ended
June 30, September
1999 30, 1999
(audited) (unaudited)
<S> <C> <C>
Income Statement Data:
Revenues: $0 $0
Expenses:
Total Expenses: $101,750 $162,299
------------------------
Other Income or Expenses
Interest Income $206 $836
========================
Net (Loss) from Operations $(101,544) $(161,463)
========================
Loss per share $(.02) $(.04)
------------------------
</TABLE>
<TABLE>
Balance Sheet Data: At June 30, At
1999 September
(Audited) 30, 1999
(Unaudited)
<S> <C> <C>
Total Assets. $216,170 $75,027
Liabilities. $20,764 $39,084
----------------------
Stockholders' Equity. $195,406 $35,943
======================
</TABLE>
<PAGE>
DILUTION
The difference between our initial public offering price per share of
common stock and the pro forma net tangible book value per share of common
stock after this offering constitutes the dilution to investors in this
offering. Our net tangible book value per share is determined by dividing
our net tangible book value (total tangible assets less total liabilities)
by the number of outstanding shares of common stock.
At September 30, 1999 our common stock had a pro forma net tangible
book value of approximately $35,943 or $0.01 per share. After giving
effect to the receipt of the net proceeds from the maximum offering offered
in this prospectus at an assumed initial offering price of $2.00 per share,
our pro forma net tangible book value at September 30, 1999, would have
been $4,515,943 or $0.67 per share, representing an immediate increase in
net tangible book value of $0.66 per share to our present stockholders, and
immediate dilution of $1.33 per share to investors, or 67%. The following
table illustrates dilution to investors on a per share basis:
Offering price per share... $2.00
Net tangible book value per share before offering $0.01
Increase per share attributable to investors $0.66
Pro forma net tangible book value per share after offering $0.67
Dilution per share to investors $1.33
The following table summarizes, as of September 30, 1999, the
difference between the number of shares of common stock purchased from us,
the total cash consideration paid and the average price per share paid by
existing stockholders of common stock and by the new investors purchasing
shares in this offering. The table assumes the sale of the 2,250,000
shares maximum offered in this prospectus at an assumed initial public
offering price of $2.00 per share and before any deduction of estimated
offering expenses.
<TABLE>
Shares Purchased Total Cash Average
Consideration Price
Per
Share
Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C>
Original Stockholders 4,517,950 67% $296,950 6% $0.07
Public Stockholders 2,250,000 33% $4,500,000 94% $2.00
----------- ----- ----------- ----- ------
Total 6,767,950 100% $4,796,950 100%
=========== ===== ============ ======
</TABLE>
LITIGATION
We may from time to time be involved in routine legal matters
incidental to our business; however, at this point in time we are currently
not involved in any litigation, nor are we aware of any threatened or
impending litigation.
<PAGE>
MANAGEMENT
We are currently searching for a Chief Executive Officer and a Vice
President of Marketing. The members of our Board of Directors serve until
the next annual meeting of stockholders, or until their successors have
been elected. The officers serve at the pleasure of the Board of
Directors. Information as to the directors and executive officers are as
follows:
<TABLE>
Name Age Title
<S> <C> <C>
Karl Kraft 29 President, Chairman of the Board
Charles Catania 54 Secretary, Treasurer and Director
Ray Waddell 63 Director
</TABLE>
Duties, Responsibilities and Experience
Karl Kraft acts as our President and Chairman of the Board. Mr. Kraft is
the principal designer of the frameworks used in the NFOX operating system,
and will be the leader of the technical team. He has been involved with
Internet communication technologies since 1985, including news, web site
development, web and application servers, and email. From 1989-1999, Mr.
Kraft was CEO and CTO for Ensuing Technologies, a small software
development firm focusing on mission critical custom applications, and
shrink wrap software for Unix based workstations. Mr. Kraft has also
created security and encryption components for the NeXTSTEP and OpenStep
operating systems that are now owned by Apple Computer Inc.
Charles Catania acts as Secretary/Treasurer and as a Director of NFOX. Mr.
Catania attended California State University of Fullerton earning a
Bachelor of Arts Degree in Business Administration in 1973. Mr. Catania
has acted as President and a Director of MarJo Investment Corporation since
1973, and is presently Vice President of TODO Construction, a General
Contracting Firm in Las Vegas, Nevada.
Ray Waddell is a Director of NFOX. Mr. Waddell holds a BS in Business
Administration from Los Angeles State. Since 1975 he has been on the board
of directors of several corporations including Latta-Waddell, Todo
Construction, Mulberry Hill Construction, Nova Wears and Wearables, and
Ensuing Technologies. From 1967 to 1975 he was a general partner of Minnet-
Waddell Investment Corporation.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date of this
prospectus, and as adjusted giving effect to the sale of 500,000 shares
minimum and 2,250,000 shares maximum of common stock in this offering,
relating to the beneficial ownership of our common stock by those persons
known to us to beneficially own more than 5% of our capital stock, by each
of our directors, proposed directors and executive officers, and by all of
our directors, proposed directors and executive officers as a group. The
address of each person is care of NFOX.
<TABLE>
Percent Percent
Name of Beneficial Owner Percent After After
Number Before Offering Offering
Of Shares Offering (Minimum) (Maximum)
<S> <C> <C> <C> <C>
Karl Kraft 2,400,000 53.12% 47.83% 35.46%
Charles Catania 770,000 17.04% 15.34% 11.38%
Ray Waddell 800,000 17.71% 15.94% 11.82%
- ---------------------------------------------------------------------------
All Directors, Officers and
Principle Stockholders as a 3,970,000 87.87% 79.11% 58.66%
Group
</TABLE>
"Beneficial ownership" means the sole or shared power to vote or to
direct the voting of, a security, or the sole or shared investment power
with respect to a security (i.e., the power to dispose of or to direct the
disposition of, a security). In addition, for purposes of this table, a
person is deemed, as of any date, to have "beneficial ownership" of any
security that such person has the right to acquire within 60 days from the
date of this prospectus.
The figures in the table are rounded to the nearest percent. In
addition, the figures do not reflect 500,000 shares of stock options
granted to Mr. Kraft as part of his employment agreement, 100,000 shares of
stock options granted to Mr. Catania as part of his employment agreement or
75,000 shares of stock options granted to Mr. Waddell as part of his
consulting agreement.
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation authorizes the issuance of 25,000,000
shares of common stock, $0.001 par value per share, of which 4,517,950
shares were outstanding as of the date of this prospectus. Upon sale of the
500,000 shares minimum and 2,250,000 share maximum, we will have
outstanding 5,017,950 or 6,767,950 shares of common stock, respectively.
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock
have no cumulative voting rights. Holders of shares of common stock are
entitled to share ratably in dividends, if any, as may be declared, from
time to time by the Board of Directors in its discretion, from funds
legally available to be distributed. In the event of a liquidation,
dissolution or winding up of NFOX, the holders of shares of common stock
are entitled to share pro rata all assets remaining after payment in full
of all liabilities. Holders of common stock have no preemptive rights to
purchase our common stock. There are no conversion rights or redemption or
sinking fund provisions with respect to the common stock. All of the
outstanding shares of common stock are validly issued, fully paid and non-
assessable.
<PAGE>
Preferred Stock
Our Articles of Incorporation authorizes the issuance of 10,000,000
shares of preferred stock, $.001 par value per share, of which no shares
were outstanding as of the date of this prospectus. The preferred stock
may be issued from time to time by the Board of Directors as shares of one
or more classes or series. Our board of directors, subject to the
provisions of our Articles of Incorporation and limitations imposed by law,
is authorized to:
* adopt resolutions;
* to issue the shares;
* to fix the number of shares;
* to change the number of shares constituting any series; and
* to provide for or change the following:
* the voting powers;
* designations;
* preferences; and
* relative, participating, optional or other special rights,
qualifications, limitations or restrictions, including the following:
* dividend rights (including whether dividends are cumulative);
* dividend rates;
* terms of redemption (including sinking fund provisions);
* redemption prices;
* conversion rights; and
* liquidation preferences of the shares constituting any class or series
of the preferred stock.
In each of the listed cases, we will not need any further action or
vote by the stockholders.
One of the effects of undesignated preferred stock may be to enable
the Board of Directors to render more difficult or to discourage an attempt
to obtain control of us by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of our management. The
issuance of shares of preferred stock pursuant to the Board of Director's
authority described above may adversely affect the rights of holders of
common stock. For example, preferred stock issued by us may rank prior to
the common stock as to dividend rights, liquidation preference or both, may
have full or limited voting rights and may be convertible into shares of
common stock. Accordingly, the issuance of shares of preferred stock may
discourage bids for the common stock at a premium or may otherwise
adversely affect the market price of the common stock.
Nevada Laws
The Nevada Business Corporation Law contains a provision governing
"Acquisition of Controlling Interest." This law provides generally that
any person or entity that acquires 20% or more of the outstanding voting
shares of a publicly-held Nevada corporation in the secondary public or
private market may be denied voting rights with respect to the acquired
shares, unless a majority of the disinterested stockholders of the
corporation elects to restore such voting rights in whole or in part. The
<PAGE>
control share acquisition act provides that a person or entity acquires
"control shares" whenever it acquires shares that, but for the operation of
the control share acquisition act, would bring its voting power within any
of the following three ranges: (i) 20 to 331/3%, (ii) 331/3 to 50%, or
(iii) more than 50%. A "control share acquisition" is generally defined as
the direct or indirect acquisition of either ownership or voting power
associated with issued and outstanding control shares. The stockholders or
board of directors of a corporation may elect to exempt the stock of the
corporation from the provisions of the control share acquisition act
through adoption of a provision to that effect in the articles of
incorporation or bylaws of the corporation. Our articles of incorporation
and bylaws do not exempt our common stock from the control share
acquisition act.
The control share acquisition act is applicable only to shares of
"Issuing Corporations" as defined by the act. An Issuing Corporation is a
Nevada corporation, which (1) has 200 or more stockholders, with at least
100 of such stockholders being both stockholders of record and residents of
Nevada; and (2) does business in Nevada directly or through an affiliated
corporation. At this time, we do not have 100 stockholders of record
resident of Nevada. Therefore, the provisions of the control share
acquisition act do not apply to acquisitions of our shares and will not
until such time as these requirements have been met. At such time as they
may apply to us, the provisions of the control share acquisition act may
discourage companies or persons interested in acquiring a significant
interest in or control of NFOX, regardless of whether such acquisition may
be in the interest of our stockholders.
The Nevada "Combination with Interested Stockholders Statute" may also
have an effect of delaying or making it more difficult to effect a change
in control of NFOX. This Statute prevents an "interested stockholder" and
a resident domestic Nevada corporation from entering into a "combination,"
unless certain conditions are met. The Statute defines "combination" to
include any merger or consolidation with an "interested stockholder," or
any sale, lease, exchange, mortgage, pledge, transfer or other disposition,
in one transaction or a series of transactions with an "interested
stockholder" having (i) an aggregate market value equal to 5 percent or
more of the aggregate market value of the assets of the corporation; (ii)
an aggregate market value equal to 5 percent or more of the aggregate
market value of all outstanding shares of the corporation; or (iii)
representing 10 percent or more of the earning power or net income of the
corporation. An "interested stockholder" means the beneficial owner of 10
percent or more of the voting shares of a resident domestic corporation, or
an affiliate or associate thereof. A corporation affected by the Statute
may not engage in a "combination" within three years after the interested
stockholder acquires its shares unless the combination or purchase is
approved by the board of directors before the interested stockholder
acquired such shares. If approval is not obtained, then after the
expiration of the three-year period, the business combination may be
consummated with the approval of the board of directors or a majority of
the voting power held by disinterested stockholders, or if the
consideration to be paid by the interested stockholder is at least equal to
the highest of (i) the highest price per share paid by the interested
stockholder within the three years immediately preceding the date of the
announcement of the combination or in the transaction in which he became an
interested stockholder, whichever is higher; (ii) the market value per
common share on the date of announcement of the combination or the date the
interested stockholder acquired the shares, whichever is higher; or (iii)
if higher for the holders of Preferred Stock, the highest liquidation value
of the Preferred Stock.
LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for us
by the Law Offices of Sperry Young & Stoecklein, Las Vegas, Nevada. The
firm beneficially controls 100,000 shares of our common stock. We consent
to and understand this potential conflict of interest.
<PAGE>
EXPERTS
The financial statements of NFOX.COM as of June 30,1999 are included
in this prospectus and have been audited by Barrie L. Friedman, LLP, an
independent auditor, as set forth in his report thereon appearing elsewhere
herein and are included in reliance upon such reports given upon the
authority of such individual as an expert in accounting and auditing.
OUR BUSINESS
Overview
We are a developer of portable software components and frameworks for
the transportation and management of information over computer networks
particularly the Internet and related networks. Frameworks are a technology
for placing complex or common software routines in a library for later
projects to leverage. Portable software components are multi-platform
applications that run in an
Operating System of some kind.
Our unique software framework is carefully designed for processor and
interface portability, low memory footprint, internationalization, and low
CPU and network impact. This will allow us to enter a section of the
market that has previously been ignored. We feel that with the industry
contacts we have obtained and with a solid capital foundation, we will
occupy a dominant position in several present and future key market spaces.
The targeted market spaces we intend to enter include enterprise
information and workflow, Internet browsers, information appliances,
personal digital assistants, set top boxes, screen phones, and embedded
network devices. Due to the variety of market spaces, we will be selling
products, services related to the products, and entering into licensing
agreements for third parties to use portions of our technology.
Our ability to occupy and be a major force in each of these market
spaces is based on the capability to cross use of component software on
both multiple processor and operating systems; such as IBM, Macintosh, Unix
and Linux, and also through different application delivery methods;
including Graphical user interfaces, command line, web sites, "net
stations", Java clients and Client/Server. As new components are
developed, innovative applications will be emphasized to take advantage of
emerging markets. In addition, the framework allows for components to be
shared and transported over networks, allowing the framework to be
functional and usable on lightweight platforms under heavy load.
The framework and certain components are proprietary to us. We intend
to file for various copyrights, trademarks, patents, and will use certain
trade secret agreements in order to protect our intellectual property. The
source code to certain components and the method for writing components
will be released openly and will generally be available to the public at
large.
Revenues will be generated through the use of our framework offered at
our public web site, which we intend to develop and operate. The web site
will commingle and sort information for many practical uses, including the
use of public company research, price comparisons, online shopping, and
other multi-source information services. This information will be offered
on a subscription basis.
<PAGE>
As we grow we will grow our revenue base and streams by:
* increasing the number of components available to end-users;
* redeploying the framework and components as new products
such as retail software and set top boxes;
* providing development services to third parties for the
creation of custom components;
* licensing the framework and components, either in sections
or total content, to third parties.
The overall strategy and portable design of the framework is unique,
and may give us a competitive advantage and ability to work in several
market spaces. Within capital expenditures, our diverse products will
initially focus primarily on expansion related to component design and
development. This will position us to act quickly as infrastructure and
markets develop for future products, such as screen phones, set top boxes,
and Internet appliances.
Our distribution strategies and revenue sources will remain flexible
in accordance with evolving product lines.
Impact of the Internet
The Internet has emerged as a global communications medium, enabling
millions of people to gather information, communicate and conduct business
electronically. The Internet's ability to empower customers, reduce
transaction costs and product development times and accelerate the pace of
business transactions has dramatically transformed the competitive
landscape of a wide range of industries. The Internet provides customers
with a broader selection, increased purchasing power and unparalleled
convenience while enabling businesses to reach a global audience, increase
economies of scale and operate with minimal infrastructure.
The Internet has facilitated the emergence of new competitors and is
increasingly affecting the methods by which incumbent competitors sell
goods and services and manage relationships with customers. For example, in
the software industry, the Internet is profoundly changing the way that
software is developed and distributed. The Internet has enabled multiple
groups of developers to collaborate on specific projects from remote
locations around the globe. Developers can write code alone or in groups,
make their code available over the Internet, give and receive comments on
other developers' code and modify it accordingly. The Internet has also
provided an avenue not only for less expensive and speedier delivery of
code, but also for support and other online services.
Competition
The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other
market activities of industry participants. Our products are targeted at
the emerging market for Internet software parts and programming tools and,
to a lesser extent, at the emerging Java market. Our competitors offer a
variety of products and services to address these markets. We believe that
the principal competitive factors in this market are product quality,
flexibility, performance, functionality and features, use of standards
based technology, quality of support and service, company reputation and
price. While price is less significant than other factors for corporate
customers, price can be a significant factor for individual programmers.
Direct competitors include Microsoft, IBM, ILOG and several privately held
companies. Microsoft is a particularly strong competitor due to its large
installed base. Microsoft may decide in the future to devote more resources
to or broaden the functions of its products in order to address and more
<PAGE>
effectively compete with the functionality of our products. We face direct
competition in the Java market from Borland, JavaSoft (a business unit of
Sun Microsystems), Microsoft, Sybase, Symantec and other companies for our
proposed Java products and we expect to face significant competition in the
future from such companies with respect to other Java products we may
introduce. Software applications can also be developed using software parts
and programming tools in environments other than that in which we currently
are involved in. Indirect competitors with such offerings include
Microsoft, Borland, Oracle, ParcPlace-Digitalk and Powersoft (a subsidiary
of Sybase). Many of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and larger installed bases of
customers than us. In addition, several database vendors, such as Informix,
Oracle and Sybase are increasingly developing robust software parts for
inclusion with their database products and may begin to compete with us in
the future. These potential competitors have well-established relationships
with current and potential customers and have the resources to enable them
too more easily offer a single vendor solution. Like our current
competitors, many of these companies have longer operating histories,
significantly greater resources and name recognition and larger installed
bases of customers than us. As a result, these potential competitors may
be able to respond more quickly to new or emerging technologies and changes
in customer requirements, or to devote greater resources to the
development, promotion and sale of their products than us.
We also face competition from systems integrators and internal
development efforts. Many systems integrators possess industry specific
expertise that may enable them to offer a single vendor solution more
easily, and already have a reputation among potential customers for
offering enterprise-wide solutions to software programming needs. There can
be no assurance that these third parties, many of which have significantly
greater resources than us, will not market competitive software products in
the future. It is also possible that new competitors or alliances among
competitors will emerge and rapidly acquire significant market share. We
also expect that competition will increase as a result of software industry
consolidation. Increased competition may result in price reductions,
reduced gross margins and loss of market share, any of which could
materially and adversely affect our business, operating results and
financial condition. There can be no assurance that we will be able to
compete successfully against current and future competitors or that
competitive pressures faced by us will not materially and adversely affect
our business, financial condition and results of operations.
Internet Servers
We have deployed two general-purpose servers to support our software
product, and to run our web site. One of these servers is located at our
principal place of business in Las Vegas, Nevada. The other is located in
San Jose at a co-location facility owned and operated by AboveNet [AboveNet
is in the process of being merged with a subsidiary of MetroMedia Fiber].
We plan to use part of the proceeds from this offering to acquire and place
additional servers in facilities in Vienna (Virginia, United States),
London (United Kingdom), and Japan.
In addition to these general-purpose servers, we also maintain several
servers that are capable of running our portable software components and
frameworks. We plan to use part of the proceeds to purchase additional
servers for this purpose, both for testing and assuring the portable nature
of the frameworks, and for providing operational support for our web
servers and clients.
<PAGE>
Employees
We currently employ 8 people on a full time basis and no part time
employees. Our personnel structure can be divided into two broad
categories; finance and administration (2 of the 8 employees), and software
engineering personnel. Upon the successful closing of the maximum
offering, we have plans to hire additional software engineering personnel
and additional management personnel, an exact number of personnel to be
hired has not been determined.
None of our employees is represented by a labor union or subject to a
collective bargaining agreement.
REPORTS TO STOCKHOLDERS
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our registration statement is
effective and our securities are registered under the exchange act, we will
file supplementary and periodic information, documents and reports that are
required under section 13 of the Securities Act of 1933, as amended, with
the Securities and Exchange Commission. We intend to register our
securities under Section 12(g) of the Exchange Act. Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at the Pacific Regional Office located at
5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648,
the New York Regional Office located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and the Chicago Regional Office located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and can be reviewed through the Commission's Electronic Data
Gathering Analysis and Retrieval System which is publicly available through
the Commission's web site (http://www.sec.gov).
We intend to furnish annual reports to stockholders, which will
include audited financial statements reported on by our Certified Public
Accountants. In addition, we may issue unaudited quarterly or other interim
reports to stockholders, as it deems appropriate.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by the financial statements section included
herein.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties.
Forward looking statements include, but are not limited to, statements
concerning anticipated trends in revenues and net income, the date of
introduction or completion of our products, projections concerning
operations and available cash flow. Our actual results could differ
materially from the results discussed in such forward looking statements.
The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and
the related notes thereto appearing elsewhere in this prospectus.
Overview
NFOX.COM, which was organized in April 1999, is a Development Stage
Company, engaged in the business of developing portable software components
and frameworks for the transportation and management of information over
computer networks. We have a limited operating history and have not
generated revenues from the sale of any products. Our activities have been
<PAGE>
limited to the development of prototypes and analyzing the market
conditions for the proprietary services and products. Consequently, we have
incurred the expenses of start-up. Future operating results will depend on
many factors, including our ability to raise adequate working capital,
demand for our services and products, the level of competition and our
ability to deliver services and products while maintaining quality and
controlling costs.
Results of Operations
Period from April 14, 1999 (Inception) to June 30, 1999 and quarter ending
September 30, 1999.
From inception through the end of the third quarter we achieved three
main goals; The formation of our organization to pursue our business
strategy, development of a production model and achieving the public
company status to assist in funding our objectives.
Revenues. We are a development stage enterprise as defined in SFAS #7,
and have yet to generate any revenues. We are devoting substantially all of
our present efforts to: (1) developing our technology and other programs,
(2) developing our market, and (3) obtaining sufficient capital to commence
full operations.
Pre-Operating Expenses. Pre-Operating expenses for the period from
April 14, 1999 to June 30, 1999 were $101,544. Pre-Operating expenses for
the period from July 1, 1999 to September 30, 1999 were $161,463.
Research and Development. Research and Development expenses have not
been a significant portion of the total Pre-Operating expenses.
Plan of Operation
During the next 12 months we plan to focus our efforts on the
continued development of our proposed products, search for possible
collaborative partners in our industry and to release the first product on
a beta level to be tested by a limited number of end users.
Liquidity and Capital Resources
Cash and cash equivalents will be increasing primarily due to
commencement of operations. The receipt of funds from this offering and
loans obtained through private sources by us are anticipated to offset our
near term cash equivalents. Since inception, we have financed our cash flow
requirements through issuance of common stock. As we expand our activities,
we may continue to experience net negative cash flows from operations,
pending receipt of sales revenues. Additionally we may be required to
obtain additional financing to fund operations through common stock
offerings and bank borrowings, to the extent available, or to obtain
additional financing to the extent necessary to augment our working
capital.
Over the next twelve months, we intend to increase our revenues by
releasing our products under development to our target markets. However, we
will continue the research and development of our products, increase the
number of our employees, and expand our facilities where necessary to meet
product development and completion deadlines. We believe that, funds from
the maximum offering, existing capital and anticipated funds from
operations will be sufficient to sustain operations and planned expansion
in the next twelve months. However, if we were only to achieve the minimum
offering we may have to seek additional financing in order to sustain
operations. There can be no assurance such additional funds will be
available or that, if available, such additional funds will be on terms
acceptable to us. In either case, the financing could have negative impact
on our financial condition and our stockholders.
<PAGE>
We anticipate that we will incur operating losses in the next twelve
months. Our lack of operating history makes predictions of future operating
results difficult to ascertain. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by companies
in their early stage of development, particularly companies in new and
rapidly evolving markets. Such risks for us include, but are not limited
to, an evolving and unpredictable business model and the management of
growth. To address these risks, we must, among other things, obtain a
customer base, implement and successfully execute our business and
marketing strategy, continue to develop and upgrade our technology and
products, provide superior customer services and order fulfillment, respond
to competitive developments, and attract, retain and motivate qualified
personnel. There can be no assurance that we will be successful in
addressing such risks, and the failure to do so can have a material adverse
effect on our business prospects, financial condition and results of
operations.
Costs Associated with Year 2000 Problem
We did not experience any noticeable Year 2000 problems and have
incurred minimal expenses associated with the Year 2000 Problem. As a
result of us being a Development Stage Enterprise, our computer equipment
is being purchased as Year 2000 compliant, where possible.
FACILITIES
We have leased 2,370 square feet of office space located at 6216 S.
Sandhill Rd., Suite C, Las Vegas, Nevada 89120. The lease is for a three-
year term. We believe that our facilities are adequate for our purposes at
this time.
CERTAIN TRANSACTIONS
Consulting Contracts
In April of 1999, we retained the consulting services of Ray Waddell
to assist us in product development and market research. Mr. Waddell is
also one of our Directors. We agreed to pay Mr. Waddell at the rate of
$1,000 per month for his consulting services for a five (5) year term.
MARKET PRICE OF COMMON STOCK
We intend to file for inclusion of our common stock on the National
Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board;
however, there can be no assurance that NASD will approve the inclusion of
the common stock. Prior to the effective date of this offering, our common
stock was not traded.
As of November 1, 1999 there were approximately 127 stockholders of
our common stock.
<PAGE>
DIVIDENDS
The payment of dividends is subject to the discretion of our Board of
Directors and will depend, among other things, upon our earnings, our
capital requirements, our financial condition, and other relevant factors.
We have not paid or declared any dividends upon our common stock since our
inception and, by reason of our present financial status and our
contemplated financial requirements, do not anticipate paying any dividends
upon our common stock in the foreseeable future.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of our Chief
Executive Officer, Karl Kraft from inception (April 14, 1999) to June 30,
1999. No other officer or director has received or is anticipated to
receive remuneration in excess of $100,000 for fiscal 1999. The
remuneration described in the table does not include the cost to us of
benefits furnished to the named executive officer, including premiums for
health insurance and other benefits provided to such individual that are
extended in connection with the conduct of our business. The value of such
benefits cannot be precisely determined, but the executive officer named
below did not receive other compensation in excess of the lesser of $50,000
or 10% of such officer's cash compensation.
Summary Compensation Table
<TABLE>
Long Term
Annual Compensation Compensation
Name and
Principal Other Annual Restricted
Position YTD Salary Bonus Compensation Stock Options
<S> <C> <C> <C> <C> <C> <C>
Karl Kraft,
President, CEO 1999 $41,500 N/A N/A N/A 500,000
</TABLE>
Karl Kraft is subject to a five year employment agreement with annual
salary of $120,000 and a $600 per month auto allowance.
Key Officer Employment Agreements
Karl Kraft, Chief Executive Officer and President, pursuant to a written
agreement dated April 16, 1999 and continuing for five (5) years, in
consideration for his services, Mr. Kraft will receive an annual base
Salary of $120,000. Mr. Kraft has agreed to receive a reduced salary of
$5,000 per month and defer payment of the balance of his salary until we
release our first two products or have sufficient capital to pay his full
salary. As additional compensation, Mr. Kraft receives an auto allowance of
$600 per month, such allowance will be paid when our board of directors
determines we have become profitable and are generating sufficient revenue
to pay such allowance.
Charles Catania, Secretary and Treasurer, pursuant to a written agreement
dated April 16, 1999 and continuing for five (5) years, in consideration
for his services, Mr. Catania will receive an annual base Salary of $48,000
for the first year of employment, increasing to $84,000 per year in the
remaining years. Mr. Catania has agreed to receive a reduced salary of
<PAGE>
$1,000 per month and defer payment of the balance of his salary until we
have sufficient capital to pay his full salary. As additional compensation,
Mr. Catania receives an auto allowance of $600 per month, such allowance
will be paid when our board of directors determines we have become
profitable and are generating sufficient revenue to pay such allowance.
Compensation Committee Interlocks and Insider Participation
We do not currently have a compensation committee of the Board of
Directors. However, the Board of Directors intends to establish a
compensation committee, which is expected to consist of three inside
directors and two independent members.
Stock Option Plan and Non-Employee Directors' Plan
The following descriptions apply to stock option plans which we
adopted in April of 1999; 820,600 options have been granted as of the date
of this prospectus.
We have reserved for issuance an aggregate of 1,500,000 shares of
common stock under our 1999 Stock Option Plan and Non-Employee Directors'
Plan. These plans are intended to encourage directors, officers, employees
and consultants to acquire ownership of common stock. The opportunity so
provided is intended to foster in participants a strong incentive to put
forth maximum effort for our continued success and growth, to aid in
retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals to us in the future.
Stock Option Plan
Officers (including officers who are members of the Board of
Directors), directors (other than members of the stock option committee to
be established to administer the stock option plan and the directors' plan)
and other employees and consultants and its subsidiaries (if established)
will be eligible to receive options under the planned stock option plan.
The committee will administer the stock option plan and will determine
those persons to whom options will be granted, the number of options to be
granted, the provisions applicable to each grant and the time periods
during which the options may be exercised. No options may be granted more
than ten years after the date of the adoption of the stock option plan.
Non-qualified stock options will be granted by the committee with an
option price equal to the fair market value of the shares of common stock
to which the non-qualified stock option relates on the date of grant. The
committee may, in its discretion, determine to price the non-qualified
option at a different price. In no event may the option price with respect
to an incentive stock option granted under the stock option plan be less
than the fair market value of such common stock to which the incentive
stock option relates on the date the incentive stock option is granted.
Each option granted under the stock option plan will be exercisable
for a term of not more than ten years after the date of grant. Certain
other restrictions will apply in connection with this plan when some awards
may be exercised. In the event of a change of control (as defined in the
stock option plan), the date on which all options outstanding under the
stock option plan may first be exercised will be accelerated. Generally,
all options terminate 90 days after a change of control.
<PAGE>
Option Grants
The Board of directors adopted and the stockholders approved the
adoption of our 1999 stock option plan pursuant to which incentive stock
options or nonstatutory stock options to purchase up to 1,500,000 shares of
common stock may be granted to employees, directors and consultants.
Pursuant to the plan we granted stock options as follows:
<TABLE>
Date Granted Exercise Price Number of Shares
<S> <C> <C>
April 16, 1999
Granted $0.20 675,000
Exercised 0 0
Cancelled 0 0
July 1, 1999
Granted $1.00 145,600
Exercised 0 0
Cancelled 0 0
Total outstanding
November 1, 1999 820,600
</TABLE>
Transfer Agent
The transfer agent for the common stock is Pacific Stock Transfer,
5844 S. Pecos Road, Suite D, Las Vegas, Nevada 89120.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of common stock in the public
market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for
sale shortly after this offering because of certain restrictions on resale,
sales of substantial amounts of our common stock in the public market after
the restrictions lapse could adversely affect the prevailing market price
and our ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding an
aggregate of 6,767,950 shares of common stock, assuming:
(i) the maximum offering of 2,250,000 shares is achieved, and
(ii) no exercise of options to purchase 820,600 shares of common stock
outstanding as of the date of this prospectus.
Of these shares, the 2,250,000 shares of common stock sold in this
offering will be freely tradable without restriction or further
registration under the Securities Act, unless such shares are purchased by
our "affiliates" as that term is defined in Rule 144 under the Securities
Act. The remaining 4,517,950 shares of common stock held by our existing
stockholders are "restricted securities" as that term is defined in Rule
<PAGE>
144 under the Securities Act. Restricted shares may be sold in the public
market only if registered or if they qualify for an exemption from
registration under Rule 144 or 701 promulgated under the Securities Act.
As a result of the provisions of Rules 144 and 701, additional shares will
be available for sale in the public market as follows:
(i) no restricted shares will be eligible for immediate sale on the date
of this prospectus;
(ii) 140,000 restricted shares will be eligible for sale 90 days after the
date of this prospectus; and
(iii) the remainder of the restricted shares will be eligible for sale
from time to time thereafter upon expiration of their respective one-year
holding periods, subject to restrictions on such sales by affiliates and
certain vesting provisions.
In general, under Rule 144 as currently in effect, beginning 90 days
after the Effective Date, an affiliate of NFOX, or person (or persons whose
shares are aggregated) who has beneficially owned restricted shares for at
least one year will be entitled to sell in any three-month period a number
of shares that does not exceed the greater of:
(i) one percent of the then outstanding shares of our common
stock; or
(ii) the average weekly trading volume of our common stock in the
Over-the-Counter Bulletin Board during the four calendar
weeks immediately preceding the date on which notice of the
sale is filed with the SEC.
Sales pursuant to Rule 144 are subject to certain requirements
relating to manner of sale, notice, and the availability of current public
information about us. A person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of NFOX at any time during the
90 days immediately preceding the sale and who has beneficially owned
restricted shares for at least two years is entitled to sell such shares
under Rule 144(k) without regard to the resale limitations.
An employee, officer or director of or consultant to NFOX who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 under the Securities Act, which permits Affiliates
and non- Affiliates to sell their Rule 701 shares without having to comply
with Rule 144's holding period restrictions, in each case commencing 90
days after the date of this prospectus. In addition, non-Affiliates may
sell Rule 701 shares without complying with the public information, volume
and notice provisions of Rule 144.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In July 1999, we engaged the services of Barrie L. Friedman, P.C. of
Las Vegas, Nevada, to provide an audit of our financial statements for the
period from April 14, 1999 (inception) to June 30, 1999. This was our first
auditor. We have no disagreements with our auditor through the date of
this prospectus.
<PAGE>
NFOX.COM
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET - ASSETS F-2
BALANCE SHEET - LIABILITIES AND STOCKHOLDERS EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board Of Directors November 15, 1999
NFOX.COM
Las Vegas, Nevada
I have audited the Balance Sheet of NFOX.COM, (A Development Stage
Company), as of June 30, 1999, and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period April 14, 1999,
(inception) to June 30, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. I believe that my audit provides
a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NFOX.COM, (A
Development Stage Company), as of June 30, 1999, and the results of its
operations and cash flows for the period April 14, 1999, (inception) to
June 30, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #3 to the
financial statements, the Company has had no operations and has no
established source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in regard to
these matters are also described in Note #3. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Barry L. Friedman
Certified Public Accountant
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
BALANCE SHEET
ASSETS
As of As of
June 30, September 30,
1999 1999
(Audited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 205,923 $ 25,992
----------------------------
TOTAL CURRENT ASSETS $ 205,923 $ 25,992
----------------------------
FIXED ASSETS:
Equipment (Net) $ 6,610 $ 39,636
----------------------------
TOTAL FIXED ASSETS $ 6,610 $ 39,636
----------------------------
OTHER ASSETS:
Deposits $ 3,637 $ 3,637
Public Offering Costs 0 5,762
----------------------------
TOTAL OTHER ASSETS $ 3,637 $ 9,399
----------------------------
TOTAL ASSETS $216,170 $ 75,027
============================
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
As of As of
June 30, September
1999 30, 1999
(Audited) (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Payroll Taxes Payable $ 264 $ 10,550
Accounts Payable 0 434
Accrued Expenses 20,500 28,100
------------------------
TOTAL CURRENT LIABILITIES $ 20,764 $ 39,084
------------------------
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.001 par value
Authorized 10,000,000 shares
issued and outstanding at
September 30, 1999-None $ 0 $ 0
Common stock, $.001 par value
Authorized 25,000,000 shares
issued and outstanding at
September 30, 1999-4,517,950 shares 4,518 4,518
Additional paid-in capital 292,432 294,432
Deficit accumulated during
Development stage (101,544) (263,007)
------------------------
TOTAL STOCKHOLDER'S EQUITY $ 195,406 $ 35,943
------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 216,170 $ 75,027
========================
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF OPERATIONS
April 14, For the
l999 Three Months
(Inception) Ended
to June 30, September
1999 30, 1999
(Audited) (Unaudited)
<S> <C> <C>
INCOME:
Revenue $ 0 $ 0
EXPENSES:
Auto Allowance 3,000 3,600
Bank Charges 4 9
Consulting Services 37,500 0
Contract Labor 0 3,000
Data Processing 250 352
Depreciation 228 3,060
Dues and Subscriptions 0 600
Education and Seminars 0 450
Entertainment 245 2,497
Gifts 0 116
Insurance 0 572
Insurance - Medical 0 4,018
Interest Expense 0 2
Internet Expense 464 10,882
Legal Expense 10,000 0
Licensing Expense 120 0
Miscellaneous Expense 0 2,000
Moving Expense 0 1,000
Office Expense 0 3,797
Office Supplies 876 4,370
Organization Cost Expense 905 0
Postage 1,668 323
Printing 1,982 1,381
Professional Fees 0 3,095
Promotion 187 807
Public Offering Expense 590 (590)
Rent 3,318 10,737
Salary 35,000 89,328
Taxes - Other 239 50
Taxes - Payroll 1,794 8,935
Telephone 106 3,501
Trade Show Expense 1,099 690
Travel Expense 2,175 3,717
-------------------------
TOTAL EXPENSES $ 101,750 $ 162,299
-------------------------
NET LOSS OPERATIONS $ (101,750) $ (162,299)
Other income or expense
Interest Income 206 836
-------------------------
NET INCOME(+)/ OR LOSS(-) $ (101,544) $ (161,463)
=========================
Weighted average number of common shares
outstanding 4,237,666 4,517,950
=========================
Net Loss Per Share $ (.02) $ (.04)
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
accumulated
Additional during
paid in development
Common Stock capital stage
Shares Amount
<S> <C> <C> <C> <C>
April 14, 1999
Issued for cash 4,000,000 $ 4,000 $ 0 $ 0
April 16, 1999
for corporate
services 140,000 140 34,860
May 14, 1999
Public offering
for cash 160,000 160 39,840
June 30,1999
Public offering
for cash 217,950 218 217,732
Net loss,
April 14, 1999 (inception)
To June 30,1999 (101,544)
----------- --------- -------------- ----------
Balance,
June 30,1999 4,517,950 $ 4,518 $ 292,432 $ (101,544)
========== ========= ============= ===========
July 1, 1999 subscription
receivable for previous sale
of common stock - - $ 2,000
Net loss
Three Months Ended
September 30, 1999 (161,463)
Balance,
September 30, 1999 4,517,950 $ 4,518 $ 294,432 $(263,007)
=========== ========== ============ ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF CASH FLOWS
April 14,
l999 Three Months
(Inception) Ended
to June 30, September 30,
1999 1999
(Audited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income(+)/ Loss(-) $ (101,544) $ (161,463)
Adjustments to reconcile net income or
loss to net cash provided by operations:
Depreciation 228 3,060
Issue common stock for
Corporate Services 35,000 0
Accounts Payable 264 10,721
Accrued Expenses 20,500 7,600
---------------------------
Net cash provided by Operating Activities $ (45,552) $ (140,082)
===========================
INVESTING ACTIVITIES
Equipment (6,838) (36,085)
Deposits (3,637) 0
Public Offering Costs 0 (5,762)
---------------------------
Net cash provided by Investing Activities $ (10,475) $ (41,847)
===========================
FINANCING ACTIVITIES
Sale of Common Stock $ 261,950 $ 1,998
---------------------------
Net cash provided by Financing Activities $ 261,950 $ 1,998
===========================
Net increase in cash $ 205,923 $ (179,931)
Cash,
Beginning of period 0 205,923
----------------------------
Cash,
End of period $ 205,923 $ 25,992
============================
</TABLE>
See accompanying notes to financial statements
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized April 14, 1999, under the laws of the State
of Nevada, as NFOX.COM. The Company has no operations and in accordance
with SFAS #7, the Company is considered a development stage company.
On April 14, 1999, the Company issued 4,000,000 shares of its $0.001
par value common stock for cash of $4,000.00 to its directors.
On April 16, 1999, the Company issued a total of 140,000 shares of
common stock for services under Rule 701 of the Securities Act of 1933, as
amended. The shares were valued at $0.25 per share and are considered
"Restricted Securities". All of the shares were issued pursuant to written
agreements between the Company and the consultants on April 16, 1999.
On April 21, 1999, the Company initiated an exempt placement of
securities for 300,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $0.25 per share. On May 14, 1999, the Company terminated
the Offering following the sale of 160,000 shares for $40,000 in cash
consideration.
On May 21, 1999, the Company initiated an exempt placement of
securities for 925,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $1.00 per share. On June 30, 1999, the Company terminated
the Offering following the sale of 217,950 shares for $217,950 in cash
consideration.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. The cost of organization, $905.00, is being amortized over a period
of 60 months (April 14, 1999, through April 13, 2004).
3. Earnings per share is computed using the weighted average number of
shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES CONTINUED
5. Income Taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting Standards
No. 109, (SFAS #109), "Accounting for Income Taxes." A deferred tax asset
or liability is recorded for all temporary differences between financial
and tax reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the 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. However, the Company has no current source
of revenue. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern. It is management's plan to
seek additional capital through future private placements or public
offerings.
NOTE 4 - RELATED PARTY TRANSACTION
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 5 - OFFICERS ADVANCES
While the Company is seeking additional capital through a private
placement or a public offering, an officer of the Company has advanced
funds on behalf of the Company to pay for any costs incurred by it. These
funds are interest free. As of June 30, 1999, the amount advanced is zero.
NOTE 6 - LEASES
On June 30, 1999, the Company entered into an operating lease for
2,370 square feet of executive office space in Las Vegas, Nevada, which
expires June 30, 2002. Total rent to be paid for the period July 1, 1999,
to June 30, 2002, is $119,448.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 7 - EMPLOYMENT CONTRACTS
Karl Kraft, Chief Executive Officer and President, pursuant to a
written agreement dated April 16, 1999, and continuing for five (5) years,
in consideration for his services to the Company, Mr. Kraft will receive an
annual base salary of $120,000. Mr. Kraft has agreed to receive a reduced
salary of $5,000 per month and defer payment of the balance of his salary
until the Company releases its first two products or has sufficient capital
to pay his full salary. As additional compensation, Mr. Kraft receives an
auto allowance of $600 per month, such allowance will accrue and be paid
when the Company becomes profitable. In addition, Mr. Kraft received
options to purchase 500,000 shares of common stock at a price of $0.20 per
share for the term of his agreement. As of June 30, 1999, Mr. Kraft has
accrued $6,500 in consideration.
Charles Catania, Secretary and Treasurer, pursuant to a written
agreement dated April 16, 1999, and continuing for five (5) years, in
consideration for his services to the Company, Mr. Catania will receive an
annual base salary of $48,000 for the first year of employment, increasing
to $84,000 per year in the remaining years. Mr. Catania has agreed to
receive a reduced salary of $1,000 per month and defer payment of the
balance of his salary until the Company has sufficient capital to pay his
full salary. As additional compensation, Mr. Catania receives an auto
allowance of $600 per month, such allowance will accrue and be paid when
the Company becomes profitable. In addition, Mr. Catania received options
to purchase 100,000 shares of common stock at a price of $0.20 per share
for the term of his agreement. As of June 30, 1999, Mr. Catania has accrued
$11,500 in consideration.
On July 20, 1999, the board of directors of the Company agreed to
discontinue the accrual of the auto allowance as of July 1, 1999 to Messrs.
Kraft and Catania and will only pay the auto allowance when the Company
becomes profitable.
NOTE 8 - CONSULTING AGREEMENTS
On April 16, 1999, the Company retained the consulting services of Ray
Waddell to assist it in product development and market research. Mr.
Waddell is also a Director of the Company. The Company agreed to pay Mr.
Waddell at the rate of $1,000 per month for said consulting services for a
term of five (5) years. In addition, Mr. Waddell received options to
purchase 75,000 shares of common stock at a price of $0.20 per share for
the term of his agreement. As of June 30, 1999, Mr. Waddell has accrued
$2,500 in consideration.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 9 - STOCK OPTIONS
The Board of directors adopted and the stockholders approved the
adoption of the Company's 1999 Stock Option Plan pursuant to which
incentive stock options or nonstatutory stock options to purchase up to
1,500,000 shares of common stock may be granted to employees, directors and
consultants. Pursuant to the plan, on April 16, 1999, the Company granted
675,000 stock options to key management and consultants pursuant to certain
employment and consulting agreements as follows:
Exercise Price Number of Shares
Granted $0.20 675,000
Exercised 0 0
Cancelled 0 0
Total outstanding
June 30, 1999 675,000
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a
director involving any act or omission of any such director since
provisions have been made in the Articles of Incorporation limiting such
liability. The foregoing provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of
loyalty to us or our stockholders, (ii) for acts or omissions not in good
faith or, which involve intentional misconduct or a knowing violation of
law, (iii) under applicable Sections of the Nevada Revised Statutes, (iv)
the payment of dividends in violation of Section 78.300 of the Nevada
Revised Statutes or, (v) for any transaction from which the director
derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers,
and employees of NFOX in most cases for any liability suffered by them or
arising out of their activities as directors, officers, and employees of
NFOX if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a
settlement the indemnification will apply only when the Board of Directors
approves such settlement and reimbursement as being for the best interests
of the Corporation. The Bylaws, therefore, limit the liability of directors
to the maximum extent permitted by Nevada law (Section 78.751).
Our officers and directors are accountable to us as fiduciaries, which
means they are required to exercise good faith and fairness in all dealings
affecting us. In the event that a stockholder believes the officers and/or
directors have violated their fiduciary duties to us, the stockholder may,
subject to applicable rules of civil procedure, be able to bring a class
action or derivative suit to enforce the stockholder's rights, including
rights under certain federal and state securities laws and regulations to
recover damages from and require an accounting by management. Stockholders
who have suffered losses in connection with the purchase or sale of their
interest in NFOX in connection with such sale or purchase, including the
misapplication by any such officer or director of the proceeds from the
sale of these securities, may be able to recover such losses from us.
RECENT SALES OF UNREGISTERED SECURITIES
On April 14, 1999, we issued 4,000,000 shares of our $0.001 par value
common stock for cash of $4,000.00 to our three directors. All of the
shares were issued pursuant to Rule 4(2).
On April 16, 1999, we granted options to purchase our common stock in
the following amounts: 500,000 options to Karl Kraft, our President;
100,000 to Charles Catania, our Secretary/Treasurer; and 75,000 to Ray
Waddell, a director and consultant. The options vested immediately and are
exercisable over five years at a per share price of $0.20.
On April 16, 1999, we issued a total of 140,000 shares of common stock
to five individuals for various consulting services associated with the
structuring of our future public company status. The shares were issued
under Rule 701 of the Securities Act of 1933, as amended. The shares were
valued at $0.25 per share and are considered "Restricted Securities". All
of the shares were issued pursuant to written agreements between NFOX and
the consultants on April 16, 1999.
<PAGE>
In April of 1999, we initiated an exempt private placement of
securities of 300,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $.25 per share. The shares were offered directly by us to
unaccredited investors which were known by our officers and directors. The
shares were considered "restricted securities." On May 14, 1999 we
terminated the offering following the sale of 160,000 shares for $40,000 in
cash consideration.
On May 21, 1999, we initiated an exempt placement of securities for
925,000 shares of common stock, pursuant to Rule 504 of Reg. D, at a price
of $1.00 per share. Again, we offered the shares to unaccredited investors
known by us. On June 30, 1999, we terminated the offering following the
sale of 217,950 shares for $217,950 in cash consideration.
On July 1, 1999, we granted 145,600 options to purchase our common
stock. The options were granted to six of our employees and vest equally
over a three-year period as long as the employee stays with NFOX. The
options, once vested, are exercisable over five years at a per share price
of $1.00. Employees have 30 days from the date of termination to exercise
any vested options.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
UNDERTAKINGS
A. The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding the
forgoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation From the low or high end of
the estimated maximum offering range may be reflected in the form of
prospects filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
<PAGE>
B.
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer 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.
(2) In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of
the small business issuer 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 small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorize, in the City of Las Vegas, State of Nevada, on
November 17, 1999.
NFOX.COM
By: /s/ Karl Kraft
Karl Kraft, President
Special Power of Attorney
The undersigned constitute and appoint Karl Kraft their true and
lawful attorney-in-fact and agent with full power of substitution, for him
and in his name, place, and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this Form SB-2
Registration Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting such attorney-in-fact the full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that
such attorney in-fact may lawfully do or cause to be done by virtue hereof.
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 date indicated:
<PAGE>
Signature Title Date
/s/ Karl Kraft President, Chief January 11, 2000
Karl Kraft Executive Officer,
Director
/s/ Charles Catania Vice President, January 11, 2000
Charles Catania Secretary, Director
/s/ Ray Waddell Director January 11, 2000
Ray Waddell
<PAGE>
Exhibit Description
Number
(1) N/A
(2) N/A
(3)(I) Articles of Incorporation
(a) Articles of Incorporation of Anonymous Data
Corporation
(3)(ii) Bylaws
(a) Bylaws of Anonymous Data Corporation
(4) Instruments defining the rights of security holders:
(4)(I) (a) Articles of Incorporation for Anonymous Data
Corporation, a Nevada Corporation
(b) Bylaws of Anonymous Data Corporation, a Nevada
Corporation
(c) Stock Certificate Specimen
(5)* Opinion re: Legality
(a) Sperry Young & Stoecklein
(6) N/A
(7) N/A
(8) N/A
(9) N/A
(10)(i) Material Contracts
(a) 1998 Stock Option Plan
(b) Employment Agreement for Karl Kraft
(c) Employment Agreement for Charles Catania
(d) Consulting Agreement for Ray Waddell
(e) Commercial Lease for Company's Facilities
(f) Addendum for Commercial Lease
* (g) Consulting Agreement for Kellie Mahon
* (h) Consulting Agreement for Todd Ream
* (i) Consulting Agreement for Debra Amigone
* (j) Consulting Agreement for Anthony DeMint
* (k) Subscription Agreement
(11) Statement regarding computation of per share earnings
(a) Please see Statement of Operations of
the Audited Financials filed herewith
(12) N/A
(13) N/A
(14) N/A
(15) N/A
(16) N/A
(17) N/A
(18) N/A
(19) N/A
(20) N/A
(21) N/A
(22) N/A
(23)* Consent of experts
(a) Sperry Young & Stoecklein
(b) Barry L. Friedman, P.C.
(24) N/A
(25) N/A
(26) N/A
(27) Financial Data Schedule
<PAGE>
No dealer, salesman or any other
person has been authorized to give any
information or to make any
representation other than those $4,500,000
contained in this prospectus and, if
given or made, such information or
representation must not be relied upon
as having been authorized by us. This
prospectus does not constitute an
offer to sell or a solicitation of any
offer to buy any security other than
the shares of common stock offered by
this prospectus, nor does it
constitute an offer to sell or a
solicitation of any offer to buy the
shares of a common stock 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 any person to whom it is
unlawful to make such offer or
solicitation. Neither the delivery of
this prospectus nor any sale made
hereunder shall, under any
circumstances create any implication
that information contained herein is
correct as of any time subsequent to
the date hereof.
_____________________ _____________
TABLE OF CONTENTS PROSPECTUS
Page
Prospectus Summary. 1
Risk Factors. 2
Use of Proceeds. 7
Determination of Offering Price. 8
Plan of Distribution. 8
Capitalization. 9
Summary Financial Information. 10
Dilution. 11
Litigation. 11
Management. 12
Principal Stockholders. 13
Description of Securities. 13
Legal Matters. 15
Experts. 16
Our Business. 16
Reports to Stockholders. 19
Management Discussion and
Analysis. 19
Facilities. 21
Certain Transactions. 21
Market Price of Common Stock. 21
Dividends. 22
Executive Compensation. 22
Shares Eligible for Future Sale. 24
Changes in and Disagreements
with Accountants. 25
Independent Auditors Report. F-1
Balance Sheet. F-2 ___________________, 2000
Statement of Operations. F-4
Statement of Stockholders'
Equity. F-5
Statement of Cash Flows. F-6
Notes to Financial Statements. F-7
SPERRY YOUNG & STOECKLEIN
Telephone (702) 794-2590
Facsimile (702) 794-0744
DONALD J. STOECKLEIN
ATTORNEY AT LAW
Practice Limited to Federal Securities
- -------------------------------------------------------------------------------
1850 E. Flamingo Rd. Suite 111, Las Vegas, Nevada 89119
January 11, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: NFOX.COM REGISTRATION STATEMENT ON FORM SB-2
Ladies and Gentlemen:
As counsel to NFOX.COM (the "Company"), we are rendering
this opinion in connection with a proposed sale of those certain
shares of the Company's newly-issued Common Stock as set forth in
the Registration Statement on Form SB-2 to which this opinion is
being filed as Exhibit 5(a) & 23(a) (the "Shares") pursuant to
Rule 462(b) under the Securities Act of 1933, as amended. We have
examined all instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the originals of all
documents submitted to us as copies.
We express no opinion with respect to (i) the availability
of equitable remedies, including specific performance, or (ii)
the effect of bankruptcy, insolvency, reorganization, moratorium
or equitable principles relating to or limiting creditors' rights
generally.
Based on such examination, we are of the opinion that the
Shares identified in the above-referenced Registration Statement
will be, upon effectiveness of the Registration Statement and
receipt by the Company of payment therefor, validly authorized,
legally issued, fully paid and nonassessable in accordance with
the Nevada Corporation Laws.
We hereby consent to the filing of this opinion as an
exhibit to the above-referenced Registration Statement and to the
use of our name wherever it appears in said Registration
Statement, including the Prospectus constituting a part thereof,
as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Donald J. Stoecklein
Sperry Young & Stoecklein
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into by
and between
Kellie Mahon and NFOX.COM
("Consultant"). ("Company"),
WHEREAS, Company desires to employ the Consultant as an independent
contractor, and
WHEREAS, Consultant is willing to accept such employment by Company on the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Duties. During the term of this Agreement, Consultant agrees to be
employed by and to serve Company as a Consultant, and the Company agrees to
employ and retain Consultant in such capacities. Consultant shall devote a
portion of his business time, energy, and skill to the affairs of the
Company as an Consultant, and shall report to the Company as appropriate
and Consultant shall at all times during the term of this Agreement have
powers and duties at least commensurate with his position as Consultant to
the Company.
2. Term of Employment. The Initial Term of this Agreement shall be from
April 16, 1999 to April 1, 2000.
3. Extension of Term. At any time prior to the expiration of the Initial
Term, Company and Consultant may by mutual written agreement extend
Consultant's employment under the terms of this Agreement for such
additional periods as they may agree.
4. Scope of Work. Subject to the terms and conditions hereinafter
provided, Company engages the Consultant for the furnishing of services
specifically as advisor in the areas of Business Organization and Audit
Preparation in Las Vegas and for such other tasks as may be mutually agreed
upon in writing between the Consultant and Company.
5. Compensation. As payment for the services to be rendered by
Consultant, the Company agrees to pay to Consultant compensation of 5,000
restricted common shares of the Companies stock valued at $.25 per share
plus authorized and reasonable expenses in regards to duties assigned by
Company to Consultant provided such expenses are approved in advance by
Company.
6. Payment Obligations. Company's obligation to pay Consultant the
compensation and to make the arrangements provided herein shall be
unconditional, and Consultant shall have no obligation whatsoever to
mitigate damages hereunder. If litigation shall be brought to enforce or
interpret any provision contained herein, Company, to the extent permitted
by applicable law and the Company' Articles of Incorporation and Bylaws,
hereby indemnifies Consultant for Consultant's reasonable attorneys' fees
and disbursements incurred in such litigation.
<PAGE>
7. Confidentiality. Consultant agrees that all confidential and
proprietary information relating to the business of Company shall be kept
and treated as confidential both during and after the term of this
Agreement, except as may be permitted in writing by Company's Board of
Directors or as such information is within the public domain or comes
within the public domain without any breach of this Agreement.
8. Withholdings. All compensation and benefits to Consultant hereunder
shall not be reduced by federal, state, local and other withholdings and
similar taxes and payments required by applicable law and shall be the
responsibility of Consultant (see section 17).
9. Indemnification. In addition to any rights to indemnification to
which Consultant is entitled to under the Company's Articles of
Incorporation and Bylaws, Company shall indemnify Consultant at all times
during and after the term of this Agreement to the maximum extent permitted
under applicable Nevada state law, and shall pay Consultant's expenses in
defending any civil or criminal action, suit, or proceeding in advance of
the final disposition of such action, suit or proceeding, to the maximum
extent permitted under such applicable state laws.
10. Notice of Termination. Either the Consultant or the Company may effect
a termination of this Agreement pursuant to thirty (30) days written notice
to the other party of such termination.
11. Minimum Compensation. There is no guarantee, other than the shares
referenced in paragraph five of this Agreement, of any minimum amount to be
paid under this contract.
12. Expenditure Limitation. For services, travel and living expenses,
the total authorized expenditure limitation hereunder is not to exceed
$1,000 per calendar year unless prior authorization is obtained in writing
from Company.
13. Applicable Law. Any controversy or claim arising out of or relating
to this Contract shall be governed by the laws of the State of Nevada. Any
litigation under this Contract, if commenced by Consultant, shall be
brought in a Court of competent jurisdiction in the State of Nevada. All
matters pertaining to this Agreement (including its interpretation,
application, validity, performance and breach), shall be governed by,
construed and enforced in accordance with the laws of the State of Nevada.
The parties herein waive trial by jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction located in
Clark County, State of Nevada. In the event that litigation results from or
arises out of this Agreement or the performance thereof, the parties agree
to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
14. Assignment. This Contract is for personal services and shall not be
transferred or assigned by the Consultant without prior written consent of
Company.
15. Confidential Matters. The Consultant shall keep in strictest
confidence all information relating to this Contract which may be acquired
in connection with or as a result of this Contract.
16. Reports. The Consultant, when directed, shall provide written reports
with the respect to the services rendered hereunder.
<PAGE>
17. Consultant. Both the Company and the Consultant agree that the
Consultant will act as an Consultant in the performance of its duties under
this Agreement. Accordingly, the Consultant shall be responsible for
payment of all taxes, including Federal, State and local taxes arising out
of the Consultant's activities in accordance with this Agreement, including
by way of illustration, without limitation, Federal and State income tax,
Social Security tax Unemployment Insurance taxes and any other taxes or
business license fees as may be required.
18. Signatures. Both the Company and the Consultant agree to the above
Agreement. Signed this 16th day of April, 1999.
CONSULTANT
/s/ Kelli Mahon
__________________________
Kellie Mahon
NFOX.COM
/s/ Karl Kraft
__________________________
Karl Kraft-President
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into by
and between
Todd S. Ream and NFOX.COM
("Consultant"). ("Company"),
WHEREAS, Company desires to employ the Consultant as an independent
contractor, and
WHEREAS, Consultant is willing to accept such employment by Company on the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Duties. During the term of this Agreement, Consultant agrees to be
employed by and to serve Company as a Consultant, and the Company agrees to
employ and retain Consultant in such capacities. Consultant shall devote a
portion of his business time, energy, and skill to the affairs of the
Company as an Consultant, and shall report to the Company as appropriate
and Consultant shall at all times during the term of this Agreement have
powers and duties at least commensurate with his position as Consultant to
the Company.
2. Term of Employment. The Initial Term of this Agreement shall be from
April 16, 1999 to April 1, 2000.
3. Extension of Term. At any time prior to the expiration of the Initial
Term, Company and Consultant may by mutual written agreement extend
Consultant's employment under the terms of this Agreement for such
additional periods as they may agree.
4. Scope of Work. Subject to the terms and conditions hereinafter
provided, Company engages the Consultant for the furnishing of services
specifically as advisor in the areas of Business Organization - Investor
Relations in Las Vegas and for such other tasks as may be mutually agreed
upon in writing between the Consultant and Company.
5. Compensation. As payment for the services to be rendered by
Consultant, the Company agrees to pay to Consultant compensation of 5,000
restricted common shares of the Companies stock valued at $.25 per share
plus authorized and reasonable expenses in regards to duties assigned by
Company to Consultant provided such expenses are approved in advance by
Company.
6. Payment Obligations. Company's obligation to pay Consultant the
compensation and to make the arrangements provided herein shall be
unconditional, and Consultant shall have no obligation whatsoever to
mitigate damages hereunder. If litigation shall be brought to enforce or
interpret any provision contained herein, Company, to the extent permitted
by applicable law and the Company' Articles of Incorporation and Bylaws,
hereby indemnifies Consultant for Consultant's reasonable attorneys' fees
and disbursements incurred in such litigation.
<PAGE>
7. Confidentiality. Consultant agrees that all confidential and
proprietary information relating to the business of Company shall be kept
and treated as confidential both during and after the term of this
Agreement, except as may be permitted in writing by Company's Board of
Directors or as such information is within the public domain or comes
within the public domain without any breach of this Agreement.
8. Withholdings. All compensation and benefits to Consultant hereunder
shall not be reduced by federal, state, local and other withholdings and
similar taxes and payments required by applicable law and shall be the
responsibility of Consultant (see section 17).
9. Indemnification. In addition to any rights to indemnification to
which Consultant is entitled to under the Company's Articles of
Incorporation and Bylaws, Company shall indemnify Consultant at all times
during and after the term of this Agreement to the maximum extent permitted
under applicable Nevada state law, and shall pay Consultant's expenses in
defending any civil or criminal action, suit, or proceeding in advance of
the final disposition of such action, suit or proceeding, to the maximum
extent permitted under such applicable state laws.
10. Notice of Termination. Either the Consultant or the Company may effect
a termination of this Agreement pursuant to thirty (30) days written notice
to the other party of such termination.
11. Minimum Compensation. There is no guarantee, other than the shares
referenced in paragraph five of this Agreement, of any minimum amount to
be paid under this contract.
12. Expenditure Limitation. For services, travel and living expenses,
the total authorized expenditure limitation hereunder is not to exceed
$1,000 per calendar year unless prior authorization is obtained in writing
from Company.
13. Applicable Law. Any controversy or claim arising out of or relating
to this Contract shall be governed by the laws of the State of Nevada. Any
litigation under this Contract, if commenced by Consultant, shall be
brought in a Court of competent jurisdiction in the State of Nevada. All
matters pertaining to this Agreement (including its interpretation,
application, validity, performance and breach), shall be governed by,
construed and enforced in accordance with the laws of the State of Nevada.
The parties herein waive trial by jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction located in
Clark County, State of Nevada. In the event that litigation results from or
arises out of this Agreement or the performance thereof, the parties agree
to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
14. Assignment. This Contract is for personal services and shall not be
transferred or assigned by the Consultant without prior written consent of
Company.
15. Confidential Matters. The Consultant shall keep in strictest
confidence all information relating to this Contract which may be acquired
in connection with or as a result of this Contract.
16. Reports. The Consultant, when directed, shall provide written reports
with the respect to the services rendered hereunder.
<PAGE>
17. Consultant. Both the Company and the Consultant agree that the
Consultant will act as an Consultant in the performance of its duties under
this Agreement. Accordingly, the Consultant shall be responsible for
payment of all taxes, including Federal, State and local taxes arising out
of the Consultant's activities in accordance with this Agreement, including
by way of illustration, without limitation, Federal and State income tax,
Social Security tax Unemployment Insurance taxes and any other taxes or
business license fees as may be required.
18. Signatures. Both the Company and the Consultant agree to the above
Agreement. Signed this 16th day of April, 1999.
CONSULTANT
/s/ Todd Ream
__________________________
Todd Ream
NFOX.COM
/s/ Karl Kraft
__________________________
Karl Kraft-President
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into by
and between
Debra K. Amigone and NFOX.COM
("Consultant"). ("Company"),
WHEREAS, Company desires to employ the Consultant as an independent
contractor, and
WHEREAS, Consultant is willing to accept such employment by Company on the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Duties. During the term of this Agreement, Consultant agrees to be
employed by and to serve Company as a Consultant, and the Company agrees to
employ and retain Consultant in such capacities. Consultant shall devote a
portion of his business time, energy, and skill to the affairs of the
Company as an Consultant, and shall report to the Company as appropriate
and Consultant shall at all times during the term of this Agreement have
powers and duties at least commensurate with his position as Consultant to
the Company.
2. Term of Employment. The Initial Term of this Agreement shall be from
April 16, 1999 to April 1, 2000.
3. Extension of Term. At any time prior to the expiration of the Initial
Term, Company and Consultant may by mutual written agreement extend
Consultant's employment under the terms of this Agreement for such
additional periods as they may agree.
4. Scope of Work. Subject to the terms and conditions hereinafter
provided, Company engages the Consultant for the furnishing of services
specifically as advisor in the areas of Business Organization and Corporate
Structuring in Las Vegas and for such other tasks as may be mutually agreed
upon in writing between the Consultant and Company.
5. Compensation. As payment for the services to be rendered by
Consultant, the Company agrees to pay to Consultant compensation of 10,000
restricted common shares of the Companies stock valued at $.25 per share
plus authorized and reasonable expenses in regards to duties assigned by
Company to Consultant provided such expenses are approved in advance by
Company.
6. Payment Obligations. Company's obligation to pay Consultant the
compensation and to make the arrangements provided herein shall be
unconditional, and Consultant shall have no obligation whatsoever to
mitigate damages hereunder. If litigation shall be brought to enforce or
interpret any provision contained herein, Company, to the extent permitted
by applicable law and the Company' Articles of Incorporation and Bylaws,
hereby indemnifies Consultant for Consultant's reasonable attorneys' fees
and disbursements incurred in such litigation.
<PAGE>
7. Confidentiality. Consultant agrees that all confidential and
proprietary information relating to the business of Company shall be kept
and treated as confidential both during and after the term of this
Agreement, except as may be permitted in writing by Company's Board of
Directors or as such information is within the public domain or comes
within the public domain without any breach of this Agreement.
8. Withholdings. All compensation and benefits to Consultant hereunder
shall not be reduced by federal, state, local and other withholdings and
similar taxes and payments required by applicable law and shall be the
responsibility of Consultant (see section 17).
9. Indemnification. In addition to any rights to indemnification to
which Consultant is entitled to under the Company's Articles of
Incorporation and Bylaws, Company shall indemnify Consultant at all times
during and after the term of this Agreement to the maximum extent permitted
under applicable Nevada state law, and shall pay Consultant's expenses in
defending any civil or criminal action, suit, or proceeding in advance of
the final disposition of such action, suit or proceeding, to the maximum
extent permitted under such applicable state laws.
10. Notice of Termination. Either the Consultant or the Company may effect
a termination of this Agreement pursuant to thirty (30) days written notice
to the other party of such termination.
11. Minimum Compensation. There is no guarantee, other than the shares
referenced in paragraph five of this agreement, of any minimum amount to be
paid under this contract.
12. Expenditure Limitation. For services, travel and living expenses,
the total authorized expenditure limitation hereunder is not to exceed
$1,000 per calendar year unless prior authorization is obtained in writing
from Company.
13. Applicable Law. Any controversy or claim arising out of or relating
to this Contract shall be governed by the laws of the State of Nevada. Any
litigation under this Contract, if commenced by Consultant, shall be
brought in a Court of competent jurisdiction in the State of Nevada. All
matters pertaining to this Agreement (including its interpretation,
application, validity, performance and breach), shall be governed by,
construed and enforced in accordance with the laws of the State of Nevada.
The parties herein waive trial by jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction located in
Clark County, State of Nevada. In the event that litigation results from or
arises out of this Agreement or the performance thereof, the parties agree
to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
14. Assignment. This Contract is for personal services and shall not be
transferred or assigned by the Consultant without prior written consent of
Company.
15. Confidential Matters. The Consultant shall keep in strictest
confidence all information relating to this Contract which may be acquired
in connection with or as a result of this Contract.
16. Reports. The Consultant, when directed, shall provide written reports
with the respect to the services rendered hereunder.
<PAGE>
17. Consultant. Both the Company and the Consultant agree that the
Consultant will act as an Consultant in the performance of its duties under
this Agreement. Accordingly, the Consultant shall be responsible for
payment of all taxes, including Federal, State and local taxes arising out
of the Consultant's activities in accordance with this Agreement, including
by way of illustration, without limitation, Federal and State income tax,
Social Security tax Unemployment Insurance taxes and any other taxes or
business license fees as may be required.
18. Signatures. Both the Company and the Consultant agree to the above
Agreement. Signed this 16th day of April, 1999.
CONSULTANT
/s/ Debra Amigone
__________________________
Debra K. Amigone
NFOX.COM
/s/ Karl Kraft
__________________________
Karl Kraft-President
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into by
and between
Anthony N. DeMint and NFOX.COM
("Consultant"). ("Company"),
WHEREAS, Company desires to employ the Consultant as an independent
contractor, and
WHEREAS, Consultant is willing to accept such employment by Company on the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Duties. During the term of this Agreement, Consultant agrees to be
employed by and to serve Company as a Consultant, and the Company agrees to
employ and retain Consultant in such capacities. Consultant shall devote a
portion of his business time, energy, and skill to the affairs of the
Company as an Consultant, and shall report to the Company as appropriate
and Consultant shall at all times during the term of this Agreement have
powers and duties at least commensurate with his position as Consultant to
the Company.
2. Term of Employment. The Initial Term of this Agreement shall be from
April 16, 1999 to April 1, 2000.
3. Extension of Term. At any time prior to the expiration of the Initial
Term, Company and Consultant may by mutual written agreement extend
Consultant's employment under the terms of this Agreement for such
additional periods as they may agree.
4. Scope of Work. Subject to the terms and conditions hereinafter
provided, Company engages the Consultant for the furnishing of services
specifically as advisor in the areas of Business Organization and Capital
Formation in Las Vegas and for such other tasks as may be mutually agreed
upon in writing between the Consultant and Company.
5. Compensation. As payment for the services to be rendered by
Consultant, the Company agrees to pay to Consultant compensation of 20,000
restricted common shares of the Companies stock valued at $.25 per share
plus authorized and reasonable expenses in regards to duties assigned by
Company to Consultant provided such expenses are approved in advance by
Company.
6. Payment Obligations. Company's obligation to pay Consultant the
compensation and to make the arrangements provided herein shall be
unconditional, and Consultant shall have no obligation whatsoever to
mitigate damages hereunder. If litigation shall be brought to enforce or
interpret any provision contained herein, Company, to the extent permitted
by applicable law and the Company' Articles of Incorporation and Bylaws,
hereby indemnifies Consultant for Consultant's reasonable attorneys' fees
and disbursements incurred in such litigation.
<PAGE>
7. Confidentiality. Consultant agrees that all confidential and
proprietary information relating to the business of Company shall be kept
and treated as confidential both during and after the term of this
Agreement, except as may be permitted in writing by Company's Board of
Directors or as such information is within the public domain or comes
within the public domain without any breach of this Agreement.
8. Withholdings. All compensation and benefits to Consultant hereunder
shall not be reduced by federal, state, local and other withholdings and
similar taxes and payments required by applicable law and shall be the
responsibility of Consultant (see section 17).
9. Indemnification. In addition to any rights to indemnification to
which Consultant is entitled to under the Company's Articles of
Incorporation and Bylaws, Company shall indemnify Consultant at all times
during and after the term of this Agreement to the maximum extent permitted
under applicable Nevada state law, and shall pay Consultant's expenses in
defending any civil or criminal action, suit, or proceeding in advance of
the final disposition of such action, suit or proceeding, to the maximum
extent permitted under such applicable state laws.
10. Notice of Termination. Either the Consultant or the Company may effect
a termination of this Agreement pursuant to thirty (30) days written notice
to the other party of such termination.
11. Minimum Compensation. There is no guarantee, other than the shares
referenced in paragraph five of this Agreement, of any minimum amount to be
paid under this contract.
12. Expenditure Limitation. For services, travel and living expenses,
the total authorized expenditure limitation hereunder is not to exceed
$1,000 per calendar year unless prior authorization is obtained in writing
from Company.
13. Applicable Law. Any controversy or claim arising out of or relating
to this Contract shall be governed by the laws of the State of Nevada. Any
litigation under this Contract, if commenced by Consultant, shall be
brought in a Court of competent jurisdiction in the State of Nevada. All
matters pertaining to this Agreement (including its interpretation,
application, validity, performance and breach), shall be governed by,
construed and enforced in accordance with the laws of the State of Nevada.
The parties herein waive trial by jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction located in
Clark County, State of Nevada. In the event that litigation results from or
arises out of this Agreement or the performance thereof, the parties agree
to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing party may be
entitled. In such event, no action shall be entertained by said court or
any court of competent jurisdiction if filed more than one year subsequent
to the date the cause(s) of action actually accrued regardless of whether
damages were otherwise as of said time calculable.
14. Assignment. This Contract is for personal services and shall not be
transferred or assigned by the Consultant without prior written consent of
Company.
15. Confidential Matters. The Consultant shall keep in strictest
confidence all information relating to this Contract which may be acquired
in connection with or as a result of this Contract.
16. Reports. The Consultant, when directed, shall provide written reports
with the respect to the services rendered hereunder.
<PAGE>
17. Consultant. Both the Company and the Consultant agree that the
Consultant will act as an Consultant in the performance of its duties under
this Agreement. Accordingly, the Consultant shall be responsible for
payment of all taxes, including Federal, State and local taxes arising out
of the Consultant's activities in accordance with this Agreement, including
by way of illustration, without limitation, Federal and State income tax,
Social Security tax Unemployment Insurance taxes and any other taxes or
business license fees as may be required.
18. Signatures. Both the Company and the Consultant agree to the above
Agreement. Signed this 16th day of April, 1999.
CONSULTANT
/s/ Anthony DeMint
__________________________
Anthony N. DeMint
NFOX.COM
/s/ Karl Kraft
__________________________
Karl Kraft-President
Investor:
Investor #:
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
INVESTMENT AGREEMENT
and
LETTER OF INVESTMENT INTENT
NFOX.COM
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
I/We hereby tenders this subscription for the purchase of
________________ shares ("Shares") of the common stock ("Common Stock") of
NFOX.COM, a Nevada corporation ("NFOX"), at a price of $2.00 per Share. A
check or other form of payment payable to "NFOX.COM (IPO account)" in the
amount of $__________________ is also delivered herewith. By execution
below, I/We acknowledges that NFOX is relying upon the accuracy and
completeness of the representations contained herein in complying with its
obligations under applicable securities laws.
An accepted copy of this Agreement will be returned to you as a
receipt, and the physical stock certificates shall be delivered to you
within thirty (30) days of the date the Subscription Agreement is accepted
by NFOX.
Securities Offered - NFOX is offering a minimum five hundred thousand
(500,000) shares and a maximum of two million two hundred fifty thousand
(2,250,000) shares, at two dollars ($2.00) per share.
Minimum Offering Amount - Funds received prior to reaching the 500,000
share minimum will be held in an interest bearing money market account and
will not be used until the minimum offering is achieved. If NFOX does not
sell at least the minimum of 500,000 shares within 180 days after
commencement of the offering, the offering will terminate and all money
paid for shares will be promptly returned to you, with interest and without
deduction. NFOX's officers and directors will have sole authority over the
funds raised, including the funds prior to the achievement of the minimum
offering.
Limitations in Certain States - Depending on the state of your
residence, there may be certain investor suitability qualifications and
numerical limitations imposed on NFOX in order to qualify the offering as
exempt from securities registration within such state(s). All Subscriptions
shall be subject to all such applicable state securities laws and
regulations.
<PAGE>
1. In connection with this investment in NFOX, I/we represent and warrant
as follows:
(a) You have read NFOX's Initial Public Offering Prospectus dated,
_______________, 2000, prior to remitting payment for the Shares.
(b) You have been given full and complete access to information regarding
NFOX and have utilized such access to your satisfaction for the purpose of
obtaining such information regarding NFOX as you have reasonably requested;
and, particularly, you have been given reasonable opportunity to ask
questions of, and receive answers from, representatives of NFOX concerning
the terms and conditions of the offering of the Shares and to obtain any
additional information, to the extent reasonably available;
(c) That you recognize that NFOX has a limited operating history and that
the Shares as an investment involve a high degree of risk, including, but
not limited to, the risk of economic losses from operations of NFOX;
(d) In the event that it becomes necessary to prepare and deliver to NFOX
a Purchaser Suitability Questionnaire ("Questionnaire") as a requirement of
state law, all of the information contained in such Questionnaire is
correct and accurate as of the date thereof and may be relied upon by NFOX
in complying with all applicable state securities laws and regulations.
(e) NFOX and the other purchasers are relying on the truth and accuracy of
the declarations, representations and warranties herein made by you.
Accordingly, the foregoing representations and warranties and undertakings
are made by you with the intent that they may be relied upon in determining
your suitability as a purchaser. You agree that such representations and
warranties shall survive the acceptance by you as a purchaser, and you
indemnify and agree to hold harmless, NFOX, its agents, officers,
directors, and its financial consultants or advisors, and each other
purchaser from and against all damages, claims, expenses, losses or actions
resulting from the untruth of any of the warranties and representations
contained in this Subscription Agreement.
2. The undersigned, if other than an individual, makes the following
additional representations:
(a) The undersigned was not organized for the specific purpose of
acquiring the Shares; and
(b) This Subscription Agreement and Letter of Investment Intent have been
duly authorized by all necessary action on the part of the undersigned,
have been duly executed by an authorized representative of the undersigned,
and are legal, valid and binding obligations of the undersigned enforceable
in accordance with their respective terms.
<PAGE>
Please register the Shares that I/(we) am/(are) purchasing as follows:
Name(s) Date
______________________________________
As (check one):
_____Individual _____Corporation _____Existing Partnership
_____Joint Tenants WROS _____Tenants-in-Common _____Trust
_____Minor with Adult Custodian under the Uniform Gift to Minors Act
_____Tenants in the Entirety (Married Couples Only)
<PAGE>
INDIVIDUAL
Address to which Correspondence
Should be Directed
Signature (Individual) Name
Street Address
Signature (All record holders should sign) City, State and Zip Code
Name(s) Typed or Printed Tax Identification
or Social Security Number
Telephone Number
<PAGE>
CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY
Address to which Correspondence
Should be Directed
Name of Entity Street Address
By:
* Signature City, State and Zip Code
Its:
Title Tax Identification or Social
Security Number
( )
Name Typed or Printed Telephone Number
*If Shares are being subscribed for by a corporation, partnership, trust or
other entity, the Certificate of Signatory on the following page must also
be completed.
<PAGE>
CERTIFICATE OF SIGNATORY
To be completed if Shares are being subscribed for by an entity.
I, _____________________________________________________, am the
President of ______________________________________________________ (the
"Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and Letter of
Investment Intent and to purchase and hold the Shares, and certify that the
Subscription Agreement and Letter of Investment Intent has been duly and
validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.
IN WITNESS WHEREOF, I have hereto set my hand this ______ day of
________________________, 2000.
<PAGE>
ACCEPTANCE
This Subscription Agreement is accepted as of
____________________________, 2000.
NFOX.COM
a Nevada corporation
By:
Officer
SPERRY YOUNG & STOECKLEIN
Telephone (702) 794-2590
Facsimile (702) 794-0744
DONALD J. STOECKLEIN
ATTORNEY AT LAW
Practice Limited to Federal Securities
- -------------------------------------------------------------------------------
1850 E. Flamingo Rd. Suite 111, Las Vegas, Nevada 89119
January 11, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: NFOX.COM REGISTRATION STATEMENT ON FORM SB-2
Ladies and Gentlemen:
As counsel to NFOX.COM (the "Company"), we are rendering
this opinion in connection with a proposed sale of those certain
shares of the Company's newly-issued Common Stock as set forth in
the Registration Statement on Form SB-2 to which this opinion is
being filed as Exhibit 5(a) & 23(a) (the "Shares") pursuant to
Rule 462(b) under the Securities Act of 1933, as amended. We have
examined all instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the originals of all
documents submitted to us as copies.
We express no opinion with respect to (i) the availability
of equitable remedies, including specific performance, or (ii)
the effect of bankruptcy, insolvency, reorganization, moratorium
or equitable principles relating to or limiting creditors' rights
generally.
Based on such examination, we are of the opinion that the
Shares identified in the above-referenced Registration Statement
will be, upon effectiveness of the Registration Statement and
receipt by the Company of payment therefor, validly authorized,
legally issued, fully paid and nonassessable in accordance with
the Nevada Corporation Laws.
We hereby consent to the filing of this opinion as an
exhibit to the above-referenced Registration Statement and to the
use of our name wherever it appears in said Registration
Statement, including the Prospectus constituting a part thereof,
as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Donald J. Stoecklein
Sperry Young & Stoecklein
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
CONSENT OF INDEPENDENT AUDITORS
To Whom It May Concern:
January 11, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of November 15, 1999, on the
Financial Statements of NFOX.COM, as of June 30, 1999, in any filings that
are necessary now or in the near future with the U.S. Securities and
Exchange Commission.
Very truly yours,
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
