UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A-5
GENERAL FORM FOR REGISTRATION OF
SECURITIES Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
Consolidated Data Inc.
----------------------
(Exact name of Small Business Issuer as specified in its charter)
Colorado, USA 84-1343219
- ------------------------------ ---------------------------------
State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization
6912 220th, Mountlake Terrace, Washington 98043
-----------------------------------------------
(Address of principal executive offices)
Issuer's Telephone Number, (800) 256-3954
----------------
Securities to be registered pursuant to Section 12(b) of the Act: None
Securitiesto be registered pursuant to Section 12(g) of the Act:
Common Shares, with no par value.
(Title of Class)
Page 1 of xxxxx
Index to Exhibits on Page 41
<PAGE>
CONSOLIDATED DATA, INC.
Form 10-SB
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................. 03
Item 2. Management's Discussion and Analysis or Plan of
Operation................................ 28
Item 3. Description of Property............................. 31
Item 4. Security Ownership of Certain Beneficial Owners
and Management..................................... 31
Item 5. Directors, Executive Officers, Promoters
and Control Persons................................. 35
Item 6. Executive Compensation.............................. 38
Item 7. Certain Relationships and Related Transactions...... 39
Item 8. Description of Securities........................... 39
PART II
Item 1. Market Price Of And Dividends on the Registrant's
Common Equity and Related Stockholder Matters....... 43
Item 2. Legal Proceedings................................... 44
Item 3. Changes in and Disagreements with Accountants...... 44
Item 4. Recent Sales of Unregistered Securities............ 44
Item 5. Indemnification of Directors and Officers.......... 44
PART F/S
Item 1. Financial Statements................................ 45
PART III
Item 1. Index to Exhibits 46
Item 2. Description of Exhibits
PART I
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------
Introduction
- ------------
Reference is made here to the section entitled "Risk Factors" beginning on page
21.
Consolidated Data Inc. (hereinafter is also referred to as the "Company" and/or
the "Registrant") is a company in the development phase. The Company was
incorporated July 14, 1995 under the laws of the State of Colorado and was
originally known as Attache Holdings, Ltd.
The Company has experienced significant losses during the past two years.(A loss
of $405 thousand in Fiscal 1997, a loss of $175.8 in Fiscal 1998 and a loss of
$319 thousand for the first six months of Fiscal 1999.) Management has
determined that because of the deficiency in working capital, significant
operating losses and lack of liquidity, there is doubt about the ability of the
Company to continue in existence unless additional working capital is obtained.
(Note section entitled "Risk Factors" beginning on page 21 for additional
information.)
The Company was inactive until it acquired Contractor's Directory on April 17,
1997 via a stock for stock acquisition in exchange for 1,000,000 shares of the
Company's restricted common stock. In November of 1998, Attache Holdings Ltd.
became Consolidated Data, Inc. From 1997 to the first quarter of 1999, the
Company was exclusively involved in the development of an E Commerce business
designed to fill the needs of the construction industry. Development included a
web site called "Contractors Directory.Com". Use of Contractors Directory allows
public information to be downloaded, via the internet, and reformatted for ease
of use by contractors and suppliers. This information includes credit
information and information pertaining to building permits.
In February 1999 the Company purchased a software system called
"(yourbank)Online" which is now its primary asset. The Company's current
business involves the marketing, sale and support of this software to members of
the banking industry and the operation of Contractors Directory.
The Company's principal office is located at 6912 220th, Mountlake Terrace,
Washington 98043. The contact person is Mr. Pakie Plastino, Chairman and
Director. The telephone number is (800) 256-3954; the facsimile number is (425)
776-1855. The
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Company currently maintains two websites which are yourbankonline.com and
contractors-directory.com.
The Company's authorized capital includes 50,000,000 shares of common stock with
no par value and 5,000,000 shares of non-voting preferred stock with no par
value. As of the close of the Company's latest fiscal year, September 30, 1998,
there were 6,456,000 shares of common stock outstanding (as restated) and
100,000 shares of preferred shares outstanding. As of June 30, 1999, there were
10,784,000 shares of common stock outstanding and 100,000 shares of preferred
shares outstanding.
The Company's common stock trades on the Over-the-Counter Electronic Bulletin
Board with the symbol "CSDDE".
The information in this Registration Statement is current as of July 15, 1999,
unless otherwise indicated.
Historical Corporate Development
- --------------------------------
The Company was incorporated in Colorado, USA on July 14, 1995 under the name
Attache Holdings, Ltd.
The organization meeting of the Company and the initial directors meeting of the
Company was held on April 24, 1996. At this meeting it was decided that the
fiscal year of the Company would end on December 31st of each calendar year
subsequently change to September 30th) and forms of Common and Preferred Stock
certificates were presented. It was also agreed that the Company issue up to
100,000 shares of its preferred stock for an aggregate of up to $10,000 to Tudor
Trading Limited, Casa Bella Holdings, Inc. and EDR Financial, Inc. On May 24,
1996, the Company issued the preferred stock. Also at this meeting, Clark Burch
was appointed as President of the Company and Gary Clark was appointed as
Secretary of the Company.
A meeting of the Board of Directors was held on April 28, 1996 and it was
resolved that the Company offer and sell up to 10,000,000 shares of its common
stock, in an offering under the exemptions to registration provided under
Section 3(b), Regulation D, Rule 504 of the Securities Act of 1933, as amended
and under the exemption to registration under Section 11-51-308(1)(p) of the
Colorado Securities Act.
Pursuant to a prospectus dated May 31, 1996, the Company sold 1,926,000 common
shares for an aggregate purchase price of $850.50.
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Pursuant to an offering in October, 1997, the Company sold 80,000 shares of
common stock for an aggregate purchase price of $12,000.
A special meeting of the Directors of the Company was held on March 14, 1997 at
which time it was resolved that the Company acquire the marketing rights to
Contractor's Directory for the states of Colorado, New Mexico and California in
exchange for 1,500,000 shares of its common stock which was restricted.
Effective April 20, 1997 the Company assumed all worldwide rights and ownership
to the Contractor's Directory by acquiring 100% of the issued and outstanding
common stock of Contractor's Directory in exchange for 1,000,000 common shares
of the Company's stock which was restricted.
On March 20, 1997, Pakie V. Plastino, the current Chairman of the Company, was
appointed to the Board of Directors and was also appointed President of the
Company.(Mr. Plastino was elected to the office of President by a majority of
the shareholders of the Company. He was elected as Chairman of the Board by the
Board of Directors.) Also on this date, William D. Doehne, the current Chief
Operating Officer of the Company, was appointed to the Board of Directors and
was also appointed Secretary and Treasurer. The Company's corporate headquarters
was also changed to its current location in Mountlake Terrace, Washington.
BUSINESS
- --------
Banking Software
Historical Development of (yourbank)Online Software
- ---------------------------------------------------
The Company's primary business involvement today involves the marketing, sale
and support of a banking software product called "(yourbank)Online" to members
of the banking industry.
This software system was originally developed by River City Bank of Sacramento,
California in 1996 and 1997. River City Bank began offering a range of online
services, resulting from the "(yourbank)Online" product in September of 1997.
The system was developed internally with a goal to offer state-of-the-art
service to River City Bank's customers.
Following the successful implementation at River City Bank, management of that
bank licensed and installed the system in three additional community banks
located in northern California. These banks were Citizens Bank, Tri-Counties
Bank and Auburn National Bank. River City Bank also acted as a service bureau
for these banks. (i.e.: provided them computing capabilities.)
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In 1998, management at River City Bank decided to focus on the bank's operations
and not expand the online banking system to additional banks.
DTEK Corporation, a privately held company located in Boise, Idaho, purchased
the software from River City Bank of Sacramento, California in September 1998
for total consideration of $410,000. Payment was in the form of a $60,000
downpayment and a note for $350,000 due to River City Bank in September 1999.
Prior to the purchase by the Company of the (yourbank)Online software from DTEK,
DTEK granted a license in the software to Global Payment Systems Inc., a
subsidiary of National Data Inc. The license is a perpetual worldwide
non-exclusive irrevocable transferable right and license to the (yourbank)Online
software. Global Payment Systems Inc. has the right to modify, customize,
sublicense, resale and distribute the system. Global can also transfer its
rights to a third party. Global retains this right and currently markets and
sells a version of the software to financial institutions. Global is and will
continue to be a competitor of the Company. Global does not have any rights to
any modifications, revisions, additions or any other changes that the Company
makes to the software.
In consideration of this assignment, Global Payment Systems Inc. agreed to pay
DTEK 50% of the first $1,300,000 in license fees received, plus commissions,
plus a final lump sum of $50,000. There is no certain date for the payment.
Global Payment Systems Inc. also agreed to operate and maintain the existing
(yourbank)Online server sites. Global Payment Systems Inc. currently receives
the monthly fee of $1100 paid by the three banks other than River City Bank
(e.g. Citizens Bank, Tri-Counties Bank and Auburn Bank) as licensing fees for
the system.
In February 1999 the Company purchased this software system and all rights
related to it from DTEK Corporation. Consideration for the purchase was $640,000
payable as follows:
a. $400,000 paid by the issuance of 2,000,000 common shares of the
Company's restricted stock at $0.20 per share. -----
b. $240,000 paid at the rate of $10,000 per license use or the stock
equivalent at the rate of $0.20 per share of the Company's
restricted common stock or 1,200,000 shares. The cash or the
stock must be paid by the Company twelve months from the date of
the contract or by March 10, 2000.
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On April 12, 1999, the Company authorized and did issue 1,200,000 shares of its
restricted common stock in full satisfaction of its agreements with DTEK
Corporation.
As part of the agreement with DTEK Corporation, DTEK Corporation has assigned to
the Company all rights and title to an existing software license between DTEK
Corporation and Global Payment Systems, LLC which shall include payments from
River City Bank of Sacramento, subject to DTEK Corporation receiving the balance
of the initial licensing revenues as compensation for its consulting and
support. All residual income will go to the Company. Management expects this
income to be insignificant.
Description of (yourbank)Online Software
(yourbank)Online is a browser-based solution designed and developed to help
banks provide a full range of online banking products and services to their
commercial and retail customers. The system allows the bank's customers to do
more than view balances and transfer money. It gives users the ability to manage
their financial activity without leaving the bank's website, thus creating a
strong financial relationship between the bank and its customers.
The modular design and flexible technology of (yourbank)Online can be changed
quickly and easily to accommodate the needs of all types of customers. This
allows the banks to tailor online services to different segments of their
customer bases.
Key features of (yourbank)Online include the following:
a. Customizable User Interface: The bank's customer can choose screen
colors, page lengths, and simplified interface options;
b. Transaction Editing: Bank's customers can modify the description
reference of a transaction to better explain its purpose. They can
also categorize the transaction for reporting purposes;
c. Payment Scheduling and Bill Payment: Bank's customers can schedule
payments to be performed at later dates. The system incorporates a pay
anyone approach, which doesn't limit the customer to specific payees;
d. User Defined Reports: Several detailed and summary reports provided
can be configured in a variety of formats according to the bank's
customers specific preferences;
e. Stop Payment Requests: Back office staff processes and generates a
confirmation letter to the customer for extended stop payment
authorization. (Limited only to what is available through the host
system.);
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f. Custom Information Reporting: AR cleared transaction detail, including
extended descriptions for ATM and Debit and Credit Card transactions;
g. Funds Transfer Between Linked Accounts;
h. 24 Hour Access to Statements: Statements can be generated at anytime
throughout the month. The system maintains the statement cycle
information specified within the host system;
i. User Configurable Transaction History: The amount of history
maintained is configurable on the user level.
The software allows banks to provide a number of user-specific financial
services and products to their customers through a dynamic interface between
traditional backend systems of the bank and the bank's customers. The base of
the software is a data warehouse that collects and distributes information
between the bank and the customer. The data warehouse can be linked to the
customer via the Internet, intranet, or Web TV. The design of the data warehouse
allows banks to provide services by user or by group of users and deliver the
information via a medium that is appropriate for each user or group of users.
Banks can choose to link virtually any financial product or service to the data
warehouse. This includes standard balance and account information to insurance
services, loan information, credit and debit card information, and investment
services.
Additionally, the technology can be used to seamlessly connect existing IT
systems for automating collaborative and administrative processes to provide
managers and key personnel with valuable information for decision making and
targeted marketing efforts.
Security
- --------
(yourbank)Online uses US grade encryption. This encryption, along with unique
Sign-On ID and password security front-end, provides the foundation for a
secure, reliable interface. In addition, a customer-selected name rather than an
account number references customer accounts. This ensures the privacy of account
information should an unauthorized individual gain access.
Individual security control levels are maintained at the customer level by the
financial institution, providing the ability to isolate certain functions of the
system to different levels of security. An example of this implementation would
be to set the security requirement for bill-pay higher than other activities.
This would allow the ability to track bill-pay enabled customers for billing
purposes. Another level could be given to categorization capabilities, thus
providing a way of controlling
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the customer capabilities based on subscription. (yourbank)Online accommodates
99 user specific levels of security.
Encrypted Messaging provides security for sensitive communication between the
customer and the bank and a detailed audit Trail) is incorporated into
(yourbank)Online. All activity is logged by date and time to a log file that can
be analyzed to track individual activity by bank personnel and end-users.
The entire system is maintained through a single interface with an
administrator-privileged account. The system can be locked down for crisis
management or unscheduled modification requirements. This eliminates the need
for additional applications and management tools and allows an administrator to
control access when the system is available for use from anywhere in the world.
When locked, customers received a customizable screen informing them of the
system availability.
The software utilizes a centralized data warehouse concept of providing
functional interfaces between the bank and its customers. Users use a front-end
interface to access a subset of information collected and maintained separately
from the bank's core system, eliminating virtually all risk of tampering with
vital data.
Database
- --------
(yourbank) Onlines' architecture utilizes current Microsoft established
standards for Client/Server access. The host system runs on an Intel platform
microcomputer running a Microsoft NT Server 4.0 operating system. The system
runs as a subset of Microsoft's Internet Information Server 4.0 Web Server
software, which is shipped with NT Server. A collection of databases and Active
Server scripts are incorporated on the server which provide the foundation for
the (yourbank)Online system. Five application modules combine to maintain and
update the ODBC databases. These modules are used to maintain timed executions,
query the host system, update and modify the local databases with the account
detail information, update and modify the local databases with the cleared
transaction information, and collect, process, and monitor scheduled payments.
The User Interface is provided through several Active Server scripts and graphic
files maintained on the Microsoft NT server. These scripts are activated through
customer requests and combine with database information to produce the bulk of
the user screens and input forms within (yourbank)Online. These scripts and
graphic files provide almost unlimited flexibility and can be modified to
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accommodate individual interests and presentation specific to the environment.
They can also be modified to accommodate user controllable variations. Screen
colors, information placement, navigation control visuals and placements can be
modified to give the interface an entirely different and unique look and feel by
individual and by group.
Bank administrative personnel and customers gain access to the (yourbank)Online
system through a standard commercial browser over the Internet. This allows the
user to gain access from virtually any system that provides an Internet access
point. This can be a home PC, Office PC, laptop, or even other Internet capable
devices such as Internet Terminals, Web enabled television sets, Internet ready
telephones, etc.
Bill-pay requests are warehoused within the (yourbank)Online system up to the
date of processing, allowing the end-user full control of the scheduled
transaction. Following processing, bill-pay transactions are collected in a file
and can be sent to a third party bill payment processor, i.e. Global Payment
Systems, Checkfree, etc., or can be processed internally on Global's PayLink
bill payment module on behalf of the account holder. The flexibility of the
PayLink module enables the bank to not only fulfill in-house bill pay processing
but also leverage the technology to create any type of payment including
cashiers checks and accounts payables checks.
The following table summarizes the technical specifications of (yourbank)Online:
<TABLE>
- ---------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
- ---------------------------- -------------------------------------- --------------------------------------
Bank Features Modular Design Yes
- ---------------------------- -------------------------------------- --------------------------------------
Overviews Automated Billing for Bank Yes
- ---------------------------- -------------------------------------- --------------------------------------
Voice Response Module Can be accommodated
- ---------------------------- -------------------------------------- --------------------------------------
Credit Card Interface Yes (optional)
- ---------------------------- -------------------------------------- --------------------------------------
Administrative Options According to user rights, different
administrators can maintain the entire
system from the administrative area.
- ---------------------------- -------------------------------------- --------------------------------------
Set the interface by user.
- ---------------------------- -------------------------------------- --------------------------------------
Maintain automated billing for each
customer including: grace periods,
promotional pricing and per
transaction pricing.
- ---------------------------- -------------------------------------- --------------------------------------
Send broadcast or user-specific
e-mails.
- ---------------------------- -------------------------------------- --------------------------------------
Turn on and off specific modules,
features, and functionality by
customer.
- ---------------------------- -------------------------------------- --------------------------------------
Setup, modify and delete
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- ---------------------------- -------------------------------------- --------------------------------------
customers.
- ---------------------------- -------------------------------------- --------------------------------------
Audit Trail Reporting
- ---------------------------- -------------------------------------- --------------------------------------
Technical Information Programming Microsoft Active Data Objects
- ---------------------------- -------------------------------------- --------------------------------------
Hardware Platform (bank) Windows NT
- ---------------------------- -------------------------------------- --------------------------------------
Hardware Platform (user) Platform Independent
- ---------------------------- -------------------------------------- --------------------------------------
Software (bank) Any Internet Browser
- ---------------------------- -------------------------------------- --------------------------------------
Software (user) Any Internet Browser
- ---------------------------- -------------------------------------- --------------------------------------
Communication Network Internet access, private dial-up
access.
- ---------------------------- -------------------------------------- --------------------------------------
Security Security Type Secure Socket Layer
- ---------------------------- -------------------------------------- --------------------------------------
Encryption Independent encryption allows full
range from 40 bit to 128 bit from
any site certificate authority.
- ---------------------------- -------------------------------------- --------------------------------------
User Security Sign On ID and Pass Code
- ---------------------------- -------------------------------------- --------------------------------------
User Security Levels 99 levels of security
- ---------------------------- -------------------------------------- --------------------------------------
End User Functionality Account Access Checking, Savings, Loans, CD and
Others
- ---------------------------- -------------------------------------- --------------------------------------
Real-time Access( bank specified Yes
timing)
- ---------------------------- -------------------------------------- --------------------------------------
Transaction Categorization Yes
- ---------------------------- -------------------------------------- --------------------------------------
Transaction History Unlimited
- ---------------------------- -------------------------------------- --------------------------------------
Research/Reporting Capabilities Date Range, Deposits/Credits,
Category of Transaction, Check, Stop
Payments, Number of Withdrawals
- ---------------------------- -------------------------------------- --------------------------------------
Reports Available Category List, Category
Summary, Category Detail, Payee List,
Electronic Statement, Transaction
Detail, Export Transaction and Custom
(user definable) Reporting.
- ---------------------------- -------------------------------------- --------------------------------------
Export Options Quicken, MS Money and ASCII (custom)
- ---------------------------- -------------------------------------- --------------------------------------
Account Transfers DDA/TDA, Loans/LOC's and Credit card
- ---------------------------- -------------------------------------- --------------------------------------
E-mail Yes
- ---------------------------- -------------------------------------- --------------------------------------
Event Notification E-mail notification
- ---------------------------- -------------------------------------- --------------------------------------
Pager notification
- ---------------------------- -------------------------------------- --------------------------------------
Check Imaging Yes
- ---------------------------- -------------------------------------- --------------------------------------
Bill Payment Yes
- ---------------------------- -------------------------------------- --------------------------------------
Financial Institution Minimum Hardware Requirements: Intel Recommended: Intel Pentium II 266
Pentium 166 Mhz, 128 Mb RAM, 4 Gig Mhz duel processor, 512 Mb RAM, 18
Hard Drive, 24 Gig Tap to Storage Gig Hard Drive, 24 Gig Tap to
and Seagate Backup Exec Storage and Seagate Backup Exec
- ---------------------------- -------------------------------------- --------------------------------------
Software Reqirements: Microsoft NT
Server 4.0 w/Internet Information
- ---------------------------- -------------------------------------- --------------------------------------
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- ---------------------------- -------------------------------------- --------------------------------------
Server 4.0 and Microsoft SQL Server
6.5
- ---------------------------- -------------------------------------- --------------------------------------
End-User Communication Requirements Internet connection access
- ---------------------------- -------------------------------------- --------------------------------------
Platform Independent Browser depends on level of
encryption required by financial
institution
- ---------------------------- -------------------------------------- --------------------------------------
End-User Functionality Online Applications (yourbank)Online, Loans and Credit
Card
- ---------------------------- -------------------------------------- --------------------------------------
Discount Brokerage Currently in Beta test
- ---------------------------- -------------------------------------- --------------------------------------
End-User Options Change Password, Change Session
Timeout, Change Account Names,
Change basic color scheme, Change
level of interface from standard to
enhanced, Change Amount of History,
Change Lines per page and Bank
customized user options.
- ---------------------------- -------------------------------------- --------------------------------------
Cash Management ACH origination PPD/PPD+, CCD/CCD+, CTX, Importing
capabilities, NACHA File Processing,
Multiple Company Option, State &
Federal Taxes, Customer controlled
security, Multi-level approvals,
Auto prenotes, On-Us processing,
Warehousing, File limits,
Transaction limits, Bank Controlled
offset and NACHA Import
- ---------------------------- -------------------------------------- --------------------------------------
</TABLE>
The Company will provide all technologies to its customers so that they do not
have to hire additional personnel, purchase additional equipment, train
personnel or devote additional development time to the project. Management
believes that this program is beneficial for the financial institution that
wants to obtain immediate Internet presence.
In this context the Company will provide to its customers the following: a
Server, Customer Service, Technical Support, Monthly Reporting, Staff & Customer
Training, Upgrades, Web Page Development and Web Hosting Services.
The Market for (yourbank)Online Software
- ----------------------------------------
The Internet has rapidly become a significant marketplace for buying and selling
goods and services. Many consumers are showing strong preferences for
transacting certain types of business over the Internet, including booking
airline tickets, trading securities and purchasing consumer products. As
consumers and companies become more familiar and comfortable with making
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purchases online, this increase in knowledge and comfort level will translate
into higher interest and willingness to do their banking online.
Management believes that the Web has clearly arrived for the marketing and sales
of financial services and credit products. Some of the recent developments are
summarized as follows:
o The Internet became an accepted way to purchase a credit card. Almost 11
million people have already applied for a credit card online. At year-end
1998, one million applications per month were being submitted. NextCard
offered a credit card optimized for the Internet and received over 750,000
applications within nine months of its startup.
o Fifteen million Internet users have checked mortgage and equity loan rates
online. A new loan marketplace business model has been created on the Net
where consumers apply once to receive multiple offers on their loan. These
companies are among the biggest non-credit card advertisers in search
engine loan categories
o Internet only banks appear to be flourishing. Net.B@nk, TeleBank and
Security First, the only public companies, each have a market
capitalization over $1 billion, and are valued higher than Amazon.com on a
value per customer basis. Net.B@ank claims to have 29,000 customers in
April 1999 and over $330.0 million in deposits. As many as 25 to 35
Net-only banks are expected to launch in 1999, many of them spin-offs of
existing banks.
o Banking has come to the portals. Yahoo!, AOL, MSN, and Excite have entered
into very expensive long-term agreements with major banks. Advertisements
on the portals offer mortgages, credit cards, automobile loans, savings
instruments, home equity loans and checking services.
o Bank One Corp. Chief Executive Officer John McCoy, one of the most
aggressive acquirers in the banking industry, has indicated his corporation
isn't planning any more major purchases but will instead rely on the
Internet for the bank's growth. The nation's fourth largest bank already
has arrangements with America Online Inc., Excite Inc., Yahoo!
Inc., and Microsoft to sell its credit cards.
Consumers have indicated a preference for conducting all of their financial
transactions at a single web site. River City Bank is currently running a
demonstration version of this portfolio management feature using
[yourbank]Online software.
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Traditional banks have been slow to add Internet banking to their services until
they could be confident that demand was sufficient to offset the added expenses.
However, the technology is changing so rapidly and new forms of competition
appearing so broadly, that banks must carefully reconsider their reluctance.
Specific factors affecting a bank's decision to offer Online banking are:
o Customer Retention. Near the end of 1998, there were 73 million adults
using the Internet in the U.S., an increase of 30% in just twelve months.
This is 37% of the U.S. adult population. The nations' largest banks are
beginning to offer some level of online banking, and there are large
numbers of new Internet entrants into the financial markets trying to
capture traditional bank business. For banks to retain customers who
respond favorably to online technologies, they will have to provide
competing products and services. River City Bank, where the
[yourbank]Online system was developed, has achieved higher retention rates
since the system was installed.
o Service Improvements. Service levels can be enhanced significantly through
the technologies coming available, which should improve overall customer
satisfaction.
o Cross Sales Generator. The online connection gives the bank opportunities
to cross sell its other products and services much more effectively than
through the mail or in the branch.
o New Fee-Based or Revenue Sharing Revenue Streams. Banks will have the
ability to add new services to their product offerings that can be sourced
from outside providers. Examples are mortgage lending, equipment leasing,
credit cards, investment services, financial planning services,
advertisements, insurance and others to be developed.
o Bill Payment. While bill payment has become a component of most bank's
online services offering, bill presentment over the Internet is finally
nearing a launch and should become a highly hyped service in late 1999 or
2000. Recent research indicated that consumers would prefer banks as their
preferred provider for bill presentment and payment, compared to other
options. However, given the huge potential volume of transactions in this
category, aggressive competition will come from large banks, the web
portals, and new companies being started to specialize in this area.
Transpoint, LLC, a joint venture between Microsoft, First Data Corp. and
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Citibank, just announced that it will start up its national bill
presentment and payment service later this year.
o Cost Savings. Over time, the highly efficient electronic equipment and
systems used in online banking should allow significant cost savings as
paper-based transactions are eliminated. Management estimates that costs
per transaction via the Internet are significantly lower than those via
established methods, as follows:
o $1.07 in a physical branch
o $0.54 over the phone
o $0.27 at an ATM
o $0.01 over the Internet
The table below sets out the number of FDIC insured banks and S&Ls, as well as
the deposits and number of accounts under $100,000. 54% of accounts under
$100,000 are with the 10,630 institutions with assets of less than $10 billion.
The average of these banks has 20,000 deposit accounts under $100,000.
FDIC INSURED INSTITUTIONS
Assets Number of Client Accts Under $100 Thousand
Institutions Number Percent Cum Percent
Under $25 million 1,509 2,961,743 1% 1%
$25 to 50 million 2,240 9,028,289 2% 3%
$50 to $100 million 2,624 18,854,073 5% 8%
$100 to 300 million 2,813 45,288432 12% 20%
$300 to 500 million 566 18,368,196 4% 24%
$500 to 1 billion 432 23,591,074 6% 30%
$1 to 3 billion 306 35,810,864 9% 39%
$3 to 10 billion 140 56,153,044 14% 54%
$10 billion or more 82 180,125,114 46% 100%
Total Institutions 10,712 390,180,829 100%
Assuming the nation's 100 million households are distributed among banks in
proportion to the distribution of bank accounts, 54 million households use over
10,000 institutions for banking. These 10,000 institutions have over 200 million
deposit accounts under $10,000. Although individual banks vary greatly,
management estimates that a bank represents one household for every four
accounts. The average household has two adults. Thus an institution with 20,000
accounts represents 5,000 households containing 10,000 adults or registered
users. Actual results for River City Bank are shown in Table 3, which indicates
one household for every 2.3 accounts.
River City Bank
FDIC Insured Accounts Under $100 thousand 47,000
15
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Total Assets $450,000,000
Personal Core Deposit Accounts 33,632
Households 19,985
Online Households 2,243
Registered Users 4,956
The target market of the Company for its (yourbank)Online software is the 1,444
institutions with assets of $300 million to $10 billion, which represent over 60
million users.
The Marketing Strategy for (yourbank)Online Software
- ----------------------------------------------------
June 30, 1998
Total
FDIC Customer
Number of Institutions Insured Population
---------------------- ------- ----------
Less than $25 million 1,509 1,366,325
$25 to 50 million 2,240 4,164,971
$50 to 100 million 2,624 8,697,847
$100 to 300 million 2,813 20,892,666
$300 to 500 million 566 8,473,700
$500 to 1 billion 432 10,883,142
$1 to 3 billion 306 16,520,431
$3 to 10 billion 140 25,904,778
$10 billion or more 82 83,096,139
Total institutions 10,712 180,000,000
The Company intends to rapidly establish a national market presence by
leveraging a customer base of community banks.
Marketing Strategy:
The Company will utilize its [yourbank]online system to build the user base as
rapidly as possible and leverage its position to permit banks to become
"Financial Portals", defined as central sites where customers can use the
Internet to manage all their financial transactions, information and planning.
The Company will make it easy and economical for banks to participate in online
banking and then the banks and the Company will share in the fee income
generated by the online banking sites.
Pricing Strategy:
The range of prices for online banking systems is currently very broad, from a
low of about $30,000 to well over $1 million plus recurring monthly fees of $1
to $3 per user. Management believes the pricing strategy for the basic
[yourbank]online system should be to minimize the initial cost to the bank, so
that only the
16
<PAGE>
Company's hard system costs and marketing expenses are covered. This pricing
should encourage the banks to initiate online banking and then progress toward
becoming a portal that creates revenue opportunities for both the bank and the
Company. The current model calls for the Company to contract with individual
banks to provide the [yourbank]online software for a fixed fee of $10,000. The
Company will absorb the ongoing site maintenance and software development costs.
The Company intends to be compensated by retaining 25% of the usable space on
each page to be used for advertising and e-commerce. The resulting revenue will
be shared, net of commissions and costs, 25% to the bank and 75% to the Company.
Advertising for the bank's existing products and services will be provided free.
Should the bank identify other services and goods to be advertised on the site,
the resulting revenue will be shared 50/50 net of cost.
Distribution Strategy:
The Company intends to build a network of relationships with established
companies in order to achieve national market coverage in a short period of time
with a moderate investment. Management is currently in preliminary talks with
several companies that already sell systems related products and services to
target market banks. Their customer relationships should permit fast access to
banks' decision makers, and system specialists from [yourbank]Online will
provide technical support to close the sale. In addition, the Company plans on
building an internal sales force.
Revenue Model:
The Company's revenues are projected to come from several sources. Since the
Company's economic model is unique in the marketplace, management has used its
best judgment to identify these sources, recognizing that substantial changes
may occur as the market grows and matures:
1. Sales of the basic online banking system, including licensing, software
and installation support. 2. Sales of system enhancements and newly
developed financial service modules.
3. Service bureau fees.
4. Referral revenue and transaction fees from outside service providers, such
as mortgage lenders, stock trading, and equipment leasing.
5. Share of advertising and sponsorship revenues.
The Company believes that owning online financial accounts is a strategic
gateway to other electronic purchases, making online customers worth much more
than traditional bank customers. User
17
<PAGE>
acquisition costs are lower than pure Internet companies, due to the banks'
existing client relationship. Revenues from advertising will be higher due to
the desirable demographics of the user the frequent account visits. River City
Bank reports that registered users visit the site an average of 2.5 times per
week. The Financial Portal will give customers more reasons to regularly visit
the bank's web site. When customers find relevant and useful services in
addition to the basic ones, then they are discouraged from search for and going
to competing sites thus, providing more opportunities for revenue for the bank
and more time for relationship building.
Factors in the revenue model are:
Target Market
- -------------
The first target market will be all banks and credit unions with a focus on
banks that have higher demographics in the retail customer base. The target
market is the 1,444 institutions with assets of $400 million to $10 billion,
which represent over 60 million users.
Turn-Key Approach
- -----------------
The Company will provide a turn-key Internet banking system to create immediate
presence without a bank having to add staff, extensive equipment, training or
development time. The Company will establish a service bureau in a central
location where server "farms" will be housed. These servers will act as the
Online Financial Warehouses for the banks. [yourbank]online will also provide
technical assistance, customer service, staff training, system upgrades, web
page creative development, and monthly activity reporting. A bank will only need
to provide Internet access, a database transfer file and a staff member at the
bank to work with [yourbank]online representatives. The Company will provide the
systems and support to help the banks become portals.
Portal Development
- ------------------
Management expects each bank's portal to develop in stages. The initial stage
will include basic services such as checking/savings account management, loan
account management and bill payment. In the second stage, banks build their
experience with their customer base, and introduce additional financial services
according to the preferences of its customers. In the mature stage, when the
banks become financial portals, more opportunities emerge. The range of services
will be selected according to the needs and opportunities of each bank's
customer base. A stream of revenue from a diverse range of services, including
bank-based and outsourced services should generate strong profitability for the
banks and the Company. Vast amounts of demographic data and transaction data
collected and analyzed
18
<PAGE>
from customer experience with the system will create opportunities for highly
targeted marketing. Management believes that customized services can be marketed
to individual customers or categories of customers identified from the analysis.
The potential for one-to-one marketing is exceptional through the Financial
Portal, and superior to opportunities of other Internet- based businesses.
Competition for (yourbank)Online Software
- -----------------------------------------
Competition consists of software companies offering products comparable to
[yourbank]Online and a wide array of internet companies with offerings ranging
from specific financial services (i.e. Schwab) to general portals such as Yahoo!
or AOL, which include some financial services among their wide range of
offerings.
It is management's belief that the only software product as full-featured and
with as wide a range of capabilities as [yourbank]Online is the range of
products put out by Security First (NASDAQ: "SONE"). Security First has targeted
banks over $10 billion.
Online Resources and Nfront are examples of two direct competitors. It is
management's belief that neither of these companies offer products with the full
range of features and capabilities of [yourbank]online. Moreover management of
the Company believes that their entire model is built on obtaining fees from
banks for the software.
More than 100 companies offer some type of internet software to banks, including
many that have been long-time providers of bank operating systems. No company
has achieved a dominant market share and with less than 5% of the banks online
there is a large share available. These companies are not internet companies,
but software companies. The possibility exists that some will eventually prefer
to buy existing software rather than develop their own; indeed Security First
recently purchased Edify in order to augment their online capabilities.
Competition may also be forthcoming from Global Systems, which has a
non-exclusive irrevocable right and license to the Company's software. If Global
Systems were to begin aggressively marketing the software and were put efforts
into adding features to the software it could have a detrimental impact on the
Company's future to successfully market the software.
In regard to the wider market of specialized financial sites and general-purpose
portals, each of these can be considered as much a potential strategic partner
as a competitor. The Company's
19
<PAGE>
strategy of acquiring and leveraging community banks' customer base is based on
the premise that a large group of customers will ultimately prefer doing
business with a local financial institution that they can readily access in
physical form. The Company's competitive advantage is simply to provide a
superior product for far below market cost in order to leverage a bank's
customer base into a set of registered users. The Company believes this can be
done for far less investment than building a financial services portal through
advertising.
Contractors Directory
Historical Development of the Contractors Directory
- ---------------------------------------------------
From 1997 through First Quarter 1999, the Company was involved in the
development and operation of a website, Contractors Directory
(contractors-directory.com). This site was designed to provide construction
contractors with information useful to their business such as notices of liens
filed, notices of building permits, directories of contractors, notices of
upcoming bids, and other services of interest to a contractor. Contractors
Directory also provided website development for individual contractors. The site
grew from Pakie Plastino's previous history as a contractor and his ownership of
another company, Contractors Lien Service, which files and enforces liens for
contractors.
The Company, through loans and contributed services from Pakie Plastino and his
related companies, has invested approximately $700,000 in the development of
Contractors Directory. This has resulted in the production of negligible
revenue. Current plans are to "spin-off" Contractors Directory, Inc. to the
shareholders of the Company.
Description of the Contractors Directory
- ----------------------------------------
The Contractor's Directory provides an internet site available to general
contractors, subcontractors, architects, property managers, insurance companies
and other individuals and entities involved in the construction industry.
Subscribers in various categories are able to provide information about their
companies that interested parties can review in the privacy of their office
using DOS or Windows. Each subcontractor or supplier can provide a color photo
and up to eight pages of text describing their company. Additionally, bid lists,
building permits, and credit and lien information will be updated daily of the
website. General contractors and other interested parties can receive this
service for a fee.
20
<PAGE>
Competition
- -----------
Management believes that there are no other companies offering services similar
to the Contractor's Directory. General contractors, property managers,
engineers, architects and others in the industry normally find sub-contractors
and suppliers through the standard Yellow Pages or by word of mouth.
Risk Factors
1. Dependence on the Banking Industry
For the foreseeable future, Consolidated Data expects to derive
substantially all of its revenues from products and services provided to banks
and other participants in the banking industry. Accordingly, the Company's
future success significantly depends upon the continued demand for its solutions
within this industry. The Company believes that an important factor in its
growth will be the willingness of the banking industry to pursue technological
innovation and customer demand and acceptance of such innovation. If this
environment of change were to slow, the Company could experience reduced demand
for its products and services. In addition, changes in economic conditions and
unforeseen events, such as recession, inflation or other adverse occurrences,
may result in a significant decline in the utilization of bank services or
demand for the Company's products and services. Any event that results in
decreased consumer or corporate use of bank services, or increased pressures on
banks toward the in-house development and implementation of revenue enhancement
or cost reduction measures, could have a material adverse effect on the
Company's business, financial condition and results of operations.
2. Dependence On Uncertain Market
The market for Internet-based financial services only has recently begun to
develop and market demand for the Company's products and services is uncertain.
Certain critical issues concerning commercial use of the Internet for financial
services, including security, reliability, ease and cost of access, and quality
of service are evolving and may impact the growth of Internet use. The Company
cannot predict the size of the market for Internet-based financial services or
the rate at which such market will grow. If the market for Internet-based
financial services fails to grow, grows more slowly than anticipated, or becomes
saturated with competitors, the Company's business, financial condition and
results of operations would be materially adversely affected.
21
<PAGE>
The Company's future success will depend on its ability to design, develop,
test, sell and support enhancements of current products and new software
products on a timely basis in response to changing customer needs, competition,
technological developments and emerging industry standards. There is no
assurance that the Company will be able to do this.
The market for the Company's products and services is characterized by
rapidly changing technology, evolving industry standards, emerging competition
and frequent new product and service introductions. Such developments could
limit the marketability of its products and services. There can be no assurance
that the Company can successfully identify new product opportunities and develop
and bring new products and services to market in a timely manner. Furthermore,
telephone and personal computer banking systems have been marketed in the past
by other banking companies, and have not enjoyed widespread consumer demand.
Accordingly, there can be no assurance that there will be widespread consumer
acceptance of sophisticated banking systems such as that of the Company.
3. Dependence On Key Personnel.
The Company's continued success is dependent, to a large degree, upon the
efforts of its current executive officers. The loss or unavailability of any
such person could have an adverse effect on the Company. At the present time the
Company does not maintain key man life insurance policies for any of these
individuals. Also, the continued success and viability of the Company is
dependent upon its ability to attract and retain qualified personnel in all
areas of its business, especially management positions. In the event the Company
is unable to attract and retain qualified personnel, its business may be
adversely affected. There are currently no employment agreements in place.
Management is; however, currently negotiating agreements with the executive
officers of the Company.
4. Limited Operating History
The Company only has no operating history upon which to base an evaluation
of its business and prospects. Operating results for future periods are subject
to numerous uncertainties, and there can be no assurance that the Company will
achieve or sustain profitability on an annual or quarterly basis. The Company's
prospects must be considered in light of the risks encountered by companies in
the early stage of development, particularly companies in new and rapidly
evolving markets. Future operating results will depend upon many factors,
including the demand for the Company's software products, the level of product
and price competition, the Company's success
22
<PAGE>
in attracting and retaining motivated and qualified personnel, and in
particular, the growth of activity on the Internet World Wide Web as it relates
to the financial services industry.
5. Product Concentration
Substantially all of the projected revenue of the Company is attributable
to the Company's (yourbank)Online software product. This product and related
services currently are expected to account for most of the Company's total
revenue for the foreseeable future. As a result, a decline in demand for, or
failure to achieve broad market acceptance of (yourbank)Online as a result of
competition, technological change or otherwise, would have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company's future financial performance will depend in part on the successful
development, introduction and customer acceptance of new and enhanced versions
of (yourbank)Online and other products. There can be no assurance that the
Company will be successful in marketing (yourbank)Online or any new or enhanced
products.
6. Risks of Product Defects and Product Liability
As a result of their complexity, software products may contain undetected
errors or failures when first introduced or as new versions are released. There
can be no assurance that, despite testing by the Company and testing and use by
current and potential customers, errors will not be found in new products after
commencement of commercial shipments. The occurrence of such errors could result
in loss of or delay in market acceptance of the Company's products, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company's product also may be vulnerable to
break-ins and similar disruptive problems caused by Internet or other users.
Such computer break-ins and other disruptions would jeopardize the security of
information stored in and transmitted through the computer systems of the
Company's customers, which may result in significant liability to the Company
and deter potential customers. The sale and support of the Company's products
may entail the risk of liability claims. A product liability claim brought
against the Company or could have a material adverse effect on the Company's
business, financial condition and results of operations.
7. The Ability to Manage Growth
Should the Company be successful in the sales and marketing efforts of its
(yourbank)Online software product it will experience significant growth in
operations. If this occurs
23
<PAGE>
management anticipates that additional expansion will be required in order to
continue its product development. Any expansion of the Company's business would
place further demands on its management, operational capacity and financial
resources. The Company anticipates that it will need to recruit qualified
personnel in all areas of its operations, including management, sales,
marketing, delivery and software development. There can be no assurance that the
Company will be effective in attracting and retaining additional qualified
personnel, expanding its operational capacity or otherwise managing growth. In
addition, there can be no assurance that the Company's current systems,
procedures or controls will be adequate to support any expansion of S1's
operations. The failure to manage growth effectively could have a material
adverse effect on the Company's business, financial condition and results of
operations.
8. Risk of System Failure and/or Security Risks
Despite the implementation of security measures, the core of the Company's
network infrastructure could be vulnerable to unforeseen computer problems.
Although the Company believes it has taken steps to mitigate much of the risk,
it may in the future experience interruptions in service as a result of the
accidental or intentional actions of Internet users, current and former
employees or others. Unknown security risks may result in liability to the
Company and also may deter financial institutions from purchasing its software
and services, and individuals from conducting transactions with it. Although the
Company intends to continue to implement and establish security measures, there
can be no assurance that measures implemented by S1 will not be circumvented in
the future, which could have a material adverse effect on the Company's
business, financial condition or results of operations.
9. Competition
The market for software and services for the Internet and intranets is
relatively new, constantly changing and intensely competitive. As streaming
media evolves into a central and necessary component of the Internet experience,
more companies are entering the market for, and expending ever resources to
develop, streaming media software and services, and competition is thus
intensifying. Many of the Company's current and potential competitors have
longer operating histories, greater name recognition, larger overall installed
bases, more employees and significantly greater financial, technical, marketing,
public relations and distribution resources than the Company.
23
<PAGE>
In addition, There are currently over ten companies that offer software for
Internet banking. Among them are: Digital Insight, Corillian, Global Payment
Systems, National Data Corp., Nfront, Online Resources, Security First
Technologies Corporation. Online Resources (Nasdaq: ORCC), Nfront and Security
First (Nasdaq: SONE) have completed public offerings within the last 30 months
indicating awareness and acceptance of this growing market segment. Many of
these companies have greater financial, technical, and marketing resources than
the Company with products and services that compete with the Company's, the
competitive landscape could change significantly to the detriment of the
Company.
Competition may also be forthcoming from Global Systems, which has a
non-exclusive irrevocable right and license to the Company's software. If Global
Systems were to begin aggressively marketing the software and were put efforts
into adding features to the software it could have a detrimental impact on the
Company's future to successfully market the software.
In addition to competing with a variety of third parties, the Company will
experience competition from its customers and potential customers. From time to
time, these potential customers develop, implement and maintain their own
services and applications for revenue enhancements, cost reductions and/or
enhanced customer services, rather than purchasing services and related products
from third parties. As a result, the Company must continuously educate existing
and prospective customers about the advantages of purchasing its solutions.
There can be no assurance that these customers or other potential customers will
perceive sufficient value in the Company's solutions to justify investing in
them. In addition, customers or potential customers could enter into strategic
relationships with one or more of the Company's competitors to develop, market
and sell competing services or products.
10. Dependence on Proprietary Technology and Risk of Infringement
The Company's success will depend significantly upon its proprietary
technology and information. The Company relies upon a combination of copyright,
trademark and trade secret laws and confidentiality procedures to protect its
proprietary technology and information. There can be no assurance that the steps
taken by it to protect its services and products are adequate to prevent
misappropriation of its technology or that the Company's competitors
independently will not develop technologies that are substantially equivalent or
superior to its technology. Further, it is very difficult to police unauthorized
use of the Company's software due to the nature of software. Any such
misappropriation of the Company's proprietary technology or
25
<PAGE>
information or the development of competitive technologies could have a material
adverse effect on the Company's business, financial condition and results of
operations. It may also be necessary or desirable in the future to obtain
additional licenses for use of third-part products in the Company's solutions
and there can be no assurance that the Company will be able to do so on
commercially reasonable terms, if at all.
11. Government Regulation
The Company's primary customers are banks. Although the products and
services currently offered by it will not be subject to any material, specific
government regulation the banking industry, including electronic banking, is
regulated heavily, and the Company expects that such regulation will affect the
relative demand for its products and services. There can be no assurance that
federal, state or foreign governmental authorities will not adopt new
regulations addressing electronic banking or banking operations generally which
could require the Company to modify its current or future solutions. The
adoption of laws or regulations affecting the Company or its customers' business
could reduce the Company's growth rate or could otherwise have a material
adverse effect on the Company's business, financial condition and results of
operations.
12. Dividend Policy
The Company does not presently intend to pay cash dividends in the
foreseeable future, as any earnings are expected to be retained for use in
developing and expanding its business. However, the actual amount of dividends
received from the Company will remain subject to the discretion of the Company's
Board of Directors and will depend on results of operations, cash requirements
and future prospects of the Company and other factors.
Significant Customers and/or Supplier
- -------------------------------------
N/A
Employees
- ---------
At 7/15/99 the Company operated with the services of its Directors, Executive
Officers, and three additional employees and consultants. There is no collective
bargaining agreement in place.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -------------------------------------------------------------------
SELECTED FINANCIAL DATA
- -----------------------
The selected financial data in Table No. 1 for Fiscal 1998 and 1997 ended
September 30th was derived from the financial statements of the Company which
were audited by William Butcher, CPA, as indicated in his report which is
included elsewhere in this Registration Statement.
The selected financial data for the nine month period ended June 30th is derived
from the unaudited financial statements of the Company, also included herein
and, in the opinion of the Company, present fairly the information set forth
herein.
The selected financial data was extracted from the more detailed financial
statements and related notes included herein and should be read in conjunction
with such financial statements and with the information appearing under the
heading, "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
Table No. 1
Selected Financial Data
($ in 000, except per share data)
- --------------------------------------------------------------------------------
9 Months Ended Year Year
6/30/99 Ended Ended
9/30/98 9/30/97
Revenue $25.0 $17.5 $29.5
- --------------------------------------------------------------------------------
Net Income (Loss) ($319) ($175.8) ($405.9)
- --------------------------------------------------------------------------------
Earnings (Loss) per Share ($0.03) ($0.03) ($0.08)
- --------------------------------------------------------------------------------
Dividends per Share 0 0 0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
#Shares (000) 10,784 5,256 5,026
- --------------------------------------------------------------------------------
Working Capital ($460) $0.5 $0.6
- --------------------------------------------------------------------------------
Long Term Debt $0 $526 $378
- --------------------------------------------------------------------------------
Shareholders' Equity $241 ($396) ($240)
- --------------------------------------------------------------------------------
Total Assets $772 $130 $140
- --------------------------------------------------------------------------------
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATION
- ---------
Cash Balances
- -------------
The Company maintains its major cash balances at one financial institution,
Seattle First National Bank, located in Mountlake Terrace, Washington. The
balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. At July 15, 1999, there were no uninsured cash balances.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Fiscal 1998 and 1997 Ended 9/30
- -------------------------------
Cash Used In 1998 Operating Activities totaled ($106), including the ($175,773)
Net Loss; the primary adjusting items were ($3,348) in office equipment, ($632)
for accrued interest receivable, ($2,111) in payroll taxes, $14,003 in
depreciation and amortization and $42,703 in accrued interest payable. Cash
provided by 1998 Financing Activities totaled $125,052.
Cash Used from inception through September 30, 1997 Operating Activities totaled
($589), including the ($405,879) Net Loss; the primary adjusting items were
$75,000 for Directory Marketing Rights, $10,589 in depreciation and
amortization, $2,111 in payroll taxes, $20,758 in accrued interest payable, and
($25,000) for software Cash provided from 1997 Financing Activities totaled
$472,989.
RESULTS OF OPERATIONS
- ---------------------
Fiscal 1998 and 1997 Ended 9/30
- -------------------------------
General and administrative expenses for the fiscal year ended September 30, 1998
totaled $151,217 and the Company experienced a net loss of ($235,773) against
revenues of $17,515. The major expenses during this period were $13,333 in
amortization; $102,201 for contract labor; $67,500 for Director's fees; $12,974
for rent of equipment; and, $3,600 for office rent and related office expenses.
The categories of telephone; travel; general supplies; office expense;
miscellaneous expenses; licenses; internet expenses; depreciation; consulting;
and, bank charges made up the remainder of the total expenses.
From inception through September 30, 1997, general and administrative expenses
totaled $414,620 and the Company experienced a net loss of $405,879 against
revenues of $29,518. The major expenses during this period were $36,589 in
advertising and promotion; $10,589 in amortization; $31,247 in consulting fees;
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$197,217 in contract labor; $25,000 in Director's fees; $17,092 in legal and
professional fees; $16,484 in office expenses; $12,443 in equipment rent;
$10,754 in wages and salaries; and, $27,545 in website fees. The categories of
travel; telephone; supplies; miscellaneous expenses; and, bank charges made up
the remainder of the total expenses.
The Nine Months ended June 30, 1999
- -----------------------------------
Total expenses for the nine months ended June 30, 1999, totaled $247,284. This
was a significant increase as compared to the year ended 9/30/98. The increase
in expenses and the corresponding increase in loss from operations was a direct
result of the increased business activity as compared to the previous year.
The Company reported a net loss for the nine months ended June 30, 1999, of
($258,694).
Income Taxes
- ------------
All tax returns due for Consolidated Data, Inc. and Contractors Directory, Inc.
have been filed resulting in net operating losses for each company as follows:
The net operating loss for Consolidated Data, Inc. is $(117,502) and will begin
expiring in the year 2010. The net operating loss for Contractors Directory,
Inc. is $(524,130) and will begin expiring in the year 2010.
Known Trends
- ------------
Management has determined that because of the deficiency in working capital,
significant operating losses and lack of liquidity, there is doubt about the
ability of the Company to continue in existence unless additional working
capital is obtained. Consequently such trends or conditions could have a
material adverse effect on the Company's financial position, future results of
operations, or liquidity. The Company currently has plans to raise sufficient
working capital through equity financing or reorganization of the Company.
Inflation
- ---------
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.
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Y2K Compliance
- --------------
Management believes the (yourbank)Online system is fully Y2K compliant and does
not expect Year 2000 transition issues to have a material impact on operations.
All aspects of the system have been designed to accurately handle any Y2K issue.
FORWARD-LOOKING STATEMENTS
- --------------------------
From time-to-time, the Company or its representatives may have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission
or other regulatory agencies. Words or phrases "will likely result", "are
expected to", "will continue", " is anticipated", "estimate", "project or
projected", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). The Reform Act does not apply to initial
registration statements, including this filing by the Company. The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to maximize to the fullest extent possible the protections of
the safe harbor established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied by the following
discussion of certain important factors that could cause actual results to
differ materially from such forward-looking statements.
The risks identified here are not inclusive. Furthermore, reference is also made
to other sections of this Registration Statement that include additional factors
that could adversely impact the Company's business and financial performance.
Also, the Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, not can it access the impact of
all such risk factors on the Company's business or the extent to which any
factor or combination of factors may cause actual results to differ
significantly from those contained in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results.
ITEM 3. DESCRIPTION OF PROPERTY
- -------------------------------
The Company rents approximately 1,400 square feet of space at 6912 220th,
Mountlake Terrace, Washington 98043, on a month to month bases, for
administrative and sales efforts. The Company
30
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pays $300 per month for this facility. The Company considers the facility
adequate for current purposes.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
The Registrant is a publicly-owned corporation, the shares of which are owned by
United States residents. The Registrant is not controlled directly or indirectly
by another corporation or any foreign government.
Table No. 2 lists as of July 15, 1999 all persons/companies the Registrant is
aware of as being the beneficial owner of more than five percent (5%) of the
common stock of the Registrant.
Table No. 2
5% Shareholders
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ ------------------------ ----------------- -------
Common Pakie Plastino (1) 4,875,000 45.2%
Common DTEK (2) 2,685,000 24.9%
TOTAL 7,560,000 70.1% (3)(4)
# Based on 10,784,000 shares outstanding as of July 15, 1999.
1. 4,650,000 of these shares are restricted pursuant to Rule 144. Mr.
Plastino's address is 6912 220th Street S.W., Mountlake Terrace, Washington
98043.
2. All of these shares are restricted pursuant to Rule 144. These shares are
voted by Patricia J. Fishback. Ms. Fishback's address is 2309 Mountainview
Drive, #195, Boise, Idaho.
3. Does not reflect share purchase options for 250,000 shares of common stock
issued to Wall Street Marketing Group Inc. for consulting services; does
not include 300,000 shares of common stock issued to Intercorp Inc. for
consulting services; and, does not include the conversion of preferred
stock.
4. All 100,000 shares of Preferred Stock currently outstanding are owned
beneficially and of record by HEP Trust Company, located at 22
Grapetree/Cocoplum West Bay Road, Grand Cayman Island, British West
Indies.
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Table No. 3 lists as of July 15, 1999 all Directors and Executive Officers who
beneficially own the Registrant's voting securities and the amount of the
Registrant's voting securities owned by the Directors and Executive Officers as
a group.
Table No. 3
Shareholdings of Directors and Executive Officers
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ ----------------------------------- ---------------- ----------
Common Pakie Plastino, Chairman & Director 4,875,000[1] 45.2%
Common William D. Doehne 250,000 2.3%
Total 6,125,000 47.5%[2]
# Based on 10,784,000 shares outstanding as of July 15, 1999.
[1] Mr. Plastino acquired 225,000 in March 1997; 1,500,000 shares in March 1997;
750,000 in April, 1997; 500,000 on May 1, 1997; 1,200,000 on September 30, 1998;
and 700,000 in June, 1999.
[2] Does not reflect share purchase options for 250,000 shares of common stock
issued to Wall Street Marketing Group Inc. for consulting services; does not
include 300,000 shares of common stock issued to Intercorp Inc. for consulting
services; and, does not include the conversion of preferred stock
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------
Table No. 4 lists as of July 15, 1999 the names of the Directors of the Company.
The Directors have served in their respective capacities since their election
and/or appointment and will serve until the next Annual Shareholders' Meeting or
until a successor is duly elected, unless the office is vacated in accordance
with the Articles/By-Laws of the Company. All Directors are residents and
citizens of the United States.
Table No. 4
Directors
Date First
Elected
Name Age or Appointed
- ------------------------------- ----- --------------
Pakie Plastino 50 July 1997
William D. Doehne 46 July 1997
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Table No. 5 lists, as of July 15, 1999, the names of the Executive Officers of
the Company. The Executive Officers serve at the pleasure of the Board of
Directors. All Executive Officers are residents/citizens of the United States.
Table No. 5
Executive Officers
Name Position Date of Board Approval
- ----------------- ----------------------- -------------------------
Pakie Plastino Chairman July 1997
William D. Doehne Chief Operating Officer July 1997
Business Experience
- -------------------
Pakie Plastino. Mr. Plastino is Chairman and a Director of the Company. He
spends 90% of his time on the affairs of the Company. He has been employed by
the Company since March 1997. His responsibilities include coordinating
strategy, planning, and marketing. Since 1984 Mr. Plastino has served as the
Chairman of Contractors Directory. Mr. Plastino is also an officer of
Construction Lien and Credit Services, a Seattle-based company that provides
lien filing and collection services for contractors, and ChekProtekt, a
Seattle-based company that provides check collection services for merchants. Mr.
Plastino has been involved with Construction Lien and Credit Services since
1993. Mr. Plastino has been an active businessman in the Seattle area for more
than 20 years and resides in Seattle and in Palm Springs, California.
Johathan J. Goody. Mr. Goody is a member of the Advisory Board of the Company.
He is a former Vice President and sales executive for Private Business Inc. of
Brentwood, Tennessee. Private Business is a software company that provides cash
management software to small business through community bank partners. Mr. Goody
joined Private Business in 1992 and was it grow to over $60 million in sales and
more than 350 people. Private Business became a public company in June 1999. The
Private Business business manager system has been sold to over 1,400 bank
clients. Mr. Goody's primary responsibility with Private Business included sales
to banks located on the West Coast. In this capacity he sold the Company's
software to over 200 community banks. Mr. Goody is also a founding partner of
Bay Equity Real Estate Acquisitions, a private real estate holding company. Mr.
Goody attended the University of Southern California where he received a
Bachelor of Science Degree in Business Administration.
William D. Doehne. Mr. Doehne is the Chief Operating Officer and a Director of
the Company. He spends 90% of his time on the affairs of the Company. Mr. Doehne
is also the President of Contractors Directory,Inc., a company previously owned
by Mr.
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Plastino and William D. Doehne before being acquired by the Company. Mr.
Doehne has been associated with Contractors Directory since 1995. From 1991 to
1995 he was employed by a company called Chek Protekt.
Curt Dean Blake. Mr. Blake is a member of the Company's Advisory Committee. He
is formerly the Chief Operating Officer of Starwave Corporation, a company
involved in the collection of content sites on the Internet. Mr. Blake graduated
from the University of Washington in 1980 when he received his Bachelor of Arts
degree in Business Administration. In June 1983 he received his Juris Doctorate
from the University of Washington and in 1984 he received his MBA from the
University of Washington.
Gary L. Bylund. Mr. Bylund is a member of the Company's Advisory Committee. He
is currently the President and Chief Executive Officer of Corporate Planning
Systems, L.L.C., a company involved in employee benefit brokerage and
consulting.
Jim David. Mr. David is a member of the Company's Advisory Committee. He is the
President of Trilogy Software, a mainframe software publisher. From 1996 through
1998 he was employed by Data I/O Corporation first as Vice President Worldwide
Sales & Marketing and then as President. From 1992 through 1995 he was a Vice
President of Aldus USA. Mr. David received both his MBA and B.S (Business
Administration/Mathematics) from the University of Washington.
Involvement in Certain Legal Proceedings
- ----------------------------------------
Steven Everett Coryell
On December 20, 1995, a civil injunctive complaint was filed in the
Fourth Judicial District Court in Boise,(Cause #CV0C95-06373D) Idaho
charging that Steven Everett Coryell, the former Chief Executive
Officer of Consolidated Data, and his company, National Investigative
Consultants, Inc. violated the anti-fraud and registrations provisions
of the Idaho Securities Act. The defendants admitted the allegations in
the complaint which included that they sold securities in the form of
stock, distressed loans packages and limited partnership interests to
13 residents of the state of Idaho. A judgement was entered against the
defendants on March 27, 1996. The court's order found that the
defendants violated the securities laws and permanently enjoined them
from engaging in such practices in the future. Full restitution to the
investors in the amount of nearly $345,000 was ordered by the court.
Stipulation for judgement and permanent injunction was entered on May
13, 1996. Mr.
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Coryell is the sole owner of DTEK Corporation, the owner of 2,685,000
common shares of the Company.
Pakie Plastino
On or around June 11, 1994, Pakie Plastino was debarred from acting in
any capacity as a contractor in any federally funded construction
project by the U.S. Department of Education. The term of the exclusion
expired on or about August 28, 1995.
Other than that described above, there have been no events during the last five
years that are material to an evaluation of the ability or integrity of any
director, person nominated to become a director, executive officer, promoter or
control person including:
a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;
b) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
c) being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;
d) being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Family Relationships
- --------------------
There are no family relationships between any of the officers and/or directors.
Other Relationships/Arrangements
- --------------------------------
There are no arrangements or understandings between any two or more Directors or
Executive Officers, pursuant to which he/she was selected as a Director or
Executive Officer. There are no material arrangements or understandings between
any two or more Directors or Executive Officers.
35
<PAGE>
On March 3, 1999 in response to newly instituted public company regulatory
requirements, the Company engaged Inter Corp., Inc. of Seattle, Washington to
procure accounting and legal services necessary to produce current audited
financial statements and to complete and file Form 10-SB with the Securities and
Exchange Commission. Inter Corp., Inc. also was to develop a business plan for
the online banking system. Inter Corp agreed to provide such services in
exchange for 300,000 shares of restricted common shares. The services were
deemed to have a value of $60,000. The Company issued 300,000 shares of common
stock in March, 1999 in consideration for services and $100. Through October
1999, the Company incurred costs associated with services to be provided by
InterCorp, specifically accounting and legal costs associated with preparation
of financial statements and the Form 10-SB. The Company paid these bills
directly and InterCorp has reimbursed the Company $45,000 for these costs.
Through October 1999, the Company incurred $45,000 in accounting and legal costs
associated with the preparation of financial statements and the Form 10-SB.
These costs related to services that were to be provided by InterCorp. The
Company paid these bills directly and, as of October 1999, InterCorp has
reimbursed the Company in-full for these costs.
The Company's independent auditor is unrelated to Inter Corp., Inc.
The Company has awarded 250,000 share purchase options to Wall Street Marketing
Group, Inc., a firm which was hired to assist the Company in investor relations
matter. To date Wall Street Marketing Group Inc. has exercised 75,000 of these
share purchase options.
ITEM 6. EXECUTIVE COMPENSATION
- -------------------------------
The Company has no formal plan for compensating its Directors for their service
in their capacity as Directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any Director undertaking any special services on
behalf of the Company other than services ordinarily required of a Director.
During Fiscal 1997, no Director received and/or accrued any compensation for his
services as a Director, including committee participation and/or special
assignments.
During Fiscal 1999, the Company awarded 25,000 shares of common stock to each
member of the Advisory Board.
36
<PAGE>
The Company has no material bonus or profit sharing plans pursuant to which cash
or non-cash compensation is or may be paid to the Company's Directors or
Executive Officers. The Company has no stock option or other long-term
compensation program.
During 1998, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.
The Company has no plans or arrangements in respect of remuneration received or
that may be received by Executive Officers of the Company in Fiscal 1998 to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds
$60,000 per Executive Officer.
The Company has no written employment agreements.
Between April 1997 and March 1999, Pakie Plastino received 100,000 shares per
month as compensation for his services.
Other than that disclosed above, no compensation was paid during Fiscal 1998 to
any of the officers or directors of the Company to the extent that they were
compensated in excess of $60,000.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
There have been no transactions since July 14, 1995 (Date of Inception), or
proposed transactions, which have materially affected or will materially affect
the Company in which any Director, Executive Officer, or beneficial holder of
more that 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates has had or will have any direct or
material indirect interest.
ITEM 8. DESCRIPTION OF SECURITIES
- ----------------------------------
The authorized capital of the Registrant is 50,000,000 shares of common stock
with no par value and 5,000,000 shares of non-voting preferred stock with no par
value of which 6,456,000 of common stock was issued and outstanding at September
30, 1998 (as restated), the end of the most recent fiscal year. At July 15,
1999, there were 10,784,000 shares of common stock outstanding. At September 30,
1998, the end of the most recent fiscal year there were 100,000 shares of
non-voting preferred stock outstanding and as of July 15, 1999 there were
100,000 shares of non-voting preferred stock outstanding.
37
<PAGE>
All common shares are equal to each other, and when issued, are fully paid and
non-assessable, and the private property of shareholders who are not liable for
corporate debts. Preferred shares have such preferences as the Directors may
assign to them prior to issuance. Each holder of a common share of record has
one vote for each share of stock outstanding in his name on the books of the
Corporation and shall be entitled to vote said stock.
The common stock of the Company shall be issued for such consideration as shall
be fixed from time to time by the Board of directors. In the absence of fraud,
the judgment of the Directors as to the value of any property or services
received in full or partial payment for shares shall be conclusive. When shares
are issued upon payment of the consideration fixed by the board of Directors,
such shares shall be taken to be fully paid stock and shall be non-assessable.
Except as may otherwise be provided by the Board of Directors, holders of shares
of stock of the Corporation shall have no preemptive right to purchase,
subscribe for or otherwise acquire shares of stock of the Company, rights,
warrants or options to purchase stocks or securities of any kind convertible
into stock of the Company.
Dividends in cash, property or shares of the Company may be paid, as and when
declared by the Board of Directors, out of funds of the Company to the extent
and in the manner permitted by law.
Upon any liquidation, dissolution or winding up of the Company, and after paying
or adequately providing for the payment of all its obligations, the remainder of
the assets of the company shall be distributed, either in cash or in kind, pro
rata to the holders of the common stock, subject to preferences, if any, granted
to holders of the preferred shares. The Board of Directors may, from time to
time, distribute to the shareholders in partial liquidation from stated capital
of the Company, in cash or property, without the vote of the shareholders, in
the manner permitted and upon compliance with limitations imposed by law.
Each outstanding share of common stock is entitled to one vote and each
fractional share of common stock is entitled to a corresponding fractional vote
on each matter submitted to a vote of shareholders. Cumulative voting shall not
be allowed in the election of Directors of the company and every shareholder
entitled to vote at such election shall have the right to vote the number of
shares owned by him for as many persons as there are Directors to be elected,
and for whose election he has a
38
<PAGE>
right to vote. Preferred shares have no voting rights unless granted by
amendment to the Articles of Incorporation.
When, with respect to any action to be taken by the Shareholders of the Company,
the Colorado Corporation Code requires the vote or concurrence of the holders of
two-thirds of the outstanding shares entitled to vote thereon, or of any class
or series, any and every such action shall be taken, notwithstanding such
requirements of the Colorado Corporation Code, by the vote or concurrence of the
holders of a majority of the outstanding shares entitled to vote thereon, or of
any class or series.
Preferred Stock
The Company initially authorized 5,000,000 shares of no par value, non-voting
preferred stock, the rights and preferences of which to be determined by the
Board of Directors at the time of issuance.
On May 24, 1996, the Company issued 100,000 shares of its preferred stock at a
price of $0.10 per share. The Directors have assigned the following preferences
to the issued and outstanding shares of Preferred Stock: (I) the Preferred Stock
shall be non-voting, (II) the holders of the stock as a group have the right to
receive, prorata, a mandatory dividend of 10% of the Company's adjusted gross
profit as reflected on its annual corporate income tax return and to be paid
within ten days of the filing thereof, and (III) upon dissolution or winding up
of the Company, 10% of the assets of the Company shall be distributed on a
prorata basis to the holders of the Preferred Stock prior to division and
distribution of assets to the holders of the Company's Common Stock; Further,
the holder of the preferred shares shall sell to the Company the preferred
shares for a price equal to the price paid by the preferred shareholder for the
shares, plus 50% of the Company's net profit as of the end of six months from
the issuance in the event there is any change in the Company's management
(officers and directors) in the six months following issuance, but subject to
the Company's obligation to pay the same amount to purchase and retire the
shares if at the end of six months from the issuance there is no change in
management. The preferences may be changed at any time with written unanimous
approval by and between the Company and all holders of the preferred shares.
39
<PAGE>
Subsequently, on or about May 19, 1997, the Board of Directors altered the
rights and preferences of the preferred stock as follows:
i) Upon declaration of any dividends by the Company, preferred shares
shall each receive 4.5 times the amount of dividends on each common share,
and preferred dividends shall be paid in full prior to payment of any
dividends on common shares.
ii) Each share of preferred stock may be converted at any time into
4.5 common shares.
iii) Upon liquidation, after the payment of all creditors or other
parties having superiority to capital stock, preferred shares shall be paid
a liquidation value of $1.00 per share prior to any distribution to common
shareholders
All 100,000 shares of Preferred Stock currently outstanding are owned
beneficially and of record by HEP Trust Company, Grand Cayman Island, British
West Indies.
Debt Securities to be Registered. Not applicable.
- --------------------------------
American Depository Receipts. Not applicable.
- ----------------------------
Other Securities to be Registered. Not applicable.
- ---------------------------------
40
<PAGE>
PART II
Item 1. Market Price Of And Dividends on the Registrant's
-------------------------------------------------
Common Equity and Other Shareholder Matters
-------------------------------------------
The Company's common stock formerly traded on the Over-the-Counter Electronic
Bulletin Board in the United States, having the trading symbol "CSDD" and CUSIP#
20902 W106. Trading volume and high/low/closing prices for the past ten quarters
are disclosed in the following table:
Table No. 7
NASBD Stock Trading Activity
Quarter High Low Close Volume
Ended
- -------- -------------- -------------- -------------- --------------
06/30/99 $17.00 $1.87 $4.50 2,171,000
03/31/99 $2.00 $0.12 $1.81 565,000
12/31/98 $0.69 $0.19 $0.25 78,101
09/30/98 No Trading No Trading No Trading No Trading
06/30/98 No Trading No Trading No Trading No Trading
03/31/98 No Trading No Trading No Trading No Trading
12/31/97 No Trading No Trading No Trading No Trading
09/30/97 No Trading No Trading No Trading No Trading
06/30/97 No Trading No Trading No Trading No Trading
03/31/97 No Trading No Trading No Trading No Trading
The Company's common stock is issued in registered form. Corporate Stock
Transfer (located in Denver, Colorado) is the registrar and transfer agent for
the common stock.
On July 15, 1999 shareholders' list for the Company's common shares showed
twenty four registered shareholders and 10,784,000 shares outstanding
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain future earnings for use in its operations and expansion
of its business.
The preferred stock of the Company is not registered and does not trade.
41
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
- --------------------------
The Company knows of no material, active or pending legal proceedings against
them; nor is the Company involved as a plaintiff in any material proceeding or
pending litigation.
The Company knows of no active or pending proceedings against anyone that might
materially adversely affect an interest of the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------------------------------------------------------
Not Applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- ------------------------------------------------
Securities sold by the Company within the past three years which were not
registered consist of the following:
In March 1997, the Company issued 1,500,000 shares of Common Stock to Pakie
Plastino in exchange for marketing rights in three states for Contractors
Directory. The shares of common stock issued were pursuant to an exemption to
registration provided under Section 4(2), of the Securities Act of 1933. No cash
was received, but Management assumed a non-cash equity value for the stock
issuance of $75,000 (e.g.$0.05 per share). At the same time Mr. Plastino was
subsequently appointed to the Board of Directors and as President of the
Company. At the time of the transaction Mr. Plastino was provided with full and
complete information as to the Company. All stock certificates were issued with
appropriate legend indicating that the securities were acquired for investment
purposes.
On April 17, 1997, the Company issued 1,000,000 shares of Common Stock in
exchange for common stock of Contractor's Directory. The shares of common stock
were issued pursuant to an exemption to registration provided under Section
4(2), of the Securities Act of 1933. No cash was received, but a non-cash equity
value for the stock issuance of $100 (e.g.$0.0001 per share) was utilized. The
acquisition was accounted for as a "pooling of interest" and, consistent with
generally accepted accounting principles, the value of the contributed capital
of the acquired company was carry-forwarded to the books and records of the
surviving company. Contractor's Directory, Inc. had a contributed capital book
value of $100.00 prior to the acquisition and therefore, was the value carried
forward by Contractor's Directory in exchange for the 1,000,000 shares.
Representatives of Contractor's Directory were provided full access to
information about the Company as part of it's due diligence process. All stock
42
<PAGE>
certificates were issued with appropriate legend indicating that the securities
were acquired for investment purposes.
In May, 1997 and September 30, 1997, a total of 100,000 shares of Common Stock
were issued for attorneys fees (e.g. Dean Kalivas) and secretarial services
(e.g. Connie Pinter). The shares of common stock issued were pursuant to an
exemption to registration provided under Section 4(2), of the Securities Act of
1933. Mr. Kalivas acted as legal counsel for the Company and performed various
legal services on behalf of the Corporation for the period March 1997 through
June 1997. Mr. Plastino and Mr. Kalivas have been business associates in various
real estate transactions over the past several years. In addition, Mr. Kalivas
purchased a business known as Construction Lien and Credit Services ("CLCSI")
from Mr. Plastino. Mr. Kalivas is not affiliated with Consolidated Data, its
subsidiaries, or Officers or Directors, in any way other than as a shareholder
of the Company. Ms. Pinter acted as executive assistant to Pakie Plastino,
President of the Company, and has been employed by affiliated Companies of Mr.
Plastino since 1984. Ms. Pinter has known Mr. Plastino for approximately 20
years. She has been employed by CLCSI and LGA, Inc, companies controlled, or
previously controlled by Mr. Plastino, in the capacity of Executive Assistant
and Bookkeeper for those companies. Ms. Pinter is not affiliated with
Consolidated Data or its subsidiaries, Officers or Directors, in any way other
than as a shareholder of the company. No cash was received, but Management
assumed a non-cash equity value for the stock issuance of $5,000 (e.g.$0.05 per
share). The Company believes that Ms. Pinter's status as an employee of the
Company provided her access to information concerning the Company. The Company
believes that Mr. Kalivas' position as counsel to the Company provided him
access to information concerning the Company. All stock certificates provided to
Ms. Pinter and Mr. Kalivas were issued with appropriate legend indicating that
the securities were acquired for investment purposes.
Pursuant to an offering in October, 1997, the Company sold 80,000 shares of
common stock for an aggregate purchase price of $12,000. The purchaser was
Clayten Vance, a Canadian citizen. He is not affiliated with the Company, its
subsidiaries, Officers or Directors in any way other than as a shareholder of
the Company. The shares of common stock in the foregoing offering, were offered
pursuant to an exemption to registration provided under Section 3(b), Regulation
D, Rule 504 of the Securities Act of 1933, as amended and under the exemption to
registration under Section 11-51-308(1)(p) of the Colorado Securities Act.
In August, 1998 and March, 1999, a total of 175,000 shares of Common Stock were
issued for consulting services (e.g. Arthur Stevens, 150,000 shares; and Gary
Bylund, 25,000 shares). The
43
<PAGE>
shares of common stock issued were pursuant to an exemption to registration
provided under Section 4(2), of the Securities Act of 1933. At the time Mr.
Stevens was an employee, and his services related to computer networking and
related support. He continues to provide services to the Company as a consultant
through his own business. The Company believes that Mr. Stevens status as an
employee of the Company provided him access to information concerning the
Company. Mr. Stevens worked for Consolidated Data for approximately 1 1/2 years.
He is not affiliated with Consolidated Data or its subsidiaries, Officers or
Directors, in any way other than as a former employee, current vendor, and as a
shareholder of the company. Neither Mr. Plastino or the Company had any
association or relationship with Mr. Stevens prior to his employment with the
Company. At the time the services were performed, Mr. Bylund was a member of the
advisory committee to the Company providing advice to the Company in the area of
insurance and financial products. Mr. Bylund is the owner of an insurance
brokerage firm and a registered representative of the NASD. Mr. Bylund has known
Mr. Plastino for 20 years and has provided insurance products to Mr. Plastino in
the past. He is affiliated with Consolidated Data and its subsidiaries as an
advisor and as a shareholder of the company. He is not affiliated in any way
with any other Officers or Directors.No cash was received, but Management
assumed a non-cash equity value for the stock issuance to Mr. Stevens was $7,500
(e.g.$0.05 per share), and Mr. Bylund was $5,000 (e.g.$0.20 per share). The
Company believes that Mr. Bylund's was sophisticated and had complete access to
information concerning the Company. All stock certificates provided to Messrs.
Stevens and Bylund were issued with appropriate legend indicating that the
securities were acquired for investment purposes.
In March, 1999, the Company issued 300,000 shares of Common Stock to InterCorp,
Inc., in compensation for services. The shares of common stock issued were
pursuant to an exemption to registration provided under Section 4(2), of the
Securities Act of 1933. No cash was received, but Management assumed a non-cash
equity value for the stock issuance of $60,000 (e.g.$0.20 per share). InterCorp,
Inc. has made representations to the Company that all of the equity owners of
such company are "accredited investors" as well as recognizing the high degree
of risk of the investment, the ability to bear the risk, that InterCorp, Inc. is
a sophisticated investor, the investment is suitable as an investment, InterCorp
has been given access to full and complete financial and business information
regarding the Company, the securities are restricted securities, and InterCorp
acquired the securities for its own account. All stock certificates were issued
with appropriate legend indicating that the securities were acquired for
investment purposes. Additionally, the
44
<PAGE>
President of InterCorp, Beau Jeffries, has known Mr. Plastino for 6 years.
InterCorp has not provided any other services other than those for which is was
compensated 300,000 shares, nor does InterCorp. have any other relationship with
Consolidated Data or its subsidiaries. In prior years, InterCorp has provided
services to other companies controlled by Mr. Plastino. InterCorp is not
affiliated with any Directors and Officers of Consolidated Data other than as a
past vendor to companies managed by Mr. Plastino.
In April 1999, the Company issued 75,000 shares of Common Stock to Wall Street
Marketing Group, Inc., pursuant to an exercise of options previously granted
under the terms of a consulting agreement entered into between the Company and
Wall Street Marketing Group, Inc. on March 1, 1999. The exercise price was
$25,000 for 25,000 shares (e.g. $1.00 per share,$50,000 for 25,000 shares (e.g.
$2.00 per share), and $125,000 for 25,000 (e.g. $5.00 per share). The options
originally granted were for a total of 250,000 shares of common stock at varying
prices and amounts, to be exercised no later than May 1, 2000. Wall Street
Marketing Group still retains the option for: 25,000 shares at $10.00 per share;
25,000 shares at $15.00 per share; 25,000 shares at $20.00 per share; 25,000
shares at $25.00 per share; 25,000 shares at $30.00 per share; 25,000 shares at
$40.00 per share; and 25,000 shares at $50.00 per share. The shares of common
stock issued were pursuant to an exemption to registration provided under
Section 4(2), of the Securities Act of 1933. Under the terms of the Consulting
Agreement, Wall Street Marketing Group was retained to provide representation
and advice in public relations, public appearances and marketing of the Company,
as well as to dissemninate information concerning the Company to licensed
members of the securities industry. Wall Street Marketing Group was provided
with full access to information concerning the Company. All stock certificates
were issued with appropriate legend indicating that the securities were acquired
for investment purposes. The President of Wall Street Marketing ("WSM") has
known Mr. Plastino for one year. The Company did not have any affiliation with
WSM prior to services provided by WSM in 1999. WSM has not provided any other
services other than those for which it was compensated in cash and options. WSM
has not had any other relationship with the Company, its subsidiaries, Officers
or Directors.
In May, 1999, the Company issued 28,000 shares of Common Stock to Robert O'Dell,
in compensation for services from January 1998 through June 1999, as a graphics
designer for web site design. The shares of common stock issued were pursuant to
an exemption to registration provided under Section 4(2), of the Securities Act
of 1933. Mr. O'Dell has been employed by CLCSI and Contractor's Directory, Inc.,
companies controlled by Mr. Plastino, in the capacity of advertising and design
specialist
45
<PAGE>
for those companies. Mr. Odell is not affiliated with the Company, its
subsidiaries, Officers or Directors, in any other way, other than as a
shareholder of the company. No cash was received, but Management assumed a
non-cash equity value for the stock issuance of $5,600 (e.g.$0.20 per share).
The Company believes that Mr. O'Dell's relationship to the Company provided him
access to information concerning the Company. All stock certificates were issued
with appropriate legend indicating that the securities were acquired for
investment purposes.
On May 1, 1997 (500,000), September 30, 1998 (1,200,000), and June
1999(700,000), collectively the Company issued 2,400,000 shares to Pakie
Plastino as compensation for services as an officer and director. No cash was
received, but Management assumed a non-cash equity value for the stock issuance
of $120,000 (e.g.$0.05 per share). The Company believes that Mr. Plastino's
status as an officer and director of the Company provided him access to
information concerning the Company. All stock certificates were issued with
appropriate legend indicating that the securities were acquired for investment
purposes. The shares of common stock issued were pursuant to an exemption to
registration provided under Section 4(2), of the Securities Act of 1933.
In March 1999 (2,000,000 shares of Common Stock), and April 12, 1999 (1,200,000
shares of Common Stock), the Company collectively issued 3,200,000 shares of its
restricted common stock in full satisfaction of agreements with DTEK
Corporation. The shares of common stock issued to DTEK, were offered pursuant to
an exemption to registration provided under Section 4(2), of the Securities Act
of 1933. No cash was received, but Management assumed a non-cash equity value
for the stock issuance of $640,000 (e.g.$0.20 per share). DTEK was provided with
full and complete access to information about the Company. All stock
certificates were issued with appropriate legend indicating that the securities
were acquired for investment purposes.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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The Company's By-Laws address indemnification under Article XIII.
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director of
officer; provided however, that the foregoing provision shall not eliminate or
limit the liability of a director of officer (i for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of Section 70-109-102, et. seq. of the
Colorado
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Revised Statues. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such repeal or
modification.
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PART F/S
ITEM 1. FINANCIAL STATEMENTS
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The financial statements and notes thereto as required under ITEM #13 are
attached hereto and found immediately following the text of this Registration
Statement. The audit report of William Butcher, Independent Certified Public
Accountant, for the audited financial statements for Fiscal 1998, 1997 and for
the six months ended March 31, 1999 and notes thereto is included herein
immediately preceding the audited financial statements.
(A-1) Audited Financial Statements: Fiscal 1998, 1997, and the six months ended
March 31, 1999.
Auditor's Report, dated July 27, 1999
Consolidated Balance Sheets for inception to 9/30/97, 9/30/98 and 3/31/99
Consolidated Statement of Loss and Accumulated Deficit from inception to
9/30/97, 9/30/98 and the interim six months ended 3/31/99.
Consolidated Statements of Cash Flows from inception to 9/30/97, 9/30/98 and the
interim six months ended 3/31/99.
Consolidated Statement of Changes in Stockholders' Equity from inception to
9/30/97, 9/30/98 and the interim six months ended 3/31/99.
Notes to Financial Statements
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PART III
Item 1. INDEX TO EXHIBITS:
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Exhibit number
3.1 *Articles of Incorporation
3.2 *BYLAWS
4 *Amendment to Form D
21 Subsidiaries of the Registrant
23 *Consent of Accountants
27 Financial Data Schedule
* These documents have been previously filed with the Securities and Exchange
Commission and are incorporated by reference herein.
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Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
List of all subsidiaries
Contractors Directory, Inc.
The State of incorporation
Washington
