<PAGE> 1
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SENSUS CAPITAL CORP.
(Name of small business issuer in its charter)
-------------------------
Nevada 5961 98-0212741
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification Number)
Classification Code Number)
53 Stratford Place, S.W.
Calgary, Alberta
T3H 1H7
(403) 242-9703
(Address and telephone
number of principal executive
offices and principal
place of business)
-------------------------
J. Timothy Bowes, President,
Chief Executive Officer
SENSUS CAPITAL CORP.
53 Stratford Place, S.W.
Calgary, Alberta
T3H 1H7
(403) 242-9703
(Name, address and
telephone number of agent for
service)
Copies to:
Jeffrey E. Sultan, Esq.
Sandra Lee Montgomery, Esq.
Jeffer, Mangels, Butler &
Marmaro LLP
2121 Avenue of the Stars,
10th Floor
Los Angeles, California
90067
(310) 203-8080
Fax (310) 203-0567
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock issued to Founder 7,500 $1.00
Common Stock underlying Takeover Bid 10,000,000 $1.00
Common Stock Issued under Offering
Memorandum 124,000 $1.00 $35
Common Stock Issued pursuant to the
AOI Asset Acquisition Agreement 25,000 $1.00
Common Stock to be issued by the
Company pursuant to this registration 1,000,000 $1.00 $1,000,000 $264
TOTALS: 11,156,500 $1.00 $11,156,500 $2,946
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE INFORMATION IN THIS REGISTRATION STATEMENT IS NOT COMPLETE AND MAY
BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
REGISTRATION STATEMENT IS NOT AN OFFER TO SELL SECURITIES AND IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
THIS REGISTRATION STATEMENT COVERS BOTH A PRIMARY OFFERING OF SHARES OF
COMMON STOCK BY SENSUS CAPITAL CORPORATION, A NEVADA CORPORATION, AND THE
RE-OFFERING OF THE COMMON STOCK BY CERTAIN SELLING SECURITY HOLDERS. THIS
REGISTRATION STATEMENT IS BEING FILED IN ORDER TO REGISTER, ON BEHALF OF THE
SELLING SECURITY HOLDERS, A TOTAL OF 10,156,000 SHARES OF COMMON STOCK.
<PAGE> 3
SENSUS CAPITAL CORP.
CROSS REFERENCE SHEET FOR PROSPECTUS UNDER FORM SB-2
<TABLE>
<CAPTION>
FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTS
- ------------------------------ --------------------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Outside Front Cover Page; Cross Reference
Front Cover of Prospectus Sheet; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside front and Outside Back Cover Pages
Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Risk Factors; Underwriting
6. Dilution Dilution
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Inside Front Cover Page; Underwriting
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers Promoters and Management
Control Person
11. Security Ownership of Certain Beneficial Owners Principal Shareholders; Management
and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Management - Limitation of Liability;
Indemnification for Securities Act Liabilities Underwriting; Management - Indemnification of
Officers and Directors
15. Organization within Last Five Years Business
16. Description of Business Business
17. Certain Relationships and Related Transactions Certain Relationships and Related Transactions
18. Market for Common Equity and Related Shareholder Risk Factors; Dividend Policy; Description of
Matters Securities; Shares Eligible for Future Sale
19. Executive Compensation Management - Executive Compensation
20. Financial Statements Financial Statements
21. Changes in and Disagreements with Accountants on Not Applicable
Accounting and Financial Disclosure
</TABLE>
<PAGE> 4
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
SUBJECT TO COMPLETION DATED MARCH 23, 2000
PROSPECTUS
UP TO 11,156,500 SHARES
SENSUS CAPITAL CORP.
COMMON STOCK
This Prospectus covers the offer of 11,156,500 shares of common stock,
par value $0.001 per share ("Common Stock") (the "Shares") of Sensus Capital
Corp. (the "Company") in an initial public offering of which 1,000,000 Shares
are being offered by the Company and the balance of 10,156,500 Shares by the
following holders of the Company's Common Stock (collectively, the "Offering"):
<TABLE>
<CAPTION>
SELLING STOCKHOLDER SHARES OWNED PRIOR TO PERCENTAGE OF SHARES OF
REGISTRATION SENSUS CURRENTLY ISSUED
<S> <C> <C>
J. Timothy Bowes 5,600,000 55.14%
First Island Acceptance Corporation 900,000 8.86%
682908 Alberta Ltd. 1,000,000 9.85%
682910 Alberta Ltd. 1,000,000 9.85%
682911 Alberta Ltd. 1,500,000 14.77%
ALLTeam Online, Inc. 25,000 0.25%
Offering Memorandum Security Holders 124,000 1.22%
John M. Hall 7,500 0.07%
TOTAL 10,156,500 100.00%
</TABLE>
THE SELLING SECURITY HOLDERS MAY, FROM TIME TO TIME, OFFER AND SELL ALL
OR A PORTION OF THE SECONDARY SHARES IN NEGOTIATED TRANSACTIONS OR IN TRADING
MARKETS FOR THE SECURITIES WHICH MAY DEVELOP. THERE IS CURRENTLY NO TRADING
MARKET IN THE SECURITIES AND THE SECURITIES DO NOT TRADE ON THE NATIONAL
SECURITIES EXCHANGE OR THE NASDAQ STOCK MARKET. THE SECONDARY SHARES MAY BE SOLD
DIRECTLY OR THROUGH BROKERS OR DEALERS IN A DISTRIBUTION BY ONE OR MORE
UNDERWRITERS ON A FIRM COMMITMENT OR BEST EFFORTS BASIS. TO THE EXTENT REQUIRED,
THE NAMES OF ANY AGENT OR BROKER DEALER AND APPLICABLE COMMISSIONS OR DISCOUNTS
AND ANY OTHER REQUIRED INFORMATION WITH RESPECT TO ANY PARTICULAR OFFER WILL BE
SET FORTH IN AN ACCOMPANYING PROSPECTUS SUPPLEMENT. SEE "PLAN OF DISTRIBUTION."
EACH OF THE SELLING SECURITY HOLDERS RESERVE THE RIGHT TO ACCEPT OR REJECT, IN
WHOLE OR IN PART, ANY PROPOSED PURCHASE OF THE SECONDARY SHARES TO BE MADE
DIRECTLY OR THROUGH AGENTS.
THE SELLING SECURITY HOLDERS AND ANY AGENTS OR BROKER DEALER THAT
PARTICIPATE WITH THE SELLING STOCK HOLDERS IN THE DISTRIBUTION OF THE
1
<PAGE> 5
SECONDARY SHARES MAY BE DEEMED TO BE "UNDERWRITERS" WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND ANY COMMISSIONS RECEIVED BY
THEM, AND ANY PROFITS ON THE SALE OF THE SECONDARY SHARES MAY BE DEEMED TO BE
UNDERWRITING COMMISSIONS OR DISCOUNTS UNDER THE ACT. THERE WILL BE NO PROCEEDS
RECEIVED BY THE COMPANY FROM THE SALE OF ANY SECONDARY SHARES BY THE SELLING
SECURITY HOLDERS AND THE COMPANY HAS AGREED TO BILL THE EXPENSES OF THE
REGISTRATION OF THE SECONDARY SHARES, OTHER THAN THE COMMISSIONS AND DISCOUNTS
OF AGENTS, BROKER DEALERS AND TRANSFER TAXES, IF ANY.
For information on how to subscribe, call (403) 242-9703 and ask for J. Timothy
Bowes. Sale of our Common Stock will only be made in connection with this
Prospectus.
<TABLE>
<CAPTION>
Shares Price to
Offered (1) Public Proceeds to Us
----------- ------
<S> <C> <C> <C>
Sensus Capital Corp. 1,000,000 $1.00 $1,000,000
Selling Security
Holders. 10,156,500 $1.00 $0
---------- ------
11,156,500 $11,156,500 $1,000,000
</TABLE>
(1) We are offering these Shares directly on a "best efforts" basis without
an underwriter.
SEE "RISK FACTORS" ON PAGES 9 TO 16 FOR FACTORS THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN THE SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
2
<PAGE> 6
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form SB-2 under the Securities Act of 1933, as
amended, or the Securities Act, for the shares of our Common Stock being offered
by this Prospectus. This Prospectus does not contain all of the information set
forth in the registration statement and the exhibits. For further information
about the Company and the Common Stock being offered, see the registration
statement and the exhibits thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other document to which reference
is made are not necessarily complete, and, in each instance where a copy of a
contract or other document has been filed as an exhibit to the registration
statement, reference is made to the copy so filed, each of those statements
being qualified in all respects by that reference. A copy of the registration
statement and the exhibits may be inspected without charge at the SEC's offices
at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549, and copies of all
or any part of the registration statement may be obtained from the Public
Reference Room of the SEC, Washington, D.C. 20549 upon the payment of the fees
prescribed by the SEC. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC- 0330. The SEC maintains a
Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as us, that file
electronically with the SEC. As a result of this Offering, we will become
subject to the information and reporting requirements of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, and we will file periodic reports,
proxy statements and other information with the SEC. We intend to furnish our
stockholders with annual reports containing audited financial statements and
with quarterly reports for the first three quarters of each year containing
unaudited interim financial information.
No dealer, salesman or any other person has been authorized to give any
information which is not contained in this Prospectus or to make any
representation in connection with this Offering other than those which are
contained in the Prospectus, and if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities which are offered hereby to any person
in any jurisdiction where such offer or solicitation would be unlawful. Neither
the delivery of this Prospectus nor any sale hereunder shall under any
circumstances create any implications that there has been no change in the
affairs of the Company or the facts which are herein set forth since the date
hereof.
3
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary........................................................................................
Risk Factors..............................................................................................
Forward-Looking Statements................................................................................
Use of Proceeds...........................................................................................
Dividend Policy...........................................................................................
Dilution..................................................................................................
Capitalization............................................................................................
Selected Financial Data...................................................................................
Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................................................
Business..................................................................................................
Management................................................................................................
Principal and Selling Shareholders........................................................................
Certain Transactions......................................................................................
Description of Capital Stock..............................................................................
Shares Eligible for Future Sale...........................................................................
Underwriting..............................................................................................
Legal Matters.............................................................................................
Experts...................................................................................................
Additional Information....................................................................................
Index to Financial Statements..........................................................................F-1
</TABLE>
4
<PAGE> 8
PROSPECTUS SUMMARY
7,500 Shares of Common Stock - John M. Hall
10,000,000 Shares of Common Stock underlying Takeover Bid Shares
124,000 Shares of Common Stock issued pursuant to an Offering Memorandum
25,000 Shares of Common Stock issued under the AOI Asset Acquisition Agreement
1,000,000 Shares of Common Stock to be issued by the Company on a "Best
Efforts" Basis
This summary highlights information contained elsewhere in this
Prospectus. This summary does not contain all of the information that you should
consider before investing in our Common Stock. You should read the entire
Prospectus carefully, especially the risks of investing in our Common Stock
discussed under "Risk Factors."
This Prospectus covers the offer of 11,156,500 shares of Common Stock
(the "Shares") of the Company in an initial public offering of which 1,000,000
Shares are being offered by the Company and 10,156,500 Shares are being offered
by various Selling Security Holders (see definition below). The Selling Security
Holders acquired these Shares from the Company in various transactions, all of
which were exempt from registration under the Securities Act of 1933, as
amended.
THE COMPANY
Sensus Capital Corp. is a Nevada corporation formed on May 21, 1999
("Sensus" or the "Company"), for the purpose of engaging in businesses related
to the Internet, e-commerce and technology by acquiring the business concept and
certain rights to domain names owned by ALLTeam Online Inc., a Seattle based and
Internet media company ("AOI"). See "Acquisition of AOI Technology." Sensus is
also the parent corporation of 830245 Alberta Ltd.("Alberta Corp."), a
corporation incorporated under the laws of Alberta, Canada on May 10, 1999.
Sensus acts as a holding corporation for Alberta Corp. For simplicity, we use
the terms "we" and "our" to refer both to the Company and Alberta Corp. At times
we will refer to Alberta Corp. and Sensus for purposes of distinguishing the two
entities.
Our executive offices are located at 53 Stratford Place, S.W., Calgary,
Alberta, T3H 1H7. The telephone number and facsimile number in Canada is (403)
242-9703. The registered and records office of the Company is located at 318
North Carson Street, Suite 214, Carson City, Nevada 89701. The executive offices
in Canada is located within the home of our president and, as such, there are no
leases in place. Until such time as it becomes necessary to hire staff, the
Company does not intend on leasing any space.
THE OFFERING
(a) 7,500 shares of Common Stock issued to John M. Hall ("Original Security
Holder") upon incorporation of the Company ("Original Shares");
(b) 10,000,000 shares of Common Stock underlying the shares in Alberta
Corp. issued to five (5) security holders ("TOB Security Holders")
which were exchanged for shares of Common Stock in the Company ("TOB
Shares");
(c) 124,000 shares of Common Stock issued to 31 security holders ("OM
Security Holders") pursuant to an offering memorandum issued on
September 30, 1999 ("OM Shares");
(d) 25,000 shares of Common Stock issued to the principal of AOI ("AOI
Security Holders"), pursuant to the terms of the AOI Asset Acquisition
Agreement dated July 31, 1999 ("AOI Shares"); and
(e) 1,000,000 shares of Common Stock to be issued by the Company to new
security holders ("New Security Holders") on a "best efforts" basis
once the shares are registered pursuant to
5
<PAGE> 9
this Prospectus ("New Shares").
The securities issued to TOB Security Holders, OM Security Holders and
AOI Security Holders were issued in Regulation S transactions by Sensus and the
securities issued to the Original Security Holder was issued pursuant to a
Regulation D, Rule 506,transaction by Sensus. TOB Security Holders, OM Security
Holders, AOI Security Holders and the Original Security Holder are collectively
referred to herein as the "Selling Security Holders." The Original Shares, TOB
Shares, OM Shares, and AOI Shares are collectively referred to herein as the
"Secondary Shares." See "Plan of Distribution" and "Selling Security Holders."
There will be no proceeds received by the Company from the sale of any
Secondary Shares of the Selling Security Holders and the Company has agreed to
bill the expenses of the registration of the Secondary Shares, other than the
commissions and discounts of agents, broker dealers and transfer taxes, if any.
Of the proceeds received by the Company from the sale of the New Shares, the
Company intends to allocate the proceeds as follows: 1) $500,000 to fund the
development of the AOI Network, as defined below, 2) approximately $150,000 for
working capital and other general purposes, 3) approximately $300,000 for
marketing expenditures related to the AOI Network, including web based
advertisement, cross data promotion and linking with other Web site companies,
and 4) approximately $50,000 to pay all the costs associated with this
Prospectus and legal and accounting fees.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE IN NATURE
AND INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS AT PAGE 9 OF THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSIONS HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS AN
OFFENCE.
SUMMARY OF FINANCIAL INFORMATION
Since the Company was formed on May 21, 1999 and we did not commence
operations through the Company until after May 27, 1999, the following data has
been derived from the financial statements of Sensus and Alberta Corp. and
should be read in conjunction with those statements, which are included in this
Prospectus. All dollar amounts referred to in this Prospectus are, unless
otherwise stated, expressed in United States dollars. On March 20, 2000 the
conversion rate on the Canadian dollar was $1.4711 Canadian on $1.00 US.
<TABLE>
<CAPTION>
Outstanding as of February Outstanding if all shares offered
18, 2000 for sale are purchased by the New
Security Holders
Capital Authorized (audited)(1) (unaudited)
Long Term Debt N/A NIL NIL
<S> <C> <C> <C>
Common Stock 25,000,000 shares with $123,558(1) $1,123,558(1)
a par value of $0.001 (10,156,500 shares) (11,156,500 shares)
US per share
</TABLE>
Notes:
(1) Canadian Currency converted at exchange rates in place at the end of
the period.
6
<PAGE> 10
RISK FACTORS
INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND COULD
RESULT IN A LOSS OF YOUR ENTIRE INVESTMENT. SEE "RISK FACTORS" FOR A DISCUSSION
OF VARIOUS RISKS ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK.
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<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL OPERATING DATA
The summary information set forth below is derived from and should be
read in conjunction with the financial statements of the Company, including the
notes thereto, appearing elsewhere in this Prospectus.
Selected Statement of Operations Data:
<TABLE>
<CAPTION>
PERIOD FROM MAY 27, 1999 TO
FEBRUARY 18, 2000
$
-----------------------------
<S> <C>
REVENUE --
EXPENSES
General and administrative 12,007
Amortization 9,104
------
NET LOSS AND ENDING DEFICIT FOR THE PERIOD 21,111
======
</TABLE>
CONSOLIDATED BALANCE SHEETS
(all amounts are expressed in U.S. dollars)
(see basis of presentation - note 1)
<TABLE>
<CAPTION>
FEBRUARY 18, 2000
$
-------------------
ASSETS
CURRENT
<S> <C>
Cash 83,351
Stock subscriptions receivable 6,000
Prepaid expenses and deposits 5,000
-------
94,351
Goodwill, net of $9,104 accumulated amortization [note 4] 15,173
-------
109,524
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities 7,077
-------
7,077
-------
COMMITMENTS AND CONTINGENCIES [NOTE 1 AND 11]
STOCKHOLDERS' EQUITY
Authorized
25,000,000 common shares at $0.001 par value
Common stock issued and paid-up [note 5] 10,157
Additional paid in capital [note 5] 113,401
Deficit accumulated during the development stage (21,111)
-------
102,447
-------
109,524
=======
</TABLE>
See accompanying notes
8
<PAGE> 12
RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You
should consider carefully the following information about these risks before
buying shares of Common Stock. The risks described below are not the only ones
facing our Company. Additional risks may impair our business operations. If any
of the following risks occur, our business, results of operations or financial
condition could be adversely affected. In that case, the trading price of our
Common Stock could decline, and you may lose all or part of your investment. You
should also refer to the other information contained in this Prospectus,
including our financial statements and the notes to those statements.
RISKS RELATED TO OUR BUSINESS
NO OPERATING HISTORY
Sensus and Alberta Corp. do not have an operating history that could
provide a template to evaluate our future performance. Sensus and Alberta Corp.
have not yet begun operations. As a result, you will not be able to predict our
future financial condition based upon our past performance.
YOU MAY NOT HAVE A SIGNIFICANT IMPACT UPON CONTROLLING OUR AFFAIRS.
Mr. J. Timothy Bowes, our President and Chief Executive Officer, is
also a director of the Company, and owns directly and indirectly 68% of our
issued and outstanding Common Stock.
DEPENDENCE ON NET PROCEEDS OF THIS OFFERING.
The Company has very limited resources and is dependent on the net
proceeds of this Offering to implement its plan of operation. Although the
Company anticipates that the maximum net proceeds of this Offering will enable
it to fund its acquisition and operation of the AOI Network, there can be no
assurance that the proceeds from this Offering will be sufficient to finance the
Company's business plans. Included in such proceeds from this Offering will be
$10,156,500 from the sale of Shares by the Selling Security Holders, which will
not benefit the Company. See "Use Of Proceeds." If the Company's plans change,
its assumptions prove to be inaccurate or the capital resources available to the
Company otherwise prove to be insufficient to implement its plan of operation
(as a result of unanticipated expenses, problems, or otherwise), the Company
could be required to seek additional financing or may be required to limit its
business activities. There can be no assurance that the Company will be able to
obtain any additional financing or if any financing is available to the Company
it will be on terms and conditions acceptable to the Company.
DEPENDENCE ON KEY PERSONNEL.
Although the Company has experienced officers and directors it will be
substantially dependent upon the services of few key personnel that it intends
on employing. The ability to hire such employees is not assured and the loss of
the services of any of these individuals so hired could have a material adverse
effect on the business of the Company.
COMPETITION FOR EMPLOYEES.
The success of Internet ventures depends on the availability of highly
skilled employees with technical, management, marketing, sales, product
development and other specialized training for which competition is intense, and
there can be no assurance that the Company will be successful in attracting and
retaining such personnel. There can also be no assurance that employees will not
leave the Company or compete against the Company. The Company's failure to
attract additional qualified
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<PAGE> 13
employees or to retain the services of key personnel could materially adversely
affect the Company's business, operating results and financial condition. See
"Management."
POTENTIAL ADVERSE IMPACT OF ADDITIONAL STOCK.
The board of directors could, without shareholder approval, issue
Common Stock, preferred stock, options, warrants or other securities, including
both debt and equity securities, with voting and other rights that could
adversely affect the voting rights of the holders of the Common Stock and could
have certain anti-takeover effects.
COMPETITION.
The Web site development industry is intensely competitive. Several of
these competitors are significantly larger and have substantially greater
financial, technical, personnel, marketing and other resources than the Company
and may have more established reputations for success in their Web site
development. The Company expects competition to persist, intensify and increase
in the future. Almost all of the Company's current and potential competitors
have longer operating histories, greater name recognition and significantly
greater financial, technical and marketing resources than the Company. Such
competition could materially adversely affect the Company's business, operating
results or financial condition.
SECURITY AND PRESERVATION FROM HARM.
Despite the implementation of network security measures by the Company,
it is potentially vulnerable to computer break-ins and similar disruptive
problems caused by its customers or others. Consumer concern over Internet
security has been, and could continue to be, a barrier to commercial activities
requiring consumers to send their credit card information over the Internet.
Computer viruses, break-ins or other security problems could lead to
misappropriation of proprietary information and interruptions, delays or
cessation in service to the Company's customers. Moreover, until more
comprehensive security technologies are developed, the security and privacy
concerns of existing and potential customers may inhibit the growth of the
Internet as a medium for commerce. The Company's operations are dependent on its
ability to maintain its computer and telecommunications equipment in effective
working order and to protect its systems against damage from fire, natural
disaster, power loss, telecommunications failure or similar events. In addition,
the growth of the Company's customer base may strain or exceed the capacity of
its computer and telecommunications systems and lead to degradations in
performance or systems failure. While the Company continually reviews and seeks
to upgrade its technical infrastructure and provides for certain system
redundancies and back-up power to limit the likelihood of systems overload or
failure, any damage, failure or delay that causes interruptions in the Company's
operations could have a material adverse effect on the Company's business.
PROPRIETARY PROTECTION.
The success of the Company will depend, in part, on its ability to
maintain trade secret protection and operate without infringing the proprietary
rights of third parties. Alberta Corp. will enter into confidentiality
agreements with their key employees and consultants, and generally controls
access to and distribution of their proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use this proprietary information without authorization. In addition,
effective copyright and trade secret protection may be unavailable or limited in
certain foreign countries and may be unenforceable under the laws of certain
jurisdictions. There can be no assurance that the steps taken by the Company and
the Subsidiaries will prevent misappropriation of their technology. In addition,
litigation may be necessary in the future to protect the Company's and the
10
<PAGE> 14
Subsidiaries' trade secrets. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, operating results or financial condition.
OPERATING RESULTS.
The Company has no operating history and has no history of earnings.
There is no assurance that the Company will achieve profitability in the future
or that the Company will be able to generate sufficient cash from operations, or
to raise sufficient financing, to fund its operations. Operating results of the
Company and the Subsidiary could be adversely affected by general economic and
other conditions affecting the timing of customer demand and specifically the
development of the Internet. The Company has no present intention to pay
dividends.
FINANCING REQUIREMENTS.
The Company will require additional financing. The ability of the
Company to arrange such financing in the future will depend in part upon the
prevailing capital market conditions, as well as the business performance of the
Company. There can be no assurance that the Company will be successful in its
efforts to arrange additional financing on terms satisfactory to the Company. If
additional financing is raised by the issuance of shares from treasury of the
Company, control of the Company may change and shareholders may suffer
additional dilution. If adequate funds are not available, or are not available
on acceptable terms, the Company may not be able to take advantage of
opportunities, develop new products or otherwise respond to competitive
pressures and remain in business.
GROWTH RELATED RISKS.
The Company may be subject to growth-related risks, including capacity
constraints and pressure on their internal systems and controls. The Company's
ability to manage its growth effectively will require it to continue to
implement and improve its operational and financial systems and to expand, train
and manage its employee base. The inability of the Company to deal with this
growth could have a material adverse impact on its business, operations and
prospects.
WE WILL ENGAGE IN TRANSACTIONS IN FOREIGN CURRENCY WHICH ARE SUBJECT TO EXCHANGE
RATE FLUCTUATIONS.
The Company will conduct a substantial number of transactions in
foreign currency, primarily the Canadian dollar. Fluctuations in the exchange
rates between the United States dollar and the Canadian dollar, could have an
adverse effect upon our operating results in the future. The Company may seek to
limit its exposure to the risk of currency fluctuations by engaging in foreign
currency transactions which could expose the Company to substantial risk of
loss. The Company's management has limited experience in managing international
transactions and has not yet formulated a strategy to protect Sensus against
currency fluctuations. There can be no assurance that fluctuations in foreign
currency exchange rates will not have a significant adverse impact upon the
future operating results.
THE SOURCE OF THE FACTUAL DATA IN THIS REGISTRATION STATEMENT WAS PROVIDED BY
MR. J. TIMOTHY BOWES, CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY.
The information which is set forth in this registration statement was
obtained, in large part, from Mr. J. Timothy Bowes, our President, Chief
Executive Officer and a Director. 5,600,000 shares of our Common Stock owned
directly by Mr. J. Timothy Bowes and other shares owned by companies in which he
has indirect interests will be registered as a result of this registration, and
he will benefit
11
<PAGE> 15
substantially from this registration of our securities. This information
necessarily incorporates significant assumptions as well as factual matters and
Mr. J. Timothy Bowes believes it to be accurate.
CONFLICTS MAY EXIST WITH CERTAIN OF OUR OFFICERS AND DIRECTORS OF THE COMPANY
There are several conflicts associated with our officers and directors.
These conflicts include, but are not limited to, engaging in other businesses
similar or dissimilar to ours, allocating their time and services between the
Company and the other entities with which they are involved.
RISKS RELATED TO THE INDUSTRY/INTERNET
MARKET UNCERTAINTY AND INTERNET DEPENDENCE.
Market demand for the services of the Company is substantially
dependent upon the adoption of the Internet network for commerce. The adoption
of the Internet for commence and communications, particularly by those
individuals and enterprises which have historically relied upon alternative
means of commerce and communication, generally requires the acceptance of a new
way of conducting business and exchanging information. Use of the Internet by
consumers is at a relatively early stage of development, and market acceptance
of the Internet as a medium for commerce is subject to a high level of
uncertainty. The Company's future success will require the development and
widespread acceptance of the Internet as a medium for commerce. There can be no
assurance that the Internet will be a successful commerce channel. The Internet
may not prove to be a viable commercial marketplace because of inadequate
development of the necessary infrastructure, such as reliable network backbones,
or complementary services, such as high speed modems and security procedures for
financial transactions. The viability of the Internet or its viability for
commerce may prove uncertain due to delays in the development and adoption of
new standards and protocols to handle increased levels of Internet activity or
due to increased government regulation or taxation. If use of the Internet does
not continue to grow, the Company's results may be negatively affected.
RAPID TECHNOLOGICAL CHANGE.
The Web site development industry generally is susceptible to
significant technological advances and the introduction of new products and
services utilizing new technologies. The Internet and the E-commerce industries
are characterized by rapid technological change, changes in use and customer
requirements and preferences, frequent new product and service introductions,
embodying new technologies and the emergence of new industry standards and
practices that could render the Company's technology and systems obsolete. The
Company's success will depend, in part, on its ability to license leading
technologies useful in its business, enhance its existing services, develop new
services and technology that address the increasingly sophisticated and varied
needs of its existing and prospective customers and respond to technological
advances in emerging industry standards and practices on a cost effective and
timely basis. The development of Web site and other proprietary technologies
entails significant technical, financial and business risks. There can be no
assurance that the Company will successfully implement new technologies or adapt
its Web site, proprietary technology and transaction processing systems to
customer requirements or emerging industry standards. If the Company is unable,
for technical, legal, financial or other reasons, to adapt in a timely manner
and respond to changing market conditions or customer requirements, the
Company's business could be materially adversely affected.
GOVERNMENT AND OTHER REGULATION.
E-commerce is new and rapidly changing, and federal and provincial
regulation relating to the Internet and e-commerce is evolving. Currently, there
are few laws or regulations directly applicable to
12
<PAGE> 16
access to or e-commerce on the Internet. Due to the increasing popularity of the
Internet, it is possible that laws and regulations may be enacted with respect
to the Internet, covering issues such as user privacy, pricing, taxation,
content and quality of products and services. The adoption of such laws or
regulations could reduce the rate of growth of the Internet, which could
potentially have a material adverse effect of the Company's business.
RISKS CONCERNING THE SECURITIES OF THE COMPANY
RISKS OF LOW-PRICED OR PENNY STOCK.
The Common Stock of the Company is not traded nor listed on Nasdaq. As
such it is subject to Rule 15g-9 under the 1934 Act. This Rule adversely effects
the ability of purchasers in this Offering to sell the securities acquire hereby
in the secondary market. Rule 15g-9 requires additional disclosure, relating to
the market for penny stocks, in connection with trades in any stock defined as a
penny stock. The Commission defines a penny stock to be any equity security that
has a market price of less than $5.00 per share (exclusive of commissions),
subject to certain exceptions. Such exceptions include any equity security
listed on Nasdaq and any equity security issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been in continuous
operation for three years, (ii) net tangible assets of at least $5,000,000, if
such issuer has been in continuous operation for less than three years, or (iii)
average annual revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an exemption is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith.
In addition, trading in the Common Stock would be covered by Rules
15g-1 through 15g-6 trading in the Common Stock would be covered by Rules 15g-1
through 15g-6 under the 1934 Act for non-Nasdaq and non-exchange listed
securities. Under such rules, broker/dealers who recommend such securities to
persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities also
are exempt from these rules if the market price is at least $5.00 per share.
Although the Company's securities are, as of the date of this
Prospectus, outside the definitional scope of penny stocks as they are listed on
Nasdaq, in the event the Company's securities were subsequently to become
characterized as penny stocks, the market liquidity for the Company's securities
could be severely affected. In such an event, the regulations on penny stocks
could limit the ability of broker/dealers to sell the Company's securities and
thus the ability of purchasers of the Company's securities to sell their
securities in the secondary market.
RISKS RELATED TO THIS OFFERING
POSSIBLE VOLATILITY OF SHARE PRICE.
Announcements of quarterly variations in operating results,
technological innovations or new acquisitions, investments or other
developments, or events involving the Company or competitors of the Company, as
well as market conditions in the computer industry, may have a significant
impact on the market price of the Common Shares. The stock market has from time
to time experienced extreme price and volume fluctuations, particularly in the
computer sector, which have often been unrelated to the operating performance of
particular companies.
13
<PAGE> 17
YOU WILL EXPERIENCE IMMEDIATE DILUTION WITH RESPECT TO YOUR SHARES. WE MAY NEED
ADDITIONAL CAPITAL AND RAISING ADDITIONAL CAPITAL MAY DILUTE EXISTING
STOCKHOLDERS.
Assuming the sale of all of the Shares of Common Stock being offered in
this Prospectus by the Company, you will incur immediate and substantial
dilution of $0.90 per share in the net tangible book value of your shares as a
result of this Offering. See "Dilution."
OUR STOCK HAS NOT BEEN PUBLICLY TRADED BEFORE THIS OFFERING AND OUR STOCK PRICE
MAY BE VOLATILE.
Our Common Stock has not been publicly traded, and an active trading
market may not develop or be sustained after this Offering. We have determined
the initial public offering price. The price at which our Common Stock will
trade after this Offering is likely to be highly volatile and may fluctuate
substantially due to factors such as:
o actual or anticipated fluctuations in our results of operations;
o changes in or failure by us to meet securities analysts' expectations;
o announcements of technological innovations;
o introduction of new services by us or our competitors;
o developments with respect to intellectual property rights;
o conditions and trends in the Internet and other technology industries;
o impact of additional acquisitions;
o the terms of any new financings which may be dilutive; and
o general market conditions.
In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have affected the market prices
for the common stocks of technology companies, particularly Internet companies.
These broad market fluctuations may result in a material decline in the market
price of our Common Stock. In the past, following periods of volatility in the
market price of a particular company's securities, securities class action
litigation has often been brought against that company. We may become involved
in this type of litigation in the future. Litigation is often expensive and
diverts management's attention and resources which is needed to successfully run
our business.
NO FIRM COMMITMENT TO PURCHASE SHARES.
There is no commitment to purchase all or any part of the Shares being
offered. The Shares are offered on a "best efforts" basis.
OUR ARTICLES OF INCORPORATION AND BYLAWS AND NEVADA LAW CONTAIN PROVISIONS WHICH
COULD DELAY OR PREVENT A CHANGE IN CONTROL AND COULD ALSO LIMIT THE MARKET PRICE
OF YOUR STOCK.
Our Articles of Incorporation and Bylaws contain provisions that could
delay or prevent a change in control. These provisions could limit the price
that investors might be willing to pay in the future for shares of our Common
Stock. Some of these provisions:
14
<PAGE> 18
o authorize the issuance of preferred stock which can be created and issued
by the board of directors without prior stockholder approval, commonly
referred to as "blank check" preferred stock, with rights senior to those
of Common Stock; and
o establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by stockholders at a meeting.
In addition, certain provisions of Nevada law make it more difficult
for a third party to acquire us. Some of these provisions:
o establish a supermajority stockholder voting requirement to approve an
acquisition by a third party of a controlling interest; and
o impose time restrictions or require additional approvals for an acquisition
of us by an interested stockholder.
These provisions could also limit the price that investors might be
willing to pay in the future for shares of our Common Stock. See "Description of
Capital Stock" for additional discussion of these provisions.
OUR STOCKHOLDERS MAY HAVE DIFFICULTY IN RECOVERING MONETARY DAMAGES FROM DIRECT
ORS.
Our Certificate of Incorporation contains a provision which may
eliminate personal liability of our directors for monetary damages to be paid to
us and our stockholders for some breaches of fiduciary duties. As a result of
this provision, our stockholders may be unable to recover monetary damages
against our directors for their actions that constitute breaches of fiduciary
duties, negligence or gross negligence. Including this provision in our
Certificate of Incorporation may also reduce the likelihood of derivative
litigation against our directors and may discourage lawsuits against our
directors for breach of their duty of care even though some stockholder claims
might have been successful and benefited stockholders.
OUR RIGHT TO ISSUE PREFERRED STOCK MAY FACILITATE MANAGEMENT ENTRENCHMENT
Our Board of Directors has the right to issue up to 25,000,000 shares
of Common Stock and to determine the rights, price, preferences, privileges, and
restrictions, including voting rights, of these shares without the approval of
our stockholders. Any issuance of preferred shares could be used by our current
management to delay, defer or prevent a change in management, which may not be
in the best interests of the holders of our Common Stock. (See "Description of
Capital Stock").
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus discuss future expectations and
plans which are considered forward-looking statements as defined by section
27(a) of the Securities Act of 1933, section 21(e) of the Securities Exchange
Act of 1934, and as the term has been defined in the Private Securities
Litigation Reform Act of 1995. Sentences which incorporate words such as
"believes," "intends," "expects," "predicts," "may," "will," "should,"
"contemplates," "anticipates," or similar statements are based on our beliefs
and expectations using the most current information available to us. However,
these statements involve risks and uncertainties and are subject to change at
any time which can cause actual results to differ materially from the results
discussed in such statements. These forward-looking statements speak only as of
the date of this Prospectus. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement
15
<PAGE> 19
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any
statement is based.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. FOR
INFORMATION REGARDING CERTAIN RISKS RELATING TO THE COMPANY, SEE THE SECTION
MARKED "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
DETERMINATION OF OFFERING PRICE
The price at which the securities are being offered for sale hereunder
has been arbitrarily determined by management. Prior to this registration of our
Common Stock, there has been no public market for any of our securities and
there can be no assurance that a market will develop. The price of our Common
Stock, when sold by our stockholders will be determined by broker-dealers and
market makers in negotiated transactions, or trades over the open market where
we intend to list our Common Stock. The following are some of the factors which
may be considered by broker-dealers, market makers and investors in order to
determine the price for our securities in the public market:
(a) estimates of our business potential;
(b) prevailing market conditions in the United States economy and
the market in which we intend to compete; and
(c) an evaluation of other companies comparable to us and their
ability to effectively compete with our product.
USE OF PROCEEDS
Sensus will not be receiving any of the proceeds associated with the
sale of Shares by the Selling Security Holders but will receive the funds from
the sale of Shares to the New Security Holders.
We estimate that the maximum net proceeds to us from the sale of the
1,000,000 Shares of Common Stock offered by this Prospectus, will be
approximately $1,000,000. This estimate is based on an assumed initial public
offering price of $1.00 per share. Assuming that all 1,000,000 Shares being
offered by the Company are sold in this Offering, we intend to use the proceeds
from this Offering as follows: 1) $500,000 to fund the development of the AOI
Network, as defined below, 2) approximately $150,000 for working capital and
other general purposes, 3) approximately $300,000 for marketing expenditures
related to the AOI Network, including web based advertisement, cross data
promotion and linking with other Web site companies, and 4) approximately
$50,000 to pay all the costs associated with this Prospectus and legal and
accounting fees.
Sensus intends on issuing a sufficient number of shares so as to raise
sufficient funds to be able to fund such projects, or acquire such businesses,
as may be identified as meeting the strategic objectives of the Company. For the
time being, this will involve raising the funds required in order to develop the
AOI Network and pay the costs associated with this offering. See "Acquisition of
AOI Technology." Thereafter, it will be necessary to raise additional capital to
properly promote the Web site before it becomes self-sustaining.
16
<PAGE> 20
In due course, it will attempt to list its common shares on the NASD
OTC Bulletin Board. Sensus believes that there is greater access to capital in
the United States than in Canada.
DIVIDEND POLICY
No dividends have been paid on any shares of Sensus or Alberta Corp.
The future payment of dividends will be dependent upon the financial
requirements of Sensus and Alberta Corp. to fund further growth, the financial
condition of Sensus and Alberta Corp. and other factors that the Board of
Directors of Sensus or Alberta Corp. may consider. It is not contemplated that
Sensus or Alberta Corp. will declare any dividends in the immediate or
foreseeable future.
CAPITALIZATION AND STOCK OWNERSHIP
SENSUS
As of the date of this Prospectus, Sensus is authorized to issue
25,000,000 shares of Common Stock. There are 10,156,500 shares of Common Stock
issued and outstanding. The following table sets out the capitalization of
Sensus as of February 18, 2000 (as per audited financial statements). This table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto appearing elsewhere in this document.
<TABLE>
<CAPTION>
Capital Authorized Outstanding as at Outstanding if all shares offered for sale
February 18, 2000 are purchased by the New Security Holders
(unaudited)
(audited)(1)
<S> <C> <C>
Long Term Debt N/A NIL NIL
Common Stock 25,000,000 $123,558(1) $1,123,558 (1)
shares with a (10,156,500 shares) (11,156,500 shares)
par value of
$0.001 US per
share
</TABLE>
Notes:
(1) Canadian Currency converted at exchange rates in place at the end of the
period.
ALBERTA CORP.
The authorized share capital of Alberta Corp. consists of an unlimited
number of: (a) Class "A" Shares; (b) Class "B" Shares; and (c) Class "C"
Preferred Shares. As of the date of this Prospectus, there are 10,000,000 issued
and outstanding Class "A" Shares that were issued for an aggregate consideration
of $50,000 CDN. All these shares were transferred to the Company by the TOB
Security Holders in exchange for their TOB Shares in the Company. There are no
Class "B" Shares issued and outstanding. There are no Class "C" Preferred Shares
issued and outstanding. All of the Class "A" Shares issued and outstanding are
fully paid and non-assessable.
17
<PAGE> 21
The following table sets forth the capitalization of Alberta Corp. as
of February 18, 2000. This table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and notes thereto
appearing elsewhere in this document.
<TABLE>
<CAPTION>
CAPITAL AUTHORIZED OUTSTANDING AS OF FEBRUARY 18, 2000
<S> <C> <C>
Long Term debt $NIL
Class "A" Common Shares Unlimited $34,270
(10,000,000) Shares
Class "B" Shares Unlimited NIL
Class "C" Shares Unlimited NIL
</TABLE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
SENSUS
The following shares of Common Stock of Sensus have been issued and
remain outstanding:
<TABLE>
<CAPTION>
DATE NUMBER ISSUE PRICE AGGREGATE CONSIDERATION
OF SHARES PER SHARE ISSUE PROCEEDS/ RECEIVED
$US EFFECTIVE PROCEEDS
$US
<S> <C> <C> <C> <C>
John M. Hall May/99(1) 7,500 $1.00 $7,500 Cash
TOB Security Holders (2) 10,000,000 n/a $53,905 Exchanged shares
OM Security Holders(3) 124,000 $0.50 $62,000 Cash
AOI Security Holders(4) 25,000 n/a $153 Technology
TOTAL- FEBRUARY 18, 2000 10,156,500 $123,558
</TABLE>
Notes:
(1) The shares were issued pursuant to the provisions of Regulation S on
May 25, 1999. The shares purchased are restricted and are not freely
transferable until the earlier of either one year following purchase of
the shares or registration of the shares with the SEC.
(2) The shares were issued pursuant to registration and Prospectus
exemptions in Alberta, Canada, pursuant to a transaction where Sensus
acquired all of the shares of Alberta Corp. by the exchange of all of
the issued and outstanding shares of Alberta Corp. on a 1 for 1 basis
pursuant to a securities exchange take-over bid circular. At present,
the Sensus shares issued to the TOB Security Holders are restricted and
are not freely transferable until the earlier of either one year
following purchase of the securities or registration of the securities
with the SEC.
18
<PAGE> 22
The following table sets out the TOB Security Holders:
<TABLE>
<CAPTION>
SHARES OWNED PRIOR TO
SELLING STOCKHOLDER REGISTRATION PERCENTAGE OF SHARES OF SENSUS
<S> <C> <C>
J. Timothy Bowes 5,600,000 55.14
First Island Acceptance Corporation 900,000 8.86
682908 Alberta Ltd.(A) 1,000,000 9.85
682910 Alberta Ltd.(B) 1,000,000 9.85
682911 Alberta Ltd.(C) 1,500,000 14.77
TOTAL 10,000,000 98.47
</TABLE>
(A) J. Timothy Bowes also owns 45% of the shares of 682908 Alberta
Ltd., The other owners of 682908 Alberta Ltd. are brothers of
J. Timothy Bowes' wife, Sharon A. Bowes.
(B) J. Timothy Bowes owns 45% of the shares of 682910 Alberta Ltd.
The other owners of 682910 Alberta Ltd. are brothers of J.
Timothy Bowes.
(C) J. Timothy Bowes owns 25% of the voting shares of 682911
Alberta Ltd. The other owners are the wife (Sharon A. Bowes)
and three minor children of J. Timothy Bowes.
(3) The shares were issued pursuant to the provisions of Regulation S on
February 10, 2000 and pursuant to registration and Prospectus
exemptions in Alberta and British Columbia, Canada under an offering
memorandum. At present the common shares issued to the OM Security
Holders are restricted and are not freely transferable until the
earlier of either one year following purchase of the securities or
registration of the securities with the SEC. The following individuals
comprise the OM Security Holders:
<TABLE>
<CAPTION>
NAME: ADDRESS NUMBER OF SHARES
PURCHASED
<S> <C> <C>
354948 B.C. Ltd. Vancouver, B.C. 4000
455529 B.C. Ltd. Vancouver, B.C. 4000
Appleby, Marilou Joan Vancouver, B.C. 4000
Appleby, Richard Vancouver, B.C. 4000
Austin, Claire Vancouver, B.C. 4000
Austin, David Vancouver, B.C. 4000
Caulfield, Deborah J. Vancouver, B.C. 4000
Charlton, Robert Vancouver, B.C. 4000
DeLint, Jerome Daniel Vancouver, B.C. 4000
Dutka, Jim Vancouver, B.C. 4000
Everett, Bruce Jakc Vancouver, B.C. 4000
Johl, Baljinder Vancouver, B.C. 4000
Johl, Yogi Vancouver, B.C. 4000
Johnston, Susan Vancouver, B.C. 4000
Kothlow, Gordon Vancouver, B.C. 4000
Krause, Frida Vancouver, B.C. 4000
Lay, Marion Vancouver, B.C. 4000
McMillan, Hugh Alexander Vancouver, B.C. 4000
Rinfret, Claude in trust for Marc Rinfret Vancouver, B.C. 4000
Rinfret, Donna Vancouver, B.C. 4000
Rinfret, Olive Vancouver, B.C. 4000
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
NAME: ADDRESS NUMBER OF SHARES
PURCHASED
<S> <C> <C>
Rinfret, Paul C. Vancouver, B.C. 4000
Scali, Cosimo Vancouver, B.C. 4000
Schrieber, Jack Vancouver, B.C. 4000
Schrieber, Marian Vancouver, B.C. 4000
Walker, Karen Vancouver, B.C. 4000
Westlake, Ken Vancouver, B.C. 4000
Westlake, Tim Vancouver, B.C. 4000
White, Jamie Vancouver, B.C. 4000
Yamada, Alko Vancouver, B.C. 4000
Young, Chiemi Corinna Vancouver, B.C. 4000
</TABLE>
(4) The shares were issued pursuant to the provisions of Regulation S on
September 30, 1999 and pursuant to registration and Prospectus
exemptions in Alberta and British Columbia, Canada under a private
placement involving the transfer of shares in exchange for the AOI
Network. See "Acquisition of AOI Technology". At present, the common
shares issued to the AOI Security Holders are restricted and are not
freely transferable until the earlier of either one year following
purchase of the securities or registration of the securities with the
SEC.
RELATIONSHIP OF SELLING SECURITY HOLDERS TO THE COMPANY
J. Timothy Bowes is the President and a Director of the Company. His
interests in the Company are set forth in the preceding sections entitled
"Beneficial Ownership of Common Stock."
ALBERTA CORP.
Since the date of incorporation of Alberta Corp., a total of 10,000,000
Class "A" Shares were issued to the TOB Security Holders. Subsequently, on June
21, 1999, these shares were transferred by the TOB Security Holders to Sensus,
in exchange for 10,000,000 shares of Common Stock of Sensus:
<TABLE>
<CAPTION>
DATE NUMBER OF ISSUE PRICE AGGREGATE ISSUE CONSIDERATION
SHARES(1) PER SHARE PRICE RECEIVED(2)
<S> <C> <C> <C> <C>
May 26, 1999 10,000,000 $0.005 Cdn $50,000 Cdn $50,000 Cdn
</TABLE>
Notes: (1) Alberta Corp. has represented to Sensus that all of the Class
"A" Common Shares were issued pursuant to the registration and
Prospectus exemptions provided by the Alberta Securities Act.
(2) The consideration received by Alberta Corp. is already
accounted for in the consolidated financial statements of
Sensus.
DILUTION
Since the shares being offered by the Company are being offered on a
"best efforts" basis with no minimum offering, there is no assurance that any
shares being offered by the Company will be purchased by any person. The first
New Security Holders purchasing such shares from the Company will suffer a
dilution of almost all of the value of their shares (i.e., 99.9% of the value of
their shares) and even if all of the shares being offered for sale by the
Company pursuant to this Prospectus are issued, the New Security Holders will
suffer an immediate dilution of $0.90 or 90% of the value of their shares.
20
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and the notes to those statements that appear elsewhere in
this Prospectus. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
from those discussed in the forward-looking statements. Factors that could cause
or contribute to any differences include, but are not limited to, those
discussed below and elsewhere in this Prospectus, particularly in "Risk
Factors."
OVERVIEW AND PLAN OF OPERATION
The Company was formed on May 21, 1999, is in the early stage of
development and has not as yet commenced operations, other than acquiring the
rights granted to it under the AOI Technology Transfer Agreement. The Company is
engaged in Internet, e-commerce and other technology businesses. The Company
expects to create a Web site that will be the common ground for all amateur and
professional athletes.
The Company's goal is to become a destination Web site for "sports
enthusiasts" so as to generate significant earnings through the sources
described below.
In mid-1999, the Company signed an agreement with AOI, to acquire the
rights to the "AOI Network" (as defined below). The AOI Network is being
developed to become a global center for all amateur and professional athletes.
AOI will provide the technical support that will continue to develop and "fine
tune" the AOI Network.
The Company does not have any meaningful revenues, and will not
generate any meaningful revenues until after the Company implements its
strategic plan and attracts and retains a significant number of E-commerce
customers. The Company does not anticipate generating any revenue of
significance until several months following the consummation of this Offering,
if at all. For the period from May 26, 1999 to February 18, 2000, the Company
incurred a cumulative net loss of approximately $21,111. The Company anticipates
that it will continue to incur significant losses until, at the earliest, the
Company generates sufficient revenues to offset the substantial up-front
expenditures and operating costs associated with establishing, attracting and
retaining a significant business base. There can be no assurance that the
Company will be able to attract and retain a sufficient number of e-commerce
businesses to generate meaningful revenues or achieve profitable operations.
Depending upon the level of its business activity, the Company
anticipates that it will use a portion of the proceeds of this Offering to hire
several additional employees over the next twelve months to market the Company's
services to potential businesses and develop the infrastructure of the AOI
Network.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements have been to fund
its initial investment in the AOI Network. Additional capital will be needed to
complete the funding necessary to develop the AOI Network, as well as to fund
its working capital requirements, including legal and professional expenses. To
date, the Company has financed its capital requirements through the issuance of
equity securities.
At February 18, 2000, the Company had working capital of $87,274. Prior
to February 18,
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2000, the Company issued 10,131,500 shares of Common Stock to
various investors and also issued 25,000 shares of Common Stock to AOI in
exchange for the transfer of its rights to the business concept and domain names
discussed and identified below.
The capital requirements relating to implementation of the Company's
business plan will be significant. During the twelve months following the
consummation of this Offering, the Company intends to commence the funding of
the development of the AOI Network and meet its own working capital needs. Other
than as described above, as of the date of this Prospectus, the Company has no
material commitments for capital expenditures.
The Company is dependent on the proceeds of this Offering or other
financing in order to fully implement its proposed plan of operation. Based on
currently proposed plans and assumptions relating to the implementation of its
business plans in the event the Company sells all of its shares offered in this
Offering, it will retain approximately $1,000,000, less costs associated with
this offering, which will be sufficient to satisfy its contemplated working
capital requirements for approximately one year following the consummation of
this Offering. In the event that the Company's plans change, its assumptions
change or prove to be inaccurate or if the proceeds of this Offering prove to be
insufficient to implement its business plans, the Company would be required to
seek additional financing sooner than currently anticipated. There can be no
assurance that the proceeds in this Offering will be sufficient to permit the
Company to implement its proposed business plan or that any assumptions relating
to the implementation of such plan will prove to be accurate. To the extent that
the proceeds of this Offering are not sufficient to enable the Company to
generate meaningful revenues or achieve profitable operations, the inability to
obtain additional financing will have a material adverse effect on the Company.
There can be no assurance that any such financing will be available to the
Company on commercially reasonable terms, or at all.
RECENT DEVELOPMENTS
Subsequent to February 18, 2000, no developments have occurred which
have had a significant impact on the operations and results of the Company.
INFLATION
The Company has not been materially affected by inflation in the United
States. While the Company does not anticipate inflation affecting the Company's
operations, increases in labor and supplies could impact the Company's ability
to compete.
YEAR 2000 COMPLIANCE AND COSTS
As has been widely reported, there is worldwide concern that Year 2000
technology problems may materially and adversely impact a variety of businesses,
local, national and global economies. While relatively few disruptions were
reported on and after December 31, 1999, concerns remain that there will be a
delayed effect to computer users. The Company, as a newly formed entity, will
acquire computer hardware and software which is Year 2000 compliant, and does
not expect future expenses associated with ongoing compliance to be material to
the Company's financial position or future results of operations, although there
can be no assurance that presently unforeseen computer programming difficulties
will not arise.
It is possible that the Company's future performance may be adversely
impacted by payment and financial difficulties experienced by customers, and by
shipping, fulfillment and accounting difficulties experienced by vendors, which
are related to computer malfunctions. This is particularly the case as the
Company seeks to effect acquisitions, as it currently plans to do. The Company
believes
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that it can establish and maintain sufficient resources, including cash
reserves to maintain operations during delays in payments or supplies of
inventories. However, the Company is aware that extended difficulties by larger
vendors or customers may have a significant impact; however, it is unable, at
this time, to anticipate the extent of any such impact, were it to occur. An
adverse impact on such customers due to the Year 2000 issue or similar computer
malfunctions could also have a material adverse effect on the Company's
business, financial condition and results of operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, as amended,
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards requiring that all derivative
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. This Statement will become applicable to the Company
in January 2001. The Company does not engage in derivative activities.
BUSINESS
THE COMPANY
Sensus is a Nevada corporation which transacts business directly in the
United States, and through its subsidiary, Alberta Corp. Since incorporation,
Sensus has not carried on any active business. Alberta Corp. was incorporated
under the laws of Alberta on May 10, 1999 and since then it has not carried on
any active business. Sensus recently acquired certain intellectual property
rights from AOI, and intends on advancing sufficient monies to it to allow it to
develop a Web site on the Internet and implement the business plan for the AOI
Network described herein. See "AOI Network."
INDUSTRY BACKGROUND AND MARKET ANALYSIS
The Internet
The Internet is a global web of over 50,000 computer networks, the
first of which were developed over 25 years ago. The Internet was originally
installed using UNIX-based computers, a development of AT&T, a telephone
company, which had very sophisticated communications capabilities for its time.
At first, although the Internet served the objectives of the United States
Department of Defense, it was looked upon by others as awkward due to its arcane
commands and non-user friendliness. This hampered its growth for a considerable
period of time.
The development of the communications transport protocol TCP/IP made it
possible for each Internet computer to pass on packets of information to
different types of computers without using a switchboard. Any computer can link
onto the Internet and the conglomeration of networks for a cost that is
fundamentally lower than, and structured differently from, the cost of linking
onto stand-alone networks.
Communication on the Internet occurs primarily between a client and a
server, or so-called host computers. The client computer initiates a request for
information or other activity and the server computer responds to, or serves,
that request. Furthermore, server computers run specialized software
specifically designed to provide a variety of services to client computers.
Notably, many host computers operate as mail servers or file servers that enable
the downloading or transferring of files. The Internet has historically been
used by academic institutions, defense contractors and government agencies
primarily for remote access to host computers and for sending and receiving
electronic-mail and has traditionally been subsidized by the United States
Federal Government. As an increasing
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number of commercial entities have come to rely on the Internet for business
communications and commerce, the level of federal subsidies has significantly
diminished and funding for the Internet infrastructure and backbone operations
has shifted primarily to the private sector and end users. In addition,
according to industry market research, as far back as October, 1994, the number
of commercial domains on the Internet surpassed the number of educational
domains.
Individuals are now connecting directly to the Internet through
Internet access service corporations. These corporations provide easy-to-use
software packages that make accessing the Internet as easy as getting onto the
popular consumer on-line services. In order to compete with these direct
Internet access providers, consumer on-line services,, have also introduced
Internet access gateways for their subscribers. Through these gateways, the
on-line services effectively become large Internet "on-ramps," bringing large
numbers of subscribers onto the Internet.
World Wide Web
Much of the recent growth in Internet use by businesses and individuals
has been driven by the emergence of a network of servers and information
available on the Internet called the World Wide Web (the "Web"). The Web, based
on a client/server model and a set of standards for information access and
navigation, can be accessed using software that allows non-technical users to
exploit the capabilities of the Internet. The Web enables users to find,
retrieve and link information on the Internet in a consistent manner which
renders the underlying complexities transparent to the user. Electronic
documents are published on Web servers in a common format described by Hyper
Text Mark-up Language ("HTML"), which is a series of tags or codes added to a
text document to format a document or add links to other documents. Web client
software can retrieve these documents across the Internet by making requests
using a standard protocol called HyperText Transfer Protocol ("HTTP"). Browsers
and HTML are an essential part of the success of the Internet and the continuing
growth in the number of users. Browsers allow a user to wander around the
Internet with relative ease while HTML allows the exhibitor of a Web page to
navigate to either some other page at that particular Web site or to a relevant
page at another Web site. The introduction of commercial Web pages introduced a
new and substantial opportunity for users of the Internet.
The proliferation of Web users has created significant demand for
software to enable Internet servers and private servers on corporate networks to
function as Web sites, which are used by content providers to offer their
products and services on the Internet and to publish confidential company
information to employees inside the enterprise.
E-commerce
E-commerce provides companies with the opportunity to serve a rapidly
growing market as consumers increasingly accept the Internet as an alternative
shopping vehicle. Growth in Internet usage has been fueled by a number of
factors, including the large and growing number of personal computers in the
workplace and home, advances in the performance and speed of personal computers
and modems, improvements in network infrastructure, easier and cheaper access to
the Internet and increased awareness of the Internet among businesses and
consumers. The increasing functionality, accessibility and overall usage of the
Internet and online services have made the Internet an attractive commercial
medium. The Internet and other online services are evolving into a unique sales
and marketing channel, just as retail stores, mail-order catalogues and
television shopping evolved. Companies operating online can interact directly
with customers by frequently adjusting their featured selections, editorial
insights, shopping interfaces, pricing and visual presentations. The minimal
cost to publish on the Web, the ability to reach and serve a large and global
group of customers electronically from a central location and the potential for
personalized low-cost customer interaction provide additional economic benefits
for online operators.
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The Internet also provides E-commerce companies with an opportunity to
serve a global market. Online operators have the potential to build large common
global customer bases quickly and to achieve superior economic returns over the
long term. International Data Corporation ("IDC"), an information technology
market research and consulting firm, has predicted that the number of people
accessing the Internet had reached approximately 100 million by the end of 1998
and will reach 320 million by 2002. According to IDC, revenues through the
purchase of goods and services over the Internet in the United States will reach
approximately $250 billion in 2002. IDC has also reported that approximately 13%
of all United States households were online in 1996 which figure increased to
20% by early 1998. IDC estimates that the number of Internet users buying goods
and services on the Internet worldwide will exceed 128 million by 2002, as
compared to 18 million in 1997, with the amount of commerce conducted over the
Internet exceeding $400 billion by 2002. In addition, IDC estimates that
worldwide Internet services revenues increased by 71% in 1998 to reach $7.8
billion and has forecasted that such revenues will surpass $78 billion by 2003.
IDC has also reported that the United States accounted for more than 50% of
worldwide Internet services spending at $4.6 billion in 1998. IDC has also
estimated that corporate spending in the United States in the area of
Internet-based products and services will increase from $85 billion in 1999 to
over $203 billion by 2002.
The Organization for Economic Co-operation and Development (the "OECD")
ranks Canada second for worldwide Internet electronic commerce revenues,
capturing 5% of the global market share. Canada also has the second highest top
100 Web sites for Internet purchases according to OECD. Internationally, Canada
ranks as the second most wired nation in the world. A 1997 study completed by
Statistics Canada concludes that approximately 36% of Canadian households own at
least one personal computer and 13% of them have Internet access. When home,
work, school and elsewhere is included, Internet access is just above 30% and
estimated to double in the next 5 years. The Company believes that these figures
will grow substantially as Internet use becomes easier and more pleasurable
through higher-speed access and increased bandwidth.
BUSINESS STRATEGY
Acquisition of AOI Technology
On July 31, 1999, Sensus entered into an agreement with AOI, to acquire
the rights to the "AOI Network," as described below. Under the terms of the
agreement:
(a) Sensus issued 25,000 shares of Common Stock to AOI;
(b) Sensus has acquired all rights to the AOI Network and any
revenues to be derived therefrom, which allows it to operate the AOI
Network as it sees fit once development is complete;
(c) Sensus has become the owner of all existing rights to the Web site
and any related technology, and will become the owner of further
amendments to the Web site and its related technology as it is further
developed;
(d) Sensus is required, on or before December 31, 2000, to commence funding
the development of the AOI Network, by making monthly payments of
$25,000 to AOI, in exchange for which AOI will be required to arrange
for the full time services of Graham Heal, who shall be obligated to
use his best efforts to develop the Web site as efficiently as possible
(provided, however, that if Sensus does not make the first payment of
$25,000, on or before December 31, 2000, all rights to the Web site and
any related technology will revert to AOI).
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(e) After the development is completed and an operating Web site has been
completed, Sensus will be required to pay AOI a management fee equal to
10% of the gross revenues derived from the AOI Network, in exchange for
which AOI will be required to provide the services of Graham Heal to
manage the AOI Network, subject to Sensus directions.
The management of Sensus believes that the manner in which the
transaction has been structured, will provide AOI with the funds necessary to
properly develop the Web site and any technology required for the operation of
the same. The management of Sensus further believes that the 25,000 shares of
Common Stock and the royalty of 10% of the gross revenues derived from the
operation of the AOI Network will provide AOI the incentives necessary to
develop the AOI Network into a commercial success.
The AOI Network
The AOI Network will be designed to take advantage of the demand Sensus
feels is likely to take place for online content and new media. The objective is
to build a scalable, easily replicated platform from which the innovative and
entertaining theme sites and communities can be developed in and introduced on
the Web. This will be carried out through a family of sites known as
HIGHLIGHTREEL.COM. This site is intended to become an online mecca for athletes
and sports enthusiasts. In simple terms, HIGHLIGHTREEL.COM users will be asked
to submit their very own sports highlights captured on their video camcorder or
other video capturing device. HIGHLIGHTREEL.COM intends on housing and hosting
the copyright-free highlights on its Web site or channel arranged by sport or
activity and state/province so that any family member, friend or fan can access
it via a regular Internet connection to the Web. HIGHLIGHTREEL.COM will attempt
to establish regular corporate sponsored promotions on the site where highlights
are judged by the audience and winners are awarded great prizes, merchandise and
scholarships to academic institutions. It is hoped that the spirit of
competition, desire to be seen and show off one's talents and the possibility of
winning valuable prizes and awards will keep participants coming back over and
over.
Sport is one of the top three areas of interest for Internet users.
While there is a multitude of Internet sites catering to all aspects of
professional sports today, there are very few online properties bringing
non-professional athletics and sporting activities together in a compelling
entertainment package. Sports played in schools or community leagues are a
strong rallying point in North American society and everyone likes to be
recognized for their achievements. HIGHLIGHTREEL.COM will be designed to appeal
to everyone's desire to be a star and be seen by anyone surfing the Web which
now has a growing audience of at least 100 million users worldwide. Through
HIGHLIGHTREEL.COM, anyone or any team will have a channel to showcase their
game-winning touchdown or buzzer-beating basket.
In the United States and Canada there are over 60 million participants
in amateur sporting activities whether it be as part of school athletics,
community centers and associations or city leagues. With this large pool of
potential players, contributors and audience members already owning or able to
easily access video equipment, participation is guaranteed. As hosting of the
content online is provided essentially as a free service in order to drive rapid
growth of the sites' body of content, revenues will be generated by:
o Advertising;
o Merchandising Partnerships;
o Corporate Sponsorship;
o Encoding fees (involving the specific conversion process of standard
video to "encoded" internet-ready streaming content - a must for
broadcasting online);
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o Value-added and copyrighted entertainment content sold on a per use and
perpetual license basis from the HIGHLIGHTREEL.COM Streaming Store;
o Production and broadcast of live and taped sports events via streaming
on the Internet.
It is believed families that have sports participants and also have
video equipment represent a very attractive demographic that advertisers and
merchandisers will want to reach. Parents tend to be very enthusiastic about
their children's participation in sports and athletics and it is believed they
will embrace ways to raise their child's profile and recognition. Once
established, parents will also appreciate HIGHLIGHTREEL.COM's association with
academic scholarships and its focus on offering awards that can impact
children's futures. As a result, HIGHLIGHTREEL.COM strategically combines a
user's desire for fame, entertainment and personal reward. From a consumer's
perspective, HIGHLIGHTREEL.COM will have a tremendous appeal on pre-teenage and
teenage users because these pre-teenagers and teenagers will love to see
themselves on screen and call friends to say "check out my personal
HIGHLIGHTREEL.COM site! The AOI Network will be there to serve, entertain and
reward them.
AOI's principals, the developers of the site, are currently located in
Seattle, Washington. Sensus will benefit greatly by not relocating them from
Seattle to develop the site because the "streaming" media technology needed for
the site is led by industry giants located in Seattle, such as RealNetworks,
Microsoft and Disney Starwave. An initial key strategic partnership has already
been forged with a streaming media encoding leader and Seattle neighbor. The
greater Seattle area offers a strong, skilled pool of talent with experience in
online streaming content development and publishing. Further, the AOI principals
have large personal contact bases of Internet and E-commerce professionals who
can be attracted to the venture as key hires or contractors. Similarly, the
principals will use their extensive industry contact bases with key management
personnel at major Internet media and traffic leaders to establish "anchor"
distribution arrangements to ensure a strong audience and user base.
The AOI Network will be set up to become an online partner synonymous
with entertaining users who are the authors of their own fun. By giving our
users a simple-to-use online channel where their sports highlights are available
for viewing by a worldwide audience 24 hours a day, we offer anyone a chance to
be a star. AOI has secured the following Internet Web site domain names, which
will form the family of properties to be built-out and leveraged within the AOI
Network:
HIGHLIGHTREEL.COM STUDENTATHLETE.NET
HIGHLIGHTPACKAGE.COM CENTRALSCOUTING.COM
LEAGUEZONE.COM ATHLETICSCHOLARSHIP.COM
STUDENTATHLETE.COM
HIGHLIGHTREEL.COM will be the charter property to be developed.
CONTENT
In the simplest terms, HIGHLIGHTREEL.COM will leverage its user base to
populate itself with content by hosting and broadcasting highlight clips
submitted by users. This methodology will also give rise to a loyal audience who
are pulled to HIGHLIGHTREEL.COM to view each player's highlight clip. A further
benefit is that the majority of content for the site will be acquired at
virtually no cost. Players will be given incentives to participate and submit
clips on a continuous basis through a series of monthly and annual competitions
held to select the best highlights. Winners will be awarded with a variety of
valuable prizes and scholarships to academic institutions of their choice.
Sensus believes the positive relationship between athletics and scholarship will
be viewed very positively by players, advertisers and indeed all site visitors.
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HIGHLIGHTREEL.COM SITE STRUCTURE AND FUNCTIONALITY
Player highlight clip submissions of up to 3 minutes will be accepted
from any state or province in the United States or Canada and hosted absolutely
free of charge (encoding for streaming media will be offered for a fee and is
detailed below). This site will be arranged into an easy to navigate and browse
graphical interface so site visitors will be able to find what they want
quickly. Generally speaking, the interface and highlight clip archive will be
segmented and organized by:
- - Gender;
- - Sport or activity;
- - Three Age Groups (Child - 6 to 12, Teen - 13 - 18, and Adult).
This site will not distinguish between levels of athletics, e.g.
Varsity, Junior Varsity, Intra-murals, and etc., but will accept and judge clips
on their level of skill, endeavor and even uniqueness.
Once a highlight clip has been received by the site, it will be
assigned a specific URL and posted to the main site index. The player and/or
person making the clip submission will be notified by e-mail of the URL. As part
of the free hosting service, the site will also ask the user if he or she would
like HIGHLIGHTREEL.COM to notify any others about the URL, which it will do if
supplied with the addresses. Basic player profiles will be requested but due to
sensitivity regarding minors' personal information only data supplied will be
posted. Completely confidential clips without player profiles are acceptable but
unpublished registration information will be mandatory. Highlight clips will be
hosted at HIGHLIGHTREEL.COM for two months before they are removed. We may
adjust the free hosting period based on the data loads and bandwidth
optimization as the quantity of content grows.
It should be noted that once users have a URL for a particular clip
they also require a "viewer", or software to enjoy this or any other clips
hosted at the site or anywhere on the Internet. 20 million Internet users
already have the software necessary to view this file format, so the ability to
view clips is already firmly entrenched within the computer desktop. For those
users still requiring a "viewer" a link to download free versions from multiple
courses will be offered at the site. The site will also host an educational
step-by-step streaming tutorial on how to film better winning highlight clips
with tips on editing and submitting video in the proper format. The better the
quality of videos received the better the content will be at HIGHLIGHTREEL.COM.
USER INCENTIVES
While simply offering free hosting of highlight clips and the
opportunity to be broadcast as part of a new media "channel" may be enough
incentive for many players to join in at HIGHLIGHTREEL.COM, we will not leave
this to chance. To keep players posting new highlights on a regular basis, and
to keep our audience highly involved, a valuable incentive program has been
devised for all constituents. Incentives will be either in-house or 3rd party
corporate sponsorship programs, established to reward the best highlight clips
with compelling prizes and academic/athletic scholarships. Possible reward
programs would be as follows:
o three monthly highlight clip awards, one per age category (Child, Teen,
and Adult) for each major sport - awards to be approximately $1000 in
merchandise or scholarship value;
o three annual Grand Champion highlight awards, one per age category for
each major sport - awards to be approximately $10,000 in merchandise or
scholarship value.
A combination of judging formats are being considered, including
in-house HIGHLIGHTREEL.COM editors as judges, celebrity judges such as pro
athletes & coaches and the audience as judges. The
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audience would vote via automated online balloting and selection (such as the
Major League All-Star Game selection voting). The audience voting format is an
interesting one in terms of increasing additional audience traffic. If awards
were based on highest "click-thru's" (the number of times the clip was seen) we
can expect that players will ensure that everyone they know visits their
personal URL to view their latest highlight clip. Therefore, in order to insure
a fair outcome, the AOI Network will be tied to a standard online measurement
parameter which will exclude multiple viewings from the same address.
A comprehensive sponsorship program will be created and marketed to
online advertisers and merchandisers who will want to associate their company
and products with the HIGHLIGHTREEL.COM brand and its diverse usership. While
the bulk of the sponsorship fee will secure a minimum level of enhanced
visibility at the site, a portion will cover the award cost commitment.
Sponsorships will be priced for varying visibility values, including annual and
monthly positions. A wide range of award sponsorship packages outside the main
monthly and annual offerings are possible. There are some hypothetical examples:
"SPONSOR NAME" sponsors an ongoing annual "anchor" feature
known as the "HIGHLIGHTREEL.COM GRAND CHAMPIONSHIPS" involving high
visibility and placement and contribution of $30,000 for three major
awards. Tie-ins with complementary TV and in-store advertising programs
run by "SPONSOR NAME" are possible;
"SPONSOR NAME" sponsors "Golden Glove Award" for defensive
play in baseball for monthly highlight clip winner during baseball
season;
"SPONSOR NAME" sponsors a monthly award sponsorship for the
best football highlight and awards a new PC package to winner;
"SPONSOR NAME" sponsors a video clinic online with a streaming
tutorial including tips on capturing better highlights and features its
latest digital AV equipment packages.
As part of general site programming, regular features such as rotating
viewing buttons of top highlights archived at HIGHLIGHTREEL.COM will always be
available. Sponsorship packages such as "Top 10" clips of the month, "Simply the
Best" clips from all archives or "Hot out of the Can" featuring the latest
submissions will also be programmed and marketed. These will give users a
yardstick of quality to shoot for and ensure that above average content is
always a mouse click away.
Scholarship will be heavily promoted as one of the main missions of
HIGHLIGHTREEL.COM - to promote athletics as a vehicle to achieving, and as an
integral part of, academic success and growth. Although scholarships will be
promoted, award winners will have the ability to select merchandise or a
scholarship as their prize. In the event the winner chooses a scholarship for a
post-secondary institution, the scholarship will be held in trust until valid
proof of enrollment is submitted by a winner. An appointed trustee (i.e. a major
accounting firm) will be entrusted with scholarship funds and responsible for
their disbursement towards tuition or other acceptable academic costs or
expenses. The winner will be free to select the post-secondary institution at
which the scholarship funds will be used. An adult winner will be free to
allocate scholarship prizes toward his or her child or anyone of his or her
choosing.
OTHER CONTENT OFFERINGS & SERVICES
In addition to its core content focus, HIGHLIGHTREEL.COM will also
integrate a variety of entertaining offerings, many of which will provide
additional sponsorship opportunities:
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o develop sporting events branded "HIGHLIGHTREEL.COM" for "webcasting" to
an Internet audience such as the "HIGHLIGHTREEL.COM High School
Basketball All-Star Game" featuring seniors who submitted the best
highlights clips from the just concluded basketball season.
HIGHLIGHTREEL.COM will also seek out opportunities to simul-webcast 3rd
party produced sports events, and build sponsorship vehicles around
them;
o integrate entertaining chat rooms into content that is conducive to
comparison and discussions about highlight clips;
o publish sports-related information and multimedia presentations
including coaching tips and clinics, training methods and regiments,
and injury prevention and treatment;
o merchandise a wide variety of offerings for sports equipment, team
apparel and gear, or video capture and editing equipment targeted to
HIGHLIGHTREEL.COM's community of loyal, repeat users; and
o establish a HIGHLIGHTREEL.COM discount club with major sporting goods
companies for athletes and teams.
This site will also launch other co-branded sites and channels which
will branch from HIGHLIGHTREEL.COM, offering complementary content that is of
interest to our core usership and audience. Sensus has been granted the right of
first refusal to participate in the development of these additional sites. Here
are two possible sites under consideration:
ATHLETIC SCHOLARSHIP.COM that is intended to offer:
o academic development tools and information including study skills
enhancement, tutoring resources, time management, SAT preparation, goal
setting, etc.;
o resources to assist student athletes access and win athletic and
academic scholarships by providing a clearinghouse and database of
available programs; and
o information concerning potential financial support and sponsorship from
sports foundations will also be available.
CENTRALSCOUTING.COM that is intended to offer:
o a special zone for athletic recruiters from university and college
institutions searching highlight archives for high school recruits.
High school players will have the opportunity to submit additional
personal information along with their highlight clip in this zone such
as statistics, profiles, GPA's, SAT's, etc.
CONTENT PARTNERSHIPS
In addition to the "backbone" content and services previously
discussed, HIGHLIGHTREEL.COM will seek partnerships with a wide variety of
organizations to supply compelling and entertaining content targeted at the AOI
Network's core usership. It will be a continuing challenge to offer the most
valuable content possible to its users and audience. As a result, strategic
partnerships with other organizations with similar designs will be a major key
to the AOI Network's success.
Some examples may include:
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o the National Coaches Association and a corporate sponsored property
such as "SPONSOR NAME" - "You Make the Call" team up to provide content
on clinics, training and rules;
o major U.S. College, and its divisions, offer content related to
qualifying for, and becoming, an intercollegiate athlete, and to
promoting specific institutions for a potential student's college
consideration;
o previously discussed partnerships with recruiting service Web sites;
o major online sports properties offering specific pro sports content
that is complementary to HIGHLIGHTREEL.COM in exchange for traffic. For
example, a major sports publication already includes, in its print
version, a well-known feature called "High School Roundup" which
features outstanding student athletes from across the nation each week.
This type of feature could be leveraged online at HIGHLIGHTREEL.COM;
o team up with other online sports broadcasters and simulcast the video
portion of a major sports event already being provided via radio
webcast; and
o leverage a relationship with the owners of the "streaming" software
technology as a partner in a family of sites fully embracing and
extending usage of the streaming media platform for content,
advertising and merchandising. This will quickly position
HIGHLIGHTREEL.COM as a streaming content leader. An outstanding
opportunity presents itself for the owners of the "streaming" software
to host a content area at HIGHLIGHTREEL.COM devoted to tips for
capturing and producing the best highlight clips possible.
COMMUNITY SERVICE & RELATIONS
We also intend on developing the "HIGHLIGHTREEL.COM Foundation" to
create key relationships and initiatives which enhance and extend its profile in
the community while helping student athletes. Some ideas on how this can be
accomplished are as follows:
o develop partnerships with "grassroots" community programs;
o create a corporate sponsorship program to award coveted
"HIGHLIGHTREEL.COM Academic All American Scholarships" to academically
high achieving student-athletes; and
o partner with pro athletes who are active and visible in their
communities for promoting scholarships, athletics or community service.
PREMIUM CONTENT STORE
While HIGHLIGHTREEL.COM's users and audience will likely return to our
site over and over to review new highlights of those with whom they have a
personal connection, our user-base is expected to have a love for professional
and tier one college sports. They already have a long history of consuming this
content in television as spectators, and consider it one of the ways they would
most like to spend their free time.
An emerging market for premium streaming content is now taking hold
along with the ability to merchandise these products on a per view or perpetual
license basis. It is our intention to build a branded HIGHLIGHTREEL.COM
STREAMING STORE within the site where these products are merchandised and a
revenue share is paid by the content's license holder to Sensus. Here are some
examples:
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o "SPONSOR NAME" - "Crunch Course" featuring top professional football
"hits" of the year;
o "SPONSOR NAME" - "Sponsor slogan", featuring hockey's best fights and
hits; and
o HIGHLIGHTREEL.COM's own branded compilation of "The Year's Best
Highlights."
It is expected that the quantity of premium digital streaming content
will increase dramatically over the next several years and Sensus will
aggressively seek out the best products and offer them to its users. To increase
buyer interest and brand loyalty, some very innovative "purchaser incentive"
programs are being launched online by a host of aggressive technology companies.
One in particular has devised a scheme allowing merchandisers to offer online
buyers major airline frequent flyer points for each purchase. Sensus will
establish a variety of these programs to entrench HIGHLIGHTREEL.COM as a
destination merchandising partner.
Finally, it should be noted that as the site collects submissions from
users it will be in a position to build a comprehensive user database from which
merchandise offerings and advertising messages can be tightly targeted. The
tools to target on the Internet continue to improve allowing direct marketers to
build buyer histories and preference profiles. Sensus will leverage these
techniques and tools at the HIGHLIGHTREEL.COM STREAMING STORE and in other
merchandising efforts.
DATA ACQUISITION - A STREAMING MEDIA ENCODING PARTNERSHIP
HIGHLIGHTREEL.COM is really a content channel run by its users, who
populate it with entertaining content - their own highlight clips. For this
reason, it is imperative that AOI build a highlight submission system that is
both easy to use and cost conscious, reducing barriers and allowing the largest
number of potential users to play and compete. There is also the additional step
of encoding original video highlights into streaming media ready for broadcast
online. Submission and encoding must be executed flawlessly.
Rather than divert its attention from its core business of building
entertaining content sites and channels frequented by loyal users, AOI has
determined that a strategic partnership with a leader and specialist is the best
way to fulfill the encoding requirements of its users. Such a firm has been
identified and discussions are now underway to position a Seattle-based
streaming media encoding supply house as HIGHLIGHTREEL.COM's partner in the area
of converting video into the most appropriate "streaming" format. The proposed
partner identified has invested heavily in production equipment and throughput
systems to produce the clearest, sharpest sound and pictures available. Its
technologies are multi-platform both in terms of support for all original
capture formats (Beta, VHS, etc.) and streaming technologies.
At this time, a fee structure for encoding is being developed. It is
anticipated that costs will be based on a maximum of three (3) minutes of
encoded streaming video at a price point of $9.95. As the AOI Network will be
directing considerable traffic volume for retail encoding to HIGHLIGHTREEL.COM's
partner, it will keep a pre-determined percentage of each encoding fee. Further
revenue potential lies in upselling users to higher bit streams which are
clearer and these opportunities should increase as streaming media usage
approaches critical mass on the Internet.
As part of the partnership, HIGHLIGHTREEL.COM's partner would build a
seamless interface for HIGHLIGHTREEL.COM users to submit their video clips with
registration information via electronic file transfer (FTP) for required
encoding prior to posting the main site index and archive. For the large number
of users not capturing video with the latest digital camcorders, a process of
easy delivery of actual video media such as VHS tape cartridges will be offered.
A registration form will be available at the site online for printing and
inclusion with the submitted tape. The original master will be returned to the
customer for a nominal shipping charge. To offer other submission alternatives
to our users, Sensus plans to leverage a number of retail outlet relationships
where physical drop off for tapes
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is possible. AOI has also had initial discussions with one large retailing chain
for photographic products about the potential of a partnership. Such partnership
would enable users to submit their tapes at various convenient locations. Major
retail department stores and "big box" retail chains are excellent prospects for
this kind of tie-up and it will be a priority to build a network of
relationships that will facilitate retail drop off.
The AOI Network will continue to accept video clips from users that
have already been encoded and post them free of charge. However, it is
anticipated that the great majority of consumers/users will not possess the
required equipment and software for high quality encoding for many years to
come. Also, this software is not very easy to use and most consumers don't have
the time to fuss with formats, protocols and optimization tool sets. By offering
users an easy "one stop shop" per use cost approach which takes original video
to broadcast as painlessly as possible, it is believed most HIGHLIGHTREEL.COM
users will opt for our encoding solution.
FUTURE MARKET DEVELOPMENT
For the purposes of this business concept we have confined
HIGHLIGHTREEL.COM's activities to the United States and Canada, where online
usage for sports entertainment is most entrenched. However this does not mean
that great opportunities do not exist in other markets where online usage is at
or approaching critical mass. Australians are extremely enthusiastic about rugby
and cricket, the British and other Europeans are the same about soccer and the
Japanese love baseball. All of these markets and many others have a variety of
sports played at multiple levels, by both children and adults. Once
HIGHLIGHTREEL.COM is built-out and operating successfully at home, we anticipate
a wealth of opportunities to leverage the basic platform in a host of new,
ready-to-play markets.
REVENUE MODEL SUMMARY
o ADVERTISING
As HIGHLIGHTREEL.COM's usership and traffic increases, we will be in a
position to offer a wide variety of standard, animated and streaming banner
advertising opportunities to a diverse range of potential advertisers.
Particularly good advertiser prospects are ticket agencies and companies which
manufacture or retail sports equipment, electronics/computer equipment, apparel,
music or books. A standard rate card for national, regional and local targeting
will be developed based on a cost per thousand basis. It is the Company's
intention to partner with one or more of the Web media placement agencies to
sell its advertising positions and leverage these firms' large advertiser-client
bases. The one media placement agency chosen will have to have an affinity for
marketing programs for sports, family and technology sites and channels.
The Company will make efforts to leverage the highly desirable
demographics of the site, while ensuring the quality of the overall presentation
of the property. This will be partially achieved by integrating streaming media
banner technology alongside HIGHLIGHTREEL.COM's core streaming content. Studies
show that streaming ads generally produce "click-thru" rates (the percentage of
served ads actually clicked upon) twice that of standard "flat" banners. Also
the ability now exists to take existing TV advertising campaigns and move them
to the Internet with streaming media. Known as "webisodes" this ad tool will be
seen much more in the future. To make the most of this opportunity, the site
will support streaming ads and extend its positioning as a true streaming media
proponent and advocate.
o MERCHANDISING PARTNERSHIPS
The Web has become the new arena of direct marketers, who have moved
online and are now
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merchandising literally anything on the Internet. Sales numbers grow monthly and
one only needs to look to other internet based businesses to see Internet
merchandising success stories. Just recently, a joint study released by IDC and
RelevantKnowledge predicted online purchases will explode to $54 billion by 2002
from $4.3 billion in 1997!
Why is it working? It is working because of access selection, immediacy
and delivery. Particularly, it is the medium's immediacy that is fully exploited
when merchandising offers are tightly integrated with content. When consumer
products can be pitched in live chat sessions with well-known celebrities you
have a compelling sales tool. According to Forrester Research, this type of
"friendly segment" will grab hold of online purchasing in the next few years and
push it to new heights.
In light of these recent trends, large, traditional bricks & mortar
retailers and new breed Internet based players, are both paying large sums of
money for prime positioning partnerships with top online traffic aggregators and
Web portals. Software.net recently paid AOL $21 million to be the exclusive
seller of software at the online giant, up until the end of 2001; and CDNow just
paid MTV Online $22.5 million for a complex three year music retailing
partnership.
While its market power will not compare with the likes of these major
players, excellent opportunities exist for the AOI Network to leverage its
audience into a wide variety of multiple category merchandising partnerships
where specific product offers are made to HIGHLIGHTREEL.COM users. In exchange
for aggregating demand and building a compelling brand, the Company will
structure its transactions so as to combine a monthly minimum fee with revenue
sharing from products sold by the merchandiser partner positioned at the site.
Sensus will also be able to offer its user database to extend direct product
offers via e-mail, pushing recipients back to HIGHLIGHTREEL.COM and its
merchandiser-partner for the purchase. Product categories which come to mind
immediately are sports equipment and gear, audiovisual equipment, music, books
and apparel. All active online merchandisers are looking for new sources or
"eyeballs" for their online offers and HIGHLIGHTREEL.COM intends to be in one of
these sought after positions.
o CORPORATE SPONSORSHIP VEHICLES
When considering HIGHLIGHTREEL.COM's user and audience segments,
including children, teens, parents, relatives, friends and fans, there are
promotional opportunities for a very wide range of companies wishing to extend
their message. The Company intends on creating a range of compelling and
visibility catching sponsorship vehicles allowing sponsors to build brand
awareness, introduce and merchandise products and services and build an
effective association with HIGHLIGHTREEL.COM's entertainment-seeking audience.
The following is a brief summary of vehicles under consideration:
Award Sponsor - Annual Grand Championship or Monthly Championship
positions including contribution for scholarship and/or merchandise; for
example, "Sponsor Name" buys a permanent position sponsoring the Grand
Championship;
Content Feature Sponsor - regular feature spot for well-known property
from traditional media; for example, "Sponsor Name `s" Weekly High School
Round-up;
"Best of" Highlight Sponsor - positions to sponsor special content
features such as monthly "Top 10 Clips" or "Top Football Clip of the Year"; for
example, "Sponsor Name" buys a monthly position for "Top 10 Clips;"
Clinic Sponsor - positions to sponsor special multimedia streaming
clinics and tutorials related to sports and athletic coaching clinics and
educational sessions detailing video capture "how to's", editing and the "do's"
and "don'ts" of streaming media; for example, "Sponsor Name" buys an annual
position for basketball coaching clinics;
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Merchandising Sponsor - special feature areas will be programmed to
allow merchandise partners to introduce and explain products with streaming
advertisements and build a following at HIGHLIGHTREEL.COM; for example, "Sponsor
Name" buys a position to host the "Sponsor Name's AV Station;" and
HIGHLIGHTREEL.COM Streaming Store Sponsors - a number of media
companies with products stocked at the store will be approached to sponsor
particular content categories and features, a range of coop vehicles will also
be developed; for example, "Sponsor Name" heads up the stores football section.
All vehicles will be priced based on traffic, visibility and overall
promotional value.
o ENCODING FEES
As previously discussed, the great majority of HIGHLIGHTREEL.COM users
will not have the ability or the inclination to encode their video highlight
clips for streaming online. Through its encoding partner, the AOI Network
intends to offer encoding service at an attractive consumer price point of $9.95
for a 3 minute clip and earn a revenue share for each clip. This is an easy way
to establish volume-based revenue stream that is positioned as a requirement for
participation at HIGHLIGHTREEL.COM or for any streaming vehicle on the Internet.
In the future, as users become more sophisticated and skilled at video
capture and demand more clarity, we expect an opportunity to up-sell higher
quality encoding processing at higher through put bit streams.
o HIGHLIGHTREEL.COM STREAMING STORE
The AOI Network will include a branded online storefront at the site
offering premium entertainment content for streaming sold on a per use and
perpetual license basis. In addition to focusing on sports content, other
complementary content products in multiple categories will be available,
including such diverse subjects such as cooking or home renovations.
o EVENT WEBCAST PRODUCTION
As the site grows it will actively seek out opportunities to secure
digital rights for, develop, produce and webcast, branded live sport events
which will be compelling and entertaining for its audience.
o RECRUITMENT NETWORK PARTNERSHIPS
Due to the high number of high school students expected as players and
audience at HIGHLIGHTREEL.COM, the site is an attractive meeting ground for
online student-athlete recruitment services. The Company would propose to
receive a revenue share from each new recruit signed up through the site.
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o USER DATABASE LEVERAGING
As HIGHLIGHTREEL.COM's usership and audience grows, the Company will
own and manage a large database of highly coveted online consumers that can be
utilized by a whole range of direct marketers. The AOI Network will market this
database and develop partnership programs to share in merchandise sales directed
at its loyal users.
MARKETING & DISTRIBUTION
A. IMAGE & POSITIONING
Sensus' challenge will be to position HIGHLIGHTREEL.COM with the
following key elements and messages:
o "A place to bring out the star in everyone;"
o "A sports channel by you for you;"
o "Everyone gets a shot, and it's so easy;" o "Scholarship and Sports - a
Great Partnership;"
o "Families and Sports - another Great Partnership;" and
o "Interactive Programming is here - You select what you want."
To drive these points home we intend on pushing forward with an
attention catching media launch and blitz. The program elements include:
o holding a press launch event with an AV presentation demonstrating
HIGHLIGHTREEL.COM's content offering;
o distributing media kits to press contact database in media, technology,
sports, publishing and general categories;
o principals of AOI participating in press tours to interviews with
selected media outlets in New York, Washington, Los Angeles and San
Francisco;
o participating in a selection of Internet, streaming and interactive
publishing trade shows including hosting several media awareness events
within them; and
o to drive home the positive aspects of the site, building an association
through corporate sponsorship or some other means to secure a
"signature anchor" affiliation(s) with household name professional
athletes who embody the core values of the AOI Network.
B. STRATEGIC DISTRIBUTION PARTNERSHIPS
The principals of AOI have considerable experience establishing
strategic partnerships for commerce and traffic generation with online leaders
and will seek to build HIGHLIGHTREEL.COM's exposure and audience through
positioning the property within appropriate large media properties online.
A range of strategic partnership classes can be identified, sought and
implemented by the Company.
o DISTRIBUTION & TRAFFIC
The Internet "Gold Rush" or "Land Grab" is on and a whole host of
traditional media organizations and youthful, Internet-bred Web portals and
content leaders are fighting it out to be destination "home bases" for users
online now and the massive host still to come. Activity is so fierce that a
whole new round of acquisitions are now in play. It has now become clear that
the way to win or lead this battle is to offer the most compelling, entertaining
and informative content, services and
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tools available. We intend to position HIGHLIGHTREEL.COM as a new content
feature that online content leaders can simply plug into their menu of
offerings. Given the site's appeal to such a wide range of ages and
demographics, the potential should interest a wide variety of new media players.
Alternatively, the best possibilities may exist with well-financed new
portals and properties, which may be late to the game as content players and are
now moving fast to extend their brand online and catch up with their full
featured programming menus.
In the case of the telecommunication companies and cable organizations
providing their subscribers access and bandwidth, there are interesting
opportunities to demonstrate what streaming media is, and what it can achieve
with new high speed offerings such as cable modems. The Company will seek
partnerships with this group, allowing it to offer an initial hosted and encoded
clip as a promotion enclosed with monthly billing statements.
HIGHLIGHTREEL.COM is also a good fit with any sports category site or
channel and these will be explored as tie-up targets. The same can be said for
family-friendly Internet sites due to their heavy traffic from parents and
educators.
The nature of any potential tie-up would likely involve co-branding and
licensing HIGHLIGHTREEL.COM's content free of charge to the partner and sharing
advertising revenues generated within the partner's domain. Commerce partnership
deals will also be offered to traffic partners by sharing 10 - 20% of encoding
fees payable to the site. The Company is also keen on establishing exciting
launch promotions with its partners, including offering a first highlight clip
with free hosting and encoding.
A final note is that HIGHLIGHTREEL.COM may be an excellent acquisition
target for a wide range of online content players looking to broaden and extent
their offerings.
o TECHNOLOGY PROMOTION
Another tie-up possibility involves promoting streaming media as a new
mainstream communications vehicle that is both accessible and easy to use. The
"streaming" technology leaders will be approached on the basis of highlighting
the site as a real-world example of the power of streaming for leveraging the
Internet as an entertainment medium. These companies have launched "Site Partner
Programs" and HIGHLIGHTREEL.COM will grow these associations to the greatest
extent possible.
o EDUCATION & COMMUNITY PARTNERSHIPS
In keeping with the value placed on athletics as a vehicle to academic
achievement, the Company intends on establishing a range of affiliations that
position it within the educational community and neighbourhoods everywhere.
After building awareness and buy-in from this constituency, the Company will
seek to promote itself through association with organizations such as the:
o U.S. Collegiate Organizations;
o U.S. National and State High School Coaches Associations;
o U.S. National and State Principals Associations; and
o National Charitable Organizations focusing on schools.
C. AFFILIATE PROGRAM
Many Web sites and online content publishers are looking for new and
exciting content to
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compliment their online offerings in the struggle to attract traffic and
revenue. We intend on developing an affiliate program that allows independent
sites to quickly build and activate a co-branded version of HIGHLIGHTREEL.COM
for presentation at their sites at no cost or obligation. Particular attention
will be given to sites devoted to streaming media development and presentation,
AV merchandising, and family content players.
D. DIRECT MARKETING
To build awareness quickly and make a promotional offer to play, the
Company will execute a highly targeted direct response campaign via traditional
mail and electronic mail vehicles. This organization's target lists are suitable
to convey the HIGHLIGHTREEL.COM opportunity to their constituents.
Specific databases that may be considered include:
o K-12 Schools and Athletic Departments;
o regional representatives for junior football, Little League Baseball
and Minor Hockey;
o community centers; o cable, Telco and ISP subscribers;
o Web portals and major traffic properties; and
o online merchandising leaders.
E. ADVERTISING
The Company is prepared to consider a range of paid advertising
vehicles to build awareness and make promotional and special offers. Family,
parenting and youth print publications are one alternative. Online advertising
programs provided through media placement companies are particularly
interesting, based on their ability to make advertising buys from a range of
affinity sites in specific categories like family, sports or technology. The
necessity of utilizing paid advertising will be determined by the success of
other visibility and distribution programs mentioned previously.
OPERATIONS
A. ORGANIZATION
AOI is based in Seattle, Washington and Sensus intends to have AOI
build the AOI Network from there. Seattle is the optimal location for
establishing the AOI Network due to its focus on streaming media and
entertainment. With leaders in this field of technology situated in Seattle, and
since it is expected it will be entering a strategic alliance with a leader in
the encoding technology which is also located in Seattle, AOI will be able to
take advantage of many benefits by growing within the world's streaming media
nexus. Modest, well-located premises with the latest Internet connection
infrastructure will be secured for the operation.
B. PRINCIPAL
The principal of AOI has the requisite Internet and E-commerce
experience gained in online technology ventures dating back to 1994, including
management positions in marketing, business development, software and product
licensing and corporate finance.
Graham Heal, 37 years of age, Chief Executive Officer and President of
AOI, has online industry experience dating back to 1994 when he was a founding
member of Net Nanny Software, the well-known Internet filtering tool. At that
time, he was responsible for many functions as its Vice President of Marketing
(which included steering, marketing, sales, channel development, online
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commerce, licensing, strategic partner development and assisting in corporate
finance and funding). He then went on to fulfill management roles at two
E-commerce companies. At first, he was a Director of Business Development at
DownloadWAREHOUSE, an innovator and leader in operating Internet stores
reselling downloadable software. Later he became the Director of Business
Development at online software distributor, Digital River Inc., where he was
responsible for establishing key partnerships with online traffic leaders
wishing to merchandise software from their sites.
Prior to entering the online arena, Graham spent six years as a
management consultant for telecommunications companies, forest product giants
and firms particularly focused on trade to Asia. He also spent three years in
Japan in the mid 1980's where he worked in public relations and trade
development positions for an international brewer and the Province of British
Columbia, Canada.
It will be Graham's responsibility to direct AOI's initial development
and growth while being directly involved in corporate finance, investor
development and relations, marketing, public relations and strategic
relationship development.
Acquisition of TargetCo Corporation
Pursuant to the terms of an agreement pursuant to which a Takeover Bid
Circular dated May 31, 1999 was issued (the "TargetCo Acquisition Agreement"),
Sensus acquired 10,000,000 Class "A" Common Voting Shares representing all of
the issued and outstanding shares of 830245 Alberta Ltd., in exchange for which
Sensus issued 10,000,000 Common Voting Shares in Sensus to the holders of shares
in Alberta Corp., on a share for share basis. The Takeover Bid Circular was
registered under the provisions of the Alberta Securities Act, and was filed at
SEDAR (the Canadian equivalent to the EDGAR database), as a result of which
Sensus has become a reporting issuer in the Province of Alberta, Canada.
COMPETITION
While sport content sites are plentiful online no other property has
been identified in this specific niche of sports entertainment.
PLAN OF OPERATION
Corporate Strategy
Sensus intends on raising sufficient funds necessary to acquire
Internet related businesses or to invest in Internet related projects that
appear to have superior commercial prospects.
Business Or Project Characteristics
Sensus recognizes that the potential for any particular project or
business will depend upon the individuals behind the project or business.
Therefore, the decision on whether or not it will invest in any particular
project or business will depend upon the integrity and talent of the individuals
behind the project or business. It will be essential to secure the commitment of
such individuals through creative incentive plans or business relationship, as
well as properly structured intellectual property protection agreements.
INTELLECTUAL PROPERTY
Sensus has secured a commitment from AOI to convey the rights to the
domain names described above. It has also secured a commitment from AOI to act
as project manager in the development of the Web site to be established in
accordance with the business plan developed by AOI.
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Otherwise, any and all technology to be used in the operation of the Web site
will be developed internally or purchased from conventional sources for computer
equipment.
ENVIRONMENTAL MATTERS
The Company believes it is in material compliance with all relevant
federal, state, and local environmental regulations and does not expect to incur
any significant costs to maintain compliance with such regulations in the
foreseeable future.
EMPLOYEES AND LABOR RELATIONS
Currently, the Company does not have any employees.
LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims
arising out of our operations in the normal course of business. We are not party
to any material legal proceeding.
RESEARCH AND DEVELOPMENT
We have not undertaken any research or development initiatives as of
this date. It will be necessary to retain and employ additional individuals to
assist in the development of the web site as described herein. The description
of the use of proceeds is given below.
PROPERTIES
Our executive offices are located at 53 Stratford Place, S.W., Calgary,
Alberta, T3H 1H7. The telephone number and facsimile number in Canada is (403)
242-9703. The registered and records office of the Company is located at 318
North Carson Street, Suite 214, Carson City, Nevada 89701. The executive office
in Canada is located within the home of our President and as such there are no
leases in place. Until such time as it becomes necessary to hire staff, the
Company does not intend on leasing any space.
GOVERNMENTAL MATTERS
Except for usual and customary business and tax licenses and permits,
and the licenses and permits described elsewhere herein, no governmental
approval is required for the principal products/services of Company, nor does
Company know of any existing or probable governmental regulations affecting
Company's activities.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Sensus
The following are the names and municipalities of residence of the
directors and officers of Sensus, their positions and offices with Sensus and
their principal occupations during the last five years.
Name and
Municipality of Residence Office Held Principal Occupation
- ------------------------- ----------- --------------------
J. Timothy Bowes President; June 1999 to present -
B. Comm, M.B.A. Secretary-Treasurer President & Director of
Calgary, Alberta and Director Sensus Capital Corp.
June 1999 to present -
President & Director of
Batoche Energy Corp.
September 1999 to present
- President and a director
of San Joaqin Resources
Inc.
October 1999 - President
and a Director of Lucre
Ventures Ltd.
Yorkton Securities Inc.,
Corporate Finance Natural
Resources Section,
April 1997 - March 1999;
Yorkton Securities Inc.,
Corporate Finance Analyst
New Issues, June 1995 -
April 1997; Yorkton
Securities Inc., Senior
Analyst Oil & Gas October
1994 - June 1995;
Numac Energy Inc., (and
previously at Westcoast
Petroleum Ltd. before its
merger with Numac Energy
Inc.), Land Manager,
August 1987-October 1994.
Stefan Scott, Ph.D. Director 50% Owner of SCWS
Consulting Inc., a private
corporation that Edmonton,
Alberta has been in
operation for over 8
years, providing computer
consulting services to
various multi-national
corporations in the nature
of computer network
support and security
issues. This corporation
developed, and retains a
50% ownership to the CLASS
software system, a
privately run software
system providing criminal
law lawyers in Canada with
research assistance. The
CLASS system has become
the standard research tool
for all criminal law
lawyers in Canada.
The following is a brief, but more detailed, description of the
background of the key management and directors of Sensus:
J. TIMOTHY BOWES
In addition to his involvement in Sensus Capital Corp., Mr. Bowes is
also involved in the management of, and investment in, various other entities.
At present he is involved in three different companies involved in the oil and
gas sector of the economy. He is the President and a Director of each of Batoche
Energy Corp. (a private company); San Joaqin Resources Inc. (a private company);
and Lucre Ventures Ltd. ( a publicly traded company listed on the Canadian
Venture Exchange - "CDNX").
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Prior to this, Mr. Bowes was employed by Yorkton Securities Inc. Mr.
Bowes started as a Senior Analyst for Oil & Gas properties for Yorkton
Securities Inc. in October of 1994. During his employment with Yorkton
Securities Inc., he held several positions with the company that included acting
in a corporate finance capacity responsible for reviewing, structuring and
approving all initial public offerings generated from Yorkton Securities Inc.'s
Calgary Office from June 1995 to April 1997. Thereafter, he was to be appointed
as Vice President, Corporate Finance, in the Natural Resources section of
Yorkton Securities Inc. (the appointment as Vice President did not take place,
since it was made subject to receiving regulatory approval and the approval had
not taken place by the time he left the firm) in its Calgary office.
Prior to joining Yorkton Securities Inc., up until October of 1994, Mr.
Bowes had been the Land Manager of Numac Energy Inc. which had been created as a
result of the 1993 merger of Westcoast Petroleum Ltd. with Numac Oil & Gas Ltd.
Prior to the merger, from August 1987, Mr. Bowes had been the Land Manager for
Westcoast Petroleum Ltd.
J. Timothy Bowes may be considered to be the promoter of Sensus from
the date of incorporation.
STEFAN W.C. SCOTT, PH.D., P. ENG.
Stefan Scott has over 12 years experience in computer, software and
network systems, and a wide range of industrial engineering experience including
operation of control systems, computer solutions and project management. He has
designed, developed and implements a high profile Internet presence for a number
of international technology based companies and organizations, comprised of
specifying installing and commissioning server and communications equipment for
such organizations in Canada and the United States.
The positions he has held with various organizations over the last few
years include the following:
1991 - Present: SWCS Consulting Inc., Edmonton, AB - Partner,
President, Systems consultant in software, hardware, database, local and wide
area networking, Internet communication, office automation and project
management. Major clients in government, legal, software development,
pharmaceutical, computer based training, dairy and camp industries. Most
solutions leverage Microsoft's suite of products NT/IIS/MSSQL/MS Exchange.
1996 - Present: CLASS.ab.ca Inc., Edmonton, Alberta - Partner, Vice
President Engineering, Supervising the development of a national Internet based
legal research engine in conjunction with the Criminal Justice Division of the
Alberta Department of Justice.
1991 - 1996: High Power Laser Group, Dept. of Electrical Engineering,
University of Alberta, Edmonton, AB. - Research Associate active in laser
welding, cutting, alloying, optics, gas discharges, data acquisition, hardware
and software development and RF slab laser design. Application projects
included: oil and gas pipeline construction and repair and oceanic oil tanker
multiple hull construction.
1991 - 1996: Dept. of Electrical Engineering, University of Alberta,
Edmonton, AB. - Sessional Instructor, 3rd year electronics design. Developed a
new project design lab program. Projects developed included: single and multiple
stage JFET and BJT amplifiers, regulated DC power supplies and a amplitude
modulated, optically coupled transmitter-receiver.
He holds a Ph.D. in Electrical Engineering from the University of
Alberta in 1996 and a B.Sc.
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in Electrical Engineering from the University of Alberta in 1992.
Alberta Corp.
J. Timothy Bowes and Stefan Scott are the only directors and officers
of Alberta Corp. (See "Directors and Officers of Sensus"). J. Timothy Bowes may
also be considered to be a promoter of Alberta Corp. under applicable securities
laws because he took the initiative of founding and organizing the business and
enterprise of Alberta Corp. J. Timothy Bowes has had no direct or indirect
interest in any material transaction involving Alberta Corp. since its
incorporation except as disclosed elsewhere herein.
BOARD COMMITTEES
The Company's board of directors met (or acted through unanimous
written consent) five times since the date of incorporation. The Company
currently has no Board committees.
COMPENSATION OF DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION BY SENSUS
Sensus has not employed, nor is it planning to employ, any individuals
until it has acquired sufficient businesses to require full time employees to
manage the same.
Sensus may reimburse expenses incurred due to the executive's
attendance at any meetings of directors but does not provide any other form of
compensation. No payments are intended to be made to any directors.
There is no employment contract with Mr. Bowes. At present, he is not
being paid for his services, nor has he been granted any options to acquire
Sensus Shares.
There is no employment contract with Mr. Scott. At present, he is not
being paid for his services, nor has he been granted any options to acquire
Sensus Shares.
EXECUTIVE COMPENSATION BY ALBERTA CORP.
Directors are not remunerated in their capacities as such. Out of
pocket expenses of directors will be paid for by Alberta Corp. No compensation
has been paid, nor is any expected to be paid, to any person until such time as
the Company has acquired sufficient assets to require someone to manage the
same.
CERTAIN TRANSACTIONS
On February 10, 2000, the Company raised $62,000 in a private placement
through the sale of 124,000 shares of its Common Stock to the OM Security
Holders. The Company agreed to allow OM Security Holders to offer to sell the
124,000 Shares in this Offering. If applicable, the registration period shall
commence 120 days after the effective date of this registration statement and
will expire on the first to occur of three years from the effective date or when
the OM Security Holders are able to otherwise sell such amount of shares under
Rule 144 promulgated under the Securities Act.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Not Applicable.
43
<PAGE> 47
CONFLICTS
Sensus
Except as disclosed herein, there are no material interests, direct or
indirect, of directors, senior officers or any shareholders who beneficially
own, directly or indirectly, more than 10% of the outstanding Sensus Shares or
any known associates or affiliates of such persons, in any transaction since
incorporation or in any proposed transaction which has materially affected or
would materially affect Sensus. See "TargetCo Acquisition Agreement."
Alberta Corp.
The directors, officers and principal shareholders of Alberta Corp.
(and the known associates and affiliates of such persons) have no direct or
indirect interest in any material transaction involving Alberta Corp. since its
incorporation.
The directors of Alberta Corp. are engaged and will continue to be
engaged in other projects. Conflicts of interest, if any, which arise will be
subject to, and governed by, procedures prescribed by the ABCA, which require a
director or officer of a corporation who is a party to, or is a director or an
officer of, or has a material interest with any person who is a party to, a
material contract or proposed material contract with the corporation, to
disclose his interest and, in the case of directors, to refrain from voting on
any matter in respect of such contract unless otherwise permitted under the
ABCA.
OPTION GRANTS IN LAST FISCAL YEAR
Both Sensus and Alberta Corp. were formed in 1999 and have not granted
any options prior to the date of this offering.
INDEBTEDNESS OF SENSUS' AND ALBERTA CORP.'S DIRECTORS AND SENIOR OFFICERS
Since incorporation, no indebtedness has been incurred nor does any
indebtedness currently exist between Sensus or Alberta Corp. and the directors
or officers of Sensus or Alberta Corp. or any of their associates or affiliates.
EMPLOYMENT AGREEMENTS
Not applicable.
1999 PRIVATE PLACEMENTS
On February 10, 2000, the Company consummated the sale, in a private
placement, of 124,000 shares of Common Stock for $0.50 per share to OM Security
Holders, for which the Company received proceeds of $62,000. A portion of the
proceeds from this sale will be used to finance the expenses associated with
this Offering.
44
<PAGE> 48
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock as of February 18, 2000, and
as adjusted to reflect the sale of the shares of Common Stock offered under this
Prospectus by: (1) each person who we know owns beneficially more than 5% of our
Common Stock, (2) each of our directors individually, (3) each of our executive
officers individually and (4) all of our executive officers and directors as a
group.
Unless otherwise indicated, to our knowledge, all persons listed below
have sole voting and investment power with respect to their shares of Common
Stock. Shares of Common Stock that an individual or group has the right to
acquire within 60 days of February 18, 2000 pursuant to the exercise of options
are deemed to be outstanding for the purpose of computing the percentage
ownership of such person or group, but are not deemed outstanding for the
purpose of calculating the percentage owned by any other person listed.
Beneficial Ownership of Common Stock
See "Beneficial Ownership of Common Stock."
DESCRIPTION OF CAPITAL STOCK
Sensus
General
As of the date of this Prospectus, Sensus is authorized to issue
25,000,000 shares of Common Stock (the "Sensus Shares"). There are 10,156,500
shares of Common Stock issued and outstanding. All shares are fully paid and
non-assessable. In connection with this Offering, the board of directors has
authorized the issuance of up to 1,000,000 Shares to be issued to the investors.
The following is a general description of the material rights,
privileges, restrictions and conditions attached to each class of shares:
Subject to the provisions of the Nevada Corporations Code, the holders
of the Sensus Shares are entitled to receive notice of, to attend and vote at
all meetings of the shareholders of Sensus (other than meetings of a class or
series of shares other than the Sensus Shares as such) and are entitled to one
vote for each Sensus Share held, except as required by law.
Subject to the payment of preferred rights attaching to any other class
or series of shares of Sensus, the holders of the Sensus Shares are entitled to
receive, if, as and when declared by the directors of Sensus, dividends in such
amount and payable on such date as may be determined from time to time by the
directors of Sensus. Subject to the preferential rights attaching to any other
class or series of shares of Sensus, if any, on the liquidation, dissolution or
winding-up of Sensus, or any other distribution of the assets of Sensus among
its shareholders for the purpose of winding-up its affairs, the holders of the
Sensus Shares shall be entitled to share, on a per share basis, the remaining
property and assets of Sensus.
Dividends
Holders of Common Stock will be entitled to receive, when, as and if
declared by the board of directors out of legally available funds, cash
dividends. The Common Stock will not have priority as to
45
<PAGE> 49
dividends over any other series or class of the Company's stock that ranks
senior as to dividends to the Common Stock.
Voting Rights
Holders of Common Stock shall have the right to one vote per share upon
all matters presented for the vote of holders of the Common Stock.
Alberta Corp.
General
The authorized share capital of Alberta Corp. consists of an unlimited
number of: (a) Class "A" Shares; (b) Class "B" Shares; and (c) Class "C"
Preferred Shares. As of the date of this Prospectus, there are 10,000,000 issued
and outstanding Class "A" Shares that were issued for aggregate consideration of
$50,000 CDN. There are no Class "B" Shares issued and outstanding. There are no
Class "C" Preferred Shares issued and outstanding. All of the Class "A" Shares
issued and outstanding are fully paid and non-assessable.
The following is a general description of the material rights,
privileges, restrictions and conditions which attach to each class of shares.
CLASS "A" SHARES OF ALBERTA CORP.
Subject to the provisions of the Alberta Business Corporations Act (the
"ABCA"), the holders of the Class "A" Shares are entitled to receive notice of,
to attend and vote at all meetings of the shareholders of Alberta Corp. (other
than meetings of a class or series of shares other than the Class "A" Shares, as
required under the ABCA) and are entitled to one vote for each Class "A" Share
held, except as required by law.
Subject to the preferential rights attaching to any other class or
series of shares of the corporation, the holders of the Class "A" Shares are
entitled to receive, if, as and when declared by the directors of Alberta Corp.,
dividends in such amount and payable on such date as may be determined from time
to time by the directors of Alberta Corp. No dividend may be declared or paid on
the Class "A" Shares if payment of the dividend would cause the realizable value
of the corporation's assets to be less than the aggregate of its liabilities and
the amount required to redeem all shares of the corporation then outstanding
having attached thereto a redemption or retraction right.
Subject to the preferential rights attaching to any other class or
series of shares of the corporation, if any, on the liquidation, dissolution or
winding-up of Alberta Corp., or any other distribution of the assets of Alberta
Corp. among its shareholders for the purpose of winding-up its affairs, the
holders of the Class "A" Shares shall be entitled to share, on a per share
basis, the remaining property and assets of Alberta Corp.
CLASS "B" SHARES OF ALBERTA CORP.
Subject to the provisions of the ABCA, the holders of the Class "B"
Shares are not entitled to receive notice of, to attend and/or vote at meetings
of the shareholders of Alberta Corp.
Subject to the preferential rights attaching to any other class or
series of shares of the corporation, the holders of the Class "B" Shares are
entitled to receive, if, as and when declared by the directors of Alberta Corp.,
dividends in such amount and payable on such date as may be determined
46
<PAGE> 50
from time to time by the directors of Alberta Corp. No dividend may be declared
or paid on the Class "B" Shares if payment of the dividend would cause the
realizable value of the corporation's assets to be less than the aggregate of
its liabilities and the amount required to redeem all shares of the corporation
then outstanding having attached thereto a redemption or retraction right.
Subject to the preferential rights attaching to any other class or
series of shares of the corporation, if any, on the liquidation, dissolution or
winding-up of Alberta Corp., or any other distribution of the assets of Alberta
Corp. among its shareholders for the purpose of winding-up its affairs, the
holders of the Class "A" Shares shall be entitled to share, on a per share
basis, the remaining property and assets of Alberta Corp.
CLASS "C" PREFERRED SHARES OF ALBERTA CORP.
The Class "C" Preferred Shares may be issued from time to time in one
or more series in the number and with the designation, rights, privileges,
restrictions and conditions as determined by the directors of Alberta Corp. in
their sole discretion. The Class "C" Preferred Shares will be entitled to
preference, as to the payment of dividends and the distribution of the remaining
property of Alberta Corp. on dissolution, over the Class "A" Shares and the
Class "B" Shares.
Dividend
Alberta Corp. has not paid any dividends on its securities and has no
present intention of paying dividends on its securities. The future payment of
dividends will be dependent upon the financial requirements of Alberta Corp. to
fund future growth, the financial condition of Alberta Corp. and other factors
the Board of Directors of Alberta Corp. may consider appropriate in the
circumstances.
ANTI-TAKEOVER EFFECTS OF VARIOUS PROVISIONS OF NEVADA LAW.
Upon the closing of this Offering, we will be subject to the provisions
of Section 438 of the Nevada General Corporation Law. Subject to specific
exceptions, Section 438 prohibits a publicly-held Nevada corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the transaction in which such
stockholder became an "interested stockholder" is approved by the board of
directors prior to the date the "interested stockholder" attained that status;
"Business combinations" include mergers, acquisitions, asset sales and
other transactions resulting in a financial benefit to the "interested
stockholder." Subject to various exceptions, an "interested stockholder" is a
person who, together with his or her affiliates and associates, owns, or within
three years did own, 15% or more of the corporation's voting stock. The
restrictions in this statute could prohibit or delay the accomplishment of
mergers or other takeover or change-in-control attempts with respect to the
Company and, therefore, may discourage attempts to acquire us.
Limitations On Liability and Indemnification of Directors and Officers
Our Articles of incorporation contains the following provision with
respect to indemnification of our directors and officers:
The personal liability of the directors of the Company is hereby
eliminated to the fullest extent permitted by the provisions of Section 78.037
of the General Corporation Law of the State of Nevada, as the same may be
amended or supplemented.
47
<PAGE> 51
This provision does not eliminate or limit the liability of a director
for violating the following:
o duty of loyalty (which includes a director's obligation to refrain from
self dealing with Sensus improperly competing with Sensus or usurping
Sensus' opportunities);
o failing to act in good faith;
o engaging in intentional misconduct or knowingly violating a law; or
o participating in the payment of a dividend or a stock repurchase or
redemption for himself.
This provision does not affect any director's liability under federal
securities laws or the availability of equitable remedies such as an injunction
or rescission for breach of fiduciary duty.
We intend to purchase directors' liability insurance for our officers
and directors. However, there can be no assurance that such insurance will be
available to us at commercially reasonable terms, or at all.
Authorized but Unissued Shares
The authorized but unissued shares of Common Stock is available for
future issuance without stockholder approval. We may use these additional shares
for a variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of Common Stock and preferred stock
could render more difficult or discourage an attempt to obtain control of the
Company by means of a proxy contest, tender offer, merger or otherwise.
SELLING SHAREHOLDERS
An aggregate of 10,156,500 Shares of Common Stock may be offered for
resale by the Selling Security Holders. See "The Offering." These Shares of
Common Stock include shares issued to the OM Security Holders pursuant to a
private placement of shares consummated on February 10, 2000.
There are no material relationships between any of the Selling
Shareholders and the Company or any of its predecessors or affiliates, nor have
any such material relationships existed within the past three years.
TRANSFER AGENT AND REGISTRAR OF SENSUS
The transfer agent and registrar of the Company is
MARKET FOR TRADING OF SENSUS SHARES
The shares of Sensus are not listed on any exchange and there is
currently no market for its shares.
48
<PAGE> 52
SHARES ELIGIBLE FOR FUTURE SALE
Currently, Sensus has 10,156,500 shares of Common Stock outstanding,
and the Company intends to issue another 1,000,000 shares. All are intended to
be registered pursuant to this registration statement and the 1,000,000 new
shares to be issued will be freely transferable without restriction or further
registration under the Securities Act.
The outstanding Common Stock are "restricted securities," as that term
is defined in Rule 144 promulgated under the Securities Act, and may only be
sold pursuant to an effective registration statement under the Securities Act,
or in compliance with the exemption provisions of Rule 144 or pursuant to
another exemption under the Securities Act.
In general, under Rule 144 as currently in effect, any person (or
persons whose shares are aggregated) who has beneficially owned restricted
securities for at least one year is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of 1% of the then
outstanding shares of the issuer's common stock or the average weekly trading
volume during the four calendar weeks preceding such sale, provided that certain
public information about the issuer as required by Rule 144 is then available
and the seller complies with certain other requirements. Affiliates may sell
unrestricted securities in compliance with Rule 144 subject to the holding
period requirement. A person who is not an affiliate, has not been an affiliate
within three months prior to sale, and has beneficially owned the restricted
securities for at least two years, is entitled to sell such shares under Rule
144 without regard to any of the limitations described above.
Prior to this registration, there has been no public trading market for
the Common Stock and we cannot predict the effect, if any, that public sales of
shares of Common Stock or the availability of shares for sale will have on the
market prices of the Common Stock and warrants. Nevertheless, the possibility
that a substantial amount of Common Stock or warrants may be sold in the public
market may adversely effect prevailing market prices and could impair our
ability to raise capital through the sale of its equity securities.
PLAN OF DISTRIBUTION
The Selling Security Holders (or pledgees, donees, transferees or
successors in interest) may sell all or a portion of the respective Secondary
Shares held by them from time to time while the registration statement of which
this Prospectus is a part remains effective. The aggregate proceeds to the
Selling Security Holders from the sale of the respective Secondary Shares
offered by the Selling Security Holders hereby will be the prices at which such
securities are sold, less any commissions. There is no assurance that the
Selling Security Holders will sell any or all of the Secondary Shares offered
hereby.
The 1,000,000 Shares being offered in this Offering are being sold
directly by the Company and without an underwriter. The Company intends to
market the 1,000,000 Shares through general advertising medium but only in those
states where the Offering is authorized. For information on how to subscribe,
call (403) 242-9703 and ask for J. Timothy Bowes.
The Company intends to list its securities on the NASD OTC Bulletin
Board and if it is successful, the Shares may be sold in transactions on the
NASD OTC Bulletin Board, in negotiated transactions, or by a combination of
these methods, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to such market prices or at negotiated
prices or through the writing of options on the Secondary Shares. The Selling
Security Holders may elect to engage a broker or dealer to effect sales in one
or more of the following transactions:
49
<PAGE> 53
(a) block trades in which the broker or dealer so engaged will attempt
to sell the Secondary Shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; and
(c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, brokers and dealers engaged by
the Selling Security Holders may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from the
Selling Security Holders in amounts to be negotiated (and, if such broker-dealer
acts as agent for the purchaser of such Secondary Shares, from such purchaser).
Broker-dealers may agree with the Selling Security Holders to sell a specified
number of such Secondary Shares, at a stipulated price per share. To the extent
that such broker-dealer is unable to sell all of the shares, it may, as agent
for the Selling Security Holders, purchase the unsold shares as principal at the
price required to fulfill the broker-dealer's commitment to the Selling Security
Holders. Broker-dealers who acquire shares as principal may thereafter resell
such shares from time to time in transactions (which may involve crosses and
block transaction and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market, or
otherwise on terms then prevailing at the time of sale, at prices then related
to the then-current market price or in negotiated transactions, and in
connection with such resales, may pay to, or receive from, the purchasers of
such shares, commissions as described above.
The Selling Security Holders and any broker-dealers or agents who
participate in the sale of the shares may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agent and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933.
The Company will not pay any expenses related to the sale of such
securities to the public.
The Selling Security Holders have been advised that during the time
they are engaged in "distribution" (as defined under Regulation M under the
Securities Exchange Act of 1934, as amended) of the securities covered by this
Prospectus, they must comply with Regulation M under the Securities Exchange Act
of 1934, as amended, and pursuant thereto: (i) shall not engage in any
stabilization activity in connection with the Company's securities; and (ii)
shall not bid for or purchase any securities of the Company or attempt to
include any person to purchase any of the Company's securities other than as
permitted under the Securities Exchange Act of 1934, as amended. Any Selling
Security Holders who are "affiliated purchasers" of the Company, as defined in
Regulation M, have been further advised that they and their affiliates must
coordinate their sales under this Prospectus and otherwise with the Company and
any other "affiliated purchasers" of the Company for purposes of Regulation M.
The Selling Security Holders selling shares must also furnish each broker
through which their securities are sold copies of this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus
will be passed upon for us by Jeffer, Mangels, Butler & Marmaro LLP, Los
Angeles, California.
50
<PAGE> 54
EXPERTS
The financial statements and schedules audited by Ernst & Young, LLP
have been included in reliance on their report (which contains an explanatory
paragraph describing conditions that raise substantial doubt about the Company's
ability to continue as a going concern as described in note 1 to the
consolidated financial statements) given with their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2, including exhibits, schedules and
amendments to that registration statement, under the Securities Act with respect
to the shares of Common Stock to be sold in this Offering. This Prospectus does
not contain all the information included in our Registration Statement. For
further information with respect to us and the shares of Common Stock to be sold
in this Offering, we refer you to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete, and in each instance we
refer you to the copy of that contract, agreement or other document to the
extent filed as an exhibit to the Registration Statement.
You may read and copy all or any portion of the Registration Statement
or any other information we file at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the Securities and Exchange Commission. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the public reference room. Our Securities and Exchange Commission filings,
including the Registration Statement, are also available to you over the
Internet on the Securities and Exchange Commission's Web site located at
http://www.sec.gov. As a result of this Offering, we will become subject to the
information and reporting requirements of the Exchange Act and, in accordance
with the Exchange Act, we will file periodic reports, proxy statements and other
information with the Securities and Exchange Commission. Upon approval of the
Common Stock for quotation on the Nasdaq SmallCap Market those reports, proxy
statements and other information may also be inspected at the offices of [Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006. We intend to furnish
our stockholders with annual reports containing audited financial statements and
with quarterly reports for the first three quarters of each fiscal year
containing unaudited interim financial information.
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<PAGE> 55
TABLE OF CONTENTS OF FINANCIAL INFORMATION
Page
Auditor's Report of SENSUS CAPITAL CORP.
Audited Consolidated Financial Statements of SENSUS CAPITAL CORP.
Notes to Financial Statements of SENSUS CAPITAL CORP.
<PAGE> 56
CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
SENSUS CAPITAL CORP.
FEBRUARY 18, 2000
<PAGE> 57
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
SENSUS CAPITAL CORP.
We have audited the accompanying consolidated balance sheet of SENSUS CAPITAL
CORP. (a development stage company) (and its subsidiary) as of February 18,
2000, and May 26, 1999 and the related statements of loss and deficit, changes
in stockholders' equity and cash flows from the date of commencement of
operations on May 27, 1999 to February 18, 2000. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Sensus Capital
Corp. (a development stage company) (and its subsidiary) as of February 18,
2000, and May 26, 1999 and the consolidated results of their operations and
their cash flows for the period from date of commencement of operations on
May 27, 1999 to February 18, 2000 in conformity with accounting principles
generally accepted in the United States.
As discussed in Note 1 to the financial statements, the Corporation's loss from
operations raise substantial doubts about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Calgary, Canada /s/ Ernst & Young LLP
February 20, 2000 Chartered Accountants
(except for note 12
which is as at
March 23, 2000)
<PAGE> 58
SENSUS CAPITAL CORP.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(all amounts are expressed in U.S. dollars)
(see basis of presentation - note 1)
<TABLE>
<CAPTION>
FEBRUARY 18, MAY 26,
2000 1999
$ $
<S> <C> <C>
ASSETS
CURRENT
Cash 83,351 34,270
Stock subscriptions receivable 6,000 --
Prepaid expenses and deposits 5,000 --
------- ------
94,351 34,270
------- ------
Goodwill, net of $9,104 accumulated amortization [note 4] 15,173 --
------- ------
109,524 34,270
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities 7,077 --
------- ------
7,077 --
------- ------
COMMITMENTS & CONTINGENCIES (note 1 and 11)
STOCKHOLDERS' EQUITY
Authorized
25,000,000 common shares at $0.001 par value
Common stock issued and paid-up [note 5] 10,157 34,270
Additional paid in capital [note 5] 113,401 --
Deficit accumulated during the development stage (21,111) --
------- ------
102,447 34,270
------- ------
109,524 34,270
======= ======
</TABLE>
See accompanying notes
On behalf of the Board: /s/ J. TIMOTHY BOWES /s/ STEFAN SCOTT
Director Director
<PAGE> 59
SENSUS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>
PERIOD FROM MAY
27, 1999 TO
FEBRUARY 18, 2000
$
<S> <C>
REVENUE --
----------
EXPENSES
General and administrative 12,007
Amortization 9,104
----------
21,111
----------
NET LOSS AND ENDING DEFICIT FOR THE PERIOD [NOTE 7] 21,111
----------
Net loss per common share [note 7] --
Weighted average number of shares outstanding 10,026,944
==========
</TABLE>
See accompanying notes
<PAGE> 60
SENSUS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>
NUMBER OF COMMON STOCK CAPITAL IN TOTAL
SHARES PAR VALUE EXCESS OF PAR STOCKHOLDERS'
---------- VALUE EQUITY
$ $ $
------------ ------------- ------------
<S> <C> <C> <C> <C>
BALANCE, MAY 26, 1999 -
Founder's shares of 830245 Alberta Ltd. [NOTE 3] 10,000,000 34,270 -- 34,270
June 21, 1999 change in shares and
share capital as a result of reverse
acquisition [note 3] 7,500 (24,262) 51,397 27,135
---------- ------ ------- -------
BALANCE JUNE 21, 1999 10,007,500 10,008 51,397 61,405
---------- ------ ------- -------
Common stock issued for services
[note 11] 25,000 25 128 153
Common stock issued for cash 124,000 124 61,876 62,000
---------- ------ ------- -------
BALANCE, FEBRUARY 18, 2000 10,156,500 10,157 113,401 123,558
========== ====== ======= =======
</TABLE>
See accompanying notes
<PAGE> 61
SENSUS CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>
PERIOD FROM MAY 27, 1999 TO
FEBRUARY 18, 2000
$
---------------------------
<S> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss for the period (21,111)
Adjustments to reconcile loss to cash flows used in operating
activities:
Amortization of goodwill 9,104
Marketing expense not involving the payment of cash [note 5] 153
Changes in non-cash working capital balances [note 8] (11,065)
-------
(22,919)
-------
CASH FLOWS GENERATED BY FINANCING ACTIVITIES
Proceeds from the issuance of common stock 62,000
-------
62,000
-------
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash acquired on acquisition of subsidiary [note 3] 10,000
-------
10,000
-------
INCREASE IN CASH 49,081
Cash, beginning of period 34,270
-------
CASH, END OF PERIOD 83,351
=======
</TABLE>
See accompanying notes
<PAGE> 62
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
1. BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTY
Sensus Capital Corp., ("Sensus" or the "Corporation") was incorporated on May
21, 1999 under the laws of the State of Nevada, and was inactive from the date
of incorporation to May 26, 1999. On June 21, 1999, the Corporation purchased
all of the outstanding shares of 830245 Alberta Ltd. which has been accounted
for as a reverse takeover (see Note 3). Accordingly the comparative balance
sheet as at May 26, 1999 in the accompanying financial statements is that of
830245 Alberta Ltd.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Corporation has incurred a significant operating loss, and net
operating cash outflows of $22,919 for the period from May 27, 1999 to February
18, 2000. The Corporation's continuation as a going concern is dependent on its
ability to generate sufficient cash flow, to meet its obligations on a timely
basis, to obtain additional financing as may be required, and ultimately to
attain successful operations. However, no assurance can be given at this time as
to whether the Corporation will achieve any of these conditions. These factors,
among others, raise substantial doubt about the Corporation's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Corporation be unable to continue as a going concern.
Management intends to seek additional financing through future private or public
offerings of stock.
The accompanying financial statements reflect all adjustments which are, in the
opinion of management, necessary to reflect a fair presentation for the periods
being presented.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have, in management's opinion, been properly prepared
in accordance with accounting principles generally accepted in the United
States.
USE OF ESTIMATES
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates which would affect the amount of recorded assets,
liabilities, revenues and expenses. Actual amounts could differ from these
estimates.
<PAGE> 63
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
CONSOLIDATION
The consolidated financial statements include the accounts of the Corporation
and its wholly owned subsidiary, 830245 Alberta Ltd., an Alberta, Canada
corporation ("830245"), after elimination of intercompany accounts and
transactions.
LONG-LIVED ASSETS
The Corporation follows financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be disposed of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present.
GOODWILL
Goodwill is recorded at cost and is being amortized on a straight-line basis
over two years. The recoverability of goodwill is assessed periodically based on
management estimates of undiscounted future operating income from each of the
acquired businesses to which the goodwill relates.
INCOME TAXES
The Corporation follows the liability method of accounting for the tax effect of
temporary differences between the carrying amount and the tax basis of the
company's assets and liabilities. Temporary differences arise when the
realization of an asset or the settlement of a liability would give rise to
either an increase or decrease in the Corporation's income taxes payable for the
year or later period. Deferred income taxes are recorded at the income tax rates
that are expected to apply when the deferred tax liability is settled or the
deferred tax asset is realized. When necessary, valuation allowances are
established to reduce deferred income tax assets to the amount expected to be
realized. Income tax expense is the tax payable for the period and the change
during the period in deferred income tax assets and liabilities.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Corporation is the Canadian dollar. Accordingly,
assets and liabilities are translated at the year-end exchange rate and revenues
and expenses are translated at average exchange rates. Gains and losses arising
from the translation of the financial statements are recorded in a "Cumulative
Translation Adjustment" account in stockholders' equity.
<PAGE> 64
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
EARNINGS (LOSS) COMMON SHARE
The loss per common share has been calculated based on the weighted average
number of common shares outstanding during the period. Diluted earnings per
share, assuming all warrants, options and conversion features were exercised,
does not differ from basic earnings per share.
3. ACQUISITION
On June 21, 1999 the Corporation purchased all of the outstanding common shares
of 830245 in exchange for 10,000,000 Sensus shares to the shareholders of 830245
Alberta Ltd., on the basis of 1 Sensus share for each Class "A" share of 830245.
The purchase of 830245 Alberta Ltd. shares has been accounted for as a reverse
acquisition by 830245 of Sensus, and has been recorded using the purchase method
of accounting whereby the purchase price in excess of the carrying value of the
net assets acquired has been allocated to goodwill.
<TABLE>
<CAPTION>
PURCHASE
ALLOCATION
$
----------
<S> <C>
Cash 10,000
Goodwill 24,276
----------
Purchase price 34,276
==========
</TABLE>
Legal and audit fees of $7,141 incurred to complete the reverse acquisition,
have been allocated to goodwill.
The operating results of Sensus are included in the consolidated statements of
loss and deficit from the date of acquisition.
<PAGE> 65
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
4. GOODWILL
<TABLE>
<CAPTION>
FEBRUARY 18, 2000
-----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill 24,276 9,104 15,173
- ---------------------------------------------------------------------------------------------
</TABLE>
5. SHARE CAPITAL
AUTHORIZED
25,000,000 common shares at $0.001 par value
COMMON STOCK ISSUED
During the period ended February 18, 2000, the Corporation issued 25,000 common
stock pursuant to the terms of the agreement described in note 11. The shares
were recorded at book value as the fair market value was undeterminable.
6. EARNINGS (LOSS) PER SHARE
Loss per common share is loss for the period divided by the weighted average
number of common shares outstanding.
7. INCOME TAXES
The income tax benefit differs from the amount computed by applying the U.S.
federal statutory tax rates to the loss before income taxes for the following
reasons:
<TABLE>
<CAPTION>
FEBRUARY 18,
2000
$
- ------------------------------------------------------------------------------------------------
<S> <C>
Income tax benefit at U.S. statutory rate (34%)
Increase (decrease) in taxes resulting from: (7,178)
- ------------------------------------------------------------------------------------------------
Change in deferred tax asset valuation allowance 7,178
Income tax benefit --
================================================================================================
</TABLE>
<PAGE> 66
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
For financial reporting purposes, loss before income taxes includes the
following components:
<TABLE>
<CAPTION>
FEBRUARY 18,
2000
$
-----------
<S> <C>
Pre-tax loss:
United States 21,111
Foreign --
-----------
21,111
===========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of the
Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
FEBRUARY 18,
2000
$
------------------
<S> <C>
Deferred tax assets (liabilities):
Net operating loss carryforwards 4,633
Amortization 2,545
-----------
Net deferred tax assets 7,178
Valuation allowance (7,178)
-----------
Net deferred tax assets --
===========
</TABLE>
The Company has provided a valuation allowance for the full amount of deferred
tax assets in light of its history of operating losses since its inception.
The Company has U.S. operating losses carried forward of $13,625 which expire
as follows:
$
-----------
2020 13,625
The availability of these loss carryforwards to reduce future taxable income
could be subject to limitations under the Internal Revenue Code of 1986, as
amended. Certain ownership changes can significantly limit the utilization of
net operating loss carryforwards in the period following the ownership change.
The Company has not determined whether such changes have occurred and the effect
such changes could have on its ability to carry forward all or some of the U.S.
net operating losses.
<PAGE> 67
SENSUS CAPITAL CORP.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
May 27, 1999 to February 18, 2000
8. NET CHANGE IN NON-CASH WORKING CAPITAL
<TABLE>
<CAPTION>
FEBRUARY 18,
2000
$
-----------
<S> <C>
Stock subscription receivable (6,000)
Prepaid expenses and deposits (5,000)
Accounts payable and accrued liabilities (65)
-----------
Change relating to operating activities (11,065)
===========
</TABLE>
9. FINANCIAL INSTRUMENTS
Financial instruments comprising cash, stock subscription receivable, accounts
payable and accrued liabilities, approximate their fair value. It is
management's opinion that the Corporation is not exposed to significant currency
or credit risks arising from these financial instruments.
10. RECENT PRONOUNCEMENTS
In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities", which will be effective for fiscal years beginning after
June 15, 2000. The Corporation does not acquire derivatives or engage in hedging
activities.
11. COMMITMENT
In July 1999, the Corporation signed an agreement with Allteam Online Inc.
("AOI") to develop and operate an internet web site in exchange for 25,000
common shares of the Corporation (which were issued during the period ended
February 18, 2000) and payments of $25,000 per month, commencing on or before
December 31, 2000. Once developed, the Corporation is required to pay AOI a
management fee equal to 10% of gross revenues.
12. SUBSEQUENT EVENT
On March 23, 2000 the Corporation issued a prospectus and filed a Form SB-2
Registration Statement with the U.S. Securities and Exchange Commission to seek
registration of 11,156,500 shares of its common stock, including 1,000,000
shares to be issued and sold by the Corporation pursuant to such registration.
<PAGE> 68
======================================================
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. SENSUS CAPITAL CORP. HAS
NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS
WITH DIFFERENT OR ADDITIONAL INFORMATION. THIS
PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE
DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE
DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE
SECURITIES.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE
US TO PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR
POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN ANY OF
THESE JURISDICTIONS. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE US AND
CANADA ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO
OBSERVE THE RESTRICTIONS OF THAT JURISDICTION RELATED TO
THIS OFFERING AND THE DISTRIBUTION OF THIS PROSPECTUS.
------------------
TABLE OF CONTENTS
Page
Prospectus Summary.......................................
Risk Factors.............................................
Use of Proceeds..........................................
Dividend Policy..........................................
Capitalization...........................................
Dilution.................................................
Selected Financial Data..................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations......................
Business.................................................
Management...............................................
Principal Stockholders...................................
Transactions with Management and Others..................
Description of Capital Stock.............................
Selling Shareholders.....................................
Registration Rights......................................
Shares Eligible for Future Sale..........................
Underwriting.............................................
Legal Matters............................................
Experts..................................................
Where You Can Find More Information......................
Index to Financial Statements............................
-----------------
Dealer Prospectus Delivery Obligation:
Until April 17, 2000 (25 days after the date of this Prospectus), all dealers
that buy, sell or trade these shares of Common Stock, whether or not
participating in this Offering, may be required to deliver a Prospectus. This is
in addition to the dealers' obligation to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
================================================================================
11,156,500 SHARES
SENSUS CAPITAL CORP.
COMMON STOCK
____________________
PROSPECTUS
____________________
MARCH 23, 2000
================================================================================
52
<PAGE> 69
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses to be incurred in connection
with the Offering described in this Registration Statement, all of which will be
paid by the Company. All amounts are estimates, other than the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. fee and the [Nasdaq] listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................................................... $_____
National Association of Securities Dealers, Inc. fee................................................... $_____
Accounting fees and expenses........................................................................... $_____
Legal fees and expenses................................................................................ $_____
Director and officer insurance expenses................................................................ $_____
Printing and engraving expenses........................................................................ $_____
Transfer agent and registrar fees and expenses......................................................... $_____
Blue Sky fees and expenses (including counsel fees).................................................... $_____
Miscellaneous expenses................................................................................. $_____
Total........................................................................................ $_____
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Company's Certificate of Incorporation, contains the
following provision with respect to the indemnification of directors of the
Company:
Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any such action, suit or proceeding, whether civil,
criminal, administrative or investigative, by the reason of the fact that he or
she, or a person with whom he or she is a legal representative, is or was a
director of the corporation, or who is serving at the request of the corporation
as a director or officer of another corporation, or is a representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgements, fines, and therewith. Such right of
indemnification shall be a contract right which may be enforced in any manner
desired by such person. The expenses of officers and directors incurred in
defending a civil suit or proceeding must be paid by the corporation as incurred
and in advance of the final disposition of the action, suit, or proceeding,
under receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that he or she is not entitled to be indemnified by the
corporation. Such right of indemnification shall not be exclusive of any other
right of such directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this article.
Without limiting the application of the foregoing, the Board of
Directors may adopt By-Laws from time to time without respect to
indemnification, to provide at all times the fullest indemnification permitted
by the laws of the State of Nevada, and may cause the corporation to purchase or
maintain insurance on behalf of any person who is or was a director or officer.
The Company's By-laws do not contain any specific provisions with
respect to the indemnification of directors, officers and authorized
representatives:
53
<PAGE> 70
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada. It is the intention of the Board of Directors to amend the
by-laws as soon as possible.
The Nevada Revised Corporate and Securities Statutes also contain
provisions entitling directors and officers of the corporation to
indemnification from judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees, as the result of an action or proceeding in
which they may be involved by reason of being or having been a director or
officer of the corporation (or, at the request of the corporation, a director or
officer of another corporation or other enterprise); provided the officers or
directors acted in good faith. The corporation also may obtain an insurance
policy which will cover officers and directors for any liability arising out of
their actions in such capacity.
The foregoing do not and will not eliminate or limit the liability of a
director for violating his duty of loyalty (which includes the obligation of a
director of the corporation to refrain from self-dealing with respect to the
corporation, improperly competing with the corporation or usurping corporation
opportunities), failing to act in good faith, engaging in intentional misconduct
or knowingly violating a law or participating in the payment of a dividend or a
stock repurchase or redemption for himself. The foregoing also do not and will
not affect any director's liability under federal securities laws or the
availability of equitable remedies such as an injunction or rescission for
breach of fiduciary duty.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
Exhibit
Number Description
3.1(a) Articles of Incorporation of Sensus.
3.1(b) Articles of Incorporation of Alberta Corp.
3.2(a) By-laws of Sensus.
3.2(b) By-laws of Alberta Corp.
4. Stock Certificate specimen of the Company.
5. Opinion of Jeffer, Mangels, Butler & Marmaro LLP. (*)
10.1 AOI Acquisition Agreement
10.2 TargetCo Acquisition Agreement.
23.1 Consent of Ernst & Young.
23.2 Consent of Jeffer, Mangels, Butler & Marmaro LLP.
24. Power of attorney (included on the Signature Page).
- -------------------------------
(*) To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to
this Registration Statement:
(i) To include any Prospectus required
by section 10(a)(3) of the Securities Act
of 1933;
54
<PAGE> 71
(ii) To reflect in the Prospectus any facts
or events arising after the effective date
of the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually, or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of Prospectus filed with the
Commission pursuant to Rule 424(b) (?
230.424(b) of this Chapter) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate Offering price set forth
in the "Calculation of Registration Fee"
table in the effective registration
statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the Offering of such securities
at that time shall be deemed to be the initial bona
fide Offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the Offering.
Insofar as indemnification for liabilities arising from the Securities Act of
1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the Offering of such securities at that time shall be deemed to be the
initial bona fide Offering thereof.
55
<PAGE> 72
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, we
certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorize this registration statement to
be signed on our behalf by the undersigned, in Calgary, Alberta, on March 23,
2000.
SENSUS CAPITAL CORP.
By: /s/ J. Timothy Bowes
---------------------------
J. Timothy Bowes, President,
Chief Executive Officer
By: /s/ Stefan Scott
---------------------------
Stefan Scott, Director
POWER OF ATTORNEY
We, the undersigned officers and directors of SENSUS CAPITAL CORP.,
hereby severally constitute and appoint Stefan Scott and J. Timothy Bowes, and
each of them (with full power to each of them to act alone), our true and lawful
attorneys-in-fact and agents, with full power of substitution, for us and in our
stead, in any and all capacities, to sign any and all amendments (including
pre-effective and post-effective amendments) to this registration statement and
all documents in connection thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
necessary or advisable to be done in and about the premises, as full to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all the said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
NAME TITLE DATE
/s/ J. Timothy Bowes President, Chief Executive March 23, 2000
- ----------------------------- Officer, Secretary, Treasurer
J. Timothy Bowes and Director
/s/ Stefan Scott Director March 23, 2000
- -----------------------------
Stefan Scott
56
<PAGE> 73
Exhibit Index
3.1(a) Articles of Incorporation of Sensus.
3.1(b) Articles of Incorporation of Alberta Corp.
3.2(a) By-laws of Sensus.
3.2(b) By-laws of Alberta Corp.
4. Stock Certificate specimen of the Company.
5. Opinion of Jeffer, Mangels, Butler & Marmaro LLP. (*)
10.1 AOI Acquisition Agreement
10.2 TargetCo Acquisition Agreement.
23.1 Consent of Ernst & Young.
23.2 Consent of Jeffer, Mangels, Butler & Marmaro LLP.
24. Power of attorney (included on the Signature Page).
- -------------------------------
(*) To be filed by amendment.
<PAGE> 1
Exhibit 3.1(a)
ARTICLES OF INCORPORATION
OF
SENSUS CAPITAL CORP.
1. NAME OF COMPANY:
Sensus Capital Corp.
2. RESIDENT AGENT:
The resident agent of the Company is: Campbell Mello Associates, Inc.
3110 S. Valley View, Suite 105
Las Vegas, Nevada 89102
3. BOARD OF DIRECTORS:
The Company shall initially have one director (1) who is John S. Huckell,
Ste. 500, Scotia One, 10600 Jasper Ave.; Edmonton, AB T5J 3R8. This individual
shall serve as director until their successor or successors have been elected
and qualified. The number of directors may be increased or decreased by a duly
adopted amendment to the By-Laws of the Corporation.
4. AUTHORIZED SHARES:
The aggregate number of shares which the corporation shall have authority
to issue shall consist of 25,000,000 shares of Common Stock having a $.001 par
value. The Common Stock of the Company may be issued from time to time without
prior approval by the stockholders. The Common Stock may be issued for such
consideration as may be fixed from time to time by the Board of Directors. The
Board of Directors may issue such share of Common and/or Preferred Stock in one
or more series, with such voting shares, designations, preferences and rights or
qualifications, limitations or restrictions thereof as shall be stated in the
resolution or resolutions.
5. PREEMPTIVE RIGHTS AND ASSESSMENT OF SHARES:
Holders of Common Stock or Preferred Stock of the corporation shall not
have any preference, preemptive right or right of subscription to acquire shares
of the corporation authorized, issued, or sold, or to be authorized, issued or
sold, or to any obligations or shares authorized or issued or to be authorized
or issued, and convertible into shares of the corporation, nor to any right of
subscription thereto, other than to the extent, if any, the Board of Directors
in its sole discretion, may determine from time to time.
The Common Stock of the Corporation, after the amount of the subscription
price has been fully paid in, in money, property or services, as the directors
shall determine, shall not be subject to assessment to pays the debts of the
corporation, nor for any other purpose, and no Common Stock issued as fully paid
shall ever be assessable or assessed, and the Articles of Incorporation shall
not be amended to provide for such assessment.
<PAGE> 2
6. DIRECTORS' AND OFFICERS LIABILITY
A director or officer of the corporation shall be personally liable to
this corporation or its stockholders for damages for breach of fiduciary duty as
a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of the law or (ii) the
unlawful payment of dividends. Any repeal or modification of this Article by
stockholders of the corporation shall be prospective only, and shall not
adversely affect an limitation on the personal liability of a director or
officer of the corporation for acts or omissions prior to such repeal or
modification.
7. INDEMNITY
Every person who was or is a party to, or is threatened to be made a party
to, or is involved in any such action, suit or proceeding, whether civil,
criminal, administrative or investigative, by the reason of the fact that he or
she, or a person with whom he or she is a legal representative is or was a
director of the corporation, or who is serving at the request of the corporation
as a director or officer of another corporation or is a representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgements, fines, and amounts paid or to be paid in
a settlement) reasonably incurred or suffered by him or her in connection
therewith. Such right of indemnification shall be a contract right which may be
enforced in any manner desired by such person. The expenses of officers and
directors incurred in defending a civil suit or proceeding must be paid by the
corporation as incurred and in advance of the final disposition of the action,
suit, or proceeding, under receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. Such right of indemnification shall not be exclusive of any
other right of such directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders provision of law, or otherwise, as well as their
rights under this article.
Without limiting the application of the foregoing, the Board of Directors
may adopt By-Laws form time to time without respect to indemnification, to
provide at all times the fullest indemnification permitted by the laws of the
State of Nevada, and may cause the corporation to purchase or maintain insurance
on behalf of any person who is or was a director or officer.
8. AMENDMENTS
Subject at all times to the express provisions of Section 5 on the
Assessment of Shares, this corporation reserves the right to amend, alter,
change, or repeal any provision contained in these Articles of Incorporation or
its By-Laws, in the manner now or hereafter prescribed by statute or the
Articles of Incorporation or said By-Laws, and all rights conferred upon
shareholders are granted subject to this reservation.
9. POWER OF DIRECTORS
In furtherance, and not in limitation of those powers conferred by statute, the
Board of Directors is expressly authorized:
(a) Subject to the By-Laws, if any, adopted by the shareholders, to make, alter
or repeal the By-Laws of the corporation;
<PAGE> 3
(b) To authorize and caused to be executed mortgages and liens, with or
without limitations as to amount, upon the real and personal property of the
corporation;
(c) To authorize the guaranty by the corporation of the securities,
evidences of indebtedness and obligations of other persons, corporations or
business entities;
(d) To set apart out of any funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve;
(e) By resolution adopted by the majority of the whole board, to designate
one or more committees to consist of one or more directors of the of the
corporation, which, to the extent provided on the resolution or in the By-Laws
of the corporation, shall have and may exercise the powers of the Board of
Directors in the management of the affairs of the corporation, any may authorize
the seal of the corporation to be affixed to all papers which may require it.
Such committee or committees shall have name and names as may be stated in the
By-Laws of the corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
All the corporate powers of the corporation shall be exercised by the Board
of Directors except as otherwise herein or in the By-Laws or by law.
IN WITNESS WHEREOF, I hereunder set my hand on Thursday, May 20, 1999,
hereby declaring and certifying that the facts stated hereinabove are true.
SIGNATURE OF INCORPORATOR
Name: Thomas C. Cook Esq.
Address: 3110 S. Valley View, Suite 105
Las Vegas, Nevada 89102
SIGNATURE: /S/ THOMAS C. COOK ESQ.
STATE OF NEVADA )
COUNTY OF CLARK )
This instrument was acknowledged before me on
May 20, 1999, by Thomas C. Cook.
/S/ MATTHEW J. BLEVINS
Notary Public Signature
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT AS RESIDENT AGENT: I, Ted D. Campbell
II, as a principal of Nevada Internet Corporation Enterprises, Inc.'' (NICE),
hereby accept appointment of NICE as the resident agent for the above referenced
company.
SIGNATURE: /S/ ANTHONY M. MELLO III
<PAGE> 4
SECRETARY OF STATE
[SEAL OF THE STATE OF NEVADA]
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that SENSUS CAPITAL CORP. did on MAY 21, 1999, file in this
office the original Articles of Incorporation; that said Articles are now on
file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great Seal of
State, at my office, in Las Vegas,
Nevada, on MAY 21, 1999.
/s/ DEAN HELLER
Secretary of State
[SEAL OF THE STATE OF NEVADA]
By [SIGNATURE ILLEGIBLE]
Certification Clerk
<PAGE> 1
Exhibit 3.1(b)
Articles of Incorporation
For
830245 ALBERTA LTD.
CLASSES OF SHARES: SEE ATTACHED SCHEDULE "A"
NUMBER OF DIRECTORS:
MAXIMUM NUMBER OF DIRECTORS: 9
MINIMUM NUMBER OF DIRECTORS: 1
RESTRICTIONS ON BUSINESS TO: NONE
RESTRICTIONS ON BUSINESS FROM: NONE
RESTRICTIONS ON SHARE TRANSFERS: SEE ATTACHED SCHEDULE "B"
OTHER RULES OR PROVISIONS: SEE ATTACHED SCHEDULE "C"
REGISTRATION AUTHORIZED BY: JOHN S. HUCKELL
AGENT OF CORPORATION
<PAGE> 2
SCHEDULE A TO THE ARTICLES OF INCORPORATION SHARE STRUCTURE SECTION
1 CLASSES
The Corporation is authorized to issue an unlimited number of each of the
following classes of shares: (a) Class "A" Common - One (1) class of voting
shares to be designated as Class "A" Common shares;
(b) Class "B" Common - One (1) class of non-voting shares to be designated as
Class "B" Common shares;
(c) Class "C" Preferred - One (1) class of shares issuable in series, to be
designated as Class "C" Preferred shares, with the rights, privileges,
restrictions and conditions attaching to each series, to be determined by the
Board of Directors before the issuance of the first shares in each series of
shares in such class, subject to the limitations contained in the Act and these
articles.
SECTION 2 - INTERPRETATION In these Articles;
(a) "Act" means the Business Corporations Act of Alberta, as amended
from time to time, or any legislation substituted therefore;
(b) "common shares" means the shares of the Corporation of classes that
have a designation that includes the word "Common";
(c) "preferred shares" means the shares of the Corporation of classes
that have a designation that includes the word "Preferred";
(d) "redeemable share" has the meaning set forth in the Act although,
for the purposes of interpretation in the event that the word "retract"
or any derivation of that word is ever used in relation to shares, a
"retractable share" means a share issued by the Corporation that the
Corporation, by these Articles, is required to purchase or redeem on
the demand of a shareholder, and to "retract" means to so demand.
(e) words and expressions defined in the Act have the same meaning when
used in these Articles unless inconsistent with that meaning in the
context of these Articles.
SECTION 3 - CLASS RIGHTS, PRIVILEGES, RESTRICTIONS & CONDITIONS
3. The rights, privileges, restrictions and conditions attaching to the shares
of the Corporation are as follows:
<PAGE> 3
3.1 COMMON SHARES
3.1.1 The holders of Class "A" Common shares shall be entitled to vote
in person or by proxy at any meeting of the shareholders of the
Corporation or otherwise.
3.1.2 Except as is otherwise specifically provided in the Act, the
holders of Class "B" Common shares shall not be entitled to attend or
vote in person or by proxy at any meeting of the shareholders of the
Corporation or otherwise.
3.1.3 At the discretion of the directors of the Corporation, dividends
may be declared and paid from time to time out of the monies of the
Corporation properly applicable to the payment of dividends on the
issued and outstanding shares of any one or more classes of common
shares without declaring a ratably equal dividend or dividends, or any
dividend at all, on the then issued and outstanding shares of any of
the other classes of common shares PROVIDED ALWAYS that this right
shall always be subject to the provisions of the Act and the rights
specifically granted in these Articles to the holders of preferred
shares.
3.1.4 Except to the extent otherwise specified, each common share of
the Corporation shall rank equally with each of the other common shares
of the Corporation regardless of class including, without limitation,
the right to receive the remaining property of the Corporation on the
dissolution or winding-up of the Corporation or other distribution of
the assets of the Corporation amongst its shareholders for the purpose
of winding-up its affairs.
3.2 CLASS C PREFERRED SHARES
3.2.1 Subject to the Act, the directors shall determine, prior to the
issuance of any shares of a series in the Class "C Preferred shares:
3.2.1.1 whether or not the holders of that series of shares shall be
entitled to receive a dividend, out of the monies of the Corporation
properly applicable to the payment of dividends; and if so, whether the
same will be fixed or discretionary, non-cumulative or cumulative, or
payable annually or on the basis of some other period of time, and the
directors shall specify the basis upon which the dividends may be
calculated, which may specify, without limitation, that the dividend
shall be payable annually, semi-annually or quarterly, and that the
dividend shall be determined on the basis of a percentage on the
Redemption Amount (as
<PAGE> 4
hereinafter defined). If the directors determine the holders of such
shares will be entitled to receive a non- cumulative dividend, and if,
within four months after the expiration of any fiscal year end of the
Corporation, the directors in their discretion shall not have declared
the stated non-cumulative dividend or any part of that dividend, then
the rights of the holders of that series of shares, to the dividend or
to any undeclared part thereof for that fiscal year shall be forever
extinguished
3.2.1.2 whether or not the shares of that series of shares are to be
redeemable or retractable, and if so, the Redemption Amount, payable in
lawful money of Canada, at which that series of shares shall be
redeemed or purchased (the "Redemption Amount");
3.2.1.3 Whether or not the shares of that series of shares shall
possess any rights to convert the same into shares of another class and
if so the conversion rights and the rate at which such conversion shall
take place;
3.2.1.4 whether or not the shares of that series of shares are to be
voting or non-voting and if voting, the number of votes per share and
if applicable, any limitations on such voting rights;
3.2.1.5 any other rights, privileges, restrictions and conditions
attaching to a series which are permitted to specified by the directors
under the Act.
3.2.2 Notwithstanding the above, no rights, privileges, restrictions or
conditions attached to a series of shares authorized to be issued
hereunder shall confer on shares of a series:
3.2.2.1 greater voting rights than are attached to shares of any other
series of Class "C" Preferred shares then outstanding;
3.2.2.2 a priority in respect of dividends or return of capital over
shares of any other series of Class "C" Preferred shares then
outstanding; provided however the limitation above does not apply to a
right or privilege exchange a share or shares for, or to convert a
share or shares into, a share or shares of another Class.
3.2.3 If the shares of any series are to be redeemable at the option of
the Corporation, the Corporation may, upon giving notice as provided in
section 3.2.5, redeem all or any one or more of the redeemable shares
held by any one or more shareholders on payment for each share to be
redeemed of the Redemption Amount, together with the amount of all
declared and unpaid
<PAGE> 5
dividends thereon (the amount so established being called in this
section 3.2 the "Redemption Price").
3.2.4 If the shares are to be retractable at the option of the holder,
the holder may require the Corporation to retract the Preferred shares
upon the written demand (the "demand") of the holder, which demand
shall contain the information required by section 3.2.5, following
which the Corporation shall, within ten (l0) days following receipt of
such demand, retract, in the manner provided for in section 3.2.5, all
of the outstanding Preferred shares included in the demand, for a sum
equal to the aggregate Redemption Price.
3.2.5 In the event that shares are being redeemed at the instance of
the Corporation:
3.2.5.1 then the Corporation shall, at least thirty (30) days before
the date specified for redemption or such lesser period of time as may
be unanimously agreed upon by the holders of all the shares that are
then being redeemed, mail to each person who at the date of mailing is
a registered holder of the shares to be redeemed a notice in writing of
the election of the Corporation to redeem such shares. Such notice
shall be mailed by single registered letter, postage prepaid, addressed
to each shareholder at that shareholder's address as it appears on the
books of the Corporation or, in the event of the address of any
shareholder not so appearing, then the last known address of the
shareholder PROVIDED HOWEVER that an accidental failure or omission to
give notice to one or more of the holders shall not affect the validity
of the redemption as to the other holders. A notice sent by the
corporation under Section 3.2.5.1, or a demand by a shareholder under
Section 3.2.4, shall set out the Redemption Price, the date on which
the redemption or retraction is to take place and, if only some of the
shares held by the shareholder in question are to be redeemed or
retracted, the number thereof to be redeemed or retracted.
3.2.5.3 on or after the date specified for redemption or retraction,
the Corporation shall pay or cause to be paid to or to the order of the
registered holders of the shares to be redeemed or retracted the
Redemption Price on presentation and surrender at the head office of
the Corporation of the certificates for the shares to be redeemed or
retracted. If only part of the shares represented by any certificate
are to be redeemed or retracted, a new certificate for the balance
shall be forthwith issued at the expense of the Corporation.
3.2.5.4 From and after the date specified in any notice or demand, the
shares called for redemption or retraction shall cease to be
<PAGE> 6
entitled to dividends not declared by that date and the holders shall
not be entitled to exercise any of their rights as shareholders in
respect of those shares. However, if the Redemption Price shall not be
paid upon the presentation of certificates in accordance with the
foregoing provisions, the rights of the holders of the shares not then
paid for shall remain unaffected, except that the dividends that the
holders are entitled to receive on those shares shall thereupon become
cumulative and, for the purpose of calculating the Redemption Price of
those shares, those accrued dividends shall be considered to have been
declared.
3.2.5.5 In the event that all of the certificates for the shares to be
redeemed or retracted are not presented and surrendered as required,
the Corporation shall have the right at any time after the date
specified for redemption or retraction in any notice or demand to
deposit to a special account in any chartered bank or trust company in
Canada named in the notice or demand, the Redemption Price of the
number of shares represented by certificates which have not at the date
of the deposit been surrendered by the holders in connection with the
redemption or retraction. The deposit shall be made in such a manner
that it will be paid without interest to or to the order of the
respective holders of the shares called for redemption or retraction
upon presentation and surrender to the bank or trust company of the
share certificate or certificates representing the same. Upon the
deposit being made, or upon the date specified for the redemption or
retraction in the notice or demand, whichever is the latter, the shares
in respect whereof the deposit shall have been made shall be, and shall
be deemed to be, redeemed or retracted. The rights of the holder of the
shares after the deposit or the redemption or retraction date, as the
case may be, shall be limited to receiving without interest their
proportionate share of the total Redemption Price so deposited against
presentation and surrender of the certificates representing the shares
held by them respectively, and any interest allowed on any deposit
shall belong to the Corporation.
3.2.5.6 In the event that the shares are being redeemed or retracted
pursuant to a requirement that they be so retracted or redeemed at a
specified time or on the happening of a certain event, the provisions
of this section 3.2.6 shall apply as if the shares were being redeemed
at the instance of the Corporation unless the holder has accepted an
obligation to notify the Corporation, or on an objective basis the
event in question would be more within the knowledge or control of the
holder, in which case, for the purpose of this section 3.2, the
Corporation shall be considered to be
<PAGE> 7
required to retract the shares on the earlier of the notice by the
Corporation or the demand of the holder.
3.2.6 Subject to the Act, if only part of the outstanding redeemable
Class "C" Preferred shares are to be redeemed at the election of the
Corporation at any one time, the directors may in their absolute
discretion determine the shares so to be redeemed and the redemption
need not be pro-rata to the holding of any shareholder or on any other
fixed basis.
3.2.7 The Redemption Amount for a series of Class "C" Preferred shares
may be changed by the directors after issuance, as follows:
3.2.7.1 In the event that the shares were issued as partial or total
consideration for the purchase by the Corporation of any assets
including goodwill (hereafter called "the Purchased Assets") and it is
determined at any time to the satisfaction of the directors in
consultation with the auditors or accounting advisors of the
Corporation, as the case may be, and representatives of Revenue Canada
that the fair market value of the Purchased Assets at the date of
purchase by the Corporation is a greater or a lesser amount than the
Redemption Amount of the redeemable shares plus, if applicable, the
fair market value of any non-share consideration issued by the
Corporation in consideration for the Purchased Assets, then the
Redemption Amount shall be increased or decreased, as required, to
eliminate such difference. Any consequential overpayment by the
Corporation to the holders of the shares (whether by way of earlier
dividend, redemption, purchase or otherwise) shall be a debt due to the
Corporation by the holder of the shares and shall be repaid to the
Corporation forthwith. Any consequential underpayment by the
Corporation to the holders of the shares (whether by way of earlier
dividend, redemption, purchase or otherwise) shall be a debt due by the
Corporation to the holders of the shares and shall be paid forthwith to
the holders.
3.2.7.2 In all cases other than those covered by section 3.2.7.1 above,
by resolution of the directors, subject always to obtaining any
required consents and approvals.
3.2.8 In the event that the redemption or retraction of all those
outstanding Class "C" Preferred shares in respect of which the
Corporation has received or given notices or demands for redemption or
retraction would, at any given time, cause the Corporation to be in
contravention of the provisions of the Act, or any regulations or other
legislation promulgated thereunder or
<PAGE> 8
substituted therefore, the Corporation shall, at that time, redeem or
retract, on a pro-rata basis, disregarding fractions, only such number
of those shares as can be redeemed or retracted without causing a
contravention. Thereafter the Corporation shall, at such time or times
as the redemption or retraction can be made without causing the
Corporation to contravene the aforesaid statutory requirements, redeem
or retract the balance or a pro-rata portion of the outstanding shares
in respect of which the Corporation has received or given redemption or
retraction notices.
3.2.9 Notwithstanding anything to the contrary herein contained, and as
a further restriction to that contained in the Act, no dividends or
other payment or distribution shall be made to the holders of the
common shares or any shares of any other class of the capital stock of
the Corporation ranking junior to the Class "C" Preferred shares, if
the payment or distribution thereof would result in the fair market
value of the Corporation's assets, net of its liabilities, being less
than the aggregate of the Redemption Price of all Class "C" Preferred
shares then outstanding.
3.2.10 In the event of the liquidation, dissolution, or winding-up of
the Corporation, or other distribution of the assets of the Corporation
amongst its shareholders for the purpose of the winding-up of its
affairs, the holder of each Class "C" Preferred share shall be entitled
to receive the Redemption Price thereof in priority to any distribution
whatsoever to the holders of common shares or the holders of any other
class of the capital stock of the Corporation ranking junior to the
Class "C" Preferred shares. After payment of the fore- going amounts to
the holder of each such Class "C" Preferred share, that holder shall
not, as a holder of Class "C" Preferred shares, be entitled to share in
any further distribution of the property or assets of the Corporation.
<PAGE> 9
SCHEDULE B RESTRICTIONS ON SHARE TRANSFERS
The right of shareholders to transfer or dispose of their shares shall be
subject to the following restrictions: (i) a share or shares may be transferred
by a shareholder or by any other person entitled to transfer the same if such
transfer is first approved by the Corporation's Board of Directors.
<PAGE> 10
SCHEDULE C OTHER PROVISIONS
1. PRIVATE CORPORATION
It is intended that the Corporation, to the extent permitted by law, not be
required to comply with the Securities Act of Alberta or any legislation
substituted therefore. Accordingly, the restrictions required by that
legislation or any substitution thereof in the nature of limiting the issuance
of the Corporations securities, as is currently set forth in the definition of
"private company" therein, are incorporated as restrictions on the Corporation.
At the date these Articles are signed, such restrictions are, in addition to
there being restrictions on the right to transfer the Corporation's shares as
set forth or referred to in Schedule B to these Articles:
(a) The number of the Corporation's shareholders, exclusive of
(i) persons who are in the Corporation's employment or that of an
affiliate, and
(ii) persons who, having being formerly in the Corporation's employment or
that of an affiliate, were, while in that employment, shareholders of
the Corporation and have continued to be shareholders of that
Corporation after termination of that employment,
is limited to not more than 50 persons, 2 or more persons who are the joint
registered owners of 1 or more shares being counted as 1 shareholder.
Any invitation to the public to subscribe for the securities of the Corporation
is prohibited.
2. DIRECTORS
The precise number of directors of the Corporation within the minimum and
maximum number of directors provided for in the Articles of the Corporation
shall be determined from time to time by resolution of the Board of Directors.
The directors may, between annual general meetings, resolve to appoint l or more
additional directors to the Board of Directors to serve until the next annual
general meeting provided that the number of additional directors does not exceed
l/3 of the number of directors who held office at the expiration of the last
annual general meeting of the Corporation.
<PAGE> 11
3. LIENS ON SHARES
The Corporation shall have a first and paramount lien or charge on all the
shares registered in the name of a shareholder, whether solely or jointly with
others, for all their debts, liabilities and engagements to the Corporation,
whether solely or jointly with another person, whether a shareholder of the
Corporation or not, whether incurred or entered into before or after notice to
the Corporation of any equitable or other interest in any person other than a
shareholder and whether the period for the payment, discharge or fulfilment of
such debt, liability or engagement has actually arrived or not. Such lien shall
extend to all dividends or bonuses from time to time declared in respect of such
shares.
<PAGE> 12
CORPORATE ACCESS NUMBER: 208302455
ALBERTA
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
INCORPORATION
830245 ALBERTA LTD.
WAS INCORPORATED IN ALBERTA ON 1999/05/10.
[SEAL OF THE REGISTRAR
OF CORPORATIONS]
<PAGE> 1
Exhibit 3.2(a)
BY-LAWS
OF
SENSUS CAPITAL CORP.
A NEVADA CORPORATION
ARTICLE ONE
OFFICES
Section 1.1 Registered Office - The registered office of this corporation
shall be in the County of ____________________________ , State of Nevada.
Section 1.2 Other Offices - The corporation may also have offices at such
other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE TWO
MEETINGS OF STOCKHOLDERS
Section 2.1 Place - All annual meetings of the stockholders shall be held
at registered office of the corporation or at such other place within or without
the State of Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
Section 2.2 Annual Meetings - Annual meetings of the stockholders,
commencing with the year ____________________, shall be held on the
______________ day of _____________________ each year if not legal holiday and,
if a legal holiday, then on the next secular day following, or at such other
time as may be set by the Board of Directors from time to time, at which the
stockholders shall elect by vote a Board of Directors and transact such other
business as may properly be brought before the meeting.
Section 2.3 Special Meetings - Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President or the Secretary by
resolution of the Board of Directors or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the purposed meeting.
Section 2.4 Notices of Meetings - Notices of meetings shall be in writing
and signed by the President or a Vice-President or the Secretary or an Assistant
Secretary or by such other person or persons as the directors shall designate.
Such notice shall state the purpose or purposes for which the meeting is called
and the time and the place, which may be within or without this State, where it
is to be held. A copy of such notice shall be either delivered personally to or
shall be mailed, postage prepaid, to each stockholder of record entitled to vote
at such meeting not less than ten nor more than sixty days before such meeting.
If mailed, it shall be directed to a stockholder at his address as it appears
upon the records of the corporation and upon such mailing of any such notice,
the service thereof shall be complete and the time of the notice shall being to
run from the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to any
<PAGE> 2
officer of a corporation or association or to any member of a partnership shall
constitute delivery of such notice to such notice of and prior to the holding of
the meeting it shall not be necessary to deliver or mail notice of the meeting
to the transferee.
Section 2.5. Purpose of Meetings - Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.6. Quorum - The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.7. Voting - When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall be sufficient to elect directors
or to decide any questions brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the Articles of
Incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 2.8. Share Voting - Each stockholder of record of the corporation
shall be entitled at each meeting of stockholders to one vote for each share of
stock standing in his name on the books of the corporation. Upon the demand of
any stockholder, the vote for directors and the vote upon any question before
the meeting shall be by ballot.
Section 2.9. Proxy - At the meeting of the stockholders any stockholder
may be presented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting when required
by the inspectors of election. All questions regarding the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the inspectors of election who shall be appointed by the Board of
Directors, or if not so appointed, then by the presiding officer of the meeting.
Section 2.10. Written Consent in Lieu of Meeting - Any action which may
be taken by the vote of the stockholders at a meeting may be taken without a
meeting if authorized by the written consent of stockholders holding at least a
majority of the voting power, unless the provisions of the statutes or of the
Articles of Incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of written consents
shall be required.
<PAGE> 3
ARTICLE THREE
DIRECTORS
Section 3.1. Powers - The business of the corporation shall be managed by
its Board of Directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
Section 3.2. Number of Directors - The number of directors which shall
constitute the whole board shall be one (1). The number of directors may from
time to time be increased or decreased to not less than one nor more than
fifteen by action of the Board of Directors. The directors shall be elected at
the annual meeting of the stockholders and except as provided in Section 2 of
this Article, each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 3.3. Vacancies - Vacancies in the Board of Directors including
those caused by an increase in the number of directors, may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the stockholders. The
holders of a two-thirds of the outstanding shares of stock entitled to vote may
at any time peremptorily terminate the term of office of all or any of the
directors by vote at a meeting called for such purpose or by a written statement
filed with the secretary or, in his absence, with any other officer. Such
removal shall be effective immediately, even if successors are not elected
simultaneously and vacancies on the Board of Directors resulting therefrom shall
be filled only by the stockholders.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the Board of Directors
accepts the resignation of a director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of his term of office.
<PAGE> 4
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1. Place - Regular meetings of the Board of Directors shall be
held at any place within or without the State which has been designated from
time to time by resolution of the Board or by written consent of all members of
the Board. In the absence of such designation regular meetings shall be held at
the registered office of the corporation. Special meetings of the Board may be
held either at a place so designated or at the registered office.
Section 4.2. First Meeting - The first meeting of each newly elected
Board of Directors shall be immediately following the adjournment of the meeting
of stockholders and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the meeting, provided
a quorum be present. In the event such meeting is not so held, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.
Section 4.3. Regular Meetings - Regular meetings of the Board of
Directors may be held without call or notice at such time and at such place as
shall from time to time be fixed and determined by the Board of Directors.
Section 4.4. Special Meetings - Special Meetings of the Board of
Directors may be called by the Chairman or the President or by any
Vice-President or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed or telegraphed, it shall be deposited in the United States mail
or delivered to the telegraph company at least forty-eight (48) hours prior to
the time of the holding of the meeting. In case such notice is delivered as
above provided, it shall be so delivered at least twenty-four (24) hours prior
to the time of holding of the meeting. Such mailing, telegraphing or delivery as
above provided shall be due, legal and personal notice to such director.
Section 4.5. Notice - Notice of the time and place of holding an
adjourned meeting need not be given to the absent directors if the time and
place be fixed at the meeting adjourned.
Section 4.6. Waiver - The transactions of any meeting of the Board of
Directors, however called and noticed or wherever held, shall be as valid as
though had a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 4.7. Quorum - A majority of the authorized number of directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors,
<PAGE> 5
unless a greater number is required by law or by the Articles of Incorporation.
Any action of a majority, although not at a regularly called meeting, and the
record thereof, if assented to in writing by all of the other members of the
Board shall be as valid and effective in all respects as if passed by the Board
in regular meeting.
Section 4.8. Adjournment - A quorum of the directors may adjourn any
directors meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
ARTICLE FIVE
COMMITTEES OF DIRECTORS
Section 5.1. Power to Designate - The Board of Directors may, by
resolution adopted by a majority of whole Board, designate one or more
committees of the Board of Directors, each committee to consist of one or more
of the directors of the corporation which, to the extent provided in the
resolution, shall have and may exercise the power of the Board of Directors in
the management of the business and affairs of the corporation and may have power
to authorize the seal of the corporation to be affixed to all papers which may
require it. Such committees shall have such name or names as may be determined
from time to time by the Board of Directors. The members of any such committee
present at any meeting and not disqualified from voting may, whether or not they
constitute a quorum, unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. At meetings of such committees, a majority of the members or alternate
members shall constitute a quorum for the transaction of business, and the act
of a majority of the members or alternate members at any meeting at which there
is a quorum shall be the act of the committee.
Section 5.2. Regular Minutes - The committees shall keep regular minutes
of their proceedings and report the same to the Board of Directors.
Section 5.3. Written Consent - Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed by all members
of the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
ARTICLE SIX
COMPENSATION OF DIRECTORS
Section 6.1. Compensation - The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
<PAGE> 6
ARTICLE SEVEN
NOTICES
Section 7.1. Notice - Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 7.2. Consent - Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by a writing on
the records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meetings
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from written
consent or to the consideration of which no objection for want of notice is made
at the time, and if any meeting be irregular for want of notice or of such
consent, provided a quorum was present at such a meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity of defect therein waived by a writing signed by all parties having
the right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 7.3. Waiver of Notice - Whenever any notice whatever is required to
be given under the provisions of the statutes, of the Articles of Incorporation
or of these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE EIGHT
OFFICERS
Section 8.1. Appointment of Officers - The officers of the corporation
shall be chosen by the Board of Directors and shall be President, a Secretary
and a Treasurer. Any person may hold two or more offices.
Section 8.2. Time of Appointment - The Board of Directors at its first
meeting after each annual meeting of stockholders shall choose a Chairman of the
Board who shall be a director, and shall choose a President, a Secretary and a
Treasurer, none of whom need be directors.
Section 8.3. Additional Officers - The Board of Directors may appoint a
Vice-Chairman of the Board, Vice-Presidents and one or more Assistant
Secretaries and Assistant Treasurers and such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
Section 8.4. Salaries - The salaries and compensation of all officers of
the corporation shall be fixed by the Board of Directors.
<PAGE> 7
Section 8.5. Vacancies - The officers of the corporation shall hold office
at the pleasure of the Board of Directors. Any officer elected or appointed by
the Board of Directors. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the Board of
Directors.
Section 8.6. Chairman of the Board - The Chairman of the Board shall
preside at meetings of the stockholders and the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.
Section 8.7. Vice-Chairman - The Vice-Chairman shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties as the
Board of Directors may from time to time prescribe.
Section 8.8. President - The President shall be the chief executive officer
of the corporation and shall have active management of the business of the
corporation. He shall execute on behalf of the corporation all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some other officer or
agent of the corporation.
Section 8.9. Vice-President - The Vice-President shall act under the
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more Executive Vice-Presidents or may otherwise specify the
order of seniority of the Vice-Presidents. The duties and powers of the
President shall descend to the Vice-Presidents in such specified order of
seniority.
Section 8.10. Secretary - The Secretary shall act under the direction of
the President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the President or the Board of
Directors.
Section 8.11. Assistant Secretaries - The Assistant Secretaries shall act
under the direction of the President. In order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall, in
the absence or disability of the Secretary, perform such other duties and
exercise the powers of the Secretary. They shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time prescribe.
Section 8.12. Treasurer - the Treasurer shall act under the direction of
the President. Subject to the direction of the President he shall have custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of directors so
<PAGE> 8
requires, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
Section 8.13. Surety - If required by the Board of Directors, he shall give
the corporation a bond in such sum surety or sureties as shall be satisfactory
to the Board of Directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
Section 8.14. Assistant Treasurer - The Assistant Treasurer in the order of
their seniority, unless otherwise determined by the President or the Board of
Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe.
ARTICLE NINE
CERTIFICATES OF STOCK
Section 9.1. Share Certificates - Every stockholder shall be entitled to
have a certificate signed by the President or a Vice-President and the Treasurer
or an Assistant Treasurer, or the Secretary of the corporation, certifying the
number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than once class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall be set forth
in full or summarized on the face or back of certificate which the corporation
shall issue to represent such stock.
Section 9.2. Transfer Agents - If a certificate is signed (a) by a transfer
agent other than the corporation or its employees or (b) by a registrar other
than the corporation or its employees, the signatures of the officers of the
corporation may be facsimiles. In case any officers who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, such certificate may be issued with
the same effect as though the person had not ceased to be such officer. The seal
of the corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 9.3. Lost or Stolen Certificates - The Board of directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost or destroyed upon the making of an affidavit or that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
<PAGE> 9
Section 9.4. Share Transfers - Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duly of the corporation, if it is satisfied that all
provisions of the laws and regulations applicable to the corporation regarding
transfer and ownership of shares have been complied with, to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 9.5. Voting Shareholder - The Board of Directors may fix in advance
a date not exceeding sixty (60) days nor less than ten (10) days preceding the
date of any meeting of stockholders, or the date for the payment of any
dividend, or date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining the consent of stockholders for any purpose, as a
record date for determination of the stockholders entitled to receive payment of
any such meeting, and any adjournment thereof, or entitled to receive payment of
any such dividend, or to give such consent, and in such case, such stockholders,
and only such stockholders as shall be stockholder of record on the date so
fixed, shall be entitled to notice of and to vote at such meeting, or any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
Section 9.6. Shareholders Record - The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as other wise provided by
the laws of Nevada.
ARTICLE TEN
GENERAL PROVISIONS
Section 10.1. Dividends - Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Section 10.2. Reserves - Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends or for repairing or maintaining any property of the corporation or for
such other purpose as the directors shall think conducive to the interest of
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 10.3. Checks - All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
<PAGE> 10
Section 10.4. Fiscal Year - The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Section 10.5. Corporate Seal - The corporation may or may not have a
corporate seal, as may from time to time be determined by resolution of the
Board of Directors. If a corporate seal is adopted, it shall have inscribed
thereon the name of the Corporation and the words "Corporate Seals" and
"Nevada". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE ELEVEN
INDEMNIFICATION
Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred in defending a
civil or criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
<PAGE> 11
ARTICLE TWELVE
AMENDMENTS
Section 12.1. By Shareholder - The Bylaws may be amended by a majority vote
of all the stock issued and outstanding and entitled to vote at any annual or
special meeting of the stockholders, provided notice of intention to amend shall
have been contained in the notice of the meeting.
Section 12.2. By Board of Directors - The Board of Directors by a majority
vote of the whole Board at any meeting may amend these Bylaws, including Bylaws
adopted by the stockholders, but the stockholders may from time to time specify
particular provisions of the Bylaws which shall not be amended by the Board of
Directors.
APPROVED AND ADOPTED this 25th day of May, 1999.
/s/ John M. Hall
-------------------------------
Secretary, John M. Hall
<PAGE> 12
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of Sensus Capital Corp.,
and that the foregoing Bylaws, consisting of 11 pages, constitute the code of
Bylaws of Sensus Capital Corp., as duly adopted at a regular meeting of the
Board of Directors of the corporation held May 25, 1999.
IN WITNESS WHEREOF, I have hereunto subscribed my name this
25th day of May, 1999.
/s/ John M. Hall
-----------------------------------
Secretary, John M. Hall
<PAGE> 1
1
Exhibit 3.2(b)
BY-LAW NO. 1
A BY-LAW RELATING GENERALLY TO THE TRANSACTION OF THE
BUSINESS AND AFFAIRS OF
830245 ALBERTA LTD.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SUBJECT PAGE
------- ----
<S> <C>
ARTICLE I - INTERPRETATION ......................................................1
1.01 - Definitions ..........................................1
ARTICLE II - EXECUTION OF INSTRUMENTS ............................................2
ARTICLE III - DIRECTORS ...........................................................2
3.01 - Election and Term ...................................2
3.02 - Removal of Directors..................................2
3.03 - Vacation of Office ...................................2
3.04 - Vacancies ............................................3
3.05 - Substitute Directors..................................3
3.06 - Additional Directors..................................3
ARTICLE IV - DIRECTORS MEETINGS AND RESOLUTIONS...................................3
4.01 - Actions by Directors..................................3
4.02 - Place of Meeting .....................................3
4.03 - Calling of Meetings...................................4
4.04 - Notice of Meeting ...................................4
4.05 - First Meeting of New Board............................4
4.06 - Adjourned Meeting ....................................4
4.07 - Regular Meetings .....................................4
4.08 - Chairman .............................................4
4.09 - Quorum ...............................................5
4.10 - Votes ................................................5
4.11 - Meetings by Telephone.................................5
ARTICLE V - COMMITTEES ..........................................................5
</TABLE>
<PAGE> 2
2
<TABLE>
<S> <C>
5.01 - Executive Committee...................................5
5.02 - Other Committees of Directors.........................6
5.03 - Procedure ............................................6
ARTICLE VI - OFFICERS ..............................................................6
6.01 - Appointment ..........................................6
6.02 - Chairman of the Board.................................6
6.03 - Vice Chairman of the Board............................6
6.04 - Managing Director ....................................7
6.05 - President ............................................7
6.06 - Vice President .......................................7
6.07 - Secretary ............................................7
6.08 - Treasurer ............................................7
6.09 - Powers and Duties of Other Officers...................8
6.10 - Term of Office .......................................8
ARTICLE VII - PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 - Conflict of Interest..................................8
TABLE OF CONTENTS (Cont'd)
-----------------
SUBJECT PAGE
------- ----
7.02 - Limitation of Liability ..............................8
7.03 - Indemnity ............................................9
7.04 - Insurance ............................................9
ARTICLE VIII - SHAREHOLDERS-MEETINGS..................................................10
8.01 - Annual Meetings.......................................10
8.02 - Special Meetings......................................10
8.03 - Place of Meetings.....................................10
8.04 - Notice of Meetings....................................10
8.05 - Chairman, Secretary and Scrutineers...................10
8.06 - Persons Entitled to be Present........................11
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C>
8.07 - Quorum ...............................................11
8.08 - Proxies ..............................................11
8.09 - Voting ...............................................11
8.10 - Joint Shareholders....................................12
8.11 - Show of Hands.........................................12
8.12 - Ballots ..............................................12
8.13 - Adjournment...........................................12
8.14 - Resolution in Lieu of a Meeting.......................13
8.15 - Participation in Meeting by Telephone ................13
ARTICLE IX - SHARES ................................................................13
9.01 - Maintenance of Register...............................13
9.02 - Share Certificates....................................13
9.03 - Replacement of Share Certificates.....................13
9.04 - Non-Recognition of Trusts.............................14
9.05 - Joint Shareholders....................................14
9.06 - Deceased Shareholders.................................14
9.07 - Lien For Indebtedness.................................14
ARTICLE X - DIVIDENDS .............................................................14
10.01 - Dividend Cheques.....................................14
10.02 - Non-Receipt of Cheques...............................15
10.03 - Unclaimed Dividends..................................15
ARTICLE XI - NOTICES ...............................................................15
11.01 - Manner of Giving Notice..............................15
11.02 - Notice of Joint Shareholders.........................16
11.03 - Computation of Time..................................16
11.04 - Omissions and Errors.................................16
11.05 - Persons Entitled by Death or
Operation of Law.....................................16
11.06 - Waiver of Notice.....................................16
ARTICLE XII - EFFECTIVE DATE ........................................................17
12.01 - Effective Date ......................................17
</TABLE>
<PAGE> 4
1
ARTICLE I
INTERPRETATION
1.01 DEFINITIONS. In this By-law No. 1 and all other By-laws of the
Corporation, unless otherwise specified, or unless the context otherwise
requires:
(a) "Act" means the Business Corporations Act, Chapter B-l5, S.A.
l98l, or any statute that may be substituted therefor, as from
time to time amended;
(b) "appoint" includes "elect" and vice versa;
(c) "Articles" means the Articles of Incorporation or the Articles
of Continuance of the Corporation, as the case may be, as from
time to time amended or restated;
(d) "board"means the board of directors of the Corporation;
(e) "By-laws" means this By-law No. l and all other By-laws of the
Corporation from time to time in effect;
(f) "Corporation" means 830245 ALBERTA LTD.;
(g) "meeting of shareholders" includes an annual meeting of
shareholders and a special meeting of shareholders; "special
meeting of shareholders" includes a meeting of any class or
classes of shareholders and a special meeting of all
shareholders entitled to vote at an annual meeting of
shareholders;
(h) "recorded address" means, in the case of a shareholder, his
address as recorded in the securities register; in the case of
joint shareholders, the address appearing in the securities
register in respect of such joint holding or the first address
so appearing if there is more than one; and in the case of a
director, officer, auditors or member of a committee of the
board, his latest address as recorded in the records of the
Corporation;
(i) "signing officer" means, in relation to any instrument, any
person authorized to sign or certify the same on behalf of the
Corporation by Section 2.01 of this
<PAGE> 5
2
By-law No. 1 or by a resolution passed pursuant thereto;
Save as aforesaid, words and expressions defined in the Act have the same
meaning when used in the By-Laws; and words importing gender include the
masculine, feminine and neuter genders; and words importing persons include
individuals, bodies corporate, partnerships, trusts and unincorporated
organizations.
ARTICLE II
EXECUTION OF INSTRUMENTS
2.01 EXECUTION OF INSTRUMENTS. Deeds, transfers, assignments, contracts,
obligations, certificates and other documents requiring execution by the
Corporation may be signed by the Corporation by the hands of such person or
persons and in such manner as the Board may from time to time designate by
resolution.
ARTICLE III
DIRECTORS
3.01 ELECTION AND TERM. The election of directors shall take place at each
annual meeting of shareholders and all the directors then in office shall retire
but, if qualified, shall be eligible for re-election. The shareholders shall
elect directors to the Board in compliance with any residency requirements in
the Act and the number of directors to be elected at any such meeting shall be
the number of directors then in office or, subject to the Act, the number the
directors or the shareholders otherwise determine. The election shall be by
ordinary resolution. A director need not be a shareholder of the Corporation.
3.02 REMOVAL OF DIRECTORS. Subject to the Act, the shareholders may by ordinary
resolution passed at a meeting specially called for such purpose remove any
director from office and the vacancy created by the removal may be filled at the
same meeting, failing which it may be filled by the Board.
3.03 VACATION OF OFFICE. A director ceases to hold office when:
(a) he dies;
(b) he is removed from office by the shareholders;
(c) he ceases to be qualified for election as a director; or
<PAGE> 6
3
(d) his written resignation is sent or delivered to the
Corporation, or, if a time is specified in such resignation,
at the time so specified, whichever is later.
3.04 VACANCIES. Subject to the Act, a quorum of the Board may fill a vacancy in
the Board.
3.05 SUBSTITUTE DIRECTORS. A director being absent either temporarily or
permanently from the Province of Alberta may, if consented to by a majority of
the other directors, appoint and authorize in writing, for a period not
exceeding one (1) year from the date of such appointment, any person to attend
and vote as fully and effectively as if such director were personally present at
any meeting of the directors of the Corporation, and to accept any notice of
such meeting. A person so appointed shall be known as and referred to as a
"substitute director". For the purpose of computing a quorum of the Board for
any meeting, a substitute director attending thereat shall be deemed to be a
director. The appointment of a substitute director shall be executed by the
director making the appointment. Such appointment may be revoked at any time
upon written notice to the Corporation.
3.06 ADDITIONAL DIRECTORS. If the Articles so provide, the Board may, between
annual meetings, appoint one or more additional directors of the Corporation to
serve until the next annual meeting, but the number of additional directors
shall not at any time exceed l/3 of the number of directors who held office at
the expiration of the last annual meeting of the Corporation.
ARTICLE IV
DIRECTORS MEETINGS AND RESOLUTIONS
4.01 ACTIONS BY DIRECTORS. The Board shall manage the business and affairs of
the Corporation. Subject to the restrictions contained in the Act, the powers of
the Board and, if applicable, a committee of the Board, may be exercised by
resolution passed at a meeting at which a quorum is present or by resolution in
writing signed by all the directors entitled to vote on that resolution at a
meeting of the Board or, if applicable, a committee of the Board.
4.02 PLACE OF MEETING. Meetings of the Board may be held within
or outside Alberta.
<PAGE> 7
4
4.03 CALLING OF MEETINGS. Meetings of the Board shall be held at such time and
place as the Chairman of the Board, the Vice-Chairman of the Board, the Managing
Director, the President or any two (2) directors may determine.
4.04 NOTICE OF MEETING. Notice of the time and place of each meeting of the
Board shall be given in the manner provided in Section 11.01 to each director
not less than forty-eight (48) hours before the time when the meeting is to be
held. A notice of a meeting of the Board shall specify such matters to be dealt
with at the meeting as are required by the Act to be specified therein but need
not otherwise specify the purpose of or the business to be transacted at the
meeting. A director may in any manner and at any time waive notice of or
otherwise consent to a meeting of the Board.
4.05 FIRST MEETING OF NEW BOARD. Provided a quorum is present, a newly elected
Board may, without notice, hold their first meeting immediately following the
meeting of shareholders at which that Board is elected.
4.06 ADJOURNED MEETING. Notice of an adjourned meeting of the Board is not
required if a quorum was present at the original meeting and the time and place
of the adjourned meeting is announced at the original meeting. Where a meeting
is adjourned because a quorum is not present, a quorum will be deemed to be
present at the adjourned meeting if notice of the time and place of the
adjourned meeting, as well as notice that it is a meeting adjourned due to the
lack of a quorum at the original meeting, is given to those entitled to notice
of the originally scheduled meeting.
4.07 REGULAR MEETINGS. The Board may appoint a day or days in any month or
months for regular meetings of the Board at a place and hour to be named. A copy
of any resolution of the Board fixing the place and time of such regular
meetings shall be sent to each director forthwith after being passed, and
forthwith to each director subsequently elected or appointed, but no other
notice shall be required for any such regular meeting except where the Act or
the By-laws require that the purpose thereof or the business to be transacted
thereat be specified.
4.08 CHAIRMAN. The chairman of any meeting of the Board shall be the first
mentioned of such of the following officers as have been appointed and who is a
director and is present at the meeting: Chairman of the Board, Vice Chairman of
the Board, Managing Director or President. If no such officer is present, the
directors present shall choose one of their number to be chairman.
<PAGE> 8
5
4.09 QUORUM. Subject always to any provisions to the contrary in the Articles or
the Bylaws and to the requirements of the Act; the quorum for the transaction of
business at any meeting of the Board shall consist of the greater of the minimum
number of directors specified in the Articles or a majority of the directors;
Provided that the Board may from time to time increase such quorum for a limited
time or purpose. Notwithstanding any vacancy among the directors, a quorum of
the Board may exercise all the powers of the Board.
4.10 VOTES. At all meetings of the Board every question shall be decided by a
majority of the votes cast on the question. The chairman of the meeting, who
shall have an original vote, shall not have a second or casting vote.
4.11 MEETINGS BY TELEPHONE. A director may participate in a meeting of the Board
or, if applicable, a committee of the Board, by means of such telephone or other
communication facilities as permit all persons participating in the meeting to
hear each other.
ARTICLE V
COMMITTEES
5.01 EXECUTIVE COMMITTEE. Subject to any residency requirements contained in the
Act, the Board may appoint an executive committee consisting of three (3)
directors, or such larger number of directors as the Board may from time to time
determine, to hold office until their successors are appointed. During the
intervals between meetings of the Board, the executive committee shall possess
and may exercise (subject to any restrictions contained in the Act or imposed
from time to time by the Board) all of the powers of the Board to manage the
business and affairs of the Corporation in such manner as the executive
committee shall deem to be in the best interests of the Corporation. All
proceedings of the executive committee shall be open to examination by the
Board, or any of the directors, and shall be reported to the Board if and when
the Board so directs. The Board may from time to time remove any member from the
executive committee and may also from time to time fill any vacancy which may
occur in the membership thereof.
<PAGE> 9
6
5.02 OTHER COMMITTEES OF DIRECTORS. The Board may appoint one or more other
committees of directors, however designated, and delegate to such committees any
of the powers of the Board except those which, under the Act, a committee of
directors has no authority to exercise.
5.03 PROCEDURE. Unless otherwise determined in the By-laws or by the Board, each
committee shall have the power to fix its quorum at not less than a majority of
its members, and also to elect its chairman and to regulate its procedure.
ARTICLE VI
OFFICERS
6.01 APPOINTMENT. The Board may from time to time appoint a Chairman of the
Board, a Vice Chairman of the Board, a Managing Director, a President, one (1)
or more Vice Presidents (to which title may be added words indicating seniority
or function), a Secretary, a Treasurer and such other officers as the Board may
determine, including one (1) or more assistants to any of the officers so
appointed. The Board may specify the duties of and, in accordance with this
By-law No. 1 and subject to the provisions of the Act, delegate to such officers
powers to manage the business and affairs of the Corporation. Unless otherwise
specifically provided for herein, an officer may but need not be a director and
two (2) or more offices may be held by the same person.
6.02 CHAIRMAN OF THE BOARD. The Chairman of the Board shall be a director, and
shall, when present, preside at all meetings of the Board, and of the
shareholders. In addition the Board may assign to him any of the powers and
duties that are by the By-laws assigned to the Managing Director or to the
President; and he shall have such other powers and duties as the Board may
specify.
6.03 VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board shall be a
director and, during the absence or disability of the Chairman of the Board, the
Vice Chairman of the Board shall perform the duties and exercise the powers of
the Chairman of the Board; and he shall have such other powers and duties as the
Board may specify.
<PAGE> 10
7
6.04 MANAGING DIRECTOR. The Managing Director shall be a resident Canadian and a
director. If appointed, he shall be the chief executive officer of the
Corporation and shall (subject to the authority of the Board or any restrictions
contained in the Act) have full power to manage and direct the business and
affairs of the Corporation; and he shall have such other powers and duties as
the Board may specify. During the absence or disability of the President, or if
no President has been appointed, the Managing Director shall also have the
powers and duties of that office.
6.05 PRESIDENT. The President shall (subject to the authority of the Board and
the Managing Director, if any) have full power to manage and direct the business
and affairs of the Corporation; and he shall have such other powers and duties
as the Board may prescribe or the Managing Director, within his powers, may
delegate. During the absence or disability of the Managing Director, or if no
Managing Director has been appointed, the President shall also have the powers
and duties of that office.
6.06 VICE PRESIDENT. During the absence or disability of the President, if a
Managing Director has not been appointed or is absent or disabled, the
President's duties shall be performed and his powers exercised by the Vice
President or, if there are more than one, by the Vice President designated from
time to time by the Board. A Vice President shall have such other powers and
duties as the Board may prescribe or the President, within his powers, may
delegate.
6.07 SECRETARY. The Secretary, as and when requested to do so, shall attend and
be the secretary of all meetings of the Board, shareholders and committees of
the Board, and shall enter or cause to be entered in records kept for that
purpose minutes of all proceedings thereat. He shall give or cause to be given,
as and when instructed, all notices to shareholders, directors, officers,
auditors and members of committees of the Board. He shall be the official
custodian of the stamp or mechanical device generally used for affixing the
corporate seal of the Corporation, if any, and of all books, papers, records,
documents and instruments belonging to the Corporation, except when some other
officer or agent has been appointed for that purpose. The Secretary shall also
have such other powers and duties as the Board may prescribe or the Managing
Director, within his powers, may delegate.
6.08 TREASURER. The Treasurer shall keep proper accounting records in compliance
with the Act and shall be responsible for the deposit of monies, the safekeeping
of securities and the disbursements of the funds of the Corporation. He shall
render to the Board whenever required an account of all his transactions as
Treasurer. The Treasurer shall also have such other powers and duties as the
Board may prescribe or the Managing Director, within his powers, may delegate.
<PAGE> 11
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6.09 POWERS AND DUTIES OF OTHER OFFICERS. The powers and duties of all other
officers shall be such as the terms of their engagement call for or as the Board
may prescribe or the Managing Director, within his powers, may delegate. Any of
the powers and duties of an officer to whom an assistant has been appointed may
be exercised and performed by such an assistant, unless the Board or the
Managing Director otherwise directs.
6.10 TERM OF OFFICE. The Board, in its discretion, may remove any officer of the
Corporation. Otherwise each officer appointed by the Board shall hold office
until his successor is appointed, or until his earlier resignation.
ARTICLE VII
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 CONFLICT OF INTEREST. A director or officer shall not be required to vacate
his office by reason only that he is a party to, or is a director or officer or
has a material interest in any person who is a party to a material contract or
proposed material contract with the Corporation or a subsidiary thereof. Such a
director or officer shall, however, disclose the nature and extent of his
interest in the contract at the time and in the manner provided by the Act.
Subject to the provisions of the Act, a director shall not by reason only of his
office be accountable to the Corporation or to its shareholders for any profit
or gain realized from such a contract or transaction, and such contract or
transaction shall not be void or voidable by reason only of the director's
interest therein, provided that the required declaration and disclosure of
interest is properly made, the contract or transaction is approved by the Board
or the shareholders, and it is fair and reasonable to the Corporation at the
time it was approved and, if required by the Act, the director refrains from
voting as a director on the contract or transaction and absents himself from the
director's meeting at which the contract is authorized or approved by the
directors, except attendance for the purpose of being counted in the quorum.
7.02 LIMITATION OF LIABILITY. No director or officer shall be liable for the
acts, receipts, neglects or defaults of any other director, officer or employee,
or for joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Corporation through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Corporation, or for the insufficiency or deficiency of any security in or upon
which any of the monies of the corporation shall be invested, or for any loss or
damage arising from the bankruptcy, insolvency or tortious acts of any person
with whom any of the monies, securities or effects of the Corporation shall be
deposited, or for any loss occasioned by any error of judgment or oversight on
his part or for any other loss, damage or misfortune whatever which shall happen
in the execution
<PAGE> 12
9
of the duties of his office or in relation thereto, unless the same are
occasioned by his own wilful neglect or default; provided that nothing herein
shall relieve any director or officer from the duty to act in accordance with
the Act and the regulations thereunder or from liability for any breach thereof.
7.03 INDEMNITY. Subject to the Act, the Corporation shall indemnify a director
or officer, a former director or officer, or a person who acts or acted at the
Corporation's request as a director or officer of a body corporate of which the
Corporation is or was a shareholder or creditor, and his heirs, executors,
administrators and other legal representatives, from and against:
(a) any liability and all costs, charges and expenses that he
sustains or incurs in respect of any action, suits or
proceeding that is proposed or commenced against him for or in
respect of anything done or permitted by him in respect of the
execution of the duties of his office, and,
(b) all other costs, charges and expenses that he sustains or
incurs in respect of the affairs of the Corporation,
except where such liability related to his failure to act honestly and in good
faith with a view to the best interests of the Corporation; and, in the case of
a criminal or administrative action or proceeding that is enforced by a monetary
penalty, he had reasonable grounds for believing that his conduct was lawful.
7.04 INSURANCE. Subject to the Act, the Corporation may purchase and maintain
insurance for the benefit of any person referred to in the preceding section
against any liability incurred by him in his capacity as a director or officer
of the Corporation or of any body corporate where he acts or acted in that
capacity at the Corporation's request.
<PAGE> 13
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ARTICLE VIII
SHAREHOLDERS-MEETINGS
8.01 ANNUAL MEETINGS. The annual meeting of shareholders shall be held at such
time in each year as the Board may from time to time determine for the purpose
of considering the financial statements and reports required by the Act to be
placed before the annual meeting, electing directors and appointing auditors (if
required by the Act or the Articles) and for the transaction of such other
business as may properly be brought before the meeting.
8.02 SPECIAL MEETINGS. The Board may call a special meeting of shareholders at
any time.
8.03 PLACE OF MEETINGS. Meetings of shareholders shall be held at the registered
office or any place within Alberta if the Board by resolution determines such
place or, if all the shareholders entitled to vote at the meeting so agree,
outside Alberta.
8.04 NOTICE OF MEETINGS. Notice of the time and place of each meeting of
shareholders shall be given, in the manner provided in Section 11.01 not less
than twenty-one (21) or more than fifty (50) days before the date on which the
meeting is to be held, to each director, to the auditors if any and if required,
and to each shareholder entitled to receive notice of the meeting. Notice of a
meeting of shareholders called for any purpose other than consideration of the
financial statements and auditors' reports, if any, election of directors and
re-appointment of the incumbent auditors at an Annual Meeting shall state the
nature of such business in sufficient detail to permit the shareholder to form a
reasoned judgment thereon and shall state the text of any special resolution to
be submitted to the meeting.
8.05 CHAIRMAN, SECRETARY AND SCRUTINEERS. The chairman of any meeting of
shareholders shall be the first mentioned of such of the following persons who
are present at the meeting: Chairman of the Board, Vice Chairman of the Board,
Managing Director, President or a Vice President who is a shareholder. If no
such person is present within fifteen (15) minutes from the time fixed for
holding the meeting, the persons present and entitled to vote shall choose one
(1) of their number to be chairman of the meeting. If the Secretary of the
Corporation is absent, the chairman of the meeting shall appoint some person,
who need not be a shareholder, to act as secretary of the meeting. One (1) or
more scrutineers, who need not be shareholders, may be appointed by ordinary
resolution of the shareholders or by the chairman of the meeting with the
consent of the meeting.
<PAGE> 14
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8.06 PERSONS ENTITLED TO BE PRESENT. The only persons entitled to be present at
a meeting of shareholders shall be those entitled to vote thereat, the directors
and auditors (if any) of the Corporation and others who, although not entitled
to vote, are entitled or required under the provisions of the Act, the Articles
or the By-laws to be present at the meeting. Any other person may be admitted
only on the invitation of the chairman of the meeting or with the consent of the
meeting.
8.07 QUORUM. A quorum for the transaction of business at any meeting of the
shareholders shall be:
(a) where the Corporation has only one (1) shareholder, or one (1)
shareholder holds a majority of the shares entitled to vote at
the meeting, that shareholder, in person or represented by
proxy;
(b) in all other cases two (2) shareholders personally present and
owning or representing by proxy at least twenty-five (25%) per
cent of the shares entitled to vote at the meeting;
If a quorum is not present at the opening of a meeting of shareholders, the
shareholders present or represented by proxy may adjourn the meeting to a fixed
time and place but may not transact any other business.
8.08 PROXIES. Every shareholder entitled to vote at a meeting of shareholders
may by means of a proxy appoint a proxyholder, or one or more alternate
proxyholders, who need not be a shareholder or shareholders to attend and act at
the meeting in the manner and to the extent authorized and with the authority
conferred by the proxy. A proxy shall be in writing executed by the shareholder
or his attorney authorized in writing and shall conform with the requirements of
the Act. A proxy is valid only at the meeting in respect of which it is given or
at any adjournment thereof and may be revoked in accordance with the provisions
of the Act.
8.09 VOTING. At any meeting of shareholders every question shall, unless
otherwise required by the Act, Articles or Bylaws, be determined by the majority
of the votes cast on the question. The chairman of the meeting, who shall have
an original vote, shall not have a second or casting vote.
<PAGE> 15
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8.10 JOINT SHAREHOLDERS. If two or more persons hold a share jointly, any one of
them present in person or duly represented at a meeting of shareholders may, in
the absence of the other or others, vote that share; but if two or more of those
persons are present in person or represented and vote, they shall vote as one
the share jointly held by them.
8.11 SHOW OF HANDS. Subject to the Act, any question at a meeting of
shareholders shall be decided by a show of hands unless a ballot thereon is
required or demanded as hereafter provided. Upon a show of hands every person
who is present and entitled to vote shall have one (1) vote. Whenever a vote by
show of hands shall have been taken upon a question, unless a ballot thereon is
so required or demanded, a declaration by the chairman of the meeting that the
vote upon the question has been carried or carried by a particular majority or
not carried, if such declaration is evidenced by an entry to that effect in the
minutes of the meeting, shall be prima facie evidence of the disposition of that
question without proof of the number of votes recorded in favour of or against
any resolution or other proceeding in respect of the said question.
8.12 BALLOTS. On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon, any
shareholder or proxyholder entitled to vote at the meeting may require or demand
a ballot. If a ballot is demanded on the election of a chairman of the meeting
or on the question of adjournment it shall be taken forthwith without an
adjournment. A ballot required or demanded on any other question shall be taken
in such manner as the chairman of the meeting shall direct. A requirement or
demand for a ballot may be withdrawn at any time prior to the taking of the
ballot. If a ballot is taken each person present shall be entitled, in respect
of the shares which he is entitled to vote at the meeting upon the question, to
that number of votes provided by the Act or the Articles.
8.13 ADJOURNMENT. If a quorum is present at the opening of a meeting of the
shareholders and, if such meeting is adjourned for a specific period less than
thirty (30) days, it shall not be necessary to give notice of the adjourned
meeting other than by announcement at the earlier meeting that is adjourned, and
a quorum shall be deemed to be present at the adjourned meeting. Where a meeting
is adjourned because a quorum is not present a quorum shall be deemed to be
present at the adjourned meeting if not less than seven (7) days notice of the
time and place fixed for the adjourned meeting, as well as notice that it is a
meeting adjourned due to the lack of a quorum at the originally scheduled
meeting, is given to those entitled to notice of the originally scheduled
meeting.
<PAGE> 16
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8.14 RESOLUTION IN LIEU OF A MEETING. Notwithstanding anything contained in this
By-law No. 1, a resolution in writing signed by all the shareholders entitled to
vote on that resolution at a meeting of shareholders is as valid as if it had
been passed at a meeting of the shareholders.
8.15 PARTICIPATION IN MEETINGS BY TELEPHONE. A shareholder or any other person
entitled to attend a meeting of shareholders may participate in a meeting of the
shareholders by means of such telephone or other communication facilities as
permit all persons participating in the meeting to hear each other.
ARTICLE IX
SHARES
9.01 MAINTENANCE OF REGISTER. The Board may from time to time appoint an agent
to maintain the central securities register and branch securities registers, if
any. The Board may at any time terminate any such appointment.
9.02 SHARE CERTIFICATES. Share certificates and the form of stock transfer power
on the reverse side thereof shall (subject to the Act) be in such form as the
Board may by resolution approve and such certificates shall be signed manually
by the Chairman of the Board, or the President, or the Vice President, or the
Secretary, or by on behalf of a registrar, transfer agent or branch transfer
agent of the Corporation, if any. The corporate seal of the Corporation, if any,
need not be impressed upon a share certificate issued by the Corporation.
9.03 REPLACEMENT OF SHARE CERTIFICATES. The Board, or any officer or agent
designated by the Board for that purpose, may in their discretion, direct the
issue of a new share certificate in lieu of and upon cancellation of a share
certificate that has been mutilated or in substitution for a share certificate
claimed to have been lost, destroyed or wrongfully taken, on such terms as to
indemnity, reimbursement of expenses and evidence of loss and of title as the
Treasurer (or, in the absence of or failure to act by the Treasurer, the Board)
may from time to time prescribe, whether generally or in any particular case.
<PAGE> 17
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9.04 NON-RECOGNITION OF TRUSTS. Subject to the Act, the Corporation may treat
the registered holder of any share as the person exclusively entitled to vote,
to receive notices, to receive any dividend or other payments in respect of the
share, and otherwise to exercise all the rights and powers of an owner of the
share.
9.05 JOINT SHAREHOLDERS. If two or more persons are registered as joint holders
of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient to all of them. Any one of such persons may give
effectual receipts for the certificate issued in respect thereof or for any
dividend, bonus, return of capital or other money payable or warrant issuable in
respect of such share.
9.06 DECEASED SHAREHOLDERS. In the event of the death of a holder, or of one (1)
or more of the joint holders, of any share, the Corporation shall not be
required to make any entry in the securities register in respect thereof or to
make payment of any dividends thereon except upon production of all such
documents as may be required by the Act or otherwise by law and/or upon
compliance with the reasonable requirements of the Corporation and its transfer
agents.
9.07 LIEN FOR INDEBTEDNESS. If the Articles provide that the Corporation shall
have a lien on shares registered in the name of a shareholder indebted to the
Corporation, such lien may be enforced, subject to the Articles, by the sale of
the shares thereby affected or by any other action, suit, remedy or proceeding
authorized or permitted by law or by equity and, pending such enforcement, the
Corporation may refuse to register a transfer of the whole or any part of the
shares and withhold the payment of dividends on the shares.
ARTICLE X
DIVIDENDS
10.01 DIVIDEND CHEQUES. A dividend payable in cash shall be paid by cheque to
the order of each registered holder of shares of the class or series of which it
has been declared and mailed by pre-paid ordinary mail to such registered holder
at his recorded address, unless such holder otherwise directs. In the case of
joint holders the cheque shall, unless such joint holders otherwise direct, be
made payable to the order of all such joint holders and mailed to them at their
recorded address. The mailing of such cheque as aforesaid, unless the same is
not paid on due presentation, shall satisfy and discharge the liability for the
dividend to the extent of the sum represented thereby plus the amount of any tax
which the Corporation is required to and does withhold.
<PAGE> 18
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10.02 NON-RECEIPT OF CHEQUES. In the event of non-receipt of any dividend cheque
by the person to whom it is sent as aforesaid, the Corporation shall issue to
such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the Treasurer (or, in the absence of or failure to act by the Treasurer, the
Board) may from time to time prescribe, whether generally or in any particular
case.
10.03 UNCLAIMED DIVIDENDS. Any dividend unclaimed after a period of six (6)
years from the date on which the same has been declared to be payable shall be
forfeited and shall revert to the Corporation.
ARTICLE XI
NOTICES
11.01 MANNER OF GIVING NOTICE. Any notice (which term includes any communication
or document) to be given (which term includes sent, delivered or served)
pursuant to the Act, the regulations thereunder, the Articles, the By-laws or
otherwise to a shareholder, director, officer, auditor or member of a committee
of the Board shall be sufficiently given if delivered personally to the person
to whom it is to be given or if delivered to his recorded address or if mailed
to him at his recorded address by prepaid mail or if sent to him at his recorded
address by means of telex, telecopier, telegram or any means of transmitted or
recorded communication. A notice so delivered shall be deemed to have been given
when it is delivered personally or to the recorded address as aforesaid. A
notice so mailed shall be deemed to have been received as provided in the Act,
and a notice so sent by any means of transmitted or recorded communication shall
be deemed to have been given when actually transmitted by the person giving such
notice or, if dispatched or delivered, to the communication company or agency or
its representative for dispatch. The Secretary shall change or cause to be
changed the recorded address of any shareholder, director, officer, auditor or
member of a committee Board in accordance with any information believed by him
to be reliable.
<PAGE> 19
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11.02 NOTICE OF JOINT SHAREHOLDERS. If two (2) or more persons are registered as
joint holders of any share, any notice shall be addressed to all such joint
holders but notice to one (1) of such persons shall be sufficient notice to all
of them.
11.03 COMPUTATION OF TIME. In computing the date when notice must be given under
any provision requiring a specified number of days notice of any meeting or
other event, the date of giving the notice shall be excluded and the date of the
meeting or other event shall be included.
11.04 OMISSIONS AND ERRORS. The accidental omission to give any notice to any
shareholder, director, officer, auditor or member of a committee of the Board or
the non-receipt of any notice by any such person or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.
11.05 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW. Every person who, by
operation of law, transfer, death of a shareholder or any other reason
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of the share which shall have been duly given to the shareholder from
whom he derives his title to the share prior to his name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
11.06 WAIVER OF NOTICE. Any shareholder (or his duly appointed proxyholder),
director, officer, auditor or member of a committee of the Board may at any time
waive any notice, or waive or abridge the time for any notice, required to be
given to him under any provision of the Act, the regulations thereunder, the
Articles, the By-laws or otherwise and such waiver or abridgement shall cure any
default in the giving or in the time of such notice, as the case may be. Any
such waiver or abridgement shall be in writing except a waiver of notice of a
meeting of shareholders or of the board or of a committee of the Board which may
be given in any manner.
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ARTICLE XII
EFFECTIVE DATE
12.01 EFFECTIVE DATE. This By-law No. 1 shall become effective on the date that
it is made by the Board of Directors, unless the resolution making this By-law
No. 1 sets forth another effective date.
MADE by the First Director and Confirmed by the Board of
Directors of the 10th day of May, 1999, and EFFECTIVE ON THAT DATE.
/s/ Tim Bowes
-----------------------------
TIM BOWES
<PAGE> 1
Exhibit 4
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
SENSUS CAPITAL CORP.
TOTAL AUTHORIZED ISSUE
25,000,000 SHARES PAR VALUE $.001 EACH
COMMON STOCK
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS IS TO CERTIFY THAT _____________________________ IS THE OWNER OF
____________ fully paid and non-assessable shares of the above Corporation
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
WITNESS, the seal of the Corporation and the signatures of its duly authorized
officers.
DATED _____________
SEAL
- --------------------------- ------------------------------
SECRETARY PRESIDENT
1999 CORPEX BANKNOTE CO., BAY SHORE N.Y.
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT - __________ Custodian __________
(Cust) (Minor)
under Uniform Gifts to Minors ACT ______ __________ ______
(State)
Additional abbreviations may also be used though not in the above list
For value received ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
______________________________________________________________________ Attorney,
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated __________________ _______
In presence of
________________________________
___________________________
NOTICE THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN TAKEN BY THE ISSUEE FOR
INVESTMENT PURPOSES. SAID SHARES MAY NOT BE SOLD OR TRANSFERRED UNLESS (a) THEY
HAVE BEEN REGISTERED UNDER SAID ACT (b) THE TRANSFER AGENT (OR THE COMPANY IF IT
IS ACTING AS ITS OWN TRANSFER AGENT) IS PRESENTED WITH (i) A WRITTEN OPINION
REASONABLY SATISFACTORY TO THE COMPANY, OR (ii) A "NO ACTION" OR INTERPRETIVE
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR TRANSFER OR
(iii) OTHER EVIDENCE SATISFACTORY TO THE COMPANY.
<PAGE> 1
Exhibit 10.1
THIS AGREEMENT dated the 31st day of July, 1999,
BETWEEN:
SENSUS CAPITAL CORP.
("Sensus")
- and -
ALLTEAM ONLINE INC.
(the "Developer")
NOW THEREFORE in consideration of the respective covenants contained herein,
Sensus and the Developer agree as follows:
1. MAKE-UP OF AGREEMENT
1.1 The complete agreement between the parties with respect to the acquisition
of the idea and the development of the technology required to operate an
internet web-site to be operated as the HIGHLIGHTREEL.COM web-site and all
related domain names generally in accordance with the Business Plan attached as
Schedule "A" (herein called the "AOI Network") and for the support of the
web-site and any related services (herein called the "Agreement") shall be made
up of the following documents described under paragraphs (1) through (3):
(1) This "Head Agreement" which contains all of the terms, conditions and
provisions under which Sensus will acquire the technology and the rights to the
web-site address including any computer software and related services from the
Developer;
(2) The "Business Plan" which outlines the Custom Developed web-site which is to
be developed on behalf of Sensus which attached as Schedule "A"; and
(3) The "Technology Support Services Schedule" which sets out the Technology
Support Services to be provided by the Developer to Sensus which is attached
hereto as Schedule "B".
1.2 In the event of any inconsistency between this Head Agreement and any of the
Schedules, the Head Agreement shall prevail.
2. DEFINITIONS AND SCHEDULES
2.1 General -- Unless otherwise expressly defined herein, all data procession
industry terms in this agreement shall have the meaning applied to them by the
[American National Dictionary for Information Processing Systems] (ANSI - X3.172
- - 1990) and published by the American National Standards Institute, Inc., 1430
Broadway, New York, N.Y., 10018 Copyright 1991].
2.2 Specific -- As used in this agreement, and any schedule hereto, and any
amendment hereof, and any documents to be executed and delivered pursuant to
this agreement and in any documents executed and delivered in connection with
the completion of the transaction contemplated herein, the following words and
phrases shall have the following meanings, respectively:
<PAGE> 2
2
(a) "AOI Network" means the web-site to be developed by the Developer
in accordance with the Business Plan attached as Schedule "A";
(b) "Business Day" means each of Monday, Tuesday, Wednesday, Thursday
and Friday except where any such day occurs on any federal or
provincial statutory holiday observed in the Province of Alberta;
(c) "Custom Developed Technology" means those new computer programs
and associated Documentation provided in conjunction with the
development of the AOI Network by the Developer described in the
Business Plan attached as Schedule "A";
(d) "Documentation" means all written instructions, procedures and
practices regarding the operation of the Technology which are
required to enable Sensus to operate, maintain and manage the
Technology upon Sensus' Hardware and which includes, but is not
necessarily limited to, all of the manuals, handbooks,
maintenance libraries, operating instructions, overviews and
guides for the Technology;
(e) "Equipment" means the aggregate of electronic information
processing equipment and related components, including but not
limited to all processors, servers, workstations and tape drives,
all as acquired by Sensus for the specific purpose of operating
the Technology;
(f) "Sensus' Affiliates" means all corporations, companies, trusts,
and other entities controlled directly or indirectly, by means of
a trust, a corporation, or otherwise by Sensus;
(g) "Hardware" means the Equipment and the System Technology;
(h) "Implementation Period" means the period of time through which
Sensus pays the Developer for the development of the AOI Network
pursuant to the Implementation Plan;
(i) "Implementation Plan" has the meaning ascribed to it in Paragraph
4.2;
(j) "Installation Sites" means those sites as may be designated in
this agreement and as designated from time to time by Sensus for
both installation and operation of the Technology;
(k) "Enhancements" means the changes and additions to the Custom
Developed Technology;
(l) "Functional Specifications" has the meaning ascribed to it in
Paragraph 5;
(m) "Party" or "Parties" means either Sensus or the Developer if used
in the singular and both the Developer and Sensus if used in the
Plural;
(n) "Products and Services" means those Technology products, services
and assistance described in paragraph 3.1 and 3.2 and the
Schedules;
(o) "Source Code" means the counterpart human readable version of the
Custom Developed Technology required to be provided hereunder in
machine readable object code, and being capable, upon
compilation, of being translated into machine executable object
code when operated upon the computer system;
<PAGE> 3
3
(p) "Source Materials" means the Source Code and System Design
Specifications, logic diagrams, and all other relevant
documentation relating to the Technology;
(q) "System Design Specifications" means those technical
specifications for the Technology developed or to be developed by
the Developer for the purpose of enabling any persons reasonably
skilled in software design, analysis or programming to maintain,
and further develop, the Technology;
(r) "System Technology" means those operating systems, compilers,
development software, utilities and related documentation
hereafter specifically acquired by Sensus from third party
Technology Developers for the specific purpose of operating the
Technology upon the Equipment.
(s) "Technology" includes the computer programs comprised of Custom
Developed Technology and the Hardware to operate the AOI Network
as described in the Business Plan;
(t) "Technology Support Services" means the provision by the
Developer of Technology maintenance services upon the terms set
out in paragraph 8 of this Head Agreement and the Technology
Support Services Schedule;
3. DELIVERABLES
3.1 Single complete transaction -- Subject to the terms and conditions of this
Head Agreement, Sensus is hereby granted the following rights:
(a) All rights to the AOI Network and the Custom Developed
Technology, including, without limitation:
(i) all intellectual property rights arising in respect of the
operation of the web-site and the AOI Network;
(ii) any copyright in any software or any creative works
developed by the Developer as part of developing the
web-site and the AOI Network;
(b) the rights to the INTERNIC domain names described in the Business
Plan;
(c) the right to further develop the web-site and the AOI Network,
and in this respect, the Developer hereby waives any moral rights
it may have in respect of any software or other copyright
property developed for Sensus hereunder;
(d) to the extent the Developer provides any sublicense of System
Technology, which is specifically authorised hereunder, it shall
contemporaneously provide a letter addressed to Sensus, from the
owner of that Technology, in which that owner irrevocably
undertakes to directly license Sensus to use the Technology on
substantially the same terms and conditions as those contained
herein should any Head License from which or through which Sensus
derives its rights to that Technology, be terminated;
<PAGE> 4
4
(e) the right to be provided project management assistance and
services in accordance with paragraph 6;
(f) the right to be supplied training services in accordance with
paragraph 11;
(g) the right to be supplied Technology Support Services as specified
in Schedule "B".
3.2 Developer responsibility -- By entering into this agreement, the
Developer agrees that it will, during the Implementation Period and in
accordance with the terms and conditions of the agreement:
(a) assume overall contractual responsibility to Sensus for the
development of the AOI Network and for the delivery and
installation of all Technology components regardless of origin or
manufacture;
(b) assume contractual responsibility to Sensus for all web-site and
AOI Network development activities, which include, identifying
and obtaining any required Technology and correcting all
Technology failures, including failures relating to performance
and functionality;
(c) secure the full time services of Graham Heal and such other
employees of the Developer as are necessary to work on the
development of the web-site and the AOI Network on behalf of the
Developer in accordance with the Implementation Plan as provided
below.
3.4 Customer's responsibilities -- Except as otherwise provided in this
agreement, Sensus shall be responsible for performing the following activities:
(a) the furnishing of all supplies, including, without limitation,
all Hardware;
(b) furnishing the Developer with all information mutually determined
by the Developer and Sensus to be necessary for the performance
of those services to be provided by the Developer as specified in
this agreement.
3.5 Technology support -- Paragraph 8, together with the Technology Support
Services Schedule, specify the nature and cost to Sensus of any ongoing
Technology Support Services following expiration of the Implementation Period of
Technology Support Services.
4. CHARGES AND PAYMENTS
4.1 In order for Sensus to secure the rights described in paragraph 3
Sensus shall be required, on or before November 1, 1999, to issued 25,000 Sensus
Shares to the Developer. Thereafter, for Sensus to be able to maintain the
rights so described, and to secure the services of the Developer:
(a) Sensus is required, on or before December 31, 2000, to commence
funding the development of the AOI Network, by making monthly
payments of $25,000 US to AOI, in exchange for which AOI will be
required to arrange for the full time services of Graham Heal,
who shall be obligated to use his best efforts to develop the
web-site as efficiently as possible (provided however that if
Sensus does not make the first payment of $25,000 US, on or
before December 31, 2000, all rights to the web-site and any
related technology will revert to AOI).
<PAGE> 5
5
(b) After the development is completed and an operating web-site has
been completed, Sensus will be required to pay AOI a management
fee equal to 10% of the gross revenues derived from the AOI
Network, in exchange for which AOI will be required to provide
the services of Graham Heal to manage the AOI Network, subject to
Sensus directions;
provided however that if the parties do not agree on the Implementation
Plan or if Sensus does not provide the first advance of $25,000 before
December 31, 2000, the Developer's only recourse against Sensus will be
for the reversion of the rights acquired by Sensus pursuant to
paragraph 3.
4.2 Price all inclusive and terms of payment - It is estimated that it will take
the Developer four (4) months for the first version of the web-site to be
developed after Sensus commences funding development with the first advance of
$25,000. Prior to commencing work on the development of the AOI Network
web-site, Sensus and the Developer will meet to complete a web-site development
implementation plan that will form the basis of the work to be performed by the
Developer (the "Implementation Plan"). The actual cost of development shall be
based upon the actual time it takes the Developer to complete the web-site and
train Sensus' employees to use, the Technology (and the cost to be billed to
Sensus for any development work representing a portion of a month shall be
prorated based on the portion of the month so worked).
4.3 Taxes and other charges -- The price for all of the deliverables described
in paragraph 3.1 and 3.2, shall have added thereto, all applicable customs
duties, goods and services taxes, provincial sales taxes and any other sales or
use taxes as well as any applicable transportation, insurance and freight
charges.
5. FUNCTIONAL SPECIFICATIONS
The Parties agree that the AOI Network shall be developed in the manner set
forth in the Business Plan which describes the functional way in which the AOI
Network will operate (the "Functional Specifications").
6. PROJECT RESPONSIBILITIES
6.1 Developer project co-ordinator -- The Developer shall appoint Graham Heal,
as the Project Co-ordinator. The Developer Project Co-ordinator shall assume his
or her duties and responsibilities upon execution of this agreement and continue
performing them until expiration of the Implementation Period and thereafter the
Developer shall provide project management services on a time and materials
basis at their then current published rates. The Developer Project Co-ordinator
shall have the following responsibilities:
(a) ensure the products and services provided under this agreement
conform to the requirements under this agreement;
(b) ensure compliance with the requirements set out under paragraph
3.3;
(c) schedule meetings at a time mutually agreed to by Sensus Project
Co-ordinator, to review the project status or communicate
problems or difficulties that may be of concern to Sensus or
affect Sensus' activities;
(d) attend meetings initiated by Sensus Project Co-ordinator, and
(e) prepare monthly status reports and submit them to Sensus Project
Co-ordinator.
6.2 Customer project co-ordinator -- Sensus shall appoint one individual as the
Primary Project Co-
<PAGE> 6
6
ordinator. Sensus Project Co-ordinator shall assume his or her duties and
responsibilities upon execution of this agreement and continue to perform
them until the Technology Acceptance Date. Sensus Project Co-ordinator
shall have the following responsibilities:
(a) schedule meetings at a time mutually agreed to by the Developer
Project Co-ordinator, to review the project status or communicate
problems or difficulties that may be of concern to the Developer
or affect the Developer's activities;
(b) attend the meetings initiated by the Developer Project
Co-ordinator;
(c) facilitate the availability and co-operation of Sensus'
personnel;
(d) designate desk space for the Developer Project Co-ordinator, the
Developer personnel as determined sufficient by the Developer
Project Co-ordinator,
(e) provide controlled access for the Developer to Sensus locations
as is necessary to develop the Technology; and
(f) purchase and arrange for the delivery, in a timely fashion, of
all of the Hardware necessary, as specified by the Developer
Project Co-ordinator, to allow the Technology to be developed and
thereafter to allow for the Technology to function according to
the Technology Specifications.
6.3 Mutual project responsibilities -- The following are responsibilities that
to both the Developer and Sensus Project Co-ordinators:
(a) schedule and attend meetings at least once a week during the
Implementation Period;
(b) provide the vehicle for communication of any concerns of their
respective staff as far as is practicable.
6.4 Management level meetings -- At Sensus request and with Sensus designated
personnel in attendance, the Developer and Sensus shall hold management level
meetings to review the general progress of the implementation and specific
management related issues. For purposes of such meetings, the Developer and
Sensus shall each provide at least one authorised representative with
decision-making authority who shall be fully authorised to make commitments on
behalf of the Developer and Sensus, respectively, at such meetings.
6.5 Changes -- The Technology and the Custom Developed Technology shall be
furnished to Sensus together with all Enhancements. Prior to installation of the
Technology on the Hardware, the Developer shall make all required additions and
modifications to ensure conformity with the Functional Specifications and the
Developer further agrees, that it will, whether requested prior or subsequent to
installation to make any minor additions, modifications, or other fine tuning
changes upon the written request of Sensus.
7. IMPLEMENTATION AND ACCEPTANCE
7.1 Scheduling -- The installation and testing functions specified in this
paragraph 7 and all deliveries of Documentation shall be in accordance with the
Implementation Plan, unless otherwise agreed to by the Parties in writing.
<PAGE> 7
7
7.2 Installation and site preparation -- Sensus agrees to provide a suitable
installation environment in accordance with installation procedures communicated
in writing by the Developer to Sensus. Sensus shall give notice to the Developer
once the installation environment has been prepared.
7.3 Conditional acceptance of AOI Network
(1) Sensus will throughout the Implementation Period conduct such tests as it
deems appropriate to enable it to verify that the Technology functions and
performs in accordance with the Functional Specifications on the Computer System
(the "Test Period").
(2) If Sensus notifies the Developer in writing during the Test Period that
Technology has failed any of the tests set out in paragraph (1), and
demonstrates such failure to the Developer, then:
(a) the Developer shall have seven (7) Business Days (the "Cure
Period") during which to correct the deficiencies listed by
Sensus, and
(b) upon installation of the correction by the Developer, the tests
set out in paragraph (1) shall be repeated by Sensus using the
same test data.
(4) If the Technology fails the re-test specified in paragraph (3)(b), then the
complete process of cure and re-testing as set out in Paragraph (3) shall be
repeated once only.
(5) If the Technology fails the final re-test specified in paragraph (4), or if
the Developer fails to deliver corrected Technology by the end of either of the
Cure Periods, then, at Sensus' option, Sensus may invoke the remedies specified
in paragraph 12.
(6) If no written notice of failure has been given by Sensus to the Developer by
the end of the initial Test Period, or the re-test set out in paragraph (3),
then the Technology shall be deemed to have been conditionally accepted by
Sensus.
7.4 Computer system acceptance test
(1) Installation - Installation shall be considered to be complete
upon satisfaction of the following conditions:
(a) all the Technology has been conditionally accepted by Sensus
pursuant to paragraph 7.3; and
(b) Sensus' staff has received the Training, or at Sensus' request,
the Training has been scheduled to occur after the conditional
acceptance;
(d) the Developer has delivered all of the Documentation, and
(e) the Developer has certified to Sensus in writing that it has
verified that the Technology performs in accordance with the
Functional Specifications.
(2) Computer system acceptance test
(a) Sensus shall have thirty Business Days commencing from the day
next following the Date
<PAGE> 8
8
of Conditional Acceptance (the "Computer System Test Period")
during which it shall be entitled to perform those processes,
procedures, and other testing methodologies and results to be
obtained therefrom, to verify that all of the components of the
Computer System function together in accordance with the
Functional Specifications.
(b) The Computer System shall be deemed to have been accepted by
Sensus if, at the end of the Computer System Test Period, Sensus
has not notified the Developer of any deficiency in the Computer
System, the term "deficiency" being a failure of the Computer
System, or any of its components, to function together in
accordance with the Functional Specifications or a failure to
successfully fulfil Sensus' Acceptance Criteria. If Sensus does
notify the Developer of any deficiency, the Developer shall have
a further twenty Business Day period (the "Computer System Cure
Period") during which to correct said deficiencies. The Computer
System shall be considered to have been accepted by Sensus if
Sensus has not notified the Developer of the continuing existence
of such deficiencies or other previously identified, corrected
but recurring deficiencies in the Computer System, within five
Business Days after the Developer notified Sensus that the
deficiency was corrected.
(c) If deficiencies which have been identified by Sensus to the
Developer have not been corrected at the end of the Computer
System Cure Period, or a plan of correction agreed upon before
the end of the Computer System Cure Period, the provisions of
paragraph 13 shall apply.
(d) The date upon which Sensus unconditionally accepts or is deemed
to have unconditionally accepted the Computer System, the
Computer System shall be known as the "Date of Computer System
Acceptance".
(e) Where any activity is measured in the Implementation Plan as
occurring within a specified number of Business Days, the
Developer agrees that it will to the best of its ability
undertake and pursue, the required activities as close to the day
from the period of time is measured, it being understood and
agreed that any such specified period merely delineates the
agreed upon time frame for completion of a task and is not to be
interpreted as merely an allowance with a terminal date by which
a task must be completed.
8. TECHNOLOGY SUPPORT SERVICES
8.1 The Developer shall be responsible for providing, or arranging to have one
of its sub-contractors provide, Technology Support Services in accordance with
the terms and conditions of the Technology Support Services Schedule, for a
period of six (6) months following expiration of the Implementation Period, at
the lowest rates at which they provide such services to others.
9. WARRANTIES
9.1 Length of warranties -- The warranties in this paragraph 9 shall:
(1) extend to all updates, upgrades and enhancements made to the
Technology pursuant to this agreement, and
(2) apply for a period of one year from the Date of Computer System Acceptance,
except as may be otherwise expressly stated in this paragraph.
<PAGE> 9
9
9.2 Operational warranties -- the Developer warrants that:
(1) the Custom Designed Technology will be original in design and any rights to
be granted hereunder are and will remain proprietary to Sensus and, at the date
of this agreement, there are no claims made nor actions pending or threatened
regarding the ownership of the Custom Designed Technology or rights to be
granted hereunder;
(2) the Technology has been or will be developed, installed and implemented
in a proper and workmanlike manner;
(3) the Technology will function in accordance with the Functional
Specifications and for a period of one year from the Date of Computer System
Acceptance of the Technology;
(4) the Developer has all the rights as are necessary for it to grant the
licenses for the use of the Technology as set out in paragraph 10.1;
(5) Sensus shall hold and enjoy the rights to the Technology without any
claim, interference or demand whatsoever by the Developer, its successors
or any third party;
(6) the Developer shall indemnify Sensus against all liabilities, costs and
damages including but not limited to indirect and consequential damages arising
out of Sensus' inability to possess and enjoy the license as set out in
paragraph 9.2 (5); and
(7) the Documentation is and will continue to be accurate, complete and
reflect all changes made to the Technology.
9.3 Limitation of warranty -- The warranties provided in paragraph 9.2 do not
apply to modifications to the Technology, other than modifications made by the
Developer or its sub-contractors.
10. PROPRIETARY RIGHTS
10.1 Technology Rights
(1) The Developer hereby transfers all rights itemised in Paragraph 3, subject
to receiving the 25,000 Sensus shares, and agrees that the rights granted shall
be the exclusive rights granted for the use of the Technology.
(2) This License authorises Sensus and Sensus' Affiliates to use the
Technology in such applications as they may desire:
(a) to copy the Technology and Documentation in support of the use of
the Technology;
(b) to modify or alter the Technology and to merge it into other
systems or software as necessary to maximise the use of the
Technology and to adjust for changing business conditions; and
to use, copy, modify and enhance the Technology using the Source Materials.
(3) Sensus is entitled to make use of the Technology for Sensus' and Sensus'
Affiliates' administrative,
<PAGE> 10
10
accounting and management purposes, without any restrictions.
(4) This Technology is not CPU or machine dependent and may be freely
transferred by Sensus by any other class or category of compatible Hardware,
without additional payment or charge therefor to the Developer.
(5) The provisions of this paragraph 10 shall apply to all Custom Developed
Technology, and Enhancements.
10.2 Patent and copyright indemnity -- The Developer will defend at its own
expense any suit or proceedings brought against Sensus based on a claim that any
equipment or software product constitutes an infringement of any patent or
copyright anywhere in the world, provided that the Developer is notified
promptly in writing and given full and complete authority, information and
assistance from Sensus for the defence of same. If the foregoing provision is
complied with, the Developer will pay damages and costs awarded against Sensus,
but the Developer will not be responsible for any compromise made without its
consent. If such equipment or software product is held to constitute
infringement and its use is enjoined the Developer may, at its election and
expense, obtain for Sensus the right to continue using such equipment or
software product, modify the same so that it is not infringing, or remove the
same and grant Sensus a credit therefore. the Developer will not be liable to
Sensus if any infringement claim is based upon the interconnection or use of
such equipment or software product in combination with equipment, software
products or other devices not made by the Developer use in any matter for which
such equipment or software product was not designed.
10.3 Survival -- Paragraph 10.2 shall survive termination of this agreement.
11. TRAINING
11.1 Training schedule -- the Developer shall provide the Training services set
out in the Implementation Plan to be developed by the Parties. The Training
Schedule shall consist of separate and distinct pre-Installation and
post-Installation programs.
11.2 Commencement of training -- Training shall commence from the date of upon
which the AOI Network is operational to such extent as would allow commencing
the Training activities set out in the Training Schedule.
11.3 Experienced trainers -- All Training will be conducted by experienced
personnel of the Developer and the presentations will be adjusted, where
possible, to the general level of knowledge and experience of Sensus staff.
12. CONFIDENTIALITY
12.1 Definition
(1) "Confidential Material of Sensus" means:
(a) any information of a proprietary or confidential nature,
including but not limited to financial and business information
relating to Sensus or any Sensus customers which are communicated
to the Developer at any time;
<PAGE> 11
11
(b) any business systems, methodologies or computer programs of
Sensus of which the Developer may acquire knowledge in connection
with or while performing its obligations under this agreement,
and
(c) any other information or data received by the Developer from
Sensus that is identified as proprietary or confidential.
(2) "Confidential Material of the Developer" means the Developer portion of
the Technology, Documentation and Source Materials.
12.2 Confidentiality obligations
(1) Sensus acknowledges that the Confidential Material of the Developer is
confidential and constitutes a valuable asset of the Developer. The Developer
acknowledges that the Confidential Material of Sensus is confidential and
constitutes a valuable asset of Sensus. Unless otherwise provided under this
agreement, Sensus and the Developer shall:
(a) treat the Confidential Material of the other as confidential;
(b) exercise at least the same degree of care and discretion with
respect to the Confidential Material of the other as it exercises
in protecting its own Confidential Material;
(c) take all necessary steps including but not limited to instruction
of employees and agents of the Developer and Sensus to ensure
that the confidentiality of the Confidential Material of the
other is maintained;
(d) not disclose, publish, display or otherwise make available to
other persons any of the Confidential Material of the other, or
copies thereof; and
(e) not duplicate, copy or reproduce any of the Confidential Material
of the other without the prior written consent of the other.
(2) This paragraph 12.2 does not apply to:
(a) information that is in the public domain or enters the public
domain through no breach of confidence by Sensus or by the
Developer;
(b) information that is available to one Party from some source other
than the other Party without a breach of confidence with the
other Party;
(c) general computer technology, ideas, concepts or tools;
(d) information which has been provided in the first instance to
someone other than Sensus or the Developer; and
(e) any disclosure as may be required to be made by a court of
competent jurisdiction.
13. REMEDIES
<PAGE> 12
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13.1 Remedies
(1) Should the Technology fail to meet or exceed the criteria as set out in the
Functional Specifications within the Implementation Period, then at Sensus'
option, and without prejudice to any of Sensus' rights under this agreement or
at law or in equity, Sensus shall be entitled terminate this agreement and
employ its own contractors to complete the work required to allow the Technology
to meet the Functional Specifications. In such case Sensus shall be required to
pay the Developer for its costs incurred to the date of termination but shall be
entitled to deduct therefrom, the added expenses it had to incur over and above
that which it would have incurred had the Developer completed the Technology.
(2) If the Developer is delayed by more than ten Business Days in its
performance of any activity which is specified for completion by a Performance
Date or any extension thereof agreed to by Sensus, then in the absence of Sensus
having agreed to any further extension, Sensus may, upon notice in writing to
the Developer, terminate this agreement and thereupon the provisions of
paragraph 13 shall apply.
(3) If the Developer is unable to correct any deficiency under any of paragraph
7 within the applicable Cure Period, then in addition to any other remedy
available to Sensus under this agreement or otherwise available at law or in
equity, Sensus shall have the right to terminate this agreement and correct
itself or to arrange with someone else to correct any deficiencies, at the
Developer's cost and expense.
(4) The remedies of Sensus herein or elsewhere in this agreement are neither
exclusive nor mutually exclusive for breaches of other terms and conditions of
this agreement or shall any delay or failure of Sensus to exercise any right or
remedy available to it in respect of other breaches operate as a waiver thereof,
except where specifically provided to the contrary.
(5) If Sensus terminates this agreement as a result of the Developer's default
it will, without charge, afford Sensus perpetual use of such components of the
Technology as Sensus shall determine.
13.2 Refund -- Upon rejection by Sensus of the Technology pursuant to paragraph
7, or upon termination of this agreement pursuant as a result of the Developer's
default, the Developer shall provide a refund, to Sensus, of the additional
expenses Sensus has had to incur to ensure the Technology meets the Functional
Specifications.
13.3 Obligations on termination -- Any termination of this agreement by Sensus
pursuant to any of the provisions of this agreement shall result in:
(1) Subject to the provisions of paragraph 13.1, the termination of all
agreements for Technology Support Services. The Developer agrees to indemnify
Sensus against all claims, actions or proceedings that may be made or taken
against Sensus by any person in connection with the said licenses, subcontracts,
and agreements; and
(2) The Developer's obligation to deliver to Sensus all Sensus copies of all
available working papers, and all computer programs, documentation, files and
output then in the possession of the Developer relating to the Technology.
13.4 Developer default -- In the event of a breach of this agreement by the
Developer, Sensus shall be entitled to resort to any remedy or remedies
available at law or in equity or any combination of remedies as Sensus may in
its discretion determine. No delay or failure of Sensus to exercise any right or
remedy will operate as a waiver thereof, except where specifically provided to
the contrary. Sensus shall have the right
<PAGE> 13
13
to terminate this agreement on written notice to the Developer if the
Developer breaches any provision of this agreement and fails to remedy
the breach within thirty (30) days after receipt of written notice from
Sensus.
13.5 Customer Default - If Sensus fails to make any payment when due and such
non-payment shall continue for a period of ten (10) days after notice of default
in payment is sent to Sensus, the license to use the Technology shall thereupon
terminate, and Sensus shall thereafter have no right to use the Technology or
any components thereof. In such event, Sensus shall thereupon be required to:
(1) delete from its Hardware, all copies of the Technology;
(2) return all copies of the Documentation to the Developer.
13.6 Referral of disputes to referee
(1) The Parties acknowledge that for the purposes of amicable resolution of any
dispute which may occur between the Parties relating to the interpretation and
implementation of any of the provisions of this agreement, it will be in the
best interests of the Parties to first refer such dispute for determination to
an informal referee. The Parties agree that the purpose of such reference is for
the economical and expedient resolution of the dispute and that it shall not be
in the nature of arbitration as contemplated by the Arbitration Act, R.S.A.
1990, and that the decision of the referee shall not be binding upon the Parties
but shall be considered as a bona fide attempt by the referee to judiciously
resolve the matter in dispute. In the pursuance thereof the Parties further
agree that either Party may compel the attendance of the other Party before a
referee by serving the other Party with notice of such intention which notice
shall contain the proposed time and location of the reference and a list of at
least three and not more than five proposed referees.
(2) Upon receipt of the said notice, the notified Party shall within five
Business Days following receipt select one of the proposed individuals as the
referee. In the event that it should fail to do so within five Business Days of
receiving such notice, the compelling Party shall be free to select the referee
of its choice from the same list. The referee shall be required to proceed to
hear and to referee the matter and shall, within the next ensuing ten Business
Days or so soon thereafter as may be practical, render his decision in writing.
(3) The compelling Party shall act reasonably in designating the three to five
proposed referees and shall in such designation be guided by considerations such
as impartiality, industry knowledge, expertise and experience.
(4) The cost of such reference, as determined by the referee, shall be
borne equally between the Parties.
13.7 Backup and disaster availability -- In the event that any item of Hardware
upon which there is a Technology dependency becomes non-operational at any time
for a period of time sufficient to require the use by Sensus of another computer
facility in order to maintain business operations, or if any item of Hardware
for any reason becomes permanently non-operational, the Developer shall:
(1) use reasonable efforts to promptly provide computer processing time on a
fully compatible system which is the property of the Developer, if available at
mutually agreed to prices, or
(2) at the request of Sensus, actively participate in the arrangements for the
rental of computer time from another the Developer customer with substantially
compatible Hardware.
<PAGE> 14
14
14. GENERAL
14.1 Order of interpretation -- In the event of any dispute relating to the
terms and conditions of this agreement, or the interpretation of this agreement
in relation to the obligations of the Parties, or any other matter or thing
relating to the Technology, the Functional Specifications and the Integrated
Network Configuration, the following shall govern the order of interpretation:
(1) this Head Agreement;
(2) the Business Plan, then
(3) any other component of this agreement.
14.2 Notices -- Any notice, direction or other instrument required or permitted
to be given hereunder shall be in writing and may be given by mailing the same
postage prepaid or delivering the same addressed to the following addresses:
Developer
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
Sensus
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
Any notice, direction or other instrument aforesaid if delivered shall be deemed
to have been given or made on the date on which it was delivered or if mailed
shall be deemed to have been given or made on the fifth (5th) business day
following the day on which it was mailed. Any party hereto may change its
address for service of notice by giving notice in writing to the other parties
hereto as above provided.
14.3. Time Of The Essence -- Time shall be of the essence in relation to
interpretation of this Agreement.
14.4 Laws -- This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Alberta.
14.5 Successors -- All the terms, covenants, representations, warranties and
conditions of this Agreement shall be binding upon, and enure to the benefit of
and be enforceable by the parties hereto and their respective administrators,
successors or assigns. This Agreement and the rights and obligations hereunder
shall not be assignable by Sensus without the prior written consent of the
Developer.
14.6 Amendments -- This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, covenants, agreements, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by all parties or in the case of a waiver by the party or parties
waiving compliance.
<PAGE> 15
15
14.7 Waiver -- The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by any party of any condition or of
any breach of any term, covenant, agreement, representation or warranty under
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of any breach of any
other term, covenant, representation or warranty under this Agreement.
14.8 Headings -- The headings contained in this Agreement are inserted for
convenience of reference only and shall not otherwise affect the meaning or
interpretation or be deemed a substantive part of this Agreement.
14.9 Severability -- If any provision of this Agreement shall hereafter be held
to be invalid or unenforceable for any reason, that provision shall be reformed
to the maximum extent permitted to preserve the parties' original intent,
failing which, it shall be severed from this Agreement with the balance of this
Agreement continuing in full force and effect. Such occurrence shall not have
the effect of rendering the provision in question invalid in any other
jurisdiction or in any other case or circumstances, or rendering invalid any
other provision contained herein to the extent that such other provisions are
not themselves actually in conflict with any applicable law.
14.10 Counterparts -- For convenience, this Agreement may be executed in several
counterparts, each of which so executed shall be deemed to be an original and
such counterparts together shall constitute but one and the same instrument.
In witness whereof the parties have executed this agreement with effect the date
and year first above written.
SENSUS CAPITAL CORP.
Per: /s/ (signature illegible)
_____________________________________
ALLTEAM ONLINE INC.
Per: /s/ (signature illegible)
___________________________________
<PAGE> 16
SCHEDULE "A"
BUSINESS PLAN
<PAGE> 17
ALLTeam Online, Inc. (AOI)
An online media company to bring out the star in all of us.
<PAGE> 18
TABLE OF CONTENTS
Executive Summary
Mission Statement
1. Business Definition
2. Market Definition
2.1 Internet Industry & Growth
2.2 E-Commerce Industry & Growth
2.3 Streaming Media - What is it and how will it grow?
2.4 HighlightReel.com - A User Profile
2.5 Encoding for Streaming Media - A Revenue Opportunity
2.6 Business & Market Assumptions
3. Programming
3.1 Content
3.1.1 HighlightReel.com Site Structure & Functionality
3.1.2 User Incentives
3.1.3 Other Content Offerings & Services
3.2 Content Partnerships
3.3 Community Service & Relations
3.4 Premium Content Store
3.5 Data Acquisition - A Streaming Media Encoding Partnership
3.6 Future Market Development
4. Revenue Model Summary
5. Market & Distribution
5.1 Image & Positioning
5.2 Strategic Distribution Partnerships
5.3 Affiliate Program
5.4 Direct Marketing
5.5 Advertising
6. Operations
6.1 Corporate Finance
6.2 Organization
6.3 Principals
2
<PAGE> 19
6.4 Other Key Hires
6.5 Contracted Services
6.6 Directors
7. Major Cost Items
8. Risks
9. Competition
10. Critical Keys to Success
11. Second Stage Content Channels & Businesses
12. Financials
13. Appendices
3
<PAGE> 20
EXECUTIVE SUMMARY - ALLTEAM ONLINE, INC.
Online content and new media development is an exciting and wide open industry
made possible by the emerging acceptance of the Internet as the mass-market
communications and information medium of the 90's and the coming 21st Century.
ALLTeam Online, Inc. (AOI) is a Seattle based online and Internet media &
commerce company that will be the most recognized network of niche Internet
portal sites and WebTV/set top channels utilizing streaming media to present
original, copyright-free, entertainment content in multiple categories including
sports, film and comedy. This collection of sites and channels will become the
AOI Network.
AOI's objective is to build a scalable, easily replicated platform from which
the innovative and entertaining theme sites and communities can be developed and
introduced on the Worldwide Web. AOI will launch its first branded property from
its family of sites known as HighlightReel.com. This property will become an
online mecca for athletes and sports enthusiasts of all ages that are
entertaining, interactive, and fun. In simple terms, HighlightReel.com users are
asked to submit their very own sports highlights captured on their vide
camcorder or other video capture device. HighlightReel.com houses and hosts the
copyright-free highlights on its web site or channel arranged by sport or
activity and state/province so that any family member, friend or fan can access
it via a regular Internet connection to the Worldwide Web. Regular corporate
sponsored promotions will take place at the site where highlights are judged by
the audience and winners are awarded great prizes, merchandise and scholarships
to academic institutions. One might say it's like the online "StarSearch" of the
90's. The spirit of competition, desire to be seen, show off your talents and
winning valuable prizes and awards keep participants coming back over and over.
Sports is one of the top three areas of interest for Internet users. While there
is a multitude of Internet sites catering to all aspects of professional sports
today (e.g. ESPN Sportszone, CBS Sportsline there are very few online properties
bringing non-professional athletics and sports activities together in a
compelling entertainment package. Sports played in schools or community leagues
is a strong rallying point in North American society and everyone likes to be
recognized for their achievements. HighlightReel.com will appeal to anyone's
desire to be a star and be seen literally anyone surfing the Web, now a
potential audience of 100 million plus users worldwide and growing. Through
HighlightReel.com anyone or any team can have a channel to showcase their
game-winning touchdown or buzzer-beating basket.
In the US and Canada there are over 60 million participants in amateur sporting
activities whether it be as part of school athletics, community centers and
associations or city leagues. With this large pool of potential players,
contributors and audience members already owning or able to easily access video
capture equipment and almost anyone can participate. As hosting of the
4
<PAGE> 21
content online is provided essentially as a free service in order to drive rapid
growth of the sites' body of content, revenues will be generated by:
o Advertising;
o Merchandising Partnerships;
o Corporate Sponsorship;
o Encoding fees (involves the specific conversion process of standard
video to "encoded" internet-ready streaming content -- a must for
broadcasting online);
o Value-added and copyrighted entertainment content sold on a per use
and perpetual license basis from the HighlightReel.com Streaming
Store;
o Production and broadcast of live and taped sports events via streaming
on the Internet.
Families with sports participants and vide camcorders represent a very
attractive demographic that advertisers and merchandisers want and parents are
very enthusiastic about their children's participation in sports and athletics
and will embrace ways to raise their child's profile and recognition. Parents
will also appreciate HighlightReel.com's association with scholarship and its
focus on offering awards that can impact children's futures. Result -- motivated
users hunger for a visibility form that is also entertaining and fun! And what
kid doesn't like to see him or herself on screen or call friends and say "check
out my personal HighlightReel.com site! AOI will be there to serve, entertain
and reward them.
The Company will benefit greatly by establishing its operations in Seattle, the
streaming media technology and content nexus led by industry giants
RealNetworks, Microsoft and Disney's Starwave. An initial key strategic
partnership has already been forged with a streaming media encoding leader and
Seattle neighbor. The greater Seattle area also offers a strong, skilled pool of
talent with experience in online streaming content development and publishing.
Further the principals have large personal contact bases of Internet and
E-commerce professionals who can be attracted to the venture as key hires or
contractors. Similarly the principals will use their extensive industry contact
bases with key management personnel at major Internet media and traffic leaders
to establish "anchor" distribution arrangements ensuring a strong audience and
user base.
5
<PAGE> 22
MISSION STATEMENT
"To be the recognized network of branded niche Internet portal sites and
WebTV/set-top channel leveraging streaming media technologies to showcase
original, copyright-free, entertainment content in multiple categories including
sports, film and comedy. In short an entertainment network and online community
for everyone, populated with content produced by anyone."
6
<PAGE> 23
1. BUSINESS DEFINITION
Online content and new media development is an exciting and wide open industry
made possible by the emerging acceptance of the Internet as the mass-market
communications and information medium of the 90's and the coming 21st Century.
ALLTeam Online, Inc. (AOI) is a Seattle-based online and Internet media &
commerce company that will be the most recognized network of niche Internet
portal sites and WebTV/set top channels utilizing streaming media to present
original, copyright-free, entertainment content in multiple categories including
sports, film and comedy. This collection of sites and channels will become the
AOI Network.
AOI's objective is to build a scalable, easily replicated platform from which
innovative and entertaining theme sites and communities can be developed and
introduced on the Worldwide Web. AOI will launch its first branded property from
its family of sites known as HighlightReel.com. This property will become an
online mecca for athletes and sports enthusiasts of all ages that is
entertaining, interactive, and fun. In simple terms, HighlightReel.com houses
and hosts the copyright-free highlights on its web site or channel arranged by
sport or activity and state/province so that any family member, friend or fan
can access it via a regular Internet connection to the Worldwide Web. Regular
corporate sponsored promotions will take place the site where highlights are
judged by the audience and winners are awarded great prizes, merchandise and
scholarships to academic institutions. One might say its like the online
"StarSearch" of the 90's. The spirit of competition, desire to be see, show off
your talents and winning valuable prizes and awards keep participants coming
back over and over.
Sports is one of the top three areas of interest for Internet users. While there
is a multitude of Internet sites catering to all aspects of professional sports
today (e.g. ESPN Sportszone, CBS Sportsline) there are very few online
properties bringing non-professional athletics and sports activities together in
a compelling entertainment package. Sports played in schools or community
leagues is a strong rallying point in North American society and everyone likes
to be recognized for their achievements. HighlightReel.com will appeal to
anyone's desire to be a star and be seen by literally anyone surfing the Web,
now a potential audience of 100 million plus users worldwide and growing.
Through HighlightReel.com anyone or any team can have a channel to showcase
their game-winning touchdown or buzzer-beating basket.
In the US and Canada there are over 60 million participants in amateur sporting
activities whether it be as part of school athletics, community centers and
associations or city leagues. With this large pool of potential players,
contributors and audience members already owning or able to easily access video
capture equipment almost anyone can participate. As hosting of the content
online is provided essentially as a free service in order to drive rapid growth
of the sites body of content, revenues will be generated by:
7
<PAGE> 24
o Advertising;
o Merchandising;
o Corporate Sponsorship;
o Encoding fees (involves the specific conversion process of standard
video to "encoded" Internet-ready streaming content - a must for
broadcasting online);
o Value-added and copyrighted entertainment content sold on a per use
and perpetual license basis from the HighlightReel.com Streaming
Store;
o Production and broadcast of live and taped sports events via streaming
on the Internet.
Families with sports participants and video camcorders represent a very
attractive demographic that advertisers and merchandisers want and parents are
very enthusiastic about their children's participation in sports and athletics
and will embrace ways to raise their children's profile and recognition. Parents
will also appreciate HighlightReel.com's association with scholarship and its
focus on offering awards that can impact children's futures. Result - motivated
users hungry for a visibility form that is also entertaining and fun! And what
kid doesn't like to see him or herself on screen or call friends and say "check
out my personal HighlightReel.com site?! AOI will be there to serve, entertain
and reward them.
2. MARKET DEFINITION
The growth and future of the Internet as a medium of mass communication,
information and entertainment is no longer a matter of speculation as it was in
1994 or 95, but a self-evident reality. As network bandwidth pipelines expend
and increase speed to keep pace with market and technology demands a wider range
of compelling content will not only be available but home consumers will be
equipped to receive and enjoy in very high quality. Sure the big media players
like Time Warner and Disney will be there producing excellent mainstream
entertainment like they always have but independent new media companies like AOI
will fill the niches. And these niches will represent the majority of all
content available on the Internet making AOI an exciting opportunity.
Let's review some basic yardsticks of Internet growth, usage, commercial
activity and multimedia content development to understand the scale of the
opportunity:
2.1 INTERNET INDUSTRY & GROWTH
o Fewer than 40 million worldwide were connected to the Internet in 1996.
By the end of 1997, more than 100 million people were using the
Internet. Some experts believe that one billion people may be connected
by 2005.
- US Dept. of Commerce, "The Emerging Digital Economy". 4/98
8
<PAGE> 25
o As of the 12/96, about 627,000 Internet domain names had been
registered. By the end of 1997, the number domain names more than
doubled to reach 1.5 million.
- US Dept. of Commerce, the "Emerging Digital Economy". 4/98
o Traffic on the Internet has been doubling every 100 days.
- US Dept. of Commerce, "The Emerging Digital Economy". 4/98
o More than 58 million adults in the US & Canada use the Internet
representing 45% of the potential market.
- CommerceNet & Nielsen Media Research, 5/98
o Nearly 45 million PCs in the US access the Internet regularly, a 43%
increase from 1st quarter of 97 to 1st quarter 98.
- Ziff-Davis, 5/27/98
o The number of PCs that use the Internet has grown more than 140% in
the past two years, from 18.6 million in 1/98 to 45 million in 1/98.
- Ziff-Davis, 5/27/98
o "About one in three workplace PCs access the Internet, and nearly one
in tow home PCs does the same. In just two years, the Internet has
become a home PC mainstay.
- Ziff-Davis, 5/27/98
o "The average Internet PC was connected to the net 4.5 hours a week
therefore Internet "eye-ball hours" increased some 80% in the last
year. It's no wonder that more and more companies are looking to the
Internet as an advertising medium to reach their customers. What other
medium grew 80% in the past year?"
- Ziff-Davis, 5/27/98
o Online traffic momentum based on web page views grew 430% in the past
year at Excite.com
- Excite, Inc., 2/9/98
o Ad spending grew on average 27% in one quarter (Q3-Q4 97) at the four
largest search engines/web portals (Excite, Yahoo, Lycos, Infoseek).
- Excite, Inc., 2/9/98
o Total Internet ad spending was $907 million in 1997. It is projected
to top $1.4 billion in 1998, an increase of 55%.
- Internet Advertising Bureau, 6/98
o Sports sites overall were winners in June, 98 in terms of total
traffic and visitors.
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<PAGE> 26
- June Web Report, Relevant Knowledge. 6/98
o Venture Capitalists provided $12 billion to hundreds of IT start-ups in
1996 and 1997.
- US Dept. of Commerce, "The Emerging Digital Economy", 4/98
o Venture Capitalists poured a record $567 million into Internet
start-ups Q2 1997 and another $460 million in Q1 1998. Michael Moritz
of Silicon Valley's Sequoia Capital says "I don't think we have yet
seen even 10% of all the interesting new ideas related to the emergence
of the Internet".
- Wired Technology News, 7/15/98
2.1 E-COMMERCE INDUSTRY & GROWTH
Here are some facts that point to the emergence, growth entrenchment of commerce
and retailing online:
o By 2002, the Internet may be used for more than $300 billion worth of
commerce between businesses.
- US Dept. of Commerce, "The Emerging Digital Economy". 4/98
o A total of 10 million PCs used the Internet to shop for e-purchases in
1997.
- Ziff-Davis, 5/27/98
o Internet users are split 55.8% males, 44.2% females with median
household income at $55,740 who will spend $360/yr just on Internet
access in 2001.
- Forrester Research, Inc., 12/97
o Today it's mass-market book titles (that are selling new), reflecting
the mainstream consumers now on-line.
- Forrester Research, Inc. 12/97
o Today's online shoppers are satisfied and ready for more. They are
hooked on the convenience of this new experience.
- Forrester Research, Inc., 12/97
o During the next five years, the market will quadruple in size to 43
million on-line shoppers, slightly less than 50% of the on-line
audience.
- Forrester Research, Inc., 12/97
o By 2000, web households will purchase on-line an average of ten times
per month.
- Excite, Inc., 2/98
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<PAGE> 27
o In 1996, Amazon.com, the first Internet bookstore, recorded sales
of less than $16 million. In 1997 it sold $148 million in books to
Internet customers.
- US Dept. of Commerce, "The Emerging Digital Economy", 4/98
o In January 1997, Dell Computers was selling less than $1 million of
computers per day online. During the December 97 holiday period Dell
reported reaching $6 million in daily sales several times.
- US Dept. of Commerce, "The Emerging Digital Economy", 4/98
o Categories leading ad spending during Q1 98 were computing (27%),
consumer products (25%), telecom (14%), financial services (13%) and
new media (10%). Banner advertisements continue to dominate spending at
55% with sponsorships making up 40%.
- Internet Advertising Bureau, 6/98
o Use of the Internet and online services by the American public is
reducing the time devoted to other prominent daily activities such as
watching TV, exercise and reading. 64% of Internet users report the use
of the Internet has reduced the amount of time they spend watching TV
or using a VCR.
- Strategies Group Internet User Trends Report, 6/98
o Total Internet spending by businesses and consumers will increase to
$500 billion worldwide in 2002.
- IDC White Paper, 6/98
2.3 STREAMING MEDIA - WHAT IS IT AND HOW WILL GROW?
As recently as 1995 the prospect of listening to high quality audio or watching
passable video over the Internet was limited to discussions at cocktail parties.
With the great majority of Internet users still suffering through online
sessions at modem speeds of 14.4 kps, or maybe 28.8 kps, a real opportunity to
develop a solution to "stream" audio and video within existing bandwidth
constraints arose. While a variety of innovators jumped into the fray it was
RealNetworks of Seattle that developed a technology, the RealPlayer, which at
the end of 1997 had over 20 million unique users. Further RealNetworks'
RealSystem and servers are now used to deliver content on more than 85% of all
streaming media enabled web pages. Microsoft also waded into the streaming
technology market and invested in RealNetworks, licensed its technology and
released its own streaming media platform, Netshow. Seattle is now the worldwide
streaming technology nexus and the home to a burgeoning number of online content
developers and media companies leveraging these streaming technologies.
What's the impact of high quality streaming? In the 4th quarter of 1997 alone,
total web pages containing streaming media doubled. Every week 145,000
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<PAGE> 28
hours of sports, music, news and entertainment are broadcast over the Internet.
For broadcasters like Seattle's Starwave (recently purchased by Disney) who
produces ESPN Sportszone, CNN and Playbill Online, live and on-demand streaming
programming is one its most popular features. What sites like Starwave have
found is that by enhancing the experience with streaming media they INCREASE
TRAFFIC, KEEP VISITORS COMING BACK AND STAYING LONGER WHILE GENERATING MORE
SALES. Unlike text and pictures the Internet comes alive with streaming media
and can deliver on its potential to become a mass medium comparable on scope
with TV and radio.
Streaming media enhances and expands the quality and scope of offerings for
online content producers, broadcasters, advertisers and merchandisers. As
Streaming takes greater hold it is expected to increase consumer demand by
greatly improving the users' experience, and accelerate a shift in advertising
revenues away from traditional media to the Internet. In fact Forrester Research
predicts that advertising revenues from online content businesses will grow to
$8.5 billion by 2201 or 5% of all ad spending valued at $175 billion in 1996.
But while streaming will be a catalyst to many facets of online growth it
requires help from bandwidth providers to fulfill its promise - and there is
good news! Standard Internet access via 28.8 kps or 56k modems puts limitations
on streaming quality and the race is on from a host of telecommunications
players to lay the infrastructure and offerings for the next generation of high
speed Internet gateways. Whether it be DSL technologies from major telcos like
GT, cable modems from consortiums like AT&T/TCI?@Home or wireless, satellite or
even electric utilities, high speed access will be available throughout North
America shortly. Once these service offerings, ranging up to 10 Mps, are
embraced by bandwidth hungry consumers opportunities for content providers to
deliver superior products will be countless. When bandwidth is coupled with
ever-improving streaming technologies we expect more and more people will want
to put their own audio and video clips online. AOI will be ready to maximize
this opportunity.
2.4 HIGHLIGHTREEL.COM - A USER PROFILE
It is worth noting some online user dynamics recently identified by Forrester
Research. HIGHLIGHTREEL.COM will appeal to a huge user base including online
segments Forrester calls "Neo-hearthminders", who are families with kids and
multimedia starved, entertainment-oriented "Mouse Potatoes". These segments
currently cover 43.3 million people in the US, of which only 45% are currently
on the Internet today.
It is this piece of the Internet usage market that we believe will be most
affected by the emergence and growth of the TV set-top box access roll-out.
Notably Microsoft acquired WebTV in 1997 based on its belief that a great number
of new users who may not be power computer users would readily adopt the
Internet
12
<PAGE> 29
through their televisions. America Online has also announced the launch of its
"AOL Anywhere" service which target new and existing users who will access the
Internet through new devices including screen phones, handheld PCs and
especially the TV. It is particularly the "Neo-hearthminders" with children that
will seriously consider Internet access through what may be more convenient or
familiar devices and the bulk of WebTV/set-top access services will be directed
at them. This is an opportunity for AOI in that we will position
HighlightReel.com to appeal to this market by creating entertaining web
properties as well as targeted WebTV/set-top "channels". A speedy build-out by
AOI will allow it to ride this growth curve.
HIGHLIGHTREEL.COM'S potential user base can be segmented into a variety of
groups:
Players: HIGHLIGHTREEL.COM'S participants or "Players" (highlight subjects)
represent a huge and diverse group including k-12 kids participating in school
or community sports, university and college student-athletes and adults in city,
community or corporate leagues. These groups participate in a huge range of
activities in sports and athletics and represents 60 million individuals in
North America. Many would enjoy, and be entertained, by the exposure
HIGHLIGHTREEL.COM offers them. They will also be able to compare their talents
with other players in their age group or league and continue friendly
competition and sportsmanship online.
Behaviour Trait - "They want to be stars, or at least have a shot".
Capture-Meisters: This sub-set as all those with video capture equipment like
camcorder who will be seeking the best highlight or shot of their child, student
or school pal. It is in this group's hands not only to get best highlight but
also capture it with the highest level of quality, skill and clarity. Parents,
coaches and team mates are the artists in this group. With video camcorders
already a staple household appliance entry costs are low and the ability to
capture and broadcast a large body of highlight content from a multitude of
contributors is viable. Another encouraging trend is that digital camcorders are
the fastest growing segment of the home movie market and are expected to reach
$2.7 billion is sales in 1998 and 50% of all camcorders sales by 2002.
Behaviour Trait - "They want to ensure their Players get their shot and are
recognized for their efforts", or "consider themselves damn good directors".
Family, Friends, & Fans (F3's): This is highly a motivated audience group for
HIGHLIGHTREEL.COM as they are closely associated with participants and are keen
to follow their progress and see how they stack up. They are also often spread
out geographically and viewing video of loved ones on the Internet is much more
convenient and immediate than mailing around a bunch of VHS tapes. Give this
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group new highlights of their favorite star and they will return over and over
again.
Behaviour Trait - Very nurturing and territorial - "Jimmy next door is on that
site so Johnny Jr. should be too" or "Let's check out that Granddaughter's
latest soccer goal highlight".
Recruiters: While this may be a smaller user sub-set it is a very motivated one.
By viewing highlights at our site Recruiters from colleges or junior hockey for
example may find a diamond in the rough. Another proposed AOI property will be
introduced later to leverage this group. At CentralScouting.com highlights will
be archived by age, sport and state/province on a release basis so that
registered coaches and recruiters may review highlights of potential talent
moving up to the next level and make contact with them.
Behaviour Trait - "That kid up in Maine was phenomenal but have you checked out
that winger from Boston? Wow!!"
2.5 ENCODING FOR STREAMING MEDIA -- A REVENUE OPPORTUNITY
HIGHLIGHTREEL.COM can host highlight clips in a superior destination site but
there is a critical step in highlight clip preparation prior to presenting audio
and video on the Internet as streaming media. Every audio and video transmission
over the Internet requires compression and conversion from the original
recording or production format. This is called "encoding" and it is required
for all video recording formats from traditional VHS or Beta formats to the many
new digital formats including QuickTime, Microsoft NetShow or RealNetworks
RealVideo. Beyond the actual conversion process a skilled encoder can also
enhance the original content quality with a variety of techniques and use of
state of the art digital encoding equipment.
It is possible for home users to purchase encoding equipment and software
required to publish their video and audio content on the Internet. However the
cost is high and the time required to master the skill is considerable. It's the
perfect process for an "as-needed" service business rather than making an
investment in rapidly changing technologies and "moving target" standards. In
many respects it's like "FotoMat" for the Internet where your original audio and
video is "developed" for streaming onto the Internet. It is AOI'S assessment
that a strategic partnership with a market leader providing optimized encoding
services is crucial both in terms of offering a comprehensive package for our
users and establishing a predictable, ongoing revenue stream. A partnership with
a qualified firm has been secured and will be discussed in Section 4.
2.6 BUSINESS & MARKET ASSUMPTIONS
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o HIGHLIGHTREEL.COM can be successfully positioned and marketed as the
"COOL" site for players and teams to showcase their highlight clips and
let their friends, family and fans follow their sports journeys and
endeavors;
o Players, teams and coaches are motivated by the pursuit of recognition
of their achievements to the extent they will capture, submit, encode
and publish their highlights at HIGHLIGHTREEL.COM;
o Players will be further motivated to play by the potential of winning
exciting prizes, like sports equipment from top manufacturers, and
athletic and academic scholarships at top institutions;
o University and college-level athletic recruiters will value a large
archive and clearinghouse for player highlights as a resource for
identifying up and coming talent;
o Advertisers and merchandisers will value the site's large and diverse
user group projected to be over 90 million in North America. As the
Player group includes the "hard to crack" teen demographic advertisers
and merchandisers will actively attempt to establish long term brand
loyalties at the site;
o Compelling sponsorship products will entice corporations to associate
and partner with HIGHLIGHTREEL.COM for visibility, brand-building and
will actively participate in the provision of valuable merchandise and
prizes and underwrite coveted scholarships at academic institutions;
o Leaders in online content, media and access will wish to license or
share ad revenues in exchange for use of HIGHLIGHTREEL.COM branded
content. These partnerships will also be integral for increasing
visibility of the site, entrenching brand awareness and driving high
player participation;
o Other strategic partnerships and associations with organizations such
as DARE, the NCAS, Net Nanny or Pop Warner, will enhance
HIGHLIGHTREEL.COM'S credibility and standing with its main users and
constituents;
o A HIGHLIGHTREEL.COM interface and we site with easy to use templates
and formatting can be created with off-the-shelf tools and relatively
little development and creative time and cost;
o A variety of outsourced providers can be contracted as alternatives to
building systems in-house such as Web servers and hosting, data
warehousing, bandwidth management etc.;
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o Hosting highlight clips free will quickly populate the site with
content and audience. Encoding services can be offered at price points
appealing to the user while maintaining margins for the service
supplier-partners and revenue shares for AOI.
3. PROGRAMMING
AOI will become an online partner synonymous with entertaining users who are the
authors of their own fun. By giving our Players a simple to use online channel
where their sports highlights are available for viewing by a worldwide audience
24 hours a day we offer anyone a chance to be a star. AOI has secured the
following Internet web site domain names which will form the family of
properties to be built-out and leveraged:
HIGHLIGHTREEL.COM STUDENTATHLETE.NET
HIGHLIGHTPACKAGE.COM CENTRALSCOUTING.COM
LEAGUEZONE.COM ATHLETICSCHOLARSHIP.COM
STUDENTATHLETE.COM
Initially HIGHLIGHTREEL.COM will be the charter property to be developed by AOI.
Here is how we propose to do it.
3.1 CONTENT
In the simplest terms HIGHLIGHTREEL.COM will leverage its user base to populate
itself with content by hosting and broadcasting highlight clips submitted by
Players and Capture-Meisters. This methodology will also give rise to a loyal
audience of F3's who are pulled to HIGHLIGHTREEL.COM to view each Player
highlight clip. A further benefit is that the majority of content for the site
will be acquired at virtually no cost. Players will be incented to participate
and submit view clips on a repeat basis through a series of monthly and annual
competitions to select the best highlights. Winners will be awarded with a
variety of valuable prizes and scholarships to academic institutions of their
choice. AOI feels very strongly about the positive relationship between
athletics and scholarship and believes this focus will be viewed very positively
by Players, F3's and indeed all site visitors.
3.1.1. HIGHLIGHTREEL.COM SITE STRUCTURE AND FUNCTIONALITY
Player highlight clip submissions of up to 3 minutes will be accepted from any
state or province in the US or Canada and hosted absolutely free of charge
(Encoding for streaming media will be offered for a fee and is detailed in 3.4).
This site will be arranged into an easy to navigate and browse graphical
interface so site visitors will be able to find what they want quickly.
Generally speaking the interface and highlight clip archive will be segmented
and organized by:
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- - Gender;
- - Sport of activity;
- - Age Groups (3) (Child - p to 12, Teen - 13 - 18, Adult).
This site will not distinguish between levels of athletics eg. Varsity, JV,
Intramurals, etc., but will accept and judge clips on their level of skill,
endeavor and even uniqueness.
Once a highlight clip has been received by the site it will be assigned a
specific URL and posted to the main site index. The Player and/or person making
the clip submission will be notified by e-mail of the URL. As part of the free
hosting service the site will also as the user if he or she would like
HIGHLIGHTREEL.COM to notify any others about the URL which it will do if
supplied with the addresses. Basic Player profiles will be requested but due to
sensitivity regarding minors' personal information only data supplied will be
posted. Completely confidential clips without Player profiles are acceptable but
unpublished registration information is mandatory. At the time of writing the
highlight clips will be hosted at HIGHLIGHTREEL.COM for two months before they
are removed. AOI may adjust free hosting period based on the data loads and
bandwidth optimization as the quantity of content grows.
It should be noted that once users have a URL for a particular clip they also
require a "viewer", or software to enjoy this or any other clips hosted at the
site or anywhere on the Internet. Already 20 million Internet users have
versions of REALNETWORK'S, "REALPLAYER" or MICROSOFT'S NETSHOW so the ability to
view clips is already firmly entrenched within the computer desktop. For those
users still requiring a "viewer" a link to download free versions from multiple
courses will be offered at the site. The site will also host an educational
step-by-step streaming tutorial on how to shoot better, winning highlight clips
with tips on editing and submitting video in the proper format. The better the
quality of videos received the better the content will be at HIGHLIGHTREEL.COM.
3.1.2 USER INCENTIVES
While simply offering free hosting of highlight clips and the opportunity to be
broadcast as part of a new media "channel" may be enough incentive for many
Players to joint in at HIGHLIGHTREEL.COM we will not leave this to chance. To
keep players posting new highlights on a regular basis and to keep F3's and our
audience at large highly involved AOI has devised a valuable incentive program
for all of our constituents. The cornerstone incentives will be in-house and 3rd
party corporate sponsorship programs where the best highlight clips will be
rewarded with compelling prizes and academic/athletic scholarships. One possible
reward program is as follows:
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o Three monthly highlight clip awards, one per age category (Child,
Teen, Adult) for each major sport. Awards to be $1000 approx. in
merchandise or scholarship value;
o Three annual Grand Champion highlight awards, one per age category
for each major sport. Awards to be $10,000 approx. in merchandise or
scholarship value.
A combination of judging formats are being considered will be utilized including
in-house HIGHLIGHTREEL.COM editors, celebrity judges such as pro athletes &
coaches and an audience voting process via automated online balloting and
selection i.e. like Major League Baseball All-Star Game voting. The audience
voting format is an interesting one in terms of driving additional audience
traffic. If promoted that awards were based on highest "click-thru's (literally
how many times it was seen) we can expect that Players will ensure that everyone
they know visits their personal highlight URL to check out their latest
highlight clip. This judging process is ultimately the most democratic, least
subjective and is tied to a standard online measurement parameter that is
verifiable (multiple viewings by the same address will be excluded). These
techniques will be explored in detail.
A comprehensive sponsorship program will be created and marketed to online
advertisers and merchandisers who will want to associate their company and
products with the HIGHLIGHTREEL.COM brand its diverse usership. While the bulk
of the sponsorship fee will secure a minimum level of enhanced visibility at the
site a portion will cover the award cost commitment. Sponsorships will be priced
for varying visibility values including annual and monthly positions. A wide
range of award sponsorship packages outside the main monthly and annual
offerings are possible. There are some hypothetical examples:
Nike sponsors an ongoing, annual "anchor" feature known as the
"HIGHLIGHTREEL.COM GRAND CHAMPIONSHIPS" involving high visibility and placement
and contribution of $30,000 for three major awards. Tie-ins with complementary
TV and in-store advertising programs run by Nike are possible;
Rawlings sponsors "Golden Glove Award" for defensive play in baseball for
monthly highlight clip winner during baseball season;
CompUSA sponsors a monthly award sponsorship for best football highlight and
awards a new PC package to winner;
Sony sponsor a video clinic online with a streaming tutorial including tips on
capturing better highlights and features its latest digital AV equipment
packages.
As part of general site programming regular features such as rotating viewing
buttons of top highlights archived at HIGHLIGHTREEL.COM will always be
available.
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Sponsorship packages such as "Top 10" clips of the month, "Simply the
Best" clips from all archives or "Hot out of the Can" featuring the latest
submissions will also be programmed and marketed. These will give users a
yardstick of quality to shoot for and ensure that above average content is
always a mouse click away.
Scholarship will be heavily promoted as one of the main missions of
HIGHLIGHTREEL.COM - to promote athletics as a vehicle to achieving, and as an
integral part of, academic success and growth. It is the intention of AOI to
give award winners the ability to select merchandise or a scholarship as their
prize. Scholarship funds for post-secondary institutions will be held in trust
until valid proof of enrollment is submitted by winners. An appointed trustee
(such as Ernst & Young) will be entrusted with scholarship funds and responsible
for their disbursement towards tuitions or other acceptable academic costs or
expenses. The winner is free to select which post-secondary institution the
scholarship funds will be used at. An adult winner is free to allocate
scholarship prizes toward their child or anyone of their choosing.
3.1.2. OTHER CONTENT OFFERINGS & SERVICES
In addition to its core content focus HIGHLIGHTREEL.COM will also integrate a
variety of entertaining offerings, many of which will provide additional
sponsorship opportunities:
o Develop branded "HIGHLIGHTREEL.COM" sporting events for "webcasting" to
an Internet audience such as the "HIGHLIGHTREEL.COM High School
Basketball All-Star Game" featuring seniors who submitted the best
highlights clips form the just concluded season. AOI will also seek out
opportunities to simul-webcast 3rd party produced sports events, such
as the NCAA Ice Hockey National Championship Series, and build
sponsorship vehicles around them;
o Integrate entertaining chat rooms into content that is conducive
comparison and discussions about highlight clips;
o Publish sports-related information and multimedia presentations
including coaching tips and clinics, training methods and regiments,
injury prevention and treatment;
o Merchandise a wide variety of offerings for sports equipment, team
apparel and gear, or video capture and editing equipment targeted to
HIGHLIGHTREEL.COM'S community of loyal, repeat users;
o Establish a HIGHLIGHTREEL.COM discount club with major sporting goods
merchandiser for athletes and teams;
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This site will also launch other co-branded sites and channels that branch from
HIGHLIGHTREEL.COM, offering complementary content that is of interest to our
core usership and audience. Here are two possibilities under consideration:
ATHLETIC SCHOLARSHIP.COM WILL OFFER:
o Academic development tools and information including study skills
enhancement, tutoring resources, time management, SAT preparation, goal
setting, etc.;
o Resources to assist student athletes access and win athletic and
academic scholarships by providing a clearinghouse and database of
available programs. Information concerning potential financial support
and sponsorship from sports foundations will also be available;
CENTRALSCOUTING.COM WILL OFFER:
o A special zone for athletic recruiters from university and college
institutions searching highlight archives for high school recruits.
High school players will have the opportunity to submit additional
personal information along with their highlight clip in this zone such
as statistics, profiles, GPA's, SAT's etc.
o AOI has already identified two new and innovative online services
targeted at university and college athletic departments and allowing
them to search databases of high school recruits and their profiles.
Online Scouting Network (www.osn.com) and Scout Net (www.scout-net.com)
both offer players the opportunity to post their profile and video clip
for a fee of $70 - 150. AOI has already initiated discussions with
these firms and is hopeful to establish commercial partnerships with
one or both. In this case HIGHLIGHTREEL.COM would co-brand and offer
these value-added services to its users on a revenue share basis.
3.2 CONTENT PARTNERSHIPS
In addition to the "backbone" content and services previously discussed AOI will
seek partnerships with a wide variety of organizations to supply compelling and
entertaining content targeted at our core usership. It will be AOI'S continuing
challenge to offer the most valuable content possible to its users and audience
and partnerships to secure and offer these elements are a major key to success.
Some examples may include:
o The National Coaches Association and a corporate sponsored property
such as Gillette's "You Make the Call" team up to provide content on
clinics, training and rules;
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o NCAA and its divisions such as "The Big Ten", offer content related to
qualifying for and becoming an intercollegiate athlete, and in
promoting specific institutions for college consideration;
o Previously discussed partnerships with recruitment services such as
Online Scouting Network or ScoutNet;
o Major online sports properties, like CNNSI or ESPN Sportszone offer
specific pro sports content that is complementary to HIGHLIGHTREEL.COM
in exchange for traffic. An excellent example - Sports Illustrated
Magazine print version has a well known feature known as "High School
Roundup" featuring outstanding student athletes from across the nation
each week. This could be leveraged online at HIGHLIGHTREEL.COM;
o Team up with Broadcast.com and simulcast the video portion of a
major sports event it is providing via radio webcast for eg. NCAA
Baseball Championships.
o Leverage the RealNetworks' Site Partner Program as a one of a family
sites fully embracing and extending usage of the Real streaming media
platform for content, advertising and merchandising. This will quickly
position HIGHLIGHTREEL.COM as a streaming content leader along with
other members including Wall Street Journal Interactive and Rolling
Stone Network. An outstanding opportunity presents itself for
RealNetworks to host a content area at HIGHLIGHTREEL.COM devoted to
tips for capturing and producing the best highlight clips possible.
3.3 COMMUNITY SERVICE & RELATIONS
AOI, INC. intends to develop the "HIGHLIGHTREEL.COM Foundation" to create key
relationships and initiatives which enhance and extend its profile in the
community while helping student athletes:
o Develop partnerships with "grassroots" community programs like
"D.A.R.E." and "Stay in School";
o Create a corporate sponsorship program to award coveted
"HIGHLIGHTREEL.COM Academic All American Scholarships" to academically
high achieving student-athletes;
o Partner with pro athletes who are active and visible in their
communities for promoting scholarships, athletics or community service
eg. "Stay in School", The United Way etc.
3.4 PREMIUM CONTENT STORE
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While HIGHLIGHTREEL.COM'S users and audience will return over and over to review
new highlights that they have a personal connection to our user-base also loves
professional and tier one college sports. They already have a long history of
consuming this content in television as spectators and consider it one of the
ways they would most like to spend free time.
An emerging market for premium streaming content is now taking hold along with
the ability to merchandise these products on a per view or perpetual license
basis. It is AOI'S intention to build a branded HIGHLIGHTREEL.COM STREAMING
STORE within the site where these products are merchandised and a revenue share
is paid by the content's license holder to AOI. Here are some examples:
o Sports Illustrated's "NFL Crunch Course" featuring top "hits" of the
year;
o Don Cherry of Hockey Night In Canada hosts his annual "Rockem Sockem
Hockey" Featuring the NHL's toughest hockey clips;
o NBA Final Series Review footage from NBA Licensing;
o HIGHLIGHTREEL.COM'S own branded compilation of "The Year's Best
Highlights".
It is expected that the quantity of premium digital streaming content will
increase dramatically over the next several years and AOI will aggressively seek
out the best products and offer them to its users. To increase buyer interest
and brand loyalty some very innovative "purchaser incentive" programs are being
launched online by a host of aggressive technology companies. One in particular,
NetCentives, Inc. of San Francisco, has devised a scheme allowing merchandisers
to offer online buyers major airline frequent flyer points for each purchase.
AOI will establish a variety of these programs to entrench HIGHLIGHTREEL.COM as
a destination merchandising property.
Finally it should be noted that as the site collects submissions from users it
will be in a position to build a comprehensive user database from which
merchandise offerings and advertising messages can be tightly targeted. The
tools to target on the Internet continue to improve allowing direct marketers to
build buyer histories and preference profiles. AOI will leverage these
techniques and tools at the HIGHLIGHTREEL.COM STREAMING STORE and in other
merchandising efforts to be discussed later.
3.5 DATA ACQUISITION
- A STREAMING MEDIA ENCODING PARTNERSHIP
HIGHLIGHTREEL.COM is really a content channel run by its users, who populate it
with entertaining content - their own highlight clips. For this reason it is
imperative that AOI build a highlight submission system that is both easy to use
and cost conscious, reducing barriers and allowing the largest number of
potential users to play and compete. Returning to section 2.5 there is also the
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additional step of encoding original video highlights into streaming media ready
for broadcast online. Submission and encoding must be executed flawlessly.
Rather than divert its attention from its core business of building entertaining
content sites and channels frequented by loyal users AOI has determined that a
strategic partnership with a leader and specialist is the best way to fulfill
the encoding requirements of its users. Such a firm has been identified and
discussions are now underway to position Seattle-based ENCODING.COM
(www.encoding.com) as the AOI'S streaming media encoding supply house led by
Microsoft alumnus and e-commerce visionary, Martin Tobias, ENCODING.COM was
launched in September 1997 out of the belief that streaming media online was
here to stay. The company has invested heavily in production equipment and
throughput systems to produce the clearest, sharpest sound and pictures
available. Their technologies are multi-platform both in terms of support for
all original capture formats (Beta, VHS, etc.) and streaming technologies
(RealNetworks' RealSystem.Microsoft's Netshow etc.).
At this time a fee structure for encoding is being developed. It is anticipated
that costs will be based on a maximum of three (3) minutes of encoded streaming
video at a price point of $9.95. As AOI is directing considerable traffic volume
for retail encoding to Encoding.com it will keep a pre-determined percentage of
each encoding fee. Further revenue potential lies in upselling users to higher
bit streams which are clearer and these opportunities should increase as
streaming media usage approaches critical mass on the Internet.
As part of the partnership ENCODING.COM would build a seamless interface for
HIGHLIGHTREEL.COM users to submit their video clips with registration
information via electronic file transfer (FTP) for required encoding prior to
posting the main site index and archive. For the large number of users not
capturing video with the latest digital camcorders a process of easy delivery of
actual video media such as VHS tape cartridges will be offered. A registration
form will be available at the site online for printing and inclusion with the
submitted tape. The original master will be returned to the customer for a
nominal shipping charge. To offer other submission alternatives to our users the
AOI plans to leverage ENCODING.COM'S growing number of retail outlet
relationships where physical drop off for tapes is possible. The company has
also had initial discussions with one large retailing chain for photographic
products about the potential of a partnership to accept tape submission. Chain
operations like Wal-Mart, Costco etc. are excellent prospects for this kind of
tie-up and it will be a priority to build a network of relationships to
facilitate retail drop off.
Of course the company will accept video clips from users that have already been
encoded and post them free of charge as normal. However we anticipate that the
great majority of consumers/users will not possess the required equipment and
software for high quality encoding for many years to come. Not to mention it's
just not very easy and most consumers don't have the time to fuss with
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formats, protocols and optimization tool sets. By offering users with an easy,
"one stop shop", per use cost approach that takes original video to broadcast as
painlessly as possible most HIGHLIGHTREEL.COM users will opt for our encoding
solution.
3.6 FUTURE MARKET DEVELOPMENT
For the purposes of this business concept we have confined HIGHLIGHTREEL.COM'S
activities to the North American markets of the US and Canada, where online
usage for sports entertainment is most entrenched. However this does not mean
that great opportunities do not exist in other markets where online usage is at
or approaching critical mass Australians and rabid about rugby and cricket,
British are the same about soccer as are all European markets and the Japanese
love baseball. All of these markets and many others have a variety of sports
played at multiple levels from children to adults. Once HIGHLIGHTREEL.COM has is
built-out and operating successfully at home we anticipate a wealth of
opportunities to leverage the basic platform in a host of new, ready-to-play
markets.
4. REVENUE MODEL SUMMARY
o ADVERTISING
As HIGHLIGHTREEL.COM'S usership and traffic ramps we will be in a position to
offer a wide variety of standard, animated and streaming banner advertising
opportunities to a diverse range of potential advertisers. Particularly good
advertiser prospects are sports equipment (Foot Locker), electronics/computer
(NEC Now, Sony), apparel (Gap, Levis), music (CDNow), books (Amazon.com), ticket
agencies, (TicketMaster), Travel (Preview Travel) and image seekers (Coke,
RayBan) etc. A standard rate card for national, regional and local targeting
will be developed based on a cost per thousand basis. It is the company's
intention to partner with one or more of the web media placement agencies such
as DoubleClick or 24/7 to sell its advertising positions and leverage these
firms large advertiser-client bases. Both have affinity marketing programs for
sports, family and technology sites and channels.
All efforts to leverage the highly desirable demographics of the site will be
taken while ensuring the quality of the overall presentation of the property.
This will be partially achieved by integrating streaming media banner technology
alongside HIGHLIGHTREEL.COM'S core streaming content. Studies show that
streaming ads generally produce "click-thru" rates (the percentage of served ads
actually clicked upon) twice that of standard "flat" banners. Also the ability
now exists to take existing TV advertising campaigns and move them to the
Internet with streaming media is here. Known as "webisodes" this ad tool will be
seen much more in 1999. To make the most of this opportunity the site will joint
the RealNetwork's
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"Site Partner Program" by supporting streaming ads and extending its positioning
as a true streaming media proponent and advocate.
o MERCHANDISING PARTNERSHIPS
The web has become the new arena of direct marketers who have moved online now
merchandising literally anything on the Internet. Sales numbers grow monthly and
one only need look to brands like Amazon.com, CDNow, Cyberion Outpost and Dell
to see Internet merchandising success stories. Just recently a joint study from
IDC and RelevantKnowledge now predicts online purchases will explode to $54
billion by 2002 from $4.3 billion in 1997!
Why is it working? ACCESS SELECTION, IMMEDIACY AND DELIVERY. Particularly it is
the medium's immediacy which is fully exploited when merchandising offers are
tightly integrated with content. When Elmo Dolls can be pitched in a live chat
session with Rosie O'Donnell or "Parent's Soup" baby name finder brings up
special offers for price reduced cribs you have a compelling sales tool indeed
and remember our "Neo-Hearthminders" ? According to Forrester Research this
HIGHLIGHTREEL.COM friendly segment will grab hold of online purchasing in the
next few years and push it to new heights.
Given these trends large, traditional bricks & mortar retailers like Sears and
new breed players like Cyberion Outpost are both paying big dollars for prime
positioning partnerships with top online traffic aggregators (eg. New York Times
Online) and web portals (eg. Lycos, Yahoo), Software.net recently paid AOL $21
million to be the exclusive seller of software at the online giant through 2001
and CDNow just paid MTV Online $22.5 million for a complex three-year music
retailing partnership involving TV and online promotions to name two examples.
While its market power will not compare with likes of AOL excellent
opportunities exist for AOI to leverage its audience into a wide variety of
multiple category merchandising partnerships where specific product offers are
made to HIGHLIGHTREEL.COM users. In exchange for aggregating demand and building
a compelling brand the company will structure deals that combine a monthly
minimum fee and a revenue share from products sold by the merchandiser partner
positioned at the site. AOI will also be able to offer its user database to
extend direct product offers via e-mail pushing recipients back to
HIGHLIGHTREEL.COM and its merchandiser-partner for the purchase. Product
categories that come to mind immediately are sports equipment & gear (eg. Nike,
Foot Locker), AV equipment (eg. Sony), music eg. CDNow, Music Blvd.), books (eg.
Amazon.com, Barnes & Noble) and apparel e.g. The Gap, Levis). All active online
merchandisers are looking for new sources of "eyeballs" for their online offers
and HIGHLIGHTREEL.COM intends to be one of these sought after positions.
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o CORPORATE SPONSORSHIP VEHICLES
When considering HIGHLIGHTREEL.COM's user and audience segments including
children, teens, parents, relatives, friends and fans there are promotional
opportunities for a very wide range of companies wishing to extend their
message. The company will create a range of compelling and visibility catching
sponsorship vehicles allowing sponsors to build brand awareness, introduce and
merchandise products and services and build an effective association with
HIGHLIGHTREEL.COM's entertainment-seeking audience. Here is a brief summary of
vehicles under consideration:
Award Sponsor - Annual Grand Championship or Monthly Championship positions
including contribution for scholarship and/or merchandise. Example - Reebok buys
a permanent position sponsoring the Grand Championship;
Content Feature Sponsor - regular feature spot for well-known property from
traditional media. Example - Sport Illustrated's Weekly High School Round-up;
"Best of" Highlight Sponsor - Positions to sponsor special content features such
as monthly "Top 10 Clips" or "Top Football Clip of the Year". Example - ESPN
Sportszone buys a monthly position for "Top 10 Clips";
Clinic Sponsor - Positions to sponsor special multimedia streaming clinics and
tutorials related to sports and athletic coaching clinics and educational
sessions detailing video capture how to's, editing and the do's and don'ts of
streaming media. Example - Spalding buys an annual position for basketball
coaching clinics;
Merchandising Sponsor - Special feature areas will be programmed to allow
merchandise partners to introduce and explain products with streaming ads and
build a following at HIGHLIGHTREEL.COM. Example - JVC buys a position to host
the "JVC AV Station";
HIGHLIGHTREEL.COM Streaming Store Sponsors - a number of media companies with
products stocked at the store will be approached to sponsor particular content
categories and features. A range of coop vehicles will also be developed.
Example - NFL Films heads up the stores football section;
All vehicles will be priced based on traffic, visibility and overall promotional
value.
o ENCODING FEES
As previously discussed the great majority of HIGHLIGHTREEL.COM users will not
have the ability or the inclination to encode their video highlight clips for
streaming online. Through ENCODING.COM the company will offer encoding service
at an attractive consumer price point of $9.95 for a 3 minute clip and earn
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a revenue share for each. This is an easy to establish, volume-based revenue
stream which is positioned as a requirement for participation at
HIGHLIGHTREEL.COM or for any streaming vehicle on the Internet.
In the future as users become more sophisticated and skilled at video capture
and demand more clarity we expect an opportunity to upsell higher quality
encoding processing at higher through put bit streams.
o HIGHLIGHTREEL.COM STREAMING STORE
The company will operate a branded online storefront at the site offering
premium entertainment content for streaming sold on a per use and perpetual
license basis. In addition to focusing on sports content other complementary
content products in multiple categories will be available including such diverse
subjects such as eg. Cooking with Martha Stewart, Home Renovations with Bob
Vilas etc.
o EVENT WEBCAST PRODUCTION
As the company advances its business it will actively seek out opportunities to
secure digital rights for, and develop, produce and webcast, branded live sport
events which will be compelling and entertaining for its audience. Under
consideration are events like the Pop Warner National Football Championships.
o RECRUITMENT NETWORK PARTNERSHIPS
Due to the high number of high school students expected as Players and audience
at HIGHLIGHTREEL.COM the site is an attractive demand aggregation point for
online student-athlete recruitment services. The company would receive a revenue
share from each new recruit signed up through the site.
o USER DATABASE LEVERAGING
As HIGHLIGHTREEL.COM'S usership and audience grows the company will own and
manage a large database of highly coveted online consumers that can be utilized
by a whole range of direct marketers. AOI will market this database and develop
partnership programs to share in merchandise sales directed at its loyal users.
5. MARKETING & DISTRIBUTION
5.1 IMAGE & POSITIONING
AOI'S challenge will be to position HIGHLIGHTREEL.COM with the following key
elements and messages:
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o "A place to bring out the star in everyone";
o "A sports channel by you for you";
o "Everyone gets a shot, and it's so easy";
o "Scholarship and Sports - a Great Partnership";
o "Families and Sports - another Great Partnership";
o "Interactive Programming is here - You select what you want".
To drive these points home the first steps is to push forward with an attention
catching media launch and blitz. A suitable high tech media and press relations
firm will be retained to design and execute an awareness program for the
company. The program elements will include:
o Holding a press launch event with an AV presentation demonstrating
HIGHLIGHTREEL.COM'S content offering;
o Distribute media kits to press contact database in media, technology,
sports, publishing and general categories;
o Principals to participate in press tour to interview with selected
media outlets in New York, Washington DC, Los Angeles and
San Francisco;
o Participation in a selection of Internet, streaming and interactive
publishing trade shows including hosting several media awareness events
within them;
o To drive home the positive aspects of the site build an association
through corporate sponsorship or some other means to secure a
"signature anchor" affiliation(s) with a household name professional
athlete who embodies the core values of AOI (eg. Troy Aikman, David
Robinson, Ken Griffey Jr. etc.)
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<PAGE> 45
5.2 STRATEGIC DISTRIBUTION PARTNERSHIPS
The principals have considerable experience establishing strategic partnerships
for commerce and traffic generation with online leaders and will seek to build
HIGHLIGHTREEL.COM'S exposure and audience through positioning the property
within appropriate large media properties online.
A range of strategic partnership classes can be identified, sought and
implemented by the company;
o DISTRIBUTION & TRAFFIC
The Internet "Gold Rush" or "Land Grab" is on and a whole host of traditional
media organizations and youthful, Internet-bred web portals and content leaders
are fighting it out to be destination "home bases" for users online now and the
massive host still to come. Activity is so fierce that a whole new round of
acquisitions are now in play such as Disney's recent buy-out of Infoseek. It has
now become clear that the way to win or lead this battle is to offer the most
compelling, entertaining and informative content, services and tools available.
AOI will position HIGHLIGHTREEL.COM as a new content feature that online content
leaders can simply plug into their menu of offerings. Given the site's appeal to
such a wide range of ages and demographics the potential should interest a wide
variety of new media players. Here are some examples:
Excite, Yahoo, Lycos, AOL, Disney/Infoseek, MSN, Snap!Online/NBC etc.
Alternatively the best possibilities may exist with well-financed new portals
and properties, that may be late to the game as content players and are now
moving fast to extend their brand online and catch up with their full featured
programming menus. Some examples are:
Alta Vista, GeoCities, Mindspring, AT&T/TCI/@Home. USWest Internet, Go2Net, Time
new Media, Washington Post Online, BellSouth.net. etc.
In the case of the telcos and cable organizations providing their subscribers
access and bandwidth, such as AT&T and USWest, there are interesting
opportunities to demonstrate what streaming media is, and can achieve with new
high speed offerings such as cable modems and DSL. The company will seek
partnerships with this group allowing it to offer an initial hosted and encoded
clip as a promotion enclosed with monthly billing statements.
HIGHLIGHTREEL.COM is also a good fit with any sports category site or channel
such as CBS Sportsline, ESPN Sportszone and The Sporting News and these will be
explored as tie-up targets. The same can be said for family-friendly
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properties such as Net Nanny and Ziff Davis' Family PC Online due to their heavy
traffic from parents and educators.
The nature of any potential tie-up would likely involve co-branding and
licensing HIGHLIGHTREEL.COM'S content free of charge to the partner and sharing
ad revenues generated within the partner's domain. Commerce partnership deals
will also be offered to traffic partners who will be incented by receiving a
10-20% revenue share of encoding fees payable to the site. The company is also
keen to establish exciting launch promotions with its partners including
offering a first highlight clip with free hosting and encoding included.
A final note is that AOI/HIGHLIGHTREEL.COM may be an excellent acquisition
target for a wide range of online content players looking to broaden and extent
their offerings. A recent example of smallish content takeover had Go2Net
offering $36 million in stock to the popular, 2-person, Silicon Investor.
o TECHNOLOGY PROMOTION
Another tie-up possibility for the company involves promoting streaming media as
a new mainstream communications vehicle that is both accessible and easy to use.
Both RealNetworks and Microsoft will be approached on the basis of highlighting
the site as a real-world example of the power of streaming for leveraging the
Internet as an entertainment medium. Both companies have launched "Site Partner
Programs" and HIGHLIGHTREEL.COM will grow these associations to the greatest
extent possible.
o EDUCATION & COMMUNITY PARTNERSHIPS
In keeping with the value placed on athletics as a vehicle to academic
achievement the company will establish a range of affiliations that position it
within the educational community and neighbourhoods everywhere. After building
awareness and buy-in from this constituency the company will seek to promote
itself through association with organizations such as the:
o NCAA;
o NCAA Athletic Conferences;
o National & State High School Coaches Associations;
o National and State Principals Associations;
o "Stay in School Program";
o DARE etc.
5.3 AFFILIATE PROGRAM
Many web sites and online content publishers are looking for new and exciting
content to compliment their online offerings in the struggle to attract traffic
and revenue. AOI will develop an affiliate program that allows independent sites
to
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quickly build and activate a co-branded version of HIGHLIGHTREEL.COM for
presentation at their sites at no cost or obligation. Particular attention will
be given to sites devoted to streaming media development and presentation AV
merchandising, and family content players like Parent's Soup. Adult pornographic
sites will be excluded.
5.4 DIRECT MARKETING
To build awareness quickly and make a promotional offer to play the company will
execute a highly targeted direct response campaign via traditional mail and
electronic mail vehicles. This organization's target lists are suitable to
convey the HIGHLIGHTREEL.COM opportunity to their constituents.
Specific databases that may be considered include:
o K-12 Schools and Athletic Departments;
o Regional representatives for Pop Warner Football, Little League
Baseball, Minor Hockey;
o Community Centers;
o Cable, Telco and ISP subscribers;
o Web portals and major traffic properties;
o Online Merchandising Leaders.
5.5 ADVERTISING
The company is prepared to consider a range of paid advertising vehicles to
build awareness and make promotional and special offers. Family, parenting and
youth print publications are one alternative. Online advertising programs
provided through media placement companies like the DoubleClick Network and 24/7
are particularly interested based on the ability to make ad buys from a range of
affinity sites in specific categories like family, sports or technology. The
necessity or utilizing paid advertising will be determined by the success of
other visibility and distribution programs mentioned previously.
6. OPERATIONS
6.1 CORPORATE FINANCE
It is the intention of AOI to secure financing by being acquired by a listed
public vehicle which may be trading on either an exchange in the US or Canada.
Alternatively AOI may establish itself by listing as a small cap venture from
the outset. Several corporate finance groups have expressed interest in the
project and AOI is assessing proposals at this time.
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<PAGE> 48
6.2 ORGANIZATION
AOI is based in Seattle, Washington and intends to further build its operations
from there once corporate financing arrangements are in place. Seattle is the
optimal location for AOI due to its focus on streaming media and entertainment.
With leaders such as RealNetworks, Microsoft and Disney's Starwave situated
locally, and its prime strategic alliance with Seattle-based Encoding.com in
place, AOI will take advantage of many benefits by growing within the world's
streaming media nexus. Modest, well-located premises with the latest Internet
connection infrastructure will be secured for the operation.
6.3 PRINCIPALS
Both principals have requisite Internet and e-commerce experience gained in
online technology ventures dating back to 1994, including management positions
in marketing, business development, software and product licensing and corporate
finance.
GRAHAM HEAL (37), CEO & PRESIDENT
Graham Heal has online industry experience dating back to 1994 when he was a
founding member of Net Nanny Software, the well known Internet filtering tool.
At that time he wore a variety of hats as Vice President, Marketing including
steering marketing, sales, channel development, online commerce, licensing,
strategic partner development and assisting in corporate finance and funding. He
then went on to fulfill management roles at two e-commerce companies, firstly as
Director, Business Development at DownloadWAREHOUSE, an innovator and leader in
operating Internet stores reselling downloadable software. Most recently he was
Director, business Development at online software distributor, Digital River
Inc., where he was responsible for establishing key partnerships with online
traffic leaders wishing to merchandise software from their sites. He has very
current relationships with a variety of Internet leaders including Excite,
Yahoo, Lycos, Infoseek/Disney, Alta Vista, Mecklermedia, RealNetworks, Cnet,
DoubleClick, Time New Media, GTE, USWest etc.
Prior to entering the online arena Graham spent six years as a management
consultant where he acted on behalf of telecommunications companies, forest
product giants and firms particularly focused on trade to Asia. He also spent
three years in Japan in the mid 80's where he worked in PR and trade development
positions for an international brewer and the Province of British Columbia,
Canada.
It will be Graham's responsibility to direct AOI'S initial development and
growth while being directly involved in corporate finance, investor development
and relations, marketing, PR and strategic relationship development.
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COO & GENERAL MANAGER
TBD
6.4 OTHER KEY HIRES
Both principals have strong knowledge and experience in building an online
start-up company, e-commerce business development and strategic partner
acquisition and licensing. From previous ventures both principals have a wide
range of skilled contacts looking for new venture opportunities who they may
call upon. It is expect that the following key hires will be required and can be
secured locally in Seattle:
o Chief Technology Officer (Networking, Web design and database experience
required);
o Director - Content/Chief Web Designer;
o Director - Marketing & Business Development;
o Office Manager (Admin, Accounting, HR, Customer Support).
6.5 CONTRACTED SERVICES
It is AOI'S objective to hold hiring down to 10 persons maximum in year one. The
CEO has very recent experience directing an Internet software start-up based on
the premise of minimizing in-house staff and maximizing outsourced specialists.
The key benefits of this strategy is to hold down overheads and allow for fleet
of foot flexibility given changing market conditions and technologies in the
online industry. Too many high tech start-ups never get beyond the first 10% of
their build out due to expending the majority of their funding on high salaries
and office expenses. Contracted service positions will be allocated for:
o Accounting;
o Public Relations/Media Placement;
o Legal;
o Customer Service.
6.6 DIRECTORS
AOI anticipates gaining considerable Internet and e-commerce experience through
the skill-sets of its directors. At this time it is expected that board members
with management experience from a variety of backgrounds including companies
like Microsoft, Net Nanny and Online Interactive will join the board.
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7. MAJOR COST ITEMS
An online content business requires sophisticated systems and technology to
deliver product seamlessly to its audience. Many technology companies in this
space allocate huge sums to build their technical infrastructure and data
handling facilities. This will NOT be the course followed by AOI. Here is a
summary of major cost items:
FIXED COSTS
o In-house computer systems and network;
o Office fit-out & furniture
VARIABLE COSTS
o Web site hosting and data warehousing;
o Marketing and advertising;
o Salaries & Overhead.
8. RISKS
The business as described may encounter a host of risks given the online
industry changes rapidly. As the roll-out of the operation precedes the
mass-market for streaming media the company is taking a leading edge approach in
building its opportunity before large players are focused. Here are a few items
to consider:
o Developing internet content and publishing businesses is complex;
o Acceptance by users;
o Ability to attract users, traffic and compelling content;
o Use of data/images concerning minors.
9. COMPETITION
While sport content sites are plentiful online no other property has been
identified in this specific niche of sports entertainment.
10. CRITICAL KEYS TO SUCCESS
o Building a community and audience of loyal users with considerable size
and scale;
o Developing key alliances to drive traffic and aggregate "eye balls";
o Ability to offer compelling and entertaining content, services and
offers that are updated often;
o Selecting the best strategic partners in the online space;
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<PAGE> 51
o Executing flawlessly on content acquisition and fulfillment of
services, products and merchandise to our constituents and users;
o Provide superior customer service and care.
11. SECOND STAGE CONTENT CHANNELS AND BUSINESSES
HIGHLIGHTREEL.COM is the initial offering from AOI that will build a scalable
platform from which other online entertainment properties can be launched. Other
content categories under consideration for 2nd Stage AOI channels are
jokes/comedy and independent short films. Again the company will employ a model
of populating the channels with user-created content and award incentives to
ensure repeat submission.
12. FINANCIALS
AOI REVENUE & EXPENSE
PROJECTIONS
Reflected as $US 000's
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SALES YR1 YR2 YR3 YR4 YR5
- ----- --- --- ----- ----- -----
Banner Ads 160 960 1900 3700 7200
Merchandising 500 3500 8200 19800 46900
Partnerships
Sponsorships 115 990 1960 5000 10400
Encoding ($5.00 revenue share per user) 60 180 350 500 1100
Content Stores 225 850 2950 3500 7000
Event Broadcast & Sponsorships 0 340 1190 1400 2900
--- ---- ----- ----- -----
TOTAL SALES 960 6820 14650 33900 75500
</TABLE>
Notes: Merchandising Partnership Revenue share is 15%, Content Store Margins
are 40% avg.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
EXPENSES YR1 YR2 YR3 YR4 YR5
- -------- ---- ---- ----- ----- -----
Cost of Sales 560 3500 8200 18900 45100
Mkt, sales, Advertising 500 1300 1800 2400 2900
R&D/Ops 300 800 1400 2400 2900
Awards/Scholarships 100 200 350 500 1000
General & Admin 300 750 1000 2100 2400
Total Expenses 1760 6550 12750 26300 54300
Net Income Before Taxes -800 270 1900 7600 21200
Taxes 120 855 3420 9540
---- ---- ----- ----- -----
NET INCOME AFTER TAXES -800 150 1045 4180 11660
</TABLE>
35
<PAGE> 52
13. APPENDICES
- US Department of Commerce Study, "The Emerging Digital Economy"
April 1998
- Interactive Week Article, Subject - "Encoding.com" - June 16, 1998
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<PAGE> 53
SCHEDULE "B"
TECHNOLOGY SUPPORT SERVICES
1. SUPPORT SERVICES
For the monthly fee specified in paragraph 3, the Developer agrees to provide
the Technology Support Services to Sensus. The Technology Support Services shall
be performed during the hours of 9:00 a.m. to 5:00 p.m. in each Business Day and
shall consist of the following:
1.1 Telephone assistance -- the Developer will supply telephone assistance to
Sensus regarding the Technology, which telephone assistance shall include the
following:
(1) explanation of functions and features of the Technology;
(2) clarification of any documentation relating to the Technology;
(3) guidance in the operation of the Technology;
(4) consultation on processing problems in connection with the Technology;
(5) correction of errors and assistance in recovering lost date under
paragraph 1.1 and 1.2 of this Schedule if correction can be made by telephone,
and
(6) assistance in the installation of enhancements.
1.2 Correction of program errors -- the Developer will promptly correct errors
in the Technology of which it is notified, orally or in writing, by Sensus. the
Developer will proceed diligently and expeditiously in correcting suspected
errors. Sensus will provide particulars of the suspected errors and the
circumstances in which they occur.
1.3 Assistance in recovering lost data -- If data relating to, produced by, or
used in connection with the Technology is lost owing to a malfunction of
hardware or software, the Developer will assist Sensus in recovering the data.
This assistance will include providing advice on how to restore files from
backup media, including damaged media to the extent that the data is
recoverable, and on how to reconstruct date which is unrecoverable.
1.4 Enhancements -- the Developer will provide enhancements to Sensus at no
extra cost. Subject to paragraph 1.1(6), Sensus will be responsible for
installing the enhancements. However, the Developer shall provide to Sensus
instructions that can be understood by a non-technical person on how to install
the Enhancements.
1.5 Performance evaluation -- Once in each calendar year, a senior consultant of
the Developer will visit Sensus for a period of four hours to evaluate the
performance of the Technology and to provide general advice to Sensus.
1.6 Table and logic changes -- the Developer will forthwith provide such changes
regarding existing tables and such minor logic changes to the Technology as are
necessary to reflect legislative and regulatory amendments affecting the
Technology (for example, variation of quantum of payroll deductions).
<PAGE> 54
2
2. RESPONSE TIME
2.1 the Developer shall respond to requests for service by Sensus under
paragraph 1.1, 1.2 and 1.3 no later than the second hour after the request is
received. However, if a request for service is received by the Developer on a
day other than a Business Day, or before 9:00 a.m. or after 5:00 p.m. on a
Business Day, the Developer shall respond to the request for service no later
than the later of 9:00 a.m. of the next Business Day.
2.2 For the purposes of paragraph 2.1, a request for service made by telephone
to an employee of the Developer, to an answering service employed by the
Developer, or to a telephone recording device used by the Developer shall be
deemed to be received at the time it is made.
3. AUTHORIZED REPRESENTATIVES
Sensus shall designate in writing to the Developer three persons who will act as
representatives for Sensus. Sensus may replace its representatives at any time
by notice to the Developer. In general, the Developer will supply telephone
assistance to Sensus under paragraph 1.1 only through Sensus' representatives.
4. ADDITIONAL SERVICES
Any consulting or development services, in addition to the Technology Support
Services, provided by the Developer to Sensus, at the request of Sensus, will be
provided at the best rates provided to the Developer's other customers.
<PAGE> 1
Exhibit 10.2
TARGETCO ACQUISITION AGREEMENT entered into this 31st day of May, 1999.
BETWEEN:
SENSUS CAPITAL CORP. (a Nevada corporation)
(hereinafter called "Sensus")
OF THE FIRST PART
- and -
830245 ALBERTA LTD. (an Alberta Corporation)
(hereinafter called "830245")
OF THE SECOND PART
RECITALS
WHEREAS:
1. The Board of Directors of 830245 wish to encourage Sensus to make a
take-over bid to the shareholders of 830245 by offering to purchase all
of the outstanding Class "A" Common Voting Shares to assist in creating
an enhanced liquidity for shareholders of 830245 .
2. The Board of Directors of 830245 have determined that it will recommend
acceptance of the Sensus offer to the shareholders of 830245 .
3. Sensus is willing to make an offer subject to the terms and conditions
of this Agreement.
NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter set out, the
parties hereby agree as follows:
<PAGE> 2
-2-
ARTICLE 1
THE OFFER
1.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, Sensus
agrees to mail on or about May 31, 1999, or so soon as the
documentation is available to the holders of Class "A" Common
Voting Shares of 830245 an offer to purchase all of the
outstanding Class "A" Common Voting Shares of 830245 , by the
exchange of one (1) Sensus Common Share for each issued and
outstanding 830245 Class "A" Common Voting Share subject to the
terms and conditions set out in the Offer marked as Schedule "A"
to this Agreement (as such Offer may be amended from time to time
as permitted under this Agreement). Sensus expressly reserves the
right to modify the terms of the Offer except that, without the
prior written consent of 830245 , Sensus shall not reduce the
Offer price; change the form of consideration payable under the
Offer; or add to, amend or change any of the offer terms in any
manner adverse to the holders of Shares;
(b) The Offering shall expiry approximately 21 calendar days after it
is commenced (or, if such date is not a business day, on the next
following business day), provided that the Offer may be extended,
at the sole discretion of Sensus, if the conditions thereto set
forth in Schedule "A" hereto are not satisfied on the expiry day
of the Offer. Subject to the satisfaction or waiver of the
conditions set forth in Schedule "A" hereto, Sensus shall within
the time periods required by law take up and pay for all Class
"A" Common Voting Shares validly tendered (and not properly
withdraw) pursuant to the Offer. Sensus shall use its reasonable
commercial efforts to consummate the Offer, subject only to the
terms and conditions hereof.
1.2 830245 APPROVAL OF THE OFFER
830245 represents that its Board of Directors, upon consultation with
its advisors, has determined unanimously that the Board of Directors
will recommend that 830245 Shareholders accept the Offer.
1.3 POST OFFER COVENANTS
If Sensus takes up and pays for Class "A" Common Voting Shares pursuant
to the Offer, Sensus and 830245 agree to use all reasonable commercial
efforts to enable Sensus to acquire the balance of the Class "A" Common
Voting Shares as soon as practicable after completion of the Offer by
way of compulsory acquisition, arrangement, amalgamation or other type
of acquisition transaction
<PAGE> 3
-3-
carried out for a consideration at least of equal value of the
consideration paid in the Offer.
ARTICLE II
COVENANTS OF 830245
2.1 ORDINARY COURSE OF BUSINESS
830245 covenants and agrees that:
(a) 830245 shall conduct its business only, and not take any action
except in, the usual, ordinary and regular course of business and
consistent with past practice;
(b) 830245 shall not directly or indirectly do or permit to occur any
of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or agree
to issue, sell, pledge, lease, dispose of or encumber:
(A) any additional shares of, or any options, warrants,
calls, conversion privileges or rights of any kind to
acquire any shares of, any capital stock of 830245
(other than pursuant to the exercise, or
(B) except with the usual, ordinary and regular course of
business and consistent with past practice, any
assets of 830245 .
ii) amend or propose to amend its articles or by-laws;
iii) split, combine or re-classify any outstanding Class "A"
Common Voting Shares, or declare, set aside or pay any
dividend or other distribution payable in cash, stock,
property or otherwise with respect to the Class "A" Common
Voting Shares;
iv) redeem, purchase or offer to purchase any Class "A" Common
Voting Shares or other securities of 830245 ;
v) reorganize, amalgamate or merge 830245 with any other
person, corporation, partnership or other business
organization whatsoever;
vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any person,
corporation,
<PAGE> 4
-4-
partnership, joint venture or other business organization
or division or acquire or agree to acquire any material
assets;
vii) except in the usual, ordinary and regular course of
business and consistent with past practice, satisfy any
material claims or liabilities except such as have been
reserved against in 830245 's financial statements
delivered to Sensus, relinquish any material contractual
rights or enter into any interest rate, currency or
commodity swaps, hedges or other similar financial
instruments; or
viii) incur or commit to incur any indebtedness for borrowed
money or issue any debt securities except for the borrowing
of working capital in the ordinary course of business and
consistent with past practice.
(c) 830245 shall cooperate with Sensus in structuring the
acquisition by Sensus of 830245 in a tax efficient manner
provided that no such cooperation shall be required where such
structuring shall have any adverse effect on 830245 .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF 830245
3.1 REPRESENTATIONS
830245 hereby represents to Sensus that the information as it relates
to 830245 as set forth in Schedule "B" to this Agreement (being a draft
Takeover Bid Circular dated May 31, 1999) are accurate and 830245
hereby warrants the accuracy of the representations contained therein
(and acknowledge that Sensus is relying upon those representations and
warranties in connection with entering into this Agreement).
3.2 INVESTIGATION
Any investigation by Sensus and its advisors shall not mitigate,
diminish or affect the representations and warranties of 830245
provided pursuant to this Agreement. Where the provisions of Schedule
"B" or elsewhere in this Agreement refer to disclosure in writing, such
disclosure shall be made expressly in response to the applicable
provision and shall be signed by a senior officer of 830245 .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SENSUS
4.1 REPRESENTATIONS
<PAGE> 5
-5-
Sensus hereby represents and warrants to 830245 that the information as
it relates to Sensus as set forth in the Circular attached as Schedule
"B" to this Agreement are accurate and Sensus hereby warrants the
accuracy of the representations contained therein (and acknowledges
that 830245 is relying upon such representations and warranties in
connection with the entering into of this Agreement).
ARTICLE V
MUTUAL COVENANTS
5.1 FURTHER ASSURANCES
Subject to the terms and conditions herein, Sensus and 830245 agree to
use their respective commercially reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations,
to consummate the transactions contemplated by this Agreement and the
Offer. 830245 and Sensus will use their commercially reasonable
efforts: (I) to obtain all necessary waivers, consents and approvals
from other parties to material loan agreements, leases, and other
contracts or agreements (including in particular but without
limitation, the agreement of any persons as may be required pursuant to
any agreement, arrangement or understanding relating to 830245 's
operations); (ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal,
provincial or foreign law or regulations with respect to this Agreement
or the Offer; (iii) to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby or by the Offer; and
(iv) to fulfil all conditions and satisfy all provisions of this
Agreement and the Offer.
ARTICLE VI
TERMINATION
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective
Time:
(a) by mutual written consent of Sensus and 830245 ;
(b) by either Sensus or 830245 after June 21, 1999 if Sensus has not
purchased Class "A" Common Voting Shares pursuant to the Offer;
(c) by either Sensus or 830245 , if the conditions of the Offer have
not been satisfied or waived on the Expiry Date.
<PAGE> 6
-6-
In the event of the termination of this Agreement as provided in this
Section 6.1, this Agreement shall forthwith become void and there shall
be no liability on the part of Sensus or 830245 .
ARTICLE VII
MISCELLANEOUS
7.1 ENTIRE AGREEMENT
This Agreement and the documents referred to herein constitute the
entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements, arrangements or
understandings with respect thereto.
7.2 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument but all
such counterparts together shall constitute but one Agreement.
7.3 SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired, or invalidated and the
parties shall negotiate in good faith to modify the Agreement to
preserve each party's anticipated benefits under the Agreement.
7.4 CHOICE OF LAW
This Agreement shall be governed by, construed and in accordance with
the laws of the Province of Alberta.
7.5 REMEDIES
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to remedy or prevent non-compliance or
breaches with the terms of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the Province of Alberta
having jurisdiction; provided that such remedies shall be in addition
to, and not in substitution for, any other remedy to which the parties
may be entitled at law or in equity.
<PAGE> 7
-7-
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first above written.
SENSUS CAPITAL CORP.
(a Nevada corporation)
PER: /s/ John M. Hall
--------------------------
John M. Hall, President
830245 ALBERTA LTD.
(an Alberta corporation)
PER: /s/ J. Timothy Bowes
-------------------------
J. Timothy Bowes, President
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated February 20, 2000, in the Registration Statement
(Form SB-2 No. 333--) and related Prospectus of Sensus Capital Corp., dated
March 23, 2000 for the registration of 11,156,500 shares of its common stock.
Calgary, Canada /s/ Ernst & Young LLP
March 23, 2000 Chartered Accountants
<PAGE> 1
Exhibit 23.2
CONSENT OF JEFFER, MANGELS, BUTLER & MARMARO, LLP
We consent to the reference to our firm and to the inclusion of our
opinion as an exhibit to the Form SB-2 Registration Statement of Sensus Capital
Corp., a Nevada corporation, as filed with the Securities and Exchange
Commission on March 23, 2000
JEFFER, MANGELS, BUTLER & MARMARO LLP
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