SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
AMENDMENT [NO. 2]
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
youticket.com inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 88-0430607
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(State of Incorporation) (Issuer's I.R.S. Employer I.D. Number)
youticket.com inc.
4420 S. Arville, Suites 13 & 14
Las Vegas, NV 89103
(Address of principal executive offices and zip code)
(702) 876-8200
(Issuer's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value per share
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[Qualified Accountants Report
The report of the independent certified public accountants of youticket.com
indicates that the consolidated financial statements included in this Form 10-SB
have been prepared assuming that the company will continue as a going concern.
The significant loss for the year ended December 31, 1999 and the negative
working capital at December 31, 1999, raise substantial doubt about the
company's ability to continue as a going concern. Although youticket.com is
seeing some growth in its customer base and revenues and it has taken measures
to cut costs, it will need additional capital during the mid-part of the year
2000 to continue its operations. There is no assurance that revenues will grow
sufficiently or that financing will be available. If youticket.com is unable to
fund its operations, it will have to curtail or cease its operations.]
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
We operate an entertainment ticketing and reservation service for the Las
Vegas, Nevada market. Our services are offered primarily through our website,
www.youticket.com which was relaunched in late October 1999. We provide show and
tour ticketing and reservation services in conjunction with Ticketmaster
National Reservation Bureau, Inc., and Golf Reservations of Nevada, Inc. which
provides us with both systems and market support. In addition to selling tickets
on the Internet and by means of ticket outlets, youticket.com also enables
customers to purchase its products via its toll-free telephone numbers,
1-877-YOU-TIXS,1-877-YOU-TKTS and 1-877-BIG-TIXS. By one means or another,
customers are able to purchase show and tour tickets and make reservations 365
days a year, 7 days a week and 24 hours a day.
youticket.com seeks to be the premier Internet site for entertainment
ticketing and reservations for the business and leisure visitor to and residents
of Las Vegas.
Corporate Background
youticket.com inc. was incorporated on May 9, 1996 under the name BNE
Associates Inc. The corporate name was changed in 1998 to Occidental Rand
Corporation and again in September 1999 to the current name. youticket.com had
no business operations until the purchase of Visitcom, Inc. on June 30, 1999.
Visitcom, our wholly owned subsidiary, was founded in 1996 under the laws
of the State of Nevada. Visitcom entered the ticketing business in 1997 as a
wholesaler of Las Vegas show tickets. Visitcom bought tickets or received block
allocations from the different Las Vegas showrooms and resold these tickets to
visitors to Las Vegas. Visitcom initially reached its consumer base by
advertising in the local Las Vegas visitor publications.
In early 1998, Visitcom quickly expanded its business operations. It opened
ticketing booths at the Alamo Car Rental outlet at McCarran Airport and at the
Union Plaza hotel. It created and began publishing High Roller Magazine, a Las
Vegas entertainment guide. It developed and launched one of the first websites
offering Las Vegas show tickets, www.bigticket.com. In mid-1998, Visitcom had
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had expanded its product offerings to include hotel room reservations and
telemarketing sales, and it had entered into a contract with Ticketmaster to use
and market Ticketmaster ticketing systems.
In early 1999, Visitcom faced liquidity issues from its rapid expansion and
was forced to restructure its operations. The result of the restructuring was to
discontinue High Roller Magazine, hotel room reservations services,
telemarketing sales programs and advertising in the local Las Vegas tourist
publications. Visitcom was then sold to Youticket.com inc. on June 30, 1999.
Early Stage Company
Because the business operations of Visitcom were severely curtailed during
1999 prior to [it] being sold to us, youticket.com currently is still in the
early stages of re-building its business. As such, it is subject to all the
risks of a developmental company, including the requirement of significant
amounts of capital to fund operations, the need to establish business
relationships and to expand its product and service offerings, and the need to
develop and increase its customer base. Because of its early stage,
youticket.com has had significant losses and insufficient revenues to fund
operations. It is expected that losses will continue.
Current Products and Services
Building on the core business of Visitcom, youticket.com offers an
increasing range of ticketing and reservation services for entertainment, tours
and travel for the Las Vegas and the surrounding market areas. Below are listed
some of the principal ticketing and reservation services:
[o ] Stage and Nightclub Shows - youticket.com offers ticketing and
reservations to approximately 33 stage shows, nightclub acts and magic
acts in Las Vegas, including the long running performances of American
Superstars, An Evening at La Cage, Comedy Magic, Crazy Girls, Follies
Bergere, Hipnosis, Headliners, Houdini, Radio City Rockettes, and the
Star Trek Experience.
[o ] City, Shopping and National Park Tours - Las Vegas City, Laughlin,
Primm Outlets, Bryce National Park, Canyon National Park, Death
Valley, Grand Canyon, Hoover Dam, Lake Mead, Monument Valley, Red Rock
Canyon, Valley of Fire and Zion National Park.
[o ] Adventure Packages - Colorado River white water rafting, Hummer
vehicle off-road adventures, Lake Mead jet ski adventures and Western
ranch excursions.
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[o ] Golf Course Tee Reservations - youticket.com offers golf tee
reservations at 19 of the Las Vegas local and surrounding golf
courses, including Paiute Resort, Angel Park, Wild Horse, Legacy and
Royal Links.
[o ] Travel Reservations - youticket.com offers room reservations at 26
hotels, including the major properties such as Venetian Hotel and
Casino, Tropicana Hotel, Luxor Hotel and Casino, Sahara Hotel and
Caesar's Palace and Thrifty car rentals in the Las Vegas market.
For youticket.com to be successful, we will have to continue to expand its
offerings within each of the above categories, and expand the categories to
become a full service ticketing and reservation service in the Las Vegas market.
To do this, we will have to develop business alliances with a full range of
shows, nightclubs, magic acts, theaters, sports events, tours, adventure
packages, golf courses, hotels, restaurants, car rentals and other services that
the tourist and local resident seeks.
Market Opportunity
Las Vegas and Other Markets
Las Vegas is one of the largest tourism markets in the world. According to
the Las Vegas Convention and Visitors Bureau, the Las Vegas area received 30
million visitors in 1998, who spent close to $24 billion on entertainment. The
average Las Vegas visitor spends 3.7 nights within the city, and 48% of these
visitors will see at least one show. In addition, many Las Vegas visitors will
also take one of the many scenic tours to nearby locations such as the Grand
Canyon, Hoover Dam and the other nearby national parks.
We believe there are comparable tourism markets in other parts of North
America. These include, San Francisco, New Orleans, Orlando, Honolulu, various
casino markets such as Atlantic City, and vacation resorts such as Virginia
Beach and Branson. We believe that there is a market opportunity in these and
other markets for a comprehensive Internet based reservation and ticketing
service that offers both exciting content, in the form of online guides,
reviews, listings and other editorial content and providing visitors with the
ability to make a series of online transactions to satisfy or enhance their
vacation needs.
E-Commerce Growth
Although we offer conventional telephone reservation and ticketing, we see
our greatest prospects for growth is via the Internet. As the Internet
population continues to grow, we see this as opening e-commerce opportunities to
sell an ever increasing range of products and services to visitors to not only
Las Vegas, but to many other resort destinations across North America.
As a result of the increasing popularity of the Internet with consumers and
businesses alike, e-commerce is undergoing significant growth. This growth is
due to several factors:
o A large and growing installed base of personal computers in people's
homes.
o The improving performance of personal computers in the workplace and
the home.
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o The transformation of data transmission networks from those in common
use today that support simple transmissions of text and static images
to those that will support two-way interactive transmissions,
multimedia messaging and retrieval services.
o Free and easy access to the Internet.
o Global, mass acceptance of the Internet as a communications and
commercial medium.
o Increasing acceptance of the Internet as a secure environment for
conducting transactions.
International Data Corporation, a market research firm, estimates that the
number of Internet users worldwide exceeded 159.0 million at the end of 1998 and
anticipates this number will grow to over 510.0 million by the end of 2003.
International Data Corporation also estimates that worldwide e-commerce will
increase from approximately $50.0 billion in 1998 to approximately $1.3 trillion
by 2003.
E-commerce presents several advantages over traditional commerce by
bringing together traditionally fragmented, inefficient suppliers and
distribution channels, facilitating more efficient pricing models by better
matching buyers and sellers and empowering consumers by providing them with
better information, resulting in more informed purchasing decisions.
The travel industry has taken particular advantage of the Internet's
growth. Travelers in the United States spent more than $470 billion on travel
and tourism in 1996, according to the Travel Industry Association of America.
According to a recent study by Forrester Research, Inc., about 5 million U.S.
households booked trips online in 1998. Forrester Research predicts that number
will grow to 9 million in 1999 and 26 million--or one-fourth of all U.S.
households--by 2003. The study also projects that U.S. households will spend
approximately $7.8 billion booking trips online in 1999, and $29.4 billion by
2003.
Airlines, hotels and travel services advertise to reach the growing number
of people who use the Internet to make their travel plans. According to
Competitive Media Reporting, in 1995 the travel industry purchased over $2.3
billion in advertising through traditional vehicles such as broadcast and cable
television, radio, print and outdoor media to reach and influence customers. It
is expected that Internet related advertising will share an increasing portion
of the advertising budget.
Entertainment ticketing is also large and growing. The Internet has emerged
as a powerful medium for aggregating and disseminating event information,
selling tickets and related products, and marketing and promoting events.
According to Forrester Research, a market research firm, online ticketing sales
to marquee events, regular performances and sporting events are expected to grow
from $115.0 million in 1998 to an estimated $2.6 billion in 2003. The Internet
creates advantages and conveniences for consumers and entertainment
organizations alike. Consumers' want a single web site where they can find
information about a wide range of events and conveniently buy tickets to those
events.
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Business Strategy
General
Our initial objective is to develop a comprehensive, entertainment
ticketing and reservation service for visitors and residents in the greater Las
Vegas market. Currently, we focus on the tourist and business consumer, offering
these services for a number of shows, magic acts and nightclubs, tours, hotels,
car rental company and golf courses. We are seeking to further expand within
each of these categories to become a more comprehensive source of ticketing and
reservation source. In addition, we seek to expand our categories of service. We
anticipate future categories will include airlines, movies, sports venues,
restaurants and wedding planning. As the depth and breath of offerings
increases, we believe the customer base will expand among, and we will seek, the
national and international tourist and business traveler, travel service
professional and local resident.
The longer term objective of youticket.com is to take the model that is
developed in the Las Vegas market and apply it to other tourist markets in North
America. Potential target markets for expansion include key tourist and
convention markets such as Anaheim, Orlando, Honolulu, New Orleans, San
Francisco, and San Diego, casino markets such as Atlantic City, Reno, Laughlin,
and Biloxi, and vacation [resort destinations] such as Branson, Myrtle Beach,
Virginia Beach, and Niagara Falls.
Our ability to expand is dependant[, in part,] on our ability to identify
those entertainments and properties that consumers desire. Primarily we track
the inquiries of our website users and review other individual and comprehensive
website offerings, but we also engage in conventional research including the
review of competing or similar services, occupancy rates, travel reviews and
statistical studies. Once a particular category, entertainment or property is
identified, we seek the best available partners by researching on the Internet
and using conventional sources such as business directories. Once we have
identified likely business affiliates, we establish contact with the business
development departments and when possible negotiate and establish a business
relationship or alliance. For example, we have business relationships with
Ticketmaster for shows, National Reservation Bureau for hotels and Golf
Reservations of Nevada, Inc. for golf tee times and Thrifty car rentals.
The ability of youticket.com to develop its business model and expand will
depend on many factors. We will have to efficiently identify product offerings,
and then establish the business relationships that will permit youticket.com to
offer the ticketing or reservation services. There can be no assurance that we
will be able to establish the business relationships it needs to enhance or
expand its product offerings. We will have to sustain our operations during the
growth period which will require additional capital investment. [We will have to
continue to develop and refine our Internet presence and expand our content and
marketing. Once our business model is validated in the Las Vegas market, we will
have to apply it to additional markets.] There can be no assurance that the
model that works for Las Vegas will be successfully applied to other markets.
Internet Focus
Our business plan calls for an e-commerce orientation and the use of our
current and future websites. We plan to offer:
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o An easy to use, fast and efficient web site.
o A one-stop site with a wide selection of entertainments, properties
and services that gives the consumer everything they need and want for
a planned vacation or entertainment experience.
o Guides, reviews, listings and incisive editorial content that have a
savvy, young person's perspective to help people make smart decisions
about their entertainment and travel plans.
o The opportunity to comparison-shop across a broad spectrum of
offerings in several product and service categories.
o The ability to instantly complete safe and cost effective e-commerce
transactions.
Building Strategic Relationships
We currently have strategic relationships with Ticketmaster, National
Reservation Bureau, Inc., Golf Reservation of Nevada[,] leading hotels and
casinos [in Las Vegas,] and Thrifty Car Rental. The relationships with
Ticketmaster, National Reservation Bureau, Golf Reservations and the Venetian
Casino Resort are pursuant to written agreements. These relationships are
designed to build product offerings and provide reliable ticketing systems. We
will build on our existing alliances, form new partnerships and acquire
companies that target visitors to resort destinations.
[Another way by which we may expand is to acquire specific assets that
complement our current business or expand our offerings.] Target acquisitions
may include web sites in resort destinations, online and offline tour guides and
travel service companies. [Ultimately, we] plan to build the youticket.com brand
name through expansion into new markets and the acquisition of customer
databases, products and content. [Acquisitions and additional market expansion
will require additional capital. We have no current sources for the level of
financing that is anticipated to be required to implement all of our business
strategy. Moreover, currently our independent accountants have qualified their
report on our business as a going concern.]
By targeting specified markets, and by focusing on the needs of vacationers
and conventioneers, we believe we can create a substantial market niche for
youticket.com without focused competition from the many reservation and
ticketing web sites such as Ticketmaster Online and Tickets.com that tend to
target larger urban metropolitan areas. We believe that we will benefit from a
first-mover advantage in the resort areas which we are targeting.
Ticketmaster - Las Vegas
In May, 1998, our subsidiary Visitcom entered into a hardware and software
rental agreement with Ticketmaster - Las Vegas. Under this agreement Visitcom,
Inc. retained and authorized Ticketmaster to act as their exclusive hardware and
software supplier for programming and storage of accounts with respect to
tickets for the attractions on the automated computerized ticketing system
developed by Ticketmaster utilizing telephones and ticket outlets with terminals
and ticket print-out capabilities linked to Ticketmaster's central computer
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facility. The term of this agreement is for three years with an automatic
renewal for a successive two years unless either party notifies the other not
less than 90 days and no more than 120 days prior to the expiration of the
initial term.
The Venetian Casino Resort
In March, 1999, our subsidiary Visitcom entered into an agreement with the
Venetian Casino Resort to provide a leased ticketing system and training and
maintenance for a set fee per ticket sold. The contract expires in April, 2001
with a thirty-day cancellation provision by either party.
National Reservation Bureau
In November 1999, youticket.com entered into an agreement with National
Reservation Bureau, Inc. to [create] and carry electronic advertisements for
hotels represented by National Reservation Bureau. The agreement extends to
December 31, 2000; however it is terminable on thirty days notice. youticket.com
is paid a commission on each reservation made as a result of the youticket.com
website.
Golf Reservations of Nevada
In November 1999, youticket.com entered into an agreement with Golf
Reservations of Nevada, Inc. to create and carry electronic advertisements for
golf courses represented by Golf Reservations of Nevada. The agreement
terminates December 31, 2000; however it is terminable on thirty days notice.
youticket.com is paid a set fee for each player that reserves as a result of its
website advertising.
Sales and Marketing Strategy
In the near term our principal marketing goal is to expand our product
offerings in the Las Vegas market and increase our customer base. We plan to
increase the number of entertainment venues, tours, hotel properties and travel
providers for which we offer reservation and ticketing services and add other
business categories, including restaurants, movies, sports venues and wedding
services. We principally will target business and vacation visitors who access
the Internet seeking entertainment and travel options during their visits to Las
Vegas, but we expect that our consumers will include the travel professional and
local resident as we become better known and become more comprehensive in our
offerings.
We will use direct marketing, cross marketing and traditional marketing to
attract a loyal customer base. By gaining the trust of our consumers, we will
develop a highly targeted, brand[-]loyal audience who will serve as the base for
growth. We also intend to use "opt-in" e-mail strategies to develop affiliate
programs that will encourage visitors to use our web site. Opt-in e-mail is a
service that permits the website visitor to enter their e-mail address so that
they may receive e-mail information in the future about special deals, discounts
on products and services, and news, reviews, and tips for getting about in Las
Vegas and other resort destinations. Registered members will be rewarded with a
variety of promotions and prizes such as the opportunity to win free vacations,
cash prizes, or products such as a new set of golf clubs. Loyal members who have
made purchases on youticket.com may receive gift certificates, coupons and
discounts.
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Members may also be rewarded for telling people about our web site and
services. For example, a member will be rewarded with promotions or prizes for
telling people about us or a particular product or service. Through the
development of a loyal customer base, we will create an opportunity for
advertisers to reach a highly targeted audience who frequent resort
destinations. National advertisers such as airlines, national restaurant chains,
hotels and car rental companies will get an opportunity to target visitors to
numerous popular resort destinations. Local advertisers will get the opportunity
to advertise to people visiting their specific community. Local restaurants,
retailers, golf courses and the large base of companies that form the foundation
for a resort destination's local economy will find an excellent opportunity with
us.
To extend our reach, we will use cross-marketing strategies with other
ticket [and travel] agents and distributors to drive web traffic. The goal is to
use our existing as well as other agents' physical ticketing locations as web
site marketing vehicles. We will target these cross-marketing campaigns with
special incentives. For example, any visitor to our ticket locations who is a
web site member will get a discount on their purchase and vice-versa.
In addition we will also form alliances and partnerships with web sites,
media publications, hotels and casinos, restaurants, tour companies and travel
agencies.
Web Site Overview
Consumers who plan their trips online often have to visit numerous sites
before making their purchases. The process often takes a considerable amount of
time. People must wait for web sites to download and then register to reach the
information they need. In this long search, users will find dozens of web sites
that offer products and services for their trip. But few, if any, provide a full
service for everything a resort destination offers. We intend to connect our web
site visitors to powerful e-commerce servers that track an interconnected
network of web sites providing a one-stop shop for all travel needs to a
particular destination. We believe our service will satisfy a growing need among
Internet users for effective and efficient one-stop online shopping.
Although our revenues currently come from service charges on the sales of
tickets or reservations, in the future we plan to provide advertisers with a web
site that gives them the opportunity to reach a wide range of tourists who we
expect will spend considerable time making their purchases. By holding this
traffic, we will provide advertisers an opportunity to efficiently target
visitors who travel to particular destinations. We plan to offer advertisers the
opportunity to place banner ads, messages or e-mail links throughout the site or
in specific product and service categories. For example, a golf course company
may advertise on the home page, in the golf section or the lodging category. So
when a consumer reserves a hotel room, they will also be prompted to make a
tee-time reservation[.] Once they make the tee time reservation, the consumer
may also be exposed to a banner ad for a golf store.
A key feature of the Company's web site will be its proprietary e-commerce
engine that will be designed to drive revenues by:
o Directing visitors to daily specials that may include ticket
discounts, bargain airfares and more.
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o Leading visitors to buy hotel rooms, reserve golf tee times and other
products and services that enhance their existing itinerary.
o Holding traffic on the web site to create opportunities for generating
advertising revenues from sponsors who want to reach a targeted
demographic.
o Directing visitors to other youticket.com destinations where they may
be traveling as part of a vacation tour.
o Capturing demographic information for affiliate programs and
promotions that will include discounts, coupons and prizes.
Demographic information will be processed and managed for sales back
to potential resort destination visitors and carefully screened
third-party customers.
We believe that the travel industry is undergoing significant change. In
the past, the travel agent was the single most important source of information
and ticketing for the travel consumer and source of business for the travel
providers. More recently the trend has been to limit the role of the travel
agent. Airlines are encouraging direct sales to consumers and cutting their
commissions to the travel agent, forcing traditional travel companies to reduce
services to customers. Pricing models are increasingly complex and time
sensitive. Prices change on a continual basis, making it a challenge to provide
customers with accurate price quotes. In the meantime, customers expect more
from their travel companies. They demand a high level of service and fast,
accurate prices on travel services.
We plan to take full advantage of the Internet's capabilities to solve many
of these issues. Website visitors will have the ability to research
up-to-the-minute information on availability of flights, rooms, shows,
entertainment, golf tee-times, and tours. Consumers will feel empowered to
obtain the best prices and design the best vacation package that meets their
personal requirements, without the expense of using a traditional vacation
company. Also, as web technology improves, the ability to compare such items as
rooms and shows will be enhanced through the use of multimedia features such as
full-motion video footage that will provide the consumer with a real life
glimpse of what they are purchasing prior to their actual financial commitment.
The Internet's architecture also enables full automation of processes that
travel agents must often perform manually. This means more efficient systems and
less chance of operation losses.
In order to attract a larger audience to our web sites, we believe that it
needs to offer not only e-commerce opportunities, but also interesting and
entertaining editorial content, reviews, ratings, and detailed narrative
descriptions of its offerings. To establish an editorial base, we plan to form
joint ventures with owners of relevant content such as local visitor magazines.
By this means, we would reproduce on our website the articles appearing in print
media. Alternatively, we may seek to acquire or make strategic investments in
print media sources in order to have access to their content. Access to content
or acquisitions will require a significant investment. Therefore, unless
youticket.com is able to raise substantial amounts of capital, it does not
anticipate that it will be able to expand its website content in the near
future.
Through enhanced product selection, [we expect that] our visitor base will
grow significantly and will serve as the foundation for cross marketing and
direct marketing strategies. We will offer an increased number of shows and
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concerts, tours and excursions, reservations for restaurants and golf tee-times,
recreation activities, accommodations at hotels, motels and other
establishments, and travel services.
Our web site currently generates revenues from sales of stage show, magic
show and nightclub tickets, tours and adventure packages, hotels reservations
and golf tee time reservations. We will begin to offer rental car reservations
through Thrifty Car Rental during the second quarter of fiscal year 2000. We
also plan to add airline travel, weddings and restaurant reservations during the
third and fourth quarters of fiscal year 2000, however, there can be no
assurance that we will meet this schedule. We are currently researching
potential providers and are beginning to contact them to see if they wish to be
represented on our website. In the future we intend to generate additional
revenues by selling advertising
Since our redesign and relaunch of the youticket.com website in late
October 1999, we have seen an increase in "hits" from approximately 60,000 per
week to 200,000 per week. More significantly visitors to the website who
navigate through the product offerings, make inquiries or purchase tickets or
make reservations have increased in the time period of October 1999 to February
2000 by over 200% to approximately 10,000 web-visits per week. We believe much
of the growth is due to the introduction of hotel and golf tee links and the
additional listings and awareness of the website on Internet search engines.
All of the web sales are processed through DX Cart, a popular shopping cart
and authorized secure online credit card transaction processor. The website can
accept and process sale transactions 24 hours a day, 7 days a week with online
credit card confirmation.
In order to effectively compete with traditional retailers and other web
sites, as well as to overcome any hesitancy potential customers may have in
purchasing services over the Internet, we are planning to implement a customer
satisfaction program. Currently, we frequently deliver tickets ordered through
our website to our customers at their hotels. We believe that most e-commerce
companies do not provide users with real customer service. We intend to
differentiate our web site from other business web sites by providing live,
attentive customer service. We plan to implement a customer satisfaction system
which will manage customer service issues 24 hours a day, seven days a week,
both in person and online. We will incur substantial ongoing costs in connection
with the operation of this system, including fees payable to companies to which
we out-source parts of our customer satisfaction program.
Research and Development
We re-launched our website in late October 1999 and only then began to
spend monies on website development. In 1999 we spent approximately $29,000 on
the development of our website. In November 1999, we entered into a consulting
agreement with Reservision, Inc. for the continued development of our website.
Reservision is a national interactive media development and marketing firm, with
a focus on developing marketing companies and e-commerce solutions and website
development. Reservision will provide approximately 40 hours per month for
development and support as required by us to maintain and improve the website.
The work that may be performed by Reservision will belong to us, and they agree
to assign their proprietary rights, if any, to us. We will pay Reservision
$42,000 per year for their services during the term and reimburse Reservision
for their pre-approved expenses. The agreement with Reservision may be
terminated at any time on 10 days written notice and it expires November 21,
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2000. As additional consideration [for the services], we issued Reservision a
warrant to purchase up to 300,000 shares of common stock at our exercise price
of $.25 per share. The warrant is vested and freely exercisable, provided that
Reservision forfeits the right to purchase 25,000 shares for each month it does
not provide services to us under the consulting agreement. At this time,
warrants to purchase [100,000] shares of common stock will not be subject to the
forfeiture clause. The warrant is exercisable until November 21, 2003.
Proprietary Rights
We regard the protection of our intellectual property, including our URLs
"youticket.com" and "bigticket.com" as critical to our business. We also rely on
the proprietary technology of third parties, including TicketMaster, Authorize
Net and DXCart. Unauthorized use of the intellectual property used in our
business by third parties may damage our brand and our reputation. We rely on
intellectual property laws and confidentiality and license agreements with key
employees, customers and others to protect our intellectual property rights.
Because of the complexity and growing importance of intellectual property
rights, there can be no assurance that we will be able to protect our
proprietary rights on a global basis. Moreover, the expense of enforcing our
rights may limit or prohibit us from effective protection.
Internet and on-line activities are increasingly becoming the subject of
patent applications and patent grants. Recently Amazon.com was granted a patent
in connection with aspects of the linking function from one site to another for
cross selling purposes. Our website has cross selling and linking functions,
some or all of which may be covered by this recent patent. To the extent
youticket.com engages in any activity that is found to be the proprietary right
of another, it may have to cease it or obtain a license. No assurance can be
give that we will be able to continue business as we currently conduct it in
this changing environment.
Government Regulation; Future Business Operations Risk
Currently, our business operations is not directly regulated by
governmental entities. It is possible that as the Internet develops, there will
be greater oversight or the introduction of direct regulation of the Internet
and transactions conducted on it. To the extent that there is oversight and
regulation, our business may be adversely impacted. We may encounter additional
direct costs in our operations such as various taxes or telecommunication
charges or increased compliance expense. The laws governing Internet
transactions remain largely unsettled, even in the areas where there has been
some legislative action. It may take years to determine whether and how existing
laws such as those governing intellectual property, privacy, libel, consumer
protection and taxation apply to the Internet.
For example, although not yet enacted, Congress is considering laws
regarding Internet taxation. In addition, various jurisdictions already have
enacted laws that are not specifically directed to electronic commerce but that
could affect our business. The applicability of many of these laws to the
Internet is uncertain and could expose us to substantial liability.
The growth of the Internet and electronic commerce, coupled with publicity
regarding Internet fraud, may lead to the enactment of more stringent consumer
protection laws. These laws may impose additional burdens on our business.
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Several telecommunications carriers are seeking to have telecommunications
over the Internet regulated by the Federal Communications Commission in the same
manner as other telecommunications services. Additionally, local telephone
carriers have petitioned the Federal Communications Commission to regulate
Internet service providers and online service providers in a manner similar to
long distance telephone carriers and to impose access fees on these providers.
If either of these petitions are granted, the costs of communicating on the
Internet could increase substantially. This, in turn, could slow the growth of
use of the Internet. Any legislation or regulation could materially adversely
affect our business.
Competition
Our business is highly competitive. We compete with entertainment
organizations that handle their own ticket sales and distribution and
reservations through both traditional and on-line medium. These competitors
include international, national and local ticketing and reservation services.
Our primary competitor in Las Vegas is Allstate Ticketing which operates
multiple ticketing outlets and a web site focused on show tickets. On a national
level, Ticketmaster Online-CitySearch has an exclusive license to all of the
online ticketing for Ticketmaster Corporation. Another competitor is
Tickets.Com. We also compete with the internal reservation services of hotel
chains, airlines with their internal referrals and car rental companies. We also
compete with travel agencies, although we expect that some travel agents may use
our services. Our competitors vary in size and in the scope and breadth of the
services they offer, and the manner in which they offer their services.
E-commerce
The markets for reservation and ticketing services offered through
traditional channels and Internet channels are intensely competitive. We expect
competition to increase, especially in the e-commerce medium.
There are few barriers to the e-commerce market. The rapid growth of the
Internet in general, and online e-commerce activity specifically, has attracted
the attention of numerous companies. Competitors may enter into exclusive
distribution arrangements with our theaters, hotels, tour companies and
transportation companies which might deny us access to various products.
Increased competition also could result in pricing pressures, increased
marketing expenditures and loss of market shares. Others may be operating
similar types of comprehensive services to our company in markets that we intend
to enter that could present a formidable barrier to entry.
Employees
We currently have four full-time employees, of which three are senior
executives in the positions of president, controller, and sales manager and one
part-time employee.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Selected Financial Data
Because we continue to develop our web site products and services, we are
still in the earlier stages of development. Therefore, selected financial data
would not be meaningful. Reference is made to the financial statements included
elsewhere in the document. The fiscal year is the calendar year. Included in the
document are the audited financial statements for the twelve-month periods
ending December [31, 1998 and 1999. Also included are unaudited financial
statements for Visitcom, Inc., our subsidiary, for the interim period ending
June 30,] 1999.
Acquisition of Visitcom, Inc.
On June 30, 1999, we acquired Visitcom, Inc., a Nevada corporation and Las
Vegas show and tour ticketing and service agency. The transaction was accounted
for as a purchase. We did not have business operations until the acquisition of
Visitcom, therefore, our financial statements only reflect the operations of
Visitcom [when] acquired on [June 30], 1999.
For the purchase of Visitcom, we initially issued 14,327,140 shares of
common stock. The market value of a share of common stock on the date of this
transaction was $0.25 per share. On September 3, 1999, based on facts that
appeared to alter the representations and warranties of the prior stockholders
of Visitcom, we entered into a settlement agreement with the prior stockholders.
Under this arrangement, 11,327,140 of the shares issued for the acquisition were
returned to us for cancellation and are being held as treasury shares and we
paid $100,000 to the surrendering stockholder. As part of the settlement, on our
behalf two stockholders transferred an aggregate of 300,000 shares to one of the
prior stockholders of Visitcom. As an inducement for this action by those
stockholders, we issued a note to the transferring stockholders in the amount of
$93,750 which was subsequently converted into shares of common stock. The net
purchase price of Visitcom exceeded the fair value of the net assets acquired by
$1,204,623, and is being amortized on a straight-line basis over seven years.
Qualified Report of Independent Certified Public Accountants.
Our independent accountants have qualified their report. They state that
the audited financial statements of youticket.com for the period ended December
31, 1999 have been prepared assuming the company will continue as a going
concern. They note that the significant losses of our company as of December 31,
1999, and negative working capital at December 31, 1999, raise substantial doubt
about our ability to continue in business.
We had significant losses of $619,512 for the year ended December 31, 1999.
We have funded losses by the sale of additional securities. We expect losses to
continue. We have no sources of long-term capital. To the extent losses continue
and we are unable to fund them, we may have to curtail aspects of our operations
or cease operations altogether. We anticipate having sufficient cash flow from
operations and cash to fund our operations into the second quarter of fiscal
year 2000, but at that time we will need to raise additional capital. We cannot
predict how long we will be able to remain operational into the future.
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Results of Operations
Revenue
We had revenue of $189,243 for fiscal year 1999. Our revenues are primarily
derived from show ticket, hotel room and scenic tour ticket sales and
reservations via our ticketing booths and our website.
Cost of Revenue
The cost of revenue for fiscal year 1999 was $117,779. Cost of revenues
primarily represents the costs of show tickets sold and operating our website.
Selling, General and Administrative Expenses
The expenses for fiscal year 1999 were $604,931. These expenses are made up
of selling and marketing costs, salaries, rent, professional fees and general
overhead.
Net Losses
We had a loss of $619,512 for fiscal year 1999. Losses were attributable to
the costs of operations and costs of revenues being in excess of revenues.
Operational expenses are expected to exceed revenues for fiscal year 2000 as we
develop and seek to expand the business of youticket.com.
Liquidity and Capital Requirements
At December 31, 1999 youticket.com had a working capital deficit of
$342,610. youticket.com had cash and cash equivalent assets of $18,360 and
accounts receivable of $35,457 at December 31, 1999 and total current
liabilities of $414,149 at December 31, 1999.
[We have entered into a settlement with the Internal Revenue Service for
payment of unpaid payroll taxes of Visitcom from June 1996 through June 1999.
Under the settlement, we paid $10,000 and will pay $5,000 per month until the
payroll tax and penalties are satisfied. This amount will be paid from general
operating revenue. Payment of this obligation may restrict our cash available
for our operations and implementation of our business plan.]
Since the acquisition of Visitcom in June 1999, youticket.com has
restructured its outstanding debt obligations and funded its operations by the
issuance of common stock and shareholder loans. During the second half of 1999,
youticket.com issued an aggregate of 978,412 shares of common stock for the
conversion of outstanding debt and interest due of $503,206 and 300,000 shares
of common stock for proceeds of $150,000. On December 17, 1999 youticket.com
entered into a two year convertible promissory note in the amount of $125,000
with a shareholder which was funded on January 4, 2000. The note bears interest
at the annual rate of 10% payable at the maturity date or upon conversion and is
convertible at any time at a rate of 60% of the then market value of the common
stock.
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In the fourth quarter of fiscal [1999], youticket.com restructured its
operation to reduce its overhead and concentrate its business on those aspects
which management believes will produce operational revenues. The principal focus
of the business was directed to e-commerce sales via the website. This involved
a redesign of the website and a relaunch in late October 1999. youticket.com
also took measures to reduce operating costs. This included the discontinuance
of ticket booths, reduction of staff, moving to a smaller facility and generally
cutting costs. The restructuring and shift in marketing methodology reduced
revenues at the same time that it reduced selling, general and administrative
expenses. However, as we have been adding new reservation services in the
categories of hotels and golf tee times, during the early part of fiscal year
2000, there has been an increase in website hits, website visitors and improving
revenues. Notwithstanding the improvements in our business, the growth in
revenues do not cover operational expenses. Moreover, it is expected that
revenues will not cover operations at all in fiscal year 2000 and possibly for a
considerable period of time thereafter. If we do not increase our revenues, we
may not have access to financing. Also, without an increase in revenues, we may
have to reduce or cease operations.
We will require additional capital financing to continue to develop our
business. Principally capital funds are required for operating losses and then
further web site development, marketing, and strategic business alliances and
acquisitions. We have determined, based on our internal cash flow projections,
that we will need additional funding in the second quarter of fiscal year 2000.
We plan to seek equity funding. We believe that we will need not less than
$500,000 to sustain our operations at the current level through the second
quarter of fiscal year 2001. We believe that the funds needed for the full
implementation of our current business plan will be substantial and well in
excess of the above amount. If we are unable to raise capital or increase our
revenues, we will have to curtail aspects of our business plan and operations or
cease our operations altogether.
We do not have any identified source of financing, including bank or
private lending sources, or equity capital sources. No assurance can be given
that we will be able to develop sources of financing in the future when funds
are needed or on acceptable terms. The sale of additional equity will dilute the
current shareholder ownership position. The funding of the company by loans will
impose additional obligations on cash flow and will reduce income. (See above
for a discussion of the opinion of our independent auditors.)
Year 2000
Overview
We have evaluated the potential impact of the situation commonly referred
to as the "Year 2000 Issue". Y2K concerns the inability of information systems,
primarily computer software programs, to properly recognize and process date
sensitive information relating to the year 2000 and beyond. Many of the world's
computer systems currently record years in a two-digit format. These computer
systems will be unable to property interpret dates beyond the year 1999, which
could lead to business disruptions in the U.S. and internationally. The
potential costs and uncertainties associated with Y2K will depend on a number of
factors, including software, hardware and the nature of the industry in which a
company operates.
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Accounting and Ticketing Systems
Because we have recently upgraded our accounting systems, and our
management believes that the computer programs it purchases are Y2K compliant,
our management believes these systems and programs are Y2K compliant. In
addition, management uses Ticketmaster's ticketing system, and they have been
informed by Ticketmaster that it is Y2K compliant for many of the our critical
computer needs. We have not experienced any problems associated with Y2K issues
to date.
Other Entity Compliance
We engage in electronic data interchange with other entities. The entities
with which we exchange data with are Y2K compliant. Tangently, however, the
failure of other entities to be Y2K compliant may cause our systems issues, none
of which are yet apparent to our management. Management does not have a
contingency plan in the event a critical service, supplier or customer will not
be Y2K compliant.
ITEM 3. DESCRIPTION OF PROPERTY
Our executive offices are located at 4420 S. Arville, Suites 13 & 14 in Las
Vegas, Nevada and our telephone number is (702) 876-8200. We rent this space
under a lease that expires in April 2000. [Thereafter we will occupy the space
on a month to month basis.] The lease requires us to pay $1,199 per month during
the term. We believe that the current office and our other facilities are
adequate to meet our needs into the near future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of the common stock by (1) each person known to be the owner
of more than 5% of the outstanding shares of common stock, (2) each director and
(3) all executive officers and directors as a group. The information is as of
April 25, 2000, and it is based on information obtained from each of the below
named persons. On April 25, 2000 there were 16,051,272 shares of common stock
outstanding.
Percent of
Number of Shares of Ownership of
Common Stock Common Stock
Name of Beneficial Owner (1) Beneficially* Owned Outstanding
- ---------------------------- ------------------- -----------
LeAnna Sidhu (2) 1,057,833 6.5%
Virginia Thompson (3) 25,000 0.2%
Alexander H. Williams(4) 25,000 0.2%
DYDX Consulting, LLC (5) 1,899,220 11.8%
Elizabeth Barbara Wells 3,000,000 18.7%
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Percent of
Number of Shares of Ownership of
Common Stock Common Stock
Name of Beneficial Owner (1) Beneficially* Owned Outstanding
- ---------------------------- ------------------- -----------
ZDG Investments Limited 1,361,860 8.5%
Stockbroker Relations, Inc.
of Colorado (6) 1,100,000 6.9%
David Roff 1,017,096 6.3%
Al Landau 1,007,096 6.3%
Joel Roff 905,000 5.6%
Directors and officers as
a group (3 persons) (7) 1,107,833 6.8%
* Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
issuable upon the exercise of options or warrants currently exercisable, or
exercisable or convertible within 60 days, are deemed outstanding for
computing the percentage ownership of the person holding such options or
warrants but are not deemed outstanding for computing the percentage
ownership of any other person.
(1) The address for each of LeAnna Sidhu, Virginia Thompson and Alexander H.
Williams is c/o 4420 S. Arville, Suites 13 &14, Las Vegas, Nevada 89103.
The address for each of ZDG Investments Limited, David Roff, Al Landau and
Joel Roff is c/o133 Richmond Street West, Suite 401, Toronto, Ontario, M5H
2L3. The address for DYDX LLC is 7300 N. Lehigh Avenue, Niles, IL 60714.
The address of Elizabeth Barbara Wells is 5304 Painted Lakes Way, Las
Vegas, Nevada 89129.
(2) Includes 877,833 shares owned by Catalyst Capital, LLC, a Nevada Limited
Liability Company, of which Ms. Sidhu is a member and a manager. Includes a
vested option to purchase 30,000 shares of common stock. Includes 150,000
shares subject to an employee option agreement which are currently
exercisable but does not include 210,000 shares subject to the employee
option agreement which are not currently exercisable vesting at the rate of
30,000 per month while Ms Sidhu is employed by us during 1999.
(3) Represents 25,000 shares subject to a currently exercisable option.
Excludes 75,000 shares subject to an option agreement which are not
currently exercisable.
(4) Represents 25,000 shares subject to a currently exercisable option.
Excludes 75,000 shares subject to an option agreement which are not
currently exercisable
(5) Includes 248,000 shares owned by DYDX Corporation, an Illinois corporation.
DYDX Consulting, LLC and DYDX Corporation are owned by Nikolas Konstant.
(6) These shares were issued in payment of services [previously] rendered .
(7) See notes 2, 3 and 4 for the shares included and excluded that are subject
to employee options.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Our directors and officers as set forth in the table below.
Name Age Position
---- --- --------
LeAnna Sidhu 33 Chairperson and President
Virginia Thompson 33 Treasurer and Director
Alexander H. Williams 35 Secretary and Director
Ms. LeAnna Sidhu has been president and chairperson since December, 1999.
Ms Sidhu is employed full-time. Prior to joining our company, during 1998 and
1999 Ms. Sidhu was assistant director of advertising for both Bally's Hotel &
Casino and the Paris Hotel and Casino where she supervised the advertising
launch of the new Paris Resort, including their website. From 1992 to 1997 Ms.
Sidhu worked for Pour Le Bebe Inc., who operated the Baby Guess, Guess Kids and
Guess Home apparel businesses under license from Guess. Ms. Sidhu was the vice
president of advertising. She supervised the launch of the Guess Home business
and numerous product line launches for Baby Guess and Guess Kids. Ms. Sidhu
attended Cal State University at Sacramento.
Ms. Virginia Thompson has been the treasurer and a director since May 1999.
Ms Thompson is with the company on a part-time basis for about 10 hours per
month and reviews the accounting records of the company. Ms. Thompson also is
the President of Tusk Studio, which she founded in 1990. In 1993, Ms. Thompson
was one of two people who initially designed Las Vegas Magazine. In 1995, she
and a partner became owners of Las Vegas Magazine, and she currently serves as
Publisher and President of the magazine. Ms. Thompson has a Bachelor of Arts
degree from Montana State University.
Mr. Alexander H. Williams has been the secretary and a director of our
company since December 1999. Mr. Williams primarily is available for
consultations on the operation of the business and his primary duties are as a
director. There is no established time commitment. He is president of Hazard
Media, Inc., which he founded in 1999. Mr. Williams advises Internet companies
in marketing, communications and business development. From 1997 to 1999, Mr.
Williams worked for Mentor Graphics, a technology company that develops systems
and software solutions for the world's largest semiconductor and electronics
companies. Mr. Williams was a strategic marketing manager for Mentor Graphics
and worked more than a year as the company's corporate writer, working on an
interim basis as the director of worldwide communications. From 1996 to 1997,
Mr. Williams was the business anchor in Portland, Oregon for KPTV and The
Business Journal. From 1998 to 1996, Mr. Williams was a journalist, covering
news for The Augusta Chronicle, Times Herald-Record and HFN, a trade magazine
for the home furnishings industry. He also freelanced for Jupiter Communications
and served as the local reporter for Apple Computer's digital newspaper,
broadcast at Woodstock '94. Mr. Williams has a master of journalism degree from
Northwestern University's Medill School of Journalism and a bachelor of arts
degree in french literature from the University of Denver.
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Board Meetings and Committees
During the period January 1, 1999 to December 31, 1999, the board of
directors met on 2 occasions and took written action on 18 occasions. All the
members of the board of directors attended the meetings. The written actions
were by unanimous consent. The board of directors has established no committees.
Directors serve for a term of one year after election or until their earlier
resignation or their successor is elected or appointed and qualified.
[Other Executive Officers
On April 19, 2000 we hired Wayne Murphey as the Vice President of
Operations. Mr. Murphey will be responsible for the overall operations of the
company, developing new product offerings and maintaining and improving our
internet website.]
ITEM 6. EXECUTIVE COMPENSATION
Employment [Agreements]
We employ Ms. Sidhu as the chairperson and president of the company under a
one-year employment contract. The agreement commenced December 20, 1999 and ends
on December 20, 2000. The agreement is terminable at any time by either Ms.
Sidhu or us on thirty days advance written notice, for any reason. Ms. Sidhu is
paid a monthly salary of $3,000. When we raise an aggregate of $500,000 of
capital after December 20, 1999, her monthly salary will increase to $7,000 per
month. Ms. Sidhu receives a [monthly] car allowance of $500 and a medical
allowance of $500 until we offer a paid, comprehensive medical plan. We have
also entered into a separate indemnification agreement with Ms. Sidhu.
We granted an option under our stock option plan to Ms Sidhu in connection
with her employment as the chairperson and president. The option is for an
aggregate of 360,000 shares of common stock. The option vests at the rate of
30,000 shares per month during her employment with us, commencing December 14,
1999. Once vested the option is exercisable at $.25 [per share] for seven years
from the vesting date. If Ms. Sidhu's employment is terminated for any reason,
unvested options will terminate and not be exercisable, but vested options will
remain exercisable for the seven year period.
[We employ Mr. Wayne Murphey as the Vice President of Operations. Mr.
Murphey is employed under a one year employment agreement that is automatically
renewable for additional one year terms until April 30, 2006, unless either
party gives at least 30 days notice of non-renewal. Mr. Murphey will be paid an
initial annual salary of $36,000 that is increased to $84,000 upon our obtaining
$500,000 of capital. Mr. Murphey receives a monthly car allowance of $500 and is
paid $500 per month until we offer our employees a paid comprehensive medical
plan. The agreement is terminable at any time without cause which will require
payment of severance equal to one month's salary and benefits or at any time
with cause, which are specifically defined, immediately upon notice without
severance. Mr. Murphey is subject to non-competition and confidentiality
agreements. We have also entered into a separate indemnification agreement with
Mr. Murphey.
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We granted an option to Mr. Murphey in connection with his employment. The
option is for an aggregate of 300,000 shares of common stock. The option vests
at the rate of 25,000 shares per month commencing June 10, 2000. Once vested,
the portion of the option is exercisable at $.1875 per share for seven years
from the vesting date. If Mr. Murphey's employment is terminated for any reason
other than cause, the unvested options will terminate and not be exercisable,
but vested options will remain exercisable for the seven year period. If the
employment termination is for cause, the option will also terminate.]
Compensation of Other Officers
We currently do not pay any cash salaries to Ms. Virginia Thompson or Mr.
Alexander H. Williams for their services as officers or directors. We, however,
have issued Ms. Thompson and Mr. Williams options as compensation for their
services. Ms Thompson has an option to acquire up to 100,000 shares of common
stock of which 25,000 are vested and the balance vests in three equal
instalments in June 2000, December 2000 and June 2001; the exercise price is
$.2815 per share and they are exercisable until June 2004. Mr. Williams has an
option to acquire up to 100,000 shares of common stock of which 25,000 are
vested and the balance vests in three equal instalments in July 2000, January
2001 and July 2001; the exercise price is $.2815 per shares and they are
exercisable until July 5, 2006.
Remuneration of the Board of Directors
A director who is an employee does not receive any cash compensation as a
director. There is no plan in place for compensation of persons who are
directors who are not employees of the Company.
Stock Options
1999 Performance Equity Plan
On September 30, 1999, the board of directors adopted the 1999 Performance
Equity Plan covering 3,000,000 shares of common stock. This plan is subject to
the approval of the stockholders prior to September 30, 2000. Under the plan, we
may issue awards to our directors, officers, employees and consultants. The
awards include stock options, restricted stock, deferred stock, stock
appreciation rights, reload options and other stock based awards. The plan will
terminate when there are no more shares of common stock available for issuance
or on September 30, 2009. The plan is administered by the board of directors or
a committee of the board of directors. These bodies have the authority to
determine the terms of any specific award, in compliance with the general terms
of the plan. Currently, there are 820,000 shares of common stock reserved for
outstanding awards under the plan including [the 390,000] issued to Ms. Sidhu,
[the 100,000 issued to] Ms. Thompson and [the 100,000 issued to] Mr. Williams.
All of these awards are stock options, purchasable at prices ranging from $.25
to $.2815 per share and exercisable until various dates the last of which is in
2006.
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Other Stock Options, Warrants, Agreements and Convertible Securities
In addition to the outstanding awards under the 1999 Performance Equity
Plan, youticket.com has issued options and warrants to acquire up to [1,215,000]
shares of common stock. Of this [number, there are options outstanding to
purchase15,000 shares at $.25, 600,000 shares at $.3125 and 300,000 shares at
$.1875. These options expire at different dates in 2004 through 2007. Of this
number, there are warrants outstanding to purchase 300,000 shares] by
Reservision at $.25 until November 21, 2003, of which [200,000] shares
[currently] are subject to certain forfeiture provisions as of the date of this
Form 10-SB
On January 4, 2000, youticket.com entered into an agreement with
Stockbroker Relations, Inc. of Colorado, an investor relations company.
Stockbroker Relations is a full [service] investor relations and financial
public relations firm that offers advertising, public relations, and incoming
and outgoing lead generation and will be providing these services to
youticket.com. [The] services [provided to us included] preparation of a
national investor relations campaign, introductions to prospective investors and
market makers, [lead generations] and media services, and other [shareholder]
services[. On January 24, 2000] youticket.com issued to Stockbroker Relations
[500,000 shares of common stock for services performed through that date, and on
February 7, 2000 and April 11, 2000 we issued an additional 100,000 and 500,000]
shares of common stock, [respectively, for the balance of the services. The
aggregate value of the services, based on the stock prices on the dates of
issuance, was $428,150.]
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 30, 1999, youticket.com issued a note to each of three
[shareholders], DYDX Consulting, David Roff and Al Landau, in the amount of
$70,000, $15,000 and $15,000, respectively. On November 19, 1999 these notes
were converted into 206,220 shares of common stock.
On September 3, 1999, youticket.com issued a note to each of two
[shareholders], ZDG Holdings Inc. and David Roff, each in the amount of $96,875.
The notes earned interest at [10%] and were due on demand. The principal and
interest were converted into 392,192 shares of common stock on November 19,
1999.
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital stock consists of 100,000,000 shares of capital
stock of which all the shares are common stock, $0.0001 par value. As of [March
31], 2000 there are 16,051,272 shares of common stock issued and outstanding.
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Common Stock
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the shareholders. In addition, the holders are
entitled to receive ratably dividends, if any, as may be declared from time to
time by the board of directors out of legally available funds. In the event of
our dissolution, liquidation or winding-up, the holders of common stock are
entitled to share ratably in all assets remaining after payment of all our
liabilities and subject to the prior distribution rights of any preferred stock
that may be outstanding at that time. The holders of common stock do not have
cumulative voting rights or preemptive or other rights to acquire or subscribe
for additional, unissued or treasury shares, which means that the holders of
more than 50% of such outstanding shares, voting at an election of directors can
elect all the directors on the board of directors if they so choose and, in such
event, the holders of the remaining shares will not be able to elect any of the
directors. All outstanding shares of common stock are, and when issued, the
shares of common stock offered hereby, are fully paid and non-assessable.
Stock Transfer Agent
The stock transfer agent for the common stock is Olde Monmouth Stock
Transfer Co., Inc., 77 Memorial Parkway, Suite 101, Atlantic Highlands, New
Jersey 07716.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER STOCKHOLDER MATTERS
Market Information
Our common stock is traded on the OTC Bulletin Board under the symbol UTIX.
Our common stock is only traded on a limited or sporadic basis and this should
not be deemed to constitute an established public trading market. There is no
assurance that the common stock will be actively traded in the future.
Therefore, there can be no assurance that there will be liquidity in the common
stock.
Below is a table indicating the range of high and low bid information for
the common stock for each full quarterly period within the two most recent
fiscal years and for the first three quarters of 1999, the only quarters during
which the common stock has been publicly traded. This information was obtained
from Reuters, PLC. The information reflects inter-dealer prices, without retail,
markup, markdown or commission and may not represent actual transactions.
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Quarterly Period High Low
- ----------------- ---- ---
Fiscal Year 1999
Jan. 1 - Mar. 31 2.00 .375
Apr. 1 - Jun. 30 1.125 .19
Jul. 1 - Sep. 30 1.00 .281
Oct. 1 - Dec. 31 .43 .21
Fiscal Year 2000
Jan. 1 - [March 31] .45 [.06]
Holders
As of [March 31], 2000, there were 40 holders of record of the common
stock.
Dividend Policy
We have never declared or paid cash dividends on the common stock and
anticipate that all future earnings will be retained for working capital and
business expansion. The payment of any future dividends will be at the sole
discretion of the board of directors and will depend upon, among other things,
future earnings, capital requirements, our financial condition and general
business conditions. Therefore, there can be no assurance that any dividends on
the common stock will be paid in the future.
ITEM 2. LEGAL PROCEEDINGS
Internal Revenue Service
The Internal Revenue Service brought an administrative claim in September
1999 against Visitcom for unpaid payroll taxes from June 1996 through June 1999
in the amount of $66,856.84. We have entered into a settlement agreement with
the IRS for the satisfaction of this tax liability. Under the settlement, we
paid $10,000 and will pay $5,000 per month until the payroll tax liability and
penalties are satisfied. The IRS will forego all collection efforts against us
so long as we are current in our payments under the settlement.
Steve Notario/RSVP Ticketing Contract Dispute
On July 23, 1999, Mr. Steven Notario notified Visitcom that he was owed
$32,257.62 as of July 31, 1999 derived from our RSVP Ticketing operations. Mr.
Notario alleges that he was employed to establish the RSVP Ticketing division
for the purpose of selling high-end show tickets in Las Vegas for a split of the
profits from all tickets sold. We believe that the amount of profit from this
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business was substantially less than the asserted amount due to the number of
returned tickets and credit card charge backs. We intend to vigorously defend
any litigation that may result from this dispute.
Get Ranked Payable
Get Ranked, an Internet search engine placement provider, has notified
Visitcom that it is owed $13,013.34 and will discontinue services and pursue
collection remedies unless arrangements are made to satisfy their outstanding
invoice. We are reviewing the contract to verify the amount of this invoice and
the productivity of their services.
New Century Productions
Visitcom sub-leases a ticket booth from New Century Productions at the
Union Plaza in Las Vegas. On or about October 1, 1999, New Century served
Visitcom with a five day notice to pay back rent or in the alternative to quit.
The amount of back rent claimed is approximately $20,000. We have quit the
location.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
[(a) Previous independent accountants
(i) On August 6, 1999, we dismissed Barry Friedman, CPA, as its independent
accountants.
(ii) The report dated November 27, 1998 of Barry Friedman, CPA on the
consolidated financial statements contained no adverse opinion or disclaimer of
opinion.
(iii) The Registrant's Board of Directors participated in and approved the
decision to change independent accountants on August 6, 1999.
(iv) In connection with its audits through August 6, 1999, there have been
no disagreements with Barry Friedman, CPA on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Barry Friedman, CPA
would have caused them to make reference thereto in their report on the
consolidated financial statements for such years.
(v) Through August 6, 1999, there have been no reportable events (as
defined in Regulation S-K Item 304(a)(1)(v)).
(vi) The Registrant has requested that Barry Friedman, CPA furnish it with
a letter addressed to the SEC stating whether or not it agrees with the above
statements. A copy of such letter, dated April 25, 2000 is filed as Exhibit 16.1
to this Form 10-KSB.
(b) New independent accountants
-25-
<PAGE>
The Registrant engaged BDO Seidman, L.L.P. as its new independent
accountants as of August 6, 1999. Prior to their engagement, we did not
consulted with BDO Seidman, L.L.P. regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on our consolidated financial
statements, and no written report or oral advice was provided to us by
concluding there was an important factor to be considered by us in reaching a
decision as to an accounting, auditing or financial reporting issue; or (ii) any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(iv) of Regulation S-K.]
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
(1) On May 9, 1996 we issued 25,000 as our organizational shares to our
founding shareholders. On November 19, 1998, these were split on the
basis of 100 for 1 share.
(2) On May 5, 1999 we issued 672,860 shares to a director [of the company
for $16,822 of cash proceeds]. The exemption claimed from registration
under the Securities Act of 1933 was pursuant to Rule 504 of
Regulation D.
(3) On June 30, 1999, we issued promissory notes to three [shareholders,
DYDX Consulting, David Roff and Al Landau,] in the aggregate amount of
$100,000. These notes were issued pursuant to Section 4(2) of the
Securities Act of 1933. These notes were converted into common stock
on November 19, 1999 (see below). Each of these persons is a foreign
person who is a sophisticated investor and would qualify under
Regulation D as an "accredited investor." The offer was not made by
means of a public solicitation.
(4) On July 2, 1999, we issued 14,327,140 shares of common stock pursuant
to an Agreement and Plan of Reorganization. Under this agreement, we
acquired Visitcom, Inc. as a wholly-owned subsidiary. We issued the
shares to one person pursuant to Section 4(2) of the Securities Act of
1933. The person receiving the shares was knowledgeable about the
company as the prior owner and had a demonstrated level of investment
sophistication. By reason of [the] ownership of Visitcom [the person]
was worth in excess of $1,000,000. Subsequent to the share issuance,
the number of shares [we had issued in the transaction] was reduced to
3,000,000 to adjust the aggregate consideration paid for visitcom as a
result of certain misrepresentations and failure of the warranties
made by Visitcom, Inc. and its owners [in the purchase agreement]. The
11,327,140 shares previously issued were returned to the capital of
the company and are being held as treasury shares.
-26-
<PAGE>
(5) On September 3, 1999, we issued promissory notes to two [shareholders,
ZDG Holdings, Inc. and David Roff,] in the aggregate amount of
$193,750. These notes were issued pursuant to Section 4(2) of the
Securities Act of 1933. These notes were converted into common stock
on November 19, 1999 (see below). Each of these persons is a
shareholder of youticket.com and is a foreign person who is a
sophisticated investor and would qualify under Regulation D as an
"accredited investor." The offer was not made by means of a public
solicitation.
(6) On September 14, 1999, we issued 380,000 shares of common stock as
consideration for settlement of outstanding debt of $204,000. We
issued the shares to one person pursuant to Section 4(2) of the
Securities Act of 1933. The person receiving the shares was
knowledgeable about the company and had a demonstrated level of
investment sophistication. The offer was not made by means of a public
solicitation.
(7) On November 19, 1999, we issued 300,000 shares of common stock to four
investors for an aggregate of $150,000, pursuant to individual
subscription agreements. We issued the shares pursuant to Section 4(2)
of the Securities Act of 1933. Each of these persons were foreign
persons who are sophisticated investors and would qualify under
Regulation D as "accredited investors." The offer was not made by
means of a public solicitation.
(8) On November 19, 1999, we issued 598,412 shares of common stock for the
conversion of an aggregate of $299,206 of debt and accrued interest
due to two individuals and a limited liability company [(See paragraph
three and five above)]. We issued the shares pursuant to Section 4(2)
of the Securities Act of 1933. The persons receiving the shares were
knowledgeable about the company [,] had a demonstrated level of
investment sophistication[, and would qualify under Regulation D as an
"accredited investor."] The offer was not made by means of a public
solicitation.
(9) On December 17, 1999, we issued a convertible promissory note in the
amount of $125,000 convertible into shares of common stock, to a
corporation that is a shareholder [of the company]. The principal and
interest are convertible at a rate equal to the greater of 60% of the
average closing bid price of a share of common stock for the five days
ending two days prior to the conversion or $.005. The note was issued
pursuant to Section 4(2) of the Securities Act of 1933. The person is
a shareholder of youticket.com and is a foreign person which is a
sophisticated investor and would qualify under Regulation D as
"accredited investor." The offer was not made by means of a public
solicitation.
(10) On December 31, 1999, we issued a warrant to purchase 300,000 shares
of common stock to Reservision, Inc. in payment of services. [(See
Item 1 -Description of Business- Research and Development).] The
warrant is exercisable at $.25 per share. The warrant was issued
pursuant to Section 4(2) of the Securities Act of 1933. Reservision,
-27-
<PAGE>
Inc. is a large corporation which would qualify under Regulation D as
an "accredited investor." The offer was not make by means of a public
solicitation.
(11) On January [24], 2000 we issued [500,000] shares of common stock to
Stockbroker Relations, Inc. of Colorado in payment of services
[through that date. On February 7, 2000 and April 11, 2000 we issued
an additional 100,000 and 500,000 shares of common stock,
respectively, to Stockbroker Relations, Inc. of Colorado in payment of
services through those dates. The aggregate value of the services,
based on the stock prices on the dates of issuance, was $428,150]. The
shares were issued under the Securities Act of 1933 pursuant to Rule
504 of Regulation D. The recipient of the shares indicated it was an
"accredited investor" and the offering was made without any public
solicitation. The issuance was also in compliance with Colorado
securities law.
All the proceeds of the above offerings, unless otherwise indicated, were
used for general working capital purposes.
-28-
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection 1 of Section 78.751 of Chapter 78 of the Nevada General
Corporations Law empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe his action was unlawful.
Subsection 2 of Section 78.751 of the Nevada corporate law empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he acted in any of the capacities set forth above, against expenses,
including amounts paid in settlement and attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in accordance with the standard set forth above,
except that no indemnification may be made in respect of any claim, issue or
mater as to which such person shall have been adjudged by a court of competent
jurisdiction after exhaustion of all appeals therefrom to be liable to the
corporation or for amounts paid in settlement to the corporation unless and only
to the extent that the court in which such action or suit was brought or other
court of competent jurisdiction determines that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 78.751 of the Nevada corporate law further provides that, to the
extent a director or officer of a corporation has been successful on the merits
or otherwise in the defense of any action, suit or proceeding referred to in
subsection (1) and (2), or in the defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith; that indemnification
provided for by Section 78.751 of the Nevada corporate law shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled and
that the scope of indemnification shall continue as to directors, officers,
employees or agents who have ceased to hold such positions, and to their heirs,
executors and administrators. Finally, Section 78.752 of the Nevada corporate
law empowers the corporation to purchase and maintain insurance on behalf of a
director, officer, employee or agent of the corporation against any liability
asserted against him or incurred by him in any such capacity or arising out of
his status as such whether or not the corporation would have the authority to
indemnify him against such liabilities and expenses.
-29-
<PAGE>
Our bylaws provide that directors and officers will not be personally
liable for any of our obligations or for any breach duties or obligations
arising out of any acts or conduct of the director or officer performed for or
on behalf of us. We will indemnify and hold harmless each person and his heirs
and administrators who shall serve at any time hereafter as a director or
officer from and against any and all claims, judgments and liabilities to which
they become subject by reason of having been a director or officer, or by reason
of any action alleged to have been taken or omitted to have been taken by him as
a director or officer. We will reimburse the director or officer for all legal
or other expenses reasonably incurred in connection with any claim or liability;
however, those persons will not be indemnified against, or be reimbursed for,
any expense incurred in connection with any claim or liability arising out of
their own negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC, indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against liabilities, other than the payment by the company of
expenses incurred by a director, officer or controlling person in successful
defense of an y action, suit or proceeding, is asserted by such director,
officer or controlling person in connection with the securities being offered or
sold, we will, unless in the opinion of its counsel that the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the federal securities laws, and will be governed by the final
adjudication of such case.
We do not have any directors or officers liability insurance. We have
entered into an indemnification agreement with Ms. Sidhu [and Mr. Murphey].
PART F/S
Our financial statements are included in this report beginning on page F-1,
immediately following in this section.
-30-
<PAGE>
YOUTICKET.COM, INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1999
F-1
<PAGE>
[INDEX TO FINANCIAL STATEMENTS]
[YOUTICKET.COM]
Report of Independent Certified Public Accountants F-3
Consolidated Financial Statements
Consolidated Balance Sheet F-4
Consolidated Statements of Operations F-5
Consolidated Statement of Shareholders' Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8
[VISITCOM, INC.
Balance Sheet F-19
Statement of Operations F-20
Statement of Shareholder's Equity F-21
Statement of Cash Flows F-22
Notes to consolidated Financial Statements F-23
F-2
<PAGE>
Report on Independent Certified Public Accountants
To the Shareholders of
Youticket.com, Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of Youticket.com,
Inc. as of December 31, 1999 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years ended
December 31, 1998 and 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation of the consolidated financial statements. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above,
present fairly, in all material respects, the financial position of
Youticket.com, Inc., as of December 31, 1999 and the results of its operations
and cash flows for the years ended December 31, 1998 and 1999 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the significant loss of the Company for the
year ended December 31, 1999 and negative working capital at December 31, 1999,
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans concerning these matters are described in Note 1.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ BDO Seidman, LLP
January 21, 2000
Los Angeles, California
F-3
<PAGE>
YOUTICKET.COM
CONSOLIDATED BALANCE SHEET]
December 31,
1999
--------------
Assets
Current assets
Cash $ 18,360
Accounts Receivable 35,457
Other Assets 17,722
------------
Total current assets 71,539
------------
Property and equipment, net (Note 3) 12,472
Goodwill, net of amortization of $86,045 (Note 8) 1,118,578
------------
Total assets $ 1,202,589
==============
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 338,603
Other accrued liabilities 13,494
Accrued compensation 62,052
--------------
Total current liabilities 414,149
--------------
Commitments and contingencies (Note 6)
Shareholders' equity
Common stock, $0.0001 par value, 100,000,000
shares authorized [26,278,412] shares
issued and [14,951,272 shares] outstanding 1,495
Additional paid in capital 1,719,074
Deferred compensation (Note 7) (116,367)
Accumulated deficit (622,012)
Treasury stock [11,327,140, at cost] (Note 8) (193,750)
--------------
Total shareholders' equity 788,440
--------------
Total liabilities and shareholders' equity $ 1,202,589
==============
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
[YOUTICKET.COM
CONSOLIDATED STATEMENT OF OPERATIONS]
<TABLE>
Years ended December 31,
----------------------------------
1998 1999
------------- ----------------
<S> <C> <C>
Revenue $ - $ 189,243
Cost of revenue - 117,779
------------- ----------------
Gross profit - 71,464
Selling, general and administrative expenses - 604,931
Amortization of goodwill - 86,045
------------- ----------------
Net loss $ - $ (619,512)
============= ================
Net loss per common share - basic and diluted (Note 2) $ - $ (0.05)
============= ================
Weighted average number of common shares 10,000,000 12,224,699
outstanding
============= ================
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
YOUTICKET.COM
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
Common Stock Additional Treasury Stock Total
----------------------- Paid-In Deferred ------------------------- Accumulated Shareholders'
Shares Amount Capital Compensation Shares Amount Deficit Equity
------------ ------- ---------- -------------- ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January
1, 1998 25,000 $ 2,500 $ - $ - - $ - $ (2,500) $ -
Changed par value
from no par value - (2,498) 2,498 - - - - -
to $0.0001
Stock split 100:1 2,475,000 248 (248) - - - - -
Net loss - - - - - - - -
------------ -------- ----------- ------------ ----------- ------- ---------- ------------
Balance, December
31, 1998 2,500,000 250 2,250 - - - (2,500) -
Stock split 4:1 7,500,000 750 (750) - - - - -
Common stock issued
to a related
party (Note 4) 672,860 67 168,148 - - - - 168,215
Common stock issued
for business
acquisition 14,327,140 1,433 3,580,352 - - - - 3,581,785
(Note 8)
Common stock
repurchased
(Note 4) (11,327,140) (1,133) (2,830,935) - (11,327,140) (193,750) - (3,025,818)
Conversion of
debt to common
stock (Note 4) 978,412 98 503,108 - - - - 503,206
Issuance of
stock options - - 146,931 (116,367) - - - 30,564
Issuance of
stock for cash
(Note 4) 300,000 30 149,970 - - - - 150,000
Net loss - - - - - - (619,512) (619,512)
------------ -------- ----------- ------------ ----------- --------- ---------- -------------
Balance,
December
31, 1999 14,951,272 $ 1,495 $ 1,719,074 $ (116,367)(11,327,140) (193,750) $ (622,012) $ 788,440
============ ========== =========== ================ ============ ========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
[YOUTICKET.COM
CONSOLIDATED STATEMENT OF CASH FLOW]
<TABLE>
Years ended
December 31
-----------------------------
Increase (Decrease) in Cash: 1998 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ - $ (619,512)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization - 90,681
Non-cash charges related to equity issuances (Note 4) - 181,941
Changes in operating assets and liabilities:
Accounts receivable - (35,457)
Other assets - (17,722)
Accounts payable - 76,061
Other accrued liabilities - 13,494
Accrued compensation - 62,052
------------ ------------
Net cash used in operating activities - (248,462)
------------ ------------
Cash flows from financing activities
[Proceeds received on issuance of - 166,822
common stock] (Note 4)
Proceeds from related party debt - 293,750
(Note 4)
Purchase of treasury stock (Note 8) - (193,750)
------------ ------------
Net cash provided by financing activities - 266,822
------------ ------------
Increase in cash - 18,360
Cash, beginning of year - -
------------ ------------
Cash, end of year $ - $ 18,360
============ ============
Supplemental disclosures of cash flow information
Excess over fair value of assets acquired (Note 8) $ - $ 1,204,623
Debt converted to equity [(Notes 4 and 7)] $ - $ 503,206
Deferred compensation (Note 7) $ - $ 116,367
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
[YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]
Note 1 - Nature of Business
The Company
The Company was organized May 9, 1996, under the laws of the State of Nevada, as
BNE Associates,
Inc.
On May 9, 1996, the Company issued 25,000 shares of its no par value common
stock for cash of $2,500.
On November 19, 1998, the State of Nevada approved the Company's restated
Articles of Incorporation, which increased its capitalization from 25,000 common
shares to 50,000,000 common shares. The par value was changed from no par value
to $.0001. On August 27, 1999, the Company increased the number of authorized
common shares from 50,000,000 shares to 100,000,000 shares.
On November 19, 1998, the Company forward split its common stock 100:1, thus
increasing the number of outstanding common shares from 25,000 shares to
2,500,000 shares. On January 11, 1999, the Company forward split its common
stock 4:1, thus increasing the number of outstanding common shares from
2,500,000 shares to 10,000,000 shares. For purpose of presenting loss per share,
the splits were assumed to have occurred as of January 1, 1998.
On June 30, 1999, the Company acquired Visitcom, Inc. ("Visitcom") (see Note 8)
and the Company changed its name to Youticket.com, Inc., (the "Company").
The Company operates an Internet show and tour ticketing website,
www.youticket.com, for the Las Vegas market. Through its wholly owned subsidiary
Visitcom, the Company also provides show and tour ticketing services to the
Venetian Hotel, the Union Plaza Hotel and Alamo Car Rental Service in
conjunction with Ticketmaster who provides the Company with both systems and
market support. In addition to selling tickets through its website and ticket
outlets, Youticket.com also enables customers to purchase its products via its
toll-free telephone numbers.
Going Concern
The Company has incurred significant operating losses and at December 31, 1999,
has negative working capital, which raises substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. Management's plans for correcting this issue include raising equity
through private placement offerings, focusing the Company's business on their
website business and restructuring its operations to reduce operating expenses.
However, there can be no assurances that the Company will be able to secure
additional capital or that if such capital is available, whether the terms or
conditions will be acceptable to the Company.
F-8
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Visitcom, Inc. All significant intercompany
transactions and balances are eliminated.
F-9
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation which
is computed using the straight-line method over estimated lives of five to seven
years. The Company capitalizes expenditures which materially increase asset
lives and charges ordinary repairs and maintenance to operations as incurred.
Property and equipment are reviewed for impairment whenever events or
circumstances indicate that the assets' undiscounted expected cash flows are not
sufficient to recover its carrying amount. Impairment losses, if any, are
recorded currently.
Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been recognized in the Company's
consolidated financial statements or tax returns. Deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and tax bases of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse.
Loss Per Share
Basic earnings per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share is calculated by dividing net income (loss) by the basic
shares outstanding and all dilutive securities, including stock options, but
does not include the impact of potential common shares which would be
antidilutive. These dilutive securities were anti-dilutive in 1999.
For the year ended December 31, 1999, potential dilutive securities representing
1,635,000 outstanding stock options and warrants are not included in the
earnings per share calculation since their effect would be antidilutive.
Stock-Based Compensation
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation", which establishes a fair value
method of accounting for stock-based compensation plans. The provisions of this
Statement allow companies to either expense the estimated fair value of stock
options or to continue to follow the intrinsic value method set forth in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", but to disclose the pro forma effect on net income (loss) and net
income (loss) per share had the fair value of the stock options been expensed.
The Company has elected to continue to account for stock-based compensation
plans utilizing the intrinsic value method. Accordingly, the compensation cost
for stock options is measured as the excess, if any, of the fair market price of
the Company's stock at the date of grant above the amount paid to acquire the
stock.
F-10
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of Significant Accounting Policies (Continued)
In accordance with this Statement, the Company has provided footnote disclosure
with respect to stock-based employee compensation. The cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using a pricing model whereby compensation cost is the
excess of the fair value of the award, as determined by the pricing model at
grant date or other measurement date, above the amount an employee must pay to
acquire the stock.
Concentration of Credit Risk
Financial instruments which potentially expose the Company to concentration of
credit risk consist primarily of cash and accounts receivable. The company
places its cash with major financial institutions. At times, cash balances may
be in excess of the amounts insured by the Federal Deposit Insurance
Corporation, however, management believes the risk of loss to be minimal.
The Company provides credit, in the normal course of business, to various
customers. The Company conducts on-going credit evaluations but does not obtain
collateral or other forms of security. The Company believes its credit policies
do not result in significant adverse risk and do not expect significant credit
related losses.
Revenue Recognition
The Company generates revenues primarily from per ticket convenience fees
charged directly to consumers who order tickets through the Company's website,
telephone sales center or retail outlets. In addition, the Company charges a
handling fee to consumers for tickets sold by the Company. The Company
recognizes convenience fee and handling fee revenue from ticket sales at the
time the sale is made.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
Fair Value of Financial Instruments
The carrying value of the Company's financial instruments, consisting primarily
of accounts receivable and accounts payable, approximates fair value due to the
relatively short maturity of these instruments and the borrowing costs to the
Company.
Goodwill
Cost in excess of the fair market value of assets acquired is amortized on a
straight-line basis of seven years.
F-11
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Property and Equipment
Property and equipment consists of the following:
<TABLE>
December Estimated
31, Useful
1999 Life
--------------- ------------
<S> <C> <C> <C>
Computer and office equipment $ 9,582 5 to 7
years
Furniture and fixtures 7,526 5 years
---------------
17,108
Less accumulated depreciation 4,636
---------------
$ 12,472
===============
</TABLE>
Note 4 - Related Party Transactions
On May 5, 1999, the Company issued 672,860 shares of Common Stock, with a fair
market value of $0.25 per share, to a Director in exchange for cash proceeds of
$16,822. As a result of this issuance the Company has recorded compensation
expense of $151,393, which is included in general and administrative expense.
On September 1, 1999, the Company granted 400,000 stock options with an exercise
price of $0.3125, which was the fair market value of the shares on the date of
the grant, to an executive of the Company. These options vested immediately and
expire on August 31, 2004. On the same day, the Company granted an additional
480,000 stock options with an exercise price of $0.3125, which was the fair
market value of the shares on the date of the grant, to this executive of the
Company. These options vested at a rate of 80,000 options per month with the
first vesting on September 30, 1999. Non-vested options were canceled when the
executive terminated his agreement with the Company in November 1999. The
remaining options have an expiration date of five years after the vesting date.
On June 30, 1999, the Company issued three promissory notes to shareholders of
the Company in the amounts of $70,000, $15,000 and $15,000 in exchange for cash.
These notes, which were secured by the assets of the Company, beared interest at
a rate of 10% per annum and had a maturity date of January 31, 2000. The notes,
plus accrued interest, were converted to 206,220 shares of the Company's common
stock in November 1999.
On September 3, 1999, the Company issued two promissory notes of $96,875 each to
two shareholders of the Company in exchange for cash. These notes were secured
by 11,327,140 shares of the Company's common stock, which were repurchased from
the previous owners of Visitcom. The promissory notes beared interest at a rate
of 10% per annum and were due on demand. These notes, plus accrued interest,
were converted into 392,192 shares of the Company's common stock in November
1999.
In November 1999, the Company issued 300,000 shares of Common Stock in exchange
for $150,000 in cash to existing shareholders of the Company.
F-12
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Income Taxes
At December 31, 1999, the Company has a net deferred asset of approximately
$293,000, which has been fully offset by a valuation allowance. The net deferred
tax asset is comprised principally of a net operating loss carryforward. At
December 31, 1999, the Company has a Federal operating loss carryforward of
approximately $686,000. The net operating loss carryforward expires in 2019.
Note 6 - Commitments and Contingencies
The Company is party to legal claims arising in the normal course of business.
In the opinion of management, resolution of such matters will not have a
material adverse effect on the Company's financial position, results of
operations or cash flows.
The Company leases office space under a non-cancelable operating lease expiring
in March 2000. Future minimum payments due under this lease for the year ending
December 31, 2000 are $10,477.
Employment Agreement
In December 1999, the Company entered into an employment agreement with the
President of the Company ("President"). Under the terms of this agreement, the
Company shall pay the President a salary of $3,000 per month increasing to
$7,000 upon receipt of $500,000 of new capital. The term of this agreement is
twelve months. The agreement also provided for the granting of 360,000 options
to the President, vesting at a rate of 30,000 per month at an exercise price of
$0.25 per share.
Note 7 - Stock Options and Shareholders' Equity
During 1999, the Company received advances of $204,000 which were converted,
including accrued interest, into 380,000 shares of the Company's common stock in
September 1999. Conversion price was based on the fair market value of the
Company's common stock as of the date of the transaction.
During 1999, options were granted to purchase 15,000 shares of common stock.
These options were granted with an exercise price of $0.25 with a term of five
years. The fair value of these [options] was determined by the Company to be
approximately $5,901. These charges have been recorded as general and
administrative expenses during the year ended December 31, 1999.
In November 1999, the Company entered into a website development agreement with
an outside consulting service. In conjunction with this agreement, the Company
issued [warrants] to purchase 300,000 shares of Common Stock. These [warrants]
were granted with an exercise price of $0.25 and a term of four years. The fair
value of these [warrants] was determined by the Company to be approximately
$68,272. These charges are amortized over the twelve-month term of the
agreement. As of December 31, 1999, the unamortized balance of the deferred
expense related to these [warrants] amounted to $51,976.
In September 1999, the board of directors of the Company approved a performance
equity plan that authorized up to 3,000,000 shares to be issued. The Company has
reserved 3,000,000 shares of Common Stock for issuance under this plan.
F-13
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Stock Options and Shareholders' Equity (Continued)
The Company has also granted options under non-qualified [options].
Activity under the performance equity plan [Weighte is as follows:
<TABLE>
[Weighted]
Average
Exercise]
Shares Price
------------ ------------
<S> <C> <C>
Outstanding at December 31, 1998 - $ -
Granted 0.2915
[1,915,000]
Exercised - -
Canceled (280,000) 0.3125
------------ ------------
Outstanding at December 31, 1999 [1,635,000] $ 0.2870
============ ============
</TABLE>
Stock Based Compensation
During the year ended December 31, 1999, some of the options granted to
employees under the plan were granted at an exercise price below the fair market
value. In accordance with APB Opinion No. 25, the Company has recorded
compensation expense of $14,269 for the year ended December 31, 1999 and has
deferred $64,391 of future compensation expense at December 31, 1999. All other
stock options issued to employees have an exercise price not less than the fair
market value of the Common Stock on the date of grant, and in accounting for
such options utilizing the intrinsic value method, there is no related
compensation expense recorded in the Company's consolidated financial
statements. If compensation cost for stock-based compensation had been
determined based on the fair market value of the stock options on their dates of
grant in accordance with SFAS 123, the Company's net loss for the year ended
December 31, 1999 would have been increased to the pro forma amounts presented
below:
<TABLE>
December
31,
1999
----------------
<S> <C> <C>
Net loss:
As reported $ (619,512)
Pro forma $ (845,933)
Basic and diluted loss per common share:
As reported $ (0.05)
Pro forma $ (0.07)
</TABLE>
F-14
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair value of option grants is estimated on the date of grant utilizing the
Black-Scholes option-pricing model with the following weighted average
assumptions for options granted during 1999; expected life of option of four to
six and a half years, expected volatility of 79%, risk free interest rate of 6%
and a 0% dividend yield. The weighted average fair value at the grant date for
stock options granted during 1999 is $0.28 per option.
F-15
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Stock Options and Shareholders' Equity (Continued)
Additional information relating to stock options and warrants outstanding and
exercisable at December 31, 1999, summarized by exercise price are as follows:
<TABLE>
Exercisable
Outstanding Weighted Average Weighted Average
------------------------------------------------- ------------ ------------
Exercise Price Life Exercise Exercise
Per share Shares (Years) Price Shares Price
- ------------------------ ------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 0.25 675,000 5.05 $ 0.25 345,000 $ 0.25
$ 0.2815 360,000 6.38 $ 0.2815 112,500 $ 0.2815
$ 0.3125 600,000 4.75 $ 0.3125 600,000 $ 0.3125
------------- ------------
1,635,000 1,057,500
============= ============
</TABLE>
Note 8 - Business Acquisition
On June 30, 1999, the Company acquired Visitcom, Inc. ("Visitcom"), a Las Vegas
show and tour ticketing service agency. The Company issued 14,327,140 shares of
its common stock to purchase Visitcom. The market value of these shares on the
date of this transaction was $0.25 per share. On September 3, 1999, the Company
repurchased 11,327,140 shares of the original issuance for $193,750 in cash due
to subsequent changes in the purchase price. The transaction was accounted for
as a purchase. The net purchase price of Visitcom was $750,000. The cost in
excess of the fair value of the net assets acquired was $1,204,623, which is
being amortized on a straight line basis over seven years. The results of
operations of Visitcom are included in the accompanying consolidated financial
statements from the date of acquisition.
The following summarized unaudited pro forma financial information assumes the
acquisition had occurred on January 1, [1999.] The unaudited [pro forma] results
are not necessarily indicative of the results which might actually have been
obtained had the acquisition occurred as of January 1, nor are they intended to
be indicative of future results of operations.
Year ended December 31, 1999
<TABLE>
[Pro forma
Pro forma] Consolidated
Youticket, Inc. Visitcom, Inc. Adjustments Amounts
-------------- ------------- -------------- ----------------------
<S> <C> <C> <C> <C>
Revenue $ 189,243 $ 178,148 $ - $ 367,391
Cost of 117,779 99,757 - 217,536
Revenue
-------------- ------------- -------------- ----------------------
Gross Profit 71,464 78,391 - 149,855
Selling and 690,976 199,553 (1) 86,045 976,574
administrative
expenses
-------------- ------------- -------------- ----------------------
Net loss (619,512) $ (121,162) $ (826,719)
============== ============= ======================
Loss per $ (0.05) $ (0.06)
common share -
basic and
diluted
Shares used in [$] 12,224,699 [$] 13,704,151
computing
earnings per share
</TABLE>
(1) To amortize goodwill in connection with the purchase of Visitcom on a
straight-line basis over seven years.
F-16
<PAGE>
YOUTICKET.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Business Acquisition (Continued)
The acquisition of Visitcom on June 30, 1999 and the allocation of the purchase
price on the basis of the fair values of the assets acquired and liabilities
assumed is as follows:[
]Components of Purchase Price:
Common stock issued (14,327,140 shares) $ 3,581,785
Repurchase of common stock (11,327,140 shares) (2,831,785)
-----------------
$ 750,000
=================
Summary Allocation:
Assets $ 15,362
Liabilities (469,985)
Goodwill 1,204,623
-----------------
$ 750,000
=================
The purchase price is based on the fair value of the Company's common stock on
the date of the acquisition.
Note 9 - Subsequent Events[
In January 2000, the Company received $125,000 in exchange for a convertible
note payable issued to a company controlled by two shareholders and directors of
the company. This note bears interest at a rate of 10%, is due in December 2001
and is convertible into the number of shares of the Company's common stock of
approximately 60% of the Company's common stock price on the date of conversion.
[On] January [4,] 2000, the Company entered into an agreement with an investor
relations company [. Pursuant to the agreement, the Company issued] 500,000
shares of common stock [on January 24, 2000 for services performed through that
date. On February 7, 2000 and April 11, 2000, the Company issued] an additional
100,000 [and 500,000] shares of common stock [, respectively, as compensation
for services through those dates. The shares had an aggregate value of $428,150,
based on] the market value of the common stock [on the dates of issuance
F-17
<PAGE>
VISITCOM, INC.
------------------------------
Financial Statements
For the Six Months Ended June 30, 1999
------------------------------
F-18
<PAGE>
[VISITCOM, INC.
BALANCE SHEET
June 30, 1999
Assets
Current Assets
Cash $ 2,100.40
Accounts Receivable 0.00
Other Current Assets 3,970.80
-----------------
Total Current Assets 6,071.20
-----------------
Property and Equipment 9,291.16
Total Assets $ 15,362.36
-----------------
Liabilities and Shareholder's Deficit
Current Liabilities
Accounts Payable $ 220,147.73
Notes Payable 204,000.00
Accrued Compensation 45,910.74
-----------------
Total Current Liabilities 470,058.47
-----------------
Total Liabilities 470,058.47
-----------------
Shareholder's Deficit
Common Stock, .01 par Value, 25,000 shares
authorized, 20,000 shares issued and outstanding 200.00
Accumulated Deficit - Beginning (333,734.00)
Accumulated Deficit - Current (121,162.00)
Total Shareholder's Deficit (454,696.00)
-----------------
Total Liabilities and Shareholder's Deficit $ 15,362.47
=================
F-19
<PAGE>
VISITCOM, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
Revenue $ 178,148.00
Cost of Revenue 99,757.00
-------------------
Gross Profit 78,391.00
-------------------
Selling, General and Administrative Expenses 199,553.00
-------------------
Net Loss $ (121,162.00)]
-------------------
F-20
<PAGE>
[VISITCOM, INC.
STATEMENT OF SHAREHOLDER'S EQUITY
FOR SIX MONTHS ENDED JUNE 30, 1999]
<TABLE>
Total
Accumulated Shareholder's
[Common Stock Deficit Deficit
---------------------------------------------------- ---------------------
Shares Amount
----------------- ---------------------------------- ---------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1999 20,000 $ 200 (333,734) $ (333,534)
Net Loss for the period 0.00 (121,162) (121,162)
----------------- ---------------------------------- ---------------------
Balance, June 30, 1999 20,000 $ 200$ (454,896) $ (454,696)
----------------- ---------------------------------- ---------------------
</TABLE>
F-21
<PAGE>
VISITCOM, INC.
STATEMENT OF CASH FLOWS
FOR SIX MONTHS ENDED JUNE 30, 1999
Increase (Decrease) in Cash
<TABLE>
<S> <C>
Cash flows form operating activities
Net Loss $ (121,162)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization
Changes in operating assets and liabilities 0
Accounts Receivable 4,117
Other Assets (3,971)
Accounts Payable 101,510
Accrued Compensation
-----------------
Net cash used in operating activities (19,506)
-----------------
Cash flow from investing activities
Purchase of property and equipment (300)
-----------------
Net cash used in investing activities (300)
-----------------
Cash flows from financing activities
Bank Overdraft (3,094)
Proceeds from related party 25,000
Net cash provided by financing activities 21,906
-----------------
Increase in Cash
Cash, beginning of period 0
Cash, end of period $ 2,100]
=================
</TABLE>
F-22
<PAGE>
[VISITCOM, INC.
Notes to
Unaudited Condensed Financial Statements
June 30, 1999
Note 1. The Unaudited Condensed Financial Statements included herein have been
prepared by Registrant and include all normal and recurring adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position at June 30, 1999 pursuant to the rules and regulations of the
Securities and Exchange Commission.
The results of operation for the subject period are not necessarily indicative
of the results for the entire year.
F-23
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
(a) Exhibits
[3.1+] Certificate of Incorporation, as amended, of youticket.com inc.
[3.2+] By-laws of the Registrant
[4.1+] Form of common stock certificate of youticket.com inc.
[4.2+] Convertible Promissory Note between youticket.com inc. and ZDG
Holdings, Inc.
[4.3+] Warrant Agreement between Registrant and Reservision, Inc. dated
December 31, 1999.
[10.1+] Agreement between Visitcom, Inc. and Venetian Casino Resort LLC
[10.2+] Hardware and TM System User Agreement between Visitcom, Inc. and
Ticketmaster - Las Vegas.
[10.3+] Employment and Indemnification Agreements between youticket.com
inc. and LeAnna Sidhu
[10.4+] Reservision, Inc. Website Development Agreement
[10.5+] 1999 Performance Equity Plan
[10.8+] Amendment No. 1 Reservision, Inc. Website Development Agreement
[10.9+] Consulting Agreement dated January 4, 2000 between Registrant and
Stockbroker Relations, Inc. of Colorado.
[10.10+] Stock Issuance Agreement dated January 19, 2000 between Registrant
and Stockbroker Relations, Inc. of Colorado.
[10.11* Amendment to agreements between Stockbroker Relations, Inc. of
Colorado dated April 13, 2000.
10.12* Option Agreement between Wayne Murphey and Registrant.
10.13* Indemnification Agreement between Wayne Murphey and Registrant.
10.14* Employment Agreement between Wayne Murphey and Registrant.
16.1* Letter from Barry Friedman, CPA
21.1+] Subsidiaries of Registrant
27.1* Financial Data Schedule
* Filed herewith.
[+ Previously filed.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Amendment No. [2] to the Report on
Form 10-SB to be signed on its behalf by the undersigned, thereunto duly
authorized on the [26] day of [April], 2000.
YOUTICKET.COM, INC.
/s/ LeAnna Sidhu
--------------------------
LeAnna Sidhu, President
31
Exhibit 10.11
Amendment to
Stock Issuance Agreement Dated January 19, 2000
[Stockbroker Relations, Inc. of Colorado ("Consultant") and youticket.com
inc. ("Company") are parties to a consulting agreement dated January 4, 2000 and
a Stock Issuance Agreement dated January 19, 2000. Pursuant to these agreements,
the Consultant would earn 500,000 shares for services previously performed to
January 19, 2000 and 100,000 for each month of services to be performed by
Consultant. Consultant has performed the services that it was obligated to
perform after January 19, 2000, and the Company has agreed to issue 600,000
additional shares as final and full compensation for all the services under the
above referenced agreements.
The amendment is made the 11th day of April, 2000.
youticket.com inc.
By:_______________________
Name: LeAnna Sidhu
Title: President
Stockbroker Relations, Inc. of Colorado
By:_______________________
Name:
Title:
STOCK OPTION AGREEMENT
AGREEMENT made as of the 19th day of April, 2000 by and between
YouTicket.com inc., a Nevada corporation ("Company"), and Wayne K. Murphey
("Employee" of YouTicket.com inc.).
WHEREAS, Employee has entered into an Employment Agreement of even date
herewith pursuant to which employee will be employed by the Company ("Employment
Agreement");
WHEREAS, on April 19, 2000 ("Grant Date"), the Board of Directors of the
Company ("Board") authorized the grant to the Employee of an option ("Option")
to purchase an aggregate of 300,000 shares of the authorized but unissued Common
Stock of the Company ("Common Stock"), conditioned upon the Employee's
acceptance thereof upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the Employee the Option
to purchase all or any part of an aggregate of 300,000 shares of Common Stock
("Option Shares") on the terms and conditions set forth herein.
2. Incentive Stock Option. The Option represented hereby is intended to be
an Option, which qualifies as an "Incentive Stock Option" under Section 422 of
the Internal Revenue Code of 1986, as amended.
<PAGE>
3. Exercise Price. The exercise price of the Option is as set forth in
paragraph 4 hereof, subject to adjustment as hereinafter provided.
4. Exercisability. This Option is exercisable as follows (i) commencing on
June 1, 2000 and ending on May 31, 2005, this Option may be exercised for up to
25,000 shares of Common Stock at US$0.27 per share; (ii) commencing July 1, 2000
and ending on June 30, 2005, this Option may be exercised for up to 25,000
shares of Common Stock at US$0.27 per share; (iii) commencing August 1, 2000 and
ending on July 31, 2005 , this Option may be exercised for up to 25,000 shares
of Common Stock at US$0.27 per share; (iv) commencing September 1, 2000 and
ending August 31, 2005, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (v) commencing October 1, 2000 and ending on
September 30, 2005, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (vi) commencing November 1, 2000 and ending
on October 31, 2005 , this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (vii) commencing December 1, 2000 and ending
on November 30, 2005, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (viii) commencing January 1, 2001 and ending
on December 31, 2006, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (ix) commencing February 1, 2001 and ending
on January 31, 2006, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (x) commencing March 1, 2001 and ending on
February 29, 2006, this Option may be exercised for up to 25,000 shares of
Common Stock at US$0.27 per share; (xi) commencing April 1, 2001 and ending on
March 31, 2006, this Option may be exercised for up to 25,000 shares of Common
Stock at US$0.27 per share; (xii) commencing June 1, 2001 and ending on May 31,
2006, this Option may be exercised for up to 25,000 shares of Common Stock at
US$0.27 per share. The period during which the Option is exercisable is referred
to as the Exercise Period.
5. Effect of Termination of Employment. The termination of the employment
of Employee will have no effect on the exercisability of a portion of this
Option once it becomes exercisable. If Employee's employment is terminated
before a portion of this Option is exercisable, that portion of the Option will
terminate and be of no further effect.
2
<PAGE>
6. Withholding Tax. Not later than the date as of which an amount first
becomes includible in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall notify the Company of
the amount and, to the extent required, pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any Federal, state, local
and other taxes of any kind required by law to be withheld or paid with respect
to such amount. The obligations of the Company under this Agreement shall be
conditional upon such payment or arrangements with the Company and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Employee from the Company.
7. Adjustments. In the event of any stock dividend, forward stock split,
reverse stock split, or other recapitalization of the Company which affects the
number of outstanding shares of Common Stock, the Company shall proportionally
adjust the number and kind of Option Shares and the exercise price of the Option
in order to prevent the dilution or enlargement of the Employee's proportionate
interest in the Company and Employee's rights hereunder immediately prior to the
stock dividend, stock split, reverse stock split or recapitalization, provided
that the number of Option Shares shall always be a whole number.
8. Method of Exercise.
8.1. Notice to the Company. The Option shall be exercised in whole or in
part by written notice in substantially the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice.
8.2. Delivery of Option Shares. The Company shall deliver a certificate for
the Option Shares to the Employee as soon as practicable after payment therefor.
3
<PAGE>
8.3. Payment of Purchase Price.
8.3.1. Payment. The Employee shall make payments by wire transfer,
certified or bank check or personal check, in each case payable to the order of
the Company; the Company shall not be required to deliver certificates for
Option Shares until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof.
8.3.2. Payment of Withholding Tax. Any required withholding tax shall
be paid in cash in accordance with Sections 8.3.1.
9. Nonassignability. The Option shall not be assignable or transferable
except by will or by the laws of descent and distribution in the event of the
death of the Employee. No transfer of the Option by the Employee by will or by
the laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and a
copy of the will and such other evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions of the Option.
10. Company Representations. The Company hereby represents and warrants to
the Employee that:
(a) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the
transactions contemplated hereunder; and
(b) the Option Shares, when issued and delivered by the Company to the
Employee in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.
11. Employee Representations. The Employee hereby represents and
warrants to the Company that:
4
<PAGE>
(a) he is acquiring the Option and shall acquire the Option Shares for
him own account and not with a view towards the distribution thereof;
(b) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless they
are registered under the Securities Act of 1933 ("1933 Act") or an
exemption therefrom is available thereunder (which exemption may require a
holding period of not less than one year after exercise in certain
circumstances and not less than two years after exercise in certain other
circumstances and if an affiliate of the Company impose other restrictions)
and that the Company is under no obligation to register the Option Shares
for sale under the 1933 Act except as stated in this agreement;
(c) in him position with the Company, he has had both the opportunity
to ask questions and receive answers from the officers and directors of the
Company and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such
information or can acquire it without unreasonable effort or expense
necessary to verify the accuracy of the information obtained pursuant to
this clause;
(d) he is aware that the Company shall place stop transfer orders with
its transfer agent against the transfer of the Option Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided
herein; and
(e) the certificates evidencing the Option Shares may bear the
following legends:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of April __19___, 2000,
a copy of which is on file with the Company, and may not be
transferred, pledged or disposed of except in accordance with the
terms and conditions thereof."
5
<PAGE>
12. Restriction on Transfer of Stock Option Agreement and Option Shares.
Anything in this Agreement to the contrary notwithstanding and in addition to
the provisions of Section 11 of this Agreement, the Employee hereby agrees that
he shall not sell, transfer by any means or otherwise dispose of the Option
Shares acquired by him without registration under the 1933 Act, or in the event
that they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, and (ii) the Employee has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt.
13. Registration Right. The Company shall promptly file a Registration
Statement on Form S-8 (or successor form) to register the Option Shares for
issuance to Employee at such time as is permitted for the Company to use Form
S-8, after it has registered a class of securities under the Exchange Act of
1934, as amended, ("Exchange Act"), and provided further that the Option Shares
may be registered on Form S-8. Employee agrees that the Company is not obligated
to register a class of securities under the Exchange Act at any time.
14. Miscellaneous.
14.1. Notices. All notices, requests, deliveries, payments, demands
and other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth herein, or to such other address as either shall have specified by notice
in writing to the other. Notice shall be deemed duly given hereunder when
delivered or mailed as provided herein.
14.2. Stockholder Rights. The Employee shall not have any of the
rights of a stockholder with respect to the Option Shares until such shares have
been issued after the due exercise of the Option. Nothing contained in this
Agreement shall be deemed to confer upon Employee any right to continued
employment with the Company or any subsidiary thereof, nor shall it interfere in
any way with the right of the Company to terminate Employee in accordance with
the provisions regarding such termination set forth in Employee's written
agreement with the Company, or if there exists no such agreement, to terminate
Employee at will.
6
<PAGE>
14.3. Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach.
14.4. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof.
This Agreement may not be amended except by writing executed by the party
to be charged.
14.5. Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
14.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada (without regard to conflicts
of law provisions).
14.7. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
YouTicket.com inc. Address: 4420 S. Arville, Suite 13 and 14
Las Vegas, NV 89103
By: /s/ Leanna Sidhu
---------------------------
Leanna Sidhu, President
EMPLOYEE: Address: 3695 Calico Brook Court
Las Vegas, NV 89147
/s/ Wayne Murphey
- ------------------
Wayne K. Murphey
7
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
YouTicket.com inc.
4420 S. Arville, Suite 13 and 14
Las Vegas, NV 89103
- ---------------------------------------
DATE
Attention: Secretary or Treasurer
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of April ____, 2000
("Agreement") with YouTicket.com inc. ("Company"), I hereby irrevocably elect to
exercise the right to purchase _________ shares of the Company's common stock
("Common Stock"), which are being purchased for investment and not for resale.
As payment for my shares, enclosed is (check and complete applicable
box[es]):
[_] a [personal check] [certified check] [bank check]
payable to the order of "YouTicket.com inc." in the sum of $_________;
and/or
[_] confirmation of wire transfer in the amount of
$-------------.
I hereby represent, warrant to, and agree with, the Company that:
(i) I have acquired the Option and shall acquire the Option Shares for
my own account and not with a view towards the distribution thereof;
(ii) I understand that I must bear the economic risk of the investment
in the Option Shares, which cannot be sold by me unless they are registered
under the Securities Act of 1933 ("1933 Act") or an exemption therefrom is
available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;
<PAGE>
(iii) in my position with the Company, I have had both the opportunity
to ask questions and receive answers from the officers and directors of the
Company and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such
information or can acquire it without unreasonable effort or expense
necessary to verify the accuracy of the information obtained pursuant to
clause (ii) above;
(iv) I am aware that the Company shall place stop transfer orders with
its transfer agent against the transfer of the Option Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided
herein; and
(v) the certificates evidencing the Option Shares may bear the
following legends:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of April ____, 2000 a
copy of which is on file with the Company, and may not be transferred,
pledged or disposed of except in accordance with the terms and
conditions thereof."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ------------------------------ ------------------------------------------
(Signature) (Address)
- ------------------------------ ------------------------------------------
(Print Name) (Address)
------------------------------------------
(Social Security Number)
2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of this 19th
day of April, 2000, is made by and between YouTicket.com, Inc., a Nevada
corporation (the "Company") and Wayne K. Murphey (the "Indemnitee"), an "agent"
(as hereinafter defined) of the Company.
RECITALS
A. The Company recognizes that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, or
both, due to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the exposure
frequently bears no reasonable relationship to the compensation of such
directors and officers; and
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors and officers with adequate, reliable
knowledge of legal risks to which they are exposed or information regarding the
proper course of action to take; and
C. The Company and Indemnitee recognize that plaintiffs often seek damages
in such large amounts and the costs of litigation may be so enormous (whether or
not the case is meritorious), that the defense and/or settlement of such
litigation is often beyond the personal resources of officers and directors; and
D. The Company believes that it is unfair for its directors and officers to
assume the risk of huge judgments and other expenses which may occur in cases in
which the director or officer received no personal profit and in cases where the
director or officer acted in good faith; and
E. The Company, after reasonable investigation, has determined that the
liability insurance coverage presently available to the Company provides only
limited protection and may not continue to be available at acceptable premium
rates. The Company believes that the interests of the Company and its
stockholders would best be served by a combination of such insurance (to the
extent it remains reasonably available) and the indemnification by the Company
of the directors and officers of the Company; and
<PAGE>
F. Chapter 78 of the General Corporation Law of Nevada ("Chapter 78"),
under which the Company is organized, empowers the Company to indemnify its
officers, directors, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Chapter 78 is not exclusive; and
G. The board of directors of the Company (the "Board of Directors") has
determined that contractual indemnification as set forth herein is not only
reasonable and prudent but necessary to promote the best interests of the
Company and its stockholders; and
H. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company; and
I. The Indemnitee is willing to serve, or to continue to serve as a
director or officer of the Company, provided that the Indemnitee is furnished
the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions.
(a) Agent. For purposes of this Agreement, "agent" of the Company means any
person who (i) is or was a director, officer, employee or other agent of the
Company or a subsidiary of the Company or (ii) is or was serving at the request
of, for the convenience of, or to represent the interests of the Company or a
subsidiary of the Company as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise.
(b) Expenses. For purposes of this Agreement, "expenses" include all direct
and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements, other out-of-pocket
costs and reasonable compensation for time spent by the Indemnitee for which he
is not otherwise compensated by the Company or any third party, provided that
the rate of compensation and estimated time involved are approved in advance by
the Board of Directors), actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement;
Chapter 78 or otherwise, and amounts paid in settlement by or on behalf of the
Indemnitee, but shall not include any judgments, fines or penalties actually
levied against the Indemnitee.
2
<PAGE>
(c) Proceeding. For the purposes of this Agreement "proceeding" means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type whatsoever.
(d) Subsidiary. For purposes of this Agreement, "subsidiary" means any
corporation of which more than fifty percent (50%) of the outstanding voting
securities are owned directly or indirectly by the Company, by the Company and
one or more other subsidiaries, or by one or more subsidiaries.
(e) Other Enterprise; Fines; Serving at the Request of the Company. For
Purposes of this Agreement, "other enterprise shall include employee benefit
plans; reference to "fines" shall include any excise tax assessed with respect
to any employee benefit plans; and references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to any employee benefit plan, its
participants, or beneficiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to
serve as an agent of the Company at its will (or under separate agreement, if
such agreement exists), in the capacity the Indemnitee currently serves as an
agent of the Company, so long as the Indemnitee is duly appointed or elected and
qualified in accordance with the applicable provisions of the bylaws of the
Company or any subsidiary of the Company or until such time as the Indemnitee
tenders his resignation in writing; provided, however, that nothing contained in
this Agreement is intended to create any right to continued employment of the
Indemnitee in any capacity or to adversely affect the rights of Indemnitee under
any indemnity agreement executed after the date hereof.
3. Indemnity in Third Party Proceedings and Derivative Actions. Subject to
Section 10 below, the Company shall indemnify the Indemnitee if the Indemnitee
is a party to or threatened to be made a party to or otherwise involved in any
proceeding (including a proceeding by or in the name of the Company to procure a
judgment in its favor) by reason of the fact that the Indemnitee is or was an
agent of the Company, or by reason of any act or inaction by him in any such
capacity, against any and all expenses and liabilities of any type whatsoever
(including, but not limited to, judgments, fines and penalties), actually and
reasonably incurred by him in connection with the investigation, defense,
settlement or appeal of such proceeding.
4. Indemnification of Expenses of Successful Party. In addition to any
other indemnity provided by this Agreement, to the extent that the Indemnitee
has been successful on the merits or otherwise in defense of any proceedings or
in defense of any claim, issue or matter therein, including the dismissal of any
action without prejudice, the Company shall indemnify the Indemnitee against all
expenses actually and reasonably incurred in connection with the investigation,
defense or appeal of such proceeding.
3
<PAGE>
5. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines or penalties) actually and reasonably incurred
by him in the investigation, defense, settlement or appeal of a proceeding but
is not entitled, however, to indemnification for the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion thereof to
which the Indemnitee is entitled.
6. Advancement of Expenses. Subject to Section 10 (b) below, the Company
shall advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company. The Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company as authorized by this Agreement. The advances to be
made hereunder shall be paid by the Company to or on behalf of the Indemnitee
within thirty (30) days following delivery of a written request therefor by the
Indemnitee to the Company.
7. Notice and Other Indemnification Procedures
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) Any indemnification requested by the Indemnitee under Section 3
hereof shall be made no later than forty-five (45) days after receipt of the
written request of Indemnitee, unless a good faith determination is made within
said forty-five (45) day period (i) by the Board of Directors of the Company by
a majority vote of a quorum thereof consisting of directors who are
disinterested in such proceedings, or (ii) in the event such a quorum is not
obtainable, at the election of the Company, either by independent legal counsel
in a written opinion addressed to the Indemnitee or by a panel of arbitrators,
one of whom is selected by the Indemnitee, one of whom is selected by the
Company, and the last of whom is selected by the first two arbitrators so
selected, that the Indemnitee is not or (subject to final judgment or other
final adjudication as provided in Section 10 (a) below) ultimately will not be
entitled to indemnification hereunder.
(c) Notwithstanding a determination under Section 7 (b) above that the
Indemnitee is not entitled to indemnification with respect to any specific
proceeding, the Indemnitee shall have the right to apply to any court of
competent jurisdiction for the purpose of enforcing the Indemnitee's right to
indemnification pursuant to this Agreement. Neither the failure of the Company
(including its Board of Directors or independent legal counsel or the panel or
4
<PAGE>
arbitrators) to have made a determination prior to the commencement of such
action that the Indemnitee is entitled to indemnification hereunder, nor an
actual determination by the Company (including its Board of Directors or
independent legal counsel or the panel of arbitrators) that the Indemnitee is
not entitled to indemnification hereunder, shall be a defense to the action or
create any presumption that the Indemnitee is not entitled to indemnification
hereunder.
(d) The Company shall indemnify the Indemnitee against all expenses
incurred in connection with any hearing or proceeding under this Section 7 if
the Indemnitee prevails in such hearing or proceeding.
8. Assumption of Defense. In the event the Company shall be obligated to
pay the expenses of any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel reasonably acceptable to the Indemnitee, upon the delivery to the
Indemnitee of written notice of its election to do so. After delivery of such
notice, approval of such counsel by the Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to the Indemnitee under
this Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same proceeding, provided that (i) the Indemnitee shall have
the right to employ his counsel in such proceeding at the Indemnitee's expense;
and (ii) if (a) the employment of counsel by the Indemnitee has been previously
authorized in writing by the Company, (b) the Company shall have reasonably
concluded that there may be a conflict of interest between the Company and the
Indemnitee in the conduct of any such defense, or (c) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding within a
reasonable time, the fees and expenses of the Indemnitee's counsel shall be at
the expense of the Company.
9. Insurance. The Company may, but is not obligated to obtain directors'
and officers' liability insurance ("D&O Insurance") as may be or become
available with respect to which the Indemnitee is named as an insured.
Notwithstanding any other provision of this Agreement, the Company shall not be
obligated to indemnify the Indemnitee for expenses, judgments, fines or
penalties which have been paid directly to the Indemnitee by D&O Insurance. If
the Company has D&O Insurance in effect at the time the Company receives from
the Indemnitee any notice of the commencement of a proceeding, the Company shall
give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the policy. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policy.
10. Exceptions. Any provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
5
<PAGE>
(a) Certain Matters. To indemnify the Indemnitee on account of
any proceeding with respect to (i) which final judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section 16
(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of
any federal, state or local statute, including any statute which makes
actionable the use of non-public information or self-dealing or (ii) any
proceeding to the extent it is determined by final judgment or other final
adjudication that the Indemnitee's conduct was grossly negligent, intentionally
fraudulent, criminal or in bad faith and not believed by the Indemnitee to be in
the best interests of the Company. For purposes of the foregoing sentence, a
final judgment or other adjudication may be reached in either the underlying
proceeding or action in connection with which indemnification is sought or a
separate proceeding or action to establish rights and liabilities under this
Agreement; or
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Chapter 78, but such indemnification or advancement of expenses may be provided
by the Company in specific cases if the Board of Directors finds it to be
appropriate; or
(c) Action for Indemnification. To indemnify the Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
the Indemnitee to enforce or interpret this Agreement if the Indemnitee does not
prevail in such proceeding; or
(d) Unauthorized Settlements. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding effected without
the Company's written consent. The Company shall not settle any proceeding
without the Indemnitee's written consent. Neither the Company nor the Indemnitee
will unreasonably withhold consent to any proposed settlement; provided,
however, that the Company may in any event decline to consent to (or to
otherwise admit or agree to any liability for indemnification hereunder in
respect of) any proposed settlement if the Company determines (pursuant to
Section 7 (b) above) that the Indemnitee is not or ultimately will not be
entitled to indemnification hereunder; or
(e) Securities Act Liabilities. To Indemnify the Indemnitee or
otherwise act in violation of any undertaking in any registration statement
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"). The Indemnitee acknowledges that paragraph (i) of
Item 512 of Regulation S-K currently generally requires the Company to undertake
in connection with any registration statement filed under the Act to submit the
issue of the enforceability of the Indemnitee's rights under this Agreement in
connection with any liability under the Act on public policy grounds to a court
of appropriate jurisdiction and to be governed by any final adjudication of such
issue. The Indemnitee specifically agrees that any such undertaking shall
supersede the provisions of this Agreement and to be bound by any such
undertaking.
6
<PAGE>
11. Non-Exclusivity. The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or Bylaws, in any court in which a proceeding is
brought, the vote of the Company's stockholders or disinterested directors,
other agreements or otherwise, both as to action in the Indemnitee's official
capacity and to action in another capacity while occupying his position as an
agent of the Company, and the Indemnitee's rights hereunder shall continue after
the Indemnitee has ceased acting as an agent of the Company and shall inure to
the benefit of the heirs, executors and administrators of the Indemnitee.
12. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee, who shall execute all papers reasonably required and
shall do everything reasonably requested to secure such rights, including the
execution of such documents to enable the Company effectively to bring suit to
enforce such rights.
13. Interpretation of Agreement. It is understood that the parties hereto
intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
14. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever in a
jurisdiction, (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby
in such jurisdiction, (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal, or
unenforceable in such jurisdiction, and (iii) such invalidity, illegality or
unenforceability shall not affect the interpretation or enforceability of this
Agreement in any other jurisdiction.
15. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
16. Successors and Assigns. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto.
7
<PAGE>
17. Notice. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if by
telegram, telecopy or telex, upon answer back or other similar acknowledgment of
receipt, (ii) if delivered by hand and receipted for by the party addressee or
(iii) if mailed by certified or registered mail with postage prepaid, upon
actual receipt. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
The address of Company for purposes of this paragraph is as follows:
YouTicket.Com, Inc.
4420 S. Arville Suite 14
Las Vegas, NV 89103
Address for Indemnitee shall be as follows:
Wayne Murphey
3695 Calico Brook Court
Las Vegas, NV 89147
18. Governing Law. This Agreement shall be governed exclusively by and
construed according to the laws of the state of Nevada, as applied to contracts
between Nevada residents entered into and to be performed within and outside of
the state of Nevada.
19. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto and supersedes and replaces any and all prior agreements and
understandings, whether oral or written, express or implied, between the parties
with respect to the subject matter herein.
YOUTICKET.COM, INC. THE INDEMNIFIED PARTY:
A Nevada Corporation
By: LeAnna Sidhu /s/ Wayne Murphey
-------------------- --------------------
Its: President (Signature)
-----------------------------
(Printed Name)
8
EMPLOYMENT AGREEMENT
FOR
WAYNE MURPHEY
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
19th day of April, 2000, by and between YouTicket.com, inc., a Nevada
corporation (the "Company" or "Employer") and WAYNE MURPHEY, an individual
("Murphey" or "Employee").
RECITALS
WHEREAS, the Company is interested in hiring a seasoned corporate
professional to serve as its Vice President of Operations; and
WHEREAS, Employee is a seasoned corporate professional who is interested in
working for the Company as its Vice President of Operations; and
WHEREAS, the Company is desirous of hiring Employee and Employee is
desirous of being employed by the Company as its Vice President of Operations,
upon the terms, covenants and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Company and Employee agree as follows:
AGREEMENT
1. RECITALS. The above-listed Recitals are incorporated into this Agreement
in their entirety and expressly made a part hereof.
2. POSITION AND TITLE. The Employer will employ the Employee as the Vice
President of Operations for the Company. Employee shall report directly to the
President of the Company. The Employee will act as a senior executive of the
Company with such duties and responsibilities as are consistent with that
position and as assigned to the Employee by the President of the Company,
including, but not limited to: (a) administration of the various departments of
the Company; (b) supervising the overall operations of the Company; (c)
increasing the Company's product offerings; and (d) maintaining and improving
the Company's internet website. The Employee will perform his responsibilities
principally from an office located in Las Vegas, NV, provided that he will
travel to other locations, from time to time, as required for the full and
proper performance of his duties and responsibilities.
<PAGE>
3. ELECTION TO THE COMPANY'S BOARD OF DIRECTORS. Within ninety (90) days of
Employees hire date, the Board of Directors of the Company will recommend to the
Company's shareholders that Employee be elected to serve as a member of the
Company's Board of Directors. It should be specifically noted, however, that the
Company's obligation to make a recommendation to the shareholders that Employee
be elected to serve on the Company's Board of Directors is not to be construed
as an ongoing obligation on the part of the Company to maintain Employee as a
member of the Company's Board of Directors. If the Employee is terminated or
resigns under his employment agreement then he is also terminated as a director.
4. TERM. This Agreement shall be valid for a period of one (1) year,
specifically commencing on May 1, 2000 and continuing through and including
April 30, 2001 (the "Term"). The Term shall automatically extend for five (5)
successive one (1) year periods, unless either party provides the other with
written notice of their intent not to have the Term so extended, thirty (30)
days prior to the termination of the then current term
5. COMPENSATION.
(a) Salary. As compensation for providing the services required of Employee
under this Agreement, the Company shall pay Employee a salary of Thirty Six
Thousand Dollars ($36,000.00) per annum (the "Base Salary"), payable every other
week in equal installments. Employees annual Base Salary shall be automatically
increased to Eighty Four Thousand Dollars ($84,000.00) in the event the Company
is successful in consummating a new capital infusion or date during the Term of
this Agreement, to the Company of at least $500,000.
(b) Stock Options. Simultaneous with the execution of this Agreement, the
Company shall issue Employee an option to purchase an aggregate of 300,000
shares of the Company's Common Stock in the form attached hereto as Exhibit 1
(the "Option").
(c) Vacation/Sick Days. Employee shall be eligible for fifteen (15)
business days of paid vacation benefits each employment year, accrued on a pro
rata basis, together with that number of personal sick days and standard
holidays as are afforded to an employee of his status under the Company's
current policies.
(d) Expense Reimbursement. The Company shall reimburse Employee for those
expenses incurred by him in connection with the performance of his duties on
behalf of the Company that are in accordance with the Company's expense
reimbursement procedures currently in place; provided, that such expenses are
reasonable for an executive of Employees status and are appropriately
documented.
(e) Automobile Allowance. The Company shall pay Employee an automobile
allowance of $500.00 per month.
2
<PAGE>
(f) Insurance. Employee shall be paid a medical and dental insurance
allowance of $500 per month until such time as the Company establishes its own
similar medical and dental plan, at which time the Company will provide the same
to Employee and his immediate family at no cost to him.
(g) Cellular Telephone. The Company will reimburse Employee for business
related cellular telephone calls and for reasonable standard monthly cellular
telephone fees.
6. TERMINATION.
(a) Termination Without Cause.Either party may terminate this Agreement and
Employee's respective employment hereunder, without cause, by providing the
other party with thirty (30) days prior written notice of such intention.
(b) Termination With Cause. Employee's employment may be terminated with
cause, effective upon delivery of written notice to Employee given at any time
(without any necessity for prior notice) if any of the following shall occur:
(i) By mutual agreement of the parties; (ii) On the last day of the month in
which Employee dies or becomes permanently incapacitated. (For purposes of this
paragraph, "permanent incapacity" shall mean mental or physical incapacity, or
both, reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company's Board of
Directors, either Employees regularly attending physician or a duly licensed
physician selected by the Company's Board of Directors, rendering Employee
unable to perform substantially all of his duties hereunder and which appears
reasonably certain to continue for at least six consecutive months without
substantial improvement. Employee shall be deemed to have "become permanently
incapacitated" on the date the Company's Board of Directors has determined that
Employee is permanently incapacitated and so notifies Employee; (iii) a material
breach of this Agreement by Employee; and/or (iv) any material acts or events
which inhibit Employee from fully performing his responsibilities to the Company
in good faith, such as (a) a felony criminal conviction; (b) any other criminal
conviction involving Employees lack of honesty or moral turpitude; (c) drug or
alcohol abuse; or (d) acts of dishonesty, gross carelessness or gross
misconduct.
(c) Severance Pay. If the Employee's employment hereunder is terminated
without cause (except in the event of the termination of Employee's employment
due to a change of voting control, which is discussed in Paragraph (d), below),
the Employer shall pay Employee a lump sum payment on the date of such
termination equal to: one months' Base Salary (to be determined by the actual
salary Employee is being paid at the time of termination), car allowance,
insurance allowance, plus reimburse Employee for any accrued but unused vacation
days up through the date of termination. Employee shall not be entitled to any
such severance pay in the event Employee is terminated with cause.
3
<PAGE>
If Employee is terminated without cause as a direct result of a change in
voting control in the Company, which for purposes of this Agreement shall be
defined as a change in ownership of 51% or more of the voting stock, other than
through a public offering or subsequent secondary offerings, then the Company
shall: (1) immediately vest all outstanding options identified in Paragraph
5(b); and (2) pay Employee a lump sum payment on the date of termination equal
to: six (6) months' Base Salary (to be determined by the actual salary Employee
is being paid at the time of termination), car allowance, insurance allowance
and any incurred but unpaid expenses described in Paragraphs 5(d) and 5(g).
7. NON-COMPETITION. Except in furtherance of the business of the Employer
and as specifically provided in this Agreement, Employee shall not during the
Term of this Agreement, on his own behalf or on behalf of any other person,
company, corporation, partnership or other entity or enterprise (collectively
"Person") directly or indirectly perform any of the following acts: (a) divert
or use the resources of the Employer or its affiliates to or for any other
Person; (b) divert or use a business opportunity of the Employer or its
affiliates to or for any other Person; (c) solicit any employees, agents or
consultants of the Employer or its affiliates to terminate their business
relationship with the Employer or its affiliates or to cause or encourage them
to substantially alter their business relationship with the Employer or its
affiliates; or (d) for any business purpose, solicit or otherwise communicate
with any client of the Employer or its affiliates or with any Person that is a
reasonably potential client of the Employer or its affiliates, with the
intention of hurting the relationship between that client and the Employer. It
should be noted these prohibitions shall survive for a period of one (1) year
from the date of Employee's last date of employment with the Company, provided
the Company pays Employee a lump sum equal to one year's Base Salary.
8. CONFIDENTIALITY. The Employee acknowledges that in and as a result of
his employment hereunder, he will be making use of, acquiring and/or adding to
confidential information of special and unique nature and value relating to such
matters as the Employer's and its affiliates trade secrets, systems, procedures,
manuals, confidential reports and lists of clients, as well as the nature and
type of services rendered by the Employer and its affiliates, and the equipment
and methods used by the Employer and its affiliates ("Confidential
lnformation"). As a material inducement to the Employer to enter into this
Agreement, and to pay to the Employee the compensation referred to in this
Agreement, Employee covenants and agrees that he shall not, at any time during
or following the Term of this Agreement and Employee's respective employment
hereunder, directly or indirectly, divulge or disclose, for any purpose
whatsoever (other than in the course of his employment duties where warranted),
any of such Confidential Information which has been obtained by or disclosed to
him as a result of, Employee's employment by the Employer. In the event of a
breach or threatened breach by the Employee of any of the provisions of this
Section 8, the Employer and its affiliates, in addition to and not in limitation
of any other rights, remedies or damages available to the Employer and its
affiliates at law or in equity, shall be entitled to a permanent injunction in
4
<PAGE>
order to prevent or to restrain any such breach by Employee, or by Employee's
partners, agents, representatives, servants, employers, employees and/or any all
persons directly or indirectly acting for or with him.
The Employee acknowledges that, in and as a result of his employment
hereunder, he will acquire Confidential Information about the clients of the
Employer and its affiliates. Employee covenants and agrees that he shall not, at
any time during or following the Term of this Agreement and Employee's
respective employment hereunder, directly or indirectly, divulge or disclose,
for any purpose whatsoever (other than in the course of his employment duties
where warranted) any Confidential Information about the client, which has been
obtained by or disclosed to him as a result of his employment with the Employer.
It should be noted that Confidential Information does not include any items
which: (i) prior to disclosure, is known to the public; (ii) after disclosure,
becomes known to the public or otherwise ceases to be a trade secret, through no
act or omission of the Employee in violation of this Agreement; (iii) is
required to be disclosed pursuant to applicable laws, rules or regulations or
government requirement or court order (provided, however, that Employee shall
promptly advise the Employer of its notice of any such requirement or order);
(v) is already rightfully in the Employee's possession at the time of
disclosure; (vi) is independently developed by or for the Employee; or (vii) is
received by the Employee from another person or entity whom the Employee
reasonably believes is not obligated to the Employer to keep the same
confidential.
9. INVENTIONS AND OTHER INTELLECTUAL PROPERTY. The Employee hereby agrees
that all right, title and interest in and to all of the Employee's "Discoveries"
and work product made during the Term of this Agreement related to the business
of the Employer or its affiliates, whether pursuant to this Agreement or
otherwise, shall belong solely to the Employer and its affiliates, whether or
not they are protected or protectable under applicable patent, trademark,
service mark, copyright or trade secret laws. For purposes of this Section 9,
"Discoveries" means all inventions, designs, discoveries, improvements and works
of authorship, including, without limitation, any information relating to the
Employer's, and its affiliates' know-how, processes, designs, computer programs
and routines, formulae, techniques, developments or experimental work, or
work-in-progress made or conceived or reduced to practice by the Employer. The
Employee agrees that all work or other material containing or reflecting any
Discoveries and work product shall be deemed to be work made for hire and shall
be owned by the Employer and its affiliates without further consideration. If it
is determined that any works not works made for hire, the Employee hereby
assigns to the Employer and its affiliates all of the Employee's right, title
and interest, including all rights of copyright, patent, and other intellectual
property rights, to or in such Discoveries or work product. The Employee
5
<PAGE>
covenants that he shall keep the Employer and its affiliates informed of the
development of all Discoveries or work product made, conceived or reduced to
practice by the Employer and its affiliates, in whole or in part, alone or with
others, which either result from any work the Employee may do for, or at the
request of, the Employer and its affiliates, or are related to the Employer's
and its affiliates present or contemplated activities, investigations, or
obligations. The Employee further agrees that at the Employer's and its
affiliates request and expense, he will execute any assignments or other
documents necessary to transfer any such Discoveries or work product to the
Employer and its affiliates and to cooperate with the Employer and its
affiliates or its nominee in perfecting the Employer's and its affiliates' title
(or the title of the Employer's or its affiliates nominee) in such materials.
Employee grants the Employer and its affiliates a permanent, non-exclusive,
paid-up and worldwide license for any and all of Employee's intellectual
property rights in any Discoveries or work product that is delivered to the
Employer and its affiliates by the Employee in connection with the performance
of services for the Employer and its affiliates to use, have used, make, have
made, sell and have sold such Discoveries and reproduce in quantities, prepares
derivative works and publicly display and distribute such work product.
10. SUCCESSORS; BINDING AGREEMENT. The Employer will use its commercially
reasonable best efforts to require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer, by agreement in form and substance
satisfactory to the Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform it if no such succession had taken place. Failure of the
Employer to obtain such agreement prior to the effectiveness of any such
succession, however, shall not be a breach of this Agreement.
Employee shall not have the right to assign any obligation or benefit under
this Agreement to any person. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributes, devises and legatees. If the Employee should die or is legally
incapacitated while any amounts would still be payable to him hereunder if he
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Employee's
devisee, legatee, or other designee or, if there be no such designee, to the
Employee's estate.
11. RETURN OF PROPERTY. Upon the termination of this Agreement and the
respective employment of Employee contemplated hereunder, by the natural elapse
of time or otherwise, all property (including, but not limited to, keys,
records, notes, data, memoranda, models, credit cards and equipment) that is in
the Employee's possession or under the Employee's control, which is the property
of the Company or related to Company will be immediately returned to Company by
Employee or destroyed at the direction of the Company, which destruction will be
certified by Employee.
12. INDEMNIFICATION. Employee is entitled to the rights of indemnification
available to officers and directors under the corporation law of the state of
incorporation of the Company and, if any, the provisions of the certificate of
incorporation and by-laws of the Company. To this end, simultaneous with the
execution of this Employment Agreement, the Company will enter into a more
6
<PAGE>
formal Indemnification Agreement with Employee in substantially the same format
as is attached hereto on Exhibit 2. If the Company obtains director and officer
liability insurance or similar insurance coverage it will provide that Employee
will be covered thereunder at all times during which Employee is a director or
an officer of the Company.
13. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
if to the Employee: Wayne Murphey
3695 Calico Brook Court
Las Vegas, NV 89147
if to the Employer: YouTicket.com Inc.
4420 S. Arville, Suite 13 and 14
Las Vegas, NV 89103
with a copy to: Andrew Hudders
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. ARBITRATION. Any disputes between Employee and the Company arising out
of this Agreement or Employees employment by the Company including but not
limited to alleged violations of federal, state and/or local statutes (for
example, claims for discrimination including but not limited to discrimination
based on race, sex, sexual orientation, religion, national origin, age, marital
status, handicap or disability; and claims relating to leaves of absence
mandated by state or federal law), breach of any contract or covenant (express
or implied), tort claims, violation of public policy or any other alleged
violation of Employees statutory, contractual or common law rights (and
including claims against the Company's officers, Directors, employees or
agents), which Employee and the Company or other party are unable to resolve
through direct discussion, regardless of the kind or type of dispute (excluding
claims for workers' compensation, unemployment insurance and any solely monetary
dispute within the jurisdiction of small claims court) shall be decided
exclusively by conclusive and binding arbitration in the State of Nevada in
7
<PAGE>
accordance with the American Arbitration Association's ("AAA") Employment
Dispute Resolution Rules (the "Rules"). Except for those claims specifically
excluded from coverage under this arbitration provision, Employee and the
Company hereby waive the right to pursue any claims, including but not limited
to employment termination-related claims, through civil litigation outside the
arbitration procedures of this provision, unless otherwise required by law.
Employee and the Company each have the right to be represented by counsel with
respect to arbitration of any dispute pursuant to this paragraph. Each party
shall have the right to take depositions, make requests for production of
documents to any person or entity, and to subpoena witnesses and documents for
the arbitration. Additional discovery may be had only where the arbitrator so
orders, upon a showing of substantial need. The arbitrator shall be selected by
agreement between Employee and the Company, but if they do not agree on the
selection of an arbitrator within 30 days after the date of the request for
arbitration, the arbitrator shall be selected pursuant to the Rules. Each party
shall pay its own expenses for the arbitration and the fee and expenses of the
arbitrator shall be shared equally.
15. GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the substantive laws of the state of Nevada without
reference to the principles governing conflict of laws applicable in that or any
other jurisdiction.
16. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Employee and the Employer. No waiver by either party
hereto at any time of any breach by the other hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement.
17. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. CONSTRUCTION. It will be an irrefutable presumption that this Agreement
was drafted by both the Company and the Employee. The parties hereto also
acknowledge the ability and opportunity to have this Agreement reviewed by
independent counsel of their own choosing prior to signing.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereby acknowledge their acceptance of each
and every term and condition contained in this Agreement by affixing their
signatures below the date and year first above written.
EMPLOYEE: COMPANY:
/s/ Wayne Murphey /s/ Leanna Sidhu
- ---------------------- ----------------------
By: Wayne Murphey By: Leanna Sidhu
Its: President
<PAGE>
EXHIBIT 1
FORM OF STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT 2
FORM OF INDEMNIFICATION AGREEMENT
Exhibit 16.1
April 25, 2000
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: youticket.com, inc.
Dear Sir/Madam:
We have read Item 3, Changes in and disagreements with Accountants on Accounting
and Financial Disclosure included in the Form 10-KSB dated April 25, 2000 of
youticket.com inc. filed with the Securities and Exchange Commission and are in
agreement with the statements contained therein.
Yours very truly,
/s/ Barry Friedman
Barry Friedman, CPA]
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