SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
AMENDMENT NO.3
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 Barba Wells 1,500,000 9.3%
Wells Children Holding LLC 1,460,000 9.1%
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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 and was not modified as to uncertainty, audit scope or accounting
principles.
(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 May 24, 2000 is filed as Exhibit 16.2
to this Form 10-SB.
(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 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, dated april 25, 2000.
16.2+ Letter from Barry Friedman, CPA, dated May 24, 2000.
21.1+ Subsidiaries of Registrant
27.1* Financial Data Schedule
* Filed herewith.
+ Previously filed.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Amendment No. 3 to the Report on
Form 10-SB to be signed on its behalf by the undersigned, thereunto duly
authorized on the 24th day of May, 2000.
YOUTICKET.COM, INC.
/s/ LeAnna Sidhu
--------------------------
LeAnna Sidhu, President
32
Exhibit 16.2
May 24, 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-SB filed May 24,
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 18,360
<SECURITIES> 0
<RECEIVABLES> 35,457
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,539
<PP&E> 17,108
<DEPRECIATION> 4,636
<TOTAL-ASSETS> 1,202,589
<CURRENT-LIABILITIES> 414,149
<BONDS> 0
0
0
<COMMON> 1,495
<OTHER-SE> 1,719,074
<TOTAL-LIABILITY-AND-EQUITY> 1,203,589
<SALES> 189,243
<TOTAL-REVENUES> 189,243
<CGS> 117,779
<TOTAL-COSTS> 117,779
<OTHER-EXPENSES> 690,976
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 619,512
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 619,512
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
