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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. _________________)
Ave. A Corporation
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(Exact name of small business issuer in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 7812 23-2854997
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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609 Deep Valley Drive, Palos Verdes, CA 90274 (310) 265-4423
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(Address and telephone number of principal executive offices)
609 Deep Valley Drive, Palos Verdes, CA 90274
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(Address of principal place of business or intended principal place of business)
Neil Brodsky, 609 Deep Valley Drive, Palos Verdes, CA 90274 (310) 265-4423
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(Name, Address and telephone number of agent for service)
COPIES TO:
Miles Garnett, Esq., 66 Wayne Avenue, Atlantic Beach, NY 11509 (516) 371-4598
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______________________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________________________
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ] ______________________________
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CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
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Common Stock 5,650,000.00 $1.00 $5,650,000.00 $1,570.70
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Title of each Share Proposed maximum Proposed maximum Amount of
class of securities amount to be offering price aggregate offering registration fee
to be registered registered per unit price
</TABLE>
Total Number of Pages _____
Exhibit List - Page _____
<PAGE>
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (ss.230.457
of this chapter) relied upon, if the basis of the calculation is not otherwise
evident from the information presented in the table. If the filing fee is
calculated pursuant to Rule 457(o) under the Securities Act, only the title of
the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
need to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
PROSPECTUS
Initial Public Offering
[Logo Goes Here]
Ave. A Corporation
5,650,000 Shares of Common Stock
The purchase price for our shares is $1.00.
We are selling 5,650,000 shares of Common Stock ("Shares"), which have a par
value of $.001 per share (the "Common Stock") which represents 68% of the total
outstanding shares based on the maximum amount of the offering. We are a
Delaware corporation. We have fixed the price of all the shares made in this
offering at $1.00 each.
We will sell the shares ourselves and do not plan to use underwriters or pay any
commissions. We will be selling our shares in a direct participation offering
and no one has agreed to buy any of our shares. There is no minimum amount of
shares we must sell and no money raised from the sale of our stock will go into
escrow, trust or another similar arrangement. The offering will remain open
until August 31, 2000, unless we decide to cease selling efforts prior to this
date.
This is our public offering, and no public market exists for our shares. We hope
to have prices for our shares quoted on the bulletin board maintained by the
National Association of Securities Dealers, Inc. after we complete our offering.
Our proposed trading symbol for the over the counter bulletin board is SHAB.
Prior to this offering, there has been no public market for the Shares and there
can be no assurance that such a market will develop. The offering price for the
common stock has been arbitrarily determined by us. The minimum subscription is
200 Shares and the maximum subscription is 50,000 Shares.
The securities offered hereby are highly speculative and involve a high degree
of risk. See the caption "Risk Factors" commencing on page 7.
PER SHARE TOTAL
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Public offering price $ 1.00 $5,650,000.00
Underwriting discounts and commissions none none
Proceeds, before expenses, to us $ 1.00 $5,650,000.00
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The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
------------------------------
The date of this Prospectus is , 1999
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[Logo Goes Here]
TABLE OF CONTENTS
Summary ................................................................... 5
Our Company ............................................................... 5
Business .................................................................. 5
The Offering .............................................................. 5
Risk Factors .............................................................. 7
Management Discussion of Analysis of Condition and Results of Operations .. 9
Year 2000 Readiness Disclosure ............................................ 10
Use of Proceeds ........................................................... 12
Dilution .................................................................. 13
Business .................................................................. 14
Principal Shareholders .................................................... 17
Management ................................................................ 18
Certain Transactions ...................................................... 22
Description of Securities ................................................. 22
Shares Eligible for Future Sale ........................................... 23
Available Information ..................................................... 24
Dividend Policy ........................................................... 25
Stock Transfer Agent ...................................................... 25
Experts ................................................................... 25
Legal Matters ............................................................. 25
Index to Financial Statements ............................................. F-1
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SUMMARY
Our Company
Our company, Ave. A Corporation, was organized on June 17, 1996
under the laws of the state of Delaware, contains two divisions. SeaHab delivers
and is poised to bring new and innovative, recovery treatment to our patients
through a new breed of rehabilitation services. KnowHow produces and distributes
streaming internet audio and video content to the world wide web. Our
headquarters is at 609 Deep Valley Drive, Palos Verdes, CA 90274. Our telephone
number at that location is (310) 265-4423. Information contained on our web site
at http://www.seahab.com does not constitute part of this prospectus.
Business
We are selling 5,650,000 shares ("Shares"), which have a par
value of $.001 per share. They will be sold by our officers and directors. We
have fixed the price of all the shares made in this offering at $1.00 each.
Seahab
The rehabilitative care industry has grown exponentially over the
last 20 years and research projections suggest growth remaining constant. The
increase of drug availability multiplied by the general population growth has
caused a tremendous increase in demand for recovery treatment. We remove the
patient from the traditionally drab, non-healing conducive surroundings of a
hospital to the healing conducive environment of a luxury yacht in the
Caribbean.
From a strategic business standpoint, we limit investor risk by
leasing fully-crewed yachts. The outsourcing of this component allows us to run
more efficiently, limiting cash outlay.
KnowHow
The internet has grown exponentially over the past five years and
research suggests that growth will only increase. The growth of e-commerce and
the increasing availability of high speed access to the web have caused a
tremendous increase in the demand for multimedia web content. By producing and
acquiring new media programming and combining that with chat and instant
messaging, KnowHow will be able to bring a unique and exciting network site to
the world wide web.
From a strategic business standpoint, we limit investor risk by
leasing production facilities on an as-needed basis. The outsourcing of this
component allows us to run more efficiently, limiting cash outlay.
The Offering
Common Stock offered
for sale hereby Up to a maximum of 5,650,000 shares are being sold by
us. The holders of our shares are entitled to one
vote per share on all matters submitted to a vote of
our stockholders and to receive dividends when and if
declared by our Board of Directors from funds legally
available for that purpose. See "Risk Factors--No
Dividends and None Anticipated". Upon our
liquidation, dissolution or winding up, holders of
our shares are entitled to share in the distribution
of all assets remaining after payment of all debts.
Holders of our shares do not have cumulative voting
rights or preemptive, subscription or conversion
rights. The shares presently outstanding are, and the
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shares offered hereby will be, upon issuance and
payment therefore, validly issued, fully paid and
non-assessable.
Offering Price $1.00 per share. The shares are being sold on a "best
efforts" basis and we have the right to immediately
utilize the funds received from investors.
Terms of the Offering There is no minimum offering. Accordingly, as shares
are sold we will use the money raised for our
activities. The offering will remain open until
August 31, 2000, unless we decide to terminate the
selling efforts prior to this date. The minimum
subscription is 200 Shares and the maximum
subscription is 50,000 Shares.
Common Preferred
Stock Stock
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Authorized and
Outstanding
Shares of Authorized: 20,000,000 none
Stock Outstanding:
Prior to Offering: 2,613,800 none
After Offering*: 8,263,800 none
*Assuming the maximum amount of the offering has been subscribed.
Plan of Distribution This is a direct participation and no minimum
offering, with no commitment by anyone to purchase
any shares. The shares will be offered and sold by
our principal executive officers and directors,
although we may retain the services of one or more
NASD registered broker/dealers as selling agent(s) to
effect offers and sales on our behalf. None have been
retained as of this date. Assuming that the entire
offering will be sold then up to the first $150,000
that we raise will be used to pay the expenses of the
offering. If a lesser amount is sold this sum will be
in proportion to the amount sold. The priority for
funds raised in excess of that amount will be applied
in the following order (i) repayment of debt; (ii) to
complete R & D projects; and (iii) to augment working
capital. See "Use of Proceeds." No money raised from
the sale of our stock will go into escrow, trust or
another similar arrangement.
Use of Proceeds Assuming that the entire offering will be sold then
up to the first $150,000 that we raise will be used
to pay the expenses of the offering. If a lesser
amount is sold this sum will be in proportion to the
amount sold. The priority for funds raised in excess
of that amount will be applied in the following order
(i) repayment of debt; (ii) to complete R & D
projects; and (iii) to augment working capital. See
"Use of Proceeds." There is no minimum offering or
escrow of shareowners' funds. See "Plan of
Distribution."
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RISK FACTORS
The securities offered hereby are highly speculative and involve
substantial risks. Prospective investors should carefully consider the following
risk factors before making an investment decision.
We have a limited operating history and expectations of future losses, so that
there is an uncertainty of profitability.
The Company is an enterprise organized in June, 1996 and has no
operating revenues. Such prospects must be considered in light of the
substantial risk, expenses and difficulties encountered by new entrants into the
rehabilitation healthcare industry. We have incurred net losses from inception
through September 30, 1999 in the amount of $167,912, and therefore has
accumulated an earnings deficit, as well as negative working capital. We expect
to incur net losses as we continue to expend substantial resources on sales,
marketing and administration, and the development of our services. We do not
anticipate operating net income until the end of fiscal year 2000. In addition,
we currently intend to increase our capital expenditures and operating expenses
in order to expand our network to support additional expected subscribers in
existing and future markets and to market and provide services to a growing
number of potential subscribers. There can be no assurance that we will achieve
or sustain profitability or positive cash flow from our operations.
We expect to have competition some of which might be substantial.
We operate and compete in several markets including the
healthcare and rehabilitation markets. These markets are extremely competitive
and highly fragmented. There are no substantial barriers to entry, and we expect
competition in this market to intensify in the future. In addition to individual
small competitors, some competitors may include other large publicly funded
organizations. Our current and prospective competitors include many larger
companies that have substantially greater financial, technical, marketing and
other resources than us.
We expect to have future additional capital requirements.
Our capital requirements depend on numerous factors, including
the rate of market acceptance of our products and services, our ability to
maintain and expand our customer base, the rate of expansion of our
infrastructure and the level of resources required to expand our market. The
lack of adequate funding may adversely affect our ability to meet our short-term
objectives. We will require additional financing to expand our sales, maintain
public awareness of our services and provide working capital for our anticipated
growth. The timing and amount of such capital requirements cannot be accurately
predicted. If capital requirements vary materially from those currently planned,
or if we are unable to sell the entire amount of the offering, we may require
additional financing sooner than anticipated. The lack of additional financing
may adversely affect our ability to meet our objectives.
Any additional equity financing may be dilutive to our
shareholders, and debt financing, if available, may involve restrictive
covenants with respect to dividends, raising future capital and other financial
and operational matters. If we are unable to obtain additional financing as
needed, we may be required to reduce the scope of our operations or our
anticipated expansion, which could have a material adverse effect on our
business, operating results and financial condition.
Our officers and directors have limited liability.
Our Certificate of Incorporation and By-Laws provide that a
director's liability to the Company for monetary damages will be limited. In
addition, we are obligated under the Certificate of Incorporation and By-Laws to
indemnify our directors and officers against certain liabilities
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incurred with their service in such capacities. We will execute indemnification
agreements which will indemnify each director and officer against certain
liabilities which they may incur. Each of these measures could reduce the legal
remedies available to us and the shareholders against such individuals.
There is a risk that we may have a liability that is not covered by insurance.
Although we carry general liability insurance, our insurance may
not cover certain potential claims or may not be adequate to indemnify us for
all liability that may be imposed. Any imposition of liability that is not
covered by insurance or is in excess of insurance coverage could have a material
adverse effect on our business, operating results and financial condition.
Although we are careful, there may be security risks to our proprietary
information and data.
Despite the implementation of security measures, our networks may
be vulnerable to unauthorized access, computer viruses and other disruptive
problems. Healthcare companies have in the past experienced, and may in the
future experience, interruptions in service as a result of the accidental or
intentional actions of users, current and former employees or others.
Unauthorized access could also potentially jeopardize the security of
confidential information stored in our computer systems, which may result in our
liability to our patients and also may deter potential patients. Although we
intend to continue to implement industry standard security measures, such
measures have been circumvented in the past, and there can be no assurance that
measures implemented by us will not be circumvented in the future. Eliminating
computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to our patients, which could have
a material adverse effect on our business, operating results and financial
conditions.
We have not paid any dividends and in the foreseeable future we expect that
there will be a lack of dividends.
To date, we have not paid any dividends. We are not currently
restricted from paying cash dividends. We presently plan to reinvest earnings in
order to finance the expansion and development of our business, and it is
therefore unlikely that any cash dividends will be declared in the foreseeable
future.
We have used our own attorney to draw all the documents with respect to this
offering and no separate investors' counsel was retained by us.
We have not retained any independent professionals to review or
comment on this offering or otherwise protect the interest of the investors
hereunder. Although we have retained our own counsel, neither such firm nor any
other firm has made, on behalf of the investors, any independent examination of
any factual matters represented by management herein, and purchasers of the
shares should not rely on the firm so retained with respect to any matters
herein described.
There is no underwriter for this offering and we are relying on best efforts of
ourselves.
There is no underwriter for this offering, therefore, offerees
will not have the benefit of an underwriter's due diligence efforts which would
typically include the underwriter to be involved in the preparation of
disclosure and the pricing of the common stock offered hereby among other
matters. As we have never engaged in the public sale of our common stock, we
have no experience in the underwriting of any such offering. Accordingly, there
is no prior experience from which investors may judge our ability to consummate
this offering. In addition, the common stock is being offered on a "best
efforts" basis. Accordingly, there can be no assurances as to the number of
shares that may be sold or the amount of capital that may be raised pursuant to
this offering.
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We have a potential for possible delisting of securities and there are risks
relating to low-priced stocks which may affect us.
It is currently anticipated that our common stock will be
eligible for listing upon the completion of this offering. If we are not listed,
an investor could find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, our securities. In addition, if the
trading price of the common stock is below $5.00 per share, trading in such
securities would also be subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a penny stock (generally, any non-Nasdaq
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
our securities, which could severely limit the market price and liquidity of
such securities and the ability of purchasers in this offering to sell their
securities in the secondary market. Disclosure is also required to be made about
commissions payable to both the Broker/Dealer and the registered representative
and current quotations for the securities. Finally, monthly statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.
The foregoing penny stock restrictions will not apply to our
securities if such securities are listed on the NASDAQ National Market System or
are otherwise listed on the regional NASDAQ System and have certain price and
buying information provided on a current and continuing basis or meet certain
minimum net tangible assets or average revenue criteria. If we are successful in
raising at least $4 million, now, or at some time in the future, our securities
would qualify for the exemptions from the penny stock restrictions. Otherwise we
will remain subject to Section 15(b)(6) of the Exchange Act governing these
penny stock restrictions. If our securities were subject to the existing rules
on penny stocks, the market liquidity for our securities could be adversely
affected.
MANAGEMENT DISCUSSION OF ANALYSIS OF CONDITION AND
RESULTS OF OPERATIONS
We have not experienced substantial changes to our business and
operations since we began our operations in June, 1996. We expect to expand our
business and patient base, which will require us to increase our personnel and
purchase equipment, which will result in increasing expenses.
Results of Operations
For the period from inception in June 17, 1996 to September 30,
1999 we did not generate any revenues and incurred a cumulative net loss of
$167,912. Our operating expenses consist of professional fees, payroll, office,
and marketing.
1. Professional fees of $25,000 consisted principally of general
business consulting, business development, legal and
accounting fees.
2. Payroll and office expenses of approximately $30,000 consisted
principally of related taxes and salaries pad to employees as
well as office supplies, telephone and Internet access.
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3. As a development stage company we have had no marketing
expenses to date. We anticipate incurring marketing expenses
beginning January 1, 2000.
Liquidity and Capital Resources
Our capital requirements have exceeded our cash flow from
operations as we have been developing our business. At September 30, 1999, we
had a working capital deficit of $2,614. As a result, we have depended upon the
sales of our common stock and borrowings from our management to finance our
working capital requirements.
During the period from inception to September 30, 1999, we raised
gross proceeds of approximately $171,538 from the sale of equities securities to
investors and friends and family of our management. We used these proceeds to
finance the cost of our operations to date.
Operating expenses during our development stage as of the year
ending September 30, 1999 created a net use of cash of $167,912. We had cash and
cash equivalents of $6,240 as of September 30, 1999.
Anticipated expenditures over the next twelve months are listed
on page 13 under "Use of Proceeds." These expenditures will be used to fund our
ongoing operations, provide for working capital and cover marketing expenses.
We need the proceeds of this offering to expand our operations
and finance our future working capital requirements. Based upon our current
plans and assumptions relating to our business plan, we anticipate that
$5,500,000 in net proceeds from this offering will satisfy our capital
requirements for at least twelve months following the closing of this offering.
If our plans change or our assumptions prove to be inaccurate, we may needs to
seek additional financing sooner than currently anticipated or curtail our
operations.
Material Agreements
On July 8, 1999 we entered into an employment agreement with
Richard Rever. The terms of the agreement include salary payment at the rate of
$65,000 per year and 100,000 shares of stock to be distributed over our next
calendar year.
On August 14, 1999 we entered into a consulting agreement with
Andrew Buys. The terms of the agreement include salary and payment at the rate
of up to $60,000 per year and 10,000 shares of stock.
We have entered into consulting agreements with members of our
Medical Advisory Board. The terms of the agreement include 10,000 shares of
stock to each member to be distributed shortly after January 1, 2000.
YEAR 2000 READINESS DISCLOSURE
Year 2000 Compliance. The Year 2000 issue involves the potential for system and
processing failures of date-related data resulting from computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that contain time-sensitive software may recognize a
date using two digits of "00" as the year 1900 rather than the year 2000. This
could result in system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar ordinary business activities.
OUR STATE OF READINESS
We have defined Year 2000 compliance as follows:
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Information technology time and date data processes, including,
but not limited to, calculating, comparing and sequencing data from, into and
between the 20th and 21st centuries contained in our software and services
offered through the U.S., will function accurately, continuously and without
degradation in performance and without requiring intervention or modification in
any manner that will or could adversely affect the performance of such products
or the delivery of such software and services as applicable at any time.
Our internal systems include both information technology systems
and non-information technology systems. We have initiated an assessment of our
proprietary information technology systems, and expect to complete any
remediation and testing of all information technology systems during 1999. With
respect to information technology systems provided by third-party vendors, we
have sought assurances from such vendors that their technology is Year 2000
compliant. All of our material information technology system vendors have
replied to inquiry letters sent by us stating that they either are Year 2000
compliant or expect to be so in a timely manner.
We believe that our internal software and hardware systems will
function properly with respect to dates in the Year 2000 and thereafter.
Nonetheless, there can be no assurance in this regard until such systems are
operational in the Year 2000. We are in the process of contacting all of our
significant suppliers to determine the extent to which our interface systems are
vulnerable to those third parties' failure to make their own systems Year 2000
compliant. Additionally, any Year 2000 problems experienced by our advertising
customers could affect the placement of advertisements on our online services.
Accordingly, to the extent the systems of our suppliers and advertising
customers are not fully Year 2000 compliant, there can be no assurance that
potential system interruptions or the cost necessary to update software will not
have a material adverse affect on our business, results of operation or
financial condition.
We are evaluating our non-information technology systems for Year
2000 compliance. We have not, to date, discovered any material Year 2000 issues
with respect to our non-information technology systems.
We are in the process of contacting our material suppliers whose
products or services are sold through us to determine if they are Year 2000
compliant. To date, all such suppliers have stated that they are, or expect to
be, Year 2000 compliant in a timely manner. Our customers are individual
Internet users, and, therefore, we do not have any individual customers who are
material to an evaluation of Year 2000 compliance issues.
THE COSTS TO ADDRESS YEAR 2000 ISSUES
We have expensed amounts incurred in connection with Year 2000
compliance since its formation through December 31, 1998. Such amounts have not
been material. The additional costs to make any other software or services Year
2000 compliant by mid-1999 will be expensed as incurred, but are not expected to
be material.
We are not currently aware of any material operational issues or
costs associated with preparing our systems for the Year 2000. Nonetheless, we
may experience material unexpected costs caused by undetected errors or defects
in the technology used in our systems or because of the failure of a material
supplier to be Year 2000 compliant.
RISKS ASSOCIATED WITH YEAR 2000 ISSUES
Notwithstanding our Year 2000 compliance efforts, the failure of
a material system or vendor used in our software and service, or the Internet
generally, to be Year 2000 compliant could harm the operation of our software
and services or prevent us from generating advertising or commerce sales through
our software, or have other unforeseen, adverse consequences to us.
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Finally, we are also subject to external Year 2000-related
failures or disruptions that might generally affect industry and commerce, such
as utility or transportation company Year 2000 compliance failures and related
service interruptions. Moreover, participating vendors in our services might
experience substantial slow-downs in business if consumers avoid products and
services such as air travel both before and after January 1, 2000 arising from
concerns about reliability and safety because of the Year 2000 issue. All of
these factors could have a material adverse effect on our business, financial
condition and results of operations.
CONTINGENCY PLANS
We are engaged in an ongoing Year 2000 assessment and the
development of contingency plans. The results of our Year 2000 simulation
testing and the responses received from third-party vendors and service
providers will be taken into account in determining the nature and extent of any
contingency plans. We have identified our worst-case scenario as the
interruption of our business resulting from Year 2000 failure of the electric
company or our Internet service providers to provide services. We have not yet
completed our worst-case scenario contingency plan. Without a worst-case
scenario contingency plan we may not have enough time to complete remedial
measures and implement contingency planning for the worst-case scenario. We do
plan to complete our contingency plan in accordance with our compliance plan and
under the guidance of our consultants in the third quarter of 1999.
USE OF PROCEEDS
Our success is entirely dependent on our ability to sell the
shares in this offering. None of the items listed below can be fully completed
unless we raise a minimum of $500,000 from this offering. We may not be able to
raise all or part of the funds we need to operate our business. If we are unable
to raise these funds we will not remain as a viable going concern and investors
may lose their entire investment. If we receive net proceeds in an amount less
than $500,000, our business operations will be curtailed to an extent not
presently determinable by management.
The maximum net proceeds from this offering may be as high as
$5,500,000 if we sell all of the shares offered. If we are unable to sell all of
the shares offered, the net proceeds would be lower.
In the table below, we have detailed the minimum amount of
capital required for us to operate our business as currently planned. In
addition, we have outlined the manner in which we intend to use the funds
raised, assuming that we sell all of the shares offered. The net proceeds we
would receive from the sale of all of the 5,650,000 shares of our common stock
offered by this prospectus are estimated to be approximately $5,150,000 if sold
through broker-dealers. For lesser percentages of shares sold see the table
following. The table also shows how we will use the proceeds of the offering.
They are listed in the order of priority to which they will be applied.
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Minimum Amount Maximum Amount
Required of Net Proceeds
-------- ---------------
Company Proceeds from
the Offering $,500,000 $5,650,000
Less: Offering Expenses -0- 150,000
-------- ----------
Net Proceeds from
Offering $500,000 $5,500,000
-------- ----------
Use of Net Proceeds:
Web-hosting $25,000 $150,000
Web-development $50,000 $250,000
Video Production $25,000 100,000
Yacht Charters $150,000 $1,100,000
Office & Equipment $25,000 100,000
Marketing & Promotion 25,000 1,250,000
Working Capital, Salaries 200,000 2,500,000
Travel & Promotion -0- 50,000
-------- ----------
Total Use of Net Proceeds $500,000 $5,500,000
======== ==========
The specific amounts to be allocated for these purposes will be
in our discretion. We reserve the right to alter this stated use of proceeds
depending on business conditions.
To the extent the net proceeds of the offering are not utilized
immediately, they will be invested in short-term certificates of deposit,
interest bearing deposits, short-term obligations of the United States of
America or prime commercial paper.
DILUTION
We were initially capitalized by the sale of common stock to our
founders. The following table sets forth the difference between our founders and
purchasers of the shares in this offering with respect to the number of Shares
purchased from us, the total consideration paid and the average price per share
paid.
<TABLE>
The table below assumes 50% of the Shares offered hereby are sold.
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
-------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Founder 2,613,800 48% $ 167,912 2.9% $1.00
New Investors 2,825,000 52% $2,825,000 94.4% $1.00
--------- --- ---------- -----
Total 5,438,800 100% $2,992,912 100% $1.00
--------- --- ---------- -----
</TABLE>
Page 13
<PAGE>
<TABLE>
The table below assumes all of the Shares offered hereby are sold.
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
-------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Founder 2,613,800 32% $ 167,912 2.9% $1.00
New Investors 5,650,000 100% $ 5,650,000 97.1% $1.00
--------- ---- ----------- -----
Total(1) 8,263,800 100% $ 5,817,912 100% $1.00
--------- ---- ---------- -----
As of September 30, 1999, the net tangible book value of our
common stock was ($161,672) or ($.60) per share based on the 2,613,800 shares
outstanding. "Net tangible book value" per share represents the amount of total
tangible assets less total liabilities, divided by the number of shares. After
giving effect to the sale by us of 5,650,000 shares at an offering price of
$1.00 per share and after deducting estimated expenses and underwriting
discounts, our pro-forma net tangible book value as of that date would be
$5,488,328 or $.66 per share, based on the 8,263,800 shares outstanding at that
time. This represents an immediate dilution (i.e. the difference between the
offering price per share of common stock and the net tangible book value per
share of common stock after the offering) of $.34 per share to the new investors
who purchase shares in the offering ("New Investors"), as illustrated in the
following table (amounts are expressed on a per share basis):
(1) Calculations concerning dilution are based on an assumption of the offering
being fully subscribed.
The following table represents the dilution per share based on the percentage
sold of the total amount of shares being offered.
Shares Shares Shares
50% sold 75% sold 100% sold
-------- -------- ---------
Offering price $1.00 $1.00 $1.00
Net tangible book value before offering ($.60) ($.60) ($.60)
Increase attributable to the Offering $.39 $.56 $.72
---- ---- ----
Net tangible book value
after giving effect to the Offering $.33 $.50 $.66
-------------------------------------------------
Per share Dilution to new investors $.67 $.50 $.34
Percent Dilution per share 67% 50% 33%
</TABLE>
We do not intend to pay any cash dividends with respect to our
common stock in the foreseeable future. We intend to retain any earnings for use
in the operation of our business. Our Board of Directors will determine dividend
policy in the future based upon, among other things, our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
at the time. We intend to retain appropriate levels of our earnings, if any, to
support our business activities.
BUSINESS
Philosophy and Objectives of KnowHow
KnowHow is a new media programming and distribution company that
combines unique content with online community building tools. By using its
contacts in Hollywood's creative and production communities, we are able to
produce low cost, targeted entertainment and informational content not readily
available through traditional mediums. By delivering this content over the
internet, we are able to offer our audience a truly interactive,
multidimensional and meaningful experience. By offering its unique streaming
content on a syndication basis to other web sites, we will be able to quickly
build traffic and establish partnerships with a wide range of affiliates.
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<PAGE>
In the near future, increased broadband access will accelerate
the demand for richmedla, interactive experiences online. As this happens, our
expertise in content creation, our growing database of streaming product,
established brand, distribution channels, and audience base will offer
considerable competitive advantages.
Channel Communities
Our content will be organized into individually branded,
topically themed web site channels. Such interactive features as message boards,
member profiles, usersubmitted content and so forth will support each channel.
Each channel will serve, in effect, as a destination where visitors of similar
interests, styles and sensibilities can come together to experience our
entertainment and informational content.
Programming
Our programming will focus on dispensing how-to advice,
information and expertise tailored to specific consumer and entertainment
markets. The following broad channel-categories will cover many of our
offerings: Health, Relationships, Sex, ChildCare, Consumer Products, Gardening
and Home Improvement. In each channel category, experts will deliver bite-size
(30-60 seconds) presentations that can be viewed singly, or as part of a larger
ongoing series.
Interactivity
At set times, our audience will be able to interact live with our
online experts, posing questions, getting answers, and suggesting topics they
would like to see explored. At all times, our audience will be able to
communicate with one another through both real time chat and posted message
board formats.
Syndication Partners
We expect to make our streaming content available for posting and
branding by third party web sites. In addition, we will create unique content
packages, and provide creative multimedia solutions and related digital content
development for third parties.
Philosophy & Objectives of Seahab
Ave. A Corporation is the first of its kind program dealing with
drug and alcohol rehabilitation aboard 170 foot+ luxury sailboats in the healing
conducive environment of the Caribbean. Ave. A Corporation is the first to offer
its patients an option to the sterile confines of a typical treatment program.
We have re-invented rehabilitation by pioneering a treatment known as recreation
therapy. We believe the primary component of maintaining long-term sobriety,
something traditional programs are largely unsuccessful at, is a recovery
environment rich in the tangible qualities of a happy, healthy lifestyle through
exposure to alternative and healthy forms of recreation combined with intensive
therapy.
Recreation therapy, exclusive only to us, and a compliment of
medically supervised treatments make the Ave. A Corporation project a leading
edge experience. The entire program was developed by our medical advisory board
which consists of a panel of the rehabilitative healthcare industry's top
professionals. Physician designed nutrition supplementation and health education
are built into the program, along with individual and group counseling and
physical therapy. Best of all, a broad palate of outdoor and water sport based
activities, exotic ports of call, gourmet dining and deluxe amenities make
recovering on gentle azure seas a breeze.
Our program is designed to provide proven methods of
rehabilitation in an unconventional tropical setting. Ave. A Corporation treats
all phases of chemical dependency. Through our program, clients develop new life
skills and alternative behavior patterns, their addictions transform from a
chronic diagnosis to a challenge that catalyzes a change of perspective.
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<PAGE>
Service Objectives
* To provide a comprehensive treatment for alcohol and
chemically dependent individuals utilizing the alternative
activity replacement therapy pioneered by Ave. A
Corporation and the twelve-step philosophy. The combined
knowledge and techniques of physicians, certified
counselors, therapists and consulting psychiatrists with
90 years of combined experience in the field of drug and
alcohol rehabilitation, help to provide tremendous
potential for long-term sobriety.
* To provide 24-hours-a-day 7-days-a-week medically directed
recovery services.
* To provide an inpatient treatment program to assist
individuals in achieving permanent changes in chemical
behavior.
* To provide outpatient treatment during shore leave and to
address family concerns.
* To provide continued care referrals to maintain health and
well being.
* To provide an alternative approach that encompasses the
mind, body and spirit into rehabilitation.
Program Protocol
Facility: One 170 + foot passenger sailing vessel and full
crew with access to more vessels as needed.
History: Established in 1996, the medical advisory board
consists of four physicians and two psychiatrists
with over 90 years of combined experience in
rehabilitation.
Assessment: The program is offered year round with 30 & 60 day
programs available. Availability is first come,
first serve, except for special intervention cases.
Activities Flexible InPatient Program:
* Massage Therapy
* Group Shore Leave and Tours
* Swimming
* Snorkeling
* Scuba Diving
* Island Exploration
* Fishing
* Horseback Riding
* Water-skiing
* Jet-skiing
* Sailing and Parasailing
* Shopping and Gourmet Dining
After Care Services
Upon completion of the program, outpatient care is available on a
referral basis to holistic or traditional practitioners.
Family care.
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<PAGE>
Through group or conjoined counseling and education the family joins
the recovery process.
Affiliates
University and private affiliate contacts are available at all ports
of call. Combined treatment with chemical dependency centers are
available.
Year 2000
The Year 2000 issue involves the potential for system and
processing failures of date-related data resulting from computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that contain time sensitive software may recognize a
date using two digits of "00" as the Year 1900 rather than the Year 2000. This
could result in system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar ordinary business activities.
We believe that our internal software and hardware systems will
function properly with respect to dates in the Year 2000 and thereafter.
Nonetheless, there can be no assurance in this regard until such systems are
operational in the Year 2000. We are in the process of contacting all of our
significant suppliers to determine the extent to which our interface systems are
vulnerable to those third parties' failure to make their own systems Year 2000
compliant. In the event any of our suppliers or vendors prove not to be Year
2000 compliant, we believe that we could find Year 2000 compliant replacement
vendors or suppliers without significant delay or expense. Additionally, any
Year 2000 problems experienced by our advertising customers could affect the
placement of advertisements on our online services. Accordingly, to the extent
the systems of our suppliers and advertising customers are not fully Year 2000
compliant, there can be no assurance that potential system interruptions or the
cost necessary to update software will not have a material adverse affect on our
business, results of operation or financial condition.
Facilities
We currently lease our office facility on a year to year basis
for $1,000.00 per month to provide space for administration, technical support,
and customer service.
Our facilities are adequate for our current needs and suitable
additional space, when needed, will be available to accommodate expansion of our
operations on commercially reasonable terms.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding
beneficial ownership of our common stock as of April 30, 1999, by (i) each
person (including any "group" as that term is used in Section 13(d)(3) of the
Securities Act of 1934 (the "Exchange Act") who is known by us to own
beneficially 5% or more of the common stock, (ii) each director of the Company,
and (iii) all directors and executive officers as a group. Unless otherwise
indicated, all persons listed below have sole voting power and investment power
with respect to such shares. The total number of shares authorized is 20,000,000
shares, each of which is $.001 per share par value. 12,139,354 shares have been
issued and are outstanding as follows:
Page 17
<PAGE>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Owned after Offering
----------------------- --------------------
Number Percent Percent
------ ------- -------
Neil B. Brodsky(1) 1,500,000 57.0% 18.0%
Advanced Corporate
Technology, Inc. 200,000 7.6% 2.4%
PushTek, Ltd. 150,000 5.7% 1.8%
American Medical
Network, Inc. 250,000 9.5% 3.0%
George Winters(1) 15,000 0.5% .18%
Richard Rever(1) 100,000 3.8% 1.2%
Rose Rever(1) 75,000 2.8% 0.9%
Andrew Buys 10,000 0.3% 1.2%
Dr. David Frelinger(1) 200,000 7.6% 2.4%
Total Shares 2,500,000 95?% 30%
Directors and Officers as a Group 1,890,000 shares
(1) Directors and Officers
(2) Related by blood or marriage
<TABLE>
MANAGEMENT
There are currently three (3) occupied seats on the Board of
Directors. The following table sets forth information with respect to the
directors and executive officers.
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Neil B. Brodsky* 34 Chairman, President & Chief Executive Officer
Richard Rever* 42 V. President Marketing & Sales, COO, Director
Rose Rever 68 Vice President Administration
George M. Winters III* 32 Secretary, Director
Dr. David Frelinger 72 Vice President of Medical Operations
* Indicates Board Member
</TABLE>
All directors will hold office until the next annual
stockholder's meeting and until their successors have been elected or qualified
or until their death, resignation, retirement, removal, or disqualification.
Vacancies on the board will be filled by a majority vote of the remaining
directors. Officers of the Company serve at the discretion of the Board of
Directors.
The Officers and Directors of the Company are set forth below.
Neil B. Brodsky - President, Chief Executive Officer
Mr. Brodsky is President & Chief Executive Officer and is
responsible for business concept development, corporate strategy, as well as
overseeing all operations of the Company. Prior to founding Ave. A Corporation,
Mr. Brodsky's work history has focused on sales and marketing electronic and
computer products and services. He was highly effective in devising and
implementing regional sales and marketing initiatives that resulted in sustained
earnings growth in the fax
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<PAGE>
industry as well as in the retail pharmacy area. Most recently, Mr. Brodsky has
been involved in developing services in the Internet related business to
business temporary personel industry as head of WebTemps Inc.
Richard M. Rever - Vice President of Sales & Marketing and Chief Operating
Officer
Mr. Rever's responsibilities include sales, product planning,
market development, customer support, advertising and public relations. Mr.
Rever has overseen the start-up and growth of many successful businesses, among
them: a high-technology recruiting agency, a motion picture catering company,
and a CPR training company. In addition, Mr. Rever has worked as a publicist at
Warren Cowan & Associates, and as a marketing consultant, most recently for Mass
Market Masters, helping to position their health and wellness product
development services.
Rose Rever - Vice President Administration
Ms. Rever is Vice President of Administration. She is responsible
for the operation of company offices and oversight of human resources, policies
and benefits. Ms. Rever's experience includes twenty years as Chief
Administrator of Hilton Homes, a custom home building and real estate
development company. Most recently, Ms. Rever has been the owner of an award
winning restaurant located in North Hollywood, California.
George M. Winters III - Secretary, Director
Mr. Winters is responsible for the marketing and sales operations
of the Company. His responsibilities include sales, product planning, market
development, customer support, advertising and public relations. For over 12
years, Mr. Winters has been working in the financial services industry selling
and marketing various financial instruments. Originally brokering commodities in
the late 80's with Osbourne Financial, Inc., in Los Angeles, Mr. Winters moved
on to J.B. Oxford & Co. as a stock trader. Most recently, he was integral during
a period of tremendous growth with Investor's Business Daily, Inc., where he
held a top management position in sales and marketing.
David P. Frelinger, M.D.- Vice President of Medical Operations
Dr. Frelinger's past professional activities have included:
Clinical professor and instructor, Department of Medicine, UCLA School of
Medicine; President and counselor, Family and General Practice Section, Los
Angeles County Medical Association; Director and faculty member, Student Health
Service, Loyola Marymount University, Los Angeles, CA; Director and faculty
member, Student Health and Counseling Center, California State University,
Fullerton, CA; Medical Director and Chairman of the Board, Knights of Malta Free
Clinic, Los Angeles, CA. Dr. Frelinger's honors include being a Fellow of both
the A.A.F.P. and the A.C.H.A. He Has received his D.O. from the College of
Osteopathic Physicians and Surgeons and his M.D. from the University of
California College of Medicine, Irvine, CA.
Andrew Buys - Cruise and Itineraries Coordinator
Mr. Buys is responsible for all day to day operation and
coordination of tours, shore activities and events. For years Mr. Buys has
captained his own charter yachts based in the Caribbean. Mr. Buys has extensive
knowledge and experience of the area as well and valuable relationships with
local vendors, custom officers, Immigration and government officials.
Linda Brown - Public Relations/Stockholder Relations
Ms. Brown began her career in entertainment and corporate
publicity. She was the Director of Motion Pictures at Rogers & Cowan Publicity
and Bragman Nyman Cafarelli, before moving onto the prestigious PMK Public
Relations as a senior press agent for several years. Ms. Brown left to start
Indie PR, of which she is the President and Founder. Indie's clients include
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<PAGE>
projects with film and television studios such as Twentieth Century Fox, Fox
Television, Sony Pictures, Universal Studios, New Line Cinema, and Turner
Entertainment.
MEDICAL ADVISORY BOARD
The Company will establish an informal Executive Advisory Board,
appointed by Mr. Neil Brodsky. The role of the Medical Advisory Board is to be
available to assist the Company's management with general business and strategic
planning advice upon request from time to time. Accordingly, the Medical
Advisory Board Members intend to devote themselves part-time to the affairs of
the Company, as needed.
Maurice W. Black, M.D.
Dr. Maurice W. Black is currently a medical advisory board member
with Ave. A Corporation. His other current medical activities include: Medical
Advisor for the Department of Health and Human Services, Washington, D.C.;
Medical Director. The Substance Abuse Foundation of Long Beach, Long Beach, CA;
Medical Director, New Beginnings at Lakewood Regional Medical Center, Lakewood,
CA; Program Director, College Hospital of Cerritos, Cerritos, CA. His
achievements include establishing the first alcohol treatment program for the
military service and he is also certified by the American Society of Addiction
Medicine. Dr. Black is a Doctor of Medicine from the University of Pittsburgh,
Pennsylvania, and was a resident at the US Naval Hospitals in both Bethesda, Md.
and Philadelphia.
Jokichi Takamine, M.D.
Dr. Jokichi Takamine is currently a medical advisory board member
with Ave. A Corporation. His other current professional activities include:
Staff Member, St. John's Hospital Substance Abuce Program, Santa Monica, CA;
Director Public Inebriate Program, Los Angeles, CA. Past activities include:
Staff Member, Santa Monica Hospital and Medical Center, Santa Monica, CA;
Chairman of the Board, Alcoholism Council of Greater Los Angeles. Dr. Takamine
is the recipient of the National Drug Abuse Medicine Award and has served on the
Mayor's Committee on Narcotics and Dangerous Drugs, Los Angeles, CA. He is a
graduate of New York University Medical School, and is certified by the American
Society of Addiction Medicine.
Frank L. Clayman-Cook, Ph.D.
Dr. Frank Clayman-Cook is currently a medical advisory board
member with Ave. A Corporation. His other current medical activities include:
Psychologist in private practice specializing in acute addictive disorders, Los
Angeles, CA; Senior Psychological Consultant, Archdiocese of Los Angeles. Past
activities include: Staff Psychologist and Program Director, Dual Diagnosis
Unit, Edgemont Hospital-Exodus recovery program, Los Angeles, CA; Staff
Psychologist and Treatment Coordinator, Washington Medical Center/Exodus
Recovery Center, Culver City, CA. He lectures extensively on the diagnosis and
treatment of chemical dependency and other addictive disorders. Dr. Clayman-Cook
holds doctorates in Psychology and Philosophy from the California School of
Professional Psychology and the Institute of Contemporary Psychoanalysis.
Milton Murry Birnbaum, M.D.
Dr. Milton Murry Birnbaum is currently a medical advisory board
member with Ave. A Corporation. His other current professional activities
include: the Director of Addiction Medicine at Ancapa-by-the-Sea/S.T.E.P.S. in
Los Angeles, CA. Board certified with the American Society of Addiction
Medicine, Dr. Birnbaum lectures extensively and has been very active in
designing, directing and coordinating programs on alcohol and chemical
dependency. He is a graduate of New York University; he received a D.O. from the
College of Osteopathic Physicians and Surgeons in Los Angeles, and his M.D. from
the University of California, College of Medicine, Irvine, CA.
Monika Goodman-Korn, Ph.D.
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<PAGE>
Dr. Monika Goodman-Korn is currently a medical advisory board
member with Ave. A Corporation. Her other current medical activities include:
Therapist in private practice specializing in family crisis intervention and
groups primarily dealing with dependency, Santa Monica, CA; Co-Supervisor of
MFCC interns at the Maple Center, Beverly Hills, CA. Dr Goodman-Korn has been
active in designing and implementing chemical dependency and treatment programs.
She holds a Ph.D. in Marital and Family Therapy with a special certificate in
chemical dependency treatment, a Master's Degree in Clinical Psychology, and a
CAC Certified Counseling degree.
Employment Agreements
We entered into employment agreements with each of Messrs.
Richard Rever and Rose Rever which provide for an annual base compensation of
$65,000, $45,000, respectively, with additional amenities.
Stock Options
We have not adopted any formal stock options plans to reward and
provide incentives to our officers, directors, employees, consultants and other
eligible participants, but is anticipated to do so. The plans will be
administered by the Company's Board of Directors, which is authorized to select
the plan recipients, the time or times at which awards may be granted and the
number of shares to be subject to each option awarded.
Directors' Compensation
Our directors receive no compensation for their services as
directors. Members of the Executive Advisory Board will receive payment for
their services, travel and other expenses incurred in connection with attendance
at each meeting.
<TABLE>
Executive Compensation
The following table sets forth the annual remuneration expected
for the highest paid officers and directors of the Company for the annual period
beginning with the closing of this offering.
<CAPTION>
Name Capacities in Which Aggregate
Remuneration will be Received Remuneration
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Neil B. Brodsky Chairman, President and Chief $115,000.00/1,500,000 shares
Executive Officer
Richard Rever COO $ 65,000.00/100,000 shares
George M. Winters III Secretary /15,000 shares
Dr. David Frelinger Vice President of Medical Operations $100,000.00/200,000 shares*
Christopher Fields, Esq. Counsel /5,000 shares
Advisory Board Members - Each person 15,000 shares each
</TABLE>
Indemnification of Officers and Directors
At present the Company has not entered into individual
indemnity agreements with its Officers or Directors. However, the Company's
By-Laws and Certificate of Incorporation provide a blanket indemnification that
the Company shall indemnify, to the fullest extent under Delaware law, its
directors and officers against certain liabilities incurred with respect to
their service in such capabilities. In addition, the Certificate of
Incorporation provides that the personal liability of directors and officers to
the Company and its stockholders for monetary damages will be limited.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing
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<PAGE>
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
Directors and Officers Insurance
We are exploring the possibility of obtaining directors and
officers ("D & 0") liability insurance. We have obtained several premium
quotations but has not entered into any contract with any insurance company to
provide said coverages as of the date of this prospectus. There is no assurance
we will be able to obtain such insurance.
Keyman Life Insurance
Keyman Life Insurance is expected to be purchased after the
effective date of this offering in amounts up to $1 million, 50% payable to the
Company and 50% payable to family beneficiaries. The Company is planning to
purchase such insurance in order to fund the cross purchase of shares from the
estate of an officer or director as a result of a death and to provide the
Company with capital to replace the executive loss.
CERTAIN TRANSACTIONS
In March 1999, we offered 1,000,000 shares of our common stock
at $1.00 under Regulation D Rule 504. We successfully closed this offering June
29, 1999.
We have adopted a policy that all future transactions between
the Company and officers, directors and 5% shareholders will be on terms no less
favorable that could be obtained from unaffiliated third parties and will be
approved by a majority or independent, disinterested directors of the Company.
DESCRIPTION OF SECURITIES
All material provisions of our capital stock are summarized in
this prospectus. However the following description is not complete and is
subject to applicable Delaware law and to the provisions of our articles of
incorporation and bylaws. We have filed copies of these documents as exhibits to
the registration statement related to this prospectus.
Common Stock
We are authorized to issue 20,000,000 shares, at a par value
$.001 per share. As of the date of this prospectus, there are 2,613,800 shares
outstanding. After giving effect to the offering, the issued and outstanding
capital stock of the Company will consist of 8,263,800 shares.
You have the voting rights for your shares. You and all other
holders of common stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. You have no cumulative voting
rights with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors then up for election.
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<PAGE>
You have dividend rights for your shares. You and all other
holders of common stock are entitled to receive dividends and other
distributions when, as and if declared by the Board of Directors out of funds
legally available, based upon the percentage of our common stock you own. We
will not pay dividends. You should not expect to receive any dividends on shares
in the near future. This investment may be inappropriate for you if you need
dividend income from an investment in shares.
You have rights if we are liquidated. Upon our liquidation,
dissolution or winding up of affairs, you and all other holders of our common
stock will be entitled to share in the distribution of all assets remaining
after payment of all debts, liabilities and expenses, and after provision has
been made for each class of stock, if any, having preference over our common
stock. Holders of shares, as such, have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
common stock. All of the outstanding shares are, and the shares offered hereby,
when issued in exchange for the consideration paid as set forth in this
Prospectus, will be, fully paid and nonassessable. Our directors, at their
discretion, may borrow funds without your prior approval, which potentially
further reduces the liquidation value of your shares.
You have no right to acquire shares of stock based upon the
percentage of our common stock you own when we sell more shares of our stock to
other people. This is because we do not provide our stockholders with preemptive
rights to subscribe for or to purchase any additional shares offered by us in
the future. The absence of these rights could, upon our sale of additional
shares, result in a dilution of our percentage ownership that you hold.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 8,263,800 shares
issued and outstanding assuming all the shares offered herein are sold. The
shares sold in this offering will be freely transferable without restrictions or
further registration under the Securities Act, except for any of our shares
purchased by an "affiliate" (as that term is defined under the Act) who will be
subject to the resale limitations of Rule 144 promulgated under the Act.
There will be approximately 2,575,000 shares outstanding that are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act.
The shares owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and in
the future may be sold under Rule 144, which provides, in essence, that a person
holding restricted securities for a period of one (1) year may sell every three
(3) months, in brokerage transactions and/or market maker transactions, an
amount equal to the greater of (a) one percent (1%) of our issued and
outstanding common stock or (b) the average weekly trading volume of the common
stock during the four (4) calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of shares without any quantity
limitation by a person who is not an affiliate of the Company and who has
satisfied a two (2) year holding period. Additionally, shares underlying
employee stock options granted, to the extent vested and exercised, may be
resold beginning on the ninety-first day after the Effective Date of a
Prospectus, or Offering Memorandum pursuant to Rule 701 promulgated under the
Securities Act.
As of the date hereof and upon completion of the offering, none
of our shares (other than those which are qualified by the SEC in connection
with this offering) are available for sale under Rule 144. Future sales under
Rule 144 may have an adverse effect on the market price of the shares of Common
stock. Our officers, directors and certain of our security holders have agreed
not to sell, transfer or otherwise dispose of their shares of our common stock
or any securities convertible into common stock for a period of 12 months from
the date hereof.
Under Rule 701 of the Securities Act, persons who purchase shares
upon exercise of options granted prior to the date of this Prospectus are
entitled to sell such shares after the 90th day following the date of this
Prospectus in reliance on Rule 144, without having to comply with the holding
period
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<PAGE>
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after this 90-day
period, but without a holding period.
There has been no public market for our common stock. With a
relatively minimal public float and without a professional underwriter, there is
little or no liklihood that an active and liquid public trading market, as that
term is commonly understood, will develop, or if developed that it will be
sustained, and accordingly, an investment in our common stock should be
considered highly illiquid. Although we believe a public market will be
established in the future, there can be no assurance that a public market for
the common stock will develop. If a public market for the common stock does
develop at a future time, sales of shares by shareholders of substantial amounts
of our common stock in the public market could adversely affect the prevailing
market price and could impair our future ability to raise capital through the
sale of our equity securities.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 relating to the common stock
offered hereby. This prospectus, which is part of the Registration Statement,
does not contain all of the information included in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
us, the common stock offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules thereto. Statements contained in
this prospectus concerning the provisions or contents of any contract, agreement
or any other document referred to herein are not necessarily complete. With
respect to each such contract, agreement or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved.
The Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at prescribed rates at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
DC 20549 and at the Commission's regional offices at 7 World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Commission also maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission, including the Company.
The address of such site is [http://www.sec.gov]
We intend to furnish to our shareowners annual reports containing
audited financial statements certified by independent public accountants for
each fiscal year and quarterly reports containing unaudited financial statements
for the first three quarters of each fiscal year.
We will provide without charge to each person who receives a prospectus,
upon written or oral request of such person, a copy of any of the information
that was incorporated by reference in the prospectus (not including exhibits to
the information that is incorporated by reference unless the exhibits are
themselves specifically incorporated by reference). Any such request shall be
directed to the Chief Executive Officer of Ave. A Corporation, Neil B. Brodsky,
at 609 Deep Valley Drive, Suite 200, Palos Verdes, CA 90274, Tel. # (310)
265-4422.
Within five days of our receipt of a subscription agreement
accompanied by a check for the purchase price, we will send by first class mail
a written confirmation to notify the subscriber of the extent, if any, to which
such subscription has been accepted by us. We reserve the right to reject orders
for the purchase of shares in whole or in part. Upon acceptance of each
subscriber, we will promptly provide our stock transfer agent the information to
issue shares.
Page 24
<PAGE>
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock
and anticipate that all future earnings will be retained for development of our
business. The payment of any future dividends will be at the discretion of our
Board of Directors and will depend upon, among other things, future earnings,
capital requirements, the financial condition of the Company and general
business conditions.
STOCK TRANSFER AGENT
Our transfer agent and registrar of the common stock is
Stocktrans, Inc., 7 E. Lancaster Avenue, Ardmore, PA 19003, Tel. 610-649-7300;
Fax. 610-649-7302.
EXPERTS
Our financial statements (development stage company) as of and
for the year ending December 31, 1998 have been audited by Schiffman Hughes
Brown, P.C., CPAs, 790 Penllyn Pike, Suite 302, Blue Bell PA 19422, independent
auditors, as set forth in their report included herein and incorporated herein
by reference. Such financial statements have been included in reliance upon such
report given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
There is no past, pending or, to our knowledge, threatened
litigation or administrative action which has or is expected by our management
to have a material effect upon our business, financial condition or operations,
including any litigation or action involving our officers, directors, or other
key personnel.
The Law Offices of Miles Garnett, Esq., 66 Wayne Avenue, Atlantic
Beach, N.Y. 11509, Tel. #(516) 371-4598, [http://www.garnett.com], will pass
upon certain legal matters relating 1o the offering.
Page 25
<PAGE>
SEAHAB, INC.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report ............................................. F-2
Financial Statements:
Balance Sheets ........................................................ F-3
Statements of Operations .............................................. F-4
Statement of Stockholders' Equity ..................................... F-5
Statements of Cash Flows .............................................. F-6
Notes to Financial Statements ............................................ F-7
F-1
<PAGE>
SEAHAB, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE PERIOD JUNE 17, 1996 (INCEPTION) TO DECEMBER 31, 1998
<PAGE>
-----------
SCHIFFMAN
-----------
HUGHES
-----------
BROWN
-----------
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Of SeaHab, Inc.
We have audited the accompanying balance sheet of SeaHab, Inc. (a
development stage company) as of December 31, 1998, and the related
statements of operations, stockholder's equity (deficiency), and cash
flows for the year then ended and for the period from June 17, 1996
(Inception) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SeaHab, Inc.
as of December 31, 1998 and the results of its operations and its cash
flow for the year then ended and from June 17, 1996 (Inception) to
December 31, 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred net losses since its inception and
has experienced liquidity problems. Unless the Company can continue to
obtain financing from the issuance of common stock and/or through loans,
substantial doubt arises about the Company's ability to continue as a
going concern (Note 1). The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Schiffman Hughes Brown
Schiffman Hughes Brown
Blue Bell, Pennsylvania
November 30, 1999
F-2
- --------------------------------------------------------------------------------
790 Penllyn Pike, Suite 302, Blue Bell, Pennsylvania 19422
(215) 646-2000 o Fax (215) 646-1937
[email protected] o www.shbcpa.com
<PAGE>
SEAHAB, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
September 30,
1998 1999
---- ----
(Unaudited)
Cash $ 0 $ 6,240
=== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Stockholder's equity:
Common stock, $.0O1 par value, 20,000,000 shares
authorized; 313,800 shares issued and outstanding
in 1998 and 2,613,800 shares at
September 30, 1999 $ 314 $ 2,614
Additional paid in capital 62,538 171,538
Deficit accumulated in development stage (62,852) (167,912)
------- --------
$ 0 $ 6,240
======= ========
The accompanying notes are an integral
part of these financial statements
F-3
<PAGE>
SEAHAB, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Cumulative
Since September 30,
Inception 1998 1999
--------- ---- ----
(Unaudited)
Revenues $ 0 $ 0 $ 0
--------- -------- -----------
Costs and expenses:
Developmental and preoperating costs 62,852 323 105,060
--------- -------- -----------
Net loss $ (62.852) $ (323) $ (105,060)
========= ======== ===========
Net loss per share of common stock $ (.20) -- $ (.10)
========= ======== ===========
Weighted average shares outstanding 313,800 313,800 1,070,448
========= ======== ===========
The accompanying notes are an integral
part of these financial statements
F-4
<PAGE>
SEAHAB, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 1998
Total
Common Paid in Retained Stockholder
Stock Capital Earnings Equity
--------- --------- --------- ---------
Balance, January l, 1998 $ 314 $ 62,386 $ (62,529) $ 171
Net loss for year ended
December 31, 1998 -- 152 (323) (171)
--------- --------- --------- ---------
Balance, December 31, 1998 314 62,538 (62,852) 0
Issuance of 200,000 shares of
common stock 200 90,100 -- 90,300
Issuance of 2,100,000 shares of
common stock for services 2,100 18,900 -- 21,000
Net loss for the period ended
September 30, 1999 -- -- (105,060) (105,060)
--------- --------- --------- ---------
Balance, September 30, 1999
(unaudited) $ 2,614 $ 171,538 $(167,912) $ 6,240
========= ========= ========= =========
The accompanying notes are an integral
part of these financial statements
F-5
<PAGE>
SEAHAB, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
Cumulative
Since September 30,
Inception 1998 1999
--------- --------- ---------
(Unaudited)
Cash flows from operating activities:
Net loss $ (62,852) $ (323) $(105,060)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Common stock issued for services -- -- 21,000
--------- --------- ---------
Net cash used by operating activities (62,852) (323) (84,060)
--------- --------- ---------
Net cash provided by financing activities
Issuance of common stock -- 152 90,300
--------- --------- ---------
Net increase (decrease) in cash 0 (171) 6,240
Cash, beginning balance 0 171 0
--------- --------- ---------
Cash, ending balance $ 0 $ 0 $ 6,240
========= ========= =========
Non-cash financing activity:
Issuance of common stock for service -- -- $ 21,000
========= ========= =========
The accompanying notes are an integral
part of these financial statements
F-6
<PAGE>
SEAHAB, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Description of Business:
SeaHab, Inc. (the "Company" or "SeaHab") was organized on June 17, 1996
under the laws of the state of Delaware. SeaHab is poised to bring new and
innovative recovery treatment to its patients through a new breed of
rehabilitation services. SeaHab removes the patient from the traditionally
surroundings of a hospital to the healing conducive environment of a luxury
yacht in the Caribbean.
The Company had no revenues from operations since inception and its ability
to continue as a going concern is dependent on the continuation of
financing to fund the expenses relating to successfully marketing and
operating the yacht Charter S. Management is currently offering 1,000,000
shares of common stock pursuant to Regulation D, Rule 504, of the
Securities Act of 1933. Management believes the net cash proceeds of the
offering will be $850,000. Management believes the proceeds will provide
the working capital necessary to (i) purchase yacht charters and computer
hardware, and (ii) bring them to market, at which time the Company believes
that sufficient cash will be generated to support its operations. Although
management cannot assume the ultimate success of the above plan, it is
reasonably confident that it will enable the Company to continue its
business and grow modestly.
2. Significant accounting policies:
Earnings per share:
Primary earnings per share are computed by dividing net income (loss) by
the weighted average number of shares of common stock and the equivalent
number of common shares of convertible preferred stock. Fully diluted
earnings per share reflect the dilutive effect of stock options and
warrants. For the year ended December 31, 1998, the computation of fully
diluted loss per share was antidilutive; therefore, the amounts reported
for primary and fully dilutive loss per share were the same.
Developmental and preoperating costs:
Developmental and preoperating costs consist of expenditure incurred by the
Company during the course of planned search and investigation aimed at
discovery of new knowledge, which will be used to bring the Company to
market. The Company expenses all such developmental and preoperating costs
as they are incurred.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount reported in its financial statements and
accompanying notes. Actual results could differ from those estimates.
F-7
<PAGE>
Part II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Officers and Directors
The information required by this item is incorporated by
reference to "indemnification" in the prospectus herein.
At present we have not entered into individual indemnity
agreements with our Officers or Directors. However, our By-Laws and Certificate
of Incorporation provide a blanket indemnification that we shall indemnify, to
the fullest extent under Delaware law, our directors and officers against
certain liabilities incurred with respect to their service in such capabilities.
In addition, the Certificate of Incorporation provides that the personal
liability of our directors and officers and our stockholders for monetary
damages will be limited.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel 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 Securities Act of 1933, as amended, and we will be governed by
the final adjudication of such case.
ITEM 25. Other Expenses of issuance and distribution
SEC Registration Fee $ 1,570.70
Blue Sky Fees and Expenses $ 3,800.00
Legal Fees and Expenses $ 20,000.00
Printing and Engraving Expenses $ 15,000.00
Accountant's Fees and Expenses $ 10,000.00
--------------
Total $ 48,800.00
The foregoing expenses, except for the SEC fees, are estimated
ITEM 26. Recent Sales of Unregistered Securities.
(a) Unregistered Securities Sold within the past three years
The following sets forth information relating to all
previous sales of common stock by the Registrant
which sales were not registered under the Securities
Act of 1933.
On April 11, 1999, we issued 38,800 shares of common
stock, for an aggregate consideration of $38,800. No
sales
<PAGE>
commissions were paid in connection with the
offering. The foregoing purchases and sales were
exempt from registration under the Securities Act
pursuant to Rule 504 of Regulation D on the basis
that the transactions involved a public offering.
All investors had the opportunity to ask questions and
receive answers from all of our officers, directors
and employees. In addition, they had access to review
all of our corporate records and material contracts
and agreements.
(i) List of persons to whom the public offering securities were sold.
Between March 8, 1999 and June 29, 1999
Advanced Corporate Technology, Inc.
Gennaro Balzano
Leticia Cahan
Nan Brodsky
Nancy Coleman
Kevin T. Cabell
Susan Ceasar
April S. Finch
Sharleen B. Glass
Joseph D. Glass
Madek Graham
Stace F. Graham
Craig Hope
Jeff Kuri
Frank E. Lambrecht
Edward Y. Lee
Drew Lambo
DeBorah M. McKinnon
Molly E. O'Hanlon
Duarte Da Silveira
H.L. Stangeland
Greg & Angela Stasiak
Mark Sanderson
Daniel R. Schuch
Judith G. Taylor
Michael Winkler
Henry Winkler
Bess Winters
Eric H. Wade
Rocco Zuccarelli
<PAGE>
ITEM 27. - EXHIBITS
Index to Exhibits
- --------------------------------------------------------------------------------
EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
- --------------------------------------------------------------------------------
1.1 Subscription Agreement This filing
page
- --------------------------------------------------------------------------------
3.1 Articles of Incorporation This filing
United Gaming page
- --------------------------------------------------------------------------------
3.2 Amended Articles of This filing
Incorporation - name change page
- --------------------------------------------------------------------------------
3.3 Amended Articles of This filing
Incorporation - name change page
- --------------------------------------------------------------------------------
3.4 Bylaws This filing
United Gaming Corporation page
(Ave. A Corporation)
- --------------------------------------------------------------------------------
10.1 Employment Agreement This filing
with Richard Rever page
- --------------------------------------------------------------------------------
10.2 Employment Agreement This filing
with Rose Rever page
- --------------------------------------------------------------------------------
10.3 Consulting Agreement This filing
with Andrew Buys page
- --------------------------------------------------------------------------------
10.4 Board Member Agreement This filing
with George Winters page
- --------------------------------------------------------------------------------
10.5 Lease Agreement on the premises This filing
609 Deep Valley Drive; page
Suite 200, Palos Verdes, CA 90274035
- --------------------------------------------------------------------------------
23.1 Consent of Schiffman Hughes Brown, This filing
P.C., CPAs page
- --------------------------------------------------------------------------------
23.2 Consent of Miles Garnett, Esq. This filing
page
- --------------------------------------------------------------------------------
27.1 Financial Data Schedule This filing
page
- --------------------------------------------------------------------------------
<PAGE>
For Office Use Only:
- -------------------------------------- ------------------------------
Broker/Dealer Name & Address Investor:
_________________________
Investor #: _____________
- -------------------------------------- ------------------------------
[Logo Goes Here]
SUBSCRIPTION AGREEMENT
for
AVE. A CORPORATION
Common Stock ($1.00 per share)
Persons interested in purchasing shares of Ave. A Corporation (the "Shares")
must complete and return this Subscription Agreement along with their check or
money order to:
Ave. A Corporation
609 Deep Valley Drive; Suite 200
Palos Verdes, CA 90274, ("the Issuer") ("the Company")
Subject only to acceptance hereof by the issuer, in its discretion, the
undersigned hereby subscribes for the number of Common Shares and at the
aggregate subscription price set forth below.
An accepted copy of this Agreement will be returned to the Subscriber as a
receipt, and the physical stock certificates shall be delivered to each Investor
within thirty (30) days of the Close of this offering.
Securities Offered - We are offering 5,650,000 shares (par value
$.001 per share) at $1.00 per share.
Minimum Subscription - In connection with this subscription the
undersigned hereby subscribes to the number of Common shares shown in the
following table.
All Subscribers - The Minimum Subscription is 200
shares and the maximum subscription is 50,000
shares.
Number of Common Shares = ____________________________
Multiply by Price of Shares x $1.00 Per Share
____________________________
Aggregate Subscription Price = $___________________________
Check or money order shall be made payable to Ave. A Corporation
Subscription Agreement Page 1 of 2
<PAGE>
In connection with this investment in the Company, I represent and warrant as
follows:
a) Prior to tendering payment for the Shares, I received a copy of and read
your Prospectus dated _____________ 1999.
b) I am a bona fide resident of the state of _______________________________.
c) The Issuer and the other purchasers are relying on the truth and accuracy of
the declarations, representations and warranties herein made by the undersigned.
Accordingly, the foregoing representations and warranties and undertakings are
made by the undersigned with the intent that they may be relied upon in
determining his/her suitability as a purchaser. Investor agrees that such
representations and warranties shall survive the acceptance of Investor as a
purchaser, and Investor indemnifies and agrees to hold harmless, the Issuer and
each other purchaser from and against all damages, clalms, expenses, losses or
actions resulting from the untruth of any of the warranties and representations
contained in this Subscription Agreement.
Please register the Shares which I am purchasing as follows:
Name: ________________________________ Date: ___________________
As (check one)
[ ] Individual [ ] Tenants in Common [ ] Existing Partnership
[ ] Joint Tenants [ ] Corporation [ ] Trust
[ ] Minor with adult custodian under the Uniform Gift to Minors Act
<TABLE>
<CAPTION>
For the person(s) who will be registered shareholder(s):
<S> <C>
___________________________________________________ _____________________________________________
Signature of Subscriber Residence Address
___________________________________________________ _____________________________________________
Name of Subscriber (Printed) City or Town
___________________________________________________ _____________________________________________
Signature of Co-Subscriber State Zip Code
___________________________________________________ _____________________________________________
Name of Co-Subscriber (Printed) Telephone
___________________________________________________ _____________________________________________
Subscriber Tax I.D. or Co-Subscriber Tax I.D. or
Social Security Number Social Security Number
___________________________________________________
E-mail Address (if available)
ACCEPTED BY: AVE. A CORPORATION
By: _______________________________________________ Date ________________________________________
Officer
Subscription Agreement Page 2 of 2
</TABLE>
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "UNITED GAMING CORPORATION", FILED IN THIS OFFICE ON THE
SEVENTEENTH DAY OF JUNE, A.D. 1996, AT 9 O'CLOCK A.M.
/s/ Edward L. Freel
______________________________________
[SEAL] Edward L. Freel, Secretary of State
2634666 8100 AUTHENTICATION: 0016253
991423405 DATE: 10-08-99
<PAGE>
TEL NO. 3026548472
Jun 17,96 12:11 P.02
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/17/1996 CERTIFICATE OF INCORPORATION
960175553 - 2634666 OF
UNITED GAMING CORPORATION
FIRST: The name of the corporation is UNITED GAMING CORPORATION
SECOND: The address of its registered office in the State of
Delaware is Three Mill Road, Suite 206, City of Wilmington, County
of New Castle, 19806-2146. Its registered agent at such address is
The Incorporators Ltd.
THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue one
thousand shares of common stock without par value.
FIFTH: The Board of Directors is expressly authorized to adopt,
amend, or repeal the By-Laws of the corporation.
SIXTH: The stockholders and directors may hold their meetings and
keep the books and documents of the corporation outside the State
of Delaware, at such places from time to time designated by the
By-Laws, except as otherwise required by the Laws of Delaware.
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The name and mailing address of the incorporator is Marie
Jorezak, Three Mill Road, Suite 206, Wilmington, DE 19806-2146.
NINTH: The number of directors of the corporation shall be fixed
from time to time by its ByLaws and may be increased or decreased.
TENTH: The Board of Directors is expressly authorized and shall
have such authority as set forth in the By-Laws to the extent such
authority would be valid under Delaware Law.
ELEVENTH: No director of the corporation shall have personal
liability to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, provided that
this provision shall not eliminate or limit the liability of a
director (a) for any breach of the director's duty or loyalty to
the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware
Corporation Law, or (d) for any transaction from which the
director derived an improper personal benefit.
THE UNDERSIGNED Incorporator for the purpose of forming a
corporation pursuant to the laws of the State of Delaware, does
make this Certificate, hereby declaring and certifying that the
June 17, 1996
BY: ?????????????
--------------------------------------
<PAGE>
EMPLOYEE AGREEMENT
This agreement is entered into between Richard Rever (hereafter referred to as
Employee) and SeaHab Inc. (hereafter referred to as Employer) commencing July 1,
1999.
1. For consideration provided herein, Employee agrees to provide services as
Marketing and Sales Director of SeaHab Inc. Such services include sales,
market development, publicity, public relations, customer support, and any
and all such services as are necessary to the success of SeaHab Inc.
2. Employee will be listed on SeaHab's Board of Directors as Director of Sales
& Marketing, and Chief Operations Officer.
3. Employee's salary, to be paid biweekly, will be $31,200 per year until such
time as SeaHab is capitalized and officially announces operation at which
time Employee's annual salary will increase to $65,000.
4. A total of 100,000 shares of SeaHab stock will be issued to Employee under
this agreement. The distribution of these shares will be contingent upon
the following:
a. An official announcement of SeaHab commencing operations is made.
b. Employee's continued employment at SeaHab during stock disbursement
period.
5. Shares of SeaHab stock will be issued to Employee on the following
schedule:
20,000 shares on September 1, 1999.
40,000 shares on March 1, 1999.
40,000 shares on September 1, 2000.
6. Issuance of shares in time frame listed is contingent upon SeaHab SB-2 being
filed and completed by September 1, 1999. Should SB-2 filing and completion fail
to take place on or before September 1, 1999 stock issuance will change
commensurate with new completion date.
EMPLOYEE
Dated: 7/8/99 Signature: /s/ ????????????
SEAHAB
Dated: 7/8/99 By: /s/ ???????????
<PAGE>
EMPLOYEE AGREEMENT
This agreement is entered into between Rose Rever (hereafter referred to as
Employee) and SeaHab Inc. (hereafter referred to as Employer) commencing July 1,
1999.
1. For consideration provided herein, Employee agrees to provide services as
Chief Financial Officer of SeaHab Inc. Such services include tax reporting,
management of payroll, accounting, budgeting and billing and any and all
such services as are necessary to the success of SeaHab Inc.
2. Employee will be listed on SeaHab's Board of Directors as Vice President
Administration.
3. Employee's salary, to be paid biweekly, will be $45,000. Salary will begin
at such time that SeaHab is capitalized and officially announces
commencement of operation.
4. A total of 75,000 shares of SeaHab stock will be issued to Employee under
this agreement.
The distribution of these shares will be contingent upon the
following:
a. An official announcement of SeaHab commencing operations is made.
b. Employee's continued employment at SeaHab during stock disbursement
period.
5. Shares of SeaHab stock will be issued to Employee on the following
schedule:
20,000 shares on September 1, 1999.
30,000 shares on March 1, 1999.
25,000 shares on Septemberi, 2000.
6. Issuance of shares in time frame listed is contingent upon SeaHab SB-2
being filed and completed by September 1, 1999. Should SB-2 filing and
completion fail to take place on or before September 1, 1999 stock issuance
will change commensurate with new completion date.
EMPLOYEE
Dated: 7/8/99 Signature: /s/ Rose Rever
SEAHAB
Dated: 7/8/99 By: ?????????
<PAGE>
CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into this August 14, 1999 Day of July between
SeaHab, Inc. (Company) and Andrew Buys (Consultant):
WHEREAS, the Company desires to have Consultant serve on the Travel Advisory
Board for a period of one (1) years.
WHEREAS, the Consultant desires to serve in an advisory capacity on the
Company's Travel Advisory Board.
In consideration of the mutual agreement herein contained, it is mutually
understood and agreed by and between the parties as follows:
COMPENSATION: Upon signing of Agreement the Company shall issue Ten Thousand
shares (10,000) of the Company's common stock issued under Rule 144 of the
Security and Exchange Commissions rules and regulations.
In addition, the Consultant shall be paid five thousand dollars ($5,000) per
month based on certain conditions including:
1. SeaHab must be in possession of a boat provided by Mr. Buys (35 person
capacity or more). Any month SeaHab does not have a boat no fee shall be paid.
No additional fees or commissions will be paid.
2. SeaHab must be in operation and the boat provided by Mr. Buys must maintain a
minimum occupancy of six persons.
CONSULTANT'S SUGGESTIONS: Company acknowledges and agrees that Consultant
services represent Consultant's opinions as to the operation of the Company's
business operations, and that Company may, at it's sole and absolute discretion,
choose to implement any or all of the Consultants opinions or ignore any or all
of the Consultants opinions.
USE OF CONSULTANTS SUGGESTIONS: Company acknowledges and agrees that the
Consultants suggestions are not to be interpreted or construe as the Consultant
making management decision for the Company. Company shall endeavor to keep the
Consultant's advice within the knowledge of the Company and not disclose the
Consultant's advice to third party not normally involved in Company business
operations.
<PAGE>
Since Consultant's suggestions are opinions and may be unsuccessful if not
implemented correctly and Consultant has no control over actual operation of the
Company, the Company may not institute and thereby waives any claims for any
omission or action by Consultant.
MODIFICATION: This Agreement can be changed or modified only in writing and only
if consented to and executed by all parties hereto.
ENTIRE AGREEMENT: This document contains the entire Agreement between the
parties concerning the subject matter hereof, and no representations,
inducements, promises or agreements, oral or otherwise between the parties with
reference thereto and not embodied in this document shall be of any force or
effect.
LEGAL COUNSEL: All parties to this Agreement represent that they have had
adequate opportunity to consult with counsel selected by each of them regarding
the negotiations and executions of this Agreement or have waived the benefit of
such counsel.
GOVERNING LAW: This Agreement shall be construed in accordance with and be
governed by the laws of the State of California. Any legal action commenced by
Company or Consultant against the other shall be brought in the State of
California in which the Company has its principal place of business.
EFFECTIVE DATE: This agreement shall become binding and effective upon the
execution by the respective parties hereto.
CORPORATE AUTHORITY: The execution and delivery of the Agreement by Company and
Consultant and the performance of all covenants and obligations under it shall
be duly authorized by all necessary corporate action, and Consultant shall
receive copies of all resolutions pertaining to the authorization upon request.
NOW THEREFORE, it is hereby agreed as follows:
CONSULTANT'S DUTIES: Consultant will perform the following services for the
Company:
Consultant shall use his/her experience and knowledge to assist the Company as a
member of it's Travel Advisory Board.
<PAGE>
Consultant will provide his/her experience and knowledge in the areas of
planning and executing the Company's business plan as related to the Company's
drug and alcohol rehabilitation services.
TERMS OF AGREEMENT: The term of this agreement shall be for a period of one (1)
year.
INDEMNIFICATION: Company shall indemnify and hold Consultant harmless from any
damages or claims of damages arising and any costs, including attorney fees,
arising from any claim by anyone in respect to any acts of omission of
Consultant or Consultant's employees or agents, in connection with any
consulting services performed by Consultant under this Agreement.
CONFIDENTIALITY: Consultant shall not, at any time during or subsequent to the
termination of this Agreement, disclose, confirm, furnish, or make available to
or use for the benefit of anyone other than the Company any secret or
confidential knowledge or information with respect to the business or other
affairs, assets, operations, plans or know-how of the Company or its
subsidiaries or affiliates, including but not limited to customer lists,
suppliers, and products.
All services performed by Consultant for the Company after the date of this
Agreement are subject to and governed by this Agreement.
FOR THE COMPANY CONSULTANT
/s/ Neil Brodsky /s/ Andrew Buys
- ---------------------- ----------------------
Neil Brodsky Andrew Buys
DATE: August 14, 1999
------------------
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS ON
FILE OF "SEAHAB, INC." AS RECEIVED AND FILED IN THIS OFFICE.
THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:
CERTIFICATE OF INCORPORATION, FILED THE SEVENTEENTH DAY OF JUNE,
A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "UNITED GAMING
CORPORATION" TO "DENNGCO CORPORATION", FILED THE THIRTIETH DAY OF SEPTEMBER,
A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "DENNGCO
CORPORATION" TO "IMAGING INTERNATIONAL INCORPORATED", FILED THE NINTH DAY OF
JUNE, A.D. 1997, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "IMAGING
INTERNATIONAL INCORPORATED" TO "SEAHAB, INC.", FILED THE NINTH DAY OF APRIL,
A.D. 1998, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE FIFTH DAY OF MARCH, A.D. 1999,
AT 10 O'CLOCK A.M.
/s/ Edward J. Freel
_________________________________________
[SEAL] Edward J. Freel, Secretary of State
2634666 810011 AUTHENTICATION: 0013239
991422475 DATE: 10-06-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/09/1997
971188293 -- 2634666
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
DENNGCO CORPORATION, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of DENNGCO CORPORATION,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
FIRST: THE NAME OF THE CORPORATION IS IMAGING INTERNATIONAL INCORPORATED
SECOND: That thereafter, pursuant to the resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, DENNGCO CORPORATION has caused this certificate to be signed
by Stace Graham, its President, and Neil Brodsky, its Secretary, this 4th day of
June, 1997.
By: /s/ Stace Graham
-----------------------------------
President
Stace Graham
Attest: /s/ Neil Brodsky
---------------------------------
Secretary
Neil Brodsky
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/09/1998
981139228 - 2634666
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
IMAGING INTERNATIONAL INCORPORATED
- --------------------------------------------------------------------------------
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of_______________________
IMAGING INTERNATIONAL INCORPORATED
- --------------------------------------------------------------------------------
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered "1 & 4" so that, as amended, said
Article shall be and read as follows:
1. THE NAME OF THE CORPORATION IS SEAHAB. INC.
- --------------------------------------------------------------------------------
4. THE NUMBER OF SHARES OF STOCK IS 20,000,000 AT .01.
- --------------------------------------------------------------------------------
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and held
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said IMAGING INTERNATIONAL INCORPORATED
-------------------------------------------------------
has caused this certificate to be signed by
Neil Brodsky
- ------------------------------------------------------- its President, and
Neil Brodsky
- ------------------------------------------------------- its Secretary,
this 9th day of April, 1998.
By: /s/ Neil Brodsky
-------------------------------
President
Attest: /s/ Neil Brodsky
----------------------------
Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:00 AM 03/05/1999
991086230 -- 2634666
File #
2634666
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
SeaHab, Inc., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY;
FIRST: That at a meeting of the Board of Directors of 3-1-1999, resolutions were
duly adopted setting forth a proposed amendment of the Certificate of
Incorporation of said corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED that the Certificate of Incorporation of this corporation be amended by
changing the Article thereof numbered "4th" so that, as amended, said Article
shall be and read as follows:
THE AUTHORIZED NUMBER OF SHARES SHALL BE 20,000,000 @ .001 COMMON.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, Neil Brodsky, has caused this certificate to be signed by
Neil Brodsky, its President, and Neil Brodsky, its Secretary, this 1 day of
March, 1999.
By: Neil Brodsky
----------------------------------
President
Attest: Neil Brodsky
-----------------------------
Secretary
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
SEAHAB, INC.
- --------------------------------------------------------------------------------
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of_______________________
DECEMBER 6, 1999
- --------------------------------------------------------------------------------
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered "1" so that, as amended, said Article
shall be and read as follows:
THE OLD NAME SEAHAB, INC. SHALL BE DELETED. THE NEW NAME SHALL BE
- --------------------------------------------------------------------------------
AVE. A CORPORATION
- --------------------------------------------------------------------------------
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and held
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
Craig L. Hope, Secretary
IN WITNESS WHEREOF, said SEAHAB, INC.
-------------------------------------------------------
has caused this certificate to be signed by
Neil B. Brodsky
- ------------------------------------------------------- its President, and
Craig
- ------------------------------------------------------- its Secretary,
this 6th day of December, 1998.
By: /s/ Neil Brodsky
-------------------------------
President
Attest: /s/ Craig L. Hope
----------------------------
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:43 PM 12/06/1999 MONDAY
99151985 - 2634666
<PAGE>
BOARD MEMBER AGREEMENT
THIS AGREEMENT is made and entered into this 7th Day of July between SeaHab,
Inc. (Company) and George Winters (Individual Board Member):
WHEREAS the Company desires to have an Individual serve as a member on the
Company Board of Directors.
WHEREAS, the Individual desires to serve as a member on the Company Board of
Directors.
In consideration of time and effort spent to date and the mutual agreement
herein contained, it is mutually understood and agreed upon between the parties
as follows:
COMPENSATION: Within four to six weeks of signing this of Agreement the Company
shall issue fifteen thousand (15,000) shares of the Company's stock (pursuant to
S.E.C. Rule 144) to the individual Board Member.
ENTIRE AGREEMENT: This document contains the entire Agreement between the
parties concerning the subject matter hereof, and no representations,
inducements, promises or agreements oral or otherwise between the parties with
reference thereto and not embodied in this document shall be of any force or
effect.
BOARD MEMBER DUTIES: Board Member will perform the following services for the
Company:
Board member will attend regularly scheduled board meetings and vote on issues
put before the Board.
For the Company: Board Member
/s/ Neil Brodsky /s/ George Winters
- ------------------------- -----------------------
Neil Brodsky George Winters
Date: 7/26/99
<PAGE>
GREAT OFFICES, INC.
AMERICAN OFFICE CENTERS, LLC.
SUBLEASE
1. Parties.
1.1 This Sublease, dated, for reference purposes only, May 19, 1999 is
made by and between GREAT OFFICES, INC., / American Office Centers, L.L.C.
(herein called "Sublessor") and Neil Brodsky, (herein called "Sublessee").
2. Premises.
2.1 Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, a portion of that certain real property situated in
the County of Los Angeles, State of California, commonly known as Great Offices,
Inc. / American Office Centers, L.L.C. at Rolling Hills Estates, California, and
described as approximately 239 square feet Office #35 & 56, as depicted on
Exhibit "A". Said real property is hereafter called the "Premises".
3. Term.
3.1 Term. The term of this Sublease shall be for 6 Months commencing
on June 1, 1999 and terminating on November 30, 1999. At that time, lease term
automatically converts to month to month. Once this lease converts to a month to
month lease, Sublessee may terminate this Sublease upon sixty (60) days, 2
calendar months, written notice which notice may not set forth an effective date
of termination other than the last business day of a calendar month. If
Sublessee subleases two or more offices or space (mini-suites = 2 offices
included), Sublessee shall provide not less than ninety (90) days, 3 calendar
months, notice of termination, the date of termination to be effective on the
last business day of a calendar month. Sublessee shall vacate the Premises on
the last business day of the lease period. All equipment and furnishings shall
be removed from the Premises by 5:00 PM on the last business day of the lease
period.
3.2 Delay in Commencement. Notwithstanding said Commencement Date, if
for any reason Sublessor cannot deliver possession of the Premises to Sublessee
on said date, Sublessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Sublease or the obligations of
Sublessee hereunder or extend the term hereof, but in such case Sublessee shall
not be obligated to pay rent until possession of the Premises is tendered to
Sublessee. If Sublessee occupies the Premises prior to said Commencement Date,
such occupancy shall be subject to all provisions hereof, such occupancy shall
not advance the termination date and Sublessee shall pay rent for such period at
the initial monthly rates set forth below.
4. Rent.
4.1 Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $697.10, in advance, on the first day of each month of the
term hereof. Rent shall be made payable to Great Offices, Inc. I American Office
Centers, L.L.C., 609 Deep Valley Drive Suite #200, Rolling Hills Estates, CA
90274, Attn: Suite Manager, or such other place Sublessor shall designate in
writing. Sublessee shall pay Sublessor upon the execution hereof $697.10 as rent
for the first whole or partial month. Rent for any period during the term hereof
which is for less than one month shall be a prorated portion of the monthly
installment based on a thirty-day month. Rent shall be payable in lawful money
of the United States to Sublessor at the address stated herein or to such other
persons or at such other places as Sublessor may designate in writing. Sublessee
shall pay a 6% or $50 late fee, whichever is greater, in the event rent is not
received by Sublessor by the 3rd day of the month (See Attachment A), and a 10%
or $20 returned check fee, whichever is greater, in the event Sublessees check
is returned for any reason, both such sums as liquidated damages to compensate
Sublessor for its costs and expenses. Acceptance of any such sum shall not limit
Sublessor's rights and remedies upon a default by Sublessee. All discrepancies
in Sublessee's billing must be directed to Sublessor's corporate offices in
writing within 30 days of Sublessee's receipt of billing. It will be assumed
that Sublessee is in receipt of billing within two days after the invoice date.
4.2 Sublessee shall pay, as additional rent hereunder, Sublessee's
proportionate share of the Building's Operating Costs in the manner set forth
herein. The "Building's Operating Costs" shall include and be computed as set
forth in the Master Lease. Sublessee's proportionate share equals a certain
percent of the Building Operating Costs charged to Sublessor by the Master
Lessor. Sublessee shall pay its proportionate share of the Building's Operating
Costs monthly, at the same time as rent, based upon the most recent statement
Sublessor has delivered to Sublessee which shall be delivered to Sublessee at
least every 18 months, or at approximately the same time Sublessor receives a
statement from the Master Lessor, or as a provision towards said operating costs
calculated by Sublessor based on historical data for building of the same
standard. Said statement shall be based upon the statement Sublessor receives
from the Master Lessor and is, therefore, subject to change as provided in the
Master Lease. In the event the Master Lessor assesses a surcharge to
Initials: AOC ????
Page 1 of 9
<PAGE>
Sublessor has delivered to Sublessee ??? shall be delivered to Sublessee at
least every ??? months, or at approximately the same time Sublessor receives a
statement from the Master Lessor, or as a provision towards said operating costs
calculated by Sublessor based on historical data for building of the same
standard. Said statement shall be based upon the statement Sublessor receives
from the Master Lessor and is, therefore, subject to change as provided in the
Master Lease. In the event the Master Lessor assesses a surcharge to Sublessor
based upon a statement which did not correctly estimate actual Building
Operating Costs, Sublessee shall immediately pay Sublessor its proportionate
share of the surcharge within ten (10) days of notice to Sublessee. In the event
the Master Lessor issues a credit to Sublessor due to an overpayment of the
Building's Operating Costs, Sublessor shall apply Sublessee's proportionate
share of such credit to any sums owing from Sublessee to Sublessor and any
remaining credit to future sums due from Sublessee under this Section 4.2.
Even if the term of this Sublease has expired and Sublessee
has vacated the Premises, or this Sublease has terminated, when the final
determination is made of the actual Building Operating Costs, Sublessee shall
immediately pay to Sublessor the difference between Sublessee's proportionate
share of the actual Operating Costs and the amounts Sublessee has previously
paid.
5. Security Deposit.
5.1 Sublessee shall deposit with Sublessor upon execution hereof
$697.10 as security for Sublessee's faithful performance of Sublessee's
obligations hereunder. If Sublessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Sublease,
Sublessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Sublessor may become obligated by reason of Sublessee's default, or
to compensate Sublessor for any loss or damage which Sublessor may suffer
thereby. If Sublessor so uses or applies all or any portion of said deposit,
Sublessee shall within ten (10) days after written demand therefor, deposit cash
with Sublessor in an amount sufficient to restore said deposit to the full
amount herein above stated and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said deposit
separate from its general accounts. If Sublessee performs all of Sublessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Sublessor, shall be returned, without payment of interest or
other increment for its use to Sublessee (or at Sublessor's option, to the last
assignee, if any, of Sublessee's interest hereunder) at the expiration of the
term hereof, and after Sublessee has vacated the Premises. No trust relationship
is created herein between Sublessor and Sublessee with respect to said Security
Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for general
office use. Sublessee will complete a "Tenant Information Sheet" for each
person(s) that will be occupying or using the Premises.
6.2 Compliance with Law. Sublessee shall, at Sublessee's expense,
promptly comply with all applicable statutes, ordinances, rules, regulations,
orders, restrictions of record, and requirements in effect during the term or
any part of the term hereof, regulating the use by Sublessee of the Premises, or
the operation of Sublessee's business. Sublessee shall not use or permit the use
of the Premises in any manner that will tend to create waste or a nuisance,
increase the cost of insurance, or which shall tend to disturb such other
tenants.
6.3 Condition of Premises. Sublessee hereby accepts the Premises in
their condition existing as of the date of the execution hereof, subject to all
applicable zoning, municipal, county and state laws, ordinances, and regulations
governing and regulating the Premises or their use, and accepts this Sublease
subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Sublessee acknowledges that neither Sublessor nor Sublessor's
agents has made any representation or warranty as to the suitability of the
Premises for the conduct of Sublessee's business.
7. Master Lease.
7.1 Sublessor is the lessee of the Premises by virtue of a written
lease hereinafter referred to as the "Master Lease", wherein Great Offices Inc./
American Office Centers L.L.C. of California is the Sublessor.
7.2 This Sublease is and shall be at all times subject and subordinate
to the Master Lease.
7.3 Sublessor agrees to maintain the Master Lease during the entire
term of this Sublease subject, however, to any earlier termination of the Master
Lease without default of Sublessor. In the event of such termination, this
Sublease shall likewise terminate.
8. Services.
Initials: AOC ????
Page 2 of 9
<PAGE>
8.2 Sublessor shall also provide or cause to be provided to Sublessee
telephone equipment, extensions, and lines as the parties shall designate upon
commencement of the lease term. Sublessor shall bill Sublessee, or cause fee to
be billed receipt of an itemized statement therefor and shall be considered
additional rent hereunder. In addition to any other remedies of Sublessor for
the failure of Sublessee to pay rent or additional rent hereunder, Sublessor may
terminate, or come to be terminated or decline to present termination of,
telephone service to the Premises.
8.3 If Sublessee brings onto the Premises a copier, Sublessor shall
have the right to surcharge Sublessee the sum of $25.00 per month to be paid
with rent as additional rent hereunder.
8.3.2 If Sublessee brings onto the Premises a facsimile machine,
Sublessor shall have the right to surcharge Sublessee the sum of $25.00 per
month to be paid with rent as additional rent hereunder.
8.3.3 Sublessee hereby guarantees usage of administrative services
valued at $35.00 per office per month (refer to service list). Sublessee will be
charged $35.00 per office per month. Sublessee may accumulate the monthly value;
however any usage over the accumulated value will be billed at the price list
rate. Any unused accumulated administrative services at the end of the lease
term will be forfeited.
8.4 Sublessee understands the working principle of the suite as being
on a "first-come-first-serve" basis. In the event of a rush job, Sublessee's
responsibility is to make clear to Great Office's/American Office Centers' staff
the urgency of the work to be done so that no misunderstanding can arise.
8.5 Sublessee acknowledges that all jobs with RUSH status will be
charged at time-and-a-half the normal word processing rate.
8.6 Sublessee also acknowledges that all jobs performed after regular
hours are charged at an overtime rate: twice the normal word processing.
8.7 Sublessee acknowledges that Sublessor is not responsible or liable
for telephone and/or voice mail equipment malfunctions or any other occurrences
out of the control of Sublessor that may interrupt this service.
8.8 Sublessee also acknowledges that incoming and outgoing messages
are oral, and Sublessor shall in no way be liable for any errors, omissions or
difficulties by its staff or equipment in the transmission of calls and
messages.
9. Repairs and Maintenance.
9.1 Sublessee shall keep the interior of the Premises neat, clean and
in good order and condition. Sublessee shall be responsible for any and all
damage or deterioration in the Premises due to an act or omission of the
Sublessee or its invitees, other than that which is a result solely of ordinary
wear and tear.
9.2 Sublessee shall be responsible for any and all damage to telephone
or other office equipment due to an act or omission of the Sublessee or its
invitees, other than that which is a result solely of ordinary wear and tear.
10. Alterations.
10.1 Sublessee shall not make any alteration in or to the Premises
without the prior written consent of Sublessor, which consent shall be in its
sole discretion, and of the Master Lessor, which consent shall be subject to the
conditions set forth in the Master Lease.
11. Rules and Regulations.
11.1 Sublessee shall comply with all rules and regulations of the
building or development of which the Premises now are or may hereafter become a
part, and such other rules and regulations which Sublessor may promulgate from
time to time applicable to all subtenants.
11.2 Sublessee shall cause any children or minors visiting the
Premises to be orderly and quiet and shall restrict them to the confines of the
Premises.
12. Assignment and Subletting.
Initials: AOC ????
Page 3 of 9
<PAGE>
12.1 Sublessee shall not assign, mortgage or encumber the Sublease,
nor sublet, suffer or permit the Premises or any part thereof to be used by
others without the prior written consent of Sublessor in each instance, which
consent may not be unreasonably withheld. If Sublessor grants such consent, and
as a condition thereof, during the term of such sublease, Sublessor shall be
entitled to all rents, additional charges or other consideration payable to
Sublessee by the sub-tenant in excess of the rent and other charges otherwise
coming due under this Sublease.
13. Holding Over.
13.1 If Sublessee retains possession of the Premises or any part
thereof after the termination of this Sublease, Sublessee's occupancy of the
Premises shall be as a tenant at will terminable at any time by Sublessor.
Sublessee shall pay to Sublessor rent for such time as Sublessee remains in
possession at the rate of 200% of the total amount of rent payable hereunder for
the month immediately preceding termination date of this Sublease, and in
addition thereto, shall pay Sublessor for all actual damages sustained by reason
of Sublessee's retention of possession.
14. Surrender of The Premises.
14.1 Upon termination of this Sublease, Sublessee shall peacefully
surrender the Premises in broom-clean condition and otherwise in as good
condition as when Sublessee took possession, except for reasonable wear and
tear.
15. Indemnification.
15.1 Sublessee shall indemnify, save, defend, protect, and hold
Sublessor harmless from all claims, suits actions, damages, liabilities and
expenses in connection with loss of life, bodily or personal injury, property
damage, or damage to Sublessee's business occurring or arising from or out of
the use or occupancy of the Premises or any part thereof or occasioned wholly or
in part by any act or omission of Sublessee or Sublessee's invitees, whether
occurring in or about the Premises, or in the common areas or elsewhere within
the building or development of which the Premises now are, or may hereafter
become, a part. Sublessee's duty of indemnification shall not apply to injury,
loss, or damage approximately caused by the negligence or willful act of
Sublessor or its agents, contractors or employees. Sublessee shall further
indemnify, save, protect and hold Sublessor harmless from any and all claims,
suits, actions, damages or liabilities arising out of Sublessee's failure to
perform and abide by the obligations of this Sublease.
16. Sublessee's Insurance.
16.1 Sublessee shall maintain at its own cost and expense insurance
against fire and other perils as may be included in extended coverage insurance
on Sublessee's property and leasehold improvements in an amount deemed adequate
by Sublessor to cover their replacement cost and comprehensive general liability
insurance on an occurrence basis with limits of liability in an amount not less
than $1 million combined single limit for each occurrence with respect to loss
of life, bodily and personal injury and damage to property by water or
otherwise. All such insurance shall name Sublessor as an additional insured and,
if reasonably requested by Sublessor, shall also name the Master Lessor as an
additional insured and shall contain appropriate endorsements denying
Sublessee's insurance the right of subrogation against Sublessor and the Master
Lessor, and shall contain a provision whereby each insurer agrees not to cancel
such insurance without 30 days' prior written notice to Sublessor.
17. Confidentiality: Temporary Waiver of Collection.
17.1 Sublessee acknowledges that (i) Sublessor has agreed to a
temporary waiver of its right to collect the difference, if any, between its
standard rates for the Premises and the occupancy and service rates set forth
elsewhere in this Sublease, (ii) some or all of the occupancy and service rates
that are set forth in this Sublease may be less than Sublessor's standard rates
therefor, as such rates may reflect the effect of such temporary waiver, (iii)
Sublessor may partially or fully withdraw such temporary waiver an be permitted
to collect the amounts so temporarily waived if Sublessee does not fully comply
with the confidentiality provisions set forth in this section, and (iv) within
its sole discretion, Sublessor may withdraw such temporary on thirty (30) days
written notice to Sublessee, although, if such temporary waiver is withdrawn
pursuant to the provisions of this subsection (iv), Sublessor may not collect
the amounts so temporarily waived to the date of such withdrawal. Sublessee
acknowledges that, as of the effective date of this Sublease, the amounts that
are the subject of such temporary waiver are: (i) rent; (ii) additional rent;
and (iii) services in the amounts set forth on summary of lease. Sublessee
acknowledges that any disclosure by Sublessee of the existence of such temporary
waiver or the amounts thereof could cause Sublessor certain economic harm.
Accordingly, Sublessee agrees that it will hold in confidence all information
concerning the terms and conditions of this Sublease and will not disclose any
of such information to any third party at any time during or after the
termination of this Sublease, without the prior written consent of the Sublessor
having been obtained provided, however, that Sublessee may disclose such
information to its professional service providers and to any relevant taxing
authority, as well as to comply with an order therefor of a court of competent
jurisdiction. In the event of any unauthorized disclosure of any such
information and in furtherance of Sublessor's rights as set forth in subsection
(iii), above, and in addition to any other rights and remedies to which the
Sublessor otherwise might be entitled. Sublessee shall, within ten (10) days
written
Initials: AOC ????
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<PAGE>
demand therefor, tender to Sublessor such amounts as to which Sublessor had
previously temporarily waived, or was currenUy temporarily waiving, collection.
The terms and concitions of this section shall not apply to any information that
has otherwise been publicly disclosed by the Sublessor.
18. Default.
18.1 The occurrence of any of the following shall be event of default
under this Sublease: (i) Sublessee defaults in payment of rent or any other sum
of money to be paid pursuant to the terms of this Sublease for a period of three
(3) days after written notice thereof from Sublessor; (ii) Sublessee defaults in
the performance of any other term, covenant, condition or obligation of
Sublessee under this Sublease and fails to cure such default within a period of
twenty (20) days after receipt of notice from Sublessor specifying such default
(or if such default specified is not capable of cure within such twenty (20) day
period, the Sublessee fails immediately after notice from Sublessor to commence
to cure such default and diligently to pursue completion of such cure during and
after such twenty (20) day period); (iii) if Sublessee abandons or vacates any
portion of the Premises for fifteen (15) consecutive days; (iv) Sublessee makes
any transfer, assignment, conveyance, sale, pledge or disposition of all or a
substantial portion of the Premises other than by reason of an assignment or
subletting of the Premises under the conditions permitted under this Sublease;
or (v) if Sublessee's interest herein is sold under execution.
18.2 Upon any event of default, Sublessor shall have all rights
specified under the laws of the State of California.
18.3 In the event of default, Sublessor may charge the following costs
for actions taken to rectify the state of default. Sublessor will charge an
administrative fee of $100.00 for the issuance of a "3-day Notice". Sublessor
will charge a reconnect fee for any full or partial disconnects resulting from
default.
18.4 In the event of default, and once Sublessee has failed to cure a
3 day notice, Sublessor waives all of his rights to occupy one or more of the
offices he leases from Sublessor. Sublessor, at Sublessee sole cost, and at
Sublessee's own risk, will move and store Sublessee property and belongings to a
proper storage facility, where Sublessee will be able to recover his/her
property upon demand.
19. Notices.
19.1 All notices, demands or other communications ("Notices")
permitted or required to be given hereunder shall be in writing, and if mailed,
postage prepaid shall be deemed given three (3) days after the date of mailing
thereof or on the date of actual receipt whichever is sooner, all other notices
shall be deemed given on the date of actual receipt. Notices shall be addressed
as follows:
(a) If to Sublessor, to the address specified on the signature
page of this Sublease; and
(b) If to Sublessee, its address at the Premises.
19.2 Sublessor may from time to time by written notice designate such
other place to receive future notices.
19.3 Once Sublessee has given notice to vacate said premises,
Sublessor reserves the right to show the Premises to prospective tenants during
or before or after normal business hours.
20. Smoking
20.1 To preserve the quality of the environment in the executive
suites of which the Premises are a part, Sublessee agrees that smoking is not
permitted within the confines of the Premises, the executive suites, and on the
floor where such suites are located.
21. Attorney's Fees.
21.1 If any party brings an action to enforce the terms hereof or to
declare rights hereunder, the prevailing party in any such action, on trial and
appeal, shall be entitled to his reasonable attorney's fees to be paid by the
losing party as fixed by the Court.
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Page 5 of 9
<PAGE>
22. Sublessee/Employee Relations.
22.1 The suite staff and Suite Manager do not report to Sublessee, nor
are they employees of Sublessee.
22.2 Sublessee acknowledges that Sublessor has invested significant
time and effort at a substantial cost to train its staff and management. Should
Sublessee hire a staff or management member, or should Sublessee encourage a
staff or management member to leave the employ of Sublessor, Sublessee will pay
Sublessor a finder's fee of $7,500.00 for each such staff or management member
so hired or encouraged to leave.
23. Relocation of Premises.
23.1 Sublessor shall have the right to relocate the Premises to
another part of Sublessor's estate in accordance with the following:
(a) The new premises shall be substantially the same in
size, dimensions, configuration, decor, and nature as
the Premises described in this Sublease;
(b) Sublessor shall give Sublessee not less than ten (10)
days written notice of Sublessor's intention to
relocate the premises.
(c) As nearly as practicable, the physical relocation of
Sublessee from the Premises to the new premises shall
take place on a weekend and shall be completed before
the following Monday. Upon completion of such
relocation, the new premises shall become the
"Premises" under this Sublease;
(d) The direct costs of any such relocation shall be
borne by Sublessor; and
(e) the parties hereto shall immediately execute an
amendment to this Sublease setting forth the
relocation of the Premises and any other
modifications to the terms of this Sublease.
24 Use Restriction.
24.1 No portion of the Premises shall be used by Sublessee to provide
similar services as those offered by Sublessor which would create a conflict of
interest. Should the situation arise, penalties and damages will be sought by
Sublessor at Sublessees expense.
25. Credit Report.
25.1 Sublessee will complete and return the requested credit
application prior to the commencement of said lease term. Sublessee authorizes
Sublessor to run a credit report at Sublessee's sole cost.
26. Addendum.
26.1 This Sublease shall also include Paragraphs 609 Deep Valley Drive
Suite #200, Rolling Hills Estates, CA 90274 through 2 phone lines waived. For
this lease term a reduction of $139.40 will apply to the Monthly recurring
charges for a rate of $867.99 as set forth on the Addendum attached hereto.
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Page 6 of 9
<PAGE>
SUMMARY OF LEASE
Sublessor: GREAT OFFICES, INC./AMERICAN OFFICE CENTERS, L.L.C.
Sublessee: Neil Brodsky
Premises: 609 Deep Valley Drive Suite #200, Rolling Hills
Estates, CA 90274
Office #: 35 & 56
Lease Term: 6 Months
Start: June 1, 1999
End: November 30, 1999
Monthly Rent: $697.10
Additional Rent: Building & Operating Expenses $23.90
Telephone Equipment: 2 @ $50.00
Telephone Lines: 6 @ $128.00 (2 line charges waived)
Facsimile Lines & Ports: 1 Port $15.00
Modem Lines & Ports: NA
Administrative Services: waived
T1 Internet Access a separate Agreement
Security Deposit: $697.10
Additional Refundable Deposits:
Telephone Equipment: NA-, First set of keys: NA- Any
damage to phone or other office equipment will be
paid in full by Sublessee.
Disclaimer: Sublessee understands that any security deposits
withheld by Sublessor may not be applied or credited
against any rent due.
Rental Payment: I, the undersigned, acknowledge that rent &
services are due on the 1st day of the month and that
penalties or notice to vacate could be imposed by the
3rd day of the month if rent and additional rent then
due has not been rendered to Sublessor.
Penalties: 6% of total invoice or $50, whichever is greater, for
each late payment. 10% of total invoice or $20,
whichever is greater, for each returned check.
Notice Conditions: Notice must be given on or before the last day of the
month prior to the 60 day notice period.
Telephone Service: I, the undersigned, acknowledge that I am liable to
Great Offices, Inc./American Office Centers, L.L.C.,
for the payment of all additional rent relating to
telephone equipment, extensions and lines. In the
event I am not in the position to meet my
obligations, I authorize Sublessor, or designee, to
remove equipment and terminate extentions immediately
when notified by verbal notice only.
Read & Accepted: /s/ ?????????
Dated: 5/19/99
Initials: AOC ????
Page 7 of 9
<PAGE>
SIGNATURE PAGE
SUBLESSOR: GREAT OFFICES, INC./AMERICAN OFFICE CENTERS, L.L.C.
AT: Corporate Office
17011 Beach Boulevard, Suite 900
Huntington Beach, CA 92647
DATE:
By: __________________________
w/copy to:
Randolf Katz
Arter & Hadden
Jamboree Center
5 Park Plaza, Ste. 1000
Irvine, CA 92614
SUBLESSEE: Neil Brodsky
DATE:
By: /s/ Neil Brodsky
------------------
Name: Neil Brodsky
Title: Chairman, CEO
Initials: AOC ????
Page 8 of 9
<PAGE>
Attachment A
Collection Policy
Article 1
All rents & services are due on the first day of each month, unless
specified otherwise in the sublease.
Article 2
As a courtesy to those who have payments mailed in, a grace period
through the third day of the month, no later than 5:00 PM, is extended.
Article 3
At 5:00 PM late fees on the third calendar day are automatically
charged to the account. Late fees are not reversible and are due in
full upon submittance of statement.
Article 4
If payment has not been received by 5:00 PM on the fifth day of the
month, a partial disconnect* will occur on all bill back services,
including, but not limited to:
* Telephone Usage, Dial Tone
* Mailing Equipment
* Photocopies, etc.
* Concurrently a three-day notice may be issues, at Landlords
discretion, Access to telephone equipment, extensions and lines will be
terminated
* The partial disconnect will incur an additional fee of $100
* A client who receives a partial disconnect status will have his
credit status change to cash in advance.
Article 5
On the seventh day of the month, a three-day notice to pay or quit will
be issued. This three-day notice will become effective at 5:00 PM on
the eighth day of the month. Full disconnect will then take place as
well as legal procedure to recover any outstanding debt for rent and
services.
A three-day notice will incur the following charges:
* $250 Administration Fee
* $100 For Reconnect Fees
IMPORTANT:
A three-day notice will be immediately reported to the following credit
bureaus:
* TRW
* Dun & Bradstreet
* Trans Union
No further credit will be extended by Great Offices and all services are to be
paid in cash in advance.
IMPORTANT:
* All dates are based on calendar days and not working days.
* Once open credit has been lifted, a six month moratorium on
reinstatement will be instituted.
* Partial disconnect: Authorization codes will be removed from
all equipment. Telephones will be restricted to prevent
outgoing calls from being made, although incoming calls still
can be answered by the suite's receptionist.
* Full disconnect: Same as above except that telephones will not
be answered and calls will connect directly to voice mail. You
will not be able to access voice mail until full payment is
made.
PAYMENT
All payments are due in full. Payment must include:
* Current invoices (Rent, Services, and any other Charges)
* Late fees
* Any past due amounts
* If you dispute any charge, please notify the Credit Manager at 714/375-6668
immediately so we can query and resolve the problem in a timely manner.
* If you withhold rent payment in a dispute, you will be in default of your
lease and procedures to collect will be enforced.
* If you think you may be late, please notify Accounts Receivable immediately so
that arrangements can be made if possible before a delinquent situation occurs.
* We have a long history of working with our tenants; so do not hesitate to call
when you need help.
Tenant Signature: /s/ ?????????
----------------------------------------
AOC Manager:
----------------------------------------
Initials: AOC ????
Page 9 of 9
<PAGE>
Left Intentionally blank
Initials: AOC ????
Page 10 of 9
<PAGE>
AMERICAN OFFICE CENTERS
Internet Service Agreement
<PAGE>
This Agreement is entered into on the day of 19, 1999 by and between American
Office Centers and ????????? ("Client"), for the provision of Internet Services.
NOW THEREFORE, the parties agree to the following:
1. The agreement is deemed to be a contract.
2. SERVICE ACTIVATION AND ANNIVERSARY DATE: "Service Activation" refers to
initial service such as domain registration, IP addressing, and circuit
ordering. American Office Centers initiates Service Activation upon
receiving an executed, American Office Centers Internet Service Agreement
and Client payment as approved by American Office Centers. The "Anniversary
Date" refers to the day in which Service begins to the Client's office
suite. From this day forward, unless a prepayment agreement has been
specified, the Client will be billed monthly in advance for each month of
Service.
3. TERM: It is hereby mutually agreed that either party may terminate this
contract at the end of said term by giving to the other party written
notice at least sixty (60) days prior thereto, but in default of such
notice this contract shall automatically renew under the same conditions
and for a term equal to that of the original one.
4. SERVICE TO BE PROVIDED: American Office Centers will provide Client with
(i) the installation and operation of Internet service over transmission
facilities provided by American Office Centers or third parties between
American Office Centers-designated termination points in cities served by
American Office Centers, and ancillary service (as hereinafter defined).
5. CLIENT RESPONSIBILITIES: Client has sole responsibility for installation,
testing and operation of facilities, services and equipment other than that
specifically provide by American Office Centers as part of the Service
described in a Service Order: ("Client Facilities"). In no event will the
untimely installation or non-operation of Client Facilities relieve Client
of its obligation to pay charges for the Service as of Start of Service.
The Client shall be responsible for user access security and network
access, such as control over which users use the Service. American Office
Centers provides no user access security with respect to any of its
Client's facilities or facilities of others connected to the Internet.
American Office Centers will assist in network security breach detection or
identification, but shall not be liable for any inability, failure, or
mistake in doing so.
6. Client will be charged $49.99 per month if Client prepays for 12 months
(the sum of $599.88). Otherwise, Client will be charged $95.00 per month
billed in advance of the first of each month.
7. Client is required to provide their own Network Interface Controller (NIC)
card and Category 5 UTP patch cable (runs from back of controller card to
wall jack). If Client so chooses, American Office Centers will provide and
install a NIC (at an additional cost) in the client PC with American Office
Centers indemnified for any loss, damage, liability, claim or expense
arising out of this purchase. If other equipment is needed at time of
onsite installation, Client will be responsible for purchase and
installation of said equipment.
- --------------------------------------------------------------------------------
ii
<PAGE>
14. INDEMITY: The Client agrees to indemnify and hold American Office Centers
harmless against any claim, action or demands arising out of content
disseminated by the Client's equipment, software, and/or users in any
connected to the Service, and out of American Office Centers registration
and maintenance of Client's domain name.
15. LIMITATION OF LIABILITY: Neither party shall be liable to the other for any
loss, damage, liability, claim or expense arising out of or in relation to
the Agreement, other than for payment of fees due under Sections 2, 3, 6, 7
and 8 for indemnification under Section 11, however caused, whether
grounded in contract, tort, (including negligence) or theory of strict
liability. IN NO EVENT SHALL American Office Centers BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, PUNITIVE, OR OTHER CONSEQUENTIAL DAMAGES (INCLUDiNG,
WITHOUT LIMITATION, LOST PROFITS) ARISING OUT OF OR IN RELATION TO THE
AGREEMENT. American Office Centers ENTIRE LIABILITY AND THE CUSTOMER'S
EXCLUSIVE REMEDY SHALL BE AT American Office Centers OPTION, EITHER RETURN
OF THE SERVICE FEES PAID FOR THE CURRENT MONTH OF SERVICE AND THE SETUP
FEES PAID, OR REPLACEMENT OF CONNECTION SERVICE OR PRODUCTS. In any case,
American Office Centers entire liability under or arising out of this
agreement shall be limited to the amount the Client paid for the products
and service that gave rise to the liability.
16. NO ASSIGNMENT: The Client shall not sell, transfer, or assign this
Agreement without the prior written consent of American Office Centers. Any
act in derogation of the foregoing shall be null and void, and the Client
will remain obligated under this Agreement.
17. CANCELLATION: If the Client has prepaid for services and cancels before the
one year term is up, Client will be prorated at $95.00 a month for months
used.
/s/ ?????? 5/19/99
- ------------------------------- --------------------
Subscriber's Signature Date
SeaHab
- -----------------------------------------------------------------
DBA (Doing Business As) American Office Centers
800 S. PCH #254
- -----------------------------------------------------------------
Address
Redondo Beach, CA 91277
- -----------------------------------------------------------------
City, State, Zip
310 316 0663
- --------------------
Phone Number
- --------------------------------------------------------------------------------
iv
<PAGE>
- ----------------------------
SCHIFFMAN
- ----------------------------
HUGHES
- ----------------------------
BROWN
- ----------------------------
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
ACCOUNTANT'S CONSENT
To the Stockholders and Board of Directors of SeaHab, Inc.
We consent to the use of our Independent Auditor's Report dated November
30, 1999 and accompanying financial statements of SeaHab, Inc. (a
development stage company) for the year ended December 31, 1998 and for
the period from June 17, 1996 (Inception) to December 31, 1998. This
Report will be included in the Form SB-2 which is to be filed with the
Securities and Exchange Commission for SeaHab, Inc.
/s/ SCHIFFMAN HUGHES BROWN
SCHIFFMAN HUGHES BROWN
Certified Public Accountants
Blue Bell, Pennsylvania
December 17, 1999
- --------------------------------------------------------------------------------
790 Penllyn Pike, Suite 302, Blue Bell, Pennsylvania 19422
(215) 646-2000 * Fax (215) 646-1937
[email protected] * www.shbcpa.com
<PAGE>
Miles Garnett
Attorney at Law
66 Wayne Avenue
Atlantic Beach, N.Y. 11509-1537
Tel. (516) 371-4598
---------------------------
December 15, 1999
Ave. A Corporation
609 Deep Valley Drive; Suite 200
Palos Verdes, CA 90274
Attention: Board of Directors
Dear Persons,
This letter is in connection with the public offering of up to
five million six hundred fifty thousand shares, par value $.001 per share of
Ave. A Corporation a Delaware corporation (the "Company"), under its Form SB-2
Registration Statement under the Securities Act of 1933 (the "Registration
Statement"). Pursuant to such Registration Statement the Company proposes to
sell 5,650,000 shares.
I have examined such corporate records, certificates and other
documents as I have considered necessary and proper for the purpose of this
opinion. In such examination, I have assumed the genuiness of all signatures,
the authenticity of all documents submitted to me as originals, the conformity
to the original documents submitted to me as copies and the authenticity of the
originals of such latter documents. As to any facts material to my opinion, I
have, when relevant facts were not independently established, relied upon the
aforesaid record, certificates and documents.
Based on the foregoing, it is my opinion that when (i) the
Registration Statement shall have become effective under the Securities Act of
1933, as amended, (ii) the Certificates for the Company's Shares of the Common
Stock have been duly executed, countersigned, registered and delivered and the
consideration therefor paid to the Company, then the Stock shall be validly
issued, fully paid and non-assessable.
<PAGE>
Ave. A Corporation
December 15, 1999
Page 2
I hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
and to the statement made in reference to me under the caption "Legal Matters"
and this opinion in the prospectus constituting a part of the Registration
Statement.
Very truly yours,
/s/ Miles Garnett
Miles Garnett
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
Fiscal Year End .......................................... December 31, 1999
Period Start ............................................. January 1, 1999
Period End ............................................... September 30, 1999
Cash ..................................................... 6,240
Securities ............................................... 0
Receivables .............................................. 0
Allowances ............................................... 0
Inventory ................................................ 0
Current Assets ........................................... 6,240
PP&E ..................................................... 0
Depreciation ............................................. 0
Total Assets ............................................. 6,240
Current Liabilities ...................................... 0
Preferred Mandatory ...................................... 0
Preferred ................................................ 0
Common ................................................... 2,614
Other--SE ................................................ 3,626
Total Liability and Equity ............................... 6,240
Sales .................................................... 0
Total Revenues ........................................... 0
CGS ...................................................... 0
Total Costs .............................................. 0
Other Expenses ........................................... (105,060)
Loss Provision ........................................... 0
Interest Expense ......................................... 0
Income--Pretax ........................................... (105,060)
Income--Tax .............................................. 0
Income--Continuing ....................................... 0
Discontinued ............................................. 0
Extraordinary ............................................ 0
Changes .................................................. 0
Net--Income .............................................. (105,060)
EPS--Primary ............................................. (.10)
EPS--Diluted ............................................. 0
<PAGE>
ITEM 28. Undertakings
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement
To include any prospectus required by section I O(a)(3) of
the Securities Act of 1933;
To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment) which,
individually or in the aggregate, represent a fundamental
change in the information in the registration statement;
To include any material information with respect to the plan
of distribution not previously disclosed in the
registration statement or any material change to the
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to
file with the Securities and Exchange Commission any supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred to that section.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to our certificate of incorporation or
provisions of Delaware law, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission the indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
If a claim for indemnification against liabilities (other than the payment by
the Registrant) of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding is asserted by a director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether the
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of the issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, in the City of Palos
Verdes, State of California, on December __, 1999.
(Registrant) AVE. A CORPORATION
By /s/ Neil B. Brodsky
-------------------------------------
Neil B. Brodsky, President and
Chairman of the Board of Directors
In accordance with the Securities Act of 1933 this registration
was signed by the following persons in the capacities and on the dates
indicated.
(Signature) /s/ George M. Winters III
------------------------------------------
George M. Winters III
Secretary, Director
(Date)
------------------------------------------
(Signature) /s/ Richard Rever
------------------------------------------
Richard Rever
Vice President Marketing & Sales,
COO, Director
(Date)
------------------------------------------
(Signature) /s/ Rose Rever
------------------------------------------
Rose Rever
Vice President Administration
(Date)
------------------------------------------
(Signature) /s/ Dr. David Frelinger
------------------------------------------
Dr. David Frelinger
Vice President Medical Operations
(Date)
------------------------------------------
Who must sign: the small business issuer, its principal executive
officer or officers, its principal financial officer, its controller
and principal accounting officer and at least the majority of directors
or persons perfoming similar functions.
<PAGE>
================================================================================
No dealer, salesperson or any other person is authorized to give any information
or to make any representations in connection with this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by us. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
by this Prospectus, or an offer to sell or solicitation of an offer to buy any
securities by anyone in any jurisdiction in which such offer or solicitation is
not authorized or is unlawful. The delivery of this Prospectus shall not, under
any circumstances, create any implication that the information herein is correct
as of any time subsequent to the date of the Prospectus.
Until August 31, 2000 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
TABLE OF CONTENTS
Summary ................................................................... 5
Our Company ............................................................... 5
Business .................................................................. 5
The Offering .............................................................. 5
Risk Factors .............................................................. 7
Management Discussion of Analysis of Condition
and Results of Operations ................................................. 9
Year 2000 Readiness Disclosure ............................................ 10
Use of Proceeds ........................................................... 12
Dilution .................................................................. 13
Business .................................................................. 14
Principal Shareholders .................................................... 17
Management ................................................................ 18
Certain Transactions ...................................................... 22
Description of Securities ................................................. 22
Shares Eligible for Future Sale ........................................... 23
Available Information ..................................................... 24
Dividend Policy ........................................................... 25
Stock Transfer Agent ...................................................... 25
Experts ................................................................... 25
Legal Matters ............................................................. 25
Index to Financial Statements ............................................. F-1
================================================================================
================================================================================
Ave. A Corporation
5,650,000
SHARES COMMON STOCK
(par value $.001 per share)
[Logo Goes Here]
Ave. A Corporation
609 Deep Valley Drive
Palos Verdes, CA 90274
_______________, 1999
================================================================================
