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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
Amendment #3
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
QUESTEC.COM, INC.
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(Name of Small Business Issuer in Its Charter)
Wyoming 11-3445299
------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
160B West Industry Court, Deer Park, New York 11729
--------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(631) 243-1880
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(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
--------------------------------------------------------------------------------
(Title of Class)
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TABLE OF CONTENTS
Cover Page 1
Table of Contents 2
Cautionary Statement Regarding Forward-Looking Information 3
Part I 3
Description of Business 3
Description of Property 7
Directors, Executive Officers and Significant Employees 7
Remuneration of Directors and officers 11
Security Ownership of Management and certain Security Holders 11
Interest of Management and Others in Certain Transactions 11
Securities Being Offered 12
Part II 12
Market Price and Dividends on the Registrant's Common Equity and
Other Stockholder Matters 12
Legal Proceedings 15
Changes In and Disagreements with Accountants 15
Recent Sales of Unregistered Securities 15
Indemnification of Directors and Officers 15
Part F/S 16
Part III 16
Signatures 17
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained under "Description of Business", and elsewhere in
this Registration Statement on Form 10-SB, regarding matters that are not
historical facts, are "forward-looking statements". Because such forward-looking
statements include risks and uncertainties, actual results may differ materially
from those expressed in or implied by such forward-looking statements. There are
several important factors that could cause actual results to differ materially
from those anticipated by the forward-looking statements contained in such
discussions. We undertake no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date of this Registration Statement on Form 10-SB or
to reflect the occurrence of unanticipated events.
PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
Item 6. Description of Business.
QuesTec.Com, Inc. (the "Company") is a Wyoming corporation originally
incorporated on February 3, 1987 under the Company Act of British Columbia as
SZL Sportsight, Inc. The Company was involved in the sports entertainment
industry at that time as the designer and developer of a baseball pitch
analyzer, and also subsequently entered the retail computer equipment market
through a subsidiary, Eastern Microsystems. When the retail venture proved
unsuccessful, the Company dissolved Eastern Microsystems. The name of the
corporation was changed to Questec Imaging Inc. on April 29, 1996, and the
corporation was then reorganized in Wyoming on May 18, 1998. The corporate name
was changed to QuesTec.Com, Inc. on December 22, 1999.
Current Business
The Company is a technology-based information service provider, creating
computer-generated, real-time virtual replays and in-game digital analysis
content for professional sporting events covered on TV and the Internet. The
Company also provides realistic content for future development of sports video
games. The Company's patented products use a series of cameras, computers and
sophisticated military-grade technology to track moving objects (such as balls
or players) and instantly reconstruct digital 3D images which can be replayed in
real-time, viewed
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from any angle, compared and analyzed. Such products are routinely and
increasingly used during coverage of baseball, tennis and golf around the world,
while development of new products for other sports continues. The Company's
digital video content has been broadcast and used for analysis during coverage
of such high-profile sporting events as the World Series, the Major League
Baseball All-Star Game, the French Open, the ATP World Championships and World
Cup Golf. The Company continues to provide its products and services to
companies covering these three major sports throughout the year, including Fox
Sports Productions, Fox SportsNet, NBC Sports, MSG Network, CBS Sportsline,
Major League Baseball, ACTV, Williams ChoiceSeat, ZDF and ARD German National
Television, France2 and France3 French National Television, The Golf Channel and
The Sports Network.
Current Products
The Company provides turnkey solutions for real-time virtual replays of
professional sporting events. These interactive 3D replays can be used for
television, sports entertainment, video games, interactive services, display
media, league scoring, player evaluation and team training.
The Company uses cameras, computers, video equipment and proprietary technology
and software to track moving objects (balls, players, anything that moves) and
instantly, in real-time, reconstruct digital 3D images which can then be viewed
from any angle, analyzed, "replayed", compared, etc. Furthermore, each sporting
event can lead to multiple revenue streams for the Company. For example, the
Company can display the pitches in a single baseball game on FOX Sports Net, do
simultaneous real-time broadcasts to other networks worldwide, do a real-time
broadcast over the internet, and then later provide the data to the baseball
teams and also to video game producers.
The Company offers the following services:
o SuperVision. This is used in Major League Baseball ("MLB") to create
virtual replays for television and provide a behind-the-scenes analysis
tool for commentators. SuperVision tracks each pitch, then measures the
speed, path and trajectory at various intervals as it approaches the strike
zone.
o TennisProView. The TennisProView system instantly captures and displays the
exact speed, trajectory and court impact of each serve during a tennis
match. TennisProView creates a virtual replay for television and a
behind-the-scenes analysis tool for commentators, providing spray charts,
serve analysis and player comparisons. Serve patterns and analysis can be
displayed on the internet as well.
o GolfProView. This is used during television golf coverage as an "instant
preview". The GolfProView system locates the golfer's ball on the green,
then proceeds to calculate and display the optimal putt path using 3D
graphics. In addition, GolfProView displays in real-time the exact distance
to the hole, the ball's height with respect to the cup and quantifies the
break or breaks in inches.
Typical Service:
The Company provides its clients with a complete turnkey solution. All equipment
and personnel required to produce the company's unique quantified content are
supplied by the Company, which operates as a separate facilities provider and
production company during each sporting event.
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A typical facilities (equipment) setup consists of front-end data capture
system, consisting of cable infrastructure, a fixed closed circuit camera
system, a video control system and a computer network for data capture and
quantification. The visualization system includes a computer network for
quantified data retrieval and a computer workstation for real-time 3-D
rendering. The scoring system is comprised of a computer or manual timing and
scoring system. The communication system includes audio communication to clients
production, video/audio display of virtual replay and an internet link for data
transmission.
All personnel required to provide services are trained and provided by the
Company.
Plan of Operation for the Next 12 Months
The Company has actively been working on a $4,000,000 private placement
financing for the past several months. At present, the Company is negotiating
with a single New York Stock Exchange listed corporation to purchase 6,000,000
shares of the Company's common stock together with a warrant to purchase up to
4,000,000 additional shares of the Company's common stock. The purchase price
per Unit (each Unit consisting of one common share and 2/3 of one warrant to
purchase one share of common stock) is $0.666667. Management is confident that
it will secure and finalize this transaction prior to the close of the Company's
first financial quarter for the current fiscal year on September 30, 2000. The
$4,000,000 purchase price will be paid upon closing of the transaction in
exchange solely for the 6,000,000 shares and above described warrants. The
exercise price for the warrants is $0.75 per share. The warrants will expire
three years from the date of issuance. The market price of the common stock on
the date the terms were set was $0.625 per share. Upon completion of the
transaction, the purchaser would own approximately 16% of the issued and
outstanding common stock of the Company. If the warrants to be issued were
exercised in full, the purchaser would then own approximately 24.1% of the
issued and outstanding common stock of the Company. Management believes that the
substantial improvement to the financial condition of the Company as the result
of this transaction will benefit the common stockholders, who, they believe,
will not be materially adversely affected by this transaction, as there will be
no resulting increase in corporate debt nor will there be any financial
commitments which would exacerbate current cash flow difficulties. These monies
will be used to pay down all long-term and short-term debt (approximately
$700,000), hire qualified management, expand marketing and distribution, enhance
current product/service offerings, and initiate a product development center in
cooperation with Atlantic Aerospace Electronics Corporation (AAEC).
Within the next twelve months, the Company anticipates that it will complete
installation of SuperVision in all 30 Major League ballparks (18 ballparks are
presently cabled and 11 systems are in operation), establish internet baseball
production service as a standard per game feature, (to date, this has been a
special event package for All-Star Game and World Series productions), expand
TennisProView production service through contracts with major world-wide
providers of tennis coverage, establish internet tennis production service as a
standard per match feature (which the Company hopes to launch on July 31, 2000
during ISL Worldwide's coverage of ATP Tour Master Series Tennis from Toronto,
Canada), complete development and deployment of new Ski Jumping system (the
Company has worked extensively with RTL Television, Cologne, Germany to develop
a real-time tracking and 3-D virtual replay system), and complete development
and deploy a new version of GolfProView.
The Company's revenue presently is derived from a number of relatively small
projects, such as contributions to Fox Sports Network's regional baseball
broadcasts and a variety of tennis tournament broadcasts, the majority of which
originate in Europe. In 1998, a significant percentage of the Company's revenue
was realized from its contribution to the broadcast of the World Series, a
single limited event from which it derived a large fee without the corresponding
costs inherent in the broadcasting of smaller events. As a result, financial
results for 1998 were more favorable, as a lower percentage of cost per contract
was realized. More recent results present a more dependable presentation of the
Company's current financial revenue flow.
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Marketing
The Company has historically worked with labor intensive, limited production
systems for baseball and for golf. Since the company teamed up with Atlantic
Aerospace Electronics Corporation, it has been able to finalize development of
"User" friendly, reliable and robust systems which are now able to be deployed
for multiple events and productions. Before the summer of 1998, the Company's
product/service offerings were limited to three production systems with limited
capability and scope. The integration of AAEC's signal processing intelligence
with the Company's core technology and production expertise has allowed the
company to broaden its product/service offerings.
In addition to technological support, AAEC has brought organization and
operational support, which has helped the Company to develop detailed
product/service cost models. All pricing and quotes are now calculated and
assume all hardware, training, communication, support, shipping, personnel and
travel.
The advent of the internet and the convergence of digital media has created a
need for new and unique content for television networks, internet service
providers, interactive television providers, data repositories and multimedia.
Through direct marketing efforts, the Company has established, on a global
basis, relationships with the league governing bodies, major television rights
holders and internet service providers.
The Company 's marketing strategy is to maintain dominance in current markets
through technical excellence and outstanding service and to enter new markets
and then similarly dominate them, build global awareness of the Company's brand.
The Company hopes to establish itself as the branded market leader in real-time
data-and motion-capture systems for sports. The Company plans to do so by
launching a promotional campaign targeting journalists and editors who cover
sports, media, entertainment, the internet and investments, availing itself of
significant on-air exposure during sports broadcasts that use the Company's
products, which carry the Company's logo or end of production credits. In
addition, the Company shall utilize public relations by customers as they
promote their own services that utilize the Company's products (for example, Fox
will promote the fact that its baseball games feature SuperVision).
Competition
Companies that compete in the sports information market are SporTVision, Elias
Sports Bureau, Inside Edge, STATS Inc., Sports Ticker, Princeton Video and ORAD.
All companies mentioned charge competitive prices and their pricing strategies
are based on a per contract/project basis.
The Company competes with these entities in the sports production market. Each
broadcast of an athletic event has a certain budget for production enhancement
features, which the Company and its competitors offer. The Company's competitors
offer principally statistics packages from historical events, information and
analysis for utilization during broadcasts. The Company's products are real-time
measurements of live action, and the only products available which create live
content which the viewer can see and understand from an on-screen display. In a
baseball broadcast, the Company can offer a visual display of pitch sequences,
either during the on-going at bat or in comparison with prior at bats, where the
viewer can see how a pitcher is pitching a particular batter and the speed and
location of a series of pitches. The Company and its competitors vie for the
same production dollars budgeted for broadcast enhancements, as only one type of
enhancement is usually utilized per broadcast.
Current Partners
In September, 1998, the Company entered into a 7-year agreement with Atlantic
Aerospace Electronics Corporation ("AAEC"), a Titan (NYSE: TTN) company. AAEC is
a leading military software developer specializing in acquiring and tracking
multiple targets in real-time. AAEC will provide the Company with all research
and development of live-motion-capture tracking technology for future sports
related applications in exchange for a 500,000 share equity interest in the
Company and 10% of product-related gross sales. The Company has a strategic
partnership with Live Motion Company ("LMC") of Wiesbaden, Germany, whereby LMC
markets and produces the Company 's products in Europe. The Company and LMC
split costs and share profits. So far, LMC has produced the French Open, ATP
Tour World Championships and several German tournaments. LMC and LMC's customers
are extremely enthusiastic about this relationship and numerous further projects
are under discussion or already finalized.
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Silicon Graphics is a long-time sponsor of the Company which provides technology
expertise and assistance.
Research and Development
The Company is committed to the improvement of its present product line and the
development of new products to provide the opportunity for growth in an
ever-changing market as the 21st century begins. The Company , pursuant to the
terms of its agreement with AAEC, is provided with all research and development
of live-motion-capture tracking technology for future sports related
applications by AAEC, a leading military software developer specializing in
acquiring and tracking multiple targets in real-time. The Company believes that
its relationship with AAEC is imperative in maintaining its position as a
technological leader in the industry.
Employees.
The Company presently has 7 full-time and 20 part time employees from its Deer
Park, New York office.
Definition of Terms.
For purposes of presentation in the Company's financial statements, the
components of "payroll and consulting" include full-time and part-time
employees, payroll taxes and consulting fees, which fees were paid primarily to
software developers. "General and administrative" are comprised of equipment
rental, accounting costs, legal expenses, banking fees, repair and maintenance,
marketing and advertising, office supplies, travel and entertainment, telephone,
auto, public company fees, postage, shipping, rent and insurance.
Item 7. Description of Property.
The Company's executive offices are located at 160B West Industry Court, Deer
Park, New York 11729 in an approximately 4,200 square foot space. The space,
which houses all of the Company's current operations, is leased for a period
through December 31, 2001, with an option to extend the term for 2 additional
years. The annual rent under the lease agreement is $30,282 for 2000 and $31,500
for 2001.
Item 8. Directors, Executive Officers and Significant Employees.
(a)(1) Directors.
Name Age Director Since
---- --- --------------
Michael W. Russo 52 December 1996
Geoffrey Hibner 50 December 1998
Felix Marggraff 29 December 1998
Philip Albanese 57 November 1998
Paul Baim 40 December 1998
William E. Cavanaugh 66 December 1998
Derek L. Donaldson 56 November 1990
Barbara Rene Stewart 47 October 1997
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(a)(2) Persons nominated to become directors.
None
(a)(3) Executive officers.
Michael W. Russo, 52, President.
Deirdre Gallagher, 36, Secretary.
(a)(4) Persons Chosen to Become Executive Officers.
None.
(a)(5) Significant employees.
Deirdre Gallagher, 36, Executive Assistant
Edward Plumacher, 40, Marketing Manager
Chris Malone, 36, New Media Manager
Dan Beard, 30, Production Manager
Ron Klimkowski, 57, Sports Marketing
(b) Family Relationships.
None.
(c) Business Experience.
Michael W. Russo, President and Director of the Company, has been employed by
the Company for the preceding five years. Mr. Russo joined the Company in
January 1995 as the Vice President of Investor Relations, a post which he held
until December 1997, when he became President of the Company.
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Deirdre Gallagher is the Secretary of the Corporation, having been appointed to
the position in December 1999. Prior to her appointment, she served as an
Executive Assistant at the Company from January 1998, which position she
continues to hold. She served as an Administrative Assistant at the Company from
January 1994 through December 1997.
Paul W. Baim is a Director of the Company, having been elected to the position
in December 1998. For the past five years, Mr. Baim has been the Director for
Software Engineering at Atlantic Aerospace Electronics Corporation in Waltham,
MA, which is now a subsidiary of Titan Corporation (NYSE:TTN). His business
responsibilities include directing engineering research and development, system
architecture, program management, technology assessment and business
development.
William E. Cavanaugh, a Director of the Company since December 1998, is a
retired business executive. Prior to his retirement in 1996, he was the Chief
Operating Officer of the Company for two years.
Philip Albanese has been a Director of the Company since 1998. He has been the
President of National Equipment Rental Program, Inc. since 1991.
Geoffrey J. Hibner, a Director of the Company since December 1998, is the Senior
Vice President - Finance and Administration and Chief Financial officer of The
Timberland Company, which is a wholesaler of footwear, apparel and licensed
products. Mr. Hibner has held this position since May 1997. From August 1995
through May 1997, he was the Chief Financial Officer of Frontier Technologies
Corporation, and served as the Vice President - Finance for Universal Foods
Corporation from July 1988 through January 1995.
Derek L. Donaldson has been a Director of the Company since November 1990. Mr.
Donaldson has also served as Secretary of the Company. He is an attorney in
Kamloops, British Columbia, Canada, and is the sole shareholder and director of
Derek Donaldson Law Corp.
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Barbara Rene Stewart, a Director of the Company since October 1997, is a legal
secretary and assistant with Derek Donaldson Law Corp., where she has been
employed for 17 years.
Felix Marggraff, a Director of the Company for the last year, is a principal of
Live Motion Company in Wiesbaden, Germany.
Edward Plumacher, the Company's Marketing Manager, has been employed by the
Company since 1991. Mr. Plumacher oversees the Company's technical operations on
a daily basis, and is responsible for the marketing of existing and new
products, as well as the set up and coordination of new product installations.
Chris Malone, The New Media Manager of the Company since January 1999,
coordinates development of new products and the research into new applications
for the Company's products. Prior to holding this position at the Company, Mr.
Malone was head of production services since December 1996 when he joined the
Company. From November 1993 through December 1996, Mr. Malone was General
Manager of Eastern Micro Systems, a small retail computer store.
Dan Beard, as Production manager for the Company, is responsible for setting up
and operating video productions for sporting events, including the coordination
of required equipment. Mr. Beard has been employed by the Company since June,
1998. He previously was an independent technical director from June, 1997
through June, 1998, and prior to that time served as a TV Director for
Cablevision from 1995 through June, 1997.
Ron Klimkowski, in his position as Sports Marketing Director, communicates with
sports teams in order to arrange the coordination of installation of the
Company's products at stadiums and training facilities, as well as the
scheduling of production at sporting events. Mr. Klimkowski, a former major
league pitcher with the New York Yankees, has been employed by the Company since
January, 1996, and prior to that time worked as a financial consultant at Paine
Webber for 3 years.
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(d) Involvement in Certain Legal Proceedings.
None.
Item 9. Remuneration of Directors and Officers.
Name of Individual or Capacities In Which Aggregate
Identity Of Group Remuneration Was Received Remuneration
----------------- ------------------------- ------------
Michael W. Russo President $65,000.00
Deirdre Gallagher Secretary $35,000.00
Directors (8 as a group) Director $0 (each Director receives
a minimum of 50,000
options per year)
Item 10. Security Ownership of Management and Certain Security Holders.
Title Name and Amount Owned Percent
Of Address of Before the of
Class Owner Offering Class
----- ----- -------- -----
Common Michael W. Russo
Stock W. Islip, NY 11795
Common Deirdre Gallagher 86,433 .29%
Stock Huntington, NY
Common Ed Plumacher 5,470,333 18.48%
Stock W. Islip, NY 11795
Common All Officers and Directors 1,788,136 6.04%
Stock as a Group (9 as a group)
Directors of the Company receive a minimum of 50,000 options to purchase Common
Stock of the Company, the final amount being determined by the Board of
Directors as a whole based upon proportional worked performed on behalf of the
Company. The issuance of such options is then submitted to the shareholders of
the Company for approval.
Options Outstanding
Name of Amount of Common Stock Exercise
Holder Called for by Options Price
Michael W. Russo 225,000 $0.27
Deirdre Gallagher 100,000 $0.38
All Officers and
Directors as a Group
(9 Persons) 1,445,000 $0.35 (weighted average)
All options are currently exercisable.
Item 11. Interest of Management and Others in Certain Transactions.
Pursuant to the terms of the agreements dated September 9, 1998 between AAEC and
the Company, the parties have established a strategic alliance. AAEC received
options to purchase up to 500,000 shares of the Company's common stock as the
result of such agreements, and will be paid a royalty on gross sales of services
or products developed as a result of this alliance. Such payments are made after
confirmation of receipt of payments in connection with such services or
products. In exchange, AAEC provides all research and development in connection
with the Company's services and products. Paul Baim, a director of the Company,
is also the Director for Software Engineering at AAEC and, as a director of the
Company, is to receive at least 50,000 options to purchase shares of the Company
per annum as compensation for his service in such
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capacity. In the fiscal year ended June 30, 1999, Mr. Baim received 200,000
options, 75,000 at $0.21 and 125,000 at $0.62. In the current fiscal year, Mr.
Baim has received 300,000 options at $0.38. Mr. Baim has no personal interest in
connection with the agreements between AAEC and the Company.
Pursuant to the terms of the agreements dated June 9, 1998 between LMC and the
Company, the parties have established a strategic alliance. In exchange for a
fee, LMC received exclusive right to use the Company's tennis product in Europe.
In addition, the Company is compensated by LMC at the end of a tennis tournament
where LMC utilizes the Company's tennis product and the Company pays LMC at the
same time for the Company's use of LMC's employees and/or video production
equipment, if the Company so utilizes the people and equipment. Felix Marggraff,
a director of the Company, is also a principal of LMC and, as a director of the
Company, is to receive at least 50,000 options to purchase shares of the Company
per annum as compensation for his service in such capacity. For the fiscal year
ended June 30, 1999, Mr. Marggraff received 125,000 options exercisable at
$0.21. As a principal of LMC, Mr. Marggraff has a personal interest in
connection with the agreements between LMC and the Company.
Item 12. Securities Being Offered.
No sale of securities is authorized by this filing. The common stock of the
Company is being registered under Section 12(g) of the Securities Exchange Act
of 1934. The Company has 80,000,000 common shares authorized. Each share of
Common Stock is entitled to share pro rata in dividends and distributions with
respect to the Common Stock when, as and if declared by the Board of Directors
from funds legally available for any of the Company's securities. Upon
dissolution, liquidation or winding up of the Company, the assets will be
divided pro rata on a share-for-share basis among holders of the shares of
Common Stock after-any required distribution to the holders of the preferred
Stock, who would be entitled to preference and first distribution in such event.
All shares of Common Stock outstanding are fully paid and non-assessable and the
shares will, when issued upon payment therefore as contemplated hereby, be fully
paid and non-assessable. Each holder of Common Stock is entitled to one vote per
share with respect to all matters that are required by law to be submitted to
shareholders.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Stockholder Matters
Price Range of Common Stock & Dividends
The Company's Common Stock, which is presently traded in the
over-the-counter market, is traded on the Pink Sheets under the symbol "QSTI".
The following table shows the per share range of prices of the Company's Common
Stock for the most recent two-year period.
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Quarter-Ended
Year Mar 31 June 30 Sept 30 Dec 31
---- ------ ------- ------- ------
2000 High $1.20
Low $0.38
1999 High $0.78 $0.98 $0.72 $1.02
Low $0.37 $0.48 $0.43 $0.31
1998 High $0.56 $0.51 $0.37 $0.64
Low $0.17 $0.22 $0.18 $0.15
Approximate Number of Equity Security Holders
At May 31, 2000, the approximate number of holders of record of the
Company's Common Stock was 2,500.
Dividends
The Company has never paid dividends. At present, the Company does not
anticipate paying any dividends on its Common Stock in the foreseeable future
and intends to devote any earnings to the development of the Company's business.
PENNY STOCK
Until the Company's shares qualify for inclusion in the NASDAQ system,
the trading of the Company's securities, if any, will be in the over-the-counter
markets which are commonly referred to as the "pink sheets" or on the OTC
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission adopted Rule
15g-9, which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has suffi-
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cient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks. The broker or dealer must also
deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public
offering and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have 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 National Association of
Securities Dealers, Inc. (the "NASD"), which administers NASDAQ, has recently
made changes in the criteria for continued NASDAQ eligibility. In order to
continue to be included on NASDAQ, a company must maintain $2,000,000 in net
tangible assets or $35,000,000 in market capitalization or $500,000 net income
in latest fiscal year or 2 or last 3 fiscal years, a $1,000,000 market value of
its publicly-traded securities and 500,000 shares in public float. In addition,
continued inclusion requires two market-makers and a minimum bid price of $1.00
per share. There can be no assurances that the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the over-the-counter market. As a result, a shareholder may find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
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Item 2. Legal Proceedings.
The Company has recently concluded a legal proceeding in which it was the
defendant in an action commenced in May 1997 in the Circuit Court of the
Fifteenth Judicial Circuit in and for Palm Beach County, Florida by a former
employee, Charles F. Mehler. Mr. Mehler claimed damages of approximately
$161,000 for breach of employment agreement, non-payment of wages, including
damages therefrom, unreimbursed employment related expenses, and loans made to
the Company. The Company denied the allegations and filed a counterclaim against
Mr. Mehler alleging receipt of funds to which he was not entitled. At the
conclusion of the case, Mr. Mehler was required to repay funds to the Company.
Item 3. Changes In and Disagreements with Accountants
Not applicable.
Item 4. Recent Sales of Unregistered Securities
On October 1, 1997, the Company commenced an offering through Alexander Wescott
& Co., Inc., pursuant to Regulation D of the Securities Act of 1933 (the "Act"),
Rule 504, of up to 5,000,000 shares of its common stock at a price of $0.21 per
share, which price was later reduced to $0.14 per share. On November 16, 1998,
this offering was completed with 5,364,756 shares being sold and issued for a
total of $834,399 being received by the Company. Common stock was sold to a
total of 40 accredited investors. The proceeds from this offering were used for
working capital, legal and accounting fees, consulting fees and office
equipment.
In addition, on October 23, 1998, the Company sold shares of its Common Stock at
$0.15 per share, subject to Rule 144, to the following individuals for the
following reasons:
Recipient Number of Shares Reason for Sale
--------- ---------------- ---------------
Michael W. Russo 300,000 For prior salary owed
Chris Malone 300,000 For prior salary owed
Edward Plumacher 4,333,333 For prior salary owed
Dan Beard 100,000 For prior salary owed
Derek Donaldson 476,666 For accrued legal fees
William Cavanaugh 300,000 For prior salary owed
Item 5. Indemnification of Directors and Officers
The Company shall indemnify to the fullest extent permitted by, and in the
manner permissible under the laws of the State of Wyoming, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he is or was
a director or officer of the Company, or served any other enterprise as
director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company. INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE
COMPANY FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE
UNENFORCEABLE.
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PART F/S
All financial statements are incorporated herein from the Company's Amendment #2
to Form SB/A filed with the Commission on July 27, 2000.
PART III
Exhibits
Index to Exhibits
2. Charter and By-Laws*
6. Material Contracts*
6a. Agreements with Atlantic Aerospace Electronics Corporation dated
September 9, 1998*
6b. Agreement with Live Motion Company dated June 9, 1999*
15. Private Placement Memorandum dated October 1, 1997*
* Incorporated by reference from Form 10-SB filed on March 2, 2000
Item 2. Description of Exhibits
As listed in the above Index, the appropriate exhibits are either being filed or
have previously been filed and are incorporated herein by reference. The
additional exhibits are marked and filed. The issuer is not a Canadian issuer
and is not filing a written consent and power of attorney.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
as amended, the Registrant caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
QUESTEC.COM,INC.
August 3, 2000 By: /s/ Michael W. Russo
-----------------------------
Michael W. Russo,
President
August 3, 2000 /s/ Deirdre Gallagher
-----------------------------
Deirdre Gallagher,
Secretary
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