UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMMUNICATE NOW.COM, INC.
DELAWARE
(State or jurisdiction of incorporation or organization)
731900
(Primary Std. Industrial Classification Code Number)
74-2945581
(IRS Employer ID Number)
2015 Bird Creek Terrace, Suite 101/102
P.O. Box 2309
Temple, TX 76502
254-771-0999
(Address and telephone number of principal executive offices)
ATTN: David Hancock
2015 Bird Creek Terrace, Suite 101/102
P.O. Box 2309
Temple, TX 76502
254-771-0999 or 254-718-1956
(Address of principal place of business or intended principal place of business)
The Company Corporation
1013 Centre Road
Wilmington, DE 19805
(302) 636-5440 or 800-315-9420 (ext. 3214)
(Name, address and telephone number of agent for service)
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3,488,820 SHARES ARE BEING OFFERED BY SELLING SECURITY HOLDERS
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration 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 of 1933, check the following box and list the
Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE (1)(2)(3)
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Title of Each Class of Amount Being Proposed Maximum Proposed Maximum Amount of Registration
Securities to be Registered Offered Offering Price per Aggregate Offering Fee
Share (1) (2) Price (1) (2)
Common 3,488,820 .0078 $27,202.80 $ 7.57
Total Registration Fee:
(1) Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457.
(2) Selling shareholders hold all of the shares, which we are registering. These
shares will be sold at prevailing market prices. We will not receive proceeds
from the sale of shares from the selling shareholders.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we 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 this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
The information in this prospectus is not complete and may be changed. Our
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 22, 2000
Communicate Now.com, Inc.
3,488,820 shares of Common Stock
Our current shareholders are offering 3,488,820 shares of our common stock.
Our common stock is not now listed on any national securities exchange or
the NASDAQ stock market.
The selling security holders may offer their shares at any price. We will
pay all expenses of registering the securities.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed. Our
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to sell these securities in any state where the offer or sale is not
permitted.
The date of this preliminary prospectus is December 22, 2000.
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Offering Information
TOTAL PER SHARE
------------- ---------------
Estimated offering expenses (1) $0.00 $0.00
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to sell these
securities in any state where the offer or sale is not permitted.
The date of this preliminary prospectus is December 22, 2000
TABLE OF CONTENTS
Page
PART I - INFORMATION REQUIRED IN PROSPECTUS
ITEM 1. Front of Registration Statement and Outside Front Cover of Prospectus.... 1
ITEM 2. Inside Front and Outside Back Cover Pages of Prospectus.................. 2
ITEM 3. Summary Information...................................................... 7
o Our Poor Financial Condition Raises Substantial Doubt About
Our Ability To Continue As A Going Concern; You Will Be
Unable To Determine Whether We Will Ever Become Profitable................. 8
o Because We Are A Development Stage Company With A Limited
Operating History, You Will Be Unable To Evaluate Our Business............. 8
o Our Business Is Dependent Upon Obtaining And Retaining Advertising
Customers; If We Fail To Obtain A Substantial Number Of Advertising
Customers Our Revenues And Operations Will Be Negatively Impacted.......... 9
o We Will Rely Upon Third Parties For The Technological Components
Of Our Business; Any Failures On The Part Of Our Third Party Providers
May Negatively Impact Our Operations....................................... 9
o We Have Only Two Possible Revenue Sources Regarding Our Internet
Display Advertising Business; If These Sources Are Inadequate, Our
Operations And Financial Condition Will Be Negatively Impacted............. 9
o We Have No Insurance To Cover Risk Of Loss From Theft Or Damage To
Personal Computers And Digital Cameras That We Provide To Our Sales
Force; If Any Such Events Occur We May Incur Losses That Negatively
Impact Our Financial Condition............................................ 9
o We Devote Substantial Resources To Our Business Information Database
From Which We Receive No Direct Revenues; If Our Costs Related To The
Information Database Exceed Our Revenue Sources, Our Financial Condition
Will Be Negatively Impacted.............................................. 9
o Our Agreements With Acxiom Corporation And Interliant May Be Terminated
By Either Party At Any Time; If We Fail To Find Companies To Replace These
Companies Services, Our Operations Will Be Negatively Impacte............. 10
o Our Sales Force Will Be Compensated Solely On A Commission Basis; If We
Are Unable To Retain Sales Personnel And/Or Hire Replacement Sales Persons
On A Timely Basis, Our Advertising Revenues Will Be Negatively Impacted... 10
o Because We Have No Managerial, Marketing Or Technical Expertise
In Internet-Related Operations, We Will Require Substantial Assistance
From Third Parties........................................................ 10
o Because We Are Vulnerable To Security Breaches, Glitches And Other
Computer Failures Our Business Could Be Adversely Affected................ 10
o Because Our Capital Requirments May Vary Substantially We May Need
To Obtain Additional Capital. If We Fail To Obtain Additional Capital
When Required, We May Be Unable To Implement Our Business Plan............ 10
o Because We May Be Unable To Attract And Retain Qualified Personnel,
Our Business, Financial Condition And Operating Results Could Be
Adversely Affected........................................................ 11
o We May Not Be Able To Obtain A Trademark For Communicate Now.Com
And/Or Bizfinders.Com. In Which Case Our Brand Name Recognition May Be
Negatively Impacted....................................................... 11
o Any Reduction In Our Sales Force Could Negatively Impact Our Operations... 11
o Because We Face Intense Competition, We May Be Unable To Successfully
Market Our Business....................................................... 11
o Because Our Principal Stockholders Retain Control Over A Majority Of
The Issued And Outstanding Shares, You Will Be Severely Limited In
Your Ability To Affect Change In How We Do Business....................... 12
o Because Conflicts Of Interest Exist Among Our Directors, You Should
Exercise Caution Before Your Purchase..................................... 12
o Because We Have Never Paid Dividends, You Should Exercise Caution
Before Making An Investment In Our Company................................ 12
ITEM 4. Use of Proceeds......................................................... 13
ITEM 5. Determination of Offering Price......................................... 13
ITEM 6. Dilution................................................................ 13
ITEM 7. Selling Security Holders................................................ 13
ITEM 8. Plan of Distribution.................................................... 15
ITEM 9. Legal Proceedings....................................................... 16
ITEM 10. Directors, Executive Officers, Promoters and Control Persons............ 16
ITEM 11. Security Ownership of Certain Beneficial Owners......................... 17
ITEM 12. Description of Securities............................................... 18
ITEM 13. Interest of Named Experts and Counsel................................... 19
ITEM 14. Disclosure of Commission Position on Indemnification.................... 19
ITEM 15. Organization Within Last Five Years..................................... 20
ITEM 16. Description of Business................................................. 20
ITEM 17. Management's Discussion and Analysis or Plan of Operation............... 24
ITEM 18. Description of Property................................................. 26
ITEM 19. Certain Relationships and Related Transactions.......................... 27
ITEM 20. Market for Common Equity and Related Stockholder Matters................ 27
ITEM 21. Executive Compensation.................................................. 28
ITEM 22. Financial Statements.................................................... 29
ITEM 23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.................................. x
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers............................... x
ITEM 25. Other Expenses of Issuance and Distribution............................. x
ITEM 26. Recent Sales of Unregistered Securities................................. x
ITEM 27. Exhibits................................................................ x
ITEM 28. Undertakings............................................................ x
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future business operations
that involve risks and uncertainties. Our actual results could differ
significantly from our anticipated future operations, as a result of many
factors, including those identified in the "Risk Factors" beginning on page 8.
The prospectus summary is limited to highlighting the most significant aspects
of the offering. You should carefully read all information in the prospectus,
including the financial statements and their explanatory notes, prior to making
an investment decision.
OUR COMPANY:
We were incorporated in the State of Delaware on January 31, 2000 to engage
in an Internet based advertising business. We are a development stage company.
Our principal executive offices are located at 2015 Bird Creek Terrace, Suites
101 and 102, Temple, TX 76502. Our telephone number is 254-771-0999. We are
authorized to issue 100,000,000 shares of common stock of which 22,998,820
shares are issued and outstanding. We are not currently authorized to issue
preferred stock.
OUR BUSINESS:
We have had limited operations, no revenues and we have sustained losses
since our inception. We have developed a website at www.bizfinders.com that
began operations on November 1, 2000. This website contains a business
information database consisting of names, addresses and phone numbers of
approximately 11 million U.S. businesses through which visitors to our website
may use a search engine to locate businesses. Searches may be made under subject
category, city, state, actual name of business and zip code. We obtained the
license to use this business database from Acxiom Corporation. We will obtain no
revenue from the searches of our database; instead our revenue will be derived
from Internet display advertisements that appear on our website, which are
developed through real time face to face interaction with our advertising
customers. Our services do not involve the development or design of websites on
behalf of our customers. Our current business plans are to develop and expand
our Internet advertising business. In March 2000, we began limited operations
consisting of our sales personnel conducting personal visits to small businesses
to demonstrate our Internet display advertisements. Our marketing plans are to
expand the promotion of our Internet display advertisements throughout major
metropolitan areas in the State of Texas by using our sales force and billboard
advertising to attempt to promote the advantages of our advertisements. There
are no assurances that we will have sufficient funds to develop our business
plans, including hiring sales personnel and purchasing equipment for our sales
personnel.
THE OFFERING:
As of the date of this prospectus, we had 22,998,820 shares of common stock
outstanding and no shares of preferred stock outstanding. This offering is
comprised entirely of shares of our common stock held by our selling security
holders.
Although we have agreed to pay all offering expenses, we will not receive
any proceeds from the sale by the selling security holders of their securities.
We anticipate offering expenses of approximately $50,000. Because we have now no
revenue sources, we may borrow funds from our management or others to pay the
offering expenses.
OUR FINANCIAL SUMMARY:
Because this is only a financial summary, it does not contain all the
financial information that may be important to you. Therefore, you should also
carefully read all the information in this prospectus, including the financial
statements and their explanatory notes before making an investment decision.
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STATEMENT OF OPERATIONS PERIOD FROM INCEPTION
TO OCTOBER 31, 2000.
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Net Sales $0.00
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Cost of Sales N/A
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Gross Profit $0.00
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Operating Expenses $631,961
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Loss from Operations $631,961
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Other Expenses, Net $1,845
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Net Loss $633,806
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Net Loss per Common Share $0.03
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BALANCE SHEET PERIOD FROM INCEPTION
TO OCTOBER 31, 2000.
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ASSETS
------------------------------------------------------------------------------
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Total Current Assets $21,098
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Other Assets $200,000
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Total Assets $338,627
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LIABILITIES & STOCKHOLDER'S EQUITY
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Current Liabilities:
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Accounts Payable & Accrued Liabilities $14,214
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Note Payable - Current Portion $6,410
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Note Payable to Stockholder $30,000
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Note Payable to Bank $42,000
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Commitment to issue common stock for
services $ 71,740
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Total Current Liabilities $164,274
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Long Term Liabilities:
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Note Payable - Net of Current Portion $11,339
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Total Liabilities $175,613
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Total Stockholder's Equity $163,014
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Total Liabilities and Stockholder Equity $338,627
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED IN THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. WE CANNOT ASSURE PROSPECTIVE INVESTORS THAT WE
WILL CONTINUE OPERATIONS, GENERATE REVENUES OR MAKE A PROFIT IN THE FUTURE.
OUR POOR FINANCIAL CONDITION RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN; YOU WILL BE UNABLE TO DETERMINE WHETHER WE WILL
EVER BECOME PROFITABLE.
We are a development stage company with no revenues. From our inception to
October 31, 2000, we incurred operating losses of $633,806 and had a working
capital deficiency of $143,176. As such, there is substantial doubt about our
ability to continue as a going concern. We anticipate that we will experience
continued losses, even if we obtain funding through various financing means. Our
poor financial condition could adversely affect our ability to hire employees,
develop our website or purchase equipment and inventory. Because we are
currently operating at a substantial loss, with a limited operating history and
no reliable revenue source, an investor cannot determine if we will ever become
profitable.
BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY,
YOU WILL BE UNABLE TO EVALUATE OUR BUSINESS.
Our business has consisted only of our development of a business database
website. You must consider the risks and difficulties frequently encountered by
development stage companies in the Internet business, which have little or no
operating history, including whether we will be able to overcome the following
challenges:
o Whether we can establish a presence on the Internet or develop a customer
base;
o Our ability to adequately train our sales force in how to sell and construct
our Internet display advertisements;
o Inordinate development expenses;
o Dependence on our Internet display advertising business and consumer search
services that have only had limited market acceptance;
o Whether we are able to compete effectively against already established
Internet websites offering the same type of business database search
services;
o Our ability to generate sufficient revenues to offset substantial costs of
implementing a sales force, developing customer support and administrative
infrastructure, and enhancing technologies pertaining to our website and
operations; and
o Our ability to attract and retain customers despite traditionally high
attrition rates among Internet-related start-ups.
Because significant up front advertising, sales, and other expenses are
required to develop and expand our Internet display advertisements, we
anticipate that we may incur losses until revenues are sufficient to cover our
operating costs. Future losses are likely before our operations become
profitable. As a result of our limited operating history, you will have no basis
upon which to accurately forecast our:
o Total Revenues;
o Gross and operating margins; and
o Labor costs
Accordingly, you have no basis upon which to judge our ability to develop
our business and you will be unable to forecast our future growth.
OUR BUSINESS IS DEPENDENT UPON OBTAINING AND RETAINING ADVERTISING CUSTOMERS;
IF WE FAIL TO OBTAIN A SUBSTANTIAL NUMBER OF ADVERTISING CUSTOMERS OUR REVENUES
AND OPERATIONS WILL BE NEGATIVELY IMPACTED.
Our ability to expand our business is dependent upon the number of
advertisers that advertise on our website. To date, we have only attracted a
limited number of advertisers to our website. The use of the Internet as an
advertising medium is a relatively new form of advertising that has only
achieved limited market acceptance. Many advertisers have limited experience on
the Internet and are reluctant to use Internet advertising. Accordingly, our
advertising services may not gain market acceptance. Even if we to obtain a
sales force to generate customers, their are no assurances that we will be
successful in generating advertising revenues from our use of such a sales
force. If we are unsuccessful in making advertising sales, our operations and
financial condition will be negatively impacted.
WE WILL RELY UPON THIRD PARTIES FOR THE TECHNOLOGICAL COMPONENTS OF OUR
BUSINESS; ANY FAILURES ON THE PART OF OUR THIRD PARTY PROVIDERS MAY NEGATIVELY
IMPACT OUR OPERATIONS.
We will rely on third parties to maintain, house and operate our Internet
servers. Although our agreements with these third parties include service
agreements in the event of any failures, there is no assurance that the third
parties will comply with the terms of the service agreements. Any service
interruptions resulting from failures by third party maintenance providers would
have a negative impact on our business.
In addition, we will rely upon third parties to process our billings and
payments due to us. Any service interruptions by these third party providers due
to computer failures, labor problems, credit card fraud, or other unforeseen
developments, could cause accounting errors or possible cash flow disruptions.
We also are reliant upon third party providers to write and improve our
software per our specifications. These third parties may be unable to keep pace
with new technology that may be implemented into our software and keep pace with
the rapidly changing Internet arena.
Any such failures on the part of our third party providers could negatively
impact our operations and financial condition.
WE HAVE ONLY TWO METHODS OF GENGERATING REVENUES FROM OUR INTERNET DISPLAY
ADVERTISING BUSINESS; IF THESE METHODS ARE INADEQUATE, OUR OPERATIONS AND
FINANCIAL CONDITION WILL BE NEGATIVELY IMPACTED.
We now have only two methods by which consumers may be potentially
attracted to our Internet display advertising services: billboard advertising
and our sales persons visiting prospective advertising customers at their place
of business. There are no assurances that our billboard advertising or personal
sales visits will be effective means by which to attract customers to our
form of advertising. If these means of attracting advertising revenue are
inadequate, our operations and financial condition will be negatively impacted.
WE HAVE NO INSURANCE TO COVER RISK OF LOSS FROM THEFT OR DAMAGE TO PERSONAL
COMPUTERS AND DIGITAL CAMERAS THAT WE WILL PROVIDE TO OUR SALES FORCE; IF ANY
SUCH EVENTS OCCUR WE MAY INCUR LOSSES THAT NEGATIVELY IMPACT OUR FINANCIAL
CONDITION.
We will be providing our salespersons with personal computers to construct
the Internet advertisements and digital cameras to take pictures of businesses
that will be incorporated into the advertisements. We may experience loss from
theft or damage to this equipment; however, we have no insurance coverage to
cover any such risk of loss. Accordingly, any losses from theft or damage to
this equipment may negatively impact our financial condition.
WE DEVOTE SUBSTANTIAL RESOURCES TO OUR BUSINESS INFORMATION DATABASE FROM
WHICH WE RECEIVE NO DIRECT REVENUES; IF OUR COSTS RELATED TO THE INFORMATION
DATABASE EXCEED OUR REVENUE SOURCES, OUR FINANCIAL CONDITION WILL BE NEGATIVELY
IMPACTED.
We pay Axciom Company a fee for the right to use their business information
database software. We also have other associated costs to our business database
such as our servers. Despite these costs, we derive no direct revenues from our
business database or searches conducted on this database. Although increased
visitation to our business database may enhance our prospects for increased
advertising sales, there are no assurances that we will be successful in
attracting increased visitation to our website or that any increased visitation
to our website will result in increased sales of our Internet display
advertising. If the costs of maintaining our information database exceed our
advertising revenues, our operations and financial condition will be negatively
impacted.
OUR AGREEMENTS WITH ACXIOM CORPORATION AND INTERLIANT MAY BE TERMINATED BY
EITHER PARTY AT ANY TIME; IF WE FAIL TO FIND COMPANIES TO REPLACE THESE COMPANIES
SERVICES, OUR OPERATIONS WILL BE NEGATIVELY IMPACTED.
Our agreements with Acxiom Corporation, our data base supplier, may be
terminated by either party, at any time, with a 90 day notice. In addition,
either party may terminate our agreements with Interliant, our server supplier,
at any time, with a 30-day notice. If these agreements are terminated and we
fail to find companies to replace these services, our operations will be
negatively impacted.
OUR SALES FORCE WILL BE COMPENSATED SOLELY ON A COMMISSION BASIS; IF WE ARE
UNABLE TO RETAIN SALES PERSONNEL AND/OR HIRE REPLACEMENT SALES PERSONS ON A
TIMELY BASIS, OUR ADVERTISING REVENUES WILL BE NEGATIVELY IMPACTED.
Our sales personnel will be compensated only on a commission basis. If our
sales personnel fail to generate enough advertising sales to provide them with
what they perceive to be adequate compensation, they will seek other employment.
Accordingly, we may experience high attrition rates among our sales force. If we
fail to maintain an adequate sales force on a continual basis, our advertising
revenues will be negatively impacted.
BECAUSE WE HAVE NO MANAGERIAL, MARKETING OR TECHNICAL EXPERTISE IN INTERNET-
RELATED OPERATIONS, WE WILL REQUIRE SUBSTANTIAL ASSISTANCE FROM THIRD PARTIES.
Our management has no Internet management, marketing or technology related
work experience. We will require substantial assistance from third parties to
manage, market and develop our product and services. Unless our current
management has the financial resources to hire qualified computer, database or
network personnel, the overall presentation and technical aspects of our website
and quality of our information database and Internet display advertising may be
negatively impacted.
BECAUSE WE ARE VULNERABLE TO SECURITY BREACHES, GLITCHES AND OTHER COMPUTER
FAILURES OUR BUSINESS COULD BE ADVERSELY AFFECTED.
The secure transmission of confidential information over public networks is
a critical element of our operations. A party who is able to circumvent security
measures could misappropriate proprietary information or cause interruptions in
our operations. If we are unable to prevent unauthorized access to our user's
information and transactions, the computer component of our business could be
harmed. Although we intend to implement industry-standard security measures, we
cannot assure that these measures will prevent future security breaches. Because
our software and services are dependent upon the integrity of software and
hardware systems we obtain from third parties, security breaches in these
systems could materially adversely affect our business, financial condition and
operating results. In this regard we face the following risks:
o Heavy stress placed on our systems that could cause systems failures or
operation of our systems at unacceptably low speeds;
o Failures in our system could also be caused by acts beyond our control, such
as failures caused by our online service providers; and
o Failures or shortcomings in our record-keeping and data processing functions
performed by third parties:
Any significant compromise of our system's security could hinder our
ability to broaden our customer base and positively promote our brand name and
could materially adversely affect our business, financial condition and
operating results.
BECAUSE OUR CAPITAL REQUIREMENTS MAY VARY SUBSTANTIALLY AT CERTAIN TIMES, WE
MAY NEED TO OBTAIN ADDITIONAL CAPITAL. IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL
WHEN REQUIRED, WE MAY BE UNABLE TO IMPLEMENT OUR BUSINESS PLAN.
We require substantial amounts of revenue to implement our business plan.
Our capital requirements may vary substantially depending on our rate of
development and other factors. We plan to generate revenue from the sale of
Internet display advertisements. Even if we begin sales and marketing campaigns,
we may not generate enough revenue to achieve profitability. Furthermore, as we
continue to develop our business, our operating expenses will increase. We plan
to increase our operating expenses as we:
o Continue to develop our website and database;
o Increase marketing activities and advertising efforts;
o Hire salespersons and other necessary employees and consultants;
o Purchase computer hardware for salespersons;
o Purchase or lease other assets; and
o Increase our general and administrative functions to support our
developing operations.
In addition, the actual costs of implementing and developing our business
may be more expensive than we currently anticipate. Increases in expenditures
will depend on many factors including but not limited to, our advertising and
marketing expenses, the number of personnel we hire, the amount and quality of
the equipment we purchase, and the assets we decide to purchase or lease. We
cannot assure that we will have sufficient financial resources to meet our
capital needs or to operate profitably. Our inability to obtain financing or
raise capital could impair our ability to market our Internet display
advertisements and operate our business database. If adequate financing is not
available, we may be required to curtail operations or to obtain funds by
entering into agreements on unattractive terms.
BECAUSE WE MAY BE UNABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL, OUR
BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS COULD BE ADVERSELY AFFECTED.
Our current and future success depends on our ability to identify, attract,
hire, train, retain and motivate various employees and consultants, including
skilled technical, managerial and professional personnel as well as sales,
marketing and customer service personnel. Competition for Internet-specific
employees is intense and we may be unable to attract or retain the technical
professionals necessary to maintain an effective website and business database.
Even if we out-source our Internet-related work, we may not be able to afford
the fees associated with doing so. If we fail to attract and retain the
necessary managerial, sales, marketing and customer service personnel, we will
be unable to develop or retain a sufficient customer base to fund our
operations.
WE MAY NOT BE UNABLE TO OBTAIN A TRADEMARK FOR COMMUNICATE NOW.COM AND/OR
BIZFINDERS.COM. IN WHICH CASE OUR BRAND NAME RECOGNITION MAY BE NEGATIVELY
IMPACTED.
We will attempt to obtain brand name recognition and protection for our
Internet names, Communicate Now.Com and BizFinders.Com. The regulations
regarding the protection of domain names as trademarks are evolving and
unpredictable. We may be unable to prevent third parties from acquiring domain
names similar to our domain names. If a third party was to infringe upon our
domain names we may become involved in litigation that may be costly and time-
consuming. In addition, any challenge to our domain names may decrease the value
of our trademarks or other proprietary rights. Any decrease in the value of our
domain names may result in our operations and financial condition being
negatively impacted.
ANY REDUCTION IN OUR SALES FORCE COULD NEGATIVELY IMPACT OUR OPERATIONS.
We plan to employ a sales staff of approximately 126 sales persons and 3
sales managers over the next twelve months. We cannot assure that we will have
available financial resources needed to implement a sales force of this size.
The costs associated with hiring our anticipated sales force and equipping them
with computers and digital cameras may exceed our financial resources, in which
case we will be unable to hire the anticipated number of sales persons. Any
reduction in our sales force may negatively impact sales of our Internet display
advertisements.
BECAUSE WE FACE INTENSE COMPETITION, WE MAY BE UNABLE TO SUCCESSFULLY MARKET
OUR INTERNET DISPLAY ADVERTISEMENTS.
The Internet business database and Internet phone book market is becoming
increasingly competitive with hundreds of competitors. Some of our biggest
competitors include:
o The Southwestern Bell Yellow Pages;
o The AT&T Phone Books; and
o On-line Directories including:
o The AnyWho Internet Directory;
o GTE Internet Directories and Business Phone Books; and
o The Big Yellow Internet Directory.
Our ability to compete will be based on our success in distinguishing our
website from our competitors. Because we do not operate an exclusive database of
information, we will encounter difficulties in distinguishing our website from
others. In addition, the business information accessible through our website
will be available elsewhere on the Internet and in other informational formats,
as indicated above. We also do not have an established brand name or reputation
while our competitors have significantly greater brand recognition, customer
bases, operating histories and financial and other resources. There can be no
assurance that we will be able to compete in the Internet advertising business,
which may negatively impact market awareness and acceptance of our business.
BECAUSE OUR PRINCIPAL STOCKHOLDERS RETAIN CONTROL OVER A MAJORITY OF THE
ISSUED AND OUTSTANDING SHARES, YOU WILL BE SEVERELY LIMITED IN YOUR ABILITY TO
AFFECT CHANGE IN HOW WE DO BUSINESS.
Our principal stockholders, Mr. David Hancock and Damber Production
Company, collectively own approximately 82% of our common stock and the
remaining stockholders own approximately 18% of our common stock. As a result,
our two principal stockholders have significant influence over all matters
requiring approval by our stockholders without the approval of minority
stockholders. In addition, they are able to elect all of the members of our
Board of Directors, which allows them to significantly control our affairs and
management. They are also able to affect most corporate matters requiring
stockholder approval by written consent, without the need for a duly noticed and
duly-held meeting of stockholders. Such control could adversely affect the
market value of our common stock or delay or prevent a change in our control.
BECAUSE CONFLICTS OF INTEREST EXIST AMONG OUR DIRECTORS, YOU SHOULD EXERCISE
CAUTION BEFORE YOUR PURCHASE.
Because some of our officers, directors and stockholders are, and may, in
the future, become involved in other business activities, our officers and
directors may face a conflict of interest in selecting between us and their
other business interests. We have not formulated a policy for the resolution of
such conflicts. One of our directors, Randal Leblanc is also the principle owner
of JCL Associates and holds 125,000 of our common stock options. JCL Associates
has a software development agreement with us and has developed the software we
use in our Internet display advertising business. JCL Associates received our
common stock in return for their development of this software. Mr. Leblanc's
position as our director and as the principal owner of a company that provides
services to us may create a conflict of interest. There can be no assurances
that any such conflicts or other potential conflicts will be resolved in our
best interests.
BECAUSE WE HAVE NEVER PAID DIVIDENDS, YOU SHOULD EXERCISE CAUTION BEFORE
MAKING AN INVESTMENT.
As a new company, we have never paid dividends nor do we anticipate the
declaration or payments of any dividends in the foreseeable future. We intend to
retain earnings, if any, to finance the development and expansion of our
business. Future dividend policy will be determined by our Board of Directors at
their sole discretion and will be contingent upon future earnings, if any, our
financial condition, capital requirements, general business conditions and other
factors. Future dividends may also be affected by covenants contained in loan or
other financing documents, which may be executed by us in the future. Therefore,
there can be no assurance that cash dividends of any kind will ever be paid.
ITEM 4. USE OF PROCEEDS
Not Applicable. We will not receive any proceeds from the sale of the
securities by the selling security holders.
ITEM 5. DETERMINATION OF OFFERING PRICE
Not Applicable. The selling security holders will be able to determine the
price at which they sell their securities.
ITEM 6. DILUTION
Not Applicable. We are not offering any shares in this registration
statement. All shares are being registered on behalf of our selling
shareholders.
ITEM 7. SELLING SECURITY HOLDERS
The selling security holders named below are selling the securities. The
table assumes that all of the securities will be sold in this offering. However,
any or all of the securities listed below may be retained by any of the selling
security holders, and therefore, no accurate forecast can be made as to the
number of securities that will be held by the selling security holders upon
termination of this offering. We believe that the selling security holders
listed in the table have sole voting and investment powers with respect to the
securities indicated. We will not receive any proceeds from the sale of the
securities by the selling security holders.
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Name Relationship With Amount Amount To Be Amount Percentage
Issuer Owned Registered Owned Owned
Prior to Offering After Offering After
Offering
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Amos, Charles D. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Atanian, Debra M. 2,000 2,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Best, William 16,000 16,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Birdwell, James Jr. 30,000 30,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Bitters, Charles Consultant 600,000 600,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Bitters, Helen 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Boatwright, Nika M. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Brandt, Chance Wade 30,000 30,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Burson, Byron 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Butler, Tim D. 2,500 2,500 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Carruth, Johnny Bob 425,000 375,000 50,000
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Chance Research Corp. 250,000 250,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Cleveland, Charlie 500,000 450,000 50,000
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Crabtree, Peter 1,250 1,250 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Damber Productions, 9,450,000 250,000 9,200,000 40%
Corp.
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Dlugosch, Pete 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Drum, Max 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Dunn, Hal 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Eudaly, Tom R. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Gann, Brandy 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Glenn Pattern Family, 50,000 50,000 0
L.P.
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hall, Barrett 100,000 100,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hallford, Mike 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hamilton, Brenda Lee Law Firm 100,000 100,000 0
Law Offices
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hamilton, John 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hancock, David President and 9,441,500 250,000 9,191,500 40%
Director
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Hanson, Thomas 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Harless, Sheila 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Harris, Carolyn 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Harris, Henry 21,000 21,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Irby, Jim 30,000 30,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Jacoby, Allen, J. 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
JCL Associates, Inc. Software Service
Provider 50,000 50,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Lacy, Chad 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Lancaster, B. Joye 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Lane, Charlene 120,000 100,000 20,000
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Langerhans, Roy R. 2,000 2,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Lisner, Tracy 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Lynam, Bruce 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
McCarthy, Elsie 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
McDonald, Christel 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
McGregor, Chris 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
McNeely, Lance 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Michael, Richard 150,000 150,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Mitchell, J. Brad 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Morrison, Jeff 3,500 3,500 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Newton, Tommy 2,500 2,500 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Oplinger, T. 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Ozgo, Tom 3,920 3,920 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Ozgo, Thomas W. 1,250 1,250 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Petree, Monte 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Petter, Roger A. 25,000 25,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Powers, Jimmy 50,000 50,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Reider, John L. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Rideout, John T. 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Rhoads, Michael 2,000 2,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Roth, David 2,500 2,500 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Sanderson, Bruce 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Scheible, Margarette 15,000 15,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Seay, Jimmy 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Sims, John F. 5,000 5,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Smith, Carl 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Smith, Jackie 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Smith, Shane D. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Stephenson, James A. 900 900 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Texas Industrial Scrap 25,000 25,000 0
Metal, Inc.
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Vaca, Gabriel 2,500 2,500 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Vogel, Luther N. 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Wang, Margaret Yuk Chu 100,000 100,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Waskom, Sam D. 2,000 2,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Weatherford, David 2,000 2,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Williams, Clay 1,000 1,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Williams, J. Marvin 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Winkler, Jack 10,000 10,000 0
Motors, Inc.
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Winkler, Jack 10,000 10,000 0
Resource Limited
Partnership
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Winkler, John 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Ying Wai Lam, Patrick 20,000 20,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
Zerr, Stephen J. 10,000 10,000 0
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
TOTAL 22,000,320 3,488,820 18,511,500 80.5%
------------------------- --------------------- -------------------- ---------------- --------------------- --------------------
We intend to seek qualification for sale of the securities in those states
where the securities will be offered. That qualification is necessary to resell
the securities in the public market and only if the securities are qualified for
sale or are exempt from qualification in the states in which the selling
shareholders or proposed purchasers reside. There is no assurance that the
states in which we seek qualification will approve of the security resales.
ITEM 8. PLAN OF DISTRIBUTION
Our Selling Shareholders are offering 3,488,820 shares of our common stock.
The selling shareholders may sell their shares at any price. We will not
receive proceeds from the sale of shares by the selling shareholders.
The securities offered by this prospectus will be sold by the selling
security holders or by those to whom such shares are transferred. We are not
aware of any underwriting arrangements that have been entered into by the
selling security holders. The distribution of the securities by the selling
security holders may be effected in one or more transactions that may take place
in the over-the-counter market, including broker's transactions, privately
negotiated transactions or through sales to one or more dealers acting as
principals in the resale of these securities.
Any of the selling security holders, acting alone or in concert with one
another, may be considered statutory underwriters under the Securities Act of
1933, if they are directly or indirectly conducting an illegal distribution of
the securities on behalf of our corporation. For instance, an illegal
distribution may occur if any of the selling security holders were to provide us
with cash proceeds from their sales of the securities. If any of the selling
shareholders are determined to be underwriters, they may be liable for
securities violations in connection with any material misrepresentations or
omissions made in this prospectus.
In addition, the selling security holders and any brokers and dealers
through whom sales of the securities are made may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and the commissions or
discounts and other compensation paid to such persons may be regarded as
underwriters' compensation.
The selling security holders may pledge all or a portion of the securities
owned as collateral for margin accounts or in loan transactions, and the
securities may be resold pursuant to the terms of such pledges, accounts or loan
transactions. Upon default by such selling security holders, the pledgee in such
loan transaction would have the same rights of sale as the selling security
holders under this prospectus. The selling security holders may also enter into
exchange traded listed option transactions, which require the delivery of the
securities listed under this prospectus. The selling security holders may also
transfer securities owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such selling security holders under this
prospectus.
In addition to the above, each of the selling security holders and any
other person participating in a distribution will be affected by the applicable
provisions of the Securities Exchange Act of 1934, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
any of the securities by the selling security holders or any such other person.
There can be no assurances that the selling security holders will sell any
or all of the securities. In order to comply with state securities laws, if
applicable, the securities will be sold in jurisdictions only through registered
or licensed brokers or dealers. In various states, the securities may not be
sold unless these securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with. Under applicable rules and regulations of the Securities Exchange
Act of 1934, as amended, any person engaged in a distribution of the securities
may not simultaneously engage in market-making activities in these securities
for a period of one or five business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of the securities.
Pursuant to the various agreements we have with the selling security holders, we
will pay all the fees and expenses incident to the registration of the
securities, other than the selling security holders' pro rata share of
underwriting discounts and commissions, if any, which is to be paid by the
selling security holders.
Should any substantial change occur regarding the status or other matters
concerning the selling security holders, we will file a Rule 424(b) prospectus
disclosing such matters.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings, in which
we are involved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors elects our executive officers annually. A majority
vote of the directors who are in office is required to fill vacancies. Each
director shall be elected for the term of one year, and until his successor is
elected and qualified, or until his earlier resignation or removal. There are no
family relationships between any of the directors and executive officers. Our
directors and executive officers are as follows:
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
Name Age Position Term
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
David Hancock 44 Director, Chairman of the Board One Year*
of Directors,
President
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
Bill Elliott 53 Director One Year*
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
Randal Leblanc 51 Director One Year*
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
John C. Winkler 55 Director One Year*
--------------------------------- ---------------- ------------------------------------- ----------------------------------------
*Our Directo's current terms, subject to re-election, expire on the second
Tuesday of April 2001, or within 60 days thereof.
Mr. David Hancock has served as our President, Chief Executive Officer, and
a Director since our inception. From 1992 until February 2000, Mr. Hancock
served as a Technical Service Manager for Wilsonart International, where he was
responsible for customer technical sales and support, customer complaints, and
quality assurance for high pressure laminates, flooring products, solid
surfacing sheets and shape goods, and adhesives. Mr. Hancock earned a Bachelors
Degree in Industrial Arts Education from Abilene Christian University in 1979.
Mr. Hancock does not hold any other directorships or managerial positions.
Mr. Bill Elliott has been one of our directors since August 19, 2000. Mr.
Elliott has been the owner and operator of Bill Elliot Homes, a custom
home-building company in Temple, Texas since 1985. Mr. Elliott earned a
Bachelors degree in Agri-business from Tarleton State University in 1973. Mr.
Elliott does not hold any other directorships.
Mr. Randal Leblanc has been one of our directors since August 19, 2000.
From 1990 to present, Mr. Leblanc has been a part owner and President of JCL
Associates, Inc., a provider of computer programming and consulting services to
the Texas state area. Mr. Leblanc earned a bachelor's degree in Accounting from
McNeese State University in 1971. Mr. Leblanc does not hold any other
directorships.
Mr. John C. Winkler has been one of our directors since August 19, 2000.
Mr. Winkler has been the owner and operator of a "Four-line General Motors New
Car Franchise" and two affiliated used car lots since 1968. Mr. Winkler earned a
bachelors degree in Business Administration from Trinity University in 1968. Mr.
Winkler does not hold any other directorships.
SIGNIFICANT EMPLOYEES
Mr. Dana M. Ransom, Jr. has been our Vice President of Sales and Marketing
since March 2000. Mr. Ransom served as a Manager of technical and special
projects for Wilsonart International from 1986 until March 2000. As a technical
representative of Wilsonart, Mr. Ransom was responsible for product development,
material negotiations, developing specifications and selling and marketing new
products.
Mr. Dennis Bash has been our Vice President of Operations and Technology
since March 15, 2000. Mr. Bash served as an Operations Manager for Wilsonart
International from 1986 until March 15, 2000. As a Technical Representative, Mr.
Bash was responsible for technical support, product development, technical
analysis, process development, technical sales support and technical training.
Mr. Bash earned an Associates Degree in Applied Science - Solar Engineering from
Texas State Technical College in 1982. In 1992, Mr. Bash earned a Bachelors
Degree in Management Information Systems from University of Houston.
FAMILY RELATIONSHIPS
There are no family relationships among our officers, directors, or persons
nominated for such positions.
LEGAL PROCEEDINGS.
No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of December 22, 2000, of
our common stock (a) by each person known by us to be the beneficial owner of
more than 5% of our outstanding common stock, and (b) by each of our directors,
by all executive officers and our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted. There are not any pending or
anticipated arrangements that may cause a change in control of our company.
Security Ownership of Certain Beneficial Owners
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
Title of Class Name and Address # of Shares Nature of Current %
Ownership Owned
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
Common David Hancock 9,441,500 Direct 41%
3402 Red Bud
Temple, TX 76068
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
Damber Production Corp.
Amanda Bitters (sole owner)
Common P.O. Box 1136 9,450,000 Direct 41%
Mineral Wells, TX 76068
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
TOTAL 18,891,500 Direct 82%
-------------------- ----------------------------------------- ----------------------- ---------------- --------------
Security Ownership of Officers and Directors
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
Title of Class Name and Address # of Shares Nature of Current %
Ownership Owned
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
Common David Hancock, President and Chairman 9,441,500 Direct 41%
of the Board of Directors
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
Common William Elliott-Director Option for 125,000 0.005%
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
Common John C. Winkler-Director Option for 125,000 0.005%
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
Common Randal Leblanc-Director Option for 125,000 0.005%
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
TOTAL 9,816,500 43%
--------------------- ---------------------------------------- ----------------------- ---------------- --------------
There are currently no arrangements, which would result in a change in our
control.
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety by
the provisions of our Articles of Incorporation and Bylaws, copies of which have
been filed as exhibits to the registration statement of which this prospectus is
a part.
COMMON STOCK
GENERAL:
We are authorized to issue 100,000,000 shares of common stock with a par
value of $.0001 per share. As of December 22, 2000, there were 22,998,820 common
shares issued and outstanding held by 90 shareholders of record. All shares of
common stock outstanding are validly issued, fully paid and non-assessable.
VOTING RIGHTS:
Each share of common stock entitles the holder to one vote, either in
person or by proxy, at meetings of shareholders. The holders are not permitted
to vote their shares cumulatively. Accordingly, the holders of common stock
holding, in the aggregate, more than fifty percent of the total voting rights
can elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of the such directors. The vote of
the holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
DIVIDEND POLICY:
Holders of common stock are entitled to receive ratably such dividends, if
any, as may be declared by the board of directors out of funds legally
available. We have not paid any dividends since our inception and presently
anticipate that all earnings, if any, will be retained for development of our
business. Any future disposition of dividends will be at the discretion of our
Board of Directors and will depend upon, among other things, our future
earnings, operating and financial condition, capital requirements, and other
factors.
MISCELLANEOUS RIGHTS AND PROVISIONS:
Holders of our common stock have no preemptive rights. Upon our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities. All
outstanding shares of our common stock are, and the common stock to be
outstanding upon completion of this offering will be fully paid and assessable.
There are not any provisions in our Articles of Incorporation or our by-laws
that would prevent or delay change in our control.
SHARES ELIGIBLE FOR FUTURE SALE.
Once this registration statement is effective, the 3,488,820 shares being
offered by our selling shareholders will be freely tradable without restrictions
under the Securities Act of 1933, except for any shares held by our
"affiliates", which will be restricted by the resale limitations of Rule 144
under the Securities Act of 1933.
In general, under Rule 144 as currently in effect, any of our affiliates
and any person or persons whose sales are aggregated who has beneficially owned
his or her restricted shares for at least one year, may be entitled to sell in
the open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates who have
held their restricted shares for one year may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited
resales of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning 90 days
after the date of this prospectus. The availability for sale of substantial
amounts of common stock under Rule 144 could adversely affect prevailing market
prices for our securities.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
Our Financial Statements for the period ending October 31, 2000 have been
included in this prospectus in reliance upon Salberg & Company, P.A.,
independent Certified Public Accountants, as experts in accounting and auditing.
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
The By-laws of this corporation, subject to the provisions of Section 145
of Delaware General Corporation Law, contain provisions which allow the
corporation to indemnify any person against liabilities and other expenses
incurred as the result of defending or administering any pending or anticipated
legal issue in connection with service to us if it is determined that person
acted in good faith and in a manner which he reasonably believed was in the best
interest of the corporation. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to our directors, officers and
controlling persons, 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 and is, therefore, unenforceable.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
common stock to David Hancock and 10,000,000 shares of our common stock to
Damber Productions Corp., a Texas corporation, for services rendered in our
corporate formation.
On March 26, 2000, we entered into a Software Development Agreement with
JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary
point-of-sale software and administrative support software that will allow for
the integration of sales, billing and payments. JCL Associates also agreed to
provide us with technical services. The software development fee of $200,000.00
was payable in two installments of $90,000.00 and $110,000.00, both of which
have been paid. Mr. Randal Leblanc is the President and a principle owner of
JCL Associates. Mr. Leblanc holds 33,000 of 100,000 total outstanding shares of
JCL Associates. On August 19, 2000, we nominated and elected Mr. Randal Leblanc
to serve as our Director. In November 2000, JCL Associates received 50,000
shares of common stock in return for software enhancements JCL Associates
provided to us. In consideration for his services as our Director, Mr. Leblanc
may exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as one of our Directors Because
Mr. Leblanc is a principal of JCL Associates and one of our directors, a
possible conflict of interest exists.
On April 16, 2000, we entered into a consulting agreement with Charles
Bitters for general business start-up consulting. In consideration for his
services, we paid Mr. Charles Bitters $10,000. Mr. Bitters is the father of
Amanda Bitters who is the President and sole Director of Damber Production
Company. Damber Production Company is a beneficial owner of 41% our common
stock.
On August 19, 2000, we nominated and elected Mr. William Elliott to serve
as a Director. In consideration for his services as our Director, Mr. Elliott
may exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as
a Director. In consideration for his services as our Director, Mr. Winkler may
exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On October 20, 2000, we entered into a second consulting agreement with
Charles Bitters. In consideration for his services, we paid Mr. Charles Bitters
$16,500 and 600,000 shares of our common stock. Mr. Bitters is the father of
Amanda Bitters, who is the President and sole Director of Damber Production
Company. Damber Production Company is the beneficial owner of 41% of our common
stock.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, nominee for director,
beneficial owner of five percent or more of our common stock, or family members
of such persons. Also, we have not had any transactions with any promoter. We
are not a subsidiary of any company.
ITEM 16. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT.
We were incorporated in Delaware on January 31, 2000 for the purpose of
engaging in an Internet based advertising business. We have operated as a
development stage company since our inception. We have devoted all of our
efforts to:
o Financial planning;
o Formulating our business plan;
o Raising capital;
o Research and development of our product and services;
o Establish our back office operations;
o Developing proprietary software to create our electronic display
advertisements; and
o Establishing our website.
We have never been the subject of any bankruptcy or receivership action. We
have had no material reclassification, merger, consolidation, or purchase or
sale of a significant amount of assets outside the ordinary course of business.
We began implementing our business plan in March 2000 that consisted of the
above activities. We began actively attempting to sell our Internet display
advertisements in November 2000.
PRINCIPAL PRODUCT & SERVICES: DATABASE SEARCHES THROUGH OUR WEBSITE:
We are currently operating a business information website located at
www.Bizfinders.com. Our search directory allows users the ability to search for
and locate businesses and business information by providing any of the following
identifying information:
o Business name;
o Business location;
o Name of service or product or subject category;
o City;
o State; and
o Zip code
We obtained a license to use this business information database from Acxiom
Corporation. This database includes the names, addresses and phone numbers of
approximately eleven million U.S. businesses. Visitors to our website can also
choose to download maps and directions to any business included on the database.
Our business database search service is offered to the public free of charge and
we receive no revenue from this aspect of our business. Our business database is
a means by which to attract visitors to our website to purchase our Internet
display advertisements.
INTERNET DISPLAY ADVERTISEMENTS
We have developed a point of sale software tool that builds Internet
display advertisements that are personally constructed by our sales personnel at
our customer's place of business.
Through this process, the customer has the ability to view our lap top
computer screen while our sales persons configures an advertisement to the exact
specifications of the customer as it will be seen on the our Bizfinders
database. The sales person uses a laptop computer to design and configure the
advertisement and a digital camera to take pictures of the business as they will
appear in the advertisement.
SOFTWARE TECHNOLOGY TO CONSTRUCT THE ADVERTISEMENTS
Our software technology includes twelve templates to format and design the
advertisements. Each template has various colors, font sizes, and graphics that
when used in combination with each other create thousands of combinations in
design. The customer may view the advertisement on the salesperson's computer
screen exactly as it will appear on our Bizfinders website. Our sales persons
will work with the customer to modify and change the advertisement until such
time that it specifically meets customer specifications. We plan to have the
finished product include a one-page color advertisement with digital images of
the customer's facilities or products. We anticipate that the advertisement's
creation will take approximately forty minutes. The following day, the customer
will be able to view his advertisement by visiting our website.
We plan to utilize our own proprietary Point-of-Sale software that will
allow our salespersons to submit invoice receipts to a central server via an
Internet transmission. At the central server, sales commissions are calculated
and forwarded to our payroll service, Time Plus Company. We plan to have the
central server send billing invoice information to a billing service, Express
Bill, that will process and send the actual bill to the customer. The customer
will then return payment to our Bank, Bank One Texas, N.A.'s billing fulfilling
center for payment acceptance and processing.
ADDITIONAL ADVERTISING OPTIONS THAT MAY BE PURCHASED AND THEIR COST
The following table illustrates the pricing of our products and services:
----------------------- ------------ -----------------------------------------------------------------------------------
Product Description Price (Per Description
Year)
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
"Electronic Display $179.00 This charge is for a full-page color advertisement created real time. Customer
Ad" (EDA) may print the advertisement himself or pay printing specialty service to download
and print.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Permanent Data File $100.00 This charge involves the addition of a permanent data file to the electronic
display advertisement. Examples of permanent data files include menus, price
sheets, or inventory descriptions that the business may want to accompany the
electronic display advertisement.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Alpha Search Listing $29.00 This charge involves in advertisement listing in more than one category. For
Option example, an automobile dealership may be listed in the new car section as well as
the used car section, and in multiple cities. Each additional listing cost $29.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Unscheduled Change $0.00 No charge if within one week of purchase. We plan to have a toll-free phone line
available.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Change Options $200.00 For 12 modifications of existing advertisement over one year. Otherwise, $50.00
per modification.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Additional Page $75.00 Additional advertisement pages are $75.00 for each page.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Additional City $49.00 A business may choose to be listed in more than one city. Additional city listings
Listings cost $49.00 for each additional city.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Link to Website or $49.00 The cost for links to a company's existing website or to their e-mail is $49 per
Email year.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Language Options Per $49.00 The advertisement may be written in multiple languages for a $49.00 fee per year.
Page
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Mini Website $279.00 A non-interactive website of up to 3 pages that fully details the business and
its goods and services may be purchased for $279.00 per year.
----------------------- ------------ -----------------------------------------------------------------------------------
----------------------- ------------ -----------------------------------------------------------------------------------
Mini Website with $379.00 A non-interactive website of up to 3 pages that fully details the business and
Permanent Data files its goods and services, including permanent data files such as restaurant
menus, price sheets, or detailed inventory descriptions the business wants to
feature. The fee for his service is $379.00 per year.
----------------------- ------------ -----------------------------------------------------------------------------------
DISTRIBUTION OF PRODUCTS & SERVICES:
We currently deliver our licensed business information through our website
located at www.bizfinders.com. Users of our website utilize a search engine to
locate the business information stored on our database servers. We provide our
Internet display advertisements through personal visits by our sales staff.
Because we are a development stage company, we cannot assure that we will ever
have the resources available to continue distributing business information
through our website or begin distribution of our Internet display advertisments
and other services.
MATERIAL AGREEMENTS:
JCL ASSOCIATES SOFTWARE DEVELOPMENT AGREEMENT
On May 26, 2000, we executed a software development agreement with JCL
Associates that required JCL Associates to provide us with technical services
and develop our proprietary Internet display advertisement development software,
point-of-sale software and administrative support software. We paid JCL
Associates $200,000.00 in two installments for these services. The first
installment of $90,000.00 was paid at the time the agreement was executed and
the remainder was paid upon completion of the software development on July 31,
2000. This agreement also commits us to minimum maintenance fees of $3,200 per
month from July 2000 through the expiration of the agreement on May 25, 2001.
All software programs and code developed under this agreement will remain our
property.
ACXIOM CORPORATION DATABASE LICENSE AGREEMENT
On May 1, 2000, we entered into a licensing agreement with The Acxiom
Corporation for the use of a United States business database on our website.
The size of this database is approximately eleven 11 million United
States businesses. This license fee of $75,000 per year, payable in twelve
monthly installments of $6,250, expires on April 30, 2001. As of October 31,
2000, the total licensing fees charged to our operations was $31,250.
INTERLIANT, INC. NETWORK SERVICE AGREEMENT
In July of 2000, we entered into a one 1 year lease agreement with
Interliant, Inc. for the use of their servers which will store, among other
things, our website, our proprietary software, and our databases. This one-year
network service agreement included a onetime fee of approximately $4,250 and
will require the payment by us of a monthly fee of approximately $6,640.
BILLING SERVICE ARRANGEMENT WITH EXPRESS BILL, INC.
We have an arrangement with Express Bill, Inc. whereby they provide billing
services.
LAMAR ADVERTISING AGREEMENT
Lamar Advertising will be furnishing us with billboard advertising in the
designated metropolitan areas that we will target during our first year of
operations. Our current agreement with Lamar Advertising pertains only to
billboard advertising for the Central Texas area for a one-time fee of $7,900
and $10,000 per month with a ninety-day cancellation term. Their services
include the design, graphics and billboard space lease.
COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET:
The Internet business database and Internet phone book market is
increasingly competitive with hundreds of competitors on the Internet alone. In
addition, because barriers to market entry are relatively low and new
competitors can establish new sites and a relatively low cost utilizing a
variety of market available software, we expect competition to become
increasingly intensified in the future. Therefore, competition is rapidly
evolving and very competitive and there are no assurances that we can keep pace
with the intense competition in this market. There are hundreds of websites that
operate similar businesses to us. Some of our biggest existing competitors
include the following companies in the following categories
YELLOW PAGE ADVERTISING:
o Southwestern Bell Yellow Pages;
o AT&T Yellow Page Phone Books; and
o Business Phone Books
ON LINE DIRECTORIES
o AnyWho Internet Directory;
o GTE Internet Directories; and
o Big Yellow Internet Directory;
o Hoovers;
o Comfind.com
These companies have substantially longer operating histories, greater name
recognition, larger customer bases, and greater financial and technical
resources than us. Accordingly, these companies are able to conduct extensive
marketing campaigns that we are financially unable to accomplish. In addition,
these companies may create more attractive pricing to potential advertisers. Our
ability to compete will be limited by our success in distinguishing our website
and business database. We will be limited in this endeavor because we do not and
will not operate an exclusive database of information. The information available
on our website will be available elsewhere on the Internet and in other
informational formats such as phone books. We will be further limited in our
ability to promote our product and services because computer hardware/software
products are available at less cost to customers if they wish to construct their
own advertisement, instead of using our advertising services. In addition, we do
not have an established brand name or reputation while our competitors have
significantly greater brand recognition, customer bases, operating histories and
financial and other resources. There can be no assurance that we will be able to
compete in the sale of Internet advertising products and services, which could
have a materially negative impact upon market awareness and acceptance of our
products and services.
SOURCES AND AVAILABILITY OF RAW MATERIALS:
We do not require raw materials in our business.
CUSTOMER DEPENDENCY:
We currently have approximately 18 customers. We plan to market our
services to a variety of businesses. Although we do not plan on being dependent
upon one single customer or just a few customers, there are no assurances that
we will not become dependent upon a single or a few customers.
INTELLECTUAL PROPERTY:
At present, we have applied for service mark protection for our
Bizfinder.com domain name and for our corporate name, CommunicateNow.com. Our
software technology is fully owned by us and is copyright protected. We do not
have any patents or royalty agreements.
GOVERNMENTAL APPROVAL REQUIREMENTS:
We are not aware of the need for any government approval of our principal
product or services.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS:
Other than federal and state employment regulations such as those
administered and regulgated by the Occupational Safety and Health
Administration, we are not aware of any governmental regulations that will
affect our business plan. We are not now affected by direct government
regulation, generally, or laws or regulations directly applicable to access to
or commerce on the Internet. However, due to increasing usage of the Internet, a
number of laws and regulations may be adopted relating to the Internet, covering
user privacy, pricing, and characteristics and quality of products and services.
Furthermore, the growth and development for Internet commerce may prompt more
stringent consumer protection laws imposing additional burdens on those
companies conducting business over the Internet. The adoption of any additional
laws or regulations may decrease the growth of the Internet, which, in turn,
could decrease the demand for Internet services and increase the cost of doing
business on the Internet. These factors may have an adverse effect on our
business, results of operations and financial condition.
Moreover, the interpretation of sales tax, libel and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
RESEARCH AND DEVELOPMENT:
During the period from our inception to December 22, 2000, we have not
spent funds on research. We have spent $200,000 on software development.
COSTS ASSOCIATED WITH ENVIRONMENTAL COMPLIANCE:
We currently have no costs associated with compliance with environmental
regulations. We do not anticipate any costs associated with environmental
compliance because delivery and distribution of our products and services should
not involve substantial discharge of environmental pollutants. However, there
can be no assurance that we will not incur such costs in the future.
EMPLOYEES:
We currently have three full time employees and no part time employees. All
of our employees are based in Temple, Texas. We have employment agreements with
all of our employees. Our full-time employees include:
o Mr. David Hancock, President and CEO.
o Mr. Dennis Bash, Vice President of Operations and Technology.
o Mr. Dana Ransom, Jr., Vice President of Marketing and Sales.
REPORTS TO SECURITY HOLDERS:
After the effective date of this document, we will be a reporting company
under the requirements of the Securities Exchange Act of 1934 and will file
quarterly, annual and other reports with the Securities and Exchange Commission.
Our annual report will contain the required audited financial statements. We are
not required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to the security holders. The
reports and other information filed by us will be available for inspection and
copying at the public reference facilities of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
ITEM 17. PLAN OF OPERATIONS
The discussion contained in this prospectus contains "forward-looking
statements' that involve risk and uncertainties These statements may be
identified by the use of terminology such as 'believes","expects", "may",
"will", or " should", or " anticipates", or expressing this terminology
negatively or similar expressions or by discussions of strategy. The cautionary
statements made in this prospectus should be read as being applicable to all
related forward-looking statements wherever they appear in this prospectus. Our
actual results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "risk factors," as well as those
discussed elsewhere in this prospectus.
We are a development stage company with no revenues or significant
operations. We plan to implement a sales staff that will attempt to sell
Internet single-page display advertisement's, primarily to small business owners
in various metropolitan markets. We plan to include these Internet display
advertisements in a separate database that may be accessed through our website.
We have developed a website containing a business information database
consisting of names, addresses and phone numbers of approximately 11 million
U.S. businesses through which visitors to our site will use a search engine to
locate businesses. Searches may be made under subject category, city, state,
actual name of business and zip code. We obtained the license to use this
database from Acxiom Corporation. We will obtain no revenue from the searches of
our database; instead our revenue will be derived from Internet display
advertisements through real time face-to face interaction with the customer.
During the next twelve months, we will need to hire and train sales persons,
purchase laptop computers, and digital cameras to enable for our sales staff to
compose the Internet display advertisements and conduct our marketing campaign
composed primarily of billboard advertising. We can continue to satisfy our
current cash requirements for a period of 12 months through our existing capital
and sales; however, there are no assurances that we will be successful in doing
so.
Over the next twelve months, we plan to continue to develop our website and
implement our current business plan. We have taken the following steps towards
the implementation of this plan:
CONDUCTED MARKET RESEARCH
From approximately February 2000 to approximately September 2000 we
conducted research into the markets for Internet Phone Directory Databases by
conducting focus studies. Based on our research, we decided to plan to sell our
products and services to small businesses that want to become involved in
Internet advertising, but lack the required knowledge to do so.
RAISED CAPITAL
We have raised $1,423,900 before offering expenses for our operations
through the sale of a private placement of our securities.
DEVELOPMENT OF A WEBSITE
From approximately May 2000 to approximately August 2000, our management
developed a website with access to a searchable database that contains the
names, addresses and phone numbers of approximately 11 million businesses in the
United States.
REGISTERED DOMAIN NAME
We have registered "Bizfinders.com" and "Communicate Now" USA.com with the
U.S. Department of Commerce as our Internet domain names.
DEVELOPMENT OF OUR BACK OFFICE INFRASTRUCTURE
From approximately March 2000 through November 2000 we researched, designed
and established our back office, the key components of which are:
1. OUR OFFICES:
We have building space of approximately 2000 square feet for our operations
area that includes a conference room, two offices, employee break room and 9
cubicle work areas that will be used for customer support purposes. We also have
building space of approximately 700 square feet to house our executive office.
2. QUALITY ASSURANCE SERVER
Through our agreement with Interliant, Inc. we have a server-based phone
system through which our customer support staff will be able to modify our
Internet display advertisements and bill for such modifications.
3. MAIN SERVER
We have secured, through a lease agreement with Interliant, Inc., a server
for the hosting of our business database. Software associated with the
server operates the Bizfinders.com database and captures and tracks customer
billing as well as commissions to our salespersons.
Over the next twelve months, we plan to take the following steps to
implement our plan of operations:
HIRE A SALES FORCE:
We will hire a sales force through the following methods:
o Contacts of our management;
o Classified advertising; and
o If necessary, hire a staffing agency.
TRAINING A SALES FORCE
From approximately June 2000 to approximately November 2000, our training
was handled through a consulting agreement with one individual. We now plan to
hire a full-time training person effective in January 2001. Training will
consist of two eight-hour sessions covering the following subjects:
o How to build an Internet display advertisement through the personal
computer furnished to each sales person;
o How to operate the digital camera; and
o Sales techniques
DEPLOY OUR SALES FORCE INTO MAJOR METROPOLITAN AREAS
We plan to deploy our sales force into the following geographic areas over
the next twelve months with a specified number of salespersons as indicated
below:
Central Texas area including: Temple, Killeen and surrounding areas
o January 2001 - 8 sales representatives will be deployed to this area
Houston, Texas Metropolitan Area
o March 2001 - 15 sales representatives and 1 sales manager will be
deployed to this area
o April 2001 - an additional 15 sales representatives will be deployed
to this area
Beaumont - Port Arthur, Texas Area
o May 2001 - 10 sales representatives will be deployed to this area
Dallas/Fort Worth, Texas Metropolitan Area
o June 2001 - 15 sales representatives and one sales manager will be
deployed to this area
o July 2001 - 15 additional sales representatives will be deployed to
this area
San Antonio/New Braunfels, Texas Area
o September 2001 – 15 sales representatives and one sales manager
will be deployed to this area
o October 2001 – 10 additional sales representatives will be
deployed to this area
Lubbock, Texas Area
o November 2001 - 8 sales representatives will be deployed to this area
Austin/San Marcos, Texas Area
o December 2001 - 15 sales representatives will be deployed to this area
Our plans then are to deploy a total of 126 sales representatives and 3
sales managers in the various Texas metropolitan areas named above.
The sales person will demonstrate the following advantages of our Internet
display advertising:
o Inexpensive cost, especially compared to yellow page advertising;
o Quick production of Internet display advertisements, typically within
twenty four hours;
o Advertising made to customer specifications; and
o Additional functions of print and brochure capability
DEVELOPING CUSTOMER LEADS
Our customer leads will be derived from our BizFinders database, prior
business contacts, yellow pages and any other sources indicating small
businesses with a business telephone listing.
OUR PLANNED COMPENSATION TO OUR SALES FORCE
Our sales force will be compensated through a combination of 35%
commission, allowances and draws. A sales person will receive a base pay against
commission of $1,250 per month. In addition, they will receive $250 per month
for use towards transportation and Internet service.
BILLBOARD ADVERTISING CAMPAIGN
Two to four weeks prior to deploying our sales force in a respective
metropolitan area, Lamar Advertising and/or other similar companies will launch
a billboard campaign in that particular area.
ITEM 18. DESCRIPTION OF PROPERTY
We do not own any property nor do we have any plans to own any property in
the future. We are currently leasing office suites 101,102 and 103 on a property
located at 2015 Birdcreek Terrace, in the City of Temple, Bell County, Texas.
Suite 101 contains approximately 705 square feet of space. Suites 102 and 103
contain approximately 1100 square feet of space.
Suite 101 is being leased for a period of nine months commencing on July
15, 2000 and terminating on April 30, 2001. Rent is $600.00 per month. The
renewable rate will be $630 per month. Suites 102 and 103 are being leased for a
period of one year commencing on May 1, 2000 and terminating on April 30, 2001.
Rent is $1151.25 per month. The renewable rate for the second year will be
$1228 per month. The renewable rate thereafter will be $1304.75 per month. We
are required to obtain general liability and damage insurance over the leased
premises in the amount of $1,000,000.
We have no policy with respect to investments in real estate or interests
in real estate and no policy with respect to investments in real estate
mortgages. Further, we have no policy with respect to investments in securities
of or interests in persons primarily engaged in real estate activities.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 31, 2000 at our inception, we issued 10,000,000 shares of our
common stock to David Hancock and 10,000,000 shares of our common stock to
Damber Productions Corp., a Texas corporation, for services rendered in our
corporate formation.
On March 26, 2000, we entered into a Software Development Agreement with
JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary
point-of-sale software and administrative support software that will allow for
the integration of sales, billing and payments. JCL Associates also agreed to
provide us with technical services. The software development fee of $200,000.00
was payable in two installments. The first installment of $90,000.00 was paid at
the time the agreement was executed and the second installment of $110,000.00
was paid upon completion of the software package on July 31, 2000. Mr. Randal
Leblanc, is the President and a principle owner of JCL Associates. Mr. Leblanc
holds 33,000 of 100,000 total outstanding shares of JCL Associates. On August
19, 2000, we nominated and elected Mr. Randal Leblanc to serve as our Director.
In November 2000, JCL Associates received 50,000 shares of common stock in
return for software enhancements. In consideration for his services as our
Director, Mr. Leblanc may exercise a non-transferable option to purchase up to
125,000 shares of our common stock at $1.00 per share while he serves as our
Director. Because Mr. Leblanc is a principal of JCL Associates and one of our
directors, a possible conflict of interest exists.
On August 19, 2000, we nominated and elected Mr. William Elliott to serve
as a Director. In consideration for his services as our Director, Mr. Elliott
may exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as
our Director. In consideration for his services as our Director, Mr. Winkler may
exercise a non-transferable option to purchase up to 125,000 shares of our
common stock at $1.00 per share while he serves as our Director.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, nominee for director,
beneficial owner of five percent or more of our common stock, or family members
of such persons. Also, we have not had any transactions with any promoter. We
are not a subsidiary of any company.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for our securities.
Management has not discussed market making with any market maker or broker
dealer. No market exists for our securities and there is no assurance that a
regular trading market will develop, or if developed will be sustained. A
shareholder in all likelihood, therefore, will not be able to resell their
securities should he or she desire to do so when eligible for public resales.
Furthermore, it is unlikely that a lending institution will accept our
securities as pledged collateral for loans unless a regular trading market
develops. We have no plans, proposals, arrangements or understandings with any
person with regard to the development of a trading market in any of our
securities.
We currently have no shares of preferred stock outstanding.
There are 3,488,820 shares of our common stock held by non-affiliates and
19,510,000 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933 defines as restricted securities. No shares have been
sold pursuant to Rule 144 of the Securities Act of 1933 and no shares are
eligible to be resold pursuant to Rule 144. We have agreed to register all of
the shares held by our existing non-affiliate selling shareholders. We plan to
issue common stock subject to an employee benefit plan.
Options.
375,000 shares of our common equity are subject to outstanding options to
purchase. 375,000 shares are issuable pursuant to three Director Agreements
where each Director is entitled to exercise an option to purchase 125,000 shares
of our common stock for one dollar per share while he is acting as our Director.
The remainder of these outstanding options are based on annual bonus packages
available to our two executive employees. These remaining options are renewable
on an annual basis and vest only after a certain number of our products and
services are sold.
Penny Stock Considerations.
Broker-dealer practices in connection with transactions in penny stocks are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. Our shares will likely be subject to such penny stock rules
and our shareholders will in all likelihood find it difficult to sell their
securities.
Holders.
As of the date of this registration, we had 90 holders of record of our
common stock. We have one class of common stock outstanding.
Dividends.
We have not declared any cash dividends on our common stock since our
inception and do not anticipate paying such dividends in the foreseeable future.
We plan to retain any future earnings for use in our business. Any decisions as
to future payment of dividends will depend on our earnings and financial
position and such other factors, as the Board of Directors deems relevant.
ITEM 21. EXECUTIVE COMPENSATION
We have entered into employment agreements with our employees and we have
arrangements under which we are obligated to compensate our officers or
employees in the future. The following Executive Compensation Chart highlights
the terms of compensation for our Executives.
----------------------------------- -------------------------------------- --------------------------------------------------
Summary Compensation Chart Annual Compensation Long Term Compensation
----------------------------------- -------------------------------------- --------------------------------------------------
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
Name & Position Year Salary Bonus Other Restricted Options L/Tip All
($) ($) ($) Stock Awards ($) ($) Other
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
David Hancock, 2000 $120,000 Equal Cell Phone None None None None
--------------
President/Director/ to that and Laptop
CEO paid to Computer
VP of
S&M
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
Dana M. Ransom, Jr., 2000 $100,000 Based Company Car, Based on Based on Sales* None None
--------------------
Vice President of Sales & on Cell Phone Sales *
Marketing Sales* and Laptop
Computer
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
Dennis Bash, 2000 $100,000 Based Cell Phone Based on Based on Sales* None None
------------
Vice President of on and Laptop Sales *
Operations & Technology Sales* Computer
--------------------------- ------- ------------ --------- --------------- ------------- ------------------ -------- --------
* Please see immediately below for details on each Executive's bonus plan.
Our March 1, 2000 employment agreement with Mr. David Hancock provides for
a term of one-year as our President and Chief Executive Officer, commencing on
March 1, 2000. The agreement provides that if after the term of the agreement
has expired, the parties continue to do business together as if the agreement
were still in effect, the agreement shall be renewed and continue in effect
until one of the parties notifies the other in writing.
Mr. Hancock will receive a base pay of $120,000.00 per year, exclusive of
bonuses, benefits and other compensation, with the exception that he will
receive additional cash compensation in the form of a base salary which is at a
minimum 20% greater than the base salary of the Vice President of Sales and
Marketing. We also offer our president an annual cash bonus that is equal to the
cash bonus paid to the Vice President of Sales and Marketing.
Our March 1, 2000 employment agreement with Mr. Ransom provides for a
one-year term of his employment as our Vice President, commencing on March 1,
2000. The agreement provides that:
- If, after the term of the agreement has expired, the parties continue to do
business together as if the agreement were still in effect, the agreement
shall be renewed and continue in effect until one of the parties notifies the
other in writing.
- Mr. Ransom will receive a base pay of $100,000.00 per year, exclusive of
bonuses, benefits and other compensation.
- Mr. Ransom will be supplied with a company car.
- Mr. Ransom will receive a yearly bonus, paid in December based on the number
of sales as follows:
a) If a minimum of 36,100 customers are sold:
a. $125,000 and
b. 25,000 shares of restricted stock and
c. an option to purchase 125,000 shares at a price of $1.00 per share
during employment.
b) If fewer than 36,100 customers are sold, then a bonus of $3.45 per
customer sold will be awarded.
c) If more than 36,100 customers are sold,
a. $125,000.00 and
b. an additional $2.00 per share bonus for every customer sold above
36,100 and
c. one share of restricted stock per customer for each above 36,100.
Our March 2, 2000 employment agreement with Mr. Bash provides for a
one-year term of his employment as our Vice President, commencing on March 15,
2000. The agreement provides that: - If, after the term of the agreement has
expired, the parties continue to do business together as if the agreement were
still in effect, the Agreement shall be renewed and continue in effect until one
of the parties notifies the other in writing.
- Mr. Bash will receive a base pay of $100,000.00 per year, exclusive of
bonuses, benefits and other compensation.
- Mr. Bash will receive a yearly bonus, paid in December based on the number of
sales as follows:
a) If a minimum of 36,100 customers have been sold:
a. $125,000.00 and
b. 25,000 shares of restricted stock and
c. an option to purchase 125,000 shares at a price of $1.00 per share
during employment.
b) If fewer than 36,100 customers are sold, then a bonus of $3.45 per
customer sold will be awarded.
c) If more than 36,100 customers are sold,
a. $125,000.00 and
b. an additional $2.00 per share bonus for every customer sold above
36,100 and
c. one share of restricted stock per customer for each above 36,100.
ITEM 22. FINANCIAL STATEMENTS
Statements included in this prospectus that do not relate to present or
historical conditions are "forward-looking statements." We may make future
forward-looking statements, which may be included in documents that we file with
the Commission other than this registration statement. Forward-looking
statements involve risks and uncertainties that may differ materially from
actual results, and may relate to our plans, strategies, objectives,
expectations, intentions and adequacy of resources.
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
OCTOBER 31, 2000
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEET AT OCTOBER 31, 2000
PAGE 3 STATEMENT OF OPERATIONS FOR THE PERIOD FROM JANUARY 31, 2000
(INCEPTION) TO OCTOBER 31, 2000
PAGE 4 STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JANUARY 31,
2000 (INCEPTION) TO OCTOBER 31, 2000
PAGE 5 STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JANUARY 31, 2000
(INCEPTION) TO OCTOBER 31, 2000
PAGES 6 - 16 NOTES TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Communicate Now.Com, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Communicate Now.Com, Inc.
(a development stage company) as of October 31, 2000 and the related statements
of operations, changes in stockholders' equity and cash flows for the period
from January 31, 2000 (inception) to October 31, 2000. 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 United States 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 Communicate Now.Com, Inc. (a
development stage company) as of October 31, 2000, and the results of its
operations and its cash flows for the period from January 31, 2000 (inception)
to October 31, 2000, in conformity with United States generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company's operating losses of $633,806 and working
capital deficiency of $143,176 raise substantial doubt about its ability to
continue as a going concern. Management's Plan in regards to these matters is
also described in Note 8. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
November 24, 2000 (except for Notes 6(c) and 9 as to which the date is December 8, 2000)
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
OCTOBER 31, 2000
ASSETS
Current Assets
Cash $ 13,613
Prepaid expenses 2,500
Other assets 4,985
----------------
Total Current Assets 21,098
----------------
Property and Equipment, Net 117,529
----------------
Other Assets
Software development costs 200,000
----------------
Total Other Assets 200,000
----------------
TOTAL ASSETS $ 338,627
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 14,124
Note payable - current portion 6,410
Note payable to stockholder 30,000
Note payable to bank 42,000
Commitment to issue common stock for services 71,740
----------------
Total Current Liabilities 164,274
----------------
Long Term Liabilities
Note payable - net of current portion 11,339
----------------
TOTAL LIABILITIES 175,613
----------------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, 100,000,000 shares authorized, 20,801,820
shares issued and outstanding 2,080
Additional paid-in capital 794,740
Deficit accumulated during development stage (633,806)
----------------
TOTAL STOCKHOLDERS' EQUITY 163,014
----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 338,627
================
3
See accompanying notes to financial statements.
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FROM JANUARY 31, 2000 (INCEPTION)
TO OCTOBER 31, 2000
OPERATING EXPENSES
Compensation $ 214,666
Consulting 223,289
General and administrative 194,006
----------------
Total Operating Expenses 631,961
----------------
Loss from operations (631,961)
Other expense
Interest expense (1,845)
----------------
NET LOSS $ (633,806)
================
Net loss per share - basic and diluted $ (.03)
================
Weighted average number of shares outstanding
during the period - basic and diluted 20,335,623
================
4
See accompanying notes to financial statements.
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JANUARY 31, 2000 (INCEPTION) TO
OCTOBER 31, 2000
Deficit
Additional Accumulated
Common Stock Paid-In During Development
Shares Amount Capital Stage Total
----------------- --------------- ------------------ ------------------- ---------------
Common stock issued for services to founders 20,000,000 $ 2,000 $ - $ - $ 2,000
Common stock issued for cash 686,900 69 686,831 - 686,900
Common stock issued for services 114,920 11 114,909 - 114,920
Offering costs - - (7,000) - (7,000)
Net loss from January 31, 2000 (inception) to
October 31, 2000 - - - (633,806) (633,806)
----------------- --------------- ------------------ ------------------- ---------------
BALANCE, OCTOBER 31, 2000 20,801,820 $ 2,080 $ 794,740 $ (633,806) $163,014
================= =============== ================== =================== ===============
5
See accompanying notes to financial statements.
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FROM JANUARY 31, 2000 (INCEPTION)
TO OCTOBER 31, 2000
Cash flows from operating activities
Net loss $ (633,806)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 7,585
Stock issued for services 116,920
Commitment to issue common stock for services 71,740
Changes in operating assets and liabilities:
(Increase) decrease in:
Prepaid expenses (2,500)
Deferred offering costs (4,985)
Increase (decrease) in:
Accounts payable and accrued liabilities 14,124
---------------
Net cash (used in) operating activities (430,922)
---------------
Cash flows from investing activities
Purchase of property and equipment (107,365)
Payment of software development costs (200,000)
---------------
Net cash (used in) investing activities (307,365)
---------------
Cash flows from financing activities
Borrowings 77,000
Repayment of debt (5,000)
Proceeds from sale of common stock 686,900
Offering costs (7,000)
---------------
Net cash provided by financing activities 751,900
---------------
Net increase in cash 13,613
Cash and cash equivalents at beginning of period -
---------------
Cash and cash equivalents at end of period $ 13,613
===============
Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
Cash paid during the year for:
Interest $ 1,845
===============
During March 2000, the Company acquired a vehicle at a purchase price of $28,557
for cash of $8,000 and a note payable of $20,557.
6
See accompanying notes to financial statements.
COMMUNICATE NOW.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2000
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Description of Business and Summary of Significant Accounting Policies
--------------------------------------------------------------------------
Communicate Now.Com, Inc. (the "Company") was incorporated on January 31,
2000 under the laws of the State of Delaware and has elected a fiscal year end
of December 31.
The Company is in the development stage and operates a website,
www.bizfinders.com, containing a business information database consisting of
names, addresses and phone numbers of approximately 11 million U.S. businesses.
Visitors to this website may use a search engine to locate businesses. The
website became operational on November 1, 2000. Revenue will be derived from
Internet display advertisements, that appear on the website, which are developed
at point-of-sale visits by the Company's sale representative to customer sites.
Activities during the development stage include raising capital and development
of the Company's web site, technology, and infrastructure.
(B) Use of Estimates
--------------------
In preparing financial statements, management is required to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period. Actual results
may differ from these estimates.
(C) Cash Equivalents
--------------------
For the purpose of the cash flow statement, the Company considers all
highly liquid investments with original maturities of three months or less at
the time of purchase to be cash equivalents.
(D) Property and Equipment
--------------------------
Property and equipment are stated at cost, less accumulated depreciation.
Expenditures for maintenance and repairs are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful life's of the assets of five to seven years.
(E) Software Development Costs
------------------------------
In a ccordance with EITF Issue No. 00-2, the Company accounts for its web
site advertisment development software in accordance with Statement of Position
No. 98-1 "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use" ("SOP 98-1').
SOP 98-1 requires the expensing of all costs of the preliminary project
stage and the training and application maintenance stage and the capitalization
of all internal or external direct costs incurred during the application
development stage. The Company amortizes the capitalized cost of software
developed or obtained for internal use over an estimated life of three years.
Internal use software license fees paid to third parties are charged to
operations as incurred.
(F) Long-Lived Assets
---------------------
During 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
be Disposed Of" ("SFAS 121"), was issued. SFAS 121 requires the Company to
review long-lived assets and certain identifiable assets related to those assets
for impairment whenever circumstances and situations change such that there is
an indication that the carrying amounts may not be recoverable. If the
non-discounted future cash flows of the enterprise are less than their carrying
amount, their carrying amounts are reduced to fair value and an impairment loss
is recognized. The adoption of this pronouncement did not have a significant
impact on the Company's financial statements for the period January 31, 2000
(inception) to October 31, 2000.
(G) Advertising
---------------
In accordance with Accounting Standards Executive Committee Statement of
Position 93-7, ("SOP 93-7") costs incurred for producing and communicating
advertising of the Company, are charged to operations as incurred. Advertising
costs for the period ended October 31, 2000 was $11,039.
(H) Stock-Based Compensation
----------------------------
The Company accounts for stock options issued to employees in accordance
with the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts are amortized over the respective vesting periods of the
option grant. The Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," which permits entities to provide pro
forma net income (loss) and pro forma earnings (loss) per share disclosures for
employee stock option grants as if the fair-valued based method defined in SFAS
No. 123 had been applied.
The Company accounts for stock options issued to non-employees for goods or
services in accordance with SFAS 123.
The Company accounts for stock issued for goods or services at the stock's
fair market value on the grant dates.
(I) Income Taxes
----------------
The Company accounts for income taxes under the Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period which includes the enactment date.
(J) Net Loss Per Common Share
-----------------------------
Basic net income (loss) per common share (Basic EPS) excludes dilution and
is computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the year. Diluted net income per share (Diluted
EPS) reflects the potential dilution that could occur if stock options or other
contracts to issue common stock, such as convertible notes, were exercised or
converted into common stock. The assumed exercise of common stock equivalent was
not utilized since the effect was antidilutive. At October 31, 2000 there were
375,000 common stock options outstanding which may dilute future earnings per
share.
(K) Fair Value of Financial Instruments
---------------------------------------
Statement of Financial Accounting Standards No. 109, "Disclosures about
Fair Value of Financial Instruments", requires disclosures of information about
the fair value of certain financial instruments for which it is practicable to
estimate that value. For purposes of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced sale or
liquidation.
The carrying amounts of the Company's short-term financial instruments,
including accounts payable and accrued liabilities, and notes payable,
approximate fair value due to the relatively short period to maturity for these
instruments.
The carrying value of the Company's long-term debt approximates fair value
because the interest rate on this instrument approximates the Company's
borrowing rate at October 31, 2000.
(L) New Accounting Pronouncements
---------------------------------
The Financial Accounting Standards Board has recently issued one new
accounting pronouncement. Statement No. 133 as amended by Statement No. 137 and
138, "Accounting for Derivative Instruments and Hedging Activities" established
accounting and reporting standards for derivative instruments and related
contracts and hedging activities. This statement is effective for all fiscal
quarters and fiscal years beginning after June 15, 2000.
The adoption of this pronouncement did not have a material effect on the
Company's financial position or results of operations.
(M) Segment Information
-----------------------
The Company applies Statement of Financial Accounting No. 131 "Disclosures
about Segments of an Enterprise and Related Information." The Company currently
operates in one segment and has no revenues and geographic concentrations,
therefore, segment information is not presented.
NOTE 2 PROPERTY AND EQUIPMENT
Property and equipment consists of the following at October 31, 2000:
Automobile $ 28,557
Machinery and equipment 80,889
Furniture and fixtures 15,668
-------------
-------------
125,114
Less: Accumulated depreciation (7,585)
-------------
$ 117,529
=============
Depreciation was $7,585 for the period from January 31, 2000 (inception) to
October 31, 2000.
NOTE 3 SOFTWARE DEVELOPMENT COSTS
Pursuant to SOP 98-1, as of October 31, 2000, the Company capitalized
$200,000 in software application development costs paid to a third party
contractor to develop their web site advertisement development and maintenance
software (See Notes 1(A) and 6(E)(iii)). No amortization has been taken as of
October 31, 2000 since the asset had not yet been placed in service. The
Company placed the software in service on November 1, 2000 and began amortizing
it over three years at that date.
During the period from January 31, 2000 (inception) to October 31, 2000,
the Company expensed $31,250 in database license fees and $6,207 of other
software and product development costs.
NOTE 4 NOTES PAYABLE
Notes payable to unrelated parties consists of the following at October 31, 2000:
Note payable due in monthly installments of $697, including $ 17,749
interest at 13.48%, due May 2003, secured by vehicle
Line of credit note payable to bank, interest at prime plus 2%, due on demand.
Secured by all present and future equipment of the Company, right of offset
against the Company's bank account, guaranteed by principal stockholder. 42,000
Less current portion (48,410)
-----------------
$ 11,339
=================
The line of credit note payable to bank of $42,000 was paid in full in November
2000.
The note payable to stockholder of $30,000 is at 6.5%, due by October 16,
2001 and unsecured. The note was paid down by $3000 in November 2000.
Long-term debt maturities are as follows:
Period ending October 31:
-------------------------
2001 $ 78,410
2002 7,284
2003 4,055
----------------
----------------
$ 89,749
================
NOTE 5 STOCKHOLDERS' EQUITY
(A) Stock Issuances
-------------------
The Company issued 20,000,000 shares of common stock to its founders on
January 31, 2000 in exchange for services valued at $2,000.
On February 23, 2000, the Company issued a private placement memorandum, as
amended, pursuant to Regulation D, Rule 506, offering up to 11,000,000 shares of
its common stock at $1 per share or a maximum of $11,000,000. Through October
31, 2000 the Company issued 686,900 shares for cash of $686,900 and issued
114,920 shares for services performed through October 31, 2000, valued at
$114,920 pursuant to this offering. Deferred offering costs of $7,000 were
charged to additional paid-in capital as of October 31, 2000. (See Note 9)
(B) Stock Options
-----------------
In August 2000 the Company granted a total of 375,000 common stock options
to three directors at an exercise price of $1.00 per share. The options vest
immediately, have no definitive expiration date and may be exercised only as
long as the individual is a member of the Board of Directors.
In accordance with SFAS 123, for options issued to employees, the Company
applies APB Opinion No. 25 and related interpretations. Accordingly, no
compensation cost has been recognized for options issued as of October 31, 2000.
Had compensation cost for the Company's options issued to directors been
determined on the fair value at the grant dates consistent with SFAS 123, the
Company's net loss for the period ended October 31, 2000 would have been
increased to the pro-forma amounts indicated below.
Net loss As reported $ (633,806)
Pro forma $ (697,556)
Net loss per share -
basic and diluted As reported $ (0.03)
Pro forma $ (0.03)
The effect of applying Statement No. 123 is not likely to be representative
of the effects on reported net income (loss) for future years due to, among
other things, the effects of vesting.
For financial statement disclosure purposes, the fair market value of each
stock option granted to directors was estimated on the date of grant using the
Black-Scholes Model in accordance with SFAS 123 using the following
weighted-average assumptions: fair market value of common stock $1.00, expected
dividend yield 0%, risk-free interest rate of 6.17%, volatility 0% and expected
term of three years.
A summary of the options issued as of October 31, 2000 and changes during
the year is presented below:
Weighted Average
Number of Options Exercise Price
-------------------- ---------------------
Stock Options
-------------
Balance at beginning of period - $ -
Granted 375,000 $ 1.00
Exercised - $ -
Forfeited - $ -
-
-------------------- ------------------
Balance at end of period 375,000 $ 1.00
==================== ==================
Options exercisable at end of period 375,000 $ 1.00
Weighted average fair value of options granted
during the period $ 0.17
================
The following table summarizes information about stock options outstanding
at October 31, 2000:
Options Outstanding Options Exercisable
--------------------------------------------------------------------- -------------------------------
Weighted Number
Number Average Weighted Exercisable Weighted
Range of Outstanding Remaining Average at Average
Exercise at October Contractual Exercise October 31, Exercise
Price 31, 2000 Life Price 2000 Price
----------- -------------- -------------- ------------ --------------- ------------
$ 1.00 375,000 N/A 1.00 375,000 1.00
-------------- ------------ --------------- ------------
375,000 N/A $ 1.00 375,000 $ 1.00
============== ============== ============ =============== ============
NOTE 6 COMMITMENTS AND CONTINGENCIES
(A) Leases
----------
The Company currently leases office space under an Operating Lease
Agreement, which started May 1, 2000 and expires April 30, 2001. Rent under this
lease is $1,228 per month.
On July 15, 2000, the Company leased additional space in the same office
building under a new lease at $600 per month. This lease also expires April 30,
2001.
Total rent expense for the period ended October 31, 2000, was $10,159.
Future minimum lease payments under the operating leases are as follows:
Period ended October 31:
2001 $ 10,968
======================
(B) Employment Agreements
-------------------------
In March 2000, the Company entered into three one-year employment
agreements to pay two employees a base salary of $100,000 and the third employee
$120,000. The two employees will also receive a performance based bonus
consisting of $125,000, 25,000 shares of restricted stock and stock options to
purchase 25,000 shares at $1.00 per share. If the performance bonus objectives
are not met, a second tier bonus will pay each employee $3.45 for each customer
sale up to 36,100 customers. One employee will receive an additional $2.00 and
one restricted common share for each customer sale made over 36,100 if the
original bonus objectives are met. As of October 31, 2000, the performance
bonuses have not been paid.
Subsequent to October 31, 2000 the Company entered into two one-year
employment agreements with salaries of $38,500 and $52,500 and sign-on bonuses
of 5,000 common shares each.
(C) Consulting Agreements
-------------------------
The Company enters into various short-term consulting agreements, generally
three months, whereby cash and/or capital stock is paid.
At October 31, 2000, there was one consulting agreement with a service
period of October 20, 2000 to January 20, 2001 whereby the consultant will
receive 600,000 shares of common stock. The Company recognized a consulting
expense of $71,740 and a related liability for the period from October 20, 2000
to October 31, 2000. Subsequent to October 31, 2000 the Company entered into
four additional consulting agreements whereby the consultants will receive an
aggregate 650,000 shares. All of the above 1,250,000 were issued as of the date
of the accompanying audit report. The Company will recognize the related
expenses over the service periods of the agreements.
(D) Advertising and Promotional Services Agreements
---------------------------------------------------
On June 20, 2000 (the "effective date") the Company entered into two
agreements (the "Agreements") with service providers (the "Service Providers")
to receive advertising and promotional services as stipulated in the Agreements.
Through November 2000, no services were performed by the service providers
and no payments were made by the Company.
In November 2000 these agreements were cancelled and both parties released
each other from any obligations or liabilities.
(E) Other Agreements
--------------------
(i) A legal services agreement entered into in June 2000 requiring payment
of $10,000 and 100,000 shares of common stock for services rendered relating to
the Company filing a proposed SB-2 with the Securities and Exchange Commission.
As of the date of the accompanying audit report, such services were
substantially complete and the stock was issued.
(ii) A license fee of $75,000 per year, payable in twelve monthly
installments of $6,250, commencing May 2000 and expiring April 2001. (See Notes
1(E) and 3). As of October 31, 2000 total license fees charged to operations was
$31,250.
(iii) A software development fee of $200,000 paid as of October 31, 2000
and reflected as software development costs on the balance sheet. (See Notes
1(E) and 3). The agreement also commits the Company to minimum maintenance
charges of $3,200 per month from July 2000 through the expiration of the
agreement on May 25, 2001. All software programs and code developed under this
agreement, remain the property of the Company.
(iv) A one-year network service agreement entered into in July 2000 with a
onetime fee of approximately $4,250 and a monthly fee of approximately $6,640.
NOTE 7 INCOME TAXES
There was no income tax expense for the period October 31, 2000 due to the
Company's net losses.
The Company's tax expense differs from the "expected" tax expense for the
period ended October 31, 2000, (computed by applying the Federal Corporate tax
rate of 34% to loss before taxes), as follows:
Computed "expected" tax expense (benefit) $ (215,494)
Effect of net operating losses 215,494
--------------
$ -
==============
The effects of temporary differences that gave rise to significant portions
of deferred tax assets and liabilities at October 31, 2000 are as follows:
Deferred tax assets:
Net operating loss carryforward 215,494
Total gross deferred tax assets 215,494
Less valuation allowance (215,494)
--------------
Net deferred tax assets $ -
==============
The Company has a net operating loss carryforward of approximately $634,000
available to offset future taxable income through 2020.
There was no valuation allowance at January 31, 2000. The net change in
valuation allowance during the period ended October 31, 2000 was an increase of
$215,494.
NOTE 8 GOING CONCERN
As reflected in the accompanying financial statements, the Company is a
development stage company with no revenues, losses of $633,806 and a working
capital deficiency of $143,176. The ability of the Company to continue as a
going concern is dependent on the Company's ability to raise additional capital
and implement its business plan. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
The Company anticipates raising additional working capital and as of the
date of the accompanying audit report subsequent to October 31, 2000 has issued
additional shares as discussed in Note 9. The Company has also begun operations
and generated sales and related revenues starting November 1, 2000. The Company
is currently preparing a Securities and Exchange Commission Form SB-2 to
register the selling securityholders outstanding common stock in order to become
quoted on the OTC Bulletin Board. Management believes that the actions presently
being taken to obtain additional funding and implement its business plan provide
the opportunity for the Company to continue as a going concern.
NOTE 9 SUBSEQUENT EVENTS
During November and December 2000, the Company issued 737,000 shares of
common stock for $737,000 cash. In addition, 1,460,000 shares were issued for
services. For financial accounting purposes the 1,460,000 shares were valued at
$1.00 per share based on concurrent cash issuances resulting in an expense of
$1,460,000.
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Salberg Company, P.A., Certified Public Accountants,
audited our Financial Statements for the period from January 31, 2000
(inception) to October 31, 2000. Prior to this, the accounting firm of Weinberg
& Company, PA, Certified Public Accountants, audited our Financial
Statements for the period from January 31, 2000 (inception) to June 30, 2000.
Since inception, we have had no changes in or disagreements with our
accountants.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ninety days after the effectiveness of the registration statement of
which this prospectus is a part, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PART II - INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws provide that we may indemnify any persons who:
(a) were or are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation or is or was serving at the request of
such corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) were or are, or are threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred y
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of nay claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that despite he
adjudication of liability but in view of all the circumstances of the case such
person is fairly and reasonably entitled to indemnify for such expenses which
the Court of Chancery or such other court shall deem proper. Any indemnification
under subsections (a) and (b) of this section, unless ordered by a court, shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify officers and directors in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses that
such officer or director actually and reasonably incurred.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling an issuer
pursuant to the foregoing provisions, the opinion of the Commission is that such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
INDEMNIFICATION AGREEMENTS
We have agreed to indemnify and hold harmless all of our Directors,
Officers, employees, consultants, sales placement agents, and fiduciaries, (the
"indemnified party"), by entering into indemnification agreements with such
persons, to the fullest extent permitted by applicable law. The agreement
includes indemnification against expenses, including reasonable attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement actually and
reasonably incurred by the Indemnified Party in connection with any civil or
criminal action or administrative proceeding arising out of the Indemnified
Party's performance of their duties in regard to all aspects arising from this
Offering of our securities. Our bylaws and Certificate of Incorporation provide
a blanket indemnification that we shall indemnify to the fullest extent under
the law our directors and officers against certain liabilities incurred with
respect to their service in such capacities. In addition, our Certificate of
Incorporation provides that the personal liability of directors and officers to
us and our shareholders 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 of the Corporation 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 a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by us 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.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without
consideration to future contingencies, incurred or expected to be incurred by
our Corporation in connection with the issuance and distribution of the
securities being offered by this prospectus. Items marked with an asterisk (*)
represent estimated expenses. We have agreed to pay all the costs and expenses
of this offering. Selling security holders will pay no offering expenses.
ITEM EXPENSE
---- -------
SEC Registration Fee $
Legal Fees and Expenses $
Accounting Fees and Expenses $
Miscellaneous* $
=============================================
Total* $
* Estimated Figure
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Between February 23, 2000 and December 8, 2000, we sold 1,423,900 shares of
our Common Stock to 71 persons at a price of $1.00 per share. As of the date of
this prospectus, we have raised proceeds of $1,423,900.
On January 31, 2000, we issued 10,000,000 shares to David Hancock and
10,000,000 to Damber Production, Inc. for services rendered in the course of our
corporate formation. On July 6, 2000, we issued 2,205 shares to Tom Ozgo for
brokerage services rendered. On July 24, 2000, we issued 11,000 shares to
William Best for consulting services rendered. On August 1, 2000, we issued
1,715 shares to Tom Ozgo for brokerage services rendered. On November 13, 2000
we issued 50,000 shares to JCL Associates for services rendered in connection
with software development. On November 13, 2000 we issued 600,000 shares to
Charles Bitters for consulting services rendered. On November 13, 2000 we issued
150,000 shares to Charlie Cleveland for consulting services rendered. On
December 4, 2000 we issued 125,000 shares to Charlie Cleveland for consulting
services rendered. On December 5, 2000 we issued 5,000 shares to Bernadette Pate
as an employee sign-on bonus. On November 15, 2000 we issued 5,000 shares to
Sheila Llewellyn as an employee sign-on bonus. On November 16, 2000 we issued
150,000 shares to Richard Michael for consulting services rendered. On December
5, 2000 we issued 250,000 shares to Chance Research Corporation for services
rendered.
The aforementioned securities were issued under the exemption from
registration provided by Section 4(2) of the Act, as amended. We believed this
exemption is available because these issuances were transactions not involving a
public offering. There was no general solicitation or advertising used to offer
our shares; each investor had a prior relationship with the Company. In
addition, each investor had the knowledge and experience in financial and
business matters to evaluate the merits and risks of this prospective investment
and therefore was either accredited or sufficiently sophisticated to undertake
such an investment.
ITEM 27. EXHIBITS
------------------- ---------------------------------------------------------------------------------------
EXHIBIT NUMBER EXHIBIT DESCRIPTION
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
3.1 Articles of Incorporation
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
3.2 Bylaws
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
5 Legal Opinion
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
8 Consents of Experts
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.1 Database Licensing Agreement between COMMUNICATE NOW.COM, INC. and Acxiom Corporation.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.2 Software Development Agreement between COMMUNICATE NOW.COM, INC.y and JCL Associates.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.3 Networking Agreement between COMMUNICATE NOW.COM, INC. and Interliant, Inc.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.4 Website Mapping Licensing Agreement between COMMUNICATE NOW.COM, INC. and ESRI.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.5 Billing Agreement between COMMUNICATE NOW.COM, INC. and ExpressBill, Inc.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
10.6 Leasing Agreement between COMMUNICATE NOW.COM, INC. and 3513 L.C.
------------------- ---------------------------------------------------------------------------------------
------------------- ---------------------------------------------------------------------------------------
27 Financial Data Schedule
------------------- ---------------------------------------------------------------------------------------
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a post-
effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement;
c. Include any additional or changed material information on the plan of
distribution.
2. That, for determining liability under the Securities Act of 1933, to treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
4. 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 the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities,
other than the payment by the Registrant of expenses incurred and paid by
a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
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 its behalf by the undersigned, in the City of Temple,
State of Texas on _________________, 2000.
(REGISTRANT) COMMUNICATE NOW.COM, INC.
By____________________________________
(Signatures and Title)
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ David Hancock /s/ Bill Elliott
______________________________ ______________________________
David Hancock Bill Elliott
(President, Chairman of the Board, (Director)
Chief Executive Officer) December 22, 2000
December 22, 2000 ______________________________
______________________________
/s/ Dennis J. Bash /s/ Randal Leblanc
______________________________ ______________________________
Dennis J. Bash Randal Leblanc
(Vice President) (Director)
December 22, 2000 December 22, 2000
______________________________ ______________________________
/s/ Dana Melroy Ransom, Jr. /s/ John C. Winkler
______________________________ ______________________________
Dana Melroy Ransom, Jr. John c.Winkler
(Vice President) (Director)
December 22, 2000 December 22, 2000
______________________________ ______________________________
(Signature)
__________
(Principle Financial Officer)
(Date)
__________
