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As filed with the Securities and Exchange Commission on September 11, 2000
Registration No. 333-40672
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
to
FORM SB-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Yorktownuniversity.com, Inc.
(Name of small business issuer in its charter)
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Virginia 8221 54-1948373
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(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code No.) Identification No.)
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P.O. Box 653
Yorktown, VA 23690
757.873.1100
(Address and telephone number of principal executive offices)
P.O. Box 653
Yorktown, VA 23690
(Address of principal place of business or intended principal place of business)
Richard J. Bishirjian, Ph.D.
P.O. Box 653
Yorktown, VA 23690
757.873.1100
(Name, address and telephone number of agent for service)
Copies of all communications to:
David G. Edwards
Doepken Keevican & Weiss
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219
412.355.2743
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Title of each class of maximum aggregate Amount of
securities to be registered offering price (1) registration fee(2)
Common Stock................. $4,500,000 $1,188
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(2) This amount was paid upon the initial filing of this Registration Statement
by the Registrant on June 30, 2000.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to such Section
8(a), may determine.
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We will amend and complete the information in this prospectus. Although we are
permitted by US federal securities law to offer these securities using this
prospectus, we may not sell them or accept your offer to buy them until the
documentation filed with the SEC relating to these securities has been declared
effective by the SEC. This prospectus is not an offer to sell these securities
or our solicitation of your offer to buy these securities in any jurisdiction
where that would not be permitted or legal.
SUBJECT TO COMPLETION--September 11, 2000
Prospectus
, 2000
Yorktownuniversity.com, Inc.
450,000 Shares of Common Stock
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. Yorktownuniversity.com is a recently formed, . This is not an underwritten offering. The
nonaccredited for-profit university which proposes to offering will continue until February 28,
offer through the Internet for-credit college level 2001, unless all of the shares are earlier
and continuing education courses in the humanities and sold or we elect in our sole discretion to
social sciences that reflect conservative thinking and earlier terminate or extend the offering
philosophies. until a date not later than May 31, 2001.
. Yorktownuniversity.com, Inc. . This is our initial public offering, and
14 West Queen's Way no public market currently exists for our
Hampton, Virginia 23669 shares.
757.873.1100
E-mail address: [email protected] . All subscription funds received will be
held in escrow and not released to us for our
. Web sites: use unless and until at least 125,000 shares
www.yorktownuniversity.com ($1,250,000) are sold prior to the
---------------------------- termination of the offering. If
subscriptions for the minimum offering amount
The Offering: have not been received prior to the
termination date of the offering, all
. We are offering 450,000 shares at $10 per share, subscription funds will be returned to the
with a minimum subscription amount of $1,000 for 100 subscribers, without interest.
shares. No existing shareholders are selling shares
in the offering. The shares are being offered directly
by Yorktownuniversity.com, principally through the
Internet.
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Per Share (1) Minimum Offering (1) Maximum Offering (1)
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Proceeds to Yorktownuniversity.com: $10 $1,250,000 $4,500,000
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_________________
(1) Excluding estimated expenses of the offering of $75,000, all of which
will be borne by Yorktownuniversity.com. See "Use of Proceeds."
Yorktownuniversity.com does not intend to pay any selling compensation
or finders' fees in connection with the offering. See "Plan of
Distribution."
This investment involves a high degree of risk. See "Risk Factors" beginning on
page 5.
Neither the SEC nor any state securities commission has approved or disapproved
of the securities to be offered or has determined whether this prospectus is
truthful or complete. Nor have they made, nor will they make, any determination
as to whether anyone should buy these securities. Any representation to the
contrary is a criminal offense.
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TABLE OF CONTENTS
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Prospectus Summary........................................................................ 5
The Offering.............................................................................. 6
Risk Factors.............................................................................. 7
Use of Proceeds........................................................................... 13
Dividend Policy........................................................................... 15
Capitalization............................................................................ 15
Dilution.................................................................................. 16
Determination of Offering Price........................................................... 17
Management's Discussion and Analysis of Certain Relevant Factors.......................... 17
Business.................................................................................. 18
Management................................................................................ 34
Principal Stockholders.................................................................... 39
Description of Capital Stock.............................................................. 41
Certain Transactions and Policies......................................................... 43
Shares Eligible for Future Sale........................................................... 45
Plan of Distribution...................................................................... 45
Experts................................................................................... 47
Legal Matters............................................................................. 47
Additional Information.................................................................... 47
Index to Financial Statements............................................................. F-1
Annex A - Form of Subscription Agreement.................................................. A-1
Annex B - Form of Escrow Agreement........................................................ B-1
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The Virginia State Corporation Commission does not pass upon the adequacy or
accuracy of this disclosure document or upon the merits of this offering, and it
expresses no opinion as to the quality of this security.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read this entire prospectus carefully. This prospectus contains
forward-looking statements, which involve risks and uncertainties.
Yorktownuniversity.com's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this prospectus.
Yorktownuniversity.com, Inc.
Yorktownuniversity.com proposes to establish and operate an online
university offering courses in government, business, economics, philosophy and
other humanities disciplines taught by leading conservative scholars.
Yorktownuniversity.com proposes to offer courses that examine contemporary
problems of government, of American society and national security from a deeper,
philosophical, and historical tradition than is commonly found in American
education. Yorktownuniversity.com proposes to offer college level degree
courses and continuing education courses targeted to the following persons:
. High school and home school students who desire to take college
level courses for credit.
. Adult, working students, ages 24 to 45, seeking the BA degree.
. Officers and enlisted military personnel taking courses relative to
their employment as military professionals.
. Adults, over the age of 45, seeking intellectual enrichment or engaged
in a personal spiritual quest.
. Traditional college age students enrolled in other four year
undergraduate programs taking courses for transfer credit or looking
for conservative faculty to guide them in their field of interest.
Yorktownuniversity.com does not intend to offer courses in all subject
areas necessary to earn a college degree, but, rather, to focus on courses in
the disciplines catering to the political, economic and social interests of our
conservative students. Students desiring to enter Yorktownuniversity.com's
degree programs must earn a minimum of 30 academic credits in core curriculum
subjects at another institution before they will be accepted into our degree
program. See "Business - B.A. Programs." Yorktownuniversity.com will seek
accreditation for its degree programs from the Department of Education's
designated accrediting body for distance education providers, which it
anticipates will occur not earlier than three years after beginning operations
and will seek accrediting from a regional accrediting body, which it anticipates
will occur not earlier than five years after beginning operations.
We believe that many working adults are seeking degree programs that
provide flexibility to accommodate the fixed schedules and time commitments
associated with their professional and personal obligations. The Internet
provides a platform that enables working adult students to attend classes and
complete coursework on a more convenient schedule. In addition to offering
broader access, we believe that online learning degree programs, such as those
proposed to be offered by Yorktownuniversity.com, provide course content and
faculty instruction that compare favorably to a traditional campus-based
education.
Yorktownuniversity.com is named for Yorktown, the site of the concluding
battle of America's War of Independence. There, American and French forces, at
land and sea, defeated the British forces under the command of Lord Cornwallis.
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The Offering
Common stock offered 450,000 shares
Offering price $10.00 per share
Minimum subscription amount $1,000 (100 shares)
Subscription Subscribers must complete and return the
subscription agreement attached as Annex A.
Subscriptions may be withdrawn at the election
of the subscriber at any time prior to our
acceptance of the subscription and release of
the subscription funds from escrow.
Minimum offering 125,000 shares
Offering period Until February 28, 2001 unless all of the shares
are earlier sold or we elect in our sole
discretion to earlier terminate or extend the
offering to a date not later than May 31, 2001.
Escrow If subscriptions for the minimum offering amount
have not been received and accepted prior to the
termination date of the offering, which in no
event will extend beyond May 31, 2001, then all
subscription funds will be returned to
subscribers, with interest, within 10 days after
the termination of the offering. The date by
which subscriptions for the minimum offering
amount must be received and accepted may be
earlier for Minnesota investors. See "Plan of
Distribution-Escrow of Funds and Acceptance of
Subscriptions."
Escrow Agent Firstar Bank, N.A.
Common stock to be outstanding
after this offering if all
shares sold 928,166 shares
Use of proceeds We plan to use the proceeds from this offering
to develop, promote and begin operating our on-
line university, including, potentially, by
acquiring other courses or educational products
that are compatible with our objectives and
philosophy, and for other working capital and
general corporate purposes.
The share information above is based upon shares outstanding as of the
date of this prospectus and excludes shares that may be issued upon the exercise
of options. Unless otherwise indicated, all information contained in this
prospectus reflects the conversion of our outstanding Series A convertible
preferred stock into our common stock.
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RISK FACTORS
An investment in Yorktownuniversity.com common stock involves a high degree
of risk. You should consider carefully the following information about these
risks, together with the other information contained in this prospectus, before
you decide to buy Yorktownuniversity.com common stock. Our business, financial
condition, or results of operations could be adversely affected by any of these
risks. The price of Yorktownuniversity.com common stock could decline or you
could be unable to sell your shares due to any of these risks, and you may lose
part or all of your investment.
Risks Related to Our Business
We expect to generate operating losses and negative cash flow for the
foreseeable future.
We expect to generate operating losses and negative cash flow for the
foreseeable future as we intend to invest heavily to attract more students. We
will incur additional expenses for hiring new faculty and counselors, expanding
our product offering, and increasing our brand awareness. Accordingly we will
need to generate significant revenues to achieve profitability.
We may not be able to attract the number of students needed to generate
sufficient revenues to sustain our online university.
The concept of an online university designed to advance conservative
thinking is unique and has not been attempted by any other operator. In
particular, we may have difficulty promoting our university to prospective
students in our degree programs unless and until it receives accreditation.
Consequently, we do not know if our concept will find acceptance. We may be
unable to attract the number of students we need to sustain our online
university.
We lack many of the competitive advantages enjoyed by traditional colleges and
universities.
We lack some of the competitive advantages enjoyed by traditional colleges
and universities, primarily in the social and personal growth areas that form
part of campus life. Students will not be able to interact in the same physical
space with other students and faculty. Moreover, enrollment at
Yorktownuniversity.com does not offer students the opportunity to participate in
the athletic, fraternal and other student organizations that often are important
to student academic life.
We have no operating history by which you can assess our likely performance.
Yorktownuniversity.com is newly organized and has no operating history with
which to evaluate its likely performance. An investment in
Yorktownuniversity.com involves significant risk factors outlined under "Risk
Factors" and elsewhere throughout this prospectus that prospective investors
should consider before subscribing to purchase our shares. We may not be
successful in addressing these risks, and the failure to do so would have a
material adverse effect on our business and financial results.
We cannot adjust expenses for any particular quarter in response to revenue
shortfalls.
Most of our expenses do not vary directly with revenue and are difficult to
adjust in the short term. As a result, if revenue for a particular quarter is
below our expectations, we could not proportionately reduce operating expenses
for that quarter. Any revenue shortfall would therefore have a disproportionate
effect on our expected operating results for that quarter.
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Our success depends in part on our ability to develop courses and degree
programs in a cost-effective manner and on a timely basis.
Our success depends in part on our ability to develop courses and degree
programs in a cost-effective manner, and meet our students' needs in a timely
manner. The development of our degree programs may not be accepted by our
students or the online education market. Even if we are able to develop
acceptable courses and degree programs, we may not be able to introduce them as
quickly as our students require or as quickly as our competitors.
Capacity constraints or system disruptions to our computer networks could damage
our reputation and limit our ability to attract and retain students.
The performance and reliability of our computer infrastructure and systems
is critical to our reputation and ability to attract and retain students. Any
system error or failure may result in the unavailability of our computer
networks. Individual, sustained, or repeated occurrences could significantly
damage our reputation and result in a loss of potential or existing students. We
cannot assure you that we will be able to expand our computer infrastructure and
systems on a timely basis sufficient to meet demand for our programs.
Our computer systems and operations are vulnerable to interruption or
malfunction due to events beyond our control, including natural disasters and
telecommunications failures. Although we have contracted for redundant server
support, our formal disaster recovery plan has never been tested, and business
interruption insurance we purchase, if any, may not be sufficient to compensate
for losses that may occur. Any interruption to our web host's computer systems
or operations could have a material adverse effect on our ability to attract and
retain students.
Our computer networks may be vulnerable to security risks that could disrupt our
operations and require us to expend significant resources.
Our computer networks may be vulnerable to unauthorized access, computer
hackers, computer viruses, and other security problems. A user who circumvents
security measures could misappropriate proprietary information or cause
interruptions or malfunctions in our operations. Due to the sensitive nature of
the information contained on our networks, such as students' grades, our
networks may be targeted by hackers. As a result, we may be required to expend
significant resources to protect against the threat of these security breaches
or to alleviate problems caused by these breaches. Although we intend to
continue to implement industry-standard security measures, these measures may be
inadequate.
We may incur liability for the unauthorized duplication or distribution of class
materials posted online for class discussions.
In some instances, our instructors may post various articles or other
third-party content on the class discussion board. We may incur liability for
the unauthorized duplication or distribution of this material posted online for
class discussions. We cannot assure you that a third party will not raise a
claim against us for the unauthorized duplication of this material. Any of these
claims could subject us to costly litigation and impose a significant strain on
our financial resources and management personnel regardless of whether the
claims have merit. General liability insurance we purchase, if any, may not
cover or be adequate for potential claims of this type and we may be required to
alter the content of our classes or pay financial damages.
Our management has never operated a university.
Although the members of our board and management include seasoned
businesspersons and academicians, none of these individuals has experience
operating a university. We intend to use a portion of the proceeds of the
8
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offering to recruit individuals with such experience. However, we may not be
able to attract suitable candidates. If our management team is inadequate, we
will likely be unable to effectively and efficiently operate an online
university.
We cannot predict our future capital needs, and we may not be able to secure
additional financing.
We may need to raise additional funds in the future to fund our operations,
to expand our markets and product offerings, or to respond to competitive
pressures or perceived opportunities. We cannot assure you that additional
financing will be available on terms favorable to us, or at all. If adequate
funds are not available when required or on acceptable terms, we may be forced
to cease our operations, and even if we are able to continue our operations, our
ability to increase our students and revenues may be adversely affected.
We depend on licensed technology from third parties and our failure to maintain
these arrangements could disrupt our operations.
We rely on technology licensed from third parties for use in operating and
managing our computer networks. We cannot assure you that these technology
licenses will continue to be available on commercially reasonable terms, that
the technology will operate as intended, or that the technology or appropriate
licenses will be available at all. Our failure to maintain relationships with
these third-party license providers could disrupt our operations.
Our future growth depends on the continued growth of the Internet.
Our business relies on the Internet for its success. If the Internet does
not develop as an effective online educational delivery system, we may not grow
as planned.
A number of factors could inhibit the growth and acceptance of the
Internet, including:
. inadequate Internet infrastructure;
. security and privacy concerns;
. the lack of compelling content; and
. the unavailability of cost-effective, high-speed service.
We intend to generate additional revenue by selling advertisements on our Web
site and due to our lack of experience in generating advertising revenue and
lack of advertising sales personnel this business plan may not be successful.
To date, we have derived no revenue from advertising. We do not have
experience in generating advertising revenue and we do not currently have an
advertising sales force. Our ability to successfully generate revenue through
advertising may require us to locate third-party experts or specialists who
would develop or assist us in developing our advertising business plan. If we
are unable to locate these experts or specialists, we may fail to develop an
advertising business plan, which could constrain our revenue growth.
If our agreements with various portals and e-commerce Web sites do not perform
as expected, it could affect our ability to increase or maintain our
enrollments.
We may rely on agreements with various portals and e-commerce Web sites to
attract potential students to our Web site. These relationships may include
arrangements relating to the positioning of our brand name on Web browsers and
agreements with Internet service providers and portals. We may also rely on
other Web site operators that provide links to our Web site. We cannot assure
you that the services of those companies that provide access or links to our Web
site will achieve market acceptance or commercial success.
9
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Accordingly, there can be no assurance that our existing, or future,
relationships will result in sustained business relationships, new enrollments,
or increased revenues. We believe that our relationships with portals and e-
commerce Web sites are important to our ability to attract potential students
and advertisers. The failure of one or more of these relationships could
significantly reduce leads to our Web site, reduce our enrollments, and limit
our revenues.
Our failure to maintain our domain name could negatively impact our business.
We currently hold Internet domain names. Third parties may acquire
substantially similar or conceptually similar domain names that decrease the
value of our domain name and trademarks and other proprietary rights which may
hurt our business. Internet regulatory bodies generally regulate domain names.
The regulation of domain names in the United States and in foreign countries is
subject to change. Regulatory bodies could establish additional top-level
domains, appoint additional domain name registrars or modify the requirements
for holding domain names. The relationship between regulations governing domain
names and laws protecting trademarks and similar proprietary rights is unclear.
As a result, we may not acquire or maintain exclusive rights to our domain name
in the United States or in other countries in which we conduct business.
Our management maintains broad discretion with respect to the use of the
offering proceeds.
Our management will make all decisions with regard to allocation of the
offering proceeds. As a result, the offering proceeds may not be directed to
purposes that will enable us to succeed as a business. The ability of our
management to determine the best uses for the offering proceeds will have a
serious impact on our likelihood of success.
We are dependent on executive management.
We believe that our success depends on the continued employment of our
management team. If one or more members of our executive management team were
unable or unwilling to continue in their present positions, our business could
be materially adversely affected.
Richard J. Bishirjian, our president and chief executive officer, has an
instrumental role in the concept, direction and day to day business decisions of
Yorktownuniversity.com. If Dr. Bishirjian were to die or suffer a disability
that prevented him from participating in our business decisions on a daily
basis, it is likely that our business would experience serious setbacks. To
mitigate this effect, we will obtain key person life insurance with policy
limits of approximately $182,000. Currently, we do not carry key person life
insurance on any other person.
In addition, we have an employment contract only with Dr. Bishirjian for a
three year term. Therefore, any other executive is free to leave our employment
at any time and compete against us. Dr. Bishirjian could also leave us and
compete against us after the expiration of his contract.
You will not have had the benefit of a contemporaneous, independent review of
certain past transactions with insiders.
At the time we originally issued our common stock to our founders and
agreed to pay management fees to an affiliate of one of the founders, we did not
have any independent directors. See "Certain Transactions." Although our
current, independent directors have since ratified these transactions, we may
not have entered into these transactions originally had they been scrutinized by
a body of independent directors. For example, the percentage of our capital
stock issued to the founders was determined without benefit of an independent
examination and may not reflect an appropriate value for their contribution to
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Yorktownuniversity.com.
A member of our management may have a conflict of interest that affects his
decisions with respect to our business.
Richard J. Bishirjian, Ph.D. founded, owns and has managed a consulting
company, CMP International Consulting, Inc. since 1983. Dr. Bishirjian serves
as our president and chief executive officer and also holds a directorial
position. We have entered into a management agreement with CMP International
Consulting, in part to enable Dr. Bishirjian to be compensated for services
rendered to us before we commence operations. As of May 31, 2000, we have paid
management fees of $4,700 to CMP International Consulting for services rendered
in organizing Yorktownuniversity.com, securing Internet domain registrations,
recruiting Faculty, making applications for state licenses and administering our
offering of shares to the public. In June 2000, our board approved payment of
management fees of $20,300 for an eight-month period, during which CMP
International Consulting will manage university affairs. Dr. Bishirjian's
relationship with CMP International Consulting may influence his decisions as
our president and chief executive officer and a member of our board, thus
creating a conflict of interest that may cause our business to suffer.
Risks Related to Our Industry
The market for online learning is in an early stage and may not continue to
develop.
The market for online learning is in an early stage of development and it
currently represents only a small percentage of the overall higher education and
training market. The use of online education and training may not increase as we
anticipate and our programs may not be accepted by students. Also, some
educators are opposed to online education and have the capacity to negatively
influence the market for our programs. Some critics have also expressed concerns
regarding the perceived loss of control over the educational process that can
result from the outsourcing of online campuses and courses. We may be unable to
continue to increase our number of students and revenues if the higher education
and training market does not more generally accept online learning.
We operate in a highly competitive market with rapid technology changes and we
may not have the resources needed to compete successfully.
Online education is a highly fragmented and competitive market that is
subject to rapid technological change. Competitors vary in size and organization
from traditional colleges and universities, many of which have some form of
online education programs, to for-profit schools, corporate universities, and
software companies providing online education and training software. We expect
the online education and training market to be subject to rapid changes in
technologies. Our success will depend on our ability to adapt to these changing
technologies. We may not have the resources necessary to compete with the
rapidly changing technologies being developed by our competitors.
We are not accredited and our inability to obtain accreditation would
significantly reduce demand for our programs.
Yorktownuniversity.com is currently not an accredited university and will
not be eligible to apply for accreditation until we meet specified accrediting
standards, including having graduated our first degree candidate. We can offer
no assurances that we will ever become an accredited institution. Unless and
until we are accredited, we will be unable to participate in federal financial
aid programs or federal tuition assistance programs established for military
personnel. In addition, unless and until we are accredited, we may have
difficulty in attracting students to our degree programs, or in attracting and
retaining a high quality faculty.
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Ultimately, a failure to obtain appropriate accreditation will diminish our
standing as an institution of higher learning and jeopardize our ability to
successfully operate our business.
State regulations for distance education are currently uncertain and may require
us to expend significant resources and significantly limit our ability to expand
our business.
Some state regulations for distance education providers are uncertain. We
may have to devote significant time and financial resources in order to comply
with various state laws and regulations, if states determine to regulate online
education or are permitted to tax it. We may not have sufficient resources to
comply with any new laws and regulations that may be enacted, which could
preclude us from operating in one or more states and could significantly limit
our ability to expand our business.
Government regulations relating to the Internet could increase our cost of doing
business or affect our ability to grow.
The increasing popularity and use of the Internet and other online services
for the delivery of education may lead to the adoption of new laws and
regulations in the U.S. or elsewhere. These new laws could relate to issues such
as online privacy, copyright and trademark, sales taxes, and fair business
practices or the requirement that online education institutions qualify to do
business as a foreign corporation or be licensed as a school in one or more
jurisdictions. Any new laws or regulations related to doing business over the
Internet could increase our cost of doing business or affect our ability to
increase our number of students and revenue.
Risks Related to this Offering
We will not have an underwriter to conduct an independent review of this
offering.
The proposed direct public offering will be conducted without an
underwriter. Underwriters customarily take appropriate steps to ensure that the
information contained in the prospectus is accurate and complete. The
underwriter typically participates in the preparation of the prospectus, is
independent of the issues and is represented by separate legal counsel. Since
there will be no underwriter in this offering, investors will not have the
benefit of an independent review and investigation of the prospectus.
There is no market for our shares and you may not be able to sell shares you
hold for what you believe is a fair price.
It is likely that there will be no liquid market for our shares following
this offering, and a market for our shares may never develop. We may not have a
market maker for our shares, in which case any trading of our shares may prove
extremely difficult. Although we intend to explore the possibility of seeking
to have our shares included on the OTC Bulletin Board or listed with alternative
trading systems, even if we are successful in doing so, there can be no
assurance that the volume of trades will be significant. In any of these
events, shareholders may not be able to sell their shares when desired, if at
all, or may not be able realize what they perceive is fair value for their
shares.
If we were to trade our common stock on a securities market, the market price of
our common stock could fluctuate significantly, subjecting us to securities
class action litigation.
The stock market has experienced extreme price and volume fluctuations and
the market prices of securities of Internet-related companies have been
particularly volatile. In the past, companies that have experienced such
volatility have sometimes been the object of securities class action litigation.
Securities class
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action litigation may result in substantial costs and a diversion of our
management's attention and resources.
If we were to trade our common stock on a securities market, the market price of
our common stock may decline due to shares of our common stock eligible for
future sale.
Upon completion of this offering, existing shareholders will have 928,398
shares of our common stock.
We cannot predict the effect, if any, that sales of our common stock, or
the availability of shares for sale, will have on the market price prevailing
from time to time. Nevertheless, sales of significant amounts of our common
stock in the public market, or the perception that those sales may occur, could
adversely affect the prevailing market price.
You will suffer immediate and substantial dilution by investing in our shares.
As a result of this offering there will be a substantial and immediate
dilution to the subscribers in the shares offered hereby since the net tangible
book value will be reduced proportionately per share. Purchasers of our shares
in this offering will incur immediate dilution of $7.70 representing 70.7% of
the offering price of $10 per share if the minimum number of shares are sold and
immediate dilution of $5.00 representing 50.0% of the offering price of $10 per
share if the maximum number of shares are sold.
As a new investor, you will bear the greatest risk of loss.
Existing shareholders acquired their shares at a price (on average, $.45
per share) that is substantially below the public offering price. Accordingly,
all new investors will bear the greatest risk of loss.
If we raise only the minimum amount of proceeds, we will need to make smaller
allocations for each intended use of proceeds.
Although we have calculated the minimum amount of money we need for each
intended use of proceeds, and based on our minimum offering on this calculation,
our estimate actually may be incorrect. The minimum offering may not provide us
with enough funds to enable our business to succeed.
USE OF PROCEEDS
The net proceeds we will receive from the sale of a minimum of 125,000
shares is estimated to be $1,175,000 after deducting estimated offering expenses
of not more than $75,000. Certain additional offering expenses will be paid
with the proceeds from existing funds. The net proceeds we will receive from
the sale of a maximum of 450,000 shares is estimated to be $4,425,000 after
deducting estimated offering expenses of $75,000.
We intend to use the net proceeds from this offering for general corporate
purposes, including to pay marketing expenses and costs necessary to begin
operations of the online university and for working capital. The costs to be
incurred to enable us to market our online university and to begin operations
include the costs of developing our web site, recruiting faculty, administrative
and management personnel, paying salaries of faculty and administrative
personnel, programming course offerings, paying administrative and officer
salaries, leasing administrative offices, purchasing or leasing office
furniture, computer equipment and software, direct mail and electronic media
marketing and radio and print advertising. If we sell more than the minimum
number of shares offered, we expect to be able to be able to program more
courses and to more aggressively recruit faculty, including internationally.
13
<PAGE>
In addition, we may acquire existing courses or educational products that
are compatible with our objectives and philosophy.
In determining whether to acquire existing courses, we will evaluate
whether (1) the content of the courses meets our qualitative and philosophical
standards and (2) the costs of acquisition exceed the cost of developing like
courses, after taking into account expected revenues from the acquired courses.
We expect to have sufficient funds to operate for in excess of 12 months
even if only the minimum number of shares is sold. Pending the specified use of
funds, we intend to invest the net proceeds from this offering in investment
grade, interest-bearing securities.
Nevertheless, the above-stated intended uses for our net proceeds are
subject to change. Potential areas for reallocation include salaries, marketing
and acquisitions, depending on the total net proceeds from this offering. Any
and all allocation decisions will be made by our chief executive officer in
consultation with our chief operating officer, subject to approval or
ratification by the board of directors.
Following is our estimated use of proceeds in tabular form:
<TABLE>
<CAPTION>
Minimum Percentage of Maximum Percentage of
Offering Minimum Offering Maximum
Offering Offering
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Offering Expenses (1) $ 75,000 6.0% $ 75,000 1.7%
--------------------------------------------------------------------------------------------------------------------------------
Web site Development (2) 70,000 5.6% 225,000 5.0%
--------------------------------------------------------------------------------------------------------------------------------
Recruitment (3) 5,000 0.4% 100,000 2.2%
--------------------------------------------------------------------------------------------------------------------------------
Programming of Course Offerings (4) 300,000 24.0% 1,000,000 22.2%
--------------------------------------------------------------------------------------------------------------------------------
Furniture and Equipment (5) 35,000 2.8% 50,000 1.1%
--------------------------------------------------------------------------------------------------------------------------------
Salaries & Benefits 165,000 13.2% 500,000 11.1%
--------------------------------------------------------------------------------------------------------------------------------
Acquisitions of Existing Courses 0 0% 500,000 11.1%
--------------------------------------------------------------------------------------------------------------------------------
Marketing 300,000 24.0% 1,300,000 28.9%
--------------------------------------------------------------------------------------------------------------------------------
Working Capital (6) 300,000 24.0% 750,000 16.7%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Total $1,250,000 100.0% $4,500,000 100.0%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Offering expenses from proceeds will vary based on our available funds. We
will expend a greater amount for additional direct mail marketing if we
meet our minimum goals.
(2) If we reach our maximum offering, we will include a capital expenditure for
a Compaq server in our website development costs.
(3) If we reach our maximum offering, our recruitment costs will increase to
include the purchase of print advertisements in professional publications.
(4) Our course programming costs are scalable to include some video programming
if we reach our maximum offering.
(5) Our furniture and equipment costs will vary depending on whether we
purchase used or new equipment.
(6) We will expend $6,000 of working capital to pay existing indebtedness to
CMP International Consulting, Inc., a consulting company founded and
operated by Richard Bishirjian, our president and chief executive officer.
See "Certain Transactions and Policies."
14
<PAGE>
DIVIDEND POLICY
We have never paid dividends and have no expectation of doing so for the
foreseeable future.
CAPITALIZATION
The following table presents the capitalization of the Company as of May
31, 2000, and as adjusted to give effect to the conversion of our Series A
convertible preferred stock and the sale of the minimum and maximum number of
shares in the offering, less estimated offering expenses.
<TABLE>
<CAPTION>
Actual As adjusted for As adjusted for As adjusted for
conversion of sale of minimum sale of maximum
Series A shares (1) shares (1)
convertible
preferred stock (1)
<S> <C> <C> <C> <C>
Stockholder's Equity:
Common Stock, par value $.001 per
share, 3,000,000 shares authorized;
351,645 shares issued and outstanding
(actual); 478,167 shares issued and
outstanding (as adjusted for
conversion of Series A convertible
preferred); 603,167 shares issued and
outstanding (as adjusted for sale of
minimum shares); 928,167 shares issued
and outstanding (as adjusted for sale
of maximum shares) $ 31,500 $214,166 $1,389,166 $4,639,166
Series A convertible preferred stock,
par value $.001 per share, 10,000
shares authorized; 172.7 shares issued
and outstanding (actual); no shares
issued and outstanding (as adjusted
for conversion of Series A convertible
preferred stock) 172,666 ----- ----- -----
Additional paid-in capital
(Common stock issued in exchange for
services) 93,400 93,400 93,400 93,400
Deficit accumulated during development
stage (95,713) (95,713) (95,713) (95,713)
-------- -------- ---------- ----------
Total stockholders' equity $201,853 $211,853 $1,386,853 $4,636,853
</TABLE>
______________________
(1) Includes an additional 10 shares of Series A convertible preferred stock
sold for $1,000 per share in June 2000 that are convertible into 6,926.4 shares
of common stock.
15
<PAGE>
DILUTION
Our pro forma net tangible book value as of May 31, 2000 was $144,218 or
$.31 per share. Our pro forma net tangible book value per share is determined
by subtracting the total amount of our liabilities from the total amount of our
tangible assets and dividing the remainder by the number of shares of our common
stock outstanding after giving effect to the conversion of Series A convertible
preferred stock into 126,521.8 shares of common stock. The pro forma net
tangible book value per share after this offering will be at $2.30 if the
minimum number of shares is sold and $5.00 if the maximum number of shares is
sold, as compared to an initial public offering price of $10 per share.
Therefore, purchasers of shares of common stock in this offering will realize
immediate dilution of $7.70 per share in the case of the minimum offering and
$5.00 per share in the case of the maximum offering. The following table
illustrates this dilution, assuming the minimum number and maximum number of
shares are sold as follows:
<TABLE>
<CAPTION>
Min. Max.
<S> <C> <C>
Initial public offering price per share........................................... $10.00 $10.00
Pro forma net tangible book value per share as of May 31, 2000............... .31 .31
Increase in net tangible book value per share attributable to new investors.. 1.99 4.69
Pro forma net tangible book value per share after this offering................... 2.30 5.00
Dilution per share purchased in this offering..................................... 7.70 5.00
</TABLE>
The following table presents, on a pro forma basis, as described above, as
of May 31, 2000 and based on an initial public offering price of $10 per share,
for our existing shareholders and our new investors:
. the number of shares of our common stock purchased from us;
. the total cash consideration paid;
. the average price per share paid before deducting estimated
underwriting discounts and commissions and our estimated offering
expenses; and
. the average price per share paid by the existing holders of common
stock including the holders of common stock after giving effect to the
conversion of the Series A convertible preferred stock into 126,521.8
shares of common stock.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------------------ ---------------------------------- Price
Number Percent Number Percent Per Share
----------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............. 478,167 51.52% $ 214,166 4.54% $ .45
New investors (maximum)............ 450,000 48.48% $ 4,500,000 95.46% $ 10.00
----------- ------------ ------------ ------------ --------------
Total (maximum).................... 928,167 100% $ 4,714,166 100% $ 5.08
=========== ============ ============ ============ ==============
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------------------ ---------------------------------- Price
Number Percent Number Percent Per Share
----------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............. 478,167 79.28% $ 214,166 14.63% $ .45
New investors (minimum)............ 125,000 20.72% $ 1,250,000 85.37% $ 10.00
---------- ------------ ------------ ------------ --------------
Total (minimum).................... 603,167 100% $ 1,464,166 100% $ 2.43
=========== ============ ============ ============ ==============
</TABLE>
The above tables exclude all outstanding options. See "Management--Stock
and Option Awards" and notes to our consolidated financial statements.
DETERMINATION OF OFFERING PRICE
In determining the per share offering price, we took into account our
expectations for future revenue and our belief as to what per share price would
be acceptable to prospective investors. This price should be considered to have
been set arbitrarily. It is not based upon any established criteria of value
and no underwriter participated in establishing this price.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CERTAIN RELEVANT FACTORS
The following commentary should be read in conjunction with the Financial
Statements and notes contained elsewhere in this prospectus.
Overview
From our inception through the date of this prospectus, our operating
activities related primarily to developing a web site, recruiting faculty
members, developing a curriculum, meeting state licensing requirements to offer
courses for degree credit, recruiting management, and selection of a host for
our web site. Since our online university is not expected to commence course
offerings until completion of this offering, we have generated no revenues to
date. Since inception we have incurred significant expenditures without
compensating income, and, as of May 31, 2000, cash on hand had been reduced to
$160,363.
We intend to generate revenues through tuition paid by our students,
through sales of books and course materials through our online bookstore, and
from Internet advertising on our web site. Particularly in the early years of
operations, we expect to incur significant marketing expenses to attract
students. By advertising in conservative magazines, on conservative radio
programs and web sites, campus conservative newspapers and military newspapers
and through development of relationships with conservative home school and
politically and educationally active Christian organizations, we expect our
advertising to be more cost effective than online universities seeking to appeal
to a broader population base. However, due to these and other operating costs,
we do not expect Yorktownuniversity.com to become profitable at least through
the first three years of operations.
Liquidity and Capital Resources
Since inception, we have financed our operations and capital expenditures
primarily through the sale of the Series A convertible preferred stock. We have
no lines of credit or other sources of cash except the net proceeds, if any, of
this offering.
17
<PAGE>
BUSINESS
Overview
Yorktownuniversity.com proposes to establish and operate an online college,
which offers courses for degree credit in government, business and economics,
and the humanities disciplines taught by leading conservative scholars.
Yorktownuniversity.com proposes to offer college level degree courses for degree
credit and continuing education courses targeted to the following persons:
. High school and home school students who desire to take college level
courses for advanced placement.
. Adult, working students, ages 24 to 45, seeking the BA degree.
. Officers and enlisted military personnel taking courses relative their
employment as military professionals.
. Adults, over the age of 45, seeking intellectual enrichment or engaged
in a personal spiritual quest.
. Traditional college age students enrolled in other four year
undergraduate programs taking courses for transfer credit or looking
for conservative faculty to guide them in their field of interest.
The Opportunity for Online Education
The National Center for Education Statistics estimates that in 2001, the
number of students enrolled in distance education programs will increase to more
than 3,500,000 students. According to the National Center for Education
Statistics, individuals with a college degree, moreover, earn 50% more than
those with only a high school diploma. The adult education market is a
significant component of the post-secondary education market. The U.S.
Department of Education estimated that, for 1996, adults over the age of 24
comprised approximately 6.1 million, or 43%, of the students enrolled in higher
education programs. The U.S. Census Bureau estimates that approximately 75% of
students over the age of 24 work while attending school. We believe that the
market for adult education will continue to prosper as working adults seek
additional education and training to update and improve their skills, to enhance
their earnings potential, and to keep pace with the rapidly expanding knowledge-
based economy. According to a leading analyst in the field, enrollments in web
based higher education is growing at an annual rate of 30%. We are in the early
stage of development of this aspect of the education marketplace, and early
entrants into the marketplace with brand identification and competitive prices
will best be able to take advantage of opportunities to grow.
Many working adults are seeking degree programs that provide flexibility to
accommodate the fixed schedules and time commitments associated with their
professional and personal obligations. The Internet provides a platform that
enables working adult students to attend classes and complete coursework on a
more convenient schedule.
According to Nielsen Media Research and NetRatings, there were over 148.8
million Internet users in the United States in July 2000. U.S. online use has
reached a level that was unanticipated five years ago. According to published
industry analysis, in July 2000, 80 million people went online, up 20% from the
previous twelve months.
18
<PAGE>
The largest university in the United States, the for-profit, publicly
traded, University of Phoenix, has 12,000 students online in a student body of
more than 90,000. The University of Maryland's Internet course offerings
attract 37,000 students annually. American Military University, which began in
1992 with 18 students and 23 course offerings, now has more than 1,500 students
enrolled in its course on military subjects. Jones International University, a
for-profit closely held Company, founded in 1993, was the first entirely
Internet university to receive U.S. regional accreditation in 1999. In this
competitive marketplace, we believe that Yorktownuniversity.com can distinguish
itself by courses that are taught by some of the leading conservative scholars
in America.
Competition
Competition for online university education and training will become
intense, with, for profit, accredited universities taking the lead, initially,
over traditional educational organizations. The University of Phoenix, a for-
profit, publicly traded university has more than 90,000 students, of which
12,000 are reported to be enrolled in online degree programs. During its
initial development of its online course offerings, University of Phoenix'
online enrollment doubled annually. Last year it experienced 60% growth in
online enrollments. American Military University, accredited by the Distance
Education Training Council, and which, thereby, may process Department of
Defense tuition assistance for members of the Armed Services of the United
States, has grown from eighteen students in 1992 to more than 1,500 in 1999.
Capella University, which recently announced significant financing from the New
York investment firm of Forstmann Little, and Jones International University,
are also for profit, accredited providers of online college level courses.
Tuition costs at Jones International of $600 per undergraduate course are price
competitive with all but a few state subsidized colleges and universities. The
University of Maryland's online division has close to 32,000 students taking
courses online. The state of Michigan recently created an Internet university,
and other states are examining this opportunity.
These online degree programs are designed for increasing numbers of
students between the ages of 23 and 45 who seek undergraduate and postgraduate
degrees. Working and parenting adults seeking a college education, or advanced
training for job advancement are increasingly turning to the Internet to fulfill
their educational needs. Providers of online education programs, therefore,
must carefully gauge the educational marketplace and design educational programs
to fulfill market demands. Efficiencies of the Internet enable online providers
to offer narrow, and job specific, education and training at costs substantially
lower than traditional education providers. Jones International's emphasis is
on communication. Phoenix focuses on business. American Military University
offers defense studies. We expect that institutions providing narrow and
focused online degree programs will become prominent in higher education in the
United States and abroad and will aggressively compete with one another as well
as with traditional colleges and universities.
We believe that Yorktownuniversity.com distinguishes itself from its
competitors by focusing on course offerings grounded in conservative ideas and
the philosophy of the founding fathers of the Constitution of the United States.
To our knowledge, no other conservative on-line university exists. We will seek
to attract students through the many conservative organizations that are active
in the United States.
Certificate Programs
Yorktownuniversity.com will offer individual courses for students seeking
degree credits, and courses that are "packaged" in Certificate Programs in
Government, Business, Economics, and the Humanities. We believe that elected
officials, particularly in state government, state and federal legislators, may
require their political appointees to complete one or more of our Certificate
Programs, and owners of closely held companies will find our Certificate
Programs a valuable means to assure knowledge of the principles of our
capitalist system among middle and senior management.
19
<PAGE>
On June 20, 2000, the State Higher Education for Virginia granted approval
to Yorktownuniversity.com to offer individual college level courses for students
seeking degree credits, and to offer Certificate Programs in Government,
Business, Economics, and the Humanities for degree credit. Our Certificate
Programs are described below:
<TABLE>
<CAPTION>
Certificate Programs
<S> <C> <C>
Faculty Government--The American Order Affiliation
James McClellan The American Founding Independent Scholar
William B. Allen The Federalists Michigan State Univ.
David Fitzsimons Liberty & Power: U.S. History to 1865 University of Rhode Island
H. Lee Cheek, Jr. American Political Thought Lee University
Thomas F. Payne Church-State Relations Since the Founding Yorktown University
Williiam B. Allen Dateline 1787 Michigan State Univ.
Richard Zeller Political Correctness Bowling Green State Univ.
Linda Raeder J. S. Mill and Origins of Secular Humanism Center for U.S. Studies (Wittenberg)
R. J. Bishirjian/H. L. History of Political Theory Yorktown University/Lee University
Cheek
Gleaves Whitney Roots of American Order Office of Gov. Engler (R-MI)
Bruce Frohnen Educating for Democracy Independent Scholar
Marshall De Rosa Political & Legal Dynamics of the American Civil War Independent Scholar
<CAPTION>
Faculty Government--How Conflicts are Resolved Affiliation
<S> <C> <C>
Atilla Yayla Democracy in Islamic Countries Hacettepe University (Turkey)
Donald Devine Public Administration Independent Scholar
Kenneth Holland Presidents & Supreme Court Justices Univ. of Memphis
J. Edgens Environmental Policy University of Kentucky
Joseph P. Martino Just War Doctrines Independent Scholar
Angelo Codevilla History of Ballistic Missile Defense: JFK to Clinton Boston University
David Bobb Rights in Conflict Boston College
<CAPTION>
Faculty Economics and Business Affiliation
<S> <C> <C>
Gerald Dwyer Principles of the Stock Market Independent Scholar
Gary Wolfram Introduction to Political Economy Hillsdale College
Douglas K. Adie Money, Financial Institutions & Markets Ohio University
Gordon Diem Fundraising for the Independent Sector ADVANCE Institute
Eugene Heath Virtue and Business SUNY-New Paltz
Marlo Lewis Adam Smith and His World Independent Scholar
William Luckey History of Economic Thought Christendom College
Edmund Shanahan Valuation of Assets Independent Scholar
William Sloane Communication/Media Law Counsel, PA House of Delegates
George Trivoli Principles of Portfolio Management Independent Scholar
Gerald Gunderson Entrepreneurial History of the United States Trinity College
<CAPTION>
Faculty Humanities--History, Arts & Literature Affiliation
<S> <C> <C>
Roger W. Cole History of The English Language Univ. of South Florida
Mitchell Kalpakgian Classics of Children's Literature Simpson College
David Mulroy Classical Mythology University of Wisconsin-Milwaukee
Thomas Landess Art of the Ghostwriter Independent Scholar
</TABLE>
20
<PAGE>
<TABLE>
Faculty Humanities--History, Arts & Literature Affiliation
<S> <C> <C>
Arthur Pontynen History of Art University of Wisconsin-Oshkosh
Dominic A. Aquila Introduction to the Fine Arts Ave Maria University
Mark Malvasi American History through Literature Randolph Macon College
Edward Levinson History of Architecture Miami/Dade Community College
Larry Schweikart Western Civilization: 1715 to 2000 University of Dayton
James Gaston Western Civilization: 410 AD to 1492 Franciscan University of Steubenville
<CAPTION>
Faculty Humanities--Philosophy/Religious Studies Affiliation
<S> <C> <C>
John Lachs Personal Ethics: In Love with Life Vanderbilt University
H.T. Edmonson The Ethics of Flannery O'Connor Georgia College and State University
James W. Gustafson Introduction to Philosophy: The Quest for Truth Northern Essex Comm. College
Bishirjian/Poyntynen The Christian Calendar Yorktown/University of WI-Oshkosh
Randall Balmer Religion in American History Barnard College, Columbia University
Linda Raeder J. S. Mill and Origins of Secular Humanism Center for U.S. Studies (Wittenberg)
</TABLE>
B.A. Programs
On June 20, 2000, the State Higher Education Council for Virginia granted
approval to Yorktownuniversity.com to enroll students in two B.A. degree
programs, as long as those students have completed successfully a minimum of 10-
three credit courses. These B.A. programs are the B.A. in Government and the
B.A. in Managerial Economics. Students admitted to these B.A. degree programs
must have completed a minimum of 30 credits in the following core general
education subject areas at other accredited educational institutions:
English Composition (3)
English Literature or Poetry (3)
Communication Arts (3)
Principles of Mathematics (3)
Laboratory or non-laboratory sciences, including computer science (6)
Social Sciences (3)
Humanities or Fine Arts (6)
Behavioral Sciences, including sociology and psychology (3)
We intend to require a minimum of 120 credits for a B.A. degree from
Yorktownuniversity.com, of which 60 credits must be earned at
Yorktownuniversity.com.
Yorktownuniversity.com will not offer courses in subjects outside its
fields of primary interest, liberal arts and the social sciences; students will
be encouraged to take courses outside of those fields at community colleges and
universities near their locale.
Required Courses for the B.A. in Government:
Required Courses in Government
Origins of the Constitution of the U.S.
21
<PAGE>
The Federalists
Liberty and Power: U.S. History to 1865
American Political Thought
Political Correctness
History of Political Theory
Church-State Relations Since the Founding
Environmental Policy
Required Courses in Economics
Intro. to Political Economy
American Economic History
Virtue and Business
Required Courses in Humanities
American History Through Literature
History of the English Language
Religion in American History
Required Courses for the B.A. In Managerial Economics:
Required Courses in Managerial Economics
Introduction to Political Economy
Introduction to Accounting
Business History
American Economic History
Monetary & Fiscal Policy
Money, Financial Institutions & Markets
Business Finance
Introduction to Marketing
Required Courses in Government
American Political Thought
Dateline 1787
Environmental Policy
Required Courses in Humanities
American History Through Literature
History of the English Language
History of Art
22
<PAGE>
Tuition
Pricing our courses at levels high enough to maintain course quality and
low enough to attract significant numbers of students is essential to the
successful management of Yorktownuniversity.com. At tuition costs of $299 per
course, we expect to capture the interest of the discerning educational
consumer, and capture a core customer base of students interested in low cost,
quality higher education. We intend to offer tuition costs at levels below
those offered at other private colleges or universities and are competitive with
all educational products in the Internet marketplace. If we become accredited
by the Department of Education accrediting agency, the Distance Education and
Training Council, which is not expected to occur until the end of the third year
of our operations, we intend to raise our tuition fees to $450 per course. See
"Business Accreditation."
Tuition at private colleges and universities can range between $20,000 and
$30,000 per year for tuition alone. The cost of attending state colleges and
universities, which includes tuition and living expenses, approaches $7,000 to
$10,000 annually for all expenses--including a multitude of student fees. We
expect to offer annual tuition costs of less than $3,000 for full-time degree
candidates.
The following table shows comparative undergraduate tuition costs:
University of Phoenix Online $1,125 per course
$11,250 annual tuition
$216 per week
American Military University $750 per course
$7,500 annual tuition
$144 per week
Jones International University $600 per course
$6,000 annual tuition
$115 per week
Yorktownuniversity.com $299 per course
$2,990 annual tuition
$58 per week
Philosophical Background
The National Association of Scholars estimates that, nationwide, only 5% of
faculty on America's campuses are political conservatives. Although many
Protestant and some Catholic academic institutions require that their faculty be
Christian or Catholic, many Christian and Catholic scholars share the socialist
economic and antipathetic views towards the American political tradition of
their liberal colleagues at sectarian institutions.
As Americans have become more conscious of this leftward drift among
educators at all levels of the education industry--especially in the last 10 to
15 years--some students and parents have retreated to sectarian colleges and
universities, to sectarian secondary schools and to home school programs. A
university education in the 19th century, and the 20th century has often meant
subjection to the secularization of traditional mores or to competing ideologies
promoted by intellectuals; whether it be ethical relativism, atheism, Socialism,
Marxism, Communism, feminism, radical egalitarianism, multiculturalism or
liberalism. The orientation and culture of contemporary academia often places
education second to modern secular religions. We believe that
23
<PAGE>
a university education should engage students in a quest for truth, and that
this quest should be pursued not only by means of the physical sciences, but by
the disciplines of philosophy and theology. Yorktownuniversity.com aspires to
reaffirm the beliefs, shared by America's founding generation, and the many
modern conservative intellectuals of post-World War II America, that an enduring
Constitution of the United States, and the body of knowledge underlying it, is
intrinsic to freedom and justice.
Faculty
Yorktownuniversity.com has recruited leading conservative scholars to serve
on its faculty. This group of academicians includes professionals who are
currently part of the traditional academic communities, as well as those who
have been, but are not currently, associated with other academic institutions.
In all cases, they are professional scholars who are pursuing their scholarly
interests through their professional writings and research. In many cases, they
are providing academic service as members of faculties of other universities and
are seeking to reach a broader audience by means of the Internet. Following is
a list of those individuals who have agreed to become full-time or part-time
members of the Yorktownuniversity.com faculty. Listing the academic
affiliations of our faculty does not mean that their respective universities
endorse the mission of Yorktownuniversity.com.
Government
Thomas F. Payne, Ph.D., Government, Claremont University; J.D., Vanderbilt
University; Chair, Department of Government, Yorktownuniversity.com.
Marshall De Rosa, Ph.D., Political Science, University of Houston.
Linda C. Raeder, Ph.D., Politics, Catholic University; Center for U.S.
Studies, Political Science, University of Wittenberg, Germany.
David J. Bobb, B.A., Political Science, Hillsdale College; Ph.D. Candidate
in Political Science, Boston College.
William B. Allen, Ph.D. Government, Claremont Graduate School; Department
of Political Science, Michigan State University.
Angelo Codevilla, Ph.D., Government, Claremont Graduate School; Department
of International Studies, Boston University.
Kenneth Holland, Ph.D., University of Chicago; Department of Political
Science, University of Memphis.
Atilla Yayla, Ph.D., Ankara University; President, Association for Liberal
Thinking, Ankara, Turkey.
H. Lee Cheek, Jr., Ph.D., Politics, Catholic University; Department of
Political Science, Lee University.
Marlo Lewis, Ph.D., Government, Harvard University.
Joseph P. Martino, Ph.D., Mathematics, Miami University; Associate Editor,
Technological Forecasting & Social Change.
24
<PAGE>
James McClellan, Ph.D., Government; J.D., University of Virginia;
Independent Scholar and former staff director, Separation of Powers
Subcommittee, U. S. Senate.
Donald J. Devine, Ph.D., Political Science, Syracuse University;
Independent Scholar and former Director, U.S. Office of Personnel
Management.
H. T. Edmonson III, Ph.D., Political Science, University of Georgia;
Department of Political Science and Public Administration, Georgia College
and State University.
Jefferson G. Edgens, Ph.D., Environmental and Natural Resources, Michigan
State University; Department of Forestry, University of Kentucky.
Gordon N. Diem, D.A., Government, Idaho State University; Independent
Scholar.
Bruce Frohnen, Ph.D., Government, Cornell University; J.D., Emory
University.
History
David Fitzsimons, Ph.D.; Department of History, University of Rhode Island.
Mark G. Malvasi, Ph.D., History, University of Rochester; Department of
History, Randolph-Macon College.
Larry Schweikart, Ph.D., Political Science, Arizona State University;
Department of History, University of Dayton.
Dominic A. Aquila, Ph.D., History, University of Rochester; Provost, Ave
Maria College.
James R. Gaston, B.A., SUNY-Oswego; M.A., History, SUNY-Cortland; Ph.D.
Candidate SUNY-Buffalo; Department of History, Franciscan University of
Steubenville.
Religious Studies
Randall Balmer, Ph.D., Religion, Princeton University; Ann Whitney Olin
Professor of American Religion, Barnard College, Columbia University.
Law
William M. Sloane, B.A., York College; M.A., Religion, Liberty University;
J.D., Widener University; LL.M., (Labor) Temple University; Ph.D.,
(Religion) American Bible College and Seminary; Legal Counsel, Pennsylvania
House of Representatives.
English
Mitchell Kalpagian, Ph.D., English, University of Iowa; Department of
English, Simpson College.
Thomas Landess, Ph.D., English, University of South Carolina; Office of the
Attorney General, South Carolina.
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Languages
Roger W. Cole, Ph.D., Linguistics and English, Auburn University; Division
of Languages & Linguistics, University of South Florida.
David D. Mulroy, Ph.D., Classics, Stanford University; Department of
Languages & Linguistics, University of Wisconsin-Milwaukee.
Economics
Douglas K. Adie, Ph.D., Economics, University of Chicago; Chair, Department
of Managerial Economics, Yorktownuniversity.com.
Gerald P. Dwyer, Jr., Ph.D., Economics, University of Chicago; Vice
President, Federal Reserve Bank of Atlanta
Gary Wolfram, Ph.D., Economics, University of California-Berkeley; George
Munson Professor of Political Economy, Hillsdale College.
Philosophy
James W. Gustafson, Ph.D., Philosophy, Boston University; Northern Essex
Community College.
F. Eugene Heath, Ph.D., Philosophy, Yale; Department of Philosophy, SUNY-
New Paltz.
John Lachs, Ph.D., Philosophy, Yale University; Department of Philosophy,
Vanderbilt University.
Architecture
Edward Levinson, AIA, B.A., University of Pennsylvania; M.A., Architecture,
University of Pennsylvania.
Art
Arthur Pontynen, Ph.D., Art History, University of Iowa; Department of Art,
University of Wisconsin-Oshkosh.
Sociology
Richard A. Zeller, Ph.D., Sociology, University of Wisconsin; Independent
Scholar.
Two faculty members, Dr. Thomas F. Payne and Dr. Douglas K. Adie, have
agreed to serve on a full time basis. Because of the nature of the
instructional activity at Yorktownuniversity.com, the distinctions between, and
classifications of full-time and part-time faculty are less meaningful than at
traditional institutions. The extent of a faculty member's teaching activity
will always depend on the student demand, implemented schedules and faculty
availability for a particular course or term of instruction. While there will
be both full and part-time employees of yorktownuniversity.com, our principal
administrators and the academic leadership of the university are full-time.
Full-time faculty administrators will head two academic degree programs of the
university. As demand warrants, other full-time faculty and staff will be added
to support the core academic and administrative activities of the university;
however, at its earliest stages of
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development, full-time faculty leadership, supplemented by a small number of
adjunct instructors, will provide instruction. Yorktownuniversity.com believes
that it has an abundance of highly qualified, experienced faculty upon which to
draw for academic service.
Marketing of Yorktown University Courses
Our potential students fall into several categories that cross many age
groups. See "Business--Overview". Each of the categories of students
identified by Yorktownuniversity.com requires a targeted marketing effort
involving direct mail and direct e-mail marketing, advertisements in print and
electronic media and web advertising.
Direct marketing aimed at privately-held or family-owned companies that may
want management level employees to take academic courses in free market
economics is the preferred method for reaching these companies.
Marketing to reach individual students may focus on advertisements in the
following print and web publications:
. National business publications
. Newsletters and publications of national conservative student
organizations
. Conservative scholarly journals
. Publications of conservative "think tanks"
. Internet booksellers
. Military, history and conservative book clubs
. Military newspapers and publications
. Home school publications and mail lists
. Publications of more than 100 state-based conservative public policy
organizations
. Publications of privately held companies
. Internet search engines
. Privacy and personal defense publications and organizations, including
the National Rifle Association
. Quality of life publications that reach older subscribers
. Publications at sectarian schools
. Conservative campus newspapers
How Students Take Yorktownuniversity.com Courses
Students interested in taking yorktownuniversity.com courses go to the
university's web site, www.yorktownuniversity.com. There they click on
"Courses" and survey our course offerings. A syllabus for each course, with
course requirements for those taking the course for degree credit, are listed.
By clicking on "Faculty," they may access a biographical sketch of faculty
teaching the selected course, along with a color photograph of the faculty
member.
When a student decides to enroll in a course, the student goes to "Enroll,"
where the student may pay tuition of $299 per course by credit card, or by
arranging with our customer service associates to pay by check or bank transfer.
When the transaction is completed, students are given an access code that
enables them to enter our course management system. There the student gains
access to faculty's recorded lectures, a transcript of those lectures that may
be downloaded onto the student's computer and printed, or read live online.
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A library fee of $25 per course enables students to access a database of
research resources that may include secondary readings required by faculty
teaching the course, or links to other library resources which the student may
access during the 10 week period of enrollment.
Though students progress at their own pace, and on their own time-schedule,
students taking a course for degree credit must complete a course within 10
weeks. We recommend that students taking courses for degree credit take no more
than two courses at a time.
Courses identified as "Online Courses" allow students to enroll in a course
at any time, proceed at the student's pace, and fulfill course requirements at
the expiration of 10 weeks from the day of enrolling. Courses specifically
designated as "Directed Readings" operate only on a schedule of five terms a
year that follow the calendar year.
Our faculty will direct our students' readings, assign topics for
discussion, monitor discussion groups, oversee the answers to frequently asked
questions, participate in interactive class discussions, read term papers and
hold office hours during which students enrolled for credit may speak to
faculty.
Many of their courses may be upper level courses for advanced students.
Their courses will be challenging and intended to develop the curiosity,
intelligence and scholarly skills of their students. Many lectures are based
upon the lecturer's original published works and emphasis is given to student's
essays, rather than examinations. When examinations are given for students
enrolled for degree credit, they are expected to be proctored by independent
proctors in the student's locale. Students may retake courses to improve a
grade.
How the University Manages its Courses on the Web
Yorktownuniversity.com is in the final process of selecting a course
management system to service university courses, manage our interactive
discussion groups and oversee library functions.
All systems in the final review provide similar operational features that
enable students to benefit from web-based learning opportunities. These
features include:
. Control of course materials by faculty and staff enabling faculty to
release class materials according to criteria established by faculty.
. Communication between faculty and students by e-mail and interactive
discussions are to be facilitated by bulletin boards, chatrooms, and
other means of web communication without the cost of long distance
telephone service.
. Student progress will be measured not only by examination, but through
our management system's ability to monitor class attendance,
attendance at interactive discussions, the time a student spends at
our web site or on a webpage. The virtual classrooms of the Internet
enable university personnel to calculate the actual time a student
spends in class, in the library and in communication with faculty and
other students. Frequency of time spent on course sites by students
can be monitored and essays and term papers may be screened for
plagiarism. Quiz and examination questions may be drawn by random
selection so that no examination is the same.
. Interactive discussions between students and students, and faculty and
students will occur on prearranged schedules, with bulletin boards,
and other means of communication, accessible online for student use.
Asynchronous bulletin and conference boards will allow students to
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submit postings. They then are to enter a searchable archive of
questions by students and answers by faculty.
. Access to central library resources are to be facilitated by the
course management system so as to enable students to survey research
and other library resources from their home computers.
. Cross discipline instructional forums may be designed to enable
faculty from different disciplines to contribute to student and
faculty discussions. Live chat rooms can be assigned by faculty.
Course and campus chat rooms will enable students in a course to
converse with other students enrolled in the same course as well as
others across disciplines.
. Training modules for faculty and students are to be available to
enable students to quickly develop Internet skills necessary to fully
utilize our library, course offerings and other features. These
training programs will include instruction in the efficient use of
Internet search engines, how to open file attachments, downloading
free software to hear faculty recorded lectures, and other web systems
including video streaming.
All course management systems now under final review provide scaleable
technical architecture that can support thousands of students online.
Faculty and students can access the university's courses by using Netscape
or Internet Explorer browsers. Other than an Internet browser, there is no
special software that students or faculty must install. Both browsers are free
to download and upgrade. A computer that has a modem and an Internet service
provider is all that is required to teach or take a Yorktownuniversity.com
course. Faculty members may use their home computers to create or edit courses,
grade students' work, read notes, hold office hours and communicate with other
faculty members, students and administrative personnel. Students may use their
home computers to take courses, create and send in term papers, take
examinations and communicate with other students, faculty and administrative
personnel.
Yorktownuniversity.com's Internet Host
During the early months of operation and at least through the completion of
this offering, Yorktownuniversity.com leases a shared server at UUNET, a
Virginia company with servers located in Virginia and other states. Thereafter,
we intend to co-locate our own server at UUNET. UUNET provides 24 hour a day
maintenance, and backup assistance, with servers that are scaleable to projected
enrollments and capable of servicing 10 courses or 10,000 courses.
Rollout of University Courses
Yorktownuniversity.com offerings are expected to be introduced on the
following schedule:
Year 1 80
Year 2 110
Year 3 135
Year 4 165
Year 5 185
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We may expand our course offerings as demand for new courses dictate and as
new faculty members are recruited.
Title IV Eligibility
U. S. Title IV financial assistance is available through the Higher
Education Assistance Act of 1965 for students at "accredited" institutions.
Educational institutions that seek to process Title IV financial assistance must
meet the standards of accrediting organizations chartered by the U.S. Department
of Education. These accrediting organizations are organized by discipline,
region and on a national basis. Examples of these accrediting organizations
include the American Bar Association, a disciplinary organization, the North
Central Association, Commission on Institutions of Higher Education, a regional
organization, and the American Association for Liberal Education, a national
association.
Furthermore, U.S. Department of Education regulations specify that an
institution is not eligible to participate in the Title IV Programs if 50% or
more of its courses are correspondence courses, or if 50% or more of its regular
students are enrolled in the institution's correspondence courses. These
regulations currently consider most distance education courses to be
correspondence courses if the number of distance education courses exceeds 50%
of the courses offered. Yorktownuniversity.com has no current plans to
participate in Title IV programs under current regulations. However, should the
guidelines change, Yorktownuniversity.com intends to apply for participation in
appropriate federal financial aid programs.
Higher Education Regulatory Environment
Most institutions of higher education must satisfactorily comply with a
variety of regulatory standards as established by the states, accrediting
agencies and the Department of Education. In order to operate within any state,
the institution must obtain approval from the appropriate regulatory authority.
Once approved for operation by a particular state, institutions generally move
to apply for one of several types of accreditation. Upon receiving
accreditation, usually of the regional variety, institutions typically seek
approval from the U.S. Department of Education to participate in the Title IV
federal financial aid program. Since these processes may take several years to
fully satisfy, Yorktownuniversity.com, as a new institution of higher education,
must position itself to initially operate without accreditation or
certification.
Accreditation is a unique American process by which the higher educational
community, in large measure, regulates itself. This regulation involves
elements of regional, national or specialized accreditation, state licensure or
operational authorization, and approval by the U.S. Department of Education to
participate in various federal financial assistance programs. In most countries
of the world, a national agency or ministry regulates higher education. As the
result of historical initiatives generated by the academy in the nineteenth
century, institutions in the United States banded together on a regional basis
to establish standards for college preparation and admissions, faculty
membership, curriculum content, degree nomenclature and structure, and academic
standards. Over time, states and the federal government have integrated the
voluntary accreditation processes into their respective approval and
authorization processes to varying degrees. Consequently, regional and other
accreditation approaches have become part of the American higher educational
landscape and are expected of all serious educational institutions.
Accreditation is not a governmental activity. Rather, it is voluntary and
achieved only after an institution, desiring membership, applies for and
satisfies the criteria for initial and continued membership. There are three
basic types of accreditation. National accreditation is applicable across the
nation and is usually sought by institutions of a particular type, and often by
institutions that operate in multiple accrediting regions. An example of a
national agency would be the Accreditation Council for Independent Colleges and
Schools. Specialized or programmatic accreditation is earned by a specific
educational entity for a particular
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program offered within a large university, such as a school of law or medicine,
or by a single purpose or freestanding institution, such as a freestanding
school of nursing. Regional accreditation is the customary accreditation sought
by most institutions of higher education and is applicable to those collegiate
level institutions qualified for membership that are located within one of the
six geographic regions of the United States. An example of regional
accreditation would be that granted by the North Central Association of Colleges
and Schools.
The regional accreditation associations accredit an entire institution and
examine the institution in its totality. While the quality of the educational
programs are of primary concern, such agencies also examine institutional
faculty membership and credentials, operational procedures, policies and
practices, student services, physical facilities, education support resources,
adequacy of financial resources, operations and stability, institutional
mission, administration and organizational governance, affiliated activities and
intercollegiate athletics, and assessment and planning strategies, as well as
the total effectiveness of the institution in achieving its mission.
Many of the more-established accrediting groups are recognized by the
Secretary of the U.S. Department of Education as reliable indicators of quality
education and training. All such recognized agencies must go through a periodic
federal review process by the National Advisory Committee on Institutional
Quality and Integrity. According to the provisions of the currently applicable
Higher Education Act, the Department of Education heavily relies on the
accrediting agencies to determine whether the educational programs of a higher
educational institution are of sufficient quality to qualify the institution for
participation in the federal government's Title IV student aid and various other
financial assistance programs.
As an institution of higher education, Yorktownuniversity.com aspires to
membership in appropriate specialized accrediting agencies, such as the Distance
Education Training Council, and the regional accreditation for which its
geographic location would dictate qualification. Because Yorktownuniversity.com
is located in the state of Virginia, a state falling within the jurisdiction of
the Commission on Colleges, Southern Association of Colleges and Schools,
membership in that organization is desired. The second largest of the regional
accreditation agencies and a pioneer in the area of institutional effectiveness,
the Southern Association of Colleges and Schools is currently engaged in a
serious and comprehensive review of its criteria for accreditation and its
accreditation and review processes. The Commission has already developed a
draft publication of new threshold requirements for candidacy, and has a number
of analytical processes underway by committees composed of faculty and
administrators from member institutions considering revision in the criteria and
the processes utilized in the accreditation process. Among the issues under
review is the application of accreditation processes and standards to
institutions engaged in and programs offered through electronic or computer
assisted distributed education. Yorktownuniversity.com views these initiatives
as positive and an indication that the agency is endeavoring to adapt its
accreditation criteria to the realities of higher education delivered in the age
of information technology.
The Commission of Institutions of Higher Education, North Central
Association of Colleges and Schools also is in the process of reviewing its
organizational structure, corporate mission, qualifications for membership, and
the scope of its accreditation activity. As a result of this review and self-
analysis, institutions that are charted, physically located or engaged in
significant educational activity within the states comprising its geographical
jurisdiction may be considered for membership. Should the anticipated
modifications reach fruition, Yorktownuniversity.com could potentially qualify
for membership eligibility and consideration by the North Central Association,
even though it might be physically located within the state of Virginia. Such a
move also could result in regional accreditation becoming more competitive than
has traditionally been the case.
To achieve membership, the faculty qualifications, instruction, program
delivery, institutional operations, policies, student characteristics, financial
stability and fiscal integrity, educational resources,
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mission, planning and assessment will be extensively reviewed. This review will
take the initial form of an institutional application and the completion of a
series of self-studies.
Once membership is earned, the institution must continue to operate in
compliance with the standards of the member agency. In addition, it will have
to submit all required reports and information, participate in all required
activities, and engage in continuous efforts to improve its programs and
demonstrate those efforts through periodic self-studies and the receiving of
periodic visitations by evaluation teams. Yorktownuniversity.com understands
that failure to continue to operate in compliance with the standards of the
accrediting agency may result in the imposition of private or public sanctions
by the agency, a change in the membership "status" of the institution, the
imposition of restrictions on various aspects of its operations, and a
deterioration in its standing in the market place and public opinion.
1. State Approvals
Every state regulates the courses that private institutions may offer for
degree credit to citizens. Illinois and Virginia have a regulatory process that
can lead to approval to offer courses for degree credit in less than a year.
The requirements for achieving operational or degree granting privileges within
the various states vary from state to state. Some states take a more consumer
protection position, while others impose academic review requirements that
resemble those of the accreditation agencies.
Yorktownuniversity.com applied for approval to offer individual courses for
degree credit, to offer courses for degree credit in Certificate Programs and to
offer two B.A. degree programs, the B.A. in Government and the B.A. in
Managerial Economics, in Virginia in April 2000. In June 2000, Virginia's
Higher Education Council granted those approvals. Yorktownuniversity.com will
apply for operating authority in the state of Illinois as well.
Our intention is to operate in that state that best positions our
university to meet regional accreditation requirements. Virginia is located in
the region where the Southern Association has regional accreditation
jurisdiction. To date, this association has not accredited an exclusively
online institution, even though the agency has indicated a willingness to do so
when presented with an appropriate application. In contrast, Illinois is
located in North Central Association's region. That agency has already
accredited an online institution and appears to be more open in its
accreditation approach to Internet education providers. Yorktownuniversity.com
has obtained approval from Virginia's Higher Education Council to offer credit
courses for degree and certificate programmatic purposes, as well as to enroll
students in two baccalaureate degree programs. Similar authority will be sought
from the state of Illinois to better position the institution to seek the
regional accreditation deemed most desirable for its goals.
The certification and accreditation processes that Yorktownuniversity.com
anticipates completing are described below.
2. Certification--ACE
A distance learning provider such as Yorktownuniversity.com may seek to
certify its courses in the American Council on Education's Credit Recommendation
Service.
By submitting detailed information about university courses, instructional
design, methods of evaluation and qualifications of faculty to ACE, students
completing work in ACE-certified courses receive a detailed evaluative
transcript. This detailed course transcript describes the course, the number of
hours the student devoted to the course and the means by which the student was
evaluated.
A student earning credits in ACE-certified courses may request transfer of
credits earned at
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Yorktownuniversity.com to the college or university where he or she is enrolled.
In many cases, ACE certification will improve the chances for transfer credit
being awarded for courses taken at an institution that has not yet matured to
the point of accreditation eligibility.
However, there are no guarantees that all for credit courses submitted
through ACE's credit recommendation system will be accepted automatically by the
colleges and universities where our students are enrolled as full time students.
To assist students to obtain credit for courses taken at Yorktownuniversity.com,
the university's registrar will instruct students to take information about our
course offerings to their college registrars and the chairs of their major
departments before enrolling in our courses.
Because registrars at colleges and universities have a great deal of
discretion in accepting or rejecting requests for transfer of credits, ACE
credit recommendation, at best, is an interim solution until regional
accreditation can be obtained. No assurances can be given that we will ever
obtain regional accreditation.
3. Accreditation--DETC
For distance learning providers and correspondence schools, the Department
of Education's chartered distance learning accrediting agency is the Distance
Education and Training Council. This accrediting agency was founded in 1926,
long before the rise of the Internet, to provide certification for
correspondence schools. Accreditation by this organization will offer some
assurance of credit transferability, and will enable Yorktownuniversity.com to
advertise its educational products as an accredited educational institution.
After two years of operation, the Company may apply for certification by
the Distance Education and Training Council. DETC certification enables
participating educational organizations to process Department of Defense tuition
assistance to students who are members of the U.S. military. Any enlisted
person or officer in the U.S. military may receive assistance equal to the 75%
of tuition in courses certified DETC.
The DETC accreditation process occurs over the course of one or more years,
and applications may be submitted in January and June of each year.
We intend to submit application for accreditation by DETC as soon as we are
eligible and expect to be accredited by DETC by the end of our third year of
operations.
4. Accreditation -- Regional Associations
Regional accreditation by agencies in which Yorktownuniversity.com desires
membership is an extended and involved process. As a general rule, such
complete membership processes are usually three years in duration, at best, and
can frequently last as long as five years. In addition to the time required to
complete the process, there are a series of eligibility conditions that must be
met, such as the graduation of students completing a degree cycle.
Consequently, Yorktownuniversity.com does not anticipate obtaining regional
accreditation for several years.
The Southern Association of Colleges and Schools is in the process of
changing the threshold requirements for candidacy, modifying its criteria for
accreditations, and developing pilot programs.
The North Central Association is in the process of expanding the scope of
its accreditation activity to consider for membership institutions that would be
chartered, physically located or engaged in significant educational activities
in states within its service regions. If these changes are adopted,
Yorktownuniversity.com could potentially become eligible for membership
consideration by the North Central Association even though it operates from
Virginia. Implementation of these changes could result in regional
accreditation becoming more competitive than has traditionally been the case.
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Nevertheless, Yorktownuniversity.com's course and programs are designed to
compete for several years in the Internet distance learning marketplace without
regional accreditation. We believe that we can effectively compete with other
online universities because of the quality of our professors, the subjects they
teach and the maintenance of low tuition costs. We intend to pursue regional
accreditation vigorously, and, if necessary, will move our operations to a state
located within the jurisdiction of the regional accreditation association deemed
most favorable to our programs.
Facilities
Yorktownuniversity.com leases administrative office space at 14 West
Queen's Way in Hampton, Virginia. Yorktownuniversity.com has no physical
classrooms nor learning centers where students can attend traditional classes.
Employees
Yorktownuniversity.com plans to employ two part-time clerical
employees. We employ Bishirjian as a full time consultant through a management
agreement with CMP International Consulting, Inc. The acting chief operating
officer, Forrest Nabors, works on a part-time basis as a consultant in exchange
for 1,000 shares of common stock. We employ our two faculty chairmen, Thomas
Payne and Douglas Adie, on a full time basis. None of our employees are
represented by a union.
Internet Domain Names and Trademarks
We own the Internet domain names, Yorktownuniversity.com and
yorktownu.com. We have also filed the trademarks, Yorktown University,
yorktownuniversity.com, yorktownu.com and The Christian Calendar, with the
United States Patent and Trademark office.
No Pending Litigation or Legal Proceedings
There currently is no pending litigation or other legal proceedings
involving Yorktownuniversity.com.
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth information regarding the directors,
executive officers and other key employees of Yorktownuniversity.com as of
May 31, 2000:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard J. Bishirjian.. 58 President, Chief Executive Officer and
Director
Paul Weyrich........... 57 Chairman of the Board
Forrest A. Nabors...... 33 Acting Chief Operating Officer
Thomas F. Payne........ 53 Provost and Chair of Department of Government
</TABLE>
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<TABLE>
<S> <C> <C>
Douglas K. Adie........ 60 Chair of Department of Managerial Economics
Gilbert K. Davis....... 57 Director
Robert H. Bradley...... 55 Director
Louis W. Barnett....... 53 Director
Robert Callahan........ 35 Secretary and Treasurer
</TABLE>
Richard J. Bishirjian, Ph.D., President, Chief Executive Officer and
Director, is a businessman and conservative educator. He earned a B.A. from the
University of Pittsburgh (1964), and a Ph.D. in Government and International
Studies from the University of Notre Dame (1972) under the direction of Gerhart
Niemyer. He did advanced study with Michael Oakeshott at the London School of
Economics (1968/69) and studied Sanskrit at the Southern Asia Institute,
Columbia University (1978). Dr. Bishirjian taught at universities and colleges
in Indiana, Texas and New York from 1968 to 1981. He is the author of a history
of political theory and editor of A Public Philosophy Reader that was cited by
the Intercollegiate Studies Institute as one of the best studies of
conservatism. Dr. Bishirjian is the author of more than thirty professional
essays and reviews. Appointed to the Office of the President-Elect in 1980, he
served as a Team Leader with responsibility for the National Endowment for the
Humanities, and was appointed by President Reagan as Acting Associate Director
of the United States International Communication Agency, now USIA. He served on
the staff of the United States Senate. He was president and founder of World
News Institute, and Associate Director of Boston University, College of
Communication. Beginning with the fall of the Berlin wall, he worked in Eastern
and Central Europe as a privatization consultant and/or partner with major
corporations. In 1996 he served as privatization consultant to the County of
Allegheny, Pittsburgh, Pennsylvania. His previous experience in distance
learning includes management of Boston University College of Communication's
continuing education seminars to government and business executives in the
Washington, DC area. In 1999 he launched American Academy of Privatization
(www.mrprivat.com) an Internet-based distance learning program of lectures on
privatization topics that is offered free of charge to public executives in
state and municipal governments. Dr. Bishirjian has been a member of the
Philadelphia Society since 1975 and serves as an Editorial Advisor to the
quarterly journal, Modern Age.
Paul Weyrich, Chairman of the Board of Directors, is an education industry
innovator, intellectual entrepreneur, and conservative proponent of democratic
government who founded, and is president of, the Free Congress Research and
Education Foundation. Among his many accomplishments, Mr. Weyrich is the
creator of National Empowerment Television, founder of the American Legislative
Exchange Council, founding president of The Heritage Foundation, and national
chairman of Coalitions for America. Mr. Weyrich is a member of the Amtrak Reform
Council, appointed to a five-year term by the Majority Leader of the United
States Senate in February 1998, and was member of the Board of Directors of
AMTRAK from 1989-93. In 1973 he was co-founder of the Republican Study
Committee of the U.S. House of Representatives. In 1990, Mr. Weyrich was
ordained a deacon of the Melkite Greek Eparchy of Newton.
Thomas F. Payne, Ph.D., J.D, Provost and Professor of Government, earned an
A.B. degree in History at the University of Notre Dame, a Ph.D. in Government
from Claremont Graduate School, and a J.D. at Vanderbilt University School of
Law. From 1983-87 Dr. Payne was an Associate Professor of Political Science at
Hillsdale College. He left college teaching to earn a J.D. degree from
Vanderbilt, and served as clerk to Justice Danny J. Boggs at the U.S. Court of
Appeals for the Sixth Circuit. He was an associate with Cravath, Swaine & Moore
from 1991-93, and with Fellheimer, Eichen & Braverman from 1993-94. He is
licensed to practice in New York and Ohio and has been admitted to the bar of
the United States Court of
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Appeals for the Sixth Circuit. He has been a trial attorney in Cincinnati, Ohio
since 1995.
Douglas K. Adie, Ph.D., Chair of Department of Managerial Economics, has
taught Economics at Ohio University since 1968. He earned a B.A. (Honors) from
McMaster University in Economics and Mathematics (1963) and a Ph.D. in Economics
from the University of Chicago (1968). He was supervised in his dissertation by
three Nobel prize winners in Economics: Milton Friedman (1976), George Stigler
(1982), and Robert Mundell (1999). He has published numerous books and articles
in professional journals on postal economics, minimum wages, privatization and
monetary history. He has testified before Congressional Committees on the
unemployment effects of minimum wages and the advisability of privatizing the US
Postal Service. He has taught in MBA programs in Malaysia, Borneo, Hong Kong
and India. From 1983-85 he was the Visiting George F. Bennett Chair in
Economics at Wheaton College. He has been a member of the Mt. Pelerin Society
since 1976 and has been listed by the Heritage Foundation as a policy expert
since 1984. Mr. Adie is also self-employed with Ark Investments, a financial
advisory consulting practice.
Forrest A. Nabors, Acting Chief Operating Officer, is a veteran Internet
business executive with management experience in marketing, sales, engineering
and administration. He served as the vice president of product development and
marketing of Learning.com, a startup Internet company, from 1999 to 2000.
Previously, Mr. Nabors held various responsible positions with Chrome Data
Corporation, an Internet/desktop software company in the automotive industry,
including as the director of product management from 1998 to 1999, as project
manager from 1997 to 1998, and as business development executive during 1997.
From 1995 to 1997, Mr. Nabors served as the regional vice president of Western
Reliance Corporation, a provider of high technology and insurance services for
lending institutions. Prior thereto, from 1993 to 1995, Mr. Nabors was
associated with BioBehavioral Consultants, a startup expert system software
developer in the behavioral healthcare information field, which he co-founded.
Before joining BioBehavioral Consultants, he served as a field manager for The
Blackstone Group, a market research and consultancy firm from 1991 to 1993, and
as a. research analyst with The Claremont Institute, a non-profit public policy
research organization from 1985 to 1988. Mr. Nabors received his B.A. degree
from the University of Chicago.
Gilbert K. Davis, Director, is partner with the law firm of Davis &
Stanley, Fairfax, Virginia. Mr. Davis earned a B.A. from Cornell College in
1964 and a J.D. from the University of Virginia School of Law in 1969. He
directed two state agencies in Iowa following graduation from college. Before
entering law school, he was a teacher of American history in the public schools
of Iowa City, Iowa and he is currently president of the Fairfax, Virginia based
Para-Legal Institute. Mr. Davis was Assistant United States Attorney for the
Eastern District of Virginia from 1969 to 1973 and is admitted to practice
before the Supreme Court of the United States, the District of Columbia Superior
Court, the Supreme Court of Virginia and many other federal district and circuit
courts. Mr. Davis has tried cases in 20 states and the District of Columbia.
He was Associate Editor of the 1969 revision of the Virginia Lawyer Handbook and
authored the Criminal Trial Manual for the United States Attorney's office in
the Eastern District of Virginia. Mr. Davis was chairman of the Young
Republican Federation of Virginia in 1973-74, and served as Parliamentarian for
the White House Conference on Small Business in 1986. He has instructed trial
lawyers in various aspects of litigation at numerous seminars, and is in demand
as a public speaker. Mr. Davis also served as an MSNBC TV news analyst. He is
a member of the Virginia State Bar and the American Trial Lawyers Association.
During a distinguished legal career, Mr. Davis brought the first prosecution
under the Clean Air Act and the first prosecution of an aircraft hijacker. Mr.
Davis obtained for a client the largest judgment in Kentucky history. He also
prosecuted the first Nixon administration official - the Director of the United
States Marshall Service -- to go to prison, and brought the first civil case
against a sitting President of the United States (Jones v. Clinton). He
successfully argued before the United States Supreme Court, which unanimously
held that a sitting President is not immune from prosecution for personal
misconduct.
Robert H. Bradley, Director, has served as the president and chief
executive officer of Bradley, Foster & Sargent, Inc., an investment management
firm, since 1994. He is also a founder, principal and
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portfolio manager of the firm. He is a member of the firm's Investment Committee
and serves on the Board of Directors. Bradley, Foster & Sargent, Inc. provides
professional, high quality, individually-tailored investment management services
to individuals, families, firms and smaller institutions. The firm has
approximately $485 million in assets under management with offices in Hartford,
Connecticut and Wellesley, Massachusetts. Prior thereto, from 1993 to 1994, Mr.
Bradley served as a vice president of Conning and Company, from which he was
responsible for spinning off its investment management group to form Bradley,
Foster & Sargent, Inc. In 1985, Mr. Bradley helped to found Boston Private Bank
& Trust Company and served as its first president and chief executive officer
from 1986 through 1992. Prior thereto, Mr. Bradley spent 14 years with Citicorp,
including assignments in the Middle East, Africa, and Germany. During his last
five years at Citicorp, he served as vice president in the Investment Management
Group in New York and London. He graduated from Williams College in 1966 and
served as an officer in the U.S. Navy including a tour in Vietnam in 1969 and
1970. In 1971, he received his Masters in international economics from Fletcher
School of Law and Diplomacy at Tufts University. Mr. Bradley serves as chairman
of the board of Directors of Massachusetts Family Institute and Massachusetts
Foundation for the Family. He is also a Trustee on the Board of Gordon College
and serves as treasurer of the Board of Missions at Park Street Church, Boston.
Louis W. Barnett, Director, has served as vice president for programs of
The Leadership Institute, a non-profit institution of national standing, since
July 2000. From 1991 to June 2000, Mr. Barnett served as a member of the board
of the California Unemployment Insurance Appeals Board, which has an annual
budget of $52 million and 500 employees and decides more than 200,000 cases a
year. During his tenure as a member of the board of the California Unemployment
Insurance Appeals Board, Mr. Barnett held the position of vice chairman from
1992 to 1995 and as chairman from 1995 to 2000, having been appointed chairman
by Governor Wilson of California in 1995 and twice confirmed by the California
State Senate. Mr. Barnett also served as a director of the Federal Home Loan
Bank of San Francisco from 1990 to 1995, where he was responsible for the
Bank's administration and management. Previously, Mr. Barnett served as director
of government affairs and national political director of Citizens for the
Republic, a civic action organization founded by Ronald Reagan, from 1981 to
1989. In that capacity, he served as liaison to the White House and coordinator
of ballot initiatives and relations with grass roots organizations. Prior
thereto, from 1978 to 1981, he served as a consultant providing guidance for
businesses dealing with federal and state government policies and programs, and,
from 1975 to 1978, he served as a legislative assistant to the Los Angeles City
Council where he conducted program audits of large federal and state grant
funded capital construction projects and social service programs.
Robert Callahan has served as the vice president of finance and
administration of the Free Congress Research and Education Foundation in
Washington, DC since October 1998, having previously served as its controller
from January 1998 to September 1998. Prior to joining Free Congress, Mr.
Callahan served as accounting manager for the National Association of Home
Builders from 1995 to 1997. From 1991 to 1995, he served as assistant
controller of the National Governors' Association. Prior thereto, from 1988 to
1991, Mr. Callahan was associated with the accounting firm of Thomas Harvey &
Co. in Washington, DC. He has served in leadership positions with various
organizations outside his career and job over the years, including the Institute
of Management Accountants Suburban Maryland Chapter, the Prince George's County
Civic Federation, and the Knights of Columbus. Mr. Callahan was elected to the
Prince George's County Board of Education in 1998, where he serves as an
advocate for conservative views in public education. He lives in Bowie,
Maryland. He is a graduate of the University of Maryland and a native
Washingtonian. Mr. Callahan is a certified public accountant.
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Board Committees
The audit committee is primarily responsible for reviewing audited
financial statements and accounting practices of Yorktownuniversity.com and for
considering and recommending the employment of, and approving the fee
arrangements with, independent accountants for both audit functions and for
advisory and other consulting services. The audit committee is chaired by Robert
Bradley. Mr. Davis also serves on this committee. The compensation committee
is primarily responsible for reviewing and approving the compensation and
benefits for our key executive officers, administering our employee benefit
plans and making recommendations to the board regarding such matters. The
compensation committee is chaired by Gilbert Davis. Mr. Bradley also serves on
this committee.
Board of Directors and Director Compensation
Three of the five members of our board of directors are independent. At
all times, we will have at least two independent directors.
Directors are entitled to reimbursement of all reasonable out-of-pocket
expenses incurred in connection with their attendance at board and board
committee meetings. No fees are paid to Directors.
Compensation Committee Interlocks and Insider Participation
Messrs. Davis and Bradley serve on the compensation committee. No
interlocking relationship exists between the board or compensation committee and
the board of directors or compensation committee of any other company, nor has
any such interlocking relationship existed in the past. The compensation
committee reviews and approves the compensation and benefits for our key
executive officers, administers our employee benefit plans and makes
recommendations to the board regarding such matters.
Employment Agreement
In June 2000, Yorktownuniversity.com entered into an employment agreement
with Richard J. Bishirjian, Ph.D., its president and chief executive officer,
for a three year term, contingent upon the successful conclusion of the
Company's stock offering, and subject to automatic renewal unless terminated by
either party. The agreement provides for the payment to him of annual
compensation of up to $100,000 plus employee health insurance and other benefits
valued at $25,000 and bonuses to be based upon mutually agreed upon revenue
goals of up to 100% of his base annual salary. If the agreement is terminated
other than for "just cause," Dr. Bishirjian is entitled to a severance payment
equal to the greater of twice his total annual compensation as of the date of
termination or $250,000. The agreement also contains customary non-competition
and non-solicitation provisions.
Stock and Option Awards
From inception through the date of this prospectus, we issued a total of
9,340 shares of Yorktownuniversity.com's common stock and options to purchase an
additional 4,700 shares at our exercise price of $10.00 per share, to its
advisors, consultants, and each of its faculty members, generally in units of
100 shares with options to purchase an additional 100 shares, as inducement for
joining the faculty or for other service.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock by:
[ ] our chief executive officer, other executive officers and directors;
[ ] all directors and executive officers as a group; and
[ ] each person known to us to own beneficially more than 5% of our
outstanding shares.
A person has beneficial ownership of shares if he has the power to vote or
dispose of the shares. This power can be exclusive or shared, direct or
indirect. In addition, a person is considered by SEC rules to beneficially own
shares underlying options that are presently exercisable or will become
exercisable within 60 days. However, none of the beneficial owners hold options
that are presently exercisable or will become exercisable within the next 60
days.
As of the date of this prospectus, there were 478,167 shares of our common
stock outstanding, after giving effect to the conversion of all shares of the
Series A convertible preferred stock into common stock. To calculate a
stockholder's percentage of beneficial ownership, we must include in the
numerator and denominator those shares underlying options that the stockholder
is considered to beneficially own, if any. Shares underlying options held by
other stockholders, however, are disregarded in this calculation. Therefore,
the denominator used in calculating beneficial ownership among our stockholders
may differ.
Security Ownership Table /(1)/
<TABLE>
<CAPTION>
Percent as Percent Percent
Number of of the date assuming assuming
Names and Address of outstanding of this minimum maximum
Beneficial Owners Shares prospectus offering offering
------------------------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Richard J. Bishirjian, Ph.D. 179,285/(3)/ 37.5% 29.7% 19.3%
14 West Queen's Way
Hampton, VA 23669
Free Congress Research and
Education Foundation/(2)/ 131,851 27.6% 21.9% 14.2%
717 Second Street, S.E.
Washington, D.C. 20002
The Leadership Institute 34,632 7.2% 5.7% 3.7%
1101 North Highland Street
Arlington, VA 22201
Paul Weyrich 3,463/(4)/ 0.7% 0.6% 0.4%
12615 Lake Normandy Lane
Fairfax, VA
Thomas F. Payne 850 0.2% 0.1% 0.1%
9726 Delray Drive
Montgomery, OH 45242
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Percent as Percent Percent
Number of of the date assuming assuming
Names and Address of outstanding of this minimum maximum
Beneficial Owners Shares prospectus offering offering
------------------------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Douglas K. Adie 850 0.2% 0.1% 0.1%
915 May Avenue
Athens, OH 45701
Forrest A. Nabors 1,000 0.2% 0.2% 0.1%
14623 S.W. Peck Court
Tigard, OR 97224
Gilbert K. Davis 27,706/(5)/ 5.8% 4.6% 3.0%
3701 S. George Mason Dr.,
#1005N
Falls Church, VA 22041
Robert Bradley 3,463/(6)/ 0.7% 0.6% 0.4%
61 Fox Hill Road
Wellesley, MA 02481
Louis W. Barnett 0 - -
1101 North Highland Street
Arlington, VA 22201
Robert Callahan 0 - - -
2713 Newman Court
Bowie, MD 20716
All directors and 216,617 45.3% 35.9% 23.3%
executive officers
as a group
</TABLE>
______________
(1) The above table assumes conversion of Yorktownuniversity.com's Series A
convertible preferred stock, which is currently convertible into common
stock at the election of either Yorktownuniversity.com or the holder. The
Series A convertible preferred stock converts to common shares at the ratio
of 692.64 common shares for each Series A convertible preferred share held.
See "Certain Transactions and Policies - Sales of Stock to Insiders" for a
table of beneficial ownership of the Series A convertible preferred stock
by our executive officers and directors and each person who beneficially
owns 5% or more of these shares.
(2) Free Congress Research and Education Foundation's president is Paul
Weyrich, a member of our board of directors.
(3) This amount includes 3,463 shares issuable to Dr. Bishirjian upon
conversion of Yorktownuniversity.com's currently outstanding Series A
convertible preferred stock, assuming conversion at the current conversion
ratio of 692.64 common shares for each Series A convertible preferred share
held. Dr. Bishirjian purchased his Series A convertible preferred shares
on May 3, 2000.
(4) This amount includes 3,463 shares issuable to Mr. Weyrich upon conversion
of Yorktownuniversity.com's currently outstanding Series A convertible
preferred stock, assuming conversion at the current conversion ratio of
692.64 common shares for each Series A convertible preferred share held.
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(5) This amount includes 27,706 shares issuable to Mr. Davis upon conversion of
Yorktownuniversity.com's currently outstanding Series A convertible
preferred stock, assuming conversion at the current conversion ratio of
692.64 common shares for each Series A convertible preferred share held.
(6) This amount includes 3,463 shares issuable to Mr. Bradley upon conversion
of Yorktownuniversity.com's currently outstanding Series A convertible
preferred stock, assuming conversion at the current conversion ratio of
692.64 common shares for each Series A convertible preferred share held.
DESCRIPTION OF CAPITAL STOCK
General
Yorktownuniversity.com is authorized by its Articles of Incorporation to
issue an aggregate of 3,000,000 shares of common stock, $.001 par value per
share, and 10,000 shares, $.001 par value per share, of Series A convertible
preferred stock.
Common Stock
As of the date of this prospectus, our outstanding common stock consisted
of 478,167 shares of common stock, after giving effect to the conversion of all
shares of the Series A convertible preferred stock into common stock upon the
closing of this offering, held by stockholders of record. Holders of common
stock are entitled to one vote for each share held of record on all matters on
which stockholders may vote, and do not have cumulative voting rights in the
election of directors. Holders of common stock are entitled to receive, as,
when and if declared by the board of directors from time to time, such dividends
and other distributions in cash, stock or property from our assets or funds
legally available for such purposes subject to any dividend preferences that may
be attributable to our outstanding preferred stock.
No preemptive, conversion, redemption or sinking fund provisions apply to
the common stock. All outstanding shares of common stock are fully paid and
non-assessable. In the event of our liquidation, dissolution or winding up,
holders of common stock are entitled to share ratably in the assets available
for distribution.
Preferred Stock
As of the date of this prospectus, we had outstanding 183 shares of Series
A convertible preferred stock, which will be converted into 126,476 shares of
our common stock effective upon the completion of this offering. See "Certain
Transaction and Policies - Sales of Stock to Insiders." Our board of directors,
without further action by the stockholders, is authorized to issue an aggregate
of 10,000 shares of preferred stock. We have no plans to issue a new series of
preferred stock. Our board of directors may issue preferred stock with dividend
rates, redemption prices, preferences on liquidation or dissolution, conversion
rights, voting rights and any other preferences, which rights and preferences
could adversely affect the voting power of the holders of common stock.
Issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions or other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or could discourage or
delay a third party from acquiring control.
Indemnification of Directors and Officers
Our articles of incorporation provide that our directors and officers shall
be, and at the discretion of the board of directors non-officer employees and
agents may be, indemnified by us to the fullest extent authorized by Virginia
law, against all expenses and liabilities actually and reasonably incurred in
connection
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<PAGE>
with service for or on behalf of Yorktownuniversity.com, and further permit the
advancing of expenses incurred in defense of claims.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Yorktownuniversity.com pursuant to the foregoing provisions, or otherwise,
Yorktownuniversity.com 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. In the event that a
claim for indemnification against such liabilities (other than the payment by
Yorktownuniversity.com of expenses incurred or paid by a director, officer or
controlling person of Yorktownuniversity.com 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,
Yorktownuniversity.com 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 Act and will be governed by the final adjudication of
such issue.
Limitation of Liability
Under the Virginia Stock Corporation Act, the liability of an officer or
director for a single transaction in a proceeding brought by or in the right of
a corporation or on behalf of shareholders is limited to damages not exceeding
the lesser of (1) the monetary amount, including the elimination of liability,
specified in the articles of incorporation or, if approved by the shareholders,
in the bylaws, as a limitation on or elimination of the liability of the officer
or director; or (2) the greater of $100,000 or the amount of cash compensation
received by the officer or director from the corporation during the 12 months
immediately preceding the act or omission for which liability was imposed. The
liability of an officer or director may not be so limited if the officer or
director engaged in willful misconduct or a knowing violation of the criminal
law or of any federal or state securities law, including, without limitation,
any claim of federal or state securities law, including, without limitation, any
claim of unlawful insider trading or manipulation of the market for any
security.
Our Articles of Incorporation include a provision eliminating, to the
fullest extent permitted by law, the personal liability of directors.
Anti-Takeover Provisions
Under the Virginia Control Share Acquisition statute, a person who makes a
bona fide offer to acquire, or acquires, shares of stock of a Virginia
corporation that when combined with shares already owned, would increase the
acquirer's ownership to at least 20%, 33 1/3%, or a majority of the voting stock
of the corporation, must obtain the approval of a majority in interest of the
shares held by all shareholders (except the acquirer and officers and inside
directors of the corporation) in order to vote the shares acquired. The statute
does not apply to mergers pursuant to a merger or plan of share exchange
effected in compliance with the relevant provision of the Virginia Act. The
Control Share Acquisition statute permits a Virginia corporation to elect not to
be governed by these provisions by including such an election in its articles of
incorporation or bylaws, and does not apply to companies with less than 300
shareholders. We have decided not to be governed by the Control Share
Acquisition statute in its Articles of Incorporation since
Yorktownuniversity.com, Inc. does not believe such provisions are in keeping
with our commitment to the efficient operation of markets.
Virginia's Affiliated Transactions statute provides that if a person
acquires 10% or more of the stock of a Virginia corporation without the approval
of its board of directors (an "interested shareholder"), such person may not
engage in certain transactions with the corporation, including a merger and
purchase or sale of greater than 5% of the corporation's assets or voting stock,
for a period of three years, and then only with the specified supermajority
shareholder vote, disinterested director approval or fair price and procedural
protections. Virginia's statute includes certain exceptions to this prohibition.
For example, if a majority of
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<PAGE>
disinterested directors approves the acquisition of stock or the transaction
prior to the time that the person became an interested shareholder, or if the
transaction is approved by the board of directors and by the affirmative vote of
two-thirds of the outstanding voting stock which is not owned by the interested
shareholder, the prohibition does not apply.
Transfer Agent
The transfer agent for our common stock is Firstar Bank, N.A.
CERTAIN TRANSACTIONS AND POLICIES
Management Fees
As of May 31, 2000, management fees totaling $4,700 have been paid to CMP
International Consulting, Inc., whose President is also our Chief Executive
Officer, for services rendered in organizing Yorktownuniversity.com, securing
Internet domain registrations, recruiting Faculty, making applications for state
licenses, and administering our offering of shares to the public. In June 2000,
the Board approved payment of management fees of $20,300 for an eight month
period during which CMP International Consulting will manage university affairs.
Management believes that these terms are at least as favorable as could have
been obtained from an independent party.
Sales of Stock to Insiders
On July 19, 1999, we issued for cash and contributed services the following
shares of common stock at a price of $.089 per share to Yorktownuniversity.com's
founders:
<TABLE>
<CAPTION>
Purchaser Number of Shares
<S> <C>
Richard J. Bishirjian, Ph.D. 175,822
Free Congress Research and Education Foundation/(1)/ 131,851
The Leadership Institute/(2)/ 34,632
</TABLE>
_____________
/(1)/ Free Congress Research and Education Foundation's president is Paul
Weyrich, a member of our board of directors.
/(2)/ The Leadership Institute's Vice President for Programs is Louis Barnett, a
member of our board of directors.
From October 1999 to June 2000, we sold 183 shares of our Series A
convertible preferred stock at a price of $1,000 per share ($182,666 in total).
These shares will be converted into 126,476.1 shares of common stock effective
upon completion of the offering, meaning the date on which offering proceeds are
raised. The following table shows the beneficial ownership of these shares by
our executive officers and directors and each person who beneficially owns 5% or
more of these shares. See also the table under "Principal Stockholders," which
shows the ownership of our common stock by our executive officer, directors and
5% stockholders upon the conversion of these shares into common stock.
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<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of Shares Of Outstanding
Of Series A Series A
Name Convertible Convertible
Preferred Stock Preferred
Stock
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gilbert K. Davis 40 21.9%
Chad Long 10 5.5%
John Engelhart 20 10.9%
Wilhelm Maier 10 5.5%
William Dahling 30 16.4%
Tony Barr 10 5.5%
Richard J. Bishirjian 5 2.7%
Paul Weyrich 5 2.7%
Robert H. Bradley 5 2.7%
--------------------------------------------------------------------------------------------------------------
</TABLE>
Other Agreements with Insiders
We have entered into indemnification agreements with each of our directors
and officers. These indemnification agreements require Yorktownuniversity.com to
indemnify such individuals to the fullest extent permitted by Virginia law.
Agent of the Issuer
Richard Bishirjian and Douglas Adie will be the registered officers who
will effect offers and sales of our securities.
Ratification of Past Material Affiliated Transactions with Insiders
At the time we entered into the above-described transactions, we did not
have disinterested, independent directors, who could evaluate and ratify these
transactions. See "Risk Factors -- You will not have had the benefit of a
contemporaneous, independent review of certain past transactions with insiders."
Our current, independent directors have since ratified these transactions.
Policy Matters
All of the material transactions and relationships entered into by
Yorktownuniversity.com and any directors, executive officers or 5% shareholders
have been ratified by the independent members of the board after having been
offered access to independent legal counsel at Yorktowuniversity.com's expense.
At the time these transactions were entered into, Yorktownuniversity did not
have any independent directors.
Policy Regarding Future Material Affiliated Transactions
We will not enter into any material affiliated transactions, such as loans
or forgiveness of loans, with any insider or affiliate, unless the terms of that
transaction are no more or less favorable to us than the terms we would agree to
in a transaction with an unaffiliated third party. In addition, we will ask our
disinterested, independent directors to review any material affiliated
transaction we seek to enter into. These directors will be entitled to consult
either our legal counsel or their own independent legal counsel at our expense
if they wish. We will not enter into a material affiliated transaction unless a
majority of those disinterested, independent directors have approved the
transaction.
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Policy Regarding Preferred Stock
We will not offer any shares of preferred stock to promoters, unless the
promoters purchase or acquire those shares on the same terms as other
shareholders. If we offer shares of preferred stock to promoters on more
favorable terms than other shareholders, we will complete the transaction only
after a majority of the disinterested, independent directors has approved the
transaction, having had the same opportunity to review the transaction and
consult either our legal counsel or their own independent legal counsel at our
expense as prescribed in the section, "Certain Transactions and Policies -
Policy Regarding Future Material Affiliated Transactions."
SHARES ELIGIBLE FOR FUTURE SALE
All of the 478,167 shares of common stock currently outstanding or issuable
through the conversion of currently outstanding Series A convertible preferred
stock upon completion of the offering are "restricted securities" under the
Securities Act and may be sold in the public market upon the expiration of
certain holding periods under Rule 144, subject to the volume, manner of sale
and other limitations of Rule 144. Subject to certain restrictions applicable
to affiliates, upon the lapse of these restrictions, these shares will become
freely tradable. Sales of substantial amounts of these or other shares of
common stock in the public market following the offering could adversely affect
the market price of the common stock and adversely affect our ability to raise
capital at a time and on terms favorable to us.
In addition, as of the date of this prospectus, there were outstanding
options to purchase 4,500 shares of common stock. We may register the shares of
common stock issued, issuable or reserved for issuance under our option plans as
soon as practicable following the date of this prospectus.
PLAN OF DISTRIBUTION
Internet Direct Offering
We intend to offer and sell shares directly through our web site. None of
our directors, officers or employees who assist us in this process will receive
any additional compensation for their efforts. We expect to promote the offering
through word of mouth to leaders of various conservative organizations,
conservative religious organizations and home school associations, direct
mailings to targeted members of such organizations or associations and the
placement of advertisements with periodicals targeted to such audiences. We
have no intention of entering into agreements with selling agents to offer and
sell our shares.
The offering will continue until February 28, 2001, unless all shares are
earlier sold or we elect in our sole discretion to earlier terminate or extend
the offering until a date not later than May 31, 2001. Subscriptions may be
withdrawn at the election of the subscriber at any time prior to our acceptance
of the subscription and release of the subscription funds from escrow.
Availability of Prospectus
This prospectus may be accessed and downloaded through our website at
www.yorktownuniversity.com. No other information on our web site is a part of
this prospectus. Any person desiring to view and download this prospectus must
represent to us in what state he or she is resident, and this prospectus will
only be made available to residents of states in which our registration has
become effective. Assistance to persons having difficulty downloading the
prospectus is available online through our website
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<PAGE>
and our telephone number, (757) 873-1100. Upon request, we will forward printed
copies of the prospectus to prospective investors.
The prospectus will be removed from our website promptly following
completion of the offering. Consequently, investors may desire to download a
copy, or request a printed copy of the prospectus for future reference.
How to Subscribe
You may subscribe to purchase shares by completing and signing the
subscription agreement which accompanies this prospectus and mailing or
delivering it to the escrow agent, together with payment in full for all shares
subscribed for. To be accepted, your subscription must be forwarded to the
escrow agent before the expiration of the offering. You must pay the full
subscription price when you return the subscription agreement. In the event
that payment is less than that required to purchase the number of shares
subscribed for, we will issue only the number of shares for which payment is
received.
You should make your check payable and return your subscription agreement to:
Firstar Bank, N.A., escrow agent
425 Walnut Street
Cincinnati, Ohio 45202
Attention: Brian George
If you have any questions about this offering, please call (757) 873-1100
or visit our web site and register your name, telephone number and the best time
to call. Our representative will return your call within one business day.
Delivery of Share Certificates
As soon as practicable following our acceptance of your subscription, we
will mail you a certificate evidencing the shares you have purchased.
Escrow of Funds and Acceptance of Subscriptions
All subscription funds received in the offering will be deposited in an
interest bearing escrow account with Firstar Bank, N.A., as escrow agent. These
funds will be held in the escrow account until released to us upon our
acceptance of subscriptions, which is expected to occur initially upon the sale
of the minimum number of shares and thereafter not more often than weekly. We
may elect to accept or reject any or all of the subscriptions in the offering
for any reason.
If subscriptions for at least 125,000 shares are not received and accepted
by February 28, 2001, subject to extension to a date not later than May 31,
2001, then all subscription funds will be returned to subscribers, with
interest, within 10 days after the termination of the offering. However,
subscriptions received from Minnesota residents cannot be held for more than 180
days after the commencement of the offering. Consequently, subscription funds
received from Minnesota residents will be earlier returned, with interest, if
subscriptions for the minimum offering amount are not received and accepted by
that date.
Our officers, directors, promoters, affiliates or associates may purchase
shares in the offering for the purpose of completing the minimum offering
requirements.
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EXPERTS
Our financial statements as of May 31, 2000, and for the period then ended,
included in this prospectus, have been audited by Goodman & Company, L.L.P.,
independent auditors as stated in their reports appearing herein and elsewhere
in the Registration Statement, and have been so included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by counsel to Yorktownuniversity.com, Doepken Keevican & Weiss Professional
Corporation, 58th Floor, USX Tower, 600 Grant Street, Pittsburgh, Pennsylvania
15219.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-1 under the
Securities Act of 1933 with respect to the common stock offered in this
prospectus. This prospectus omits certain information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to Yorktownuniversity.com and the common stock offered
in this prospectus, reference is made to such registration statement, exhibits
and schedules. Statements contained in this prospectus as to the contents of
any contract or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
The registration statement, including the exhibits and schedules filed
therewith, may be inspected free of charge at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its regional offices located at 7 World Trade
Center, New York, New York 10048 and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates and
from the SEC's Internet site at http://www.sec.gov. Information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
47
<PAGE>
Yorktownuniversity.com, Inc.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants F-2
Financial Statements:
Balance Sheet as of May 31, 2000 F-3
Statement of Operations for the Period Ended May 31, 2000 F-4
Statement of Changes in Stockholders' Equity for the
Period Ended May 31, 2000 F-5
Statement of Cash Flows for the Period Ended May 31, 2000 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Directors and Stockholders
Yorktownuniversity.com, Inc.
(A Development Stage Enterprise)
Norfolk, Virginia
We have audited the accompanying balance sheet of Yorktownuniversity.com,
Inc. (A Development Stage Enterprise) as of May 31, 2000, and the related
statement of operations, stockholders' equity and cash flows from inception,
July 19, 1999, to the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit 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 Yorktownuniversity.com, Inc.
(A Development Stage Enterprise) as of May 31, 2000, and the results of its
operations and cash flows from inception, July 19, 1999, to the period then
ended in conformity with generally accepted accounting principles.
/s/ Goodman & Company, L.L.P.
Norfolk, Virginia
September 8, 2000
F-2
<PAGE>
YORKTOWNUNIVERSITY.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
--------------------------------------------------------------------------------
May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 160,363
Travel advances - related party 835
----------------------------
161,198
----------------------------
Property and equipment
Office equipment 1,498
Less accumulated depreciation (250)
----------------------------
1,248
----------------------------
Deferred offering costs $ 57,635
----------------------------
----------------------------
$ 220,081
----------------------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Accounts payable $ 9,950
Due to related party 8,278
---------------------------
18,228
---------------------------
Stockholders' equity
Common stock, $.001 par value, 3,000,000 shares authorized,
351,645 shares outstanding 352
Series A convertible preferred stock, $.001 par value, 200
shares authorized, 172.66 shares issued and outstanding -
Additional paid-in capital 297,214
Deficit accumulated during development stage (95,713)
---------------------------
201,853
---------------------------
$ 220,081
---------------------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE>
YORKTOWNUNIVERSITY.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
Period Ended May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Revenues
Interest income $ 526
------------------------------
Operating expenses
Faculty recruitment 64,000
Organization costs 14,300
Administrative fee 7,150
Marketing 6,900
Supplies and equipment 1,217
Legal expenses 980
Office supplies 721
Other 685
Depreciation and amortization 250
Telephone 36
------------------------------
96,239
------------------------------
Net loss before income taxes (95,713)
Income tax expenses -
------------------------------
Net loss (95,713)
------------------------------
Weighted average common shares outstanding 351,645
------------------------------
Net loss per share - basic and diluted $ (0.27)
------------------------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE>
YORKTOWNUNIVERSITY.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Period Ended May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Series A Series A Additional During
Common Common Preferred Preferred Paid-In Development
Shares Stock Shares Stock Capital Stage Total
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception, July 19, 1999 $342,105 $342 - $ - $ 31,158 $ - $ 31,500
Proceeds from issuance
of Series A convertible
preferred stock - - 172.66 - 172,666 - 172,666
Net loss - - - - - (95,713) (95,713)
Common stock issued in
exchange for services 9,340 10 - - 93,390 - 93,400
-----------------------------------------------------------------------------
351,645 $352 172.66 $ - $297,214 $(95,713) $201,853
-----------------------------------------------------------------------------
</TABLE>
F-5
<PAGE>
YORKTOWNUNIVERSITY.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
Period Ended May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss $ (95,713)
Adjustments to reconcile to net cash used
by operating activities:
Depreciation and amortization 250
Services received in exchange for common stock 70,900
Changes in:
Travel advances (835)
Accounts payable 9,950
Due to related party 8,278
---------------------------
Net cash used by operating activities (7,170)
---------------------------
Cash flows from investing activities
Purchase of property and equipment (1,498)
---------------------------
Cash flows from financing activities
Proceeds from issuance of common stock 31,500
Proceeds from issuance of Series A convertible preferred stock 172,666
Deferred offering costs (35,135)
---------------------------
Net cash provided by financing activities 169,031
---------------------------
Net increase in cash 160,363
Cash at beginning of period -
---------------------------
Cash at end of period $ 160,353
---------------------------
Supplemental disclosure of non-cash investing
and financing activities
At inception, July 19, 1999, $6,500 of common stock was issued
to a related party in exchange for services rendered related to
the organization of the Company.
During the period ended May 31, 2000, 9,340 shares of common stock
were issued for services, including 2,250 shares related to the public
offering.
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-6
<PAGE>
YORKTOWNUNIVERSITY.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
NOTE 1 - BUSINESS ORGANIZATION
Yorktownuniversity.com, Inc. (the "Company"), was formed in July, 1999 in
Virginia. The Company intends to establish and operate an online university
offering courses in the humanities and social sciences disciplines. During the
development stage, the Company has undertaken efforts to complete its
organization and raise capital, recruit faculty and develop curriculum for its
course offerings, obtain accreditation and eligibility from appropriate state
and federal agencies, develop its internet-delivery system, and initiate its
marketing plans.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting and Basis of Presentation
The accounting and reporting policies of the Company conform to generally
accepted accounting principles.
Cash and Cash Equivalents
For the purpose of reporting cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents.
Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent assets and
liabilities for the reported periods. Actual results could differ from those
estimates and assumptions.
Credit Risk
Financial instruments which potentially subject the Company to
concentration of credit risk consists principally of cash. The Company
mitigates this risk by placing its cash with high credit quality financial
institutions. The Company has, at times, deposits at financial institutions in
excess of FDIC insurance limits. Amounts on deposit in excess of FDIC insurance
limits are not insured. If the financial institution failed, amounts not
insured may not be recovered.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis in organization costs and
start-up costs for financial and income tax reporting. The deferred tax asset
represents the future tax return consequences of those differences which will be
deductible when the differences are settled.
F-7
<PAGE>
(Notes continued on next page)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising
Advertising costs are expensed as incurred.
Organization and Start-up Costs
Organization and start-up costs are expensed as incurred.
Property and Equipment
Property and equipment are stated at cost and depreciated using straight-
line and accelerated methods over the following estimated useful lives:
Assets Lives
------ -----
Office equipment 5 years
Earnings Per Common Share
Financial Accounting Standards Board (FASB) Statement No. 128, Earnings Per
Share, establishes standards for computing and presenting earnings per share
(EPS). FASB Statement No. 128 requires dual presentation of basic and diluted
EPS on the face of the statement of operations, and it requires a reconciliation
of the numerator and denominator of the basic EPS computation with the numerator
and denominator of the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised, converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. The effect of potentially dilutive securities
are not considered, as they would be anti-dilutive for the period ended May 31,
2000.
Stock Compensation Plans
The Company accounts for its stock options and warrants 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 expense is recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price. Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(Statement No. 123), permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, Statement No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25, and provide pro forma net income or loss and
pro forma net income or loss per common share disclosures for stock options and
awards (as if the fair-value-based method defined in Statement No. 123 had been
applied). The Company has elected to apply the provisions of APB Opinion No. 25
and provide the pro forma disclosures of Statement No. 123.
F-8
<PAGE>
(Notes continued on next page)
Convertible Preferred Stock
Convertible preferred stock is redeemable solely at the option of the
Company, and is reported as part of stockholders' equity. Otherwise, equity
securities redeemable at the option of the holder, or at a fixed date and a
fixed price, or otherwise beyond control of the Company, are reported separately
from stockholders' equity.
Website Development Costs
For the period ended May 31, 2000, website development costs were incurred
in the planning stage and, as such, are expensed. The Company is currently
studying the impact of FASB's Emerging Issues Task Force (EITF) Issue No. 00-2,
Accounting for Website Development Costs. As of May 31, 2000, the effect of
adopting the provisions of EITF Issue No. 00-2 is immaterial. Internet domain
name registration costs are inconsequential and are expensed. Trademarks and
other proprietary rights have not been secured, therefore, costs associated with
these activities are expensed as incurred.
NOTE 3 - DEFERRED OFFERING COSTS
Deferred offering costs include printing, communication, travel and legal
costs associated with the planned offering of common stock. If the offering is
successful, the costs will be netted against the offering proceeds in
stockholders' equity. If not, they will be expensed in the period the offering
is aborted.
NOTE 4 - INCOME TAXES
The deferred tax assets include the following:
<TABLE>
<S> <C>
Deferred tax assets:
Organization and start-up costs $ 32,542
Less valuation allowance (32,542)
--------
$ --
========
</TABLE>
Net operating losses for income tax return purposes have not yet been
incurred, as the Company's operations have not yet commenced.
NOTE 5 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
In June 2000, the Company entered into an employment agreement with its
president and chief executive officer, for a three year term, contingent upon
the successful conclusion of the Company's stock offering and subject to
automatic renewal unless terminated by either party. The agreement provides for
the payment of annual compensation (base salary of $100,000 plus employee health
insurance and other benefits valued at $25,000) and bonuses to be based upon
mutually agreed upon revenue goals of up to 100% of base
(Notes continued on next page)
F-9
<PAGE>
annual salary. If the agreement is terminated other than for "just cause," he
shall be entitled to a severance payment equal to the greater of twice his total
annual compensation as of the date of termination or $250,000.
Amounts due from a related party pertain to travel advances made on behalf
of the above-mentioned CEO. Travel advances are expensed in the period the
travel occurs. Amounts due to related party represent amounts due CMP
International, Inc. (CMP), an entity affiliated with the CEO, for: (1)
management fees of $4,700 and (2) costs incurred on behalf of the Company by CMP
of $3,578. These amounts due CMP will be settled at or near the closing of the
initial public offering. See subsequent events for additional information.
NOTE 6 - PREFERRED STOCK
The Company is authorized to issue 10,000 shares of preferred stock with a
par value of $.001 per share. As of May 31, 2000, the Company issued 172.66
shares of Series A convertible preferred stock (the "Series A" shares). Series
A shares may be converted in whole or in part into common stock at the option of
either the holder or the Company, thirty days after completion of a qualified
initial public offering (as defined). If converted, Series A shares convert to
common shares at the ratio of 692.64 common shares for each Series A share held.
Series A shares are also entitled to dividends in an amount per share equal
to any per share dividend paid on common stock, and to preferential redemption,
purchase or acquisition. Each Series A share is entitled to one vote for each
share held. Series A shares are redeemable solely at the option of the Company
at a price of $1,000 per share. However, the liquidation preference for Series
A shares is $1.00 per share.
NOTE 7 - STOCK OPTION PLAN AND STOCK AWARDS
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
The Company's 2000 Stock Option Plan has authorized the grant of options to
management personnel and faculty for up to 100,000 shares of the Company's
common stock. All options granted have 10-year terms and vest and become fully
exercisable at the discretion of the Option Committee of the Board of Directors.
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for the period ended May 31, 2000: risk-free interest rate of 6.5%;
dividend yield of 0.0%; volatility factors of the expected market price of the
Company's common stock of .30; and a weighted-average expected life of the
option of 5 years.
The Black Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
(Notes continued on next page)
F-10
<PAGE>
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma and actual information follows for the period ended May 31, 2000:
<TABLE>
<S> <C>
Net loss
Actual $ (95,713)
Pro forma $(101,299)
Net loss per share - basic and diluted
Actual $ (.27)
Pro forma $ (.29)
</TABLE>
A summary of the Company's stock option activity, and related information
for the period ended May 31, follows:
<TABLE>
<CAPTION>
Weighted-
Average
Options Exercise Price
------- --------------
<S> <C> <C>
Outstanding - beginning of period - $ -
Granted/Awarded 4,900 10.00
Exercised/Issued - -
Forfeited - -
------ ------
Outstanding - end of period 4,900 $10.00
====== ======
Exercisable - end of period 4,900 $10.00
====== ======
Weighted-average fair value of options granted during the period $ 1.14
======
</TABLE>
As of May 31, 2000, the Company awarded 9,340 shares of common stock to
recruit faculty (6,400 shares), and to reduce cash expenditures to service
providers for expenses directly associated with the initial public offering
(IPO) (2,250 shares) and for marketing (690 shares). As the IPO price is $10
per share and there is no exercise price, the intrinsic-value method of APB 25
is used with respect to faculty recruitment, and resulted in faculty recruitment
expense of $64,000 for the period ended May 31, 2000. The consideration
received from the service providers approximates the number of shares awarded
multiplied by the IPO price, and resulted in additional deferred offering costs
of $22,500 and marketing expense of $6,900 for the period ended May 31, 2000.
NOTE 8 - SUBSEQUENT EVENTS
On June 30, 2000, the Company filed a Registration Statement on Form SB-1
(the Initial Public Offering or IPO) with the Securities and Exchange
Commission. The stock is being sold on a best efforts basis, with a minimum
requirement of 125,000 shares sold before funds held in escrow are released.
The Company plans to use the proceeds to develop, promote, and begin operating
an online university, and for
F-11
<PAGE>
other working capital purposes. The offering terminates on January 31, 2001,
unless all of the shares are earlier sold or the Company elects in its sole
discretion, to earlier terminate or extend the offering.
Subsequent to May 31, 2000, 1,700 more option shares were granted (at
$10.00 per share exercise price) to service providers and faculty, and 3,850
more shares were awarded to management personnel and service providers with an
estimated intrinsic and fair value of $10 per share. The Company also sold 10
more shares of Series A convertible preferred stock for $1,000 per share, after
May 31, 2000. See disclosures above regarding Series A convertible preferred
stock.
In June 2000, the Board of Directors approved payment of management fees of
$20,300 for an eight-month period during which CMP International Consulting,
Inc. (CMP) will manage university affairs.
* * * * *
F-12
<PAGE>
Annex A
SUBSCRIPTION AGREEMENT
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
Attention: Brian George
Ladies and Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of common stock, par value $0.001 (the "Shares"), of
Yorktownuniversity.com, Inc., a Virginia corporation ("Yorktownuniversity.com"),
indicated below. The undersigned has executed and delivered this Subscription
Agreement in connection with Yorktownuniversity.com's offering of Shares
described in the Prospectus dated [ ], 2000, as may be supplemented
from time to time ("Supplements"), which Prospectus and Supplements, if any,
accompany this Subscription Agreement.
The undersigned agrees to purchase the Shares subscribed for herein for the
purchase price of $10.00 per share and has delivered to our escrow agent,
Firstar Bank, N.A., with this Subscription Agreement, a check made payable to
"Firstar Bank, N.A., escrow agent."
The undersigned acknowledges receipt of a copy of our Prospectus, as
supplemented by any Supplements.
The undersigned acknowledges that we may accept or decline the
undersigned's subscription for any reason whatsoever.
<TABLE>
<S> <C>
_______________________________________
______________ Shares ($_______________) Please print name(s) of subscriber(s)
subscribed for (minimum of 100 Shares and
total subscription price of $1,000) _______________________________________
Signature of subscriber
______________________________________ _______________________________________
How Shares are to be held if this is a Signature of co-subscriber
co-investment, e.g., as joint tenants
(with right of survivorship) or _______________________________________
tenants-in-common
______________________________________
Address
_______________________________________ ______________________________________
Social Security or Tax I.D. number(s) Date
______________________________________
E-Mail Address
______________________________________
Telephone
</TABLE>
A-1
<PAGE>
Annex B
ESCROW AGREEMENT
ESCROW AGREEMENT made this ______ day of ___________, 2000 by and between
Yorktownuniversity.com, Inc. a Virginia corporation ("Yorktownuniversity.com"),
and Firstar Bank, N.A., a national banking association ("Bank").
WHEREAS, Yorktownuniversity.com has offered to sell up to [450,000] newly
issued shares ("Shares") of its common stock, at an offering price of $10.00 per
share (the "Offering");
WHEREAS, the Shares are registered pursuant to a Form SB-1 Registration
Statement (Registration No. 333-40672) filed under the Securities Act of 1933,
as amended;
WHEREAS, the Prospectus provides that Yorktownuniversity.com offer to
prospective investors shares for the period beginning on ____________, 2000
through ___________, 2001, subject to Yorktownuniversity.com's right to extend
the Offering;
WHEREAS, the terms of the offering described in Yorktownuniversity.com's
Prospectus permit subscriptions to be accepted and offering proceeds released
when subscriptions for at least 125,000 shares have been received and,
thereafter, on a weekly or other periodic basis, from and after the date on
which the Registration Statement is declared effective by the Securitise and
Exchange Commission until February 28, 2001, subject to extension up to May 31,
2001;
WHEREAS, the Prospectus provides that Yorktownuniversity.com will deposit
all subscription funds received in an interest bearing escrow account with Bank,
as escrow agent; Yorktownuniversity.com may elect to accept or reject any or all
of the subscriptions in the Offering; and
WHEREAS, the parties wish to provide for the terms of a deposit account to
be established by Yorktownuniversity.com with Bank for the deposit of
subscriptions and the terms of withdrawal thereof.
NOW, THEREFORE, in consideration of the mutual promises herein made and for
other good and valuable consideration, the parties hereto hereby agree as
follows:
FIRST: Yorktownuniversity.com shall deliver a certificate signed by
it to Bank setting forth the effective date of the Offering, immediately after
such effective date.
SECOND: All funds received from subscribers for the Shares will be
delivered by Yorktownuniversity.com to Bank at 425 Walnut Street, [
], Cincinnati, Ohio 45202, Attention: Brian George, for deposit into a special
interest bearing account (the "Account"), together with the name, address,
social security number of each such subscriber, and the name(s) in which the
Shares are to be registered. Yorktownuniversity.com agrees that where Shares
are to be paid for by check, Yorktownuniversity.com will deposit such check into
the Account within one business day following receipt by Yorktownuniversity.com
of a subscription.
THIRD: Bank will hold all funds received by it pursuant to the terms
of this Agreement in the Account. In no event shall funds in the account be
subject to claims by creditors of Yorktownuniversity.com, its affiliates or
associates until the funds have been withdrawn from the Account and disbursed to
Yorktownuniversity.com in accordance with the terms of this Agreement. Funds may
be withdrawn from the
B-1
<PAGE>
Account and disbursed only as follows:
A. From and after the date that subscriptions acceptable to
Yorktownuniversity.com for at least 125,000 Shares are received by the Bank
prior to the termination of the Offering and, thereafter on a weekly or other
periodic basis, Yorktownuniversity.com shall deliver to the Bank a certificate
(the "Closing Certificate") stating which of the subscriptions in the Offering
have been accepted or rejected.
B. The Bank shall deliver to Yorktownuniversity.com, with interest,
all funds received by it for subscriptions in the Offering (not previously
released to Yorktownuniversity.com or returned to subscribers) which
Yorktownuniversity.com shall have certified as being accepted and shall return
to subscribers, with pro rata interest and without any deduction for expenses,
all funds received by it for subscriptions which Yorktownuniversity.com shall
have certified as not being accepted.
C. Bank shall copy and forward all Subscription Agreements to
Yorktownuniversity.com daily.
FOURTH: Bank shall invest all funds received from subscribers in
short term, highly liquid, interest-bearing investments.
FIFTH:
A. Bank is acting solely as depository of the funds and not as a
trustee or fiduciary under this Agreement. Bank is not a party to, nor has it
reviewed or approved any agreement other than this Agreement, nor any other
matters of background related to this Agreement.
B. Bank shall not be liable for any damages, or have any obligations
other than the duties prescribed herein in carrying out or executing the
purposes and intent of this Agreement; provided, however, that nothing herein
-------- -------
contained shall relieve Bank from liability arising out of its own willful
misconduct or gross negligence. Bank's duties and obligations under this
Agreement shall be entirely administrative and not discretionary.
C. Bank shall not be liable to any party hereto or to any third party
as a result of any action or omission taken or made by Bank, except for
liability arising out of Bank's own willful misconduct or gross negligence.
Yorktownuniversity.com will, at its expense, indemnify Bank, hold Bank harmless,
and reimburse Bank, and its officers, directors, employees and representatives
from, against and for, any and all liabilities, costs, fees and expenses
(including reasonable attorney's fees) Bank or any of them may suffer or incur
by reason the execution and performance of this Agreement by Bank, including any
litigation relating to this Agreement instituted by or against Bank, to which it
is a party or in which Bank or any of its officers, directors, employees or
representatives are required to appear as a witness. If any legal questions
arise concerning Bank's duties and obligations hereunder, Bank may consult its
counsel at Yorktownuniversity.com's expense and rely without liability upon
written opinions given to it by such counsel.
D. Bank shall be protected in acting upon any written notice,
request, waiver, consent, authorization, or other paper or document which Bank,
in good faith, believes to be genuine and what it purports to be.
E. Bank shall not be bound in any way by any contract or agreement
between the other parties hereto, whether or not it has knowledge of any such
contract or agreement or of its terms or conditions.
F. This Agreement shall be terminated upon withdrawal and
disbursement of all of funds
B-2
<PAGE>
held in the Account, except that Articles FIFTH and SEVENTH shall survive
termination of this Agreement.
G. Notwithstanding anything to the contrary contained in this
Agreement, it is agreed that Bank shall in no case or event be liable for the
failure of any of the conditions of this Agreement or damage caused by the
exercise of its discretion in any particular manner, or for any reason, except
gross negligence or willful misconduct with reference to the Account, and Bank
shall not be liable or responsible for its failure to ascertain the terms or
conditions, or to comply with any of the provisions, of any agreement, contract
or other document delivered to it or referred to herein, nor shall Bank be
liable or responsible for forgeries or false personation.
H. If any controversy arises between the parties hereto or with any
third person with respect to the subject matter of this Agreement, its terms or
conditions, Bank shall not be required to determine the same or take any action
in the premises, but Bank may await the settlement of any such controversy by
final appropriate legal proceedings or otherwise as Bank may require, or Bank
may institute legal proceedings to determine any controversy, and in any such
event Bank shall not be liable for interest or damages.
I. It is agreed that Bank's duties are only such as are herein
specifically provided, being purely ministerial in nature, and that Bank shall
incur no liability whatsoever except for its willful misconduct or gross
negligence.
J. Bank may, but shall not be required to, institute legal
proceedings of any kind. Bank shall have no responsibility for the genuineness
or validity of any document or other item deposited with it, and Bank shall be
fully protected in acting in accordance with any written instructions given to
it hereunder and believed by it to have been signed or given by the proper
parties.
K. Bank undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against Bank.
L. No provision of this Agreement shall require Bank to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
M. Bank may consult with counsel and the written advice of such
counsel or any opinion of counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
N. Bank shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but Bank in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit.
O. The recitals contained herein shall be taken as the statements of
Yorktownuniversity.com, and Bank assumes no responsibility for their
correctness. Bank makes no representations as to the validity or sufficiency of
this Agreement. Bank shall not be accountable for the use or application by
Yorktownuniversity.com of the proceeds of the Offering.
SIXTH: Notwithstanding anything to the contrary contained in this
Agreement, Bank (a) may resign from its duties under this Agreement by giving 30
days' prior written notice of such resignation to the other parties hereto and
(b) may be discharged from its duties under this Agreement upon the receipt from
each of the other parties hereto of 30 days' prior written notice of such
discharge. Upon the resignation or discharge of Bank,
B-3
<PAGE>
Yorktownuniversity.com shall retain a substitute financial institution to
perform the functions theretofore performed by Bank under this Escrow Agreement.
SEVENTH: A. Yorktownuniversity.com agrees to pay to Bank reasonable
expenses, including counsel fees, incurred in acting hereunder.
B. It is understood that fees (if any) and usual charges agreed upon
for Bank's services hereunder shall be considered compensation for its ordinary
services as contemplated by this Agreement and in the event the conditions of
this Agreement are not promptly fulfilled or that Bank renders any service
hereunder not provided for in this Agreement, or that there is any modification
hereof, or that any controversy arises hereunder or that Bank institutes, is
made a party to, or intervenes in, any litigation pertaining to this Agreement
or the subject matter thereof, Bank and its legal counsel shall be reasonably
compensated for such extraordinary services and reimbursed for all costs and
expenses occasioned by such default, delay, controversy or litigation and Bank
shall have the right to retain all documents and/or other things of value at
any time held by it hereunder until such compensation, fees, costs and expenses
shall be paid. Yorktownuniversity.com hereby promises to pay the foregoing sums
upon demand.
EIGHTH: If, after the receipt by Bank of any check or instrument of
any party hereto, Bank shall inform Yorktownuniversity.com that such check or
instrument has been entered for collection by it hereunder and is uncollectable
and payment of the funds represented by such check or instrument has been made
pursuant to the terms of this Agreement, then Yorktownuniversity.com shall
immediately reimburse Bank for such payment, and Bank shall deliver the returned
check or instrument to Yorktownuniversity.com provided, however, that nothing
contained herein shall require Bank to invest or pay out funds which it has
reason to believe are uncollectable.
NINTH: All distributions by Bank to subscribers pursuant to this
Agreement shall be made with accrued interest by check, payable to the order of
each respective subscriber and shall be mailed directly to the subscribers by
first class mail. All payments by Bank to Yorktownuniversity.com shall be made
in immediately available funds, if and to the extent that the funds on deposit
with Bank are immediately available at the time of such payment.
TENTH: Bank and Yorktownuniversity.com agree that the Arizona
Corporation Commission, Securities Division, as the Administrator of the states
participating in a coordinated equity review of the Offering, shall have
permission to inspect and make copies of the records of the Bank relating to the
Account at any reasonable time during the regular business hours of the Bank
wherever the records are located.
ELEVENTH: The rights and obligations of each party under this
Agreement may not be assigned without the prior written consent of all other
parties. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
TWELFTH: This Agreement contains all the terms agreed upon by the
parties with respect to the subject matter hereof. This Agreement may be
amended only by a written instrument signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
THIRTEENTH: All notices, communications and instructions required or
desired to be given under the Escrow Agreement shall be in writing and shall be
deemed to be fully given if sent by certified mail, return receipt requested, to
the following addresses:
To: Firstar Bank, N.A.
Firstar Bank, N.A.
B-4
<PAGE>
425 Walnut Street
[ ]
Cincinnati, OH 45202
Attention: Brian George
To: Yorktownuniversity.com, Inc.
Yorktownuniversity.com, Inc.
P.O. Box 653
Yorktown, VA 23690
Attention: Richard J. Bishirjian, President and
Chief Executive Officer
or to such other address and to the attention of such other person as any of the
above may have furnished to the other parties by certified mail, return receipt
requested.
FOURTEENTH: Yorktownuniversity.com shall deliver to Bank a
certificate of the secretary of Yorktownuniversity.com as (a) the authority of
certain officers thereof to act on behalf of Yorktownuniversity.com in
connection with this Agreement and (b) the incumbency and signatures of such
officers, and Bank may act in reliance on such certificate upon the instructions
or directions given to it in accordance with the terms of this Agreement by
Yorktownuniversity.com, through a person authorized so to act in such
certificate.
FIFTEENTH: This Agreement shall be deemed to be an agreement made
under the laws of the State of Ohio and for all purposes shall be construed and
enforced in accordance with and governed by the laws of such State.
SIXTEENTH: This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
B-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Yorktownuniversity.com, Inc.
By:
------------------------------
Title:
----------------------------
Firstar Bank, N.A.
By:
------------------------------
Title:
----------------------------
B-6
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Indemnification of Directors and Officers.
Section 13.1-697 of the Virginia Stock Corporation Act (the "Virginia Act")
provides as follows:
A. Except as provided in subsection D of this section, a corporation may
indemnify an individual made a party to a proceeding because he is or
was a director against liability incurred in the proceeding if:
1. He conducted himself in good faith; and
2. He believed:
a. In the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests; and
b. In all other cases, that his conduct was at least not
opposed to its best interests; and
3. In the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
B. A director's conduct with respect to an employee benefit plan for a
purpose he believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of
paragraph 2b of subsection A of this section.
C. The termination of a proceeding by judgment, order, settlement or
conviction is not, of itself, determinative that the director did not
meet the standard of conduct described in this section.
D. A corporation may not indemnify a director under this section:
1. In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
2. In connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him.
E. Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
Section 13.1-698 of the Virginia Act provides as follows:
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who entirely prevails in the defense of any
proceeding to which he was a party because he is or was a director of
the corporation against reasonable expenses incurred by him in
connection with the proceeding.
II-1
<PAGE>
Under Section 13.1-702 of the Virginia Act, unless limited by a company's
articles of incorporation, an officer is entitled to mandatory indemnification
on the same basis as a director. The Virginia Act further makes provisions for
the advancement of expenses of officers and directors, and for any such
individual to make application to the court for advances, reimbursement or
indemnification.
The Company's Articles of Incorporation provide that any person who is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he or she, or a person of whom he or she is or was a
director or officer of the Company shall be indemnified and held harmless by the
Company to the fullest extent authorized by the Virginia Act against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith. This right of
indemnification includes the right to be paid by the Company the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided that if the Virginia Act require, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer in
advance of the final disposition of a proceeding shall be made only upon
delivery to the Company of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified. The Company, by
action of its Board of Directors, may but is not be obligated, to provide
indemnification to employees and agents of the Company with the same scope and
effect as the foregoing indemnification of directors and officers.
It is a defense to any such action (other than an action brought to enforce
a claim for expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is required, has been
tendered to the Company) that the claimant has not met the standards of conduct
which make it permissible under the Virginia Act for the Company to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Company.
The Company may maintain insurance, at its expense, to protect itself and
any director, officer, employee or agent of the Company or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Company would have the power to indemnify
such person against such expense, liability or loss under the Virginia Act.
Item 2. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
SEC filing fee................. $ 1,188
Printing and Mailing expenses.. $ 20,000 *
Legal fees and expenses........ $ 25,000 *
Accounting fees and expenses... $ 7,500 *
Blue Sky fees and expenses..... $ 12,000 *
Miscellaneous.................. $ 9,312 *
Total.......................... $ 75,000 *
</TABLE>
----------------
*Estimate
II-2
<PAGE>
Item 3. Undertakings.
The Company hereby undertakes to:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
2. For determining liability under the Securities Act, 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. File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
Item 4. Unregistered Securities Issued or Sold within One Year.
In July 1999, the Company issued for cash and contributed services 351,645
shares to its founders in reliance upon the exemption provided by Section 4 (2)
of the Securities Act of 1933, as follows:
<TABLE>
<CAPTION>
Purchaser Number of Shares Purchase Price
--------- -------------------- -----------------
<S> <C> <C>
Richard J. Bishirjian, Ph.D. 175,822 $ 3,605
Free Congress Research and Education Foundation 131,851 $ 2,895
The Leadership Institute 34,632 $25,000
</TABLE>
II-3
<PAGE>
In May and June 2000, the Company sold for cash 183 shares of its Series A
convertible preferred stock at a price of $1,000 per share ($183,000 in the
aggregate) to the following accredited investors in reliance upon the exemption
provided by Rule 506 of Regulation D:
Gilbert Davis Cowles M. Spencer II
Richard J. Bishirjian Lincoln Warrell
Chad Long Paul Garman
Steve and Deanna Bouknight James Hinish
John Engelhart Robert Bradley
Tom Cantrell Nancy Anthony
Paul Weyrich Walter Weld
Wilhelm Maier J. Edward Pawlick
William Dahling William Russell
Tony Barr George Trivoli
Lorenz Hart
In June 2000, the Company issued 9,340 shares of its common stock and
options to purchase an additional 4,500 shares at an exercise price of $10.00
per share to each of its faculty members, generally in units of 100 shares and
options to purchase an additional 100 shares, as inducement for joining the
faculty or providing other assistance. In the aggregate, the Company issued
9,340 shares and options to purchase an additional 4,500 shares. These
securities were issued in reliance on the exemption provided by Rule 701 under
the Securities Act of 1933. The following persons received securities:
Carole Scott William Luckey Newsmax.com
Mason Conner John Sites John Cobb
Thomas F. Payne Bruce Fohnen Linda Raeder
Talmadge Watson Atilla Yayla Gleaves Whitney
Thomas Landress Dominic Acquila Marshall De Rosa
Angelo Codevilla Gerald Dwyer David Bobb
James Gaston Jefferson Edgens David Mulroy
Henry Edmondson William Luckey Donald Devine
Joseph P. Martino Gary Wolfram Marlo Lewis
Richard Zeller Mark Malvasi Gordon Diem
Mitchell Kalpakgian H. Lee Cheek David Fitzsimons
Kenneth Holland Gerald Gunderson John Lachs
Larry Schweikart Thomas F. Payne Roger W. Cole
Edmund Shanahan James Gustafson Randall Balmer
Douglas Adie Arthur Pontynen William Sloane
Edward Levinson James McClellan George Trivoli
William B. Allen Eugene Heath Conservative HQ
Chris Moody
II-4
<PAGE>
Item 6. Description of Exhibits.
1.1 Amended and Restated Articles of Incorporation (1)
2.1 By-laws (1)
4.1 Form of Subscription Agreement (included as Annex A to the Prospectus)
9.1 Form of Escrow Agreement between the Company and Firstar Bank, N. A.
(included as Annex B to the Prospectus)
10.1 Consent of Goodman & Company, L.L.P., certified public accountants (2)
11.1 Opinion of Doepken Keevican & Weiss Professional Corporation (2)
12.1 Yorktownuniversity.com, Inc. 2000 Stock Option Plan (1)
12.2 Form of Securities Escrow Agreement (2)
______________
(1) Included with original Registration Statement filed on June 30, 2000
(2) Filed herewith.
II-5
<PAGE>
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-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the County of York,
Commonwealth of Virginia on September 8, 2000.
Yorktownuniversity.com, Inc.
By /s/ Richard J. Bishirjian
-------------------------------
Richard J. Bishirjian, Ph.D.
President and Chief Executive Officer
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:
<TABLE>
<CAPTION>
Name and Signature Position Date
------------------ -------- ----
<S> <C> <C>
/s/Paul Weyrich* Chairman of the Board and September 8, 2000
-------------------------- Director
/s/Richard J. Bishirjian President, Chief Executive September 8, 2000
-------------------------- Officer and Director
Richard J. Bishirjian (principal executive officer)
/s/Robert Callahan* Treasurer and Secretary September 8, 2000
-------------------------- (principal financial and
Robert Callahan accounting officer)
/s/Gilbert K. Davis* Director September 8, 2000
--------------------------
Gilbert K. Davis
/s/Robert Bradley* Director September 8, 2000
--------------------------
Robert Bradley
</TABLE>
* By Richard J. Bishirjian, as attorney-in-fact.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below
constitutes and appoints Richard J Bishirjian and Robert Callahan and each of
them, with full power to act without the other, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities to sign any or all
amendments to this Registration Statement, including post-effective amendments,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
II-6
<PAGE>
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents of any of them, or any substitute or
substitutes, lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Name and Signature Position Date
------------------ -------- ----
<S> <C> <C>
/s/Louis W. Barnett Director September 8, 2000
-------------------------
Louis W. Barnett
</TABLE>
II-7
