SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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VEQUITY CORPORATION
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Vequity Corporation
(Exact name of registrant as specified in its charter)
Colorado 7319 84-1325018
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Identification
incorporation or Classification Code Number)
organization) Number)
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
Tel: 1-303-798-4668
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Thomas H. Moore
President
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
(303) 798-4668
(Name, address, including zip code, and telephone number,
including area code of agent for service)
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With copies to:
J. Brent Garfield
Ameraan Corporate Center
9901 West 50th Avenue
Wheat Ridge, Colorado 80033
(303) 421-0622
(303) 423-4170 (facsimile)
Approximate date of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are being
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act, check the following box. (X)
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, 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
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
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. ( )
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CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Proposed Number of Proposed Maximum Amount of
Title of Securities Shares to be Maximum Price Aggregate Registration
to be Registered Registered Per Share Offering Amount Fee
------------------------------------------------------------------------------------------
Common Stock, 4,000,000 $5.00 $20,000,000 $ 5,280
Common Stock (1) 2,560,000 $6.25 $16,000,000 $ 4,224
Common Stock (2) 2,000,000 $8.00 $16,000,000 $ 4,224
TOTALS 8,560,000 $52,000,000 $13,728
(1) Issuable upon exercise of Series "A" Warrant exercisable only by advertiser/purchasers
of shares in this offering.
(2) Issuable upon exercise of Series "B" Warrant exercisable only by advertiser/purchasers
of shares in this offering.
</TABLE>
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act
of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
The shares evidenced by this certificate are subject to transfer
restrictions and may not be transferred without prior approval of
Vequity Corporations Management, after consulting with counsel to
determine that the conditions set forth in the Subscription
Agreement, pursuant to which these shares were purchased, have
been satisfied; or until this legend is removed by the Company's
Management, in its sole discretion.
The common stock will be offered by our officers and Directors on
a best efforts basis until all shares are sold, or until our
management determines to close this offering. If we are unable
to sell all 4,000,000 shares of the common stock offered hereby,
we will not cancel this offering. Any monies collected from
subscribers will be immediately used to finance our ongoing
development and operations, and will not be returned. There is no
minimum number of shares to be sold by the Company and no funds
received by us from the sale of these shares will be escrowed.
As stated, this offering will be conducted directly by our
officers and Directors and we currently do not intend to use
professional underwriters or securities dealers. As the offering
proceeds, we may retain a Placement Agent and/or use the services
of NASD member broker/dealers to assist us in the sale of the
shares. Should we make an arrangement to enlist the services of
such broker/dealers or placement agents, we may pay fees of up to
13% of the gross offering proceeds for their services.
Persons, who are the Company's officers or Directors, or current
shareholders, or who otherwise are affiliated or have a
connection with us may purchase some of this offering.
THIS OFFERING IS HIGHLY SPECULATIVE (SEE "RISK FACTORS" - Page 9)
Underwriting Proceeds to
Discounts and Vequity Price to
Commissions Corporation Public
------------- ----------- ---------
Per Share $5.00 $0 $5.00
A - Warrants $6.25 $0 $6.25
B - Warrants $8.00 $0 $8.00
Investing in Vequity's common stock involves risks. See "RISK
FACTORS" beginning on page 9.
TABLE OF CONTENTS
Page
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Prospectus Summary 5
Offering Summary 5
Special Notes Regarding Forward-Looking Statements 6
Business Summary 7
Summary Of Financial Information 8
Risk Factors 9
Offering Not Through Underwriters 17
Determination of Offering Price 18
Use of Proceeds 18
Dividend Policy 18
Legal Proceedings 18
Capitalization 19
Dilution 20
Directors, Executive Officers, Promoters
and Control Persons 21
Security Ownership of Certain
Beneficial Owners and Management 25
Description of Securities 26
Description of Business 31
Industry Overview 31
The Investortiser Concept:
Capitalization and Loyalty 32
Our Concept 33
InfoSpace.com and Our Co-Branding Alliance 35
Vequity Enhancements and Website Development 36
Markets & Competition 36
Marketing and Sales Strategies 37
The Work at Home Designers of Websites 38
Employees 38
Facilities 38
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis or
Plan of Operation 38
Certain Relationships and Related Transactions 40
Market for Common Equity and Related
Stockholder Matters 40
Stock Legend and Restrictions On Trading
and Transferring Shares Of Stock 40
Lock-Up Agreement of Certain Principal
Shareholders 41
Shareholders Subject to Lock-Up Agreement 41
Shares Eligible for Future Sale 41
Interests of Named Experts and Counsel 42
Disclosure of Commission Position of
Indemnification for Securities Act Liabilities 42
Selected Financial Data 43
Executive Compensation 44
Financial Statements and Additional Information 56
Additional Information 56
Subscription Procedures 56
Subscription Agreement 57
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere
in this prospectus. This summary does not contain all of the
information that you should consider before investing in our
common stock.
As used in this prospectus, the terms Vequity, we, us and our
refer to Vequity Corporation.
Offering Summary
This is the initial public offering of Vequity Corporation and
the Company is offering to sell up to 4,000,000 shares of the
Company's common stock at $5 per share. Of the 4,000,000 shares
being offered, 3,200,000 are reserved for persons or entities
purchasing Vequity Internet website advertising and purchasers of
these shares will also receive Series A and Series B Warrants in
connection with their shares as specified below. These
investor/advertisers are hereafter referred to as Investortisers
and they may choose to initially purchase Units of 200, 320 or
400 shares.
In addition to the 3,200,000 shares that may only be purchased by
Investortisers, there are also 800,000 shares that are available
to anyone, including Investortisers, without a limit on the
maximum number of shares that may be purchased. However, the
minimum number of shares required of any purchaser of these
non-Investortiser shares is 200 shares. The public offering price
for these shares is also $5.00 per share. However, no Warrants
will be issued to purchasers of these shares, except to
purchasers who are Investortisers. Each Investortiser purchasing
shares from the 3,200,000 reserved for Investortisers will
receive in connection with the shares purchased Series A Warrants
and Series B Warrants, which are legal instruments that give the
Holder of the Warrant the right, but not the obligation, to
purchase additional shares in the future. We have reserved
2,560,000 Common shares for the Series A Warrant Holders and
2,000,000 Common shares for the Series B Warrant Holders. The
exercise price of the Series A Warrants is $6.25 per share and
the exercise price of the Series B Warrants is $8 per share.
Prior to exercising Series A or B Warrants, an Investortiser must
first renew its website advertisement with Vequity as set forth
below.
An Investortiser choosing to exercise Series A or Series B
Warrants, must purchase the additional shares authorized by the
Warrants prior to the expiration of the exercise periods
(Exercise Periods) as specified in the Warrants. The Exercise
Period for the Series A Warrant expires 30 days after the first
annual renewal of the Holder's Vequity website advertisement. The
first annual renewal of the Holder's website advertisement may be
accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
thirteen (13) months thereafter. The first annual renewal of the
Holder's website will be deemed complete upon the Company's
receipt of payment for a second year of website advertising from
the Holder. The Exercise Period for the Series B Warrant expires
30 days after the second annual renewal of the Holder's Vequity
website advertisement. The second annual renewal of the Holder's
website advertisement may be accomplished after the Holder's
initial purchase of website advertising from the Company and at
any time during the period of twenty-five (25) months thereafter,
provided that the first annual renewal shall have been completed
in a timely manner. The second annual renewal of the Holder's
website will be deemed complete upon the Company's receipt of
payment for a third year of website advertising from the Holder.
Renewal of the annual website advertisements by the Holder of the
Warrants is a condition precedent to exercise of the Warrants.
The Series A Warrant, if not exercised, will expire and become
null and void upon the expiration of the Holder's Exercise Period
for the Series A Warrant. The Series B Warrant, if not exercised,
will expire and become null and void upon the expiration of the
Holder's Exercise Period for the Series B Warrant. The following
summarizes the choices an Investortiser has for purchasing stock
and Warrants:
INVESTORTISER CHOICES FOR PURCHASING STOCK AND WARRANTS:
Choice #1 Choice #2 Choice #3
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Initial 200 shares 320 Shares 400 Shares
Purchase @$5=$1,000 @$5=$1,600 @$5=$2,000
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Series A 160 Shares 256 Shares 320 Shares
Warrants @$6.25=$1,000 @$6.25=$1,600 @$6.25=$2,000
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Series B 125 Shares 200 Shares 250 Shares
Warrants @$8.00=$1,000 @$8.00=$1,600 @$8.00=$2,000
-------- ---------- ---------- ----------
Totals: 485 Shares for $3,000
776 Shares for $4,800
970 Shares for $6,000
Securities Offered: 4,000,000 shares of common stock. For more
information see Description of Securities.
Warrants: Series A Warrants that will entitle the Investortiser
Holders to purchase an additional 2,560,000 shares of common
stock and Series B Warrants that will entitle the Investortisers
to purchase an additional 2,000,000 shares of common stock.
Common Stock Outstanding: 41,000,000 shares of common stock are
outstanding as of the date of this Registration Statement. For
more information see Description of Securities.
Preferred Stock Outstanding: 934,469 shares of preferred Stock
are outstanding as of the date of this Registration Statement.
For more information see Description of Securities.
Risk Factors: The investment in the shares involves a high degree
of risk. You should not consider this offer if you cannot afford
to lose your entire investment. Please refer to RISK FACTORS
(Page 9) for factors you should consider.
Use of Proceeds: The net proceeds from the offering, if all
shares are sold, estimated to be $19,000,000, will be used to
attract advertisers to our website, publicize the site for
consumers, create websites and hot-links for our customers,
redeem outstanding preferred shares, and to pay for general
corporate needs, including payment of current liabilities,
working capital and capital expenditures. If all Warrants issued
in connection with shares purchased in this offering are
exercised, additional gross proceeds of $32,000,000 will be
received. These funds will be used to continue the development of
our Internet advertising business. For more information regarding
how we will use the proceeds, please refer to Use of Proceeds.
Special Notes Regarding Forward-Looking Statements And Industry
Data
We are a start-up company with no established operations. We make
many statements in this prospectus under the captions Prospectus
Summary, (and related subheadings including Business Summary),
Risk Factors, Description of Business (and related subheadings
including The Investortiser Concept: Capitalization and Loyalty,
and Our Concept), Management's Discussion and Analysis of
Financial Condition and Results of Operations; and elsewhere in
this prospectus which are forward-looking and are not based on
historical facts. These statements relate to our future plans,
objectives, expectations, and intentions. We may identify these
statements by the use of words such as "believe," "expect," hope,
"anticipate," "intend," and "plan," and similar expressions.
These forward-looking statements involve a number of risks and
uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result
of various factors, including those we discuss in RISK FACTORS
(Page 9) and elsewhere in this prospectus. These forward-looking
statements speak only as of the date of this prospectus, and we
caution you not to rely on these statements without also
considering the risks and uncertainties associated with these
statements and our business that are addressed in this
prospectus.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance, or achievements.
Moreover, neither we nor any other person assumes responsibility
for the accuracy and completeness of the forward-looking
statements.
This prospectus reflects our expectations with respect to the
growth of the Internet and e-commerce. To some extent our
expectations are based upon information that has been included in
studies published by nationally known market research firms.
However, we may base our own actions upon our own expectations
that may vary from the industry evaluations and from actual
industry performance. Most national research estimates assume
that certain events, trends and activities will occur. These
estimates have been produced by industry analysts based on trends
to date, their knowledge of technologies and markets, and
customer research, but these are forecasts only and we are not
certain of fulfillment. There can be no assurance that, even if
these assumptions are correct, we will experience similar growth
or market acceptance.
We incorporated in November of 1995 under the name YellowMart
International, Inc, and subsequently changed our name after
receiving certain marketing advice from our Public Relations
firm. We came into being as a result of the objective of our
founder, Thomas H. Moore, to centralize business websites into a
single Internet yellow page type directory that could become an
effective source of advertising for businesses and also an
effective source of information for consumers and business
customers. Our mission is to promote the businesses of our
advertisers by establishing our Yellow Pages & Business Websites
Directory as THE centralized Internet site for worldwide business
listings and websites and also THE place to go to conduct
electronic commerce for both businesses and consumers.
Mr. Moore believes that many businesses would like to have a
successful presence on the Internet, but struggle to find the
vehicle to accomplish this objective. He has observed that
business websites are scattered among thousands of Internet
hosting sites and are difficult to find. He believes that the
lack of a centralized source of websites creates a real
opportunity for Vequity. Additionally, many of the most popular
Internet search engines provide only a small percentage of the
searchable information that is available on the Internet and he
believes that all businesses should have an opportunity to be
found by customers.
For instance, according to an article in The Orange County
Register, the following are the percentages of the searchable Web
that are covered by these popular sites: AltaVista (15.5%), Yahoo
(7.4%), Excite (5.6%), Lycos (2.5%). Additionally, contrary to
popular belief, with Yahoo and other popular sites, when a
website is submitted for inclusion in their searchable data, only
a small fraction of the websites are accepted (Sources:
ICONOCAST, Aug. 26, 2000 and Business 2.0, Aug. 8, 2000, page
129).
As a result of these challenges for businesses, Mr. Moore
believes that the creation of an effective and centralized
Internet directory, organized along the lines of the printed
yellow pages, and dedicated to the inclusion of only commercial
websites, can form a connection between consumers and businesses
and become a powerful tool for Internet commerce. Such an
Internet directory could have the advantage over local printed
directories, as it would provide expanded local and worldwide
business websites, not just business listings. The need for such
a directory could provide a great opportunity for a company
willing to take on the challenge of organizing and centralizing
business websites.
A perusal of the Internet reveals that most of the Internet
search engines that provide a yellow page directory type service,
generally don't provide links from the business listings to
specific websites of the businesses listed - assuming a website
exists for a business. Mr. Moore envisions a centralized website
directory that will allow business customers and consumer
customers to find the type of businesses they seek in the
appropriate geographic locale and to then click on the directory
listing and be connected to the actual website of the business
they seek. This will allow customers to go from simply finding a
business listing, to visiting a website where significant
information is found, orders are placed, business is conducted,
discount coupons may be found, directions to physical business
locations can be received along with other valuable information.
An important aspect of our business model is the idea of selling
shares of stock in our Company to those purchasing advertising in
our Internet yellow page directory. Mr. Moore believes that by
allowing our website advertisers to become owners of our stock,
we could create a loyal base of advertisers. He coined the phrase
Investortiser, to describe the investor/advertiser who will both
advertise in our directory and own our common stock. The Company
is utilizing this concept as a kick-off strategy and will
discontinue selling shares of stock to our website advertisers as
soon as management believes it has captured a reasonable market
share and has stable operating results.
The Investortiser concept is designed to bring diverse
advertisers into a powerful alliance, utilizing a centralized
Internet yellow page directory in which they have an ownership
interest. If successful, the Investortiser concept could result
in a significant source of capital for us and the creation of a
cohesive and stable customer base upon which our business can
build. It is also believed that a stable revenue stream from this
initial advertiser base can provide the company with staying
power and capital necessary to fulfill our vision of Vequity's
Yellow Pages & Business Websites Directory as THE e-commerce site
for advertisers and their customers.
To develop business websites in accordance with the promotional
desires of our advertisers, we intend to build a base of work at
home contractors. We will provide the equipment, training and
means for them and these contractors will work closely with our
advertisers and provide:
Website design (if needed).
Certain priority positioning in our Yellow Pages &
Business Websites Directory.
A link from our advertiser's business listing to our advertiser's
customized website, containing expanded information to help a
customer make a buying decision.
Website maintenance for websites designed by our contractors.
Frequent changes to website content to include sales promotions,
pricing changes, new products, coupons and other matters relating
to ongoing changes in businesses.
Further, we have been able to develop a strategic alliance with
InfoSpace.com, Inc. to co-brand our Internet portal, including
our Yellow Pages & Business Websites Directory, and other website
services we offer. Co-branding means that our www.vequity.com
website, including its directories, will have the Vequity name,
look and feel. Our site will also have the phrase, Powered by
InfoSpace. Our website is an extensive portal, having all of the
content already provided on the InfoSpace website and on their
extensive network of affiliated websites. Our co-branded Yellow
Pages & Business Websites Directory already has over 18 million
businesses listed and we intend to add new businesses to the
listings.
The vast majority of the businesses listed in our Yellow Pages &
Business Websites Directory do not have websites. Our objective
is to sell website advertising to these businesses, and also to
other businesses that we will add to our Directory.
Since our founding, Mr. Moore has devoted his full time and
efforts to achieving our vision. Through his efforts, we have
obtained capital to continue to build upon this vision through
private placement stock offerings and most recently through a
preferred stock offering under Regulation D, Rule 504 wherein he
was able to raise funds to provide the means for this offering to
be prepared, and to begin implementation of our business plan.
For additional information, you may contact us as follows:
Vequity Corporation
2305 East Arapahoe Road
Suite 220
Littleton, CO 80122
Telephone: 303-798-4668
Fax: 303-795-9243
Email: [email protected]
Summary Of Financial Information
The following sets forth some summary financial data regarding
Vequity's financial position and status. This information should
be read in conjunction with the Financial Statements and Notes
and Management's Discussion and Analysis of Financial Condition
and Results of Operations elsewhere in this Prospectus.
Balance Sheet June 30, 2000 December 31, 1999
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Total Assets $ 220,711 $ 26,013
Total Current Liabilities $ 641,155 $ 1,002,247
Redeemable Series A
Preferred Shares 200,000 $ 200,000
Redeemable Series B
Preferred Shares $684,469 $ 20,000
Total Shareholder's Deficit ($1,304,913) ($1,196,234)
Statement of Operations Cumulative (Inception to June 30, 2000)
----------------------- ---------------------------------------
Net Loss ($3,885,950)
Net Operating Loss Carryforward (Approximate) ($1,500,000)
RISK FACTORS
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below before
deciding to invest in shares of our common stock. Shares
purchased in this offering will bear a legend restricting trading
and transfer until the legend is removed in the sole discretion
of our management. There is no established trading market or
price for our common stock. We do not currently intend to
register with The Nasdaq-Amex Market Group or any other exchange
or market until our management in its sole discretion determines
to remove the legend and make application for inclusion in a
national market. No one should purchase these shares who is not
willing to abide by the decision of our management concerning the
advisability and timing of such steps. We are attempting to build
a successful business before creating a trading market for our
shares. A trading market may not be established for our shares.
If a trading market or price is established for our stock, such
price could decline due to any number of factors including the
risks described below. You could lose all or part of your
investment. In assessing these risks, you should also refer to
the other information in this prospectus, including Vequity's
financial statements and the related notes.
Company Related Risks
Risks Related To Vequity's Lack Of Operational History
Our lack of operating history or results makes an evaluation of
our business plan extremely difficult and our future prospects
highly speculative.
We are a start-up company with no operating history. This makes
it extremely difficult to evaluate our business. We do not have
relevant financial operating data that will provide a basis for
evaluating our proposed business or prospects. The lack of past
results makes predicting our future prospects highly speculative.
Our business plan is unproven, which creates a risk that our
performance will not meet our expectations or the expectations of
investors.
We May Continue To Have Losses and Negative Cash Flow. Our Costs
And Expenses May Also Increase As We Begin To Implement Our
Business Plan.
We have a history of losses and negative cash flow. As with many
start-up companies, these problems may continue in the future.
The Company's auditors have included a paragraph in their audit
report regarding the Companies ability to continue as a going
concern.
We have incurred losses since Vequity was founded. As of June 30,
2000, we had an accumulated deficit of $3,885,950. We incurred a
net loss of $368,516 for the year ended December 31, 1999 and as
of the six months ended June 30, 2000 we had a cumulative net
loss of $1,525,581. Our losses may also increase significantly
from current levels as we incur additional costs and expenses
related to:
(1) marketing and sales activities;
(2) employment of additional necessary personnel;
(3) obtaining additional funds for the start-up and
development of business operations;
(4) developing directory links, directory content, web pages
and other products necessary to provide exposure for
customers; and
(5) establishing strategic relationships.
Many Obstacles Will Need To Be Overcome For Us To Become
Profitable And We Can Provide No Assurance That These Obstacles
Will Be Overcome.
We cannot predict that we will operate profitably. Our ability to
achieve profitability will depend on our ability to raise
capital, implement our business plan, generate and sustain sales
while maintaining reasonable expense levels, and establish our
name in the public eye. Each of these elements is unproven and
will require the successful combination of numerous factors
before they can be achieved. It is not certain that if we were to
achieve profitability, we would be able to sustain or increase
profitability.
We may withdraw, cancel or modify the offering
We reserve the right to withdraw, cancel or modify the offering
hereby and to reject subscriptions, in whole or in part, for any
reason.
Market Acceptance Of Our Internet Yellow Pages & Business
Websites Directory Is Untested And We Can Provide No Assurance
That Results Will Meet Our Expectations Or Those Of Our
Investors.
We are proposing an Internet product that has not been market
tested. We cannot accurately predict the results of our plan or
whether the market will receive our products and services in a
manner that will allow us to achieve the staying power to
aggregate a number of advertisers large enough to become a
meaningful source for customers seeking information. The
uncertain nature of contacting advertisers and closing sales,
makes results unpredictable. Unsuccessful sales or marketing
efforts, or a lengthening of the time taken to close sales, could
have material adverse effects on revenue and profits.
Business Expenses Are Difficult To Plan With Accuracy As A Result
Of Our Lack Of Operating Experience In Implementing A Plan Of The
Type We Are Proposing.
We have no meaningful historical financial data upon which to
base planned operating expenses. A substantial portion of our
operating expenses will be related to marketing programs,
personnel and overhead, which cannot be adjusted quickly.
Anticipated operating expense levels reflect, in part, our
expectations of future revenues. If actual revenues are not
forthcoming or are below management's expectations, or if
expenses exceed revenues, profits would be materially and
adversely affected.
Our Business And Prospects Are Difficult To Evaluate Because We
Have A Limited Operating History Of Offering Our Services Through
The Internet.
Because implementation of our business plan is dependent upon
future developments, investment decisions must be made based on
our business prospects. Our business prospects are subject to all
the risks, expenses and uncertainties we are certain to encounter
as a start-up business in a new and rapidly evolving market,
including the uncertainty of our ability to:
(1) obtain market acceptance of our Yellow Pages & Business
Websites Directory and related services;
(2) gain brand recognition and acceptance for our Yellow Pages
and Business Websites Directory and related services;
(3) develop and expand our advertising portal;
(4) continue to develop and expand our Yellow Pages & Business
Websites Directory and related services base and
functionality;
(5) respond to competitive and technological developments;
(6) appeal to and retain advertisers;
(7) attract quality sales representatives, employees, website
designers and other personnel;
(8) meet the demands of competition in the marketplace
build advertiser loyalty;
(9) implement our business plan in a timely and successful
(10) manner; and properly operate and manage capital
expenditures.
We Are Not Using An Underwriter, And If We Are Unable To Sell All
Of The Shares Offered Hereby, The Monies Collected From
Subscribers Will Be Utilized And Not Returned.
The common stock will be offered by our officers and Directors on
a best efforts basis until all shares are sold, or until our
management determines to close this offering. If we are unable
to sell all 4,000,000 shares of the common stock offered hereby,
we will not cancel this offering. Any monies collected from
subscribers will be immediately used to finance our ongoing
development and operations, and will not be returned. There is no
minimum number of shares to be sold by the Company and no funds
received by us from the sale of these shares will be escrowed.
We May Not Be Able To Generate Revenues Or Establish A Consistent
Cash Flow.
Our revenues and operating results may not be forthcoming or may
vary significantly from quarter to quarter. Because of these
uncertainties, our results in any quarter may not be indicative
of future performance and it may be difficult for investors to
properly evaluate our results. It is possible that we may not be
able to generate revenues or that in some future periods, our
revenues or earnings may fall below the expectations of
investors. This could result in a failure to establish a market
for our common stock. If a market is established, any market
price could decline as a result of a failure to establish a
revenue base or as a result of fluctuations in revenues or
earnings.
The Company hopes that all Warrants issued to Investortisers will
be exercised by the Holders. However, there are specific time
periods, known as Exercise Periods, or Notice Periods where the
Holder of Warrants has the opportunity to exercise the Warrants
and thereby purchase additional shares. If the Warrants are not
exercised during the Exercise Periods, they become null and void.
The responsibility for exercising the Warrants is solely with the
Holder and Vequity will bear no responsibility or liability for
Holders not exercising their Warrants (See Warrants and Series A
and Series B - Page 28).
We Do Not Intend To Pay Dividends.
We have never declared or paid any cash dividends on our capital
stock. We currently intend to retain any future earnings for
funding growth and, therefore, we do not expect to pay any
dividends until in the sole discretion of our management it is
possible and advisable to do so. There is no assurance that
dividends will ever be paid.
Risks Related To Our Proposed Business
We Will Depend Upon Our Co-Branding Agreement With InfoSpace To
Provide The Yellow Page Base For Our Yellow Pages and Business
Websites Directory. If InfoSpace Ceases Doing Business With Us,
We May Not Reach Mutually Satisfactory Arrangements With
Alternative Yellow Page Information Aggregators.
We are dependent on InfoSpace.com, Inc., to provide the base
yellow page directory we intend to use on our portal and to
provide access to a broad Internet search network. We have not
entered into written agreements with other companies to provide
alternatives for these services. As we continue our efforts to
grow our business, we may seek other strategic relationships to
facilitate our growth and market reach. However, at the present
time, we could suffer a serious delay and setback, if our
relationship with InfoSpace were injured or terminated. While we
believe that our relationship with InfoSpace is good, we cannot
assure you that it will continue, or that InfoSpace will perform
as we expect. If InfoSpace were to cease doing business with us,
or suffer setbacks of its own, we cannot assure you that we would
be able to reach equally satisfactory arrangements with alternate
business listing providers and/or directory service providers.
Even if we were able to enter into arrangements with alternative
business listing providers and/or directory providers, the
business listings and/or directory services available from such
other providers may be more expensive, and/or less extensive than
the services provided by InfoSpace.
We Will Be Dependent On Other Aggregators Of Yellow Page Listings
and Related Information For Most Of Our Yellow Page Directory
Content And For The Accessibility To Such Information By Internet
Users. This Dependence On Others Will Make It Difficult For Us To
Control Whether Our Customers Are Satisfied With Our Yellow Page
Directory.
Although we will provide our own format and the content for our
advertisers, we will be dependent on others to provide the bulk
of the yellow page directory information and the base directories
in which our advertisers will be listed. We have limited control
over these aspects of the yellow page directories and cannot
ensure that others will complete these aspects of the service to
the satisfaction of our advertisers. If our advertisers become
dissatisfied with the service provided, our reputation and
business could be adversely affected.
We May Fail To Achieve Or Maintain Wide Market Acceptance For Our
Services And Such Lack Of Acceptance May Cause Us To Fail To
Establish Sufficient Sales And Profitability.
We expect to generate the majority of our sales from the sale of
advertising to mid-size and small businesses through our public
presentations, advertising, media promotions and the Internet.
Our success will depend principally on achieving and maintaining
wide market acceptance of our business concepts, related
services, systems, and links to our advertiser's websites. If
businesses and consumers do not sufficiently accept our concepts
and services, our future sales growth and profitability would
suffer.
We May Fail To Attract Enough Advertisers Desiring Inclusion In
Our Yellow Pages & Business Websites Directory.
An inability to attract enough customers willing to advertise in
our Directory, or losing listings in our Directory, may leave us
with insufficient depth of content to retain or attract
additional advertisers or users.
Our Management Team Has Limited Experience Working Together And
If We Fail To Function Effectively As A Unit, Our Operating
Performance May Be Adversely Affected.
Our existing management team has had very little experience
working together. In addition, it will be necessary to bring new
members into the team for the business plan to be implemented.
Therefore, there has been no opportunity to evaluate the
effectiveness of our management team as a unit and there may be
limited opportunity to evaluate the effect of new members as they
may be hired. Any failure of the management team to function
effectively would have an adverse effect on our ability to
establish our business, maintain a cohesive culture and compete
effectively.
We Will Be Required To Rapidly Build An Organization, Hire New
Employees And Assemble A Network Of At-Home-Workers. A Failure To
Effectively Initiate and Manage This Growth Could Cause Serious
Setbacks To The Success Of Our Business.
In order to carry out our business plan we will rapidly need to
employ approximately 50 full-time employees in the next year and
to also develop and train a large group of work-at-home
contractors to produce websites and links for our advertisers.
Our ability to attract qualified employees, manage their
productivity and to develop and train the work-at-home
contractors, will create the need to establish management and
operating systems not currently in place. This will put strains
on our resources, management and operating systems. Failure to
effectively manage growth would adversely affect our business
operations and profitability. If we are to manage the growth
necessary for success, we must:
(1) estimate with reasonable accuracy the number of experienced
employees we will require and the areas in which they will
be required;
(2) strategically implement our expansion into many different
geographic areas;
(3) upgrade and expand our infrastructure for the levels of
activity we need to generate; and (4) create, refine and
improve our operating and financial systems.
If We Fail To Attract And Retain Additional Professional Staff,
Our Growth And Success Will Be Limited.
Our ability to implement our business plan depends on our ability
to hire, retain and manage highly skilled employees, including
technical, sales, marketing and business development personnel.
We will compete with other more established companies to hire and
retain qualified personnel. We cannot assure you that we will
succeed in attracting the employees we need, or that we will
succeed in retaining the services of those we hire.
If We Lose Any Of Our Senior Managers Or Other Key Personnel,
Successful Implementation Of Our Business Plan May Be Negatively
Affected.
We will depend on the continued services and performance of our
management and other key personnel including technical and sales
personnel. If we lose the services of our managers or any of our
other executive officers or key employees, we may be negatively
effected, and implementation of our business plan and operating
results may suffer.
If The Advertising, Websites And Hot-Links We Sell And
Disseminate Are Unlawful Or Lead To Claims Of Injury, We May Have
To Pay Fines Or Damages.
Publication or dissemination of advertising we sell and provide
access to, may inadvertently give rise to liability for
defamation, negligence, breach of copyright, patent, trade secret
or trademark infringement or other claims or charges based on the
nature of the content. As we provide access to the public for
this advertising and information, we may be directly or
indirectly liable to claims or charges of this nature.
Actions Of Third Parties Could Expose Us To Claims.
We could be exposed to liability arising from the activities of
our customers or their users with respect to the unauthorized
duplication of, or insertion of inappropriate material into, the
information they supply. We do not presently carry liability
insurance for these types of claims. We could face claims that
would place financial strains on our ability to operate.
Our Business Model Uses Intellectual Property We Don't Own and We
May Violate Patent Rights
We have obtained a license from Vequity's founder, Chairman of
the Board of Directors and President, Thomas H. Moore, to utilize
his Method and System for Capitalizing a Business and Maintaining
a Customer Base and/or Revenue Base. Utilizing this method, we
will primarily sell the shares of our Company to our advertising
customers. This method for capitalizing a business and obtaining
loyal customers was conceptualized by Mr. Moore and he has
applied for a patent covering his system. The patent application
is currently pending, but we have no assurance that someone else
has not applied for a similar patent and we don't know whether we
are, or will be found to be, in violation of a patent or another
patent for which application may be pending. The license also
includes the right to use the term Investortiser which is a
Service Mark owned by Mr. Moore.
If We Fail To Prevent The Unauthorized Use Or Disclosure Of Our
Proprietary Knowledge, Practices And Procedures, Our Business May
Be Negatively Affected.
We cannot assure you that we will be able to prevent the
unauthorized use or disclosure of our proprietary knowledge,
practices and procedures if employees leave.
Obtaining or Maintaining Intellectual Property Rights or
Licensing Rights for Third-Party Software Could Adversely Affect
Our Business
We will integrate third-party software into our system. This
third-party software may not continue to be available on
commercially reasonable terms. We believe that there are
alternative sources for such technology. However, if we could not
maintain licenses to use the third-party software included in our
system, use of our service could be halted until equivalent
software could be developed or licensed and integrated into our
system. The failure to maintain licenses and the potential for
litigation as described above could materially adversely affect
our business, operating results and financial condition.
Additionally, some intellectual property or software licenses
require certain safeguards to limit the disclosure of proprietary
intellectual property. We will require key employees and
consultants with access to our proprietary information to execute
confidentiality agreements with us. In addition, we will limit
the personnel who have access to any proprietary information and
technology. However, these legal protections and precautions
afford only limited protection for us.
Nonetheless, despite our efforts to protect any proprietary
rights, unauthorized parties may attempt to copy aspects of
proprietary information or to obtain and use information that we
are under obligation to protect. Litigation may be necessary in
the future to enforce intellectual property rights, to protect
trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of
infringement or invalidity.
If We Fail To Establish Or Maintain Our Reputation And Expand Our
Name Recognition, We May Have Difficulty Attracting Business And
Retaining Customers And Employees, And Our Business May Suffer.
Establishing and maintaining name recognition and a good
reputation are critical for attracting and retaining advertisers,
customers and employees and especially with the number of
Internet companies that offer similar services. If potential
customers are not familiar with our name and services, or if we
fail to establish a positive reputation or damage our reputation,
we may be unable to attract or retain advertisers, customers and
employees.
Risks Related To Competition
We Face Intense Competition That Could Impair Our Ability To
Attract Customers, Grow, And Achieve Profitability.
We face significant competition in the market for Internet
directory services. Competition in the future may even become
more intense as we address a wider range of market segments,
additional entrants join the market and existing competitors
offer new or upgraded access and exposure for Internet listings.
Barriers to new entrants are relatively low. If we fail to
compete successfully, we could fail to gain market share, lose
market share or be forced to lower prices or spend more on
marketing, which would reduce or eliminate anticipated profits.
We Will Be Required To Compete With More Established Companies
And Other Types Of Advertising Outlets For Our Customers.
We compete with more established companies that are focused on
attracting customers for online directory advertising and making
it available to online customers. We also compete with
traditional business directories that may have adapted their own
content for use by Websites. We also face competition from a wide
range of providers of different types of advertising that can be
used on Websites. We do not believe any of these competitors is
currently dominant. Some of our competitors offer products with
different pricing models, delivery systems and types of content,
and these differences could prove attractive to potential
customers. In the future, these competitors or others might offer
products with features similar or identical to those we offer.
We Will Be Required To Compete With Companies With Greater
Resources Than We Possess.
Many of our potential competitors have established operating
histories, larger customer or user bases, and significantly
greater financial, marketing and other resources than we have.
These competitors can devote substantially more resources than we
can to business development and they may adopt aggressive pricing
policies. In addition, larger, well-established and well-financed
entities may acquire, invest in, or form joint ventures with
competitors, as the use of the Internet and other online
directory services increases. Increased competition from these or
other competitors could adversely affect our ability to implement
our business plan.
Risks Of Doing Business Over The Internet
If We Do Not Continue To Keep Pace With Technology, Our Services
May Quickly Become Obsolete.
The market for Internet products and services is characterized by
rapidly changing technology, evolving industry standards,
customer demands and satisfaction, and frequent new product
introductions and enhancements. To be successful, we will have to
continually improve the accessibility, performance, features and
reliability of our directory services. We cannot assure our
shareholders that our performance and abilities will advance at
the pace necessary to attain or sustain growth. For example, to
compete effectively in the future, we may need to expand our
concepts and capabilities. Additionally, new Internet or
telecommunications technologies may require us to alter the
technology we use, or the services and products we sell, in order
to prevent obsolescence. Improving our current concepts and
developing and introducing new service capabilities will require
significant market expertise and development.
If Internet Failures Interrupt The Usability Of Our Portal Or
Yellow Page Directory By Customers, We Could Lose Customers And
Our Reputation Could Be Adversely Affected.
Our services will only be attractive to current and prospective
customers if we are able to process and distribute directory
listing and website data quickly and reliably. Any failure of the
computer equipment used, the Internet or the third-party
telecommunications networks relied upon for distribution could
interrupt or delay service. We will depend upon the Internet as
the instrument to distribute our customer's advertising. The
Internet, the third-party systems we rely upon, and our systems
are vulnerable to damage or interruption from fire, flood, power
loss, earthquake, malicious damage, including hacking, computer
viruses, telecommunications failure and similar events. This
could lead to customers canceling contracts and could damage our
reputation, which could limit our ability to attract additional
advertisers and lead to a failure to successfully implement our
business plan.
If The Internet Does Not Continue To Grow As A Medium For
Commerce, We Will Not Succeed.
Because most of our anticipated advertisers will be business
owners seeking greater access to other businesses or customers
and markets through the Internet, demand for our services will
depend in large part on continued growth in use of the Internet.
There are critical issues concerning the commercial use of the
Internet that remain unresolved. If the Internet develops more
slowly than we expect as a commercial or business medium, demand
for our services will be lower than hoped for.
Advertising On The Internet Is Not As Well Established As Other
More Traditional Advertising Media.
We will be dependent on revenues from Internet advertising for a
significant amount of our revenues. The Internet advertising
market is new and rapidly evolving. We cannot yet gauge its
effectiveness in comparison to traditional advertising outlets.
Advertisers that have traditionally relied on other advertising
methods may be reluctant to advertise on the Internet if they
believe that Internet advertising is less effective than
traditional advertising media for promoting their products and
services. Consequently, they may allocate only limited portions
of their advertising budgets to Internet advertising. Our
business could be materially harmed if Internet advertising does
not continue to grow or if we are unsuccessful in obtaining and
increasing advertising revenues.
Legal Uncertainties And Government Regulation Of The Internet
Could Inhibit Growth Of The Internet And E-Commerce.
Many legal questions relating to the Internet remain unclear and
these questions may be resolved in ways that may limit or damage
our business. It may take years to determine whether and how
existing laws governing matters such as intellectual property,
privacy, libel and taxation apply to the Internet. In addition,
new or proposed laws and regulations that apply directly to
Internet communications, commerce and advertising are becoming
more prevalent. As the use of the Internet and the prevalence of
e-commerce grow, there may be calls for further legislation and
regulation in these and other areas. Finally, our business could
subject us to the laws of foreign jurisdictions in unpredictable
ways.
Legal And Regulatory Developments Could Adversely Affect Our
Business Plan And Development.
New regulations and legislation could make the Internet less
attractive to users, resulting in slower growth in its use and
acceptance than we expect. Complying with new regulations could
result in additional costs to us, which could reduce our
projected margins, or it could leave us at risk of potentially
expensive legal action. We may be affected directly or indirectly
by legislation that fundamentally alters the practicality or
cost-effectiveness of utilizing the Internet. This includes the
cost of transmitting over various forms of network architecture,
such as telephone networks or cable systems, or the imposition of
various forms of taxation on Internet-related activities.
Regulators continue to evaluate telecommunications policies
regarding the transmission of Internet traffic and no resolutions
have been announced to date.
Risks Relating To This Offering
The Shares Offered In This Offering Will Carry A Legend
Restricting Trading Or Transfer Until Such Time As, In
Management's Sole Discretion, The Legend Is Removed.
The shares purchased in this offering will be restricted from
trading and will bear a legend limiting their transferability
until such time as our management, in its sole discretion,
believes it appropriate to remove the legend. The lack of
transferability of your shares will create a lack of liquidity
for your investment. You should not invest in our Company if you
need liquidity in your investment, if you are investing for short
term trading gains, or are unwilling to abide by the decisions of
our management as to the listing of our shares for trading with
The Nasdaq-Amex Market Group or any other market or exchange. The
shares purchased in this offering will bear the following legend
until such time as it is removed in the sole discretion of our
management:
The shares evidenced by this certificate are subject to transfer
restrictions and may not be transferred without prior approval of
Vequity Corporation's Management, after consulting with counsel
to determine that the conditions set forth in the Subscription
Agreement, pursuant to which these shares were purchased, have
been satisfied; or until this legend is removed by the Company's
Management, in its sole discretion.
There Is No Public Market For Our Common Stock And We Do Not
Intend To Take Any Steps In The Near Future To Make Application
To Include Our Stock In The Nasdaq-Amex Market Group Or On Any
Other Market Or Exchange.
There is no market for our common stock. We have not taken any
steps to make application to include our stock in The Nasdaq-Amex
Market Group or any other market or exchange. Investors
purchasing shares of our stock in this offering will not have a
market for their shares until our management, in its sole
discretion, determines that the business is sufficiently
established to make public trading in our shares advisable. It is
a part of our business strategy to sell the majority of the
shares offered as a part of this offering to advertisers
purchasing websites and hot-links in connection with our Yellow
Pages & Business Website Directory. By establishing this
connection between ownership of our stock and our advertising
services, we intend to establish a loyal base of
advertiser/owners for our yellow page directory and to establish
ourselves as a profitable business before taking the steps
necessary to bring our shares to a market, such as The
Nasdaq-Amex Market Group, where the stock may be quoted and
traded. There is no assurance that our strategy can be
implemented successfully or that a market will be opened for the
quotation and trading of our stock.
You Will Experience Immediate And Significant Dilution In The
Book Value Per Share.
The initial public offering price of our common stock is
substantially higher than the net tangible book value per share
of the outstanding common stock and your share price will be
immediately and substantially diluted after this offering. Net
tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the number of
shares outstanding. If you purchase our common stock in this
offering, you will incur immediate dilution of approximately
$4.61 in the net tangible book value per share of common stock
from the price you pay for our common stock in this offering,
based on the initial public offering price of $5.00 per share.
Volatility Of Our Stock Price Could Adversely Affect
Stockholders.
The initial public offering price of our common stock has been
determined by our management and may not reflect the value of our
common stock or the trading price of our stock if a market should
be developed. If a market for our stock is developed, the trading
price cannot be predicted and is likely to fluctuate
considerably. The stock market in general, and in particular the
market for Internet-related stocks, has experienced considerable
price fluctuations since its inception. Estimates of the value of
Internet-related companies have little historical basis and often
vary widely. Fluctuations in our stock price may not be
correlated in a predictable way to our performance or operating
results. Our stock price also may fluctuate as a result of
factors that are beyond our control or that are unrelated to any
operating results. If our shares become listed on an exchange, we
expect that our stock price will fluctuate as a result of factors
such as:
(1) variations in our actual or anticipated quarterly operating
results;
(2) operating results of our competitors;
(3) introduction of new products or services by us or our
competitors;
(4) announcements by us or our competitors of innovations;
(5) changes in trends or conditions or in the Internet
industry;
(6) market valuation changes of other Internet companies;
(7) announcements by us or our competitors of significant
mergers or acquisitions;
(8) our entry, or our competitors' entry, into strategic
alliances or joint ventures; and
(9) factors affecting the stock market.
Net Proceeds From This Offering May Be Allocated In Ways With
Which You May Not Agree.
Our business plan is subject to change based upon changing
conditions and opportunities, and management has significant
flexibility in applying the net proceeds we receive from this
offering. Because the majority of the net proceeds are not
required to be allocated to any specific investment or
transaction, you cannot determine at this time the value or
propriety of our application of the proceeds and you and other
Stockholders may not agree with management's decisions. See USE
OF PROCEEDS on page 18 for a more detailed description of how
management intends to apply the proceeds of this offering.
Much Of Our Common Stock, Including The Shares Offered Herein And
Additional Shares That May Be Issued After This Offering, May
Become Eligible For Resale In The Public Market At Such Time As
Management May Determine To Register Our Shares With A Stock
Exchange. Many Factors Relating To The Immediate Availability Of
A High Volume Of Shares To Be Sold May Cause The Company's Stock
Price To Decline.
Although there is no assurance that we will do so, at some time,
in the sole discretion of our management, but after the
completion or termination of this offering, we may take steps to
make our outstanding common stock freely tradable in the public
market. A high volume of orders to sell our shares, or the
perception that a high volume of sales could occur, may adversely
affect the market price of our common stock and materially impair
our future ability to raise capital through offerings of common
stock. An aggregate of 49,560,000 shares of common stock will be
outstanding after this offering, if all the shares are sold and
all the Warrants are exercised. (See Offering Summary, Page 5).
Also, more shares may be sold in additional offerings prior to a
possible decision by management to register our shares with a
stock exchange.
It May Be Difficult For A Third Party To Acquire Us, Which Could
Depress Our Stock Price.
Colorado corporate law and our Articles of Incorporation and
Bylaws contain provisions that could have the effect of delaying,
deferring, or preventing a change in control that you may
consider favorable or beneficial. These provisions could
discourage proxy contests and make it more difficult for you and
other Stockholders to elect directors and take other corporate
actions. These provisions could also limit the price that
investors might be willing to pay in the future for shares of our
common stock. These provisions include:
(1) a staggered Board of Directors, so that it would take
three successive annual meetings to replace all Directors;
(2) a prohibition of Stockholder action by written consent; and
(3) advance notice requirements for the submission by
Stockholders of nominations for election to the Board of
Directors and for proposing matters that can be acted upon
by stockholders at a meeting.
We Will Continue To Be Effectively Controlled By Our Directors,
Executive Officers, And Related Parties After This Offering, And
Their Interests Could Conflict With Your Interests.
If all of the shares are sold and all warrants exercised, as
contemplated in this offering, our Directors, executive officers
and related parties, in the aggregate, will beneficially own
approximately 70% of our outstanding common stock on a
fully-diluted basis. As a result, these stockholders, if acting
together, would be able to effectively control any matters
requiring approval of stockholders, including the election of
Directors, amendments to the our Articles of Incorporation and
Bylaws, and approval of mergers or other business combination
transactions. These Stockholders could delay, deter or prevent a
change in control of Vequity and could adversely affect the price
that investors might be willing to pay in the future for shares
of our common stock.
OFFERING NOT THROUGH UNDERWRITERS
We do not currently intend to use placement agents and/or
broker/dealers. However, circumstances may allow us to alter
this plan and retain a placement agent and/or use the services of
NASD member broker/dealers to assist us in the sale of the shares
and Warrants. Any decision to obtain such assistance with the
offering will be made in the sole discretion of our management.
There are currently no placement agents or broker/dealers
involved in this offering. In the event that a decision were
made to retain such services, we could pay broker/dealers or
placement agents fees of up to 13% of the gross offering
proceeds.
The common stock will be offered by our officers and Directors on
a best efforts basis until all shares are sold, or until our
management determines to close this offering. If we are unable
to sell all 4,000,000 shares of the common stock offered hereby,
we will not cancel this offering. Any monies collected from
subscribers will be immediately used to finance our ongoing
development and operations, and will not be returned. There is no
minimum number of shares to be sold by the Company and no funds
received by us from the sale of these shares will be escrowed.
We reserve the right to withdraw, cancel or modify the offering
hereby and to reject subscriptions, in whole or in part, for any
reason.
DETERMINATION OF OFFERING PRICE
There is no public market for our Common Stock. The offering
price for the initial purchase of shares at $5 per share, the
exercise price of $6.25 per share for the shares offered in the
Series A Warrants and the exercise price of $8 per share for the
shares offered in the Series B Warrants, have been arbitrarily
determined by us. Although the Warrant share prices may be
reduced under certain circumstances (See Page 29), no current or
adjusted price per share may be indicative of what the market
price for the Common Stock would be, if, after this offering, our
management were to take the steps necessary to commence public
trading of our shares.
USE OF PROCEEDS
Our net proceeds from the sale of the 4,000,000 shares of common
stock we are offering, at an initial offering price of $5.00 per
share, are estimated to be approximately $19,000,000 million
after deducting estimated offering expenses payable by us. This
is based on the assumption that all of the shares will be sold by
our Management. If we engage the services of licensed
broker-dealers or placement agents and all shares are sold by
such agents, the net proceeds would be $16,400,000, after
deducting estimated offering expenses of $1,000,000 and
commissions of $2,600,000. If all the Warrants issued to
purchasers of the shares offered hereby are exercised, we would
receive additional proceeds, before estimated expenses, of
$32,000,000, if all shares are sold by our Management, and
$27,840,000 if all shares are sold by agents. The principal
purpose of this offering is to obtain the capital necessary to
implement our business plan. We expect to use the net proceeds
from this offering to attract advertisers to our website,
publicize the site to consumers, create websites and hot-links
for our customers, redeem outstanding preferred shares, and to
pay for general corporate needs (including payment of current
liabilities, working capital and capital expenditures). If less
than 4,000,000 shares are sold, the net proceeds will be
primarily applied to operating capital, website creation,
redemption of outstanding preferred shares and reduction of
current liabilities.
If we sell all of the shares offered herein, we estimate that for
a period of twelve months, beginning when we start to sell these
shares to the public, that the total expenditures (including
capital expenditures, advertising, promotion, and operating
capital) will be approximately $11,000,000. Additionally,
$959,469 may be utilized to redeem 934,469 shares of Vequity
Series A and Series B Preferred Stock.
The amounts and timing of our actual expenditures will depend on
numerous factors, including the degree of market acceptance of
our Internet directory and advertising services, the amount of
proceeds actually raised in this offering, the amount of cash
generated by our operations, and competition. We may also use a
portion of the net proceeds from this offering for the
acquisition of, or investment in, companies, technologies or
assets that complement our business. However, we have no present
understandings, commitments, or agreements to enter into any
potential acquisitions or investments. Pending application of the
net proceeds, we intend to invest our funds in short-term,
interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on shares of
our capital stock. We intend to retain any future earnings to
finance future growth and do not anticipate paying any cash
dividends in the near future. We do not anticipate paying any
dividends, if at all, until such time as we become profitable and
funds are available in excess of our operating needs and
expansion plans. Payment of future dividends, if any, will be at
the discretion of our Board of Directors after taking into
account various factors, including our financial condition,
operating results, current and anticipated cash needs, plans for
expansion and prudent reserves.
LEGAL PROCEEDINGS
The Company is not engaged in any legal proceedings, has no plans
for legal proceedings against any other parties and we have no
knowledge of any potential legal proceedings that may be brought
against the Company.
CAPITALIZATION
The following table sets forth (i) the capitalization of our
Company as of June 30, 2000, (ii) the pro forma capitalization of
the Company as of June 30, 2000 as adjusted to reflect the sale
of 4,000,000 shares of Common Stock offered by the Company herein
(after deduction of the estimated expenses of the offering) and
(iii) the pro forma capitalization of the Company as of June 30,
2000 as adjusted to reflect the sale of all shares offered herein
and the exercise of all Warrants requiring the issuance of an
additional 4,560,000 shares of Common Stock.
<TABLE>
June 30, 2000
----------------------------------------
<S> <C> <C> <C>
Pro-Forma Pro-Forma
As Adjusted As Adjusted
Assuming All Shares Assuming All Shares
Are Sold And No Are Sold And All
Actual Warrants Are Exercised Warrants Are
Exercised
------ ---------------------- -------------------
Preferred Shares $0.001 par value;
5,000,000 shares authorized,
884,469 redeemable shares
issued and outstanding (2) $ 884,469 $ 884,469 $ 884,469
Shareholders' Deficit:
Common stock $.001 par value;
100,000,000shares authorized,
39,859,500 shares issued
and outstanding (3) $ 39 ,860 $ 43,860 $ 48,420
Subscriptions receivable (64,800) (64,800) (64,800)
Additional paid-in capital $ 2,605,977 $21,605,977 $53,605,977
Deficit accumulated during
development stage ($3,885,950) ($ 3,885,950) ($ 3,885,950)
Total shareholders equity
(deficit) ($1,304,913) $17,695,087 $49,695,087
Total capitalization ($ 420,444) $18,583,556 $50,588,116
(1) See Note 4 of Notes to Financial Statements, Page 54.
(2) For a description of our Preferred Stock, see DESCRIPTION OF SECURITIES, Page 26.
(3) For a description of our Common Stock, see DESCRIPTION OF SECURITIES, Page 26.
</TABLE>
DILUTION
Our pro forma net shareholders' deficit as of June 30, 2000, was ($1,304,913)
or ($0.03) per share of common stock. Pro forma shareholders' deficit per
share represents the amount of our total tangible assets, less total
liabilities, divided by the number of shares of common stock outstanding as of
June 30, 2000, after giving effect to the conversion of all outstanding shares
of preferred stock into shares of common stock. After giving effect to the
receipt of the net proceeds from the sale of 4,000,000 shares of our common
stock offered in this offering at an initial public offering price of $5.00 per
share, and after deducting the estimated offering expenses of $1,000,000, our
pro forma as adjusted net tangible book value as of June 30, 2000, would have
been $17,695,087, or $0.40 per share of common stock. This represents an
immediate increase in pro forma net tangible book value of $0.43 per share to
our existing stockholders and an immediate dilution of $4.60 per share to new
investors at the initial public offering price. The following table illustrates
the per share dilution:
Without Warrants:
Initial public offering price per share
(not including Warrants).. .............................. $5.00
Pro forma shareholders' deficit per share as
of June 30, 2000.........................................($0.03)
Increase per share attributable
to new investors.........................................($0.43
Pro forma net tangible book value per share
after the offering if all shares are sold
(not including Warrants) ............................... $0.40
----
Dilution per share to new investors
(not including Warrants)................................ $4.60
----
With A Warrants:
Effective public offering price per
share with A Warrants .................................. $5.56
Pro forma net tangible book value per
share after the offering if all
A Warrants are exercised ............................... $0.92
----
Dilution per share to shareholders
after all Series A Warrants are exercised .............. $4.64
----
With B Warrants:
Effective public offering price per
share with A & B Warrants .............................. $6.19
Pro forma net tangible book value per
share after the offering if all
A & B Warrants are exercised............................ $1.20
----
Dilution per share to shareholders after
all A & B Warrants are exercised........................ $4.99
----
The following table summarizes, as of the date of this offering, on the pro
forma basis described above, the number of shares of common stock purchased
from us, the estimated total consideration paid to us, and the average price
per share paid by existing stockholders and by new investors purchasing shares
of common stock in this offering, before deducting commissions and the
estimated offering expenses:
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Purchased Total Consideration Average Price
---------------- ------------------- -------------
Number Percent Amount Percent Per Share
Existing shareholders 41,000,000 91.1% $ 3,367,115 (1) 14.4% $0.08
New public investors 4,000,000 8.9% $20,000,000 85.6% $5.00
---------- ----- ---------- ---- ----
Total 45,000,000 100.0% $23,367,115 100.0%
Note (1) - Of the $3,367,115 total consideration paid by existing shareholders, $1,096,869 was cash
consideration and $2,270,246 was consideration for services provided by certain shareholders and
interest on loans from certain shareholders.
</TABLE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our Directors, executive officers and other management and their
respective ages and positions as of June 30, 2000, are as follows.
Executive Officers And Directors:
NAME AGE POSITION
---- --- --------
Thomas H. Moore 50 Chairman of the Board,
President & C.E.O.
Ronald E. Moitzfield, MBA 56 Director, Executive
Vice President
Todd A. Gibson 34 Vice President of
Technology
Dirk L. Cline 44 Vice President
Jacqueline K. Reeves 52 Vice President
Data Management
John R. Call, JD 55 Director
Richard W. James 54 Treasurer
J. Brent Garfield, JD 55 Secretary
Board Of Advisors:
NAME AGE POSITION
---- --- --------
V. Stanley Benfell 66 Board of Advisors
Joe L. Cook 47 Board of Advisors
Alfred E. Hockwalt 58 Board of Advisors
Gwinavere Johnston 54 Board of Advisors
Oliver Mc Bryan, Ph.D. 56 Board of Advisors
Michael H. Schrank 54 Board of Advisors
Colin R. Stoner, CPA 54 Board of Advisors
Biographies Of Executive Officers And Directors:
Thomas H. Moore, Chairman, President, CEO, Founder and member of
the Senior Management Council, has 25 years of business
experience as a senior executive and entrepreneur. His debut into
a leadership role occurred at the age of 28, when a regional
financial planning and investment firm named him president of the
company. At that time, the company had $5 million in annual
revenue and a staff of 35 workers. While he was President, and
later Vice-Chairman, the firm and its subsidiaries grew to more
than 500 employees with annual revenues exceeding $110 million.
At the age of 32, Moore started his own financial planning and
investment company. In addition to his involvement in packaging
over one hundred different investment projects, he was actively
involved as a personal investor in numerous ventures - including
a minority interest in the Utah Jazz of the National Basketball
Association, several high-tech companies, oil and gas ventures
and large commercial real estate complexes.
In 1987, he was hired by Crownx of Toronto, Canada, to initiate a
major turnaround for Crown America Life Insurance Company, a
variable life and annuity company with headquarters in the
Washington D.C. area. He assembled a new management team, held
together sales relationships with national and regional NYSE and
NASD Broker Dealers, developed new products, and negotiated new
strategic relationships.
In 1989, Moore returned to the entrepreneurial arena in Denver,
Colorado where he founded and served as Chairman and C.E.O. of
the Walden Institute, a consulting, coaching and training firm
that developed and trained professionals to use a proprietary
system of personalized consulting and training for executives and
entrepreneurs.
Mr. Moore is actively involved in youth programs and church and
community activities. He has participated in leadership roles
with the Boy Scouts of America for the past 26 years. He is also
the managing director of The Social Investment Foundation, a
non-profit corporation dedicated to causes related to women and
children such as abuse, attention deficit disorder, learning
style development, and other educational and social causes such
as homelessness and overcoming worldwide hunger.
Ronald E. Moitzfield, Executive Vice President, is a member of
Vequity's Board of Directors and the Senior Management Council.
He has obtained MBA and CPA designations and his career includes
more than 25 years of executive, entrepreneurial and management
consulting experience with hands-on involvement in numerous
disciplines and industries, both domestic and international. His
experiences include formation of many companies; supervision and
training of senior executives; market and financial analyses;
investment evaluations; major ownership negotiations; complex,
multi-million dollar debt and equity financings; marketing and
operational systems; professional and personal development
workshops; asset valuations and dispositions; and extensive
involvement with legal matters.
Todd A. Gibson is Vice President of Technology and serves as a
member of Vequity's Senior Management Council. He has extensive
experience in software development, management, and deployment.
Considered an expert in software project management and systems
development, Mr. Gibson has managed a variety of systems
development projects for Fortune 500 companies and the U.S.
government. Highlights include: management of the design,
development, and deployment of an inventory system for U.S.
Military installations; management of the development and
deployment of an operational data store and data warehouse; and
mentoring of a large team in object-oriented development of a
resource/task scheduling system.
Mr. Gibson is fluent in a variety of technologies including UNIX,
OOA&D, C++, Java, SQL, Perl, and Internet & Web architectures.
Mr. Gibson is also an Honorarium Faculty member at the College of
Engineering and Applied Science, University of Colorado at Denver
where he develops and delivers computer-programming courses in
the areas of C, C++ and UNIX.
Dirk L. Cline, Vice President, has over 18 years of experience
developing and leading entrepreneurial enterprises. He also has
broad experience in the creation and marketing of
technology-based products and concepts. He was a member of senior
management at several companies including: SyberVision Systems,
Inc., where he pioneered the direct marketing of video cassette
programming; Breakthrough Publishing, Inc., a software company
that produced marketing and investment products; The EZSearch
Corporation, a hardware technology company that developed a
PC-based kiosk system to display real-time real estate listings;
and Document Management Service, Inc., a software development
company that created a DOS-based CAD utility package.
Cline also founded CellTech, Inc., a research and development
firm that developed an analog to digital interface for cellular
phones in rental cars. Most recently, he was a marketing and
technology consultant for an online business directory.
Jacquelin K. Reeves, Vice President of Data Management was
formerly a Director of U S WEST Communications. She has extensive
experience in the development, implementation, management,
marketing and selling of information management solutions. She is
an expert in data and process management and has been published
both nationally and internationally on the subjects of corporate
information management and managing data as a strategic asset.
She has also consulted extensively in the telecommunications and
insurance industries and has led multiple re-engineering efforts.
With an undergraduate degree in art history, she also holds a
master's degree in technology management and is a doctoral
candidate in organizational development.
John R. Call, JD, Director, attended both Brigham Young
University and Arizona State University, and received degrees in
business administration (B.S. 1969) and law (J.D. cum laude,
1972) from Arizona State University. After serving a one-year
appointment as law clerk to the Chief Justice of the Nevada
Supreme Court, he practiced law for seven years with the Phoenix,
Arizona law firm of O'Connor Cavanagh Anderson Westover
Killingsworth and Beshears, before moving to Colorado where he
became a shareholder and director of the Denver Law firm of
Brownstein Hyatt & Farber, P.C., and practiced law there until
November, 1999. During his extensive legal career, he has
represented corporate and commercial clients, in a wide variety
of business matters. He has served as a National Trustee of the
National Conference of Christians and Jews, and as president and
member of the Board of Directors of the National Conference of
Christians and Jews, Rocky Mountain Region. He has also served as
a member of the Executive Board of Directors of the BYU
Management Society and as a member of the Economic Development
Council of the Denver Metro North Chamber of Commerce. Mr. Call,
now retired from the practice of law, devotes his talents to
several business, civic and charitable interests.
J. Brent Garfield, JD, Secretary of the Corporation, is an
attorney engaged in solo practice. Mr. Garfield graduated with
his JD Degree from the University of Utah in 1975. He was engaged
in private law practice in Salt Lake City through 1980 when he
was a partner in Fabian & Clendenin a Salt Lake law firm. In 1981
he joined the corporate law department of Forest Oil Corporation
in Denver, Colorado. In 1982 he became Manager of Forest's legal
department and served on the Management Council for the company
until 1987. From 1987 to 1995, Mr. Garfield was Vice President
and General Counsel for Nicor Oil and Gas Company in Denver,
Colorado. In 1995 Nicor was sold and Mr. Garfield has been
engaged in the private practice of law since that time.
Richard W. James, Treasurer of the Corporation, began his career
as a CPA with the International accounting firm of Peat, Marwick
and Mitchell and has expertise in finance, administration,
business development, and systems. He has served as C.F.O.,
C.O.O., C.E.O., President, Owner, and Board member of
corporations in various industries. Currently, Mr. James is
applying his experience by assisting individuals and
organizations in realizing their full potential. His highest
passion is developing worldwide "Leadership Ranches" where
deeper, quicker learning; and implementation of principles,
attitudes and practices is achieved for individual and
organizational freedom.
Duties Of Our Board Of Advisors:
Our Board of Advisors is a group of experienced people who are
shareholders of Vequity and who have agreed to be available to
our Board of Directors and Management to consult and advise with
respect to particular matters on an as needed basis. These
individuals provide our Management with a resource of expertise
and experience and should prove to be valuable as we start-up
operations and begin to implement our business plan. The members
of the Board of Advisors are appointed and not elected. They will
be involved on a consultation basis only and do not have direct
management responsibilities or voting power on the Board of
Directors, although some members of the Board of Advisors could
be employed in the future.
Biographies Of The Members Of Our Board Of Advisors
V. Stanley Benfell is an experienced senior executive who has
held the following positions: President and C.E.O. of Security
Life of Denver, an ING Group company; C.E.O. of Metropolitan Life
Insurance Company's Western Operations; Chief Corporate Marketing
Officer of Metropolitan Life; Vice President of Operations for
Crown Life Insurance Company, and Chief Marketing Officer of
Beneficial Life Insurance Company.
Joe L. Cook is a principal in Focus Real Estate Group, a small
conglomerate of real estate related companies, including a
mortgage bank, a real estate brokerage, a development company, a
foreclosure & redevelopment company, and a business
consulting/financing firm. He owns 50 -100% of all of the
businesses, serves as President/CEO, and manages the day to day
activities from a single location in Tempe, Arizona. He & his
partners invest their own & others' capital to seek significant
cash flow and capital appreciation. His consulting business
represents clients in the financing and organization of their
investments and businesses. He was formerly with Piper Jaffray &
Hopwood where he was President of Asset Management Group and
served on the company's Executive Council. He was also formerly
Vice President, Investments, for Wedbush Securities where he was
the top producer in direct investments. Over the last 12 years,
he has participated as a principal, both advisor and investor, in
over 20 start-up or reorganizations of operating entities and
real estate projects.
Alfred E. Hockwalt is the Director of Career Development for the
Financial Planning Association. He joined the association in
April 2000, after almost 15 years as the Director of Marketing
for the College for Financial Planning. He is very familiar with
current trends in financial planning, important individuals and
companies in the industry. Prior positions include Senior Editor
for C.V. Mosby Company (a Division of Times Mirror) where he
developed new education product lines in Economics, Finance and
Marketing. He also spent seven years with the Boston publisher,
Little, Brown & Co. is sales and product development.
Gwinavere Johnston, APR is Chairman and CEO of JohnstonWells
Public Relations, the largest public relations firm in the Rocky
Mountain Region. Recognized nationally as a leader in public
relations counseling, she is a Fellow of the Public Relations
Society of America, and Chairperson of the PRSA Counselor's
Academy. She has served on the boards of the Colorado Judicial
Institute and Mile High United Way, and holds the Colorado PRSA
Lifetime Achievement Award.
Oliver McBryan, Ph.D. was educated in Dublin, Ireland where he
took his B.Sc. and M.Sc. degrees from the National University of
Ireland, majoring in Mathematics and Theoretical Physics.
Following this, he studied Theoretical Physics at Harvard
University, where he received a Ph.D. in 1973. After
post-doctoral appointments at the University of Toronto, and The
Rockefeller University, New York, he joined the Mathematics
Department faculty at Cornell University in 1976 as Assistant
Professor. Dr. McBryan moved to the University of Colorado at
Boulder, where he is currently Professor of Computer Science and
Director of the Center for Applied Parallel Processing (CAPP).
Dr. McBryan was the creator of the World Wide Web Worm and he
also developed and deployed several multimedia information
servers, including a high-speed ATM network.
Colin R. Stoner is the former Senior Vice President of Taxation
for Telecommunications, Inc. (TCI) which was recently acquired by
AT&T. Mr. Stoner is a CPA who has been on the Board of Directors
of the Cable Television Tax Professionals Institute since its
inception and received its President's Award in 1994. He is a
member of the NCTA Tax Task Force, the American Institute of
Certified Public Accountants and the Colorado Society of
Certified Public Accountants.
Michael H. Schrank is VP and Marketing Communications Director of
ProLogis Trust, the largest global provider of industrial
distribution facilities and services, operating in 94 markets. He
has overall responsibility for brand development and corporate
communications. He was responsible for the company's name change
to ProLogis and subsequent branding efforts that have created the
highest brand awareness in the industry. Mr. Schrank was also
Vice President and Marketing Director (US Region) for VISA's Plus
System, Inc. From July of 1985, until November of 1996, he was a
member of the senior management team that developed and
strategically directed the PLUS ATM business from its inception
to global status. Prior to joining Plus System, Inc., he held
management, marketing and sales positions with The Arizona Bank,
Marine Bankcard Corporation and Texaco.
Board Of Directors
Our Board of Directors consists of three Directors, and will be
divided into three classes that are to remain as nearly equal in
number as possible. Mr. John R. Call is our Class I Director and
his term will expire at the first annual meeting of shareholders
in 2001. Our Class II Director is Mr. Ronald E. Moitzfield and
his term will expire at the annual meeting of shareholders in
2002. Mr. Thomas H. Moore is our Class III Director and his term
will expire at the annual meeting of shareholders in 2003. Mr.
Moore and Mr. Call are brothers-in-law.
At each annual meeting of shareholders after the initial
classification, the successors to Directors whose terms will then
expire will be elected to serve from the time of election and
qualification until the third annual meeting following election
and until their successors have been duly elected and qualified.
Any additional Directorships resulting from an increase in the
number of Directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of an
equal number of Directors. This classification of the Board of
Directors may have the effect of delaying or preventing a change
of control or management of Vequity. (See RISK FACTORS, Page 9).
Our Articles of Incorporation, Bylaws and Colorado law contain
provisions that could discourage or prevent a takeover, even if
an acquisition would be beneficial to our shareholders.
Board Committees
The Audit Committee of the Board of Directors makes
recommendations concerning the engagement of independent public
accountants. In addition the committee reviews the plans, results
and fees of the audit engagement with our independent public
accountants, and any independence issues with our independent
public accountants. The audit committee also reviews the adequacy
of our internal accounting controls. Current members of the audit
committee are Thomas H. Moore and Ronald E. Moitzfield.
The Compensation Committee of the Board of Directors makes
recommendations concerning compensation for our executive
officers. The compensation committee currently consists of Thomas
H. Moore, Ronald E. Moitzfield and John R. Call.
Compensation Committee Interlocks And Insider Participation
No member of the Compensation Committee serves as a member of the
board of directors or compensation committee of any other entity
that has one or more executive officers serving as a member of
our Board of Directors or Compensation Committee.
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Owners of more than 5% of our shares:
<S> <C> <C> <C> <C>
Class Name & Address Number % Ownership % Ownership
of Shares Before Offering After Offering
----- -------------- --------- --------------- --------------
Common Thomas & Kathleen Moore (1) 21,413,750 52.23% 47.59%
Common Thomas & Kathleen Moore Children 900,000 2.20% 2.00%
Common Total Moore Family 22,313,750 54.43% 49.59%
Common Joe L. Cook, et al (2) 2,475,000 6.03% 5.50%
(1) Mr. Moore intends to gift at least 80% of his shares to his non-profit foundation,
which supports causes related to families, women, children, education, learning style
development, attention deficit disorder, homelessness and hunger. Before and after such
gifting, Mr. Moore, his wife, Kathleen Moore, and their foundation will have substantial
ownership of the Company. At the time of this offering Mr. and Mrs. Moore and their
children have the power to vote 54.43% of the outstanding common stock of the Company and
following the completion of the maximum offering of the shares herein, they will have the
power to vote 49.59% of the outstanding common stock.
(2) The shares shown for Mr. Cook are collectively held by him, his wife and his pension
plan.
The following is a list of the Directors, Executive Officers, Advisors and Affiliates who
own significant shares of the Company. The list also reflects their percentage ownership
of the Common Stock before and after the offering of shares contemplated herein.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Class Name & Address Number % Ownership % Ownership
of Shares Before Offering After Offering
----- -------------- -------------- --------------- --------------
Common Thomas & Kathleen Moore & Children 22,313,750 54.43% 49.59%
1790 East Otero Ave., Littleton, CO
Common Joe L. Cook, et al. (1) 2,475,000 6.03% 5.50%
741 W. San Marcos Dr., Chandler, AZ
Common Marilyn M. Call (Wife of John R. 1,762,500 4.29% 3.91%
Call) (1) 7223 Routt Dr., Arvada, CO
Common Dirk L. Cline 1,230,000 3.00% 2.73%
7900 S. Harrison Circle, Littleton, CO
Common Richard W. James (1) 1,200,000 2.93% 2.67%
7768 E. Forest Court South, Littleton, CO
Common Ronald E. Moitzfield (2) 1,000,000 2.44% 2.22%
2305 E.Arapahoe Road, 220, Littleton, CO
Common Jacquelin K. Reeves 717,800 1.75% 1.60%
1331 Castle Point Circle, Castle Rock, CO
Common Todd A. Gibson (3) 500,000 1.22% 1.11%
7392 S. Monroe Court, Littleton, CO
Common J. Brent Garfield 150,000 .37% .33%
9901 W. 50th Ave., Wheat Ridge, Colorado
Common Directors, Executive Officers,
Advisors and Affiliates as a Group 31,349,050 76.46% 69.66%
Notes:
(1) These shares reflect conversion of Preferred Shares by these shareholders.
(2) Mr. Moore has the right to purchase back from Mr. Moitzfield up to 900,000 of his shares for $.05
per share if Mr. Moitzfield does not meet the terms of his Contract with the Company.
Mr. Moore has the right to purchase back from Mr. Gibson up to 240,000 of his shares for $.05 per
share if Mr. Gibson does not meet the terms of his Contract with the Company.
</TABLE>
<TABLE>
The following is a list of the Directors, Executive Officers, Advisors and Affiliates who own
Preferred shares of the Company.
<S> <C> <C> <C>
Class Name & Address No. of Shares %Ownership of
Total Preferred Shares
----- -------------- ------------- ----------------------
Preferred Joe L. Cook, et al (1) 125,000 13.38%
741 W., San Marcos Dr.
Chandler, AZ 85225
Preferred Marilyn M. Call
(Wife of John R. Call) 75,000 8.03%
7223 Routt Dr.
Arvada, Colorado 80005
Preferred Richard W. James 30,000 3.21%
7768 E. Forest Court South
Littleton, CO 80122
</TABLE>
DESCRIPTION OF SECURITIES
Under Vequity's Articles of Incorporation and Amendments thereto,
the Company is authorized to issue 100,000,000 shares of common
stock and 5,000,000 shares of preferred stock. Shares of each
class have a par value of $0.001 per share. The following
description summarizes the material provisions of our capital
stock.
As of the effective date of this offering, there were 41,000,000
shares of common stock outstanding that were held by
approximately 244 shareholders.
Each share of our common stock entitles the Holder to one vote on
all matters submitted to a vote of stockholders, including the
election of Directors. Subject to any preference rights of
Holders of preferred stock, the Holders of common stock are
entitled to receive dividends, if any, declared from time to time
by the Directors out of legally available funds. In the event of
the Company's liquidation, dissolution or winding up, the Holders
of common stock are entitled to share ratably in all assets
remaining after the payment of liabilities, subject to any rights
of Holders of preferred stock to priority distribution.
The common stock has no preemptive or conversion rights or other
subscriptions rights. There are no redemptive or sinking fund
provisions applicable to the common stock. All outstanding
shares of common stock are fully paid and non-assessable and the
shares of common stock to be issued on completion of this
offering will be fully paid and non-assessable.
The Board of Directors has the authority, without action by the
stockholders, to designate and issue preferred stock and to
designate the rights, preferences and privileges of each series
of preferred stock, which may be greater than the rights attached
to the common stock. It will not be possible to state the actual
effect of the issuance of any shares of preferred stock on the
rights of Holders of common stock until the Board of Directors
determines the specific rights attached to that specific issue of
preferred stock. The effect of issuing preferred stock could
include one or more of the following:
limiting or restricting dividends, if any, on common stock;
limiting or diluting the voting power of the common stock;
limiting or impairing any liquidation connected with the common
stock; or delaying or preventing a change of control of Vequity
Corporation.
At the time of this offering there are currently 934,469 shares
of preferred stock outstanding, with 200,000 shares of Series A
and 684,469 shares of Series B Redeemable and Convertible
Preferred Stock. As of June 30, 2000, the preferred stock was
held by approximately 69 shareholders.
Redemption and Conversion Options of Issued Preferred Shares:
The Series "A Preferred Shares were issued to two shareholders.
These shareholders have received common shares pursuant to their
redemption rights. We have the further obligation to complete
the redemption of the shares by paying $225,000 to these
shareholders.
The Series B Preferred Shares are redeemable and convertible, at
the sole discretion of the Company with one of the following
options:
Option #1: This redemption and conversion option consists of both
cash and shares of common stock as payment. The cash portion
payment of this option is $1.00 per share, or $684,469, if
redeemed on or before the redemption date, which date is two
years from date of purchase of the Series B Preferred Shares. If
the cash portion payment is not made on or before the redemption
date, a cash penalty of $.05 per share will be assessed for every
month, or partial month, that Vequity does not redeem the shares
under this option. However, the maximum cash penalty will be
$1.00 per share. The stock portion payment of this option
provides that we pay the preferred shareholder two to five shares
of common stock in exchange for each share of preferred stock
that the shareholder originally purchased. The number of common
shares required to redeem preferred shares varies by shareholder
and is dependent upon the initial investment of the shareholder
as shown:
Up to $24,999 = 2 common shares for every preferred share
purchased;
$25,000 to $49,999 = 4 common shares for every preferred share
purchased:
$50,000 or more = 5 common shares for every preferred share
purchased.
(Note: The Common shares to which these Preferred Shareholders
are entitled under Option #1 have been issued. The remaining
obligation that we have under this Option is to complete the
redemption by making the required cash payments.)
-OR-
Option #2: This redemption and conversion option gives Vequity
the right, within two years of the sale of the shares, to redeem
and convert the Preferred Shares for no cash and 7 common shares
for each preferred share.
As noted, we have commenced the redemption under exercise Option
#1, and accordingly, we have issued shares of common stock to
these Preferred shareholders in amounts relating to their initial
investments under Option #1 as shown above. It is anticipated
that the cash portion of the redemption of the preferred shares
will be paid as soon as we have the funds to do so. If we are
unable to exercise Option #1 due to lack of operating funds, we
may be forced to exercise Option #2.
Series B Redeemable And Convertible Preferences:
Subject to the rights of the Holders of Series A Preferred Stock
that are redeemable for $225,000, the Holders of Series B
Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus
funds of the Corporation to the Holders of any other outstanding
security of the Corporation, including the Common Stock, by
reason of their ownership of such stock, the amount in cash of
$1.00 per share plus the amount of any penalties or accrued, but
unpaid dividends, if applicable (the Liquidation Preference). If
the assets and funds thus distributed among the Holders of the
Series B Preferred Stock shall be insufficient to permit the
payment to such Holders of the full aforesaid Liquidation
Preference, then the entire assets and funds of the Corporation
legally available for distribution, after required payments and
distributions to Holders of Series A Preferred Stock, shall be
distributed ratably among the Holders of the Series B Preferred
Stock.
Pursuant to this offering, each Investortiser who initially
purchases shares in Units of 200, 320 or 400 of our common stock
reserved for our Investortisers will be issued Series A Warrants
and Series B Warrants, which are legal instruments that give the
Holder of the Warrant the right, but not the obligation, to
purchase additional shares in the future.
We have reserved 2,560,000 Common shares for the Series A Warrant
Holders and 2,000,000 Common shares for the Series B Warrant
Holders. The exercise price for the Series A Warrants is $6.25
per share and the exercise price for the Series B Warrants is $8
per share. In order for the Warrants to be exercised and
additional shares purchased, an Investortiser must first renew
its website advertisement with Vequity.
To be specific, an Investortiser choosing to exercise Series A or
Series B Warrants, must purchase the additional shares authorized
by the Warrants prior to the expiration of the Exercise Periods
as specified in the Warrants. The Exercise Period for the Series
A Warrant expires 30 days after the first annual renewal of the
Holder's Vequity website advertisement. The first annual renewal
of the Holder's website advertisement may be accomplished after
the Holder's initial purchase of website advertising from the
Company and at any time during the period of thirteen (13) months
thereafter. The first annual renewal of the Holder's website will
be deemed complete upon the Company's receipt of payment for a
second year of website advertising from the Holder. The Exercise
Period for the Series B Warrant expires 30 days after the second
annual renewal of the Holder's Vequity website advertisement. The
second annual renewal of the Holder's website advertisement may
be accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
twenty-five (25) months thereafter, provided that the first
annual renewal shall have been completed in a timely manner. The
second annual renewal of the Holder's website will be deemed
complete upon the Company's receipt of payment for a third year
of website advertising from the Holder. As earlier stated,
renewal of the annual website advertisements by the Holder of the
Warrants is a condition precedent to exercise of the Warrants.
The Series A Warrant, if not exercised, will expire and become
null and void upon the expiration of the Holder's Exercise Period
for the Series A Warrant and the Series B Warrant, if not
exercised, will expire and become null and void upon the
expiration of the Holder's Exercise Period for the Series B
Warrant.
The Series A Warrants, if not exercised within the designated
Exercise Period for the Series A Warrants, will become null and
void and the Series B Warrants, if not exercised within the
designated Exercise Period for the Series B Warrants, will also
become null and void. All shares issued pursuant to the Warrants
will, upon issuance, be fully paid and non-assessable and free
from all taxes, liens and other charges with respect to the
issuance thereof. If a Warrant Holder chooses to exercise the
option to purchase only part of the shares stipulated by the
Warrant, the right to purchase the remaining shares will remain
available until the end of the Warrant Exercise Period. The
following charts show the choices for purchasing the shares and
Warrants offered in this prospectus and a summary of when an
Investortiser may exercise its Warrants:
INVESTORTISER CHOICES FOR PURCHASING STOCK AND WARRANTS:
Choice #1 Choice #2 Choice #3
--------- --------- ---------
Initial 200 shares 320 Shares 400 Shares
Purchase @$5=$1,000 @$5=$1,600 @$5=$2,000
-------- ---------- ---------- ----------
Series A 160 Shares 256 Shares 320 Shares
Warrants @$6.25=$1,000 @$6.25=$1,600 @$6.25=$2,000
-------- ---------- ---------- ----------
Series B 125 Shares 200 Shares 250 Shares
Warrants @$8.00=$1,000 @$8.00=$1,600 @$8.00=$,2000
-------- ---------- ---------- ----------
Totals: 485 Shares for $3,000
776 Shares for $4,800
970 Shares for $6,000
Series A Warrant
----------------
This Warrant may be exercised by Holder as to all or any part of
the Shares covered hereby at any time during the period (the
Exercise Period) commencing on the date of the second annual
renewal of the Holders website advertisement with Vequity and
ending on the expiration of thirty days thereafter. The first
annual renewal of the Holder's website advertisement may be
accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
thirteen (13) months thereafter, provided that the first annual
renewal of the Holder's website advertising shall have been
completed in a timely manner. The second annual renewal of the
Holder's website will be deemed complete upon the Company's
receipt of payment for a third year of website advertising from
the Holder. Such renewal of the Holders website advertisement is
a condition precedent to the exercise of this Warrant. This
Warrant, if not exercised, will expire and become null and void
upon the expiration of the Exercise Period for this Warrant.
Series B Warrant
----------------
This Warrant may be exercised by Holder as to all or any part of
the Shares covered hereby at any time during the period (the
Exercise Period) commencing on the date of the second annual
renewal of the Holders website advertisement with Vequity and
ending on the expiration of thirty days thereafter. The second
annual renewal of the Holder's website advertisement may be
accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
twenty-five (25) months thereafter, provided that the first
annual renewal of the Holder's website advertising shall have
been completed in a timely manner. The second annual renewal of
the Holder's website will be deemed complete upon the Company's
receipt of payment for a third year of website advertising from
the Holder. Such renewal of the Holders website advertisement is
a condition precedent to the exercise of this Warrant. This
Warrant, if not exercised, will expire and become null and void
upon the expiration of the Exercise Period for this Warrant.
Example of Renewal Dates and Warrant's Exercise Periods: If an
Investortiser purchases a Vequity Website on January 1, 2001, and
such Investortiser chooses to renew its website advertisement and
exercise the A Warrant, such Investortiser must do so prior to
January 31, 2002. Similarly, if such Investortiser chooses to
renew its website advertisement and exercise the B Warrant, such
Investortiser must do so prior to January 31, 2003.
Prior to the time that a Warrant is exercised, the Holder will
have no rights or liabilities as a shareholder for the Warrant
shares, including no rights to vote, consent, or receive
shareholder notice for the Warrant shares in respect to any
matters whatsoever. However, shareholder rights will be in effect
for the non-Warrants shares initially purchased. If the Warrants
are not exercised within the Exercise Period they become null and
void (See RISK FACTORS, Page 9).
In the event the Company shall at any time after the issuance of
the Warrants and prior to their exercise or
expiration issue or sell any Shares through a registered public
offering (excluding any shares issued or sold pursuant to this
Prospectus and any shares issued pursuant to outstanding options,
conversion rights or redemption rights) for a consideration per
share less than the Warrant Exercise Price in effect immediately
prior to the issuance or sale of such Shares, or without
consideration, then the Warrant Exercise Price in effect
immediately prior to the issuance or sale of such. Shares shall
forthwith be reduced to a Warrant Exercise Price equal to the
price at which such shares were issued or sold.
The Warrants also contain provisions that they will survive any
reclassification, change, consolidation, or merger by us. Warrant
Holders will also be provided with a 30-day notice of any
distribution or sale of all, or substantially all, of the assets
of the Company, or any dissolution or liquidation by us. Warrant
Holders may exercise their Warrants within such 30-day period. If
the Warrants are not exercised within such 30-day period, they
will become null and void (See RISK FACTORS, Page 9).
The Warrants also provide that Vequity has the right to
repurchase the Warrants upon 30 days prior written notice to the
Holders at a price of $1.00 per share. During such 30-day notice
period, the Holders may exercise their Warrants at the Warrant
Exercise Price. If a Holder does not choose to exercise its
Warrants within such period, then we will repurchase the Warrants
upon payment of the $1.00 per share redemption offer price.
Anti-Takeover effects of Provisions of Colorado Law and the
Company's Articles of Incorporation and Bylaws
Some provisions of our Articles of Incorporation and Bylaws may
be deemed to have an anti-takeover effect and may delay or
prevent a tender offer or takeover attempt that a Stockholder
might consider in its best interest, including those attempts
that might result in a premium over the market price for issued
shares.
The Company's Board of Directors is divided into three classes of
Directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors is elected each
year. These provisions, when coupled with the provisions of our
Articles of Incorporation authorizing the Board of Directors to
fill vacant Directorships or increase the size of the Board of
Directors, may deter a Stockholder from removing incumbent
Directors and simultaneously gaining control of the Board of
Directors by filling the vacancies created by this removal with
its own nominees.
Our Articles of Incorporation expressly deny the Company's
stockholders the right to cumulative voting in the election of
Directors.
Stockholder Action; Special Meeting of Stockholders
Our Articles of incorporation eliminate the ability of
stockholders to act by written consent. They further provide that
special meetings of our stockholders may be called by the
President or by the Secretary upon the request (which shall state
the purpose of purposes therefore) of the holders of not less
than one-tenth (1/10th) of the outstanding shares of the
Corporation entitled to vote at the meeting.
Advance Notice Requirements for Stockholder Proposals and
Director Nominations
Stockholders seeking to bring business before an annual meeting
of stockholders, or to nominate candidates for election as
Directors at an annual meeting of stockholders, must provide
timely notice in writing to the Company. To be timely, a
Stockholder's notice must be delivered to or mailed and received
at our principal executive offices in time to be included in the
notice of the meeting sent to Shareholders. Notice of a meeting
of Shareholders must be provided not less than 10 days or more
than 60 days prior to the meeting. However, if the proposal is to
increase the number of authorized shares of the Corporation, the
notice of the meeting must be provided at least 30 days prior to
the meeting.
Authorized but unissued shares of common stock and preferred
stock will be available for future issuance without Stockholder
approval. These additional shares may be utilized for a variety
of corporate purposes, including, without limitation, future
offerings to raise additional capital for operating funds,
redemption of stock and warrants, corporate acquisitions, to
entice new advertisers to become Investortisers and for employee
benefit plans. The existence of authorized but unissued shares of
common stock and preferred stock could render more difficult or
discourage an attempt to obtain control of the Company by means
of a proxy contest, tender offer, merger or otherwise.
Colorado General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on
any matter is required to amend a corporation's Articles of
Incorporation or Bylaws, unless either a corporation's Articles
of Incorporation or Bylaws require a greater percentage. Our
Articles of Incorporation require a two-thirds vote of
shareholders represented at a meeting to amend provisions of our
Articles of Incorporation and Bylaws, including those provisions
relating to the classified Board of Directors, action by written
consent and ability of stockholders to call special meetings.
The transfer agent and registrar for the Company's common stock
is:
Computershare Investor Services
(Formerly American Securities Transfer & Trust)
12039 West Alameda Parkway
Lakewood, CO 80228
Tel:(303) 986-5400
Fax:(303) 986-2444
Traditionally, printed yellow page directories, available through
local or regional telephone companies or other similar
directories, have provided an effective means of advertising that
permits businesses to get their names into the public eye.
Businesses and consumers are able to consult these directories
that are generally organized alphabetically by type of business,
product or service and categorized using several commonly
recognized terms, with cross-referencing to identify the product
or service being sought. Additionally, businesses listed in these
directories are organized in fairly localized areas.
The business or consumer that consults a yellow page type
directory can easily identify businesses by category such as
restaurants, pizza restaurants, auto repair shops, plumbers,
veterinarians, dog grooming services, etc. The printed directory
usually provides the name, address and telephone number of the
business in a particular localized geographical area with an
alphabetical listing of the businesses. Businesses are also able
to provide additional information about themselves in such
directories describing with more precision, the particular
features they believe sets them apart from other businesses of
the same type listed in the directory.
For example, a business will often describe its location, time in
business, particular specialty or expertise, or other information
that it believes might be valuable to attract customers.
Businesses and customers on the other hand, are offered a large
amount of information to assist them in evaluating the numerous
choices of businesses they are seeking. These directories are
generally limited to specific areas. A business or customer
seeking information in this type of directory is limited to the
particular city or area the directory covers. They do not allow a
potential consumer to search other cities or areas without
obtaining another complete and separate directory.
Positioning in the yellow page directories is believed to be
important to businesses. Many businesses choose their name so
that it will appear at, or near, the top of the alphabetical
listing; hence, the proliferation of businesses beginning with
AAA. If consumers tend to start looking at the beginning of a
particular category, it is likely they will see something that
fits their search before they reach the end. Advertisers will
generally opt to appear early and large in these directories to
be as effective as possible.
Emergence of the Internet has opened up a vast new opportunity
for businesses to communicate their messages to other businesses
and to consumers in general. However, to be effective, the
information must be easily accessible and available over a large
number of portals. We believe that, more and more, businesses and
consumers are turning to the Internet to search for products and
services and for information about things they need, both in
their local areas and throughout the world.
The consumer needing auto repairs in his or her hometown has
little use for listings of auto repair shops in other parts of
the country. Therefore, the localization of a significant amount
of centralized information in a particular area is of great
importance to some businesses and consumers. In addition, for
some types of products and services, businesses and consumers are
concerned about availability, the best price, or other factors,
and may be willing to purchase from a business offering the
products or services regardless of location. Availability of both
localized and global information is advantageous to both
businesses paying for yellow page type websites and to customers
looking to purchase products or services. The Internet offers an
advantage over traditional printed yellow pages in that it can
provide easy access to both local and international information
with equal ease and for substantially less money than comparable
printed ads.
The World Wide Web (www) has provided the means for computers to
be connected to each other in a way that information can be
transmitted at rapid speeds on almost any subject a user might
desire. Development of the Internet as a means of attracting
customers and doing business is rapidly expanding and we believe
there is a great opportunity in providing Internet advertising
and yellow page type directory services connecting businesses to
businesses and businesses to consumers in an effective,
informative and easily accessible way.
We believe that the Internet will be a major sales channel for
many businesses. However, to date, commercial websites have
generally only been successful for niche companies that sell
products and services like computers, flowers, books, travel,
etc. Most businesses don't yet have an Internet presence, and
those that do, are scattered over thousands of Internet hosting
sites and are often difficult to find.
Many of the most popular and well-known search engines on the
Internet have developed yellow page directories. In most cases,
these directories have been developed by purchasing business
listings from listing aggregators of printed white page
directories owned by local telephone companies.
As such, other Internet yellow page directories, although useful,
are more similar to printed business white pages, in that they
offer only the name, address and telephone number of a business,
the type of business, and directions or maps to assist the
customer in finding the business. They are often limited in that
they do not tell a customer a great deal more about the business
than its basic identification and how to find it. Customers are
generally seeking expanded information, and while the Internet is
attracting new users at a very rapid pace, the volume and
diversity of information, products and services available is also
creating a great need for organization. There is a need for a
company to aggregate commercial websites with expanded
information into a readily accessible, localized and usable
directory for businesses and consumers.
An informative evaluation of the types and limitations of
Internet yellow page advertising can be made by accessing some of
the more popular and well-known search engines. Some of these are
www.yahoo.com <http://www.yahoo.com>, www.uswest.com,
www.aol.com/netfind <http://www.aol.com/netfind>,
www.lycos.com <http://www.lycos.com>
www.goto.com <http://www.goto.com>,
www.excite.com <http://www.excite.com>,
www.hotbot.com <http://www.hotbot.com>,
www.infoseek.com <http://www.infoseek.com> and
www.altavista.digital.com <http://www.altavista.digital.com>.
There are numerous other websites that could be viewed, but a
search of these sites will reveal that there is room for much
improvement in the content being offered.
The Investortiser Concept: Capitalization and Loyalty
We have obtained a license from Vequity's founder, Chairman of
the Board of Directors and President, Thomas H. Moore, to utilize
his Method and System for Capitalizing a Business and Maintaining
a Customer Base and/or Revenue Base. Utilizing this method, we
will primarily sell the shares of our Company to our advertising
customers. Mr. Moore has a Service Mark registration for the term
Investortiser which describes our investor/advertisers. This
method for capitalizing a business and obtaining loyal customers
was conceptualized by Mr. Moore and he has applied for a patent
covering his system. The patent application is currently pending.
We have also obtained a license from Mr. Moore to use the term
Investortiser.
For Vequity to thrive, we must first attract and then maintain a
stable base of Internet yellow page advertisers that is large
enough to provide sufficient revenues to sustain our operations
and establish profitability.
Traditional methods to attract and build a customer base are
generally based upon the creation of products with some distinct
or advantageous feature, advertising budgets to attract
customers, and the acquisition of capital sufficient to allow the
business to establish itself, grow and gain name recognition.
These methods present difficulties for a company that is in a
start-up situation as we are.
Products and services that have superior qualities to those of
competitors are not a guarantee of success, as product features
can be duplicated by competitors having superior resources. A
company having a superior product can be easily overwhelmed by a
competitor with a larger advertising budget, even if the product
or service of such competitor is inferior to others available in
the market.
A company also needs financial staying power, which is a function
of having the capital to develop customers, build customer
loyalty and achieve profitability. Companies without the capital
to provide staying power in their target markets can fail even
though their products or services may be superior to others.
We believe that the method we have licensed from Mr. Moore is
well designed to give us distinct and advantageous features in
addition to the capital, staying power and advertising resources
needed to establish our portal and Yellow Pages & Business
Website Directory as a prime Internet site for businesses and
consumers to locate the products and services they seek.
In a yellow pages directory type business, it is imperative that
advertisers reach the most customers possible and that customers
recognize the yellow page directory as THE place to go for
business information. Vequity's challenge is to bring to its
advertisers the exposure they require and to establish
www.vequity.com as a fixture in the minds of Internet customers.
We believe that the marketing concept we have licensed from Mr.
Moore can give us significant advantages as we move forward to
implement our business plan.
The offering of stock ownership to our website advertisers is a
key part of our strategy. We believe this feature will provide an
important incentive for Investortisers to continue placing their
website advertising with us. This advertiser loyalty will give us
the time and funding to establish our directory as THE place to
go for business information and websites.
For this reason, eighty percent of the shares offered in this
offering will be reserved exclusively for advertisers purchasing
websites in our Yellow Pages & Business Website Directory. These
Investortisers will also receive Warrants which will allow them
to purchase additional Vequity shares in future years.
Investortisers will receive benefits not only in the form of
yellow page advertising priority and benefits, but also in the
form of ownership benefits such as dividends, increases in stock
price, etc., assuming such are declared or realized.
The Investortiser feature is intended to present an incentive for
our investor/advertisers to continue purchasing our yellow page
advertising services because, as part owners, they stand to share
in the benefits from any growth or success we are able to
achieve. We believe that coupling stock ownership in our Company
with the purchase of website advertising services, will provide
an initial and ongoing revenue stream from shareholders who have
a fundamental interest in our profitability and success.
In summary, the Investortiser concept is designed to:
- unite and centralize a diverse group of advertisers into a
single, searchable, Internet site;
- stabilize a revenue stream from a loyal and consistent customer
base; and
- capitalize the growth of our venture with a group of devoted
customers.
The Investortiser concept is a kick-off strategy and we intend to
discontinue selling shares to advertisers when our management
believes that we no longer need to offer shares as an incentive
to purchase website advertising, and also when we have a
sufficient revenue stream to provide staying power.
We are a start-up company with a vision for improving
business-to-business and business-to-consumer connections on the
Internet because businesses and customers are generally having a
difficult time in finding each other online. We believe that the
lack of a centralized source of websites, and the fact that many
of the most popular Internet search engines only provide a small
percentage of the searchable information that is available on the
Internet, create a real opportunity for Vequity.
For instance, according to an article in The Orange County
Register, the following are the percentages of the Web that are
searchable by the following popular sites: AltaVista (15.5%),
Yahoo (7.4%), Excite (5.6%), Lycos (2.5%). Additionally, contrary
to popular belief, with Yahoo and other popular sites, when a
website is submitted for inclusion in their searchable data, only
a small fraction of the websites are accepted (Sources:
ICONOCAST, Aug. 26, 2000 and Business 2.0, Aug. 8, 2000, page
129).
Therefore, an integral part of our vision is to centralize
business listings and websites into a single Internet site,
similar to the printed yellow page directories. Through Vequity's
Yellow Pages and Business Website Directory, we believe we can
provide customers easy access to a useful and significant
database of local and national businesses and their products and
services. The listings and websites will be organized by type of
business, type of product or service and location.
Our goal is to make it essential for a business to have a website
in our Yellow Pages & Business Website Directory.
Our vision also calls for us to make our advertisers' listings
and websites easily accessible through as many Internet portals,
websites and other Internet yellow page type directories as
possible. One of the ways we intend to increase accessibility to
our advertisers is through our alliance with InfoSpace.com. They
have developed a network of co-branded yellow page directories
with Lycos, Netscape, Microsoft and many others and those
directories will also provide exposure for our advertisers. For
example, if a customer finds the priority listing of a Vequity
advertiser in one of the other yellow page directories in the
InfoSpace network, the customer will be able to click on our
advertiser's business listing in that directory and be connected
to the advertiser's Vequity website. Having this alliance
provides a Vequity advertiser with the appearance of having
websites in numerous yellow page directories.
Many Internet businesses and dot.com companies have focused on
advancing the technology of the Internet. Although we intend to
use cutting edge technologies, our focus is our marketing
approaches of centralizing websites and creating alliances to
increase exposure for our website advertising customers. We want
to make it easy to find business listings and websites and we
also want to build a large and loyal advertiser and customer
base. We believe our approach allows for the consistent and
sizable growth of business listings and connected websites for
use by businesses and consumers.
At http://www.vequity.com, you will find our website portal. At
the top of our Home Page, you will also find search fields for a
nation-wide directory entitled Yellow Pages & Business Website
Directory. We intend our primary revenue source to come from
selling websites and hot-links to businesses seeking a successful
Internet presence with our Yellow Pages & Business Websites
Directory.
Our website designers will work with our advertisers and provide
the professional services to produce their individualized
websites. The businesses will be listed by location, type of
business, and product or service. Customers may find business
listings and access websites in particular local areas or in
other locations in the United States and Canada.
In summary, our business model has several important elements
that we believe will allow us to establish ourselves as a readily
usable and significant source of business listings and website
information. The primary areas of focus in our business plan are
as follows:
Capitalization: We intend to capitalize our business and gain a
loyal advertiser base by offering our initial advertisers stock
ownership through this stock offering and possible future
offerings.
Centralization: We intend to centralize worldwide business
listings and websites into our Yellow Pages & Business Websites
Directory and thus make it easier for business-to-business and
business-to-consumer customers to find the products and services
they seek.
Design Services: We intend to develop a group of well trained,
work at home, contractors to professionally design the websites
for the businesses advertising in our Yellow Pages & Business
Websites Directory. Websites will consist of up to six pages of
graphics and text. Additionally, each website may contain maps,
driving directions, and email and fax capabilities. We will
design, host and maintain a website for an annual fee, currently
at $1,995.
Branding: We intend to expend significant resources and efforts
to establish and promote name recognition and branding for
Vequity and our Yellow Pages & Business Websites Directory as THE
place to have, and find, business websites. Our efforts to brand
Vequity include public presentations; radio, television, print
and Internet advertising; and public relations initiatives. In
addition to corporate branding expenditures, the Company intends
to spend at least $300 of the annual website fee from each
advertiser to pay for promotional initiatives.
Alliances: We intend to concentrate on our core marketing
strategies and to enhance our technical, sales, marketing,
investment, customer service and support functions through
alliances with third party organizations that provide certain
competencies. An example is our alliance with InfoSpace.com.
Distribution: Through our alliance with InfoSpace.com and other
potential future alliances, we intend to have the business
listings of our advertisers available and on as many other sites
and directories as possible, thus gaining deeper and wider market
exposure.
Prioritization: Through our alliance with InfoSpace.com we are
able to provide certain priority business listings for our
website advertisers. This means that a Vequity advertiser may be
listed before many other similar business, even if the similar
businesses have alphabetical priority.
InfoSpace.com and Our Co-Branding Alliance
We have entered into an Enhancements and Co-branding Agreement
with InfoSpace.com, Inc., a leading and highly regarded
information resource and search engine on the Internet.
Information about InfoSpace can be located on the Internet by
entering http://www.infospace.com.
The InfoSpace yellow page directory has approximately 18 million
existing listings for businesses in the U.S. and Canada. They
have established a significant yellow page directory network by
co-branding or private labeling their directory with, and for,
many well-known companies. According to InfoSpace, its network of
co-branded websites has grown to more than 2,100. Their
information also states that through its network, InfoSpace has
attained a reach to more than 86% of all Internet users.
According to Media Matrix, InfoSpace.com is the top-ranked local
content aggregator (local information source) on the net and
their Network includes 500,000,000 page views per month with
thousands of sites carrying their content - including Netscape,
Lycos, ABC, AOL, CBS, Disney, Microsoft, The Wall Street Journal
and Netscape. This distribution Network should be advantageous to
our website advertisers because their business listings will also
appear in many more sites than the Vequity site.
In other words, our alliance provides our advertisers with a
website link from numerous other Internet yellow page
directories. When a potential customer finds the listing of a
Vequity advertiser in one of the InfoSpace Network sites, that
customer can click on the listing and be hot-linked to the
specific advertiser's website that is hosted with Vequity.
By joining this impressive network, Vequity advertisers will be
accessible through any of the other yellow page directories in
the InfoSpace network. This feature adds potential distribution
opportunities for the websites of our advertisers because the
greater the number of users accessing the InfoSpace yellow pages
network, the broader the exposure will be for our advertisers.
The term Co-branding is very descriptive of what our Agreement is
intended to provide for our advertisers. Co-branding is a concept
that will allow us and our users to access the established
resources of InfoSpace, including their website and the personnel
who support their network of sites, including the Vequity site.
Our website has its own unique look and feel and displays the
phrase Powered by InfoSpace. Although our site is clearly the
Vequity site, it incorporates all of the power, sweep and depth
of the InfoSpace site.
Our plan is to solicit businesses in order to sell them our
website advertising packages. We intend to solicit these
advertisements throughout all fifty states of the United States.
In the future, we hope to extend our efforts to other countries.
We will have the right, in connection with our marketing
campaigns, to use InfoSpace trademarks, and its promotional and
marketing materials, and electronic and printed advertising,
publicity, press releases, newsletters and mailings about us.
InfoSpace has developed web based software packages for use in
website creation and the integration of websites into our Yellow
Pages & Business Websites Directory. We will have the right to
use these packages in the creation of web pages for our
advertisers and in the integration of their websites into the
InfoSpace yellow page directory network quickly and effectively.
Of course, we will not be limited to the use of the InfoSpace
tools and other tools may be utilized to accomplish these
purposes.
Our agreement with InfoSpace further provides that InfoSpace will
maintain all telephone lines and other communication transmission
devices to enable our site to access the InfoSpace network. In
summary, on behalf of our advertisers, we have the right to:
add hypertext to their business listings, which will enable point
and click access from yellow page directories in the InfoSpace
network to their Vequity websites;
permit users to link to advertiser websites on our site;
use Page Express, a website building tool, for creating, editing
and updating Vequity websites;
use InfoSpace Publisher, a tool for integrating listing
enhancements on a listing by listing basis;
display the Directory content in response to queries and searches
made on the specific query page, and
share in the revenue from the sale of banner advertisements that
are displayed on the co-branded pages and that adhere to the
standards of InfoSpace and Vequity.
Under the InfoSpace Co-branding Agreement, we will be able to
give our users all of the search capacity of an established
Internet portal and search engine, while avoiding many of the
delays and problems of a start-up company. The Vequity Home Page
provides instant linkage to all of the resources and assets of
the InfoSpace portal, and the headings and links will be
presented in Vequity's name and unique format.
On the Vequity Home Page, our Yellow Pages & Business Website
Directory search fields will be the most prominently displayed.
Additional search headings and links include:
<TABLE>
<S> <C> <C> <C> <C>
My Vequity Kid's Web Search Classifieds Finance News
Search the Web Email Search Recreation Movies Entertainment
White Pages Home & Family Reference Society Weather
City Guides Health Center International Science Travel
Maps Public Records Television Regional World
Sports Chats &Boards Personals Calendar
To see an example of the Vequity Home Page, view the inside cover of this prospectus or go
to http://www.vequity.com.
We believe that as businesses and consumers come to discover the breadth of information we
intend to make available on our website, they will make longer and more frequent visits to
our site. If visitors to our website are pleased with what they find, we believe they will
return and that we will be able to establish user loyalty to grow and take a place as a
significant Internet resource.
Our management wants to focus on selling and centralizing websites. A key feature of our
business plan is the turnkey service we intend to provide to our advertisers wherein we
will create, develop, host and maintain business websites in our centralized Yellow Pages
& Business Website Directory for one-year periods. Each website will contain graphics,
text, and if requested, e-commerce capabilities.
Additionally, our website advertisers will receive priority listings in the categories
(i.e. restaurants, physicians, real estate agents, etc.) where they will be found.
By providing advertisers with priority Internet yellow page listings; access from a large
number of Internet portals and other yellow page directories; and the creation,
development, hosting and maintenance of individualized websites; we will offer our
advertisers a one-stop resource that will open their business to Internet commerce.
We believe these enhancements, when coupled with the advantages
of our InfoSpace alliance and stock ownership in Vequity, will
give businesses good reasons to choose us as their resource for
Internet advertising.
For customers already having a website elsewhere, we will provide
a hot-link from our Yellow Pages & Business Websites Directory to
their existing site and we intend to reduce their website fee.
Markets and Competition
The Internet has rapidly emerged as an important medium for
facilitating communication, disseminating information and
conducting commerce. Buying and selling on e-marketplaces is
expected to boom to $2.7 trillion by 2004, according to Forrester
Research Inc. (eWeek Magazine, May 2000).
The Yankee Group conducted a similar study for
business-to-business e-commerce transactions and they estimate
that the value of goods and services sold over the Internet will
reach almost $3 trillion in 2004 (PC Magazine, June 2000).
As Internet usage has grown, advertisers have devoted increasing
portions of their advertising and marketing budgets to online
advertising and direct marketing. We believe this trend will
continue. Forrester Research also estimates that worldwide
Internet advertising spending will grow from approximately $3.3
billion in 1999 to approximately $33.1 billion in 2004.
Internet accessibility, and ease of use, are factors that we
believe will contribute to the growth of Internet usage and
e-commerce. For instance, International Data Corporation, a
market research firm, estimates that nearly 62 million people
will use wireless devices to access the Internet by 2003 and an
increase of about 728% over current levels (Red Herring, May
2000). Internet accessibility through computers and additional
devices currently in use, and other devices being developed,
provide ample opportunities for business and consumers to use the
Internet as a major resource for finding and purchasing products
and services.
The Internet is a potential marketing tool that can help level
the playing field and make it possible for anyone to put their
product, service, idea or even a hobby in front of millions, and
possibly turn it into a global business. The Internet has the
ability to become the great equalizer for both businesses and
consumers.
With all of the impressive devices and statistics, it is still
true, however, that relatively few businesses are reaching their
potential for obtaining significant sales from websites.
Likewise, relatively few customers are using the Internet for
traditional commerce.
There are numerous yellow page type directories and shopping
malls that are available on the Internet, but they all lack the
critical mass of advertising content that is needed to attract
consumers en masse. The success of the printed yellow page
directories is a result of semi-monopolies that have been created
by the Regional Bell Operating Companies. These directories have
a critical mass of advertising content and customers are
attracted to them because of the extensive and centralized
information.
Although the information that is available on the Internet is
plentiful, there is limited business information and it is not
well organized, easy to find, or centralized. Even well-known
media and communications companies have been unable to formulate
a business and marketing model that has duplicated the critical
mass of advertising content that exists in the printed
directories.
Marketing and Sales Strategies
To achieve the necessary critical mass of websites and
advertising content that will attract customers to Vequity for
Internet commerce, we intend to utilize a kick start marketing
and sales strategy that provides Vequity stock ownership to
advertisers with websites in our Yellow Pages & Business Websites
Directory accessible on www.vequity.com (See: The Investortiser
Concept-Capitalization and Loyalty, Page 32). The intention of
the Company is to create loyalty, renewable revenue, and a level
playing field for small and medium-sized companies to attract
customers and thereby compete more effectively. At some point,
our management intends to cease selling stock to advertisers and
to sell advertising only.
The essential strategy of Vequity is to create a cooperative
organization where Investortisers, and also non-equity
advertisers join in a strategic relationship and participate in
the control, management, promotion and destiny of electronic
commerce. Vequity intends to utilize numerous marketing and sales
channels to sell websites, including:
public presentations NASD and NYSE broker/dealers
associations non-profit organizations
the Internet advertising agencies
franchisors television, radio, and print media
public relations firms direct mail
word of mouth strategic relationships
Phase I Marketing and Sales: Public Presentations
Our first phase for selling websites and shares of our stock is
through public presentations in major U.S. cities. Prospective
Investortisers will be invited to presentations via radio and
print advertising. The cities selected for these presentations
will be chosen because of their size, income levels, Internet
usage, radio and print advertising rates and public relations
potential. These presentations will allow us to conduct this
offering without sales agents or licensed broker/dealers. We
believe that publicity for the public presentations will also
help build name recognition and interest in our concepts.
Phase II Marketing and Sales: Broker/Dealers and Other Third
Party Organizations
As soon as possible, we intend to involve licensed securities
representatives in selling our shares of stock and websites. We
also intend to involve other third party organizations that are
not securities licensed to sell only our websites. Our financial
projections include attractive initial commissions for the sale
of the shares offered herein and also attractive commissions for
the initial sale of websites. Additionally, our financial
projections provide attractive renewal commissions to registered
representatives if the Warrants offered herein are exercised by
Investortisers and attractive renewal commissions for those
individuals and/or organizations selling our websites.
We intend to develop a network of well-trained work at home
contractors to professionally design the websites to be hosted in
our Yellow Pages & Business Websites Directory. We will provide
training and tools for these contractors to design websites at
the volume that fits their needs and schedules. We believe there
are many people who will take advantage of an opportunity to work
for themselves in their own homes and who will enjoy the
creativity of designing and building websites for our customers,
using our templates and procedures. We also believe that the
income potential for these designers will attract educated and
easily trainable individuals.
The InfoSpace website design tools allow our designers to develop
sites with graphics, text, certain e-commerce functionality and
email capabilities. The tools also allow our designers to modify,
revise, supplement or enhance the websites of our advertisers.
The designers will also be responsible for registering the
websites with major Internet search engines and linking or
hot-linking our advertisers' business listings to our
advertisers' websites.
Employees
As of June 30, 2000, we had six individuals involved in the
development of the Company. From inception, we have also relied
on outside consultants and specialty organizations in the areas
of marketing and technical development. Our objective is to
continue to rely on outside experts and organizations as much as
possible. However, we intend to hire certain senior executives
and support personnel as our resources and needs require.
Specifically, we will hire a Chief Operating Officer, a Chief
Financial Officer, a Chief Marketing and Sales Officer, Senior
Sales and Marketing Executives and other personnel as needed.
Facilities
Our principal executive offices are located in Littleton,
Colorado where we lease approximately 2100 square feet under a
lease that expires on August 31, 2001. Our principal facility
will not be adequate to meet our needs beyond the near-term
future.
We have no regional sales offices, but we anticipate that we will
establish regional offices in the future.
We are a development stage company with no operating history. We
have not had any revenues from operations since our beginning as
a company. From inception to date, our efforts have been directed
to fund raising, the development of our concept of centralizing
business websites into a single Internet yellow page type
directory and to establishing strategic alliances. We do not have
relevant financial operating data that will provide a basis for
evaluating our proposed business or prospects. Our plan of
operation for the next twelve months is designed to build a
platform of advertisers and investors through public
presentations and through this offering from which we can expand
our Internet presence and name recognition. Our plan is intended
to provide an Internet presence for our advertisers that will
effectively promote their businesses.
This discussion of our financial condition and plan for future
operations should be read in conjunction with the financial
statements and related notes to the financial statements included
elsewhere in this Prospectus (See FINANCIAL STATEMENTS AND
ADDITIONAL INFORMATION, Page 45). This discussion is based upon
forward-looking statements and plans that involve risks and
uncertainties. Our actual experience may differ materially from
those anticipated in our forward-looking plans and concepts as a
result of numerous factors, including those set forth set forth
under RISK FACTORS (Page 9) and elsewhere in this Prospectus.
Plan of Operations for the Next Twelve Months
A critical aspect of our plan that is intended to allow us to
move forward is an Enhancements and Co-branding Agreement with
InfoSpace.com, Inc., an information resource and search engine
already established on the Internet. InfoSpace has an established
yellow page directory with approximately 18 million existing
listings for businesses in the U.S. and Canada and this content
is available in our Yellow Pages & Business Websites Directory.
Additionally, on our site, we provide much of the other content
that InfoSpace has already established.
This stock offering is another critical aspect of our plan and it
is intended to provide the funds necessary to carry on a
marketing effort and to establish operations. Without funds
provided from this offering, our plan could not proceed as
contemplated.
We intend that the implementation phase for kickoff of our
business efforts will be to advertise via radio and newspapers
and invite prospective website advertisers and Investortisers to
attend public presentations where they may learn of our concepts
and plans. We will conduct these presentations in major U.S.
cities that will be selected because of their size, income
levels, Internet usage, radio and print advertising rates and
public relations potential. The number of presentations and the
pace at which we are able to proceed will depend upon the success
of this offering. These presentations will allow us to conduct
this offering without sales agents or licensed broker/dealers. We
believe that the publicity for the presentations will also help
build name recognition and interest in our concepts.
These public presentations will introduce the participants to the
benefits of centralizing business websites on the Vequity site.
We will also introduce the Investortiser concept. These two major
concepts, centralization and ownership, constitute the core of
our marketing strategies for at least the next twelve months. The
Investortiser feature reserves for those businesses or
individuals purchasing advertising, the opportunity to purchase
shares of our stock in this offering. This plan is intended to
present an incentive for our investor/advertisers to continue
purchasing our yellow page advertising services because, as part
owners, they stand to share in the benefits from any growth or
success we are able to achieve. We believe that coupling stock
ownership in our Company with the purchase of website advertising
services, will provide an initial and ongoing revenue stream from
shareholders who have a fundamental interest in our profitability
and success. This advertising base is intended to allow us to
achieve a reasonably stable revenue stream from which we can
sustain operations and expand our efforts to enlist advertisers
for the directory services we will offer.
Contemporaneously with our marketing and sales efforts, we intend
to establish a network of work at home independent contractors to
professionally design the websites to be hosted in our Yellow
Pages & Business Websites Directory. We will build and provide
training and tools for these contractors to design websites for
our advertisers. We intend to train our contractors to develop
sites with graphics, text, certain e-commerce functionality and
email capabilities. These contractors will modify, revise,
supplement or enhance the websites of our advertisers. The
designers will also be responsible for registering the websites
with major Internet search engines and linking or hot-linking our
advertisers' business listings to our advertisers' websites.
Providing a hot-link from our advertiser's listing in our Yellow
Pages & Business Websites Directory is a key advantage that we
intend to offer to our advertisers. When a potential customer
finds the listing of a Vequity advertiser in certain Internet
directories, that customer will be able to click-on on the
listing and be hot-linked to the specific advertiser's website
that is hosted with Vequity.
Obviously, the plan we intend to pursue presents major challenges
for the next twelve months and beyond. We will need to
simultaneously proceed down the paths of attracting advertisers
and investors through sales and marketing efforts while
developing the ability to create websites and listings with
hot-links to the advertisers individually designed websites.
Additional challenges include: achieving name recognition and
branding; hiring and establishing a management team in the next
twelve months to proceed with our plan; and bringing in the right
employees at the right pace. Our management believes that the
rewards of successful implementation of our plan can be
substantial, but also realizes the high risks inherent in
attempting to establish this enterprise. We do not currently have
the funds necessary to proceed with our plan and are dependent
upon funds from this offering to proceed. The degree of success
we are able to achieve in placing this offering will dictate the
pace at which we are able to proceed.
The Investortiser Method and System for Capitalizing a Business
and Maintaining a Customer Base and/or Revenue Base is a system
developed by our CEO and President, Thomas H. Moore. A patent
application on this system was filed with the U.S. Patent and
Trademark Office on January 5, 1999. The patent application is
currently pending. On July 1, 2000 Thomas H. Moore granted us a
non-exclusive license allowing us to use the Method and System in
capitalizing our business and maintaining our customer and/or
revenue base. The license allows us to use the Method and System
on a worldwide basis for a term of ten (10) years, but does not
allow us to transfer, distribute or license the Method and System
to any other person or entity. As consideration for the license
we will pay Thomas H. Moore the sum of One Dollar ($1) per year
payable annually on the anniversary date of the License
Agreement. The license also allows us to use the term
Investortiser which has a Service Mark that is owned by Mr.
Moore. We consider the Investortiser concept to be a key
component of our business strategy and development plan.
Certain of our Directors, Executive officers or principal
shareholders have received loans from us and are owed delayed
compensation. See EXECUTIVE COMPENSATION on page 44 for further
explanation.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Stock Legend and Restrictions On Trading And Transfer Of Stock
Any shares purchased in this offering or issued as a result of
the exercise of the Warrants will be restricted as to their
transferability as set forth below. There is no established
trading market or price for our shares. We do not currently
intend to register with The Nasdaq-Amex Market Group or any other
exchange or market until our Management, in its sole discretion,
determines to remove the legend and make application for
inclusion in a national market. The reason for this restriction
is to allow us to build a base of shareholder/advertisers and to
establish a business base before entering the public trading
market. The Company's transfer agent will not transfer these
shares unless approved by the Company, after consulting with
counsel and determining that the transfer is in compliance with
the terms of the Subscription Agreement, or until the terms of
the Warrants or the legend is removed by our Management, in its
sole discretion.
The following provision are set forth in the Subscription
Agreement:
Any recipient of shares purchased in this offering or issued as a
result of the exercise of the Warrants may transfer the shares to
the Holders' immediate family members by transfer or inheritance.
Immediate family members shall mean the spouse or children of a
shareholder. In addition, a shareholder may transfer its interest
to an LLC, partnership, corporation, trust or other entity
controlled by such shareholder or such shareholder's immediate
family members. All Holders agree to the restrictions and
transfers specified herein.
(2) The following legend will appear on the certificate
evidencing the shares purchased in this offering:
The shares evidenced by this certificate are subject to transfer
restrictions and may not be transferred without prior approval of
Vequity Corporation's Management, after consulting with counsel
to determine that the conditions set forth in the Subscription
Agreement, pursuant to which these shares were purchased, have
been satisfied; or until this legend is removed by the Company's
Management, in its sole discretion.
Lock-up Agreement of Certain Principal Shareholders
As of the date of this Registration Statement, prior to this
offering, we have 41,000,000 shares of common stock issued and
outstanding. Assuming that all of the shares offered in this
offering are sold, we would have 45,000,000 shares outstanding
and the purchasers of the shares offered hereby would hold
approximately 9.75% of our issued and outstanding shares. If all
of the Warrants offered in connection with the shares offered in
this offering are exercised, we would have 49,560,000 shares
issued and outstanding and the purchasers of the shares and
Warrants offered hereby would hold approximately 17.27% of our
issued and outstanding shares. At such time as our Management
determines to remove the legend on the shares sold in this
offering and to register with a national market, in an attempt to
establish a trading market for our shares, the number of shares
available for trading will be limited by a Lock-Up Agreement
entered into with certain of our officers, directors and
principal shareholders. The Lock-up Agreement limits the ability
of our officers, directors or principal shareholders holding
31,349,050 of our issued and outstanding shares to place their
shares on the market for sale immediately following the time that
a market is established for the trading of our shares. The
Lock-up Agreement provides that for a six-month period following
the removal of the legend from the shares or the registration of
the Company's shares with a trading market, Holders of shares
subject to the Lock-up Agreement may not place their shares on
the market for sale through a national market or stock exchange.
Upon the expiration of the six month period from the time the
legend is removed and the Company's shares are registered with a
trading market, the Lock-up Agreement will expire and the
shareholders subject to the Lock-up Agreement will no longer be
bound by its terms. Thereafter, these shareholders will be
subject to the terms and restrictions of Rule 144 for the sale of
their shares. (See Shares Eligible for Future Sale Page 41,
below.) The following sets forth the identity of the shareholders
subject to the Lock-Up Agreement and the number of shares held by
each such person:
The following is a list of the Directors, Executive Officers,
Advisors and Affiliates of the Company who have consented to the
Lock-up Agreement described above.
Name & Address Number of Shares
-------------- ----------------
Thomas & Kathleen Moore 21,413,750
Joe L. Cook, et al 2,475,000
Marilyn M. Call (Wife of John R. Call) 1,762,500
Dirk L. Cline 1,230,000
Richard W. James 1,200,000
Ronald E. Moitzfield (1) 1,000,000
Thomas & Kathleen Moore Children 900,000
Jacquelin K. Reeves 717,800
Todd A. Gibson (2) 500,000
J. Brent Garfield 150,000
Directors, Executive Officers,
Advisors and Affiliates as a Group 31,349,050
At such time as the legend on the shares issued as a result of
this offering is removed and we register with a trading market to
attempt to establish a trading market for our shares, the number
of shares available for sale will have an effect on the market
price that may be established for such shares. We cannot predict
the precise effect that the number of shares available for
trading will have or what, if any, market will be established.
Future sales of substantial numbers of shares of common stock in
a public market could adversely affect whatever market price
might be prevailing for such shares. Substantial numbers of
shares for sale on a public market could also affect our ability
to raise capital through the sale of securities.
Upon completion of this offering, assuming all the offered shares
are sold, we will have issued and outstanding 45,000,000 shares.
If all of the Warrants offered in connection with the shares
offered in this offering are exercised, we will have 49,560,000
shares issued and outstanding. Of this number of shares, all of
the shares sold in this offering or issued as a result of the
exercise of the Warrants will be freely tradable upon removal of
the legend by our Management, unless these shares are purchased
by affiliates as that term is defined in Rule 144 under the
Securities Act. Of the remaining 9,650,950 shares of common stock
held by existing shareholders, 8,656,600 shares are restricted
securities as that term is defined in Rule 144 under the
Securities Act and 994,350 shares are unrestricted securities.
Restricted securities may be sold in the public market if
registered or if they qualify for an exemption from registration
under Rule 144 under the Securities Act, which Rule is summarized
below. Unrestricted securities are free trading, but no public
market will exist for the shares until Management registers all
shares with a national market or stock exchange.
Affiliates of Vequity holding restricted securities will be
subject to the requirements of Rule 144 for the sale of their
shares. Affiliates are those persons who control, are controlled
by, or under common control with Vequity. This also includes
relatives and spouses of such control persons. In general, under
Rule 144 as currently in effect, a person who has beneficially
owned shares of our common stock for at least one year would be
entitled to sell within any three month period a number of shares
that does not exceed the greater of:
1% of the number of shares of our common stock outstanding. This
will equal 49,560 shares, if all shares offered in this offering
are sold and all Warrants are exercised.
the average weekly reported volume of trading on all national
securities exchanges during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to the sale.
Sales under Rule 144 are also subject to the provisions of Rule
144 requiring the availability of public information, notice
requirements and that the sales be made in brokers' transactions.
Persons who are, or have been, non-affiliates of Vequity for at
least three months prior to a sale and who have held their shares
for two years, are entitled to sell their shares without
complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted by the Lock-up Agreement these shares held
by non-affiliates who have met the two-year holding period
requirement may be sold immediately. Shares that qualify for
immediate trading and the offering of such shares for sale, could
have an adverse affect on the market price of our shares if, or
when, a trading market is established. As of the effective date
of this offering, there were approximately 215 non-affiliate
shareholders.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Our consolidated financial statements as of June 30, 2000 have
been included herein in reliance on the report of Hein +
Associates, LLC, independent Certified Public Accountants,
appearing elsewhere herein, given upon the authority of that firm
as experts in auditing and accounting. Hein + Associates has no
interest in our Company.
The validity of the securities being offered hereby will be
passed upon on our behalf by J. Brent Garfield, 9901 West 50th
Avenue, Wheat Ridge, Colorado 80033. Mr. Garfield has acted as
our legal counsel in the preparation of this Registration
Statement, is our corporate secretary and has received 150,000
shares of our common stock for his work in representing the
Company.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Our Articles of Incorporation provide that we indemnify any
person made party to a threatened, pending or
completed action, suit, civil, criminal, administrative or
investigative proceeding, whether formal or informal, because
such person was or is serving as a Vequity Director or officer.
This indemnity extends to officers and Directors upon a
determination by the Board of Directors that the person being
indemnified acted in good faith and reasonably believed that his
or her conduct was in our best interest. In a criminal matter the
indemnity is extended if it is determined by the Board of
Directors that the person being indemnified had no reasonable
cause to believe that his or her action was unlawful. Indemnity
does not extend to an officer or Director if such person is
adjudged liable to us or is adjudged liable on the basis of
having derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to Directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that,
in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in
conjunction Financial Statements and with Management's Discussion
and Analysis of Financial Condition and Results of Operations
elsewhere in this Prospectus. The Statement of Operations data
for the years ended December 31, 1998 and December 31, 1999 and
the Balance Sheet at December 31, 1999 are derived from financial
statements of Vequity Corporation, that have been audited by Hein
and Associates LLP, independent accountants, and are included
elsewhere in this Prospectus. The Statement of Operations data
for the 6-month periods ended June 30, 1999 and June 30, 2000,
and from Inception to June 30, 2000 and the balance sheet data for June 30, 2000 are
derived from unaudited financial statements of Vequity Corporation. The unaudited
financial statements have been prepared on substantially the same basis as the audited
financial statements and, in the opinion of Management, include a fair presentation of the
results of operations for such periods. Historical results are not necessarily indicative
of the results to be expected in the future, and the results of interim periods are not
necessarily indicative of results for the entire year.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement Of Operations:
<S> <C> <C> <C> <C> <C>
Cumulative
From
November 14,
1995
For The Six Months For the Years (Inception)
Ended June 30, Years Ended to June 30,
2000 1999 1999 1998 2000
------------------- --------------- -----------------
Operating Expenses:
General and administrative $400,336 $120,137 $183,892 $344,278 2,196,848
(400,336) (120,137) (183,892) (370,12) (2,196,848)
Interest Expense, net 1,125,245 103,026 184,624 97,929 1,689,102
$(1,525,581) $(223,163) (368,516) (442,207) (3,885,950)
Net Loss Per Common Share:
Basic and diluted $ (.04) $(.01) $(.01) $(.01)
Weighted Average Common Share
Outstanding:
Basic and diluted 37,716,000 35,709,000 35,787,000 34,259,000
</TABLE>
<TABLE>
Consolidated Balance Sheet Data:
<S> <C> <C>
Balance Sheet
------------- June 30, 2000 December 31, 1999
------------- -----------------
Total Assets $220,711 $ 26,013
Total Current Liabilities $641,155 1,002,247
Redeemable Series A Preferred Shares $200,000 200,000
Redeemable Series A Preferred Shares $684,469 20,000
Total Shareholder's Deficit ($1,304,913) ($1,196,234)
</TABLE>
[CAPTION]
EXECUTIVE COMPENSATION
To date, our officers have agreed to certain amounts of cash
compensation. However, our officers have also agreed to delay
actual payments to them until the Company has sufficient funding.
If this offering is successful, we have agreed to pay this
delayed compensation to four of our officers, including to our
Chairman, President and Chief Executive Officer, Thomas H. Moore.
The actual amounts of delayed compensation are shown in the
following table:
Summary - Compensation Table
The following table sets forth all compensation awarded to,
earned by or paid to our chief executive officer, Thomas H. Moore
and our other most highly compensated executive officers as of
June 30, 2000.
Delayed Compensation Through June 30, 2000
Thomas H. Moore,
Chief Executive Officer and President $243,685
Jacquelin K. Anderson-Reeves
Vice President and Data Management $60,000
Todd A. Gibson, Vice President of Technology $64,640
Dirk L. Cline, Vice President $63,235
We have made loans to Thomas H. Moore that total approximately
the same as the amounts owed to him for delayed compensation. He
will repay the loans to us from the delayed compensation owed to
him.
Annual Compensation
There are no current contracts with any of our Directors,
Executive Officers or other key persons. However, it is
anticipated that if this offering is successful and our business
plan is implemented, that base compensation will be fixed for our
executive officers in the range of $90,000 to $175,000 per year
for the first year. Additionally, we may consider a bonus or
incentive plan for our officers and key employees, based upon our
performance. However, at this time no such plan has been agreed
to, designed or implemented.
Stock Ownership
We have transferred shares to executive officers over the past
several years as a form of compensation for services rendered to
us. Since our shares are essentially worthless, these share
transfers have represented a willingness of our officers to
render services with the hope that at some future time the
business plan might be implemented and prove successful. The
following shares have been issued to our executive officers in
consideration for the services they have rendered and intend to
render in the future.
Name Common Shares Preferred
Shares
Thomas H. Moore 22,313,750 N/A
Ronald E. Moitzfield 1,000,000 N/A
Dirk L. Cline 1,230,000 N/A
Todd A. Gibson 500,000 N/A
Jacqueline K. Reeves 459,800 N/A
Director Compensation
We reimburse each member of our Board of Directors for
out-of-pocket expenses incurred in connection with attending
board meetings. We intend to pay each member of our Board who is
not an employee a Director fee for attending meetings of the
Board of Directors and committee meetings.
<TABLE>
<CAPTION>
VEQUITY CORPORATION
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
<S> <C>
PAGE
----
Independent Auditor's Report ............................................. 2
Balance Sheet - June 30, 2000 (Unaudited) and December 31, 1999.......... 3
Statements of Operations - For the Six Months Ended
June 30, 2000 and 1999 (Unaudited), For
the Years Ended December 31, 1999 and 1998,
and Cumulative from November 14, 1995
(Inception) to June 30, 2000 (Unaudited) ................................ 4
Statement of Changes in Shareholders' Deficit
For the Period from November 14, 1995 (Inception)
to December 31, 1999 and January 1, 2000 to
June 30, 2000 (Unaudited) ............................................... 5
Statements of Cash Flows
For the Six Months Ended June 30, 2000 and
1999 (Unaudited), For the Years Ended
December 31, 1999 and 1998, and Cumulative
from November 14, 1995 (Inception)
to June 30, 2000 (Unaudited) .......................................... 7
Notes to Financial Statements ............................................. 8
</TABLE>
[CAPTION]
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Vequity Corporation
Littleton, Colorado
We have audited the accompanying balance sheet of Vequity
Corporation (a development stage company) as of December 31, 1999
and the related statements of operations, changes in
shareholders' deficit and cash flows for the years ended December
31, 1999 and 1998 and for the period from November 14, 1995
(inception) through December 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide 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 Vequity Corporation as of December 31, 1999, and the results
of its operations and its cash flows for the years ended December
31, 1999 and 1998 and for the period from November 14, 1995
(inception) through December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company has incurred
substantial losses from operations, has current liabilities in
excess of current assets and is in the development stage. These
factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans with regard to
these matters are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome
of these uncertainties.
Hein + Associates, LLP
Denver, Colorado
June 12, 2000
<TABLE>
<CAPTION>
VEQUITY CORPORATION
(A Development Stage Company)
<S> <C> <C>
June 30, December 31,
2000 1999
-------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 164,635 $ 35
Note receivable 21,250 -
Receivable, related party 21,700 21,700
-------- -----------
Total current assets 207,585 21,735
Equipment and Furniture, net 13,126 4,278
-------- -----------
$ 220,711 $26,013
Current Liabilities: ======== ===========
Accounts payable $ 97,257 $97,257
Accrued consulting expenses 324,808 401,560
Accrued interest and other expenses 89,416 73,206
Notes payable, related parties 129,674 430,224
-------- -----------
Total current liabilities 641,155 1,002,247
Redeemable preferred stock, $.001 par value,
500,000 shares authorized, liquidation
preference $1.00 per share:
Series A, 200,000 (unaudited) and 200,000
shares issued and outstanding, respectively 200,000 200,000
Series B, 684,469 (unaudited) and 20,000 shares
issued and outstanding, respectively 684,469 20,000
Commitments (Note 4)
Shareholders' Deficit:
Common stock, $.001 par value; 100,000,000
shares authorized, 39,859,500 and 35,949,232
shares issued and outstanding, respectively 39,860 35,949
Subscriptions receivable (64,800) (64,800)
Additional paid-in capital 2,605,977 1,192,986
Deficit accumulated during the development stage (3,885,950) (2,360,369)
-------- -----------
Total shareholders' deficit (1,304,913) (1,196,234)
-------- -----------
Total Liabilities and Shareholders' Deficit $ 220,711 $26,013
======== ===========
See accompanying notes to these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEQUITY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Cumulative From
November 14, 1995
For The Six Months For the Years Ended (Inception)
Ended June 30, December 31, to June 30, 2000
------------------ ------------------- ----------------
2000 1999 1999 1998 (Unaudited)
(Unaudited)*******
Operating Expenses:
General and administrative $ 400,336 $120,137 $ 183,892 $ 344,278 2,196,848
------- ------- ------- ------- ---------
Loss From Operations (400,336) (120,137) (183,892) (370,128) (2,196,848)
Interest Expense, net 1,125,245 103,026 184,624 97,929 1,689,102
------- ------- ------- ------- ---------
Net Loss (1,525,581) (223,163) $(368,516) $(442,207) $(3,885,950)
Net Loss Per Common Share: ========= ========= ========= ======== ===========
Basic and diluted (.04) (.01) (.01) (.01)
Weighted Average Common Shares
Outstanding:
Basic and diluted 37,716,000 35,709,000 35,787,000 34,259,000
========== =========== ========== ===========
See accompanying notes to these financial statements.
</TABLE>
<TABLE>
<CAPTION>
VEQUITY CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
FROM NOVEMBER 14, 1995 (INCEPTION) TO DECEMBER 31, 1999
AND JANUARY 1, 2000 TO JUNE 30, 2000 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Additional
Common Stock Subscriptions Paid-In Accumulated
Shares Value Receivable Capital Deficit Total
------------ ----- ------------- ---------- ----------- -----
Balances,
November 14, 1995 - $ - $ - $ - $ - $ -
Founders' Shares 30,706,200 30,706 - (6,506) - 24,200
Stock purchase
($.06 to $.22/share) 125,000 125 - 14,875 - 15,000
Net loss - - - - - -
------------ ----- ------------- ---------- ----------- -----
Balances,
December 31, 1995 30,831,200 30,831 - 8,369 - 39,200
Stock purchase
($.50/share) 369,500 370 (37,700) 188,130 - 150,800
Stock issued for interest
($.30/share) 358,000 358 - 107,042 - 107,400
Stock for services
($.01/share) 20,000 20 - - - 20
Stock for services
($.30 to $.40/share) 1,153,230 1,153 - 318,146 - 319,299
Stock purchase
($1.00/share) 44,070 44 (27,100) 44,026 - 16,970
Net loss - - - - (668,943) (668,943)
------------ ----- ------------- --------- ----------- ------
Balances,
December 31, 1996 32,776,000 32,776 (64,800) 665,713 (668,943) (35,254)
Stock purchase
($.01/share) 575,000 575 - - - 575
Stock purchase
($1.06/share) 67,000 67 - 4,229 - 4,296
Stock for services
($.30/share) 106,600 107 - 31,873 - 31,980
Stock issued for interest
($.30/share) 678,500 678 - 202,872 - 203,550
Net loss - - - - (880,703)(880,703)
------------ ----- ------------- --------- ----------- ------
Balances,
December 31, 1997 34,203,100 34,203 (64,800) 904,687 (1,549,646)(675,556)
Stock purchase
($.05/share) 925,350 925 - 48,525 - 49,450
Stock for services
($.50/share) 66,000 66 - 19,734 - 19,800
Stock for services
($.20 to $.25/share) 222,000 222 - 66,378 - 66,600
------------
Net loss - - - - (442,207)(442,207)
Balances,
December 31, 1998 35,416,450 35,416 (64,800) 1,039,324 (1,991,853)(981,913)
Stock issued for
interest ($.30/share) 425,000 425 - 127,075 - 127,500
Stock for services
($.50/share) 1,000 1 - 499 - 500
Stock for services
($.20 to $.25/share) 106,782 107 - 26,088 - 26,195
Net loss - - - - (368,516)(368,516)
Balances,
December 31, 1999 35,949,232 35,949 (64,800) 1,192,986 (2,360,369) (1,196,234)
***
Reduction of
founder shares
(Unaudited) (2,685,950) (2,686) - 2,686 - -
Common shares
issued in conjunction
with preferred stock
offering (Unaudited) 2,205,694 2,206 - (2,206) - -
Stock gift
($.33/share)
(Unaudited) 150,000 150 - 49,350 - 49,500
Stock issued for
interest ($.32/share) 3,593,624 3,594 - 1,142,741 - 1,146,335
Stock issued for
services ($.33/share)
(Unaudited) 646,900 647 - 220,420 - 221,067
------------
Net loss (Unaudited) - - - - (1,525,581)(1,525,581)
Balances,
June 30, 2000
(Unaudited) 39,859,500 $39,860 $(64,800) $2,605,977 $(3,885,950)(1,304,913)
==========
See accompanying notes to these financial statements.
</TABLE>
<TABLE>
<CAPTION>
VEQUITY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<S> <C> <C> <C> <C> <C>
Cumulative From
November 14, 1995
For The Six Months For the Years Ended (Inception)
Ended June 30, December 31, to June 30,
2000
------------------ ------------------- ----------------
2000 1999 1999 1998 (Unaudited)
(Unaudited)
Cash Flows from Operating Activities:
Net loss $(1,525,581) $(223,163) $(368,516) $(442,207) $(3,885,950)
Adjustments to reconcile net
loss to net cash from operating
activities:
Depreciation and amortization - - 859 2,837 9,214
Interest expense paid by stock 998,444 82,500 127,500 - 1,584,785
Stock for services 221,067 26,695 26,695 86,400 685,461
Stock issued as donation 49,500 - - - 49,500
Changes in assets and liabilities:
(Increase) decrease in:
Receivable - related party - 11,427 11,427 (11,427) (21,700)
Increase (decrease) in:
Accounts payable - 16,209 16,209 (54,853) 97,257
Accrued expenses (60,542) 76,388 117,983 52,400 414,224
------- -----
Net cash used in operating activities (317,112) (9,944) (67,843) (366,850) (1,067,209)
------- ----- ------ ------- ---------
Cash Flows from Investing Activities:
Increase in note receivable (21,250) - - - (21,250)
Purchase of equipment
and furniture (8,848) - - (3,204) (22,340)
-------
Net cash used in investing activities (30,098) - - (3,204) (43,590)
Cash Flows from Financing Activities: -------
Proceeds from common stock - - 1,500 49,450 360,291
Proceeds from preferred stock 516,578 - - 125,000 736,578
Advances under related party notes - 26,500 110,067 149,400 385,718
Payments of related party notes (4,768) (16,600) (43,733) (32,630) (207,153)
Net cash provided by -------
financing activities 511,810 9,900 67,834 291,220 1,275,434
Net Increase (Decrease) in Cash -------
and Cash Equivalents 164,600 (44) (9) (78,834) 164,635
Cash and Cash Equivalents,
beginning of period 35 44 44 78,878 -
Cash and Cash Equivalents, -------
end of period $164,635 $ - $ 35 $ 44 $ 164,635
Supplemental Cash Flow Information: =======
Cash paid for interest $ - $ - $ - $ - $ -
Cash refund of income taxes $ - $ 11,427 $ - $ -
Notes payable converted to
preferred stock $147,891 $ - $ - $ - $ 147,891
See accompanying notes to these financial statements.
</TABLE>
[CAPTION]
VEQUITY CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies:
Nature of Business Operations - Vequity Corporation (a
development stage company) (the "Company") is an Internet
advertising and transaction company and was formed in 1995. To
date, the Company's activities have consisted exclusively of
raising capital, structuring strategic relationships, developing
and testing an Internet-specific business directory and search
engine, and testing a new business model with potential
advertisers. As the Company has not yet commenced principal
operations, it is therefore still considered in the development
stage.
Liquidity - The Company has incurred losses of approximately
$2,360,000 through December 31, 1999, has current liabilities in
excess of current assets of approximately $1,000,000 and a
shareholders' deficit of approximately $1,196,000 at December 31,
1999. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans
include the simultaneous generation of advertising and Website
development revenues and equity financing through its business
model.
Cash and Cash Equivalents - The Company considers all highly
liquid investments with an original maturity of three months or
less to be cash equivalents.
Depreciation - Equipment and furniture are recorded at cost.
Depreciation is provided over the assets' estimated useful lives
of 5 to 7 years using accelerated methods. The cost and
accumulated depreciation of furniture and equipment sold or
otherwise disposed of are removed from the accounts and the
resulting gain or loss is included in operations. Maintenance and
repairs are charged to operations as incurred and betterments are
capitalized.
Research and Development Costs - Research and development costs
are charged to operations in the period incurred.
Loss Per Share - The loss per share is presented in accordance
with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128
replaced the presentation of primary and fully diluted earnings
(loss) per share (EPS) with a presentation of basic EPS and
diluted EPS. Basic EPS is calculated by dividing the income or
loss available to common shareholders by the weighted average
number of common 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 or converted
into common stock. Basic and diluted EPS were the same for 1999
and 1998 because the Company had losses from operations and
therefore, the effect of all potential common stock was
anti-dilutive.
Accounting Estimates - The preparation of financial statements in
conformity generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and the accompanying
notes. The actual results could differ from those estimates.
Impairment of Long-Lived Assets - In the event that facts and
circumstances indicate that the cost of assets or other assets
may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset would be
compared to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow value is
required.
Stock-Based Compensation - As permitted under the SFAS No. 123,
Accounting for Stock-Based Compensation, the Company accounts for
its stock-based compensation in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees. As such, compensation expense is
recorded on the date of grant if the current market price of the
underlying stock exceeds the exercise price. Certain pro forma
net income and EPS disclosures for employee stock option grants
are also included in the notes to the financial statements as if
the fair value method as defined in SFAS No. 123 had been
applied. Transactions in equity instruments with non-employees
for goods or services are accounted for by the fair value method.
Fair Value of Financial Instruments - The estimated fair values
for financial instruments under SFAS No. 107, Disclosures About
Fair Value of Financial Instruments, are determined at discrete
points in time based on relevant market information. These
estimates involve uncertainties and cannot be determined with
precision. The estimated fair values of the Company's financial
instruments, which includes cash, accounts payable, notes
payable, and other debt, approximate the carrying value in the
financial statements at December 31, 1999.
Income Taxes - The Company accounts for income taxes under the
liability method, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the
financial statements and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Recently Issued Accounting Pronouncements - SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, was
issued in June 1998. This statement establishes accounting and
reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This
statement is effective for the Company's financial statements for
the year ended December 31, 2001 and the adoption of this
standard is not expected to have a material effect on the
Company's financial statements.
Comprehensive Loss - In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS
No. 130, which is effective for fiscal years beginning after
December 15, 1997, defines comprehensive income as all changes in
shareholders' equity exclusive of transactions with owners, such
as capital investments. Comprehensive income includes net income
or loss, changes in certain assets and liabilities that are
reported directly in equity such as translation adjustments on
investments in foreign subsidiaries, and certain changes in
minimum pension liabilities. The Company's comprehensive loss was
equal to its net loss for all periods presented in these
financial statements.
Unaudited Information - The balance sheet as of June 30, 2000 and
the consolidated statement of operations for the six-month period
ended June 30, 2000 were taken from the Company's books and
records without audit. However, in the opinion of management,
such information includes all adjustments (consisting only of
normal recurring accruals) which are necessary to properly
reflect the financial position of the Company as of June 30, 2000
and the results of operations for the six months ended June 30,
2000.
2. Equipment and Furniture:
Equipment and furniture at December 31, 1999 consists of the
following:
Furniture and fixtures $4,695
Computers and equipment 8,521
Software and other 276
-----
13,492
Less accumulated depreciation
and amortization (9,214)
-----
$ 4,278
Depreciation and amortization expense of $2,359 and $2,837 was
charged to operations for the years ended December 31, 1999 and
1998, respectively.
3 Notes Payable, Related Parties
As of December 31, 1999 the Company had over 20 notes payable to
various stockholders with the majority in default at year-end.
Interest was paid in stock at the time the notes were signed,
with additional stock paid as default interest. Interest expense
was based on the value of the stock at the time of transaction.
In April 2000, approximately $119,000 of these notes were paid
and approximately $181,000 were converted into common and
preferred stock.
4. Commitments and Contingencies:
Offices Leases - The Company leases office space under a lease
which expires on August 31, 2001. Monthly lease payments are
approximately $2,682.
Office rent expense totaled $32,512 and $19,222 for the years
ended December 31, 1999 and 1998, respectively.
Accrued Consulting Expense - Due to limited working capital of
the Company, all of the Company's employees agreed with the
Company's Board of Directors to defer their salary until the
Company obtains funding through public of private offering. As of
December 31, 1999, a total of $401,560 was accrued and unpaid.
5. Income Taxes:
Under SFAS No. 109, deferred taxes result from temporary
differences between the financial statement carrying amounts and
the tax bases of assets and liabilities. The Company's deferred
tax asset of approximately $530,000 is the result of the net
operating loss carryforward, which has a 100% valuation allowance
resulting from the inability to predict sufficient future taxable
income to utilize the assets. The valuation allowance for 1999
increased by $73,000 from 1998. At December 31, 1999, the Company
has approximately $1,500,000 available in net operating loss
carryforwards which begin to expire from 2011 to 2019.
Total income tax expense for 1999 and 1998 differed from the
amounts computed by applying the U.S. Federal statutory tax rates
to pre-tax income as follows:
1999 1998
---- ----
Statutory rate (34.0%) (34.0%)
State income taxes, net of
Federal income tax benefit (3.3%) (3.3%)
Increase (reduction) in valuation
allowance related to net operating
loss carryforwards and change in
temporary differences 37.3% 37.3%
---- ----
$ - $ -
6. Stockholders' Equity:
The Board of Directors has the authority to designate and issue
preferred stock and to designate the rights, privileges and
preferences of each class of preferred stock.
In 1997 and 1998, the Company issued a total of 200,000 shares of
Series A Senior Redeemable and Convertible Preferred Stock
(Series A Preferred) for proceeds of $200,000. The Series A
preferred is redeemable at $1.00 per share and was originally
scheduled to be redeemed by the Company on or before January 1,
1999. Because the redemption did not occur as scheduled, in April
and May 2000, the Company entered into a settlement agreement
with the Holders whereby the Company issued a total of 2,500,000
shares of common stock and agreed to make cash payments totaling
$225,000 on or before June 15, 2001.
In 1999 the Company issued 20,000 shares of Series B Redeemable
and Convertible Preferred Stock (Series B Preferred) for proceeds
of $20,000. From January 1, 2000 through June 30, 2000, the
Company issued 664,469 shares of Series B Preferred for proceeds
of $664,469. The Series B Preferred is redeemable and convertible
at the sole discretion of the Company, under one of the following
options:
Option One - The Company will redeem the Series B Preferred for a
cash payment of $1.00 per share, within two years of the date of
purchase. If the cash payment is not made when due, a penalty of
$0.05 per share per month will accrue, up to a maximum penalty of
$1.00 per share. In addition, the Company will issue to the
Holder two of five shares of common stock for each share of
Series B Preferred purchased. The number of shares of common
stock to be issued is dependent upon the amount of the
shareholders investment.
Option Two - The Company may redeem and convert the Series B
Preferred shares for no cash and seven common shares for each
preferred share.
The Company intends to exercise Option One, therefore the Series
B Preferred shares have been classified outside of the
stockholders equity section of the accompanying balance sheet.
[CAPTION]
Additional Information
We have filed a registration statement on Form SB-2 under the
Securities Act with the Securities and Exchange Commission with
respect to the shares and Warrants offered hereby. This
prospectus, filed as a part of the registration, statement does
not contain all of the information contained in the registration
statement and exhibits and reference is hereby made to such
omitted information. Statements made in this registration
statement are summaries of the terms of referenced contracts,
agreements or documents and are not necessarily complete.
Reference is made to each exhibit for a more complete description
of the matters involved and these statements shall be deemed
qualified in their entirety by the reference. The registration
statement and the exhibits and schedules filed with the
Securities and Exchange Commission may be inspected by you at the
Securities and Exchange Commission's principal office in
Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of
the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549.The commission also maintains a website
(http://www.sec.gov) that contains reports, proxy statements and
information statements and other information regarding
registrants that file electronically with the Commission. For
further information pertaining to us and the shares and Warrants
offered by this prospectus, reference is made to the registration
statement.
We intend to furnish annual reports to shareholders that will
include audited financial statements reported on by our Certified
Public Accountants. In addition, we may issue unaudited quarterly
or other interim reports to shareholders, as we deem appropriate.
We will comply with the periodic reporting requirements imposed
by the Securities Exchange Act of 1934.
SUBSCRIPTION PROCEDURES
After the registration statement has been declared effective, we
will provide to each prospective investor a copy of the final
Prospectus relating to this offering that includes an agreement
to purchase shares of the Common Stock (the "Subscription
Agreement," Page 57). Completed Subscription Agreements, together
with the appropriate payment for the Common Stock, must be
delivered to one of our officers or Directors or mailed to our
office. (See "How to Subscribe, below)
Our acceptance of a subscription shall be evidenced solely by the
delivery to the Subscriber of a written confirmation of sale.
Receipt of a Subscription Agreement together with a tender of
payment for the subscribed shares as described herein shall not
constitute acceptance of a subscription. All subscription
payments and executed Subscription Agreements will be delivered
to our office for consideration for acceptance and for processing
of the written confirmation of sale.
We will process and consider for acceptance all qualified
subscriptions in the order received. Stock certificates will not
be issued to subscribers until such time as the funds related to
the purchase of Common Stock have been received by us and
subsequently clear our bank, or are determined to be good funds.
In the case of advertisers desiring to purchase shares or
exercise Warrants, we must also verify that a website has been
purchased or renewed before we will issue shares. Until such time
as stock certificates are issued to the subscribers, the
subscribers will not be considered shareholders of Vequity.
Subscribers will have the right to a return of their subscription
payment within 30 days of receipt, unless we accept such payment
and issue the written confirmation of sale. Any and all interest
earned on such funds will belong to Vequity and such funds will
not be escrowed.
How to Subscribe
Included on pages 57 and 58 of this Prospectus is a copy of our
Subscription Agreement (Agreement). It is the intent of the
Company to provide a separate copy of this Agreement to potential
investors, which they must complete in order to purchase the
Common Stock offered hereby. If a separate copy of the Agreement
has not been supplied along with this Prospectus, potential
investors may make copies of pages 57 and 58 herein. Please
complete and sign the Agreement and deliver the original, along
with a check made payable to "Vequity Subscription Account," to
one of our officers or Directors, or mail them to 2305 East
Arapahoe Road, Suite 220, Littleton, Colorado 80122. We recommend
that you make a copy of the original executed Agreement for your
files.
[CAPTION]
VEQUITY CORPORATION SUBSCRIPTION AGREEMENT
To Whom It May Concern:
The investor named below, by payment of the purchase price for
such Common Shares, by the delivery of a check payable to Vequity
Corporation, hereby subscribes for the purchase of the number of
Common Shares indicated below (minimum number two hundred shares)
of Vequity Corporation, at a purchase price of $5.00 per Share as
set forth in the Prospectus.
By such payment, the named investor further acknowledges receipt
of the Prospectus and the Subscription Agreement, the terms of
which govern the investment in the Common Shares being subscribed
for hereby. Specifically, the undersigned acknowledges and agrees
that the Shares issued hereby will be restricted as to
transferability and will bear a legend as set forth herein.
Subscriber agrees that shares purchased in this offering or
issued as a result of the exercise of the Warrants may not be
transferred, except to the Subscribers immediate family members
by transfer or inheritance. Immediate family members shall mean
the spouse or children of a shareholder. In addition, a
shareholder may transfer its interest to an LLC, partnership,
corporation, trust or other entity controlled by such shareholder
or such shareholder'S immediate family members. All Holders agree
to the restrictions and transfers specified herein.
There is no market established for the trading of the Shares
purchased in this offering and the Shares will be restricted as
to transferability until such time as Vequity's management in its
sole discretion determines to register with a national market or
other market and removes the legend from the shares. The
following legend will appear on the shares purchased in this
offering:
The shares evidenced by this certificate are subject to transfer
restrictions and may not be transferred without prior approval of
Vequity Corporations Management, after consulting with counsel to
determine that the conditions set forth in the Subscription
Agreement, pursuant to which these shares were purchased, have
been satisfied; or until this legend is removed by the Companys'
Management, in its sole discretion.
I. INVESTMENT:
(1) Advertiser: ( )Yes ( )No
If yes, number of shares to be purchased (check
only one): ( )200 ( )320 ( )400
(2) Non-Advertiser: Number of Shares (Minimum is 200
Shares): ___________
(3) Total Contribution: ($5 Per Share) $ _________________
II. REGISTRATION:
(1) Registered owner: _________________________
(2) Co-Owner: __________________________________
(3) Mailing address: ___________________________
_____________________________________________
Residence address (if different from above):
_____________________________________________
_____________________________________________
(4) Birth Date: _________ / __________ / __________
(5) Employee or Affiliate of Vequity ( )Yes ( ) No
(6) Social Security Number: _______ / _______ / ________
Co-Owner Social Security Number: _____ / _____ / _____
(7) Corporate or Custodial Taxpayer ID #: ________________
(8) ( ) U. S. Citizen ( ) Other
(9) Telephone Number: (Home) _________________________
(Business) _____________________
(10) E-Mail Address (Important For Communicating With
Shareholders):___________________________________________
III. OWNERSHIP: ( ) Individual ( ) Corporation
( ) Joint Tenants with Rights of Survivorship
( ) Pension / Trust
( ) Trust / Date Established _____ ( ) LLC
( ) Tenants in Common ( ) Tenants by the
Entirety
( ) Partnership ( ) Other _____________
IV. SIGNATURES: By signing below, I /we represent that I/we
meet the suitability standards set forth in the Prospectus.
Print Name of Registered Owner:
_________________________________________
Print Name of Registered Co-Owner:
______________________________________
Print Name of Custodian or Trustee:
_______________________________________
Signature of Authorized Owner:
__________________________________________
Signature of Authorized Co-Owner:
_______________________________________
Date:
Mail to:
Vequity Corporation
Thomas H. Moore
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
For office use only:
Date Received: _____________________
Date Deposited: ____________________
Date Accepted: __________________________
Date Rejected and Money Returned: _______
Check Number: _____________________
Check Date: _______________________
Subscriber's Check Amount: ________________________
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Limitations of Liability of Directors and Indemnification of
Directors and Officers
As permitted by the Colorado's business corporation law, our
Articles of Incorporation provide that our Directors and officers
shall not be liable to Vequity or its shareholders for any action
they may take, or omit to take, in their capacity as Directors or
officers if, in connection with such action or omission, the
Director or officer acted in good faith, with the care an
ordinary prudent person in a similar position would take, and in
a way that he or she believes to be in the best interests of the
corporation. In carrying out their duties, our Directors and
officers are entitled to rely upon the information, opinions,
reports, statements, financial statements and other financial
data prepared by others that the Director or officer reasonably
believes to be reliable and competent in the matters presented or
within such persons' professional or expert competence.
Further, as allowed under Colorado's business corporation law,
our Articles of Incorporation eliminates the personal liability
of our Directors to Vequity or its shareholders for monetary
damages for breach of fiduciary duty as a Director, except in the
following circumstances:
for breach of the Director's duty of loyalty to Vequity or its
stockholders;
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
for voting for or assenting to an unlawful distribution; or
for any transaction from which the Director derived an improper
personal benefit.
Our Director's and officer's do not have personal liability for
any injury to a person or property arising out of a tort
committed by our employees, unless the officer or Director was
personally involved in the tort or committed a criminal offense
in connection with the tort.
Our Articles of Incorporation provide that we indemnify any
person made party to a threatened, pending or
completed action, suit, civil, criminal, administrative or
investigative proceeding, whether formal or informal, because
such person was or is serving as a Vequity Director. This
indemnity extends to a Director upon a determination by the Board
of Directors that the Director being indemnified acted in good
faith and reasonably believed that his or her conduct was in our
best interest. In a criminal matter the indemnity is extended if
it is determined by the Board of Directors that the Director
being indemnified had no reasonable cause to believe that his or
her action was unlawful. Indemnity does not extend to a Director,
if the Director is adjudged liable to us or is adjudged liable on
the basis of having derived an improper personal benefit.
In addition to the indemnity provided to its Directors, we shall
advance the costs of defense to a Director named in a proceeding,
provided that the Board of Directors determines that the facts
known to the board do not preclude indemnification and that the
Director furnishes us with a written affirmation that he or she
has met the standards of conduct required of Directors by
Colorado law and that he or she will repay the advance if it is
ultimately determined that he or she did not meet the standard of
conduct required by Colorado law.
Our Articles of Incorporation also provide that our officers will
be indemnified and will have their
expenses advanced if they are involved in a legal proceeding as a
result of their service as an officer upon the same basis as the
Directors are indemnified.
Securities and Exchange Commission Filing Fee $ 13,728
Accounting Fees $ 25,000
Legal Fees $ 25,000
Printing and Engraving Fees $100,000
Edgar Filing Costs $ 500
Blue Sky Fees and Expenses $200,000
Transfer Agent Fees $ 50,000
Advertising and Promotion $550,000
Miscellaneous Expenses $ 35,772
Total $1,000,000
Since August of 1997 the Registrant has issued securities without
registration under the Securities Act in the following
transactions:
1. In 1996 the Registrant had made a Regulation D offering of
its common stock that was sold by the Registrant's management.
Many of the shares purchased in this offering were not issued
until a later date. Shares sold in this offering that were
issued within the past three years are as follows:
<TABLE>
<S> <C> <C> <C>
Name Date of Issue Number of shares Consideration Per Share
---- ------------- ---------------- -----------------------
Bruce E. Banke 12/3/1997 1,000 $0.50
Ross A. Banke 12/3/1997 1,000 $0.50
Dona Bustamante 06/29/1998 7,000 $0.71
Freda Darling 01/17/1998 10,000 $0.50
Raymond W. & Susan C. Evans 01/17/1998 10,000 $0.50
Timothy L. Foerster 01/17/1998 10,000 $0.50
Evette Higley 01/17/1998 600 $0.33
Fred C. Hill & Elaine C. Hill 01/17/1998 6,000 $0.50
Norman J. & Anita J. Schneider 01/17/1998 10,000 $0.50
L. Foerster IRA Acct. 01/17/1998 20,000 $0.20
Nicholas E. MacFalls 03/3/1998 1,250 $1.00
James D. Bechtel 04/30/2000 14,000 $0.50
2. On July 31, 2000, the Registrant issued 684,469 shares of preferred stock to
purchasers of the shares pursuant to a Regulation D offering pursuant to Rule 504 for a
consideration of $1.00 per share. The shares were sold by the Registrant's management.
Pursuant to conversion rights with respect to the preferred shares 2,398,570 shares of
common stock common have been issued to the purchasers of the preferred shares.
Individuals receiving common stock pursuant to the conversion rights are as follows:
Name Date of Issue Number of shares Consideration Per Share
---- ------------- ---------------- -----------------------
David G. Anderson 04/30/2000 40,000 conversion right
Lavell & Patti Edwards 04/30/2000 20,000 conversion right
Richard W. James 04/30/2000 120,000 conversion right
R. Marc Ferguson Living Trust 03/3/2000 20,000 conversion right
Rod E. Holcomb 01/21/2000 15,000 conversion right
Scott Robinson 04/6/2000 100,000 conversion right
Jack D. Anderson 02/15/2000 100,000 conversion right
Bijoux By Rebecca, Inc. 04/10/2000 100,000 conversion right
Robert L. Bland 02/15.2000 60,000 conversion right
William Carey 03/31/2000 10,000 conversion right
Patricia Carr 04/10/2000 20,000 conversion right
Gary N. Clark 03/6/2000 250,000 conversion right
Chari Crawford 02/1/2000 20,000 conversion right
Richard & Lisa Davis 04/30/2000 10,000 conversion right
Robert Dickson 05/5/2000 100,000 conversion right
Alvin G. Eisele & Doris Eisele 04/30/2000 21,530 conversion right
Leatrice Garcia 12/30/1999 10,000 conversion right
Steven & Laura Garvert 2/15/2000 10,000 conversion right
Dennis Graves 04/30/2000 11,290 conversion right
Harrison Investment LC Ret. Plan 02/1/00 20,000 conversion right
Claudia N. Hawley 02/2/2000 8,000 conversion right
Evette Higley 02/9/2000 10,000 conversion right
Fred C. Hill & Elaine C. Hill 03/7/2000 4,000 conversion right
Thomas N. Huckin 04/30/2000 40,000 conversion right
Scott & Elizabeth Jones 04/30/2000 13,082 conversion right
Craig A. Larson 04/30/2000 10,000 conversion right
Robert & Michelle Larson 04/30/2000 20,000 conversion right
Scott & Catherine Lemley 02/1/2000 10,000 conversion right
Jon Lutz 05/5/2000 100,000 conversion right
Elaine Manwaring 02/15/2000 2,000 conversion right
Michael P. McGrath 01/24/2000 12,000 conversion right
Travis & Sherri McQuivey 04/30/2000 5,000 conversion right
Steve Murphy 05/5/2000 10,000 conversion right
Henry & Diane P. Narvfaez 12/30/1999 10,000 conversion right
Paul & Wendy Naylor 03/16/2000 10,000 conversion right
Dwight D. & Janice J. Nissen 04/30/2000 5,759 conversion right
Bobbi Ann & George Peerless 02/9/2000 120,000 conversion right
James R. & Joan M. Penneck 04/30/2000 30,000 conversion right
04/30/2000 10,000 conversion right
Charles and Annie Preti 04/30/2000 10,000 conversion right
Eugene & Elizabeth Ramazetti 06/30/2000 10,000 conversion right
John D. Reid 02/23.2000 2,000 conversion right
Darrin & Devin Schallock 03/2/2000 5,000 conversion right
Robert & Sharon M. Schallock 01/24/2000 7,000 conversion right
Alvin J. & Odelia C. Schmidt 04/30/2000 5,759 conversion right
Gordon & Ester Seaver 03/13/2000 20,000 conversion right
Chad Shelly 03/2/2000 10,000 conversion right
Larry Starr 03/9/2000 20,000 conversion right
Nathaniel Tanner 03/31/2000 10,000 conversion right
Susan K. Torfin 03/6/2000 20,000 conversion right
Jack Turner 03/2/2000 2,000 conversion right
Brant Wadsworth 02/9/2000 28,000 conversion right
Danny & Anita Yin 03/6/2000 400,000 conversion right
3. In the past three years the Registrant has issued shares to a number of persons in
exchange for services rendered to the Company. These shares were issued directly from the
Company to the individuals. At the time of issue the shares were essentially without
value and the individuals involved accepted the shares in the hope that at some future
time the Company would be able to implement its business plan and commence operations.
Name Date of Issue Number of shares Consideration Per Share
---- ------------- ---------------- -----------------------
Gary A. Syddall 06/18/1998 5,000 Services
Todd A. Gibson 06/18/1998 60,000 Services
Marion & Mindy Harris 06/18/2000 1,000 Services
Charles Dekker & Susan Dekker 01/27/1999 6,675 Services
Phil & Veronica Hildebrand 01/27/1999 32,382 Services
Bill & Patricia Jorgensen 01/27/2000 1,000 Services
George & Julianna Sowards 01/27/2000 57,725 Services
Gary Sydall 01/27/2000 10,000 Services
Charles Dekker & Susan Dekker 10/1/1999 150,000 Services
Richard W. James 06/10/2000 80,000 Services
Dirk L Cline 04/30/2000 1,230,000 Services
Todd A. Gibson 04/30/2000 191,000 Services
Chris & Heather Hansen 04/30/2000 3,000 Services
Gwin Johnston 04/30/2000 25,000 Services
Ronald E. Moitzfield 04/30/2000 103,000 Services
Thomas H. Moore III 04/30/2000 9,000 Services
Jacqueline Reeves 04/30/2000 6,800 Services
Robert & Sharon M. Schalloock 04/30/2000 3,700 Services
Donald & Sandra Starks 04/30/2000 16,000 Services
Gary A. Syddall 04/30/2000 102,800 Services
Susan K. Torfin 04/30/2000 2,000 Services
Brant Wadsworth 04/30/2000 2,000 Services
Jack D. Anderson 02/15/2000 12,000 Services
Robert L. Bland 02/15/2000 2,000 Services
Robert Dickson 05/5/2000 2,000 Services
Kenneth Ead 08/31/2000 100,000 Services
Leatrice Garcia 12/30/1999 1,000 Services
Todd A. Gibson 11/29/2000 9,000 Services
Claudia N. Hawley 02/9/2000 6,000 Services
Evette Higley 02/9/2000 3,400 Services
J. Brent & Vicki H. Garfield 04/30/2000 150,000 Services
4. In the past three years the Registrant has issued shares to a number of persons who
have made loans to the Company. The shares were issued by the Company's management in
lieu of paying interest on loans. The transactions have been negotiated with the
individuals involved.
Name Date of Issue Number of shares Consideration Per Share
---- ------------- ---------------- -----------------------
Dennis Graves 11/13/1997 15,500 In lieu of interest on loan
Frederick & Robyn Balli 06/18/1998 220,000 In lieu of interest on loan
Roger G. Nedrow 06/19/1998 87,500 In lieu of interest on loan
Dwight D. & Janice J. Nissen 08/4/1998 10,000 In lieu of interest on loan
Timothy & Gail Foerster 08/4/1998 10,000 In lieu of interest on loan
James R. & Joan M. Penneck 10/29/1998 90,000 In lieu of interest on loan
Alvin J. & Odelia C. Schmidt 08/4/1998 10,000 In lieu of interest on loan
Alvin G. Eisele & Doris Eisele 07/29/1998 20,000 In lieu of interest on loan
Alvin G. Eisele & Doris Eisele 10/9/2000 20,000 In lieu of interest on loan
Frederick & Robyn Balli 01/27/1999 150,000 In lieu of interest on loan
Mary A. Ferguson Living Trust 02/25/1999 75,000 In lieu of interest on loan
Donald D. & Sandra C. Starks 04/15/2000 50,000 In lieu of interest on loan
Richard W. Davis & Lisa Davis 04/30/2000 23,500 In lieu of interest on loan
Richard W. Davis & Lisa Davis 04/30/2000 10,000 In lieu of interest on loan
Mary A. Ferguson Living Trust 04/30/2000 50,000 In lieu of interest on loan
Timothy & Gail Foerster 04/30/2000 5,758 In lieu of interest on loan
Dennis R. Graves 04/30/2000 3,500 In lieu of interest on loan
Colleen M. Jones 04/30/2000 30,000 In lieu of interest on loan
Scott & Elizabeth Jones 04/30/2000 18,000 In lieu of interest on loan
Scott & Elizabeth Jones 04/30,2000 30,000 In lieu of interest on loan
Frederick & Robyn Balli 04/21/2000 294,390 In lieu of interest on loan
R. Marc Ferguson Living Trust 03/15.2000 20,000 In lieu of interest on loan
Craig A. Larson 09/23/1998 50,000 In lieu of interest on loan
James R. & Joan M. Penneck 03/31/2000 100,000 In lieu of interest on loan
5.In the past three years the Registrant has issued shares to a number of persons who have
made loans to the Company. The shares were issued by the Company's management as
consideration to the individuals involved for advancing the loans. The transactions were
negotiated with the individuals involved.
Name Date of Issue Number of shares Consideration Per Share
---- ------------- ---------------- -----------------------
Scott C. & Kathy D. Robbins 09/11/1997 9,000 Loan
James D. Bechtel 07/23/1998 25,000 Loan
Craig A. Larson 09/23/1998 37,000 Loan
David G. Anderson 04/30/2000 45,000 Loan
</TABLE>
6. On November 22, 1997, the Registrant issued 75,000 shares of
preferred stock to Marilyn Call, the sister of Thomas H. Moore
and wife of John R. Call, Directors of the Company, for a
consideration of $0.93 per share. On January 17, 1998 125,000
shares of preferred stock were issued to JL Cook Trustee for Joe
L. Cook Company for a consideration of $0.13 per share. On April
30, 2000 the Registrant issued 1,125,000 shares of common stock
to Marilyn Call as a result of a default on the conditions of the
Preferred shares held by Ms. Call. In addition, the Registrant
issued 1,875,000 shares of common stock to Joe L. Cook & Debra J.
Cook and JL Cook Trustee for Joe L. Cook Co. as a result of a
default on the conditions of the preferred shares held by Mr.
Cook.
7. On January 17, 1998, the Registrant issued 150,000 shares of
common stock Joe L. Cook & Debra J. Cook for a consideration of
$0.33 per share, and issued an additional 450,000 shares of
common stock to JL Cook TTEE Joe L. Cook Co. for a consideration
of $0.13 per share.
8. On November 22, 1997, the Registrant issued 575,000 shares of
common stock to Marilyn Call for a consideration of $0.01 per
share.
The sales and issuances of the common stock described above were
deemed to be exempt from registration under the Securities Act in
reliance upon Sections 4(2) and 4(6) of the Securities Act as
transactions not involving a public offering. In addition, we
relied on Rule 701, Regulation A and Section 3(b) of the
Securities Act in exempting the issuances of shares described
above from registration. The Registrant made a determination that
the purchasers were sophisticated investors where necessary. The
purchasers in these private offerings represented their intention
to acquire the securities for investment only and not with a view
to distribution. Appropriate legends were affixed to the stock
certificates issued in these transactions. All purchasers had
adequate access to sufficient information about the Registrant to
make an informed decision. None of the securities were sold
through an underwriter and accordingly, there were no
underwriting discounts or commissions involved.
Exhibit Number Description
-------------- ------------------------------------------
3.1 Restated Articles of Incorporation
3.2 By-Laws
4.1 Instrument Defining Rights of Preferred
Shareholders
4.2 Series A Warrant
4.3 Series B Warrant
4.4 Lock-up Agreement
5.1 Legal Opinion on Legality of Shares
and Consent of Counsel
10.1 Investortiser Patent Application
10.2 License from Thomas H. Moore to Vequity for
Investortiser Concept
10.3 License and Co-Branding Agreement with
InfoSpace.com Inc.
23.1 Consent of Experts
ITEM 28 UNDERTAKINGS
The undersigned Registrant 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 set forth 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 percent 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) determine liability under the Securities Act, treat each
post-effective amendment as a new Registration Statement relating
to the securities being offered, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering of such securities.
(3) file post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
Insofar as indemnification for liabilities arising under the Act
may be permitted to Directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
The undersigned Registrant hereby undertakes (1) to provide to
transfer agent, certificates in such denominations and registered
in such names as required to permit prompt delivery to each
purchaser; (2) that for the purpose of determining any liability
under the Securities Act, treat the information omitted from the
form of prospectus filed a part of this Registration Statement in
reliance upon Rule 424 (b) (1) or (4) or 497 (h) under the
Securities Act as part of this Registration Statement as of the
time the Securities and Exchange Commission declares it
effective; and (3) that for the purpose of determining any
liability under the Securities Act, treat each post-effective
amendment that contains a form of prospectus as a new
registration statement for the securities offered in the
registration Statement herein, and treat the offering of the
securities at that time as the initial bona fide offering of
those securities.
In accordance with the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form SB-2 and authorized this Registration Statement to
be signed on its behalf by the undersigned, in the City of
Denver, State of Colorado on September 25, 2000.
VEQUITY CORPORATION
THOMAS H. MOORE
By: __________________________
Thomas H. Moore, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas H. Moore, his true
and lawful attorney-in fact and agent, with full power of
substitution and resubstitution, for him in his name, place and
stead, in any and all capacities, to sign any and all pre- or
post-effective amendments to this Registration Statement, and to
file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full
power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done
by virtue hereof.
In accordance with the Securities Act of 1933, as amended, this
Registration Statement has been signed below signed by the
following persons in the capacities indicated on September 25,
2000.
_____________________________
Chairman, President,
Chief Executive Officer and Director
Thomas H. Moore
____________________________
Executive Vice President and Director
Ronald E. Moitzfield
___________________________
Director
John R. Call
[CAPTION]
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION OF
VEQUITY CORPORATION
The following restated Articles of Incorporation of Vequity
Corporation containing amendments to the Articles of
Incorporation in effect prior hereto has been adopted by the
Board of Directors of the corporation and has been presented to
the shareholders of the corporation entitled to vote in
accordance with C.R.S. section 7-107-105 and 7-110-107 and has
been approved by a majority of the shareholders.
Upon filing of these Restated Articles of Incorporation with the
Secretary of State of Colorado these Restated Articles of
Incorporation shall supersede the original Articles of
Incorporation and all amendments thereto.
ARTICLE I
NAME
The name of the corporation is Vequity Corporation.
ARTICLE II
PURPOSE
The corporation is organized for any lawful purpose and shall
further have unlimited power to engage in and do any lawful act
concerning any and all business for which corporations may be
organized under the Colorado Business Corporations Code and any
amendments thereto.
ARTICLE III
SHARES
The corporation shall have authority to issue one hundred million
(100,000,000) shares of its common stock with each share having a
par value of $ .001. The shares may be issued upon such terms and
in such classes or series as the Board of Directors may from time
to time authorize. The Board of Directors may determine the
classes, preferences, limitations and relative rights of the
shares to be issued and is authorized to file an amendment to the
Articles of Incorporation without shareholder approval setting
forth the class or series, the preferences, limitations and
relative rights of shares to be issued.
Each owner of common stock of the corporation shall be entitled
at all shareholder's meeting to one vote for each share of stock
in his or her name on the books of the corporation, unless such
share is issued pursuant to limitations determined by the Board
of Directors in accordance with the procedures set forth in the
preceding paragraph.
The corporation shall have the authority to issue five million
(5,000,000) shares of preferred stock with each share having a
par value of $ .001. Said preferred stock may be issued from time
to time in one or more classes or series, with such dividend
rates, voting rights, or conversions, rights upon dissolution or
liquidation and with such designations, preferences and relative
participation, optional or other special rights or
qualifications, limitations or restrictions thereof, as shall be
determined by resolution adopted by the Board of Directors at the
time such stock is issued.
All shares of the corporation when issued shall be fully paid and
nonassessable.
ARTICLE IV
REGISTERED OFFICE AND AGENT
The street address of the corporation's registered office and the
name of its registered agent at that office is as follows:
Thomas H. Moore
Vequity Corporation
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
I hereby consent to my appointment as the registered agent for
Vequity Corporation.
Thomas H. Moore
----------------------
Thomas H. Moore
ARTICLE V
PRINCIPAL OFFICE
The address of the corporation's principal office is:
Vequity Corporation
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
ARTICLE VI
DIRECTORS
The Board of Directors at the time of the filing of these
Restated Articles of Incorporation consists of three members as
follows:
Thomas H. Moore
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
Ron Moitzfield
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
John R. Call
7223 Routt Dr.
Arvada, Colorado 80005
The minimum and maximum number of Directors of the corporation
shall be fixed by the bylaws of the corporation. The number of
Directors within the range established by the bylaws may be fixed
or changed from time to time by the Board of Directors.
The terms of Directors shall be staggered by dividing the number
of Directors into three groups with each group containing
one-third of the total, as near as may be. The terms of the
Directors in the first group will expire at the first annual
meeting of shareholders after their election. The terms of the
second group will expire at the second annual meeting of
shareholders after their election and the terms of the third
group shall expire at the third annual meeting of shareholders
after their election. Upon the expiration of the initial
staggered terms, Directors shall be elected for terms of three
years to succeed those whose terms expire.
If a vacancy occurs on the Board of Directors, including a
vacancy resulting from an increase in the number of Directors,
the Board of Directors may fill such vacancy or vacancies by
resolution of the Board of Directors determined by majority vote
of the Directors remaining in office.
Directors may be removed from office before the expiration of
their term only for cause.
The Board of Directors may exercise all discretionary powers
allowed to Directors to the fullest extent provided by the
Colorado Business Corporations Act.
ARTICLE VII
CONFLICTS OF INTEREST
No conflicting interest transaction shall be void or voidable or
be enjoined, set aside, or give rise to an award of damages or
other sanctions in a proceeding by a shareholder or by or in the
right of the corporation, solely because the conflicting interest
transaction involves a director of the corporation or an entity
in which a director of the corporation is a director or officer
or has a financial interest or solely because the director is
present at or participates in the meeting of the corporation's
Board of Directors or of the committee of the Board of Directors
which authorizes, approves or ratifies the conflicting interest
transaction or solely because the director's vote is counted for
such purpose if:
The material facts as to the director's relationship or interest
and as to the conflicting interest transaction are disclosed or
are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes,
approves, or ratifies the conflicting interest transaction by the
affirmative vote of a majority of the disinterested Directors,
even though the disinterested Directors are less than a quorum;
or
The material facts as to the director's relationship or interest
and as to the conflicting interest transaction are disclosed or
are known to the shareholders entitled to vote thereon, if the
transaction requires a vote of the shareholders, is specifically
authorized, approved, or ratified in good faith by a vote of the
shareholders and the conflicting interest transaction; or
The conflicting interest transaction is fair to the corporation.
ARTICLE VIII
SHAREHOLDER ACTIONS
There shall be no cumulative voting in the election of Directors.
Any action taken by the shareholders of the corporation shall be
taken at a shareholder meeting duly called and noticed pursuant
to Colorado Business Corporations Act.
For the following actions two-thirds (2/3) of the shareholders
entitled to vote shall be required to constitute a quorum at a
meeting for purposes of taking the action to be presented at the
meeting. Once a share is represented at the meeting it is deemed
present for the remainder of the meeting for quorum purposes, but
shall not be deemed present for any adjournment of the meeting
that will require the presence or representation of a new quorum.
For the actions listed below a two-thirds vote of the
shareholders represented at the meeting is required for the
action to be approved.
actions to amend the Articles of Incorporation that require
shareholder approval actions to amend the bylaws that require
shareholder approval
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS
The Directors and officers of the corporation shall not be liable
to the corporation or its shareholders for any action taken or
omitted to be taken as Directors or officers if, in connection
with such action or omission, the director or officer acted in
good faith, with the care an ordinary prudent person in a similar
position would take, and in a way that the director or officer
believed to be in the best interest of the corporation. In
carrying out their duties, Directors and officers of the
corporation are entitled to rely upon the information, opinions,
reports, statements, financial statements and other financial
data prepared by others that the director or officer reasonably
believes to be reliable and competent in the matters presented or
within such persons professional or expert competence.
Specifically with respect to monetary damages for breach of
fiduciary duty and not by way of limitation of the preceding
paragraph, Directors of the corporation shall have no personal
liability to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, except in the
following circumstances:
- for a breach of the director's duty of loyalty to the
corporation or its stockholders;
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
for voting for or assenting to an unlawful distribution; or
for any transaction from which the director derived an improper
personal benefit.
The corporation's director's and officer's shall not have
personal liability for any injury to a person or property arising
out of a tort committed by a corporate employee, unless the
officer or director was personally involved in the tort or
committed a criminal offense in connection with the tort.
The corporation shall indemnify any person made a party to a
threatened, pending or completed action, suit, civil, criminal,
administrative or investigative proceeding, whether formal or
informal, because such person was or is serving as a director.
This indemnity extends to a director upon a determination by the
Board of Directors that the director being indemnified acted in
good faith and reasonably believed that his or her conduct was in
the best interest of the corporation. In a criminal matter the
indemnity extends upon a determination by the Board of Directors
that the director being indemnified had no reasonable cause to
believe that his or her action was unlawful. Indemnity does not
extend to a director, if the director is adjudged liable to the
corporation or is adjudged liable on the basis of having derived
an improper personal benefit.
In addition to the indemnity provided to its Directors, the
corporation shall advance the costs of defense to a director
named in a proceeding, provided that the Board of Directors
determines that the facts known to the Board do not preclude
indemnification and that the director furnishes the corporation
with a written affirmation that the director has met the
standards of conduct required of Directors by Colorado law and
that the director will repay the advance if it is ultimately
determined that the director did not meet the standard of conduct
required by Colorado law.
The corporation will also indemnify it officers and advance
expenses if they are involved in a legal proceeding as a result
of their service as an officer upon the same basis as the
Directors are indemnified.
It is the intent of the provisions of this Article to provide the
Directors and Officers of the corporation with (a) limitations of
liability to the corporation and its shareholders, (b)
indemnification and (c) covenants for the advancement of costs,
all to the fullest extent allowed under Colorado law.
Dated this 26th day of May, 2000.
The above restated Articles of Incorporation have been approved
by a majority vote of 94 % of the outstanding shares of the
corporation and are approved, certified and submitted by the
following that constitute all of the Directors of the
corporation.
Thomas H. Moore
_________________________
Thomas H. Moore, Director
Ron Moitzfield
_______________________
Ron Moitzfield, Director
John R. Call
_______________________
John R. Call, Director
[CAPTION]
EXHIBIT 3.2
AMENDED BYLAWS OF
VEQUITY CORPORATION
ARTICLE I
1.Business Offices. The principal office of the corporation shall
be at 2305 East Arapahoe Road, Suite 220, Littleton, Colorado
80122. The corporation may also have one or more offices at such
other place or places within or without the State of Colorado as
the Board of Directors may from time to time determine or as the
business of the corporation may require.
Registered Office. The registered office of the corporation shall
be as set forth in the Articles of Incorporation, unless changed
as provided by the Colorado Business Corporation Code.
Shareholders Meetings
1. Annual Meetings. The annual meeting of shareholders for the
election of directors to succeed those whose terms expire and for
the transaction of such other business as may come before the
meeting shall be held in each year on such date and time as the
Board of Directors shall determine. If the day so fixed for such
annual meeting shall be a legal holiday, then such meeting shall
be held on the next succeeding business day.
Special Meetings. Special meetings of shareholders for any
purpose or purposes, unless otherwise prescribed by statute or by
the Articles of Incorporation, may be called at any time by the
President or by the Secretary upon the request (which shall state
the purpose or purposes therefore) of the holders of not less
than one-tenth (1/10) of the outstanding shares of the
corporation entitled to vote at the meeting.
Place of Meeting.
Meetings of shareholders shall be held at such locations within
or without the State of Colorado, as may be from time to time
determined by the Board of Directors.
Notice of Meetings.
Notice of each meeting of shareholders, whether annual or
special, shall be given not less than ten (10) or more than sixty
(60) days prior thereto to each shareholder of record entitled to
vote thereat by delivering written or printed notice thereof to
such shareholder personally or by mailing the same to his address
as it appears on the stock transfer books of the corporation;
provided, however, that if the authorized shares of the
corporation are proposed to be increased, at least thirty (30)
days notice in like manner shall be given. The notice of all
meetings shall state the place, day and hour thereof. The notice
of a special meeting shall, in addition, state the purposes
thereof. Whenever any notice is required to be given by these
Bylaws, the Articles of Incorporation of this corporation or by
any of the corporation laws of the State of Colorado, a waiver
thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
Fixing Record Date. The Board of Directors shall fix in advance
a date not less than ten (10) nor more than fifty (50) days
preceding the date of any meeting of shareholders, or the day for
payment of any dividend, or the date for the allotment of rights
or the date when any change or conversion or exchange of
authorized shares shall go into effect, or a date fixed as the
final date for obtaining such consent, as a record date for the
determination of the shareholders entitled to notice of, and to
vote at, any such meeting and any adjournment thereof, or
entitled to receive any such dividend, or to any such allotment
of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such
consent, and in such case only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give
such consent, as the case may be notwithstanding any transfer of
any shares on the books of the corporation after any such record
date fixed as aforesaid.
Voting List. At least ten (10) days before every meeting of
shareholders, a complete list of shareholders entitled to vote
thereat or any adjournment thereof, arranged in alphabetical
order, showing the address of each shareholder and the number of
shares held by each, shall be prepared by the officer or agent of
the corporation who has charge of the stock transfer books of the
corporation. Such list shall be open at the principal office of
the corporation to the inspection of any shareholder during usual
business hours for such period, and such list shall be produced
and kept at the time and place of the meeting during the whole
time thereof and subject to the inspection of any shareholder who
may be present.
Organization. The President or Vice President shall call meetings
of shareholders to order and act as chairman of such meetings.
In the absence of said officers, any shareholder entitled to vote
thereat, or any proxy of any shareholder may call the meeting to
order and a chairman shall be elected. In the absence of the
Secretary and Assistant Secretary of the Corporation, any person
appointed by the chairman shall act as secretary of such
meetings.
Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat shall when present in
person or represented by proxy be requisite to and shall
constitute a quorum at all meetings of shareholders for the
transaction of business, except as otherwise provided by statute,
the Articles of Incorporation, or by these Bylaws. In the
absence of a quorum at any such meeting, a majority of the
shareholders present in person or represented by proxy and
entitled to vote thereat may adjourn the meeting from time to
time without further notice until a quorum shall be present or
represented.
Voting. At every meeting of shareholders, each shareholder having
the right to vote shall be entitled to vote in person or by proxy
executed in writing by such shareholder or by his duly authorized
attorney-in-fact; provided, however, that no such proxy shall be
valid after eleven (11) months from the date of its execution,
unless such proxy expressly provides for a longer period. Shares
standing in the name of another corporation may be voted by such
officer, agent, or proxy as the Bylaws of such corporation may
prescribe or, in the absence of such provision, as the Board of
Directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by
him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer
of such shares into his name. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or
under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the court by which such
receiver was appointed. A shareholder whose share are pledged
shall be entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter the
pledge shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by
it in a fiduciary capacity shall not be voted, directly or
indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given
time. When a quorum is present at any meeting, the vote of the
holders of a majority of the shares having voting power present
in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon
which by express provision of a statute, the Articles of
Incorporation or these Bylaws, a different vote is required, in
which case such express provision shall govern and control the
decision of such question. In all elections of directors there
shall not, unless otherwise specifically stated in the Articles
of Incorporation, be cumulative voting, and every shareholder
entitled to vote may vote in person or by proxy and shall have
one vote for each such share standing in his name on the books of
the corporation.
Election and Tenure. The business and affairs of the corporation
shall be managed by a Board of Directors who shall be elected at
the annual meetings of shareholders by a majority vote, and each
director shall be elected to serve terms as provided in the
Articles of Incorporation and until his successor shall be
elected and shall qualify.
Number and Qualification.
The Board of Directors shall consist of at least three directors.
In no event shall the corporation have more than nine directors.
The Board of Directors shall fix the number and qualifications of
directors and shall fill vacancies on the Board.
3. Organization Meetings. After each annual election of
directors, the Board of Directors shall meet for the purpose of
organization and/or transaction of any other business. A chairman
shall be elected for the Board.
4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time or times as may be determined by the
Chairman of the Board of Directors and specified in the notice of
each such meeting.
5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board on three (3) days
notice to each director, either personally, by mail, by telegram
or by telephone, and shall be called by the Chairman of the Board
in like manner and on like notice on the written request of 50%
or more of the directors. The purpose of a special meeting of the
Board of Directors need not be stated in the notice thereof.
6. Place of Meetings. Any meeting of the Board of Directors may
be held at such place or places wither within or without the
State of Colorado as shall from time to time be determined by the
Chairman of the Board of Directors and designated in the notice
of the meeting.
7. Quorum. A majority of the number of directors shall constitute
a quorum at all meetings of the Board of Directors, and the act
of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. In
the absence of a quorum at any such meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice until a quorum shall be present.
8. Vacancies. Any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of a majority of the remaining
directors even though they constitute less than a quorum of the
Board of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any
directorship to be filled by the reason of an increase in the
number of directors shall be filled by the affirmative vote of a
majority of the directors then in office or by an election at an
annual meeting or at a special meeting of shareholders called for
that purpose. A director chosen to fill a position resulting from
an increase in the number of directors shall hold office until
the next annual meeting of shareholders at which the vacancy for
the term of director to be elected is to be held or until his
successor shall be elected and shall qualify.
9. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors may designate
two (2) or more directors to constitute an executive committee,
which committee, to the extent provided in such resolution, shall
have and may exercise all of the authority of the Board of
Directors in the management of the corporation; provided,
however, that such committee shall in no case act to the
exclusion of the Board of Directors whether in session or not.
Audit and Other Committees. The Board of Directors, by resolution
adopted by a majority of the number of Directors may designate
two or more directors to constitute an audit or other committees
to the extent provided in such resolutions. Such committees shall
report to the Board and shall recommend actions for Board
approval.
Compensation of Directors. Directors of the corporation may be
paid such annual compensation as may from time to time be fixed
by resolution of the Board of Directors. All directors may be
allowed a fixed sum and expenses incurred for attendance at each
regular or special meeting of the Board of Directors as may be
from time to time fixed by resolution of the Board of Directors.
Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and
receiving compensation therefore.
Stock Ownership. The Board of Directors has the power to
authorize that all stock or other securities purchased by the
corporation in any foreign or domestic corporation, be carried in
the name of any brokerage house that the directors are then
dealing with and that they then authorize such brokerage house to
carry a particular security as a house account.
Authorized Issuance of Capital Stock. The Board of Directors
shall have the power to issue the capital stock of the
corporation to the full amount or number of shares authorized by
the Articles of Incorporation, in such amounts and proportions as
from time to time shall be determined by it, and to accept in
full such property as it may determine shall be good and
sufficient consideration and necessary for the business of the
corporation.
Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented
to the action taken, unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof, or shall forward such
dissent by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such
action.
Telephonic Communications. The Board of Directors may participate
in any meeting of the Board by means of conference telephone or
similar communications equipment that enables all participants in
the meeting to hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
1. Notices. Whenever under the provisions of a statute, the
Articles of Incorporation or of these Bylaws notice is required
to be given to any director or shareholder, it shall be construed
to mean notice, given in writing, by United States first class
mail, certified receipt requested or registered, postage prepaid
and addressed to such director or shareholder at such address as
appears on the books of the corporation, and such notice shall be
deemed to be given at the time when the same shall be thus
mailed.
2. Waiver of Notice. Whenever any notice whatsoever is required
to be given under the provisions of a statute, the Articles of
Incorporation, or by these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether
before, at, or after the time stated therein, or the appearance
of such person or persons at such meeting, or in case of a
shareholders' meeting by proxy, shall be deemed equivalent
thereto.
3. Action Without A Meeting. Any action required or which may be
taken at a meeting of the directors, shareholders or members of
any executive committee of the corporation, may be taken without
a meeting, if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors, shareholders or
members of the executive committee, as the case may be, entitled
to vote with respect to the subject matter thereof.
1. General. The officers of the corporation shall be a president,
one or more vice presidents, a secretary and a treasurer. The
Board of Directors may appoint such other officers, assistant
officers, committees and agents, including a chairman of the
board, assistant secretaries and assistant treasurers, as they
may consider necessary, who shall be chosen in such manner and
hold their offices for such terms and have such authority and
duties from time to time may be determined by the Board of
Directors. The salaries of all the officers of the corporation
shall be fixed by the Board of Directors. One person may hold any
two offices, except that no person may simultaneously hold the
offices of president and secretary. In all cases where the duties
of any officer, agent or employee are not prescribed by the
Bylaws or by the Board of Directors, such officer, agent or
employee shall follow the orders and instructions of the
president.
2. Election and Term of Office. The officers of the corporation
shall be elected by the Board of Directors annually at the first
meeting of the Board held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until the
first of the following to occur: His successor shall have been
duly elected and shall have qualified; his death; his
resignation; or his removal in the manner hereinafter provided.
3. Removal. Any officer or agent may be removed by the Board of
Directors or by the executive committee whenever, in its
judgment, the best interest of the corporation will be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not in itself create
contract rights.
4. Vacancies. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the
term.
5. President. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive
officer of the corporation and shall have general and active
control of its affairs and business and general supervision of
its officers, agents, and employees. He shall, unless otherwise
directed by the Board of Directors, attend in person or by
substitute appointed by him, or shall execute on behalf of the
corporation written instruments appointing a proxy or proxies to
represent the corporation, at all meetings of the stockholders of
any other corporation in which the corporation shall hold any
stock. He may, on behalf of the corporation, in person or by
substitute or by proxy, execute written waivers of notice and
consents with regard to any such meetings. At all such meetings
and otherwise, the president, in person or by substitute or proxy
as aforesaid, may vote the stock so held by the corporation and
may execute written consents and other instruments with respect
of such stock and may exercise any and all rights and powers
incident to the ownership of said stock, subject, however, to the
instructions, if any, of the Board of Directors. The president
shall have custody of the treasurer's bond, if any.
6. Vice Presidents. The vice presidents shall assist the
president and shall perform such duties as may be assigned to
them by the president or by the Board of Directors. In the
absence of the president, the vice president designated by the
Board of Directors or (if there be no such designation)
designated in writing by the president shall have the powers and
perform the duties of the president. If no such designation shall
be made, all vice presidents may exercise such powers and perform
such duties.
7. The Secretary. The secretary shall: (a) keep the minutes of
the proceedings of the shareholders, executive committee and the
Board of Directors; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by
law; (c) be custodian of the corporation records and of the seal
of the corporation and affix the seal to all documents when
authorized by the Board of Directors; (d) keep at the
corporation's registered office or principal place of business
within or outside Colorado a record containing the names and
addresses of all shareholders and the number and class of shares
held by each, unless such a record shall be kept at the office of
the corporation's transfer agent or registrar; (e) sign with the
president, or a vice president, certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of
the stock transfer books of the corporation, unless the
corporation has a transfer agent; and (g) in general, perform all
duties incident to the office of secretary and such other duties
as may from time to time be assigned to him by the president or
by the Board of Directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to the supervision by
the secretary.
8. Treasurer. The treasurer shall be the principal financial
officer of the corporation and shall have the care and custody of
all funds, securities, evidences of indebtedness and other
personal property of the corporation and shall deposit the same
in accordance with the instructions of the Board of Directors. He
shall receive and give receipts and quittances for monies paid in
on account of the corporation, and shall pay out of the funds on
hand all bills, payrolls and other just debts of the corporation
of whatever nature upon maturity. He shall perform all other
duties incident to the office of the treasurer and, upon request
of the Board, shall make such reports to it as may be required at
any time. He shall, if required by the Board, give the
corporation a bond in such sums and with such sureties as shall
be satisfactory to the Board, conditioned upon the faithful
performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers and
perform such other duties as may from time to time be prescribed
by the Board of Directors or the president. The assistant
treasurers, if any, shall have the same powers and duties,
subject to the supervision of the treasurer. The treasurer shall
also be the principal accounting officer of the corporation. He
shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of
account, prepare and file all local, state and federal tax
returns, prescribe and maintain an adequate system of internal
audit, and prepare and furnish to the president and the Board of
Directors statements of account, showing the financial position
of the corporation and the results of its operations.
ARTICLE VI
Limitation of Liability and Indemnification
Directors and Officers of the corporation shall be have a
limitation of liability to the corporation and its shareholders
and be indemnified and have costs advanced to the fullest extent
allowed under Colorado law and in accordance with the Articles of
Incorporation of the corporation.
Execution of Instruments
1. Execution. The president shall have the power to execute and
the secretary shall have the power to attest to, on behalf and in
the name of the corporation, any deed, contract, bond, debenture,
note or other obligation or evidence of indebtedness, or proxy,
or other instrument requiring the signature of an officer of the
corporation, except where the signing and execution thereof shall
be expressly delegated by the Board of Directors to some other
officer or agent of the corporation. Unless so authorized, no
officer, agent or employee shall have any power or authority to
bind the corporation in any way, to pledge its credit or to
render it liable pecuniary for any purpose or in any amount. 2.
Checks and Endorsements. All checks and drafts upon the funds to
the credit of the corporation in any of its depositories shall be
signed by such of its officers or agents as shall from time to
time be determined by resolution of the Board of Directors, which
may provide for the use of facsimile signatures under specified
conditions, and all notes, bills receivable, trade acceptances,
drafts, and other evidences of indebtedness payable to the
corporation shall, for the purpose of deposit, discount or
collection, be endorsed by such officers or agents of the
corporation or in such manner as shall from time to time be
determined by resolution of the Board of Directors.
1. Certificates of Stock. The certificates of shares of the
corporation shall be in such form not inconsistent with the
Colorado Corporation Code and the Articles of Incorporation as
shall be approved by the Board of Directors, and shall be
numbered and shall exhibit the holder's name and number of
shares, such other matters as shall be required by law, and shall
be signed by the president, or a vice president, and the
secretary, or an assistant secretary, and shall be sealed with
the seal of the corporation or a facsimile thereof. In case any
officer who has signed a certificate ceases to hold such office
prior to the issuance or delivery of the certificate, such
certificate may nevertheless be issued and delivered by the
corporation as though the officer who signed such certificate or
whose facsimile signature shall have been used thereon had not
ceased to be such officer of the corporation.
2.Lost and Destroyed Certificates. In case any certificates of
stock of the corporation shall be alleged to have been destroyed
or lost, the corporation shall not be required to issue a new
certificate in lieu thereof, except upon receipt of evidence
satisfactory to the Board of Directors of the destruction or loss
of such certificate, and, if so required by the Board of
Directors, upon receipt also of a bond in such sum as the Board
may direct, not exceeding twice the value of such stock and, if
so required, with surety or sureties satisfactory to the Board,
to indemnify the corporation against any claim that may be made
against it on account of the alleged destruction or loss of such
certificate.
3. Transfer of Stock Transfers of the shares of the stock of the
corporation shall be made only on the books of the corporation by
the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the
secretary and upon the surrender of the certificate or
certificates for such shares. The corporation, under the Articles
of Incorporation, has the right to impose restrictions upon the
transfers of any of the shares of the stock of the corporation,
or any interest therein, and any transfers of shares shall be
made in accordance with and subject to any such restrictions from
time to time so imposed.
4. Agreement to Transfer Stock Any agreement entered into by and
between this corporation and/or its shareholders concerning the
transfer of shares of said corporation, when any holder of stock
in this corporation is desirous of selling or transferring all or
any of his shares and/or the executor or administrator of any
deceased holder of stock is desirous of selling or transferring
all or any of such shares belonging to the estate of such
deceased shareholder, shall not be inconsistent with the Articles
of Incorporation and Bylaws of the corporation.
5. Consideration for Shares. shall be issued for such
consideration, expressed in dollars (but not less than the par
value thereof unless no par value) as shall be fixed from time to
time by the Board of Directors. Treasury shares shall be disposed
of for such consideration expressed in dollars as may be fixed
from time to time by the Board. Such consideration may consist,
in whole or in part, of money, other property (tangible or
intangible), or in labor or services actually performed for the
corporation, but neither promissory notes nor future services
shall constitute payment or part payment for shares.
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the
Articles of Incorporation.
The corporate seal shall be in such form as shall be approved by
resolution of the Board of Directors. Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The impression of the seal may be made
and attested to by the secretary or an assistant secretary or the
president for the authentication of contracts or other papers
requiring the seal.
ARTICLE XI
Fiscal Year
The fiscal year of the corporation shall be such year as shall be
adopted by the Board of Directors.
ARTICLE XII
Amendments
All Bylaws of the corporation shall be subject to alteration,
amendment or repeal, and new Bylaws may be added by the
affirmative vote of a majority of a quorum of the members of the
Board of Directors and/or shareholders at any regular or special
meeting except to the extent the Articles of Incorporation
require a supermajority.
CERTIFICATE
The undersigned hereby certifies that the undersigned is the duly
elected, qualified, acting and hereunto authorized secretary of
this corporation and that the foregoing and annexed Bylaws
constitute a true and complete copy of the Bylaws of said
corporation presently in full force and effect.
IN WITNESS WHEREOF, the undersigned has signed this Certificate
and affixed hereto the seal of the corporation.
Date: May 26, 2000
Thomas H. Moore
-----------------------
STATE OF COLORADO )
) ss.:
CITY AND COUNTY OF Jefferson)
Subscribed and sworn to before me this 26th day of May, 2000 by
Thomas H. Moore, President of Vequity Corporation.
Witness my hand and official seal.
My commission expires: 4/20/2004
J. Brent Garfield___________
Notary Public
AMENDMENTS AND ADDITIONS TO THE
BYLAWS OF VEQUITY CORPORATION
Pursuant to directives from the Board of Directors, the following
Amendments and Additions to the Bylaws are effective as of May
26, 2000.
Board of Directors
2. Number and Qualification The Board of Directors shall
consist of at least one director if the corporation shall have
one sole shareholder, and at least two directors if the
corporation shall have two or more shareholders. In no event
shall the corporation have more than nine directors. Directors
need not be shareholders or residents of the State of Colorado.
Shares of Stock
1. Certificates of Stock. The Certificates of shares of the
Corporation shall be in such form not inconsistent with the
Colorado Corporation Code and the Articles of Incorporation as
shall be approved by the Board of Directors, and shall be
numbered and shall exhibit the holder's name and number of
shares, such other matters as shall be required by law, and shall
be signed by the president, or a vice president, and the
secretary, or an assistant secretary, and shall be sealed with
the seal of the corporation or a facsimile thereof.
The Corporation shall be authorized to issue more than one class
of stock or more than one series of any class, and the
designations, preferences, and relative, participating, and the
qualifications, limitations, or restriction of such preferences
and/or rights shall be set forth in full or summarized on the
face or back of the certificate which the Corporation Shall issue
to represent such class or series of stock, provided that, except
as otherwise provided in the Business Corporation Law of
Colorado, in lieu of the foregoing requirements, there may be set
forth on the face or back of the certificate which the
Corporation shall issue to represent such class or series of
stock, a statement that the Corporation will furnish without
charge to each stockholder who so requests the designations,
preferences, and relative, participating, optional, or other
special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences
and/or right.
6. Treasury Stock. The Board of Directors shall have the
authority to purchase or otherwise acquire in the name of the
corporation, any of its own shares of stock offered or tendered
by any such shareholder. Payment for such shares of stock may be
made in cash, property, stock, debentures, bonds or other debt
instruments as authorized and approved by the Board of Directors.
All such shares of stock purchased as aforesaid shall be
transferred on the corporate books to the name of the corporation
and held pending disposition by the Board of Directors.
---------------------- ----------------------
President Secretary
[CAPTION]
Exhibit 4.1
Instrument Defining Rights of Preferred Shareholders
November 10, 1999
$1,000,000
REGULATION D - RULE 504 - OFFERING MEMORANDUM
Minimum Offering: 25,000 Shares
Maximum Offering: 1,000,000 Shares
Purchase Price: $1.00 Per Share of Preferred Stock
Vequity Corporation (the "Company" or Vequity) is offering to
sell a minimum of Twenty Five Thousand (25,000) shares of Series
B Redeemable and Convertible Preferred Stock ("Preferred Stock")
and a maximum of One Million (1,000,000) shares of Preferred
Stock. See "DESCRIPTION OF SECURITIES".
<TABLE>
<S> <C> <C> <C>
Price to Investors Sales Commissions Company Proceeds
Price Per Share $1.00 $0.10 $ .90
Minimum Offering $25,000 $2,500 $22,500
Maximum Offering $1,000,000 $100,000 $900,000
</TABLE>
The Shares are being offered by the Company on a "best efforts,
minimum Twenty Five Thousand (25,000) Shares, maximum One Million
(1,000,000) Shares basis. The Company is offering the Shares
through its officers, directors and employees, who will not
receive commissions. The Company may also offer the Shares
through selected dealers who are members of the National
Association of Securities Dealers ("NASD"), and compensate such
dealers in the amount of $0.10 per Share. Such securities dealers
may be deemed to be "Underwriters" as such term is defined in the
Act. The Shares are offered when and if issued by the Company,
subject to prior sale, withdrawal or cancellation of the offer
without notice. The Shares are also being offered for sale by
Vequity Corporation as a self underwritten issue pursuant to
Regulation D - Rule 504 of the Securities Act of 1933, as
amended.
(2) Pending the sale of the minimum of 25,000 Shares, all of the
proceeds of the Offering will be held by the Company acting as
its own Escrow Agent in a special segregated interest-bearing
escrow account at Firstbank of Colorado, N.A. Such funds will be
returned to subscribers with interest, but without deduction in
the event the minimum number of Shares is not sold prior to the
termination of the Offering Period. The Offering Period shall
commence on the date of this Memorandum and shall continue for a
period of three hundred sixty five (365) calendar days. The
Offering Period can be shortened at the option of the Company.
(3) The Company Proceeds shown above is before deduction of
offering expenses payable by the Company, including filing,
printing, legal, accounting and miscellaneous expenses of
approximately $7,500, resulting in net proceeds to the Company of
approximately $15,000 if the minimum number of Shares are sold,
and approximately $892,500 in the event the maximum number of
Shares are sold.
(4) The offering price has been arbitrarily determined and is not
based upon any historical or projected earnings of the Company.
On Page 12 of the PPM, the rights of the Preferred Shareholders
are defined as follows:
Vequity's Options for Redemption and Conversion of Preferred
Shares: The Company intends to redeem and convert the Preferred
Shares offered herein with one of the following two options:
OPTION #1: This Redemption and Conversion Option consists of both
cash and shares of Common Stock as payment. The "cash portion"
payment of this Option is $1.00 per share, if redeemed on or
before the Redemption Date. If the cash portion payment is not
made on or before the Redemption Date, a cash penalty of $.05 per
share will be assessed for every month, or partial month, that
Vequity does not redeem the shares under this Option. However,
the maximum cash penalty will be $1.00. The "stock portion"
payment of this Option provides that the Company pay the Investor
two to five shares of Common Stock in exchange for each share of
Preferred Stock that the Investor originally purchased. The
number of Common shares that will be paid is dependent upon the
initial investment amount and is shown on the following
Redemption and Conversion Schedule:
(a) Up to $24,999 = 2 Common Shares for every Preferred Share
purchased;
(b) $25,000 to $49,999 = 4 Common Shares for every Preferred
Share purchased;
(c) $50,000 or more = 5 Common Shares for every Preferred Share
purchased.
-OR-
OPTION #2: This Redemption and Conversion option gives Vequity
the right (within two years of the sale of the shares offered
herein) to redeem & convert the Preferred Shares for no cash and
7 Common Shares for each Preferred Share.
The above stated options will be exercised at the sole
discreZDtion of the Company and there is no assurance that the
Company will actually be able to exercise either option in the
future.
[CAPTION]
EXHIBIT 4.2
Series A Warrant
SERIES A WARRANT
FOR THE PURCHASE OF SHARES OF COMMON STOCK
This STOCK PURCHASE WARRANT (Warrant) is issued this _____ of
____________________, 2000__, by VEQUITY CORPORATION, a Colorado
corporation (the Company) to____________________________(print),
who is an advertiser and shareholder of the Company, (Holder).
This Warrant has been issued by the Company to the Holder
pursuant to a Registration Statement dated ____________, 2000.
1. Issuance of Warrant. For value received, the Company hereby
grants to Holder, subject to the provisions set forth herein, the
right to purchase an aggregate of _____ shares ( ) common
stock, $.001 par value per share, (Shares), subject to adjustment
as set forth herein at an exercise price per share of $6.25 (the
Warrant Exercise Price) subject to adjustments as set forth
herein. The Holder agrees with the Company that this Warrant is
issued, and all the rights hereunder shall be held subject to,
all of the conditions, limitations and provisions set forth
herein.
2. Exercise of Warrant. This Warrant may be exercised by Holder
as to all or any part of the Shares covered hereby at any time
during the period (the Exercise Period) commencing on the date of
the first annual renewal of the Holders website advertisement
with Vequity, in the manner and within the time period set forth
in paragraph 3 below, and ending on the expiration of thirty days
thereafter. Such renewal of the Holders website advertisement is
a condition precedent to the exercise of this Warrant. This
Warrant, if not exercised, will expire and become null and void
upon the expiration of the Exercise Period for this Warrant. If,
however, the final day for exercise of this Warrant is on a
Saturday, Sunday, or a U.S. federal or Colorado state holiday
observed by the closure of banks in Colorado, then this Warrant
may be exercised on the next succeeding business day. This
Warrant is subject to (i) redemption by the Company pursuant to
the occurrence of the conditions set forth in paragraph 12
hereof; and (ii) earlier termination upon the occurrence of the
conditions set forth in paragraph 8 hereof. This Warrant will be
exercised upon mailing of the completed and executed Exercise
Form attached hereto, for the numbers of shares purchased,
together with this Warrant and a certified or cashier's check
payable to the order of the Company for the aggregate purchase
price of the Shares so purchased, addressed to Vequity c/o Thomas
H. Moore, 2305 East Arapahoe Road, Suite 220, Littleton, Colorado
80122 or at such other address as the Company shall designate in
writing to Holder. Delivery shall be deemed accomplished as of
the date such items are placed in the U.S. Mail (or any other
mail delivery service), postage prepaid, addressed as set forth
above. The following are additional items related to the
exercise of this Warrant:
Upon the exercise of this Warrant as aforesaid, the Company shall
as promptly as practicable, and in any event within fifteen (15)
days thereafter, execute and deliver to Holder a certificate or
certificates in the name of Holder for the total number of whole
Shares for which this Warrant is being exercised. Upon receipt
by the Company of: (i) a properly completed Exercise Form, (ii)
this original Warrant, and (iii) the funds required for the
Exercise price, the Holder shall be deemed to be the Holder of
record of the Shares to be issued upon such exercise,
notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such
Common Shares shall not then be actually delivered to the Holder.
If this Warrant shall be exercised with respect to less than all
of the Shares, Holder shall be entitled to receive a similar
warrant of like tenor and date covering the number of Shares in
respect of which this Warrant shall not have been exercised.
This Warrant shall lapse and shall be null and void, if not
exercised by Holder during the Exercise Period, unless terminated
sooner pursuant to the provisions of paragraph 8 or 12 hereof.
3. First Annual Renewal of Website Advertisement. The first
annual renewal of the Holder's website advertisement may be
accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
thirteen (13) months thereafter. The first annual renewal of the
Holder's website will be deemed complete upon the Company's
receipt of payment for a second year of website advertising from
the Holder.
4. Covenants of Company. The Company covenants and agrees that
all the Shares which may be issued upon the exercise of this
Warrant will, upon issuance, be fully paid and non-assessable and
free from all taxes, liens and charges with respect to the
issuance thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue). The Company further
covenants and agrees that during the period within which this
Warrant may be exercised, the Company will at all times have
authorized and reserved, a sufficient number of Shares to provide
for the exercise of this Warrant and the delivery of the Shares
upon such exercise.
5. Legend and Restrictions on Transfer. Any shares issued as a
result of the exercise of this Warrant will be restricted as to
their transferability and will bear a restrictive legend as set
forth herein. There is no established trading market or price for
the company's shares. The Company does not currently intend to
register with the Nasdaq National Market or any other exchange or
market until the Company's Management in its sole discretion
determines to remove the legend and make application for
inclusion in a national market. The company's transfer agent will
not transfer these shares unless approved by the company after
consultation with counsel to determine that the transfer is in
compliance with this agreement or that the legend may be removed
and that the shares may be transferred in compliance with the
provisions of the Securities Act. (a) No shares issued as a
result of the exercise of this Warrant may be transferred except
as set forth below:
Any recipient of shares issued as a result of the exercise of
this Warranty may transfer its interest to immediate family
members by transfer or inheritance. Immediate family members
shall mean the spouse or children of a shareholder. In addition,
a shareholder may transfer its interest to an LLC, partnership,
corporation, trust or other entity controlled by such shareholder
or such shareholder's immediate family members. All Holders agree
to the restrictions on transfers specified herein.
The following legend will appear on the shares issued as a result
of the exercise of this Warrant:
The shares evidenced by this certificate are subject to the
transfer restrictions set forth in the Warrant For The Purchase
of Shares of Common Stock pursuant to which these shares were
issued. These securities may not be offered or sold or
transferred unless or until the transfer is approved by the
Company after consultation with counsel to determine that the
transfer is in compliance with the terms of this Warrant or until
this legend is removed by the Company's Management, in its sole
discretion.
6. Adjustments of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and number of Shares purchasable
pursuant to this Warrant shall be subject to adjustment from time
to time as follows:
In the event the Company shall at any time after the issuance of
this Warrant, and prior to its exercise or expiration, issue or
sell any Shares through a registered public offering (excluding
any shares issued or sold pursuant to the Company's Registration
Statement dated *, 2000 and any shares issued pursuant to
outstanding options, conversion rights or redemption rights) for
a consideration per share less than the Warrant Exercise Price in
effect immediately prior to the issuance or sale of such Shares,
then, and thereafter successively upon each such issuance or
sale, the Warrant Exercise Price in effect immediately prior to
the issuance or sale of such Shares shall forthwith be reduced to
a Warrant Exercise Price (calculated to the nearest full cent)
equal to the price at which such shares were issued or sold. For
the purposes of any computation to be made in accordance with the
provisions of this paragraph the following provisions shall be
applicable.
In the event of the issuance or sale of Shares for cash, the
consideration received by the Company therefore shall be deemed
to be the net cash proceeds received by the Company for such
Shares, after deducting commissions or other expenses paid or
incurred by the Company for any underwriting of, or otherwise in
connection with, the issuance or sale of such Shares.
In the event of the issuance or sale of Shares for consideration
other than cash or consideration a part of which shall be other
than cash, the amount of the consideration other than cash
received by the Company for such Shares shall be deemed to be the
fair market value of such consideration as determined by the
Board of Directors of the Company, irrespective of any accounting
treatment thereof.
In the event of the issuance of Shares as a dividend, the Shares
shall be deemed to have been issued for consideration equal to
the Warrant Exercise Price at the close of business on the
dividend record date. If no dividend record date is fixed, the
date on which the resolution of the Board of Directors of the
Company declaring such dividend is adopted shall be treated as
the record date.
(b.) In the event the Company shall at any time exchange as a
whole, by subdivision or consolidation in any manner or by
effecting a stock dividend, the number of Shares, then
outstanding into a different number of Shares, with or without
par value, then, thereafter, the number of Shares which Holder
shall have the right to purchase (calculated immediately prior to
such change), shall be increased or decreased, as the case may
be, in direct proportion to the increase or decrease in the
number of Shares of the Company issued and outstanding by reasons
of such change, and the Warrant Exercise Price of the Shares
after such change shall, in the event of an increase in the
number of Shares be proportionately reduced and in the event of a
decrease in the number of Shares, be proportionately increased.
7. Survival of Mergers and Reorganizations. In the event of the
reclassification of, or change in the outstanding Shares (other
than a change in the number of shares outstanding as a result of
the sale or issuance of shares and other than a change in par
value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision, combination or stock
dividend), or in the event of any consolidation or merger of the
Company into, another corporation, the Company, or such successor
Company, as the case may be, shall provide that Holder shall
thereafter be entitled to purchase the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, or merger by a Holder of
the number of Shares which this Warrant entitled the Holder
thereof to purchase immediately prior to such reclassification,
change, consolidation or merger. Such Company, which thereafter
shall be deemed to be the Company for purposes of this Warrant,
shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for
in paragraph 6 hereof.
8. Sale of Assets, Dissolution. In the event of the sale of all
or substantially all the assets of the Company, or in the event
of any distribution of all or substantially all of its assets in
dissolution or liquidation, the Company shall mail notice thereof
by certified mail to Holder, at the Holder's address on the books
and records of the Company and shall make no distribution to the
shareholders of the Company until the expiration of thirty (30)
days from the date of mailing of the aforesaid notice; provided,
however, that in any such event if Holder shall not exercise this
Warrant at or before the thirtieth (30th) day after the date of
mailing such notice, this Warrant automatically becomes null and
void. The Company shall not, however, be prevented from
consummating any such sale without awaiting the expiration of
such thirty (30) day period, it being the intent and purpose
hereof to enable Holder, upon exercise of this Warrant, to
participate in the distribution of the consideration to be
received by the Company upon any such sale or in the distribution
of assets upon any dissolution or liquidation.
9. No Fractional Shares. The number of Shares subject to issuance
upon the exercise of this Warrant shall be rounded down to the
nearest whole number of Shares so that no fractional Share or
scrip shall be issued upon the exercise of this Warrant. Holder
shall not be entitled to receive any compensation or property in
lieu of such fractional Share that it may have been entitled to
in the absence of this provision. It is the intent of the Company
that all fractional interests shall be eliminated.
10. Notices. If there shall be any adjustment as provided in
paragraph 6 hereof, or if securities or property other than
Shares of the Company shall become purchasable in lieu of Shares
upon exercise of this Warrant, the Company shall forthwith cause
written notice thereof to be sent by registered mail, postage
prepaid, to Holder at its address shown on the books of the
Company, which notice shall be accompanied by a certificate of
either independent public accountants of recognized standing or
the Chief Financial Officer of the Company, setting forth in
reasonable detail the basis for the adjusted Warrant Exercise
Price or the facts requiring any such adjustment.
11. Taxes. The issuance of any stock or other certificate upon
the exercise of this Warrant shall be made without charge to
Holder for any tax in respect of the issuance of such
certificate. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other
than that of Holder, as the registered Holder of this Warrant,
and the Company shall not be required to issue or deliver any
such certificate unless and until the person or persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
12. Redemption. The Company may redeem (repurchase) this Warrant
from the Holder for $1.00 per share at any time after its
issuance and prior to its exercise or expiration by giving thirty
(30) days prior written notice to the Holder by certified mail,
return receipt requested at the Holder's address shown on the
books of the Company. Notwithstanding the foregoing, upon receipt
of a notice of the Company's intent to redeem this Warrant for
$1.00 per share, the Holder may exercise this Warrant and
purchase the shares at the Warrant Exercise Price at any time
within thirty (30) days from the date of the redemption notice in
which event the Company shall not have the right the redeem the
Warrant. If the Holder does not exercise this Warrant within such
thirty (30) day period, then the Company will redeem (repurchase)
this Warrant for the $1.00 per share redemption price. On and
after the date and time fixed for any such redemption, Holder
shall have no rights with respect to this Warrant except to
receive the redemption price per share upon the surrender of this
Warrant.
13. Limitations on Transferability of Warrant: This Warrant may
not be transferred except to the Holder's immediate family
members by transfer or inheritance. Immediate family members
shall mean the spouse or children of a Warrant Holder. In
addition, a Holder may transfer this Warrant to an LLC,
partnership, corporation, trust or other entity controlled by
such Holder or such Holder's immediate family members. Holder
agrees to the restrictions on transfers specified herein. In the
event this Holder elects to transfer or assign this Warrant, in
whole or in part to a permitted transferee, it shall do so by
completing, executing and delivering a copy of the appropriate
Warrant Transfer Form that is attached hereto to the permitted
assignee(s) and the Company. If this Warrant is transferred, in
whole or in part, to a permitted transferee, this Warrant shall
be surrendered at our principal office, or such other office as
we shall notify the Holder hereof in writing, along with the
appropriate completed and executed Warrant Transfer Form attached
hereto, and thereupon, a new Warrant(s) will be issued to the
permitted transferee (and the Holder in the event of a partial
assignment) for the number of Shares covered by such Warrant(s)
as appropriate. Upon the transfer of this Warrant by Holder in
compliance with the applicable provisions hereof to our
satisfaction and that of our counsel, (i) the designated
permitted transferee(s) shall have the same rights and privileges
and be subject to the same obligations as originally granted
hereunder to Holder to the extent of such assignment, and (ii)
all references to this Warrant to Holder shall be deemed, and
shall upon delivery of a new Warrant to the permitted transferee
be changed, to the permitted transferee.
14. Warrant Holder Not Shareholder. This Warrant does not confer
upon Holder any right to vote or to consent or to receive notice
as a shareholder of the Company in respect of any matters
whatsoever, or any other rights or liabilities as a Shareholder,
prior to the exercise thereof as provided herein.
15. Lost Warrants. In case any Warrant shall be mutilated, lost,
stolen or destroyed, the Company may issue a new Warrant of like
date, tenor and denomination and deliver the same in exchange and
substitution for and upon surrender and cancellation of any
mutilated Warrant, or in lieu of any Warrant lost, stolen or
destroyed, upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant, and upon
receipt of indemnity satisfactory to the Company.
16. Indemnification by Holder. Holder, by acceptance hereof,
agrees to indemnify and hold harmless the Company, its directors
and officers, and each other person, if any, who controls the
Company, against any losses, claims, damages, or liabilities,
joint or several, to which the Company or any such director or
officer or any such person may become subject under the Act, or
any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the disposition by Holder of this
Warrant or the Shares issuable upon the exercise hereof in
violation of the provisions of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
issued and Holder has approved and accepted the same as of the
day and year first above written.
Vequity Corporation
By: Thomas H. Moore
-----------------------
Thomas H. Moore, President
HOLDER
By: _____________________
Name: _____________________
Title: _____________________
WARRANT EXERCISE FORM
The Holder named below hereby exercises this Series A Warrant for
the purchase of the number of Common Shares indicated in the
Warrant that is attached hereto. Enclosed herewith is:
my certified or cashiers check for the Warrant Exercise Price
made payable to Vequity Corporation, and the Series A Warrant.
Holder agrees that shares issued as a result of the exercise of
this Warrant may only be transferred in accordance with the terms
set forth in the Warrant Agreement.
Name and Address of Holder:
_____________________________________
_____________________________________
_____________________________________
SIGNATURES
Authorized signature: _______________________________________
Authorized signature of Co-Owner: ___________________________
Date:
Mail to:
Vequity Corporation
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
_________________________________________________________________
For office use only:
Date Received: ___________________________
Date Accepted: ___________________________
Date Rejected: ___________________________
Holder's Check Amount: ___________________
Check No.: ____________ Check Date: _____________
Deposited: _______________________________
[CAPTION]
Exhibit 4.3
SERIES B WARRANT
FOR THE PURCHASE OF SHARES OF COMMON STOCK
This STOCK PURCHASE WARRANT (Warrant) is issued this _____ of
_______________, 2000__, by VEQUITY CORPORATION, a Colorado
corporation (the Company) to ___________________________ (print),
who is an advertiser and shareholder of the Company, (Holder).
This Warrant has been issued by the Company to the Holder
pursuant to a Registration Statement dated ____________, 2000.
1. Issuance of Warrant. For value received, the Company hereby
grants to Holder, subject to the provisions set forth herein, the
right to purchase an aggregate of _____ shares ( ) common
stock, $.001 par value per share, (Shares), subject to adjustment
as set forth herein at an exercise price per share of $8.00 (the
Warrant Exercise Price) subject to adjustments as set forth
herein. The Holder agrees with the Company that this Warrant is
issued, and all the rights hereunder shall be held subject to,
all of the conditions, limitations and provisions set forth
herein.
2. Exercise of Warrant. This Warrant may be exercised by Holder
as to all or any part of the Shares covered hereby at any time
during the period (the Exercise Period) commencing on the date of
the second annual renewal of the Holders website advertisement
with Vequity, in the manner and within the time period set forth
in paragraph 3 below, and ending on the expiration of thirty days
thereafter. Such renewal of the Holders website advertisement is
a condition precedent to the exercise of this Warrant. This
Warrant, if not exercised, will expire and become null and void
upon the expiration of the Exercise Period for this Warrant. If,
however, the final day for exercise of this Warrant is on a
Saturday, Sunday, or a U.S. federal or Colorado state holiday
observed by the closure of banks in Colorado, then this Warrant
may be exercised on the next succeeding business day. This
Warrant is subject to (i) redemption by the Company pursuant to
the occurrence of the conditions set forth in paragraph 12
hereof; and (ii) earlier termination upon the occurrence of the
conditions set forth in paragraph 8 hereof. This Warrant will be
exercised upon mailing of the completed and executed Exercise
Form attached hereto, for the numbers of shares purchased,
together with this Warrant and a certified or cashier's check
payable to the order of the Company for the aggregate purchase
price of the Shares so purchased, addressed to Vequity c/o Thomas
H. Moore, 2305 East Arapahoe Road, Suite 220, Littleton, Colorado
80122 or at such other address as the Company shall designate in
writing to Holder. Delivery shall be deemed accomplished as of
the date such items are placed in the U.S. Mail (or any other
mail delivery service), postage prepaid, addressed as set forth
above. The following are additional items related to the exercise
of this Warrant:
Upon the exercise of this Warrant as aforesaid, the Company
shall as promptly as practicable, and in any event within fifteen
(15) days thereafter, execute and deliver to Holder a certificate
or certificates in the name of Holder for the total number of
whole Shares for which this Warrant is being exercised. Upon
receipt by the Company of: (i) a properly completed Exercise
Form, (ii) this original Warrant, and (iii) the funds required
for the Exercise price, the Holder shall be deemed to be the
Holder of record of the Shares to be issued upon such exercise,
notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such
Common Shares shall not then be actually delivered to the Holder.
If this Warrant shall be exercised with respect to less than all
of the Shares, Holder shall be entitled to receive a similar
warrant of like tenor and date covering the number of Shares in
respect of which this Warrant shall not have been exercised.
This Warrant shall lapse and shall be null and void, if not
exercised by Holder during the Exercise Period, unless terminated
sooner pursuant to the provisions of paragraph 8 or 12 hereof.
3. Second Annual Renewal of Website Advertisement. The second
annual renewal of the Holder's website advertisement may be
accomplished after the Holder's initial purchase of website
advertising from the Company and at any time during the period of
twenty-five (25) months thereafter, provided that the first
annual renewal of the Holder's website advertising shall have
been completed in a timely manner. The second annual renewal of
the Holder's website will be deemed complete upon the Company's
receipt of payment for a third year of website advertising from
the Holder.
4. Covenants of Company. The Company covenants and agrees that
all the Shares which may be issued upon the exercise of this
Warrant will, upon issuance, be fully paid and non-assessable and
free from all taxes, liens and charges with respect to the
issuance thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue). The Company further
covenants and agrees that during the period within which this
Warrant may be exercised, the Company will at all times have
authorized and reserved, a sufficient number of Shares to provide
for the exercise of this Warrant and the delivery of the Shares
upon such exercise.
5. Legend and Restrictions on Transfer. Any shares issued as a
result of the exercise of this Warrant will be restricted as to
their transferability and will bear a restrictive legend as set
forth herein. There is no established trading market or price for
the company's shares. The Company does not currently intend to
register with the Nasdaq National Market or any other exchange or
market until the Company's Management in its sole discretion
determines to remove the legend and make application for
inclusion in a national market. The company's transfer agent will
not transfer these shares unless approved by the company after
consultation with counsel to determine that the transfer is in
compliance with this agreement or that the legend may be removed
and that the shares may be transferred in compliance with the
provisions of the Securities Act.
(a) No shares issued as a result of the exercise of this Warrant
may be transferred except as set forth below:
Any recipient of shares issued as a result of the exercise of
this Warranty may transfer its interest to immediate family
members by transfer or inheritance. Immediate family members
shall mean the spouse or children of a shareholder. In addition,
a shareholder may transfer its interest to an LLC, partnership,
corporation, trust or other entity controlled by such shareholder
or such shareholder's immediate family members. All Holders agree
to the restrictions on transfers specified herein.
The following legend will appear on the shares issued as a result
of the exercise of this Warrant:
The shares evidenced by this certificate are subject to the
transfer restrictions set forth in the Warrant For The Purchase
of Shares of Common Stock pursuant to which these shares were
issued. These securities may not be offered or sold or
transferred unless or until the transfer is approved by the
Company after consultation with counsel to determine that the
transfer is in compliance with the terms of this Warrant or until
this legend is removed by the Company's Management, in its sole
discretion.
6. Adjustments of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and number of Shares purchasable
pursuant to this Warrant shall be subject to adjustment from time
to time as follows:
(a) In the event the Company shall at any time after the issuance
of this Warrant, and prior to its exercise or expiration, issue
or sell any Shares through a registered public offering
(excluding any shares issued or sold pursuant to the Company's
Registration Statement dated ______, 2000 and any shares issued
pursuant to outstanding options, conversion rights or redemption
rights) for a consideration per share less than the Warrant
Exercise Price in effect immediately prior to the issuance or
sale of such Shares, then, and thereafter successively upon each
such issuance or sale, the Warrant Exercise Price in effect
immediately prior to the issuance or sale of such Shares shall
forthwith be reduced to a Warrant Exercise Price (calculated to
the nearest full cent) equal to the price at which such shares
were issued or sold. For the purposes of any computation to be
made in accordance with the provisions of this paragraph the
following provisions shall be applicable.
(i) In the event of the issuance or sale of Shares for cash, the
consideration received by the Company therefore shall be deemed
to be the net cash proceeds received by the Company for such
Shares, after deducting commissions or other expenses paid or
incurred by the Company for any underwriting of, or otherwise in
connection with, the issuance or sale of such Shares.
(ii) In the event of the issuance or sale of Shares for
consideration other than cash or consideration a part of which
shall be other than cash, the amount of the consideration other
than cash received by the Company for such Shares shall be deemed
to be the fair market value of such consideration as determined
by the Board of Directors of the Company, irrespective of any
accounting treatment thereof.
(ii) In the event of the issuance of Shares as a dividend, the
Shares shall be deemed to have been issued for consideration
equal to the Warrant Exercise Price at the close of business on
the dividend record date. If no dividend record date is fixed,
the date on which the resolution of the Board of Directors of the
Company declaring such dividend is adopted shall be treated as
the record date.
In the event the Company shall at any time exchange as a whole,
by subdivision or consolidation in any manner or by effecting a
stock dividend, the number of Shares, then outstanding into a
different number of Shares, with or without par value, then,
thereafter, the number of Shares which Holder shall have the
right to purchase (calculated immediately prior to such change),
shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of Shares of
the Company issued and outstanding by reasons of such change, and
the Warrant Exercise Price of the Shares after such change shall,
in the event of an increase in the number of Shares be
proportionately reduced and in the event of a decrease in the
number of Shares, be proportionately increased.
7. Survival of Mergers and Reorganizations. In the event of the
reclassification of, or change in the outstanding Shares (other
than a change in the number of shares outstanding as a result of
the sale or issuance of shares and other than a change in par
value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision, combination or stock
dividend), or in the event of any consolidation or merger of the
Company into, another corporation, the Company, or such successor
Company, as the case may be, shall provide that Holder shall
thereafter be entitled to purchase the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, or merger by a Holder of
the number of Shares which this Warrant entitled the Holder
thereof to purchase immediately prior to such reclassification,
change, consolidation or merger. Such Company, which thereafter
shall be deemed to be the Company for purposes of this Warrant,
shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for
in paragraph 6 hereof.
8. Sale of Assets, Dissolution. In the event of the sale of all
or substantially all the assets of the Company, or in the event
of any distribution of all or substantially all of its assets in
dissolution or liquidation, the Company shall mail notice thereof
by certified mail to Holder, at the Holder's address on the books
and records of the Company and shall make no distribution to the
shareholders of the Company until the expiration of thirty (30)
days from the date of mailing of the aforesaid notice; provided,
however, that in any such event if Holder shall not exercise this
Warrant at or before the thirtieth (30th) day after the date of
mailing such notice, this Warrant automatically becomes null and
void. The Company shall not, however, be prevented from
consummating any such sale without awaiting the expiration of
such thirty (30) day period, it being the intent and purpose
hereof to enable Holder, upon exercise of this Warrant, to
participate in the distribution of the consideration to be
received by the Company upon any such sale or in the distribution
of assets upon any dissolution or liquidation.
No Fractional Shares. The number of Shares subject to issuance
upon the exercise of this Warrant shall be
rounded down to the nearest whole number of Shares so that no
fractional Share or scrip shall be issued upon the exercise of
this Warrant. Holder shall not be entitled to receive any
compensation or property in lieu of such fractional Share that it
may have been entitled to in the absence of this provision. It is
the intent of the Company that all fractional interests shall be
eliminated.
10. Notices. If there shall be any adjustment as provided in
paragraph 6 hereof, or if securities or property other than
Shares of the Company shall become purchasable in lieu of Shares
upon exercise of this Warrant, the Company shall forthwith cause
written notice thereof to be sent by registered mail, postage
prepaid, to Holder at its address shown on the books of the
Company, which notice shall be accompanied by a certificate of
either independent public accountants of recognized standing or
the Chief Financial Officer of the Company, setting forth in
reasonable detail the basis for the adjusted Warrant Exercise
Price or the facts requiring any such adjustment.
11. Taxes. The issuance of any stock or other certificate upon
the exercise of this Warrant shall be made without charge to
Holder for any tax in respect of the issuance of such
certificate. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other
than that of Holder, as the registered Holder of this Warrant,
and the Company shall not be required to issue or deliver any
such certificate unless and until the person or persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
12. Redemption. The Company may redeem (repurchase) this Warrant
from the Holder for $1.00 per share at any time after its
issuance and prior to its exercise or expiration by giving thirty
(30) days prior written notice to the Holder by certified mail,
return receipt requested at the Holder's address shown on the
books of the Company. Notwithstanding the foregoing, upon receipt
of a notice of the Company's intent to redeem this Warrant for
$1.00 per share, the Holder may exercise this Warrant and
purchase the shares at the Warrant Exercise Price at any time
within thirty (30) days from the date of the redemption notice in
which event the Company shall not have the right the redeem the
Warrant. If the Holder does not exercise this Warrant within such
thirty (30) day period, then the Company will redeem (repurchase)
this Warrant for the $1.00 per share redemption price. On and
after the date and time fixed for any such redemption, Holder
shall have no rights with respect to this Warrant except to
receive the redemption price per share upon the surrender of this
Warrant.
13. Limitations on Transferability of Warrant: This Warrant may
not be transferred except to the Holder's immediate family
members by transfer or inheritance. Immediate family members
shall mean the spouse or children of a Warrant Holder. In
addition, a Holder may transfer this Warrant to an LLC,
partnership, corporation, trust or other entity controlled by
such Holder or such Holder's immediate family members. Holder
agrees to the restrictions on transfers specified herein. In the
event this Holder elects to transfer or assign this Warrant, in
whole or in part to a permitted transferee, it shall do so by
completing, executing and delivering a copy of the appropriate
Warrant Transfer Form that is attached hereto to the permitted
assignee(s) and the Company. If this Warrant is transferred, in
whole or in part, to a permitted transferee, this Warrant shall
be surrendered at our principal office, or such other office as
we shall notify the Holder hereof in writing, along with the
appropriate completed and executed Warrant Transfer Form attached
hereto, and thereupon, a new Warrant(s) will be issued to the
permitted transferee (and the Holder in the event of a partial
assignment) for the number of Shares covered by such Warrant(s)
as appropriate. Upon the transfer of this Warrant by Holder in
compliance with the applicable provisions hereof to our
satisfaction and that of our counsel, (i) the designated
permitted transferee(s) shall have the same rights and privileges
and be subject to the same obligations as originally granted
hereunder to Holder to the extent of such assignment, and (ii)
all references to this Warrant to Holder shall be deemed, and
shall upon delivery of a new Warrant to the permitted transferee
be changed, to the permitted transferee.
14. Warrant Holder Not Shareholder. This Warrant does not confer
upon Holder any right to vote or to consent or to receive notice
as a shareholder of the Company in respect of any matters
whatsoever, or any other rights or liabilities as a Shareholder,
prior to the exercise thereof as provided herein.
15. Lost Warrants. In case any Warrant shall be mutilated, lost,
stolen or destroyed, the Company may issue a new Warrant of like
date, tenor and denomination and deliver the same in exchange and
substitution for and upon surrender and cancellation of any
mutilated Warrant, or in lieu of any Warrant lost, stolen or
destroyed, upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant, and upon
receipt of indemnity satisfactory to the Company.
16. Indemnification by Holder. Holder, by acceptance hereof,
agrees to indemnify and hold harmless the Company, its directors
and officers, and each other person, if any, who controls the
Company, against any losses, claims, damages, or liabilities,
joint or several, to which the Company or any such director or
officer or any such person may become subject under the Act, or
any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the disposition by Holder of this
Warrant or the Shares issuable upon the exercise hereof in
violation of the provisions of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
issued and Holder has approved and accepted the same as of the
day and year first above written.
Vequity Corporation
By: __________________________
Thomas H. Moore, President
HOLDER
By: _______________________
Name: _____________________
Title: ______________________
WARRANT EXERCISE FORM
The Holder named below hereby exercises this Series B Warrant for
the purchase of the number of Common Shares indicated in the
Warrant that is attached hereto. Enclosed herewith is:
my certified or cashiers check for the Warrant Exercise Price
made payable to Vequity Corporation, and the Series B Warrant
Holder agrees that shares issued as a result of the exercise of
this Warrant may only be transferred in accordance with the terms
set forth in the Warrant Agreement.
Name and Address of Holder:
____________________________________
____________________________________
SIGNATURES:
Authorized signature: _______________________________________
Authorized signature of Co-Owner: ___________________________
Date:
Mail to:
Vequity Corporation
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
_________________________________________________________________
For office use only:
Date Received: ___________________________
Date Accepted: _____________________
Date Rejected:
Holder's Check Amount: ________________________
Check No.: ____________ Check Date: _____________
Deposited: _______________________
[CAPTION]
EXHIBIT 4.4
Lock-up Agreement
LOCK-UP AGREEMENT BY AND BETWEEN VEQUITY CORPORATION AND CERTAIN
OF ITS SHAREHOLDERS
This Lock-up Agreement (the Agreement) is made and entered into
by and between Vequity Corporation (Vequity) and the individual
shareholders whose names are subscribed hereto effective with
respect to each named individual as of the date affixed by the
signature of the individual.
We, the undersigned shareholders of Vequity, hereby agree that we
will not sell or transfer any shares of the common stock of
Vequity owned or controlled by us, except as authorized herein,
sooner than the later of six months after the date on which
Vequity shall register with a national market to allow trading in
its shares or six months after the date on which Vequity elects
in its sole discretion to remove the legend that restricts
trading of the shares that may be sold in its public offering
made pursuant to a Registration Statement filed with the
Securities and Exchange Commission.
Subject to the provisions of this paragraph, the undersigned
shareholders may, at any time, transfer his/her shares to
immediate family members by transfer or inheritance without
breaching the terms of this Agreement. Immediate family members
shall mean the spouse or children of a shareholder. In addition
and further subject to the provisions of this paragraph, a
shareholder may, at any time, transfer its interest to an LLC,
partnership, corporation, trust or other entity controlled by
such shareholder or such shareholder's immediate family members
without breaching the terms of this Agreement. In the event of
any transfer allowed by this paragraph the Transferee shall agree
to and be bound by the terms of this Agreement before such
transfer shall be effective.
Vequity may refuse to recognize any attempted sale or transfer
made in contravention of this Agreement and may instruct its
transfer agent not to effect such a transfer. The parties
specifically recognize that a breach of this Agreement could
cause irreparable harm to Vequity. Vequity shall be entitled to
any and all rights and remedies available at law or in equity,
including without limitation specific performance and equitable
relief by way of injunction, as a remedy for any breach of this
obligation of confidentiality.
The parties specifically agree that this Agreement is intended to
provide each party with specific benefits and long term
advantages and that each party has received adequate
consideration for the obligations imposed hereby.
This Agreement is made and entered into with respect to each
party hereto as of the date that such party signs the Agreement
as set forth below.
LOCK-UP AGREEMENT SIGNATURES
Vequity Corporation
By: _____________________
Date: ___________________
Its: ____________________
Thomas H. Moore
_________________________
Date: ____________________
Thomas H. Moore
Kathleen Moore
__________________________
Date: ___________________
Kathleen Moore
__________________________
Date: ___________________
Joe L. Cook
__________________________
Date: ___________________
Joe L. Cook
Marilyn M. Call
__________________________
Date: ___________________
Marilyn M. Call
Dirk L. Cline
__________________________
Date: ___________________
Dirk L. Cline
Richard W. James
___________________________
Date: ____________________
Richard W. James
Jacquelin K. Reeves
Date: ___________________
Jacquelin K. Reeves
Ronald E. Moitzfield
___________________________
Date: ____________________
Ronald E. Moitzfield
Todd A. Gibson
__________________________
Date: ___________________
Todd A. Gibson
J. Brent Garfield
__________________________
Date: ___________________
J. Brent Garfield
[CAPTION]
Exhibit 5.1
Legal Opinion on Legality of Shares and Consent of Counsel
September 23, 2000
Vequity Corporation
Thomas H. Moore, President
2305 East Arapahoe Road, Suite 220
Littleton, Colorado 80122
Re: Vequity Corporation
Registration Statement on Form SB-2
Gentlemen:
I have acted as counsel to the Corporation in connection with the
preparation of the Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the 1933 Act), relating to the proposed
public offering of 4,000,000 Shares of the Corporation's Common
Stock, par value $0.01 per share (the Common Stock), including
Series A Warrants that may be exercised for an additional
2,560,000 Shares of the Corporation's Common Stock and Series B
Warrants that may be exercised for an additional 2,000,000 Shares
of the Corporation's Common Stock.
I am furnishing this opinion to you in accordance with Item 601
(b) (5) of Regulation S-B promulgated under the 1933 Act for
filing as Exhibit 5.1 to the Registration Statement.
I am familiar with the Registration Statement, and I have
examined the Corporation's Restated Articles of Incorporation,
the Corporation's By-laws, as amended to date, and minutes and
resolutions of the Corporation's Board of Directors and
shareholders. I have also examined such other documents,
certificates, instruments and corporate records, and such
statutes, decisions and questions of law as I have deemed
necessary or appropriate for the purpose of this opinion.
Based upon the foregoing, I am of the opinion that the Shares of
Common Stock to be sold by the Corporation to the public,
including the Shares to be issued upon the exercise of the Series
A Warrants and the Series B Warrants, when issued and sold in the
manner described in the Registration Statement (as amended), will
be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an Exhibit to
the Registration Statement and to the use of my name in the
Prospectus constituting a part thereof in connection with the
matters referred to under the caption Interests of Named Experts
and Counsel.
Very truly yours,
J. Brent Garfield
[CAPTION]
Exhibit 10.1
Investortiser Patent Application
METHOD AND SYSTEM FOR CAPITALIZING A BUSINESS AND MAINTAINING A
CUSTOMER BASE AND/OR REVENUE BASE BACKGROUND OF THE INVENTION
1. Field of the Invention.
The present invention relates, in general, to methods for
operating a business entity, and, more particularly, to a method
and system for capitalizing a business entity and developing and
stabilizing a customer base and/or revenue base.
2. Relevant Background.
For any business entity to thrive it must first attain and then
maintain a stable customer base. This is particularly difficult
for startup businesses where they must create the customer base
from nothing and grow that base up to a level sufficient to
support the business endeavor. Traditionally businesses relied on
techniques such as product differentiation and advertising to
accomplish these tasks. As used herein, the term "product"
includes both goods and service type products including bundles
of goods, services, as well as bundles of goods and services
together.
Product differentiation means to provide a product that is
perceived by the customer base to be marginally superior to
competitive products. This marginal superiority must be
sufficient to draw customers from the competitive product.
Although offering a marginally superior product remains a sound
way to maintain a customer base, it suffers some limitation from
the business perspective. For example, the business must maintain
the superiority over its competitor's products. This is difficult
or impossible for products such as service products where
improvements are readily copied by competitors. Further,
effective advertising may create an incorrect customer perception
that a competitor's product is superior. This enables large, well
funded businesses that can afford deep advertising budgets to
compete against new market entrants even where the new entrant
has superior products. The result of such techniques is often a
marketplace with inferior products where the marketplace has such
high entry barriers that newcomers with superior products cannot
create and maintain sufficient market share to survive.
Another problem for businesses involves generating and
maintaining adequate capital (e.g., funds, cash, or other
economic resources). Capitalization is a continuing problem for
business entities (e.g., corporations, partnerships, and the
like). This is particularly true in the case of startup
businesses that do not have a proven track record of profits and
a stable customer base. Capitalization is even more problematic
where the business competes in a market with little
differentiation between competitors. In such cases, the market is
often divided amongst many competitors so that no one competitor
can provide economies of scale that lower costs to that
business's customers.
In many markets this division results in lowering profit margins
to a point where market participants (i.e., businesses offering
products to the market) flounder while the low profit margin
creates an entry barrier to new competitors. In such cases, the
customer base desires a product provider that can more
efficiently provide the product so that the cost to the product
consumer is reduced.
Traditionally, each business entity competes to provide a product
marginally superior to the products of its competitors. Each
entity intends that the margin of superiority is sufficient to
gain a sufficient market share so as to afford that business an
economy of scale that will allow it to provide its product more
efficiently than can its competitors. Unfortunately, many markets
do not permit sufficient product differentiation to provide the
desired marginal superiority. As a result, end users tend to use
multiple product suppliers and may switch between suppliers over
time such that economies of scale do not become a benefit to the
consumer. In such a circumstance it is apparent that an unstable
customer base is disadvantageous to both the business and the end
user. Hence, a need exists for a means to differentiate between
product providers that also allows the end user to have the best
available products at any given time.
Similarly, many products require a sufficient level of end user
recognition before the product becomes practicable. For example,
a "yellow pages" type business directory works well only when a
sufficient number of product end users recognize the particular
publication as "the place to go" for business information.
Advertisers wish to advertise in a place where they will reach
the most customers, and customers wish to use a directory that
has the most comprehensive collection of advertisers. This
creates a "chicken and egg" problem that raises the entry
barriers for new competitors. The entry barrier for new
competitors is high because end users are familiar with and tend
to continue using the existing product. Also, the cost to
customer in this instance is high because of the lack of
competition. A need exists for a method and system for lowering
entry barriers to markets where superior products require a
critical mass of customers to achieve a level of market
acceptance that draws a sufficient number of end users to support
the business.
A particular problem exists in businesses where the customer
(i.e., the purchaser of a product from an organizing business) is
different from the end user of a product. Advertising is a
particular example of such a business. Advertising is purchased
from an advertising agency, media company, or the owner of a
business directory publication, for example. In this transaction
the advertiser is referred to as the "customer" and the party
selling the advertising space is referred to as the "organizing
business entity". However, the end user of the advertisement is
neither the organizing business entity nor the customer, but
instead is a third party consumer that uses the advertisement to
aid in product selection. For clarity, the consumer is referred
to as the "end user" herein. All of these parties share a desire
to reach end users with the customer's message at minimal cost to
the customers. These costs are not simply monetary, particularly
in the case of the end user. The end user desires to receive
advertising that minimizes the time and effort to compare product
suppliers thereby enabling the end user to select the best from
among the available sources.
SUMMARY OF THE INVENTION
Briefly stated, the present invention involves a method for
capitalizing a business entity and developing and stabilizing a
customer and/or revenue. Once a product to be sold by the
organizing business is developed, an ownership interest in the
business is authorized to be sold to the customers of the
organizing business. Each product is sold to a customer together
with a right to buy a preselected quantity of the authorized
ownership interest in the business entity. Upon a customer's
request, the right is exercised for the preselected quantity of
ownership interest.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 shows a networked computer environment implementing the
system, method and devices in accordance with the present
invention;
FIG. 2 illustrates basic product components in accordance with an
embodiment of the present invention; and
FIG. 3 illustrates in flow diagram form details of a particular
embodiment of a method and system in accordance with the present
invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
The present invention is particularly described in terms of a
business application for creating and stabilizing a customer and
revenue base in an electronic business directory service.
However, it is contemplated that the teachings of the present
invention are more broadly applicable to other businesses facing
the challenges of capitalization, customer base stabilization,
and revenue base stabilization. An understanding of the present
invention is aided by a clear understanding of the following
terminology:
"organizing business entity" is the business entity that is using
the methods and system in accordance with the present invention
to provide a product to a customer base for the purpose of
creating a revenue base.
"customer" is the person or entity that purchases the product
from the organizing business entity. In the particular examples
herein, the customer is typically an advertiser.
"customer-partner" is an entity that, in accordance with the
present invention, is a customer as defined above that also holds
an ownership interest in the organizing business entity.
"end user" is the person or entity that actually uses the
product. In most of the examples herein, the end user is
different from the customer, although this is not true in all
contemplated applications.
"customer base" is the group of customers that purchase the
product from the organizing business entity. A "stable" customer
base is a customer base that is biased in favor of the product
offered by the organizing business entity as opposed to
competitor products so as to reduce a tendency to shift between
competitive products.
"revenue base" is an income stream generated from selling a
product to customers. A "stable" revenue base is one that tends
to remain constant or increase in a predictable manner in the
face of competitive market forces such as entrance of new
competitors.
"ownership interest" broadly refers to any type or kind of claim
that one may have to the equity or future profits of an
organizing business. An ownership interest is typically, although
not always, represented by some legal instrument such as a
contract or a share of stock. As used herein, an ownership
interest may range in kind from a promise or contractual
obligation to a fully transferable unrestricted stock.
FIG. 1 illustrates a typical distributed computing environment,
such as the Internet, in which the present invention may be
implemented. In overview, FIG. 1 shows general and/or special
purpose computers, workstations or personal computers that are
connected via communications links of various types. The
representative computer system shown in FIG. 1 includes a
workstation or personal computer (PC) 111 coupled to communicate
with other devices through a network, fabric or other data
communication "cloud" 116. Workstation 111 typically includes
input/output ("I/O") devices, central processing unit ("CPU") and
memory sections (not shown) and an associated monitor for
interacting with a user. A variety of input devices, such as a
mouse or keyboard, form a portion of the workstation 101 and are
coupled to the I/O section to provide user input data.
Host computers such as host 101 are accessible through the
network 116 to provide requested data and services to end users
such as workstation 111. Host 101 typically includes mass storage
devices such as CDROM and hard disk devices (not shown) for read
only and read-write storage. Additionally, host 111 may access
external mass storage devices such as disk array 102 that is
directly connected to host 101 and disk array 103 and tape
storage 104 that are coupled through connections to network 116.
In a particular implementation, host 101 implements an
internet-based business directory that is essentially a database
for storing, retrieving, and distributing business information.
The business directory includes a plurality of entries with each
entry associated with a customer business. The business
information may include, among other things, business name,
address, phone number, SIC code, and other equivalent types of
information useful in identifying the products and services
provided by the business. Data storage device 102 stores the
business directory in, for example, a database having a plurality
of entries. An organizing business entity operates host 101. It
should be understood that the organizing business entity may own
host 101 and/or storage devices 102-104, or may lease storage
space and processing time from a third party that owns the
hardware equipment.
The computer program devices in accordance with the present
invention are instantiated in host 101 and are operative to
interface with users through network 116. The computer program
devices in accordance with the present invention process requests
to access data from the business directory database and respond
to those requests by providing that data to a user operating, for
example, a workstation 111.
In addition to business and product identification data, the
business directory database includes a pointer or hyperlink
pointing to an internet world wide web site associated with the
customer business. Host 101 also includes computer program
devices configured to implement and host the customer's web site.
Alternatively, another host 101 (not shown) may host the customer
web site. In either case, the host entity controls both the
directory database and the customer web site and sells the
customer a product that includes a directory listing and the
customer web site.
Network 116 may be implemented as a public network, a wide area
network (WAN), local area network (LAN) and may use any available
technology for establishing communication links such as Ethernet,
Fibre Channel (FC), transfer connection protocol (TCP), Internet
Protocol (IP), asynchronous transfer mode (ATM), digital
subscriber line (DSL), cable, satellite, and the like. Network
116 may also couple to external LAN or WAN subnetworks such as
LAN 108 including workstations 112 and 113 and a server 110
coupled together by a hub 109.
Each host 101 serves to provide requested data in response to
request data packets received from network 116. In accordance
with the present invention, each host 101 can have a unique
interface, data format, query syntax, security protocol, and the
like. For example, server 101 may be configured as a web server
and so responds to hypertext transfer protocol (HTTP) request
packets and generates responses formatted as hypertext markup
language (HTML), standard generalized markup language (SGML) or
extensible markup language (XML) web pages, and the like. In
contrast other servers 101 may use file transfer protocol (FTP)
or other available transfer protocols, both public and private.
In a particular example, at least one server 101 implements a web
server that hosts a customer "website" having a predefined
structure and access syntax and protocol. In general each website
is designed to provide information about the associated
customer's product offerings in response to queries communicated
through network 116.
The communication process involves a request message generated by
computer 111 that is addressed to a specific server 101. The
request message is processed by the receiving server 101 which
responds by returning a web page in, for example, HTML format. In
conventional applications where the computer 111 is running a web
browsing application, the HTML page is rendered and displayed on
the requesting computer 111.
In a distributed computing environment, some of the computer
program products containing mechanisms to effectuate the
apparatus and methods of the present invention may reside in the
memory and mass storage portions of the workstations 111, 112 and
113. The computer program products containing mechanisms to
effectuate the apparatus and methods of the present invention are
readily embodied in magnetic, optical, magneto-optical or other
available machine readable encoding systems.
As shown in FIG. 2, the organizing business entity provides a
product 201 that comprises one or more components that can be
purchased by a customer. The present invention is particularly
illustrated as an advertising product and more specifically as an
Internet based web site hosting service and product directory,
however, it should be understood that the inventive features of
the present invention may be usefully applied to other products.
For example, banking services, financial services products,
telephony products, subscription services as well as conventional
goods may benefit from the business model implemented by the
system and methods in accordance with the present invention.
In the example of FIG. 2, the product 201 includes a directory
listing 202 and a web site 203, both described above. Directory
listing 202 comprises a plurality of entries selected from a
database 205 in response to an inquiry from end user 210.
Directory listing 202 includes a number of entries where each
entry is associated with a particular customer of the organizing
business entry. Typically the customer's in directory listing 202
are competitors that have each purchased an entry in the
directory database 205. Each directory entry includes a hyperlink
pointer to the website 203 to aid in directing a customer inquiry
from the directory listing to a particular web site that is
associated with an end user selected customer business. The
content of the customer specific web site is typically selected
and arranged by the customer to provide the end user with product
information unique to that customer.
An important feature of the present invention is that each
product 201 includes a right to ownership 203 that can be
exercised at the customer's request to obtain an ownership
interest 209. Preferably, the right to obtain an ownership
interest 209 is exclusive to those who have purchased a product
from the organizing business so that the owners are either the
founders of the organizing business and the customer-partners
that have exercised their right(s) 204. Ownership interest 209
enables a customer that purchases a product 201 to purchase an
ownership interest in the organizing business itself. This
ownership interest 209 may be in the form of shares of stock,
restricted stock shares, partnership interests, preferred stock,
options, contractual rights to buy, and the like. The right to
ownership 204 is exercisable by the customer ownership interests
209 in a ratio determined by, for example, the amount of business
done between the customer and the web organizing business entity.
Other criteria may include the size of the customer's web site,
the number of entries purchased by a customer in the directory
database 205, or the length of time that a customer has been a
customer of the organizing business entity. These criteria and
others will be readily apparent to those of skill in the art and
are readily modified to meet the needs of a particular
application.
An important advantage of the ownership interest component of
product 201 is that each customer becomes an owner of the
organizing business entity in rough proportion to the amount of
business that the customer does with the organizing business
entity. Customers who choose to exercise the ownership right 204
will potentially receive future benefits not only in the form of
product benefits, but also in the form of owner benefits such as
dividends, increased stock price, and the like. This feature of
the present invention provides an incentive for customers to
continue purchasing advertising services from the organizing
business entity because as part owner, they receive a direct
benefit from their own purchase. Also, this feature of the
present invention provides a mechanism by which end customers of
otherwise diverse business interests can band together to control
the products and services provided by an organizing business
entity. In this manner, the ownership interest feature provides
both a means for creating a customer base and a means for
stabilizing that customer base once created.
The coupling of a right to an ownership interest with the
purchase of a product is an efficient way of raising capital.
This is of particular importance for startup organizing business
entities. Because the shareholders are customers it is
contemplated that they will be superior shareholders as compared
to those gathered by conventional capitalization mechanisms. The
customers/partners will have common interests that include not
only profitability of the organizing business entity, but also a
fundamental interest in the competitiveness, quality, and
sustained performance of the organizing business entity's
products themselves.
In essence, the ownership interest component 209 serves to
differentiate product 201 where other features of product 201 are
difficult to differentiate among competitors. For example, many
competitors can provide web site component 203. Any innovation in
web site 203 is readily copied by competitors thereby preventing
its use as an effective product differentiator. However, because
a competitor site 207 cannot offer the equity component,
end-users will continue to prefer product 201 to those offered by
competitor site 207. Moreover, because customers owning products
201 are also owners of the organizing business entity, they have
not only an interest in improving product 201, but also the
control necessary to implement changes to product 201 that will
make it superior, or at least competitive with any product
offered by competitor site 207.
An optional feature of product 201 in accordance with the present
invention is that each product 201 includes an obligation 206
owed by the organizing business entity to the customer to
purchase entries or "hot links" on competitive business
directories that include hyperlinks that point to the customer's
web site 203. A hot link in a hypertext media system such as the
World Wide Web is a reference to another document that when
activated by a user loads the referenced document into the user's
browser application (or the equivalent). Component 206 serves to
increase the distribution and accessibility of the customer's web
site 203 to the end users. In the past, this cross listing
technique was not implemented because the competitor site might
steal the customer's business by providing a competitive product
that was substantially equivalent to product 201. However, in
accordance with the present invention product 201 provides
sufficient marginal superiority by virtue of ownership interest
209 such that the benefits of cross listing with a competitor
site 207 can be achieved without risk of losing the customer. It
is contemplated that the net benefit of the competitor link
purchase component will increase the value of product 201 and
provide increased exposure and distribution for the products of
the customer and increased selection for the end user.
A further component shown in FIG. 2 comprises an obligation 208
owed by the organizing business entity to the customer to spend a
fixed portion of the purchase price of product 201 on promotion
of the organizing business entity's product 201. In essence,
product 201 includes an obligation on the part of the organizing
business entity to contribute an agreed upon portion of the
purchase price to a promotional fund where that promotional fund
is dedicated to promotion of the organizing business entity's
product (not the customer's product directly).
This promotion can be in the form of advertisement or other
promotion directed to attract additional end users 210. Component
208 had little value in the past because the customer had little
interest in whether the organizing business entity promoted
product 201 or not as such promotion primarily benefited the
organizing entity, not the customer. However, because the
customer is optionally a part owner because of ownership
component 209, an obligation to promote future sales of product
201 is directly beneficial to a customer.
All of the components of product 201 shown in FIG. 2 work
cooperatively to 1)unite a diverse group of customers into a
cohesive and stable customer base 2)stabilize the revenue stream
generated by a particular product and 3)capitalize the organizing
business entity with a group of owners with superior motivation.
These features of product 201 are particularly useful in markets
where the customer base is readily fractured. In addition to
markets where there is little product differentiation, the
present invention is useful in markets where there exist few
factors that tend to make the customer base cohesive. For
example, where the customer base includes customers with varying
business needs, diverse economic and social backgrounds, and the
like, there is little opportunity for the customer base to
achieve a "critical mass" sufficient to sustain the host
business. The present invention essentially creates this cohesion
by binding an ownership interest with a product offering.
The present invention is also particularly useful in markets
where the end user of the product is different from either the
product provider (e.g., the organizing business entity in the
particular examples) or the product purchaser (e.g., the customer
or customer-partner in the particular examples). A typical
example of such a market is an advertising market.
FIG. 3 illustrates steps in the operation of the method and
system in accordance with the present invention. In step 301 a
product is developed comprising goods, services, or a combination
of goods and services such as product 201 described hereinbefore.
The organizing business entity performs the product development
301 directly or through the use of agents. Alternatively, an
organizing business entity may purchase rights to a product that
is already developed by a third party.
In step 303, the organizing business entity authorizes, using
available or required legal means, an ownership interest in the
organizing business entity itself. Various governmental
authorities may have diverse requirements for the authorization
in step 303 and so the appropriate combination of steps must be
chosen in step 303 to meet the needs of a particular
jurisdiction.
The ownership interest authorized in step 303 may be divisible
and freely transferable on a public exchange, restricted to
trading on a private exchange, or restricted from trading for a
period of time, or a combination of the above according to the
securities laws of the appropriate governing authorities. To give
the ownership interest value they must be transferable in some
fashion, but it is contemplated that a wide variety of ownership
instruments may be used to provide the value needed in a
particular application. Accordingly, it is not intended that the
present invention as defined in the appended claims be limited by
the type of ownership interest authorized in step 303.
In step 305 a product 201 (shown in FIG. 2) is sold together with
the right in step 306 to purchase the ownership interest that is
authorized in step 303. At the end user's discretion the right
transferred in step 306 can be exercised or not in step 307.
The right will have a time period in which it must be exercised
to convert the right 204 into an ownership interest 209. If the
right is not exercised, the customer becomes something akin to a
conventional customer with the organizing business entity
providing the product in step 309. The customer thereafter
receives the benefits of a superior product 201 but is not
otherwise obligated to, or benefitted by, the success of the
organizing business entity.
When the right of step 306 is exercised within the predetermined
time period, ownership interest 209 (shown in FIG. 2) are issued
to the customer, typically in the form of tangible ownership
instruments, in step 311 and the customer becomes a
customer-partner. The exercise step 307 most likely will require
a purchase of ownership interest (e.g., shares of stock) by the
customer thereby bringing working capital into the organizing
business entity. As shown, the organizing business provides the
product 201 to the customer in step 309 and may provide a
dividend and/or other ownership benefits to the customer-partner
on a regular or semi-regular basis in step 313.
In the case of renewable products such as advertising or a
subscription service, the product 201 provided in step 309 will
expire and need to be renewed. In such cases, the process returns
to step 305 in which the product is sold, once again with rights
to purchase an ownership interest in the organizing business
entity.
It is contemplated that at some point in time a sufficiently
stable customer base and/or revenue base will have been achieved
such that further sale of ownership interests of the organizing
business will not be desired. It is further contemplated that an
organizing business entity may at such time opt out of the
process in accordance with the present invention by several
means. For example, the current owners may agree to discontinue
the sale of stock as a component of product 201 and continue to
sell products and ownership interests de-coupled from each other.
Alternatively, the shareholders may distribute any remaining
authorized stock to themselves and continue to operate the
organizing business entity in a conventional fashion.
Although the invention has been described and illustrated with a
certain degree of particularity, it is understood that the
present disclosure has been made only by way of example, and that
numerous changes in the combination and arrangement of parts can
be resorted to by those skilled in the art without departing from
the spirit and scope of the invention, as hereinafter claimed.
I CLAIM:
1. A method for capitalizing an organizing business entity
comprising the steps of:
developing a product to be sold by the organizing business;
authorizing an ownership interest in the business;
selling a product to a customer;
offering only to customers that have purchased a product a right
to buy a preselected quantity of the ownership interest in the
organizing business; and issuing an ownership interest to the
customer in response to that customer's request to exercise the
right to buy the preselected quantity of ownership interest.
2. The method of claim 1 wherein the ownership rights provide a
potential beneficial return to the customer based upon future
performance of the business entity.
3. The method of claim 1 wherein the ownership interest comprises
restricted equity shares that cannot be transferred for a period
of time.
4. The method of claim 1 wherein the ownership interest may be
transferred by the customer to a third party that is not a
customer of the organizing business.
5. The method of claim 1 wherein the product comprises
Internet-based business directory services including a directory
listing for the customer.
6. The method of claim 5 wherein the product further comprises
purchasing services causing the business to purchase competitor
products on behalf of the customer.
7. The method of claim 6 wherein the step of selling comprises
selling the product for a business specified purchase price, and
the product further comprises a contribution of an agreed upon
portion of the purchase price to a promotional fund dedicated to
promotion of the product.
8. A system for performing electronic commerce comprising:
a server computer having a data storage unit coupled thereto and
a user interface;
a business directory stored in the data storage portion, the
business directory comprising a plurality of entries wherein each
entry is associated with a customer that purchased the entry;
computer program devices operating on the server to enable users
to access the business directory;
an organizing business entity operating the server computer; and
an authorized ownership interest in the host business, wherein
each entry in the business directory is associated with a right
to buy a preselected quantity of the authorized ownership
interest.
9. The system of claim 8 wherein the rights at least some of the
customer's have been exercised upon that customer's request.
10. The system of claim 8 wherein each entry in the business
directory is associated with a specified purchase price, and each
entry is associated with an obligation on the part of the
organizing business entity to contribute an agreed upon portion
of the purchase price to a promotional fund dedicated to
promotion of the organizing business's product.
11. A business directory product provided by an organizing
business entity comprising:
an internet world wide web site;
an entry in an Internet business directory with the entry
including a hyperlink pointing to the world wide web site; and
a right to buy a preselected quantity of ownership interest in
the organizing business entity.
12. The product of claim 11 further comprising:
an obligation on the part of the organizing business to purchase
competitor products on behalf of the customer.
13. The product of claim 11 wherein further comprising an
obligation on the part of the organizing business to contribute
an agreed upon portion of the product's purchase price to a
promotional fund dedicated to promotion of the product.
ABSTRACT OF THE DISCLOSURE
A method and system for capitalizing a business entity and
developing and stabilizing a customer and/or revenue base. Once a
product to be sold by the business is developed by the organizing
business, an ownership interest in the organizing business is
authorized. Each product is sold to a customer together with a
right to purchase a quantity of the authorized ownership interest
in the organizing business entity. Upon a customer's request, the
right is exercised and the organizing business entity issues a
preselected quantity of ownership interest. Thereafter, the
customer becomes a customer-partner and qualifies to receive
ownership benefits in addition to product benefits.
[CAPTION]
Exhibit 10.2
License from Thomas H. Moore to Vequity for Investortiser Concept
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this Agreement) is made and entered into
effective as of this 1st day of July, 2000 by and between Thomas
H. Moore whose address is 1790 East Otero Avenue, Littleton,
Colorado 80122 (the Licensor) and Vequity Corporation, a Colorado
corporation having a place of business at 2305 East Arapahoe
Road, Suite 220, Littleton, Colorado 80122 (the "Licensee").
WHEREAS, Licensor has Developed a Method and System for
Capitalizing a Business and Maintaining a Customer Base and/or
Revenue Base and has applied for a Patent on said Method and
System for Capitalizing a Business and Maintaining a Customer
Base and/or Revenue Base (hereinafter referred to as set forth in
the patent application as the Method and System); and
WHEREAS, Licensor desires to grant Licensee a non-exclusive
license to use the Method and System; and
WHEREAS, Licensee desires a license from Licensor allowing
Licensee to use the Method and System; and
WHEREAS, Licensor and Licensee wish to set out in writing the
terms and conditions of their agreements and understandings in
respect of such license.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Grant. Licensor hereby grants Licensee a sole, worldwide,
non-exclusive license for a term of ten (10) years from the date
hereof to use the Method and System and to employ the Method and
System in its business and capitalizing efforts (the "License").
This License includes the right to the use of the term
Investortiser.
(a) Limitations. The parties agree that the License is for the
use of Licensee only and is not for distribution or use of any
other person or entity and that the License granted hereby to
Licensee may not be transferred by Licensee to any other person
or entity and Licensee shall not have authority to sub-license or
assign its rights to any other person or entity.
(b) Access. Licensee will have full access to the Method and
System for its own use in capitalizing its business and
maintaining its customer and/or revenue base.
2. Licensor Royalty. In consideration of the licenses granted
hereunder, Licensee agrees to pay Licensor a royalty (the
"Licensor Royalty") equal to one Dollar ($1.00) per year.
3. Version Licensed. Licensee may use the Method and System in
the form in which it is presented in the Patent Application and
may not be modified by Licensee without the written approval of
Licensor.
4. Licensor's Representations. Licensor covenants, represents and
warrants to Licensee as follows:
(a) Licensor is an individual.
(b) Licensor has full power, authority, and legal right to enter
into this Agreement and this Agreement has been duly executed and
delivered by Licensor to Licensee and is a legal, valid and
binding obligation of Licensor, enforceable against Licensor in
accordance with its terms.
(c) Licensor is the sole owner of the Method and System and has
all legal and beneficial title to the Method and System free and
clear of all encumbrances.
(d) Licensor will use its best efforts to maintain all existing
patents and patent applications that Licensor owns in respect of
the Method and System, at no charge to Licensee.
5. Licensee's Representations. Licensee covenants, represents and
warrants to Licensor as follows:
(a) Licensee is a corporation duly organized, validly existing
and in good standing under the laws of Colorado and is authorized
to do business in all jurisdictions where such authorization is
necessary.
(b) Licensee has full corporate power, authority, and legal right
to enter into this Agreement and this Agreement has been duly
executed and delivered by Licensee to Licensor and is a legal,
valid and binding obligation of Licensee, enforceable against
Licensee in accordance with its terms.
(c) Licensee shall make reasonable efforts to employ the Method
and System made available by Licensor and will make available to
Licensor all information reasonably requested by Licensor to
allow Licensor to evaluate the use and results obtained by
Licensee from its employment of the Method and System.
6. Patent Protection. Licensor retains ownership over the Method
and System licensed hereunder and the ability to file additional
patent applications and copyright applications in its
developments, which shall form part of the License.
7. Confidentiality. Licensee hereby acknowledges that trade
secrets and confidential information of Licensor obtained hereby
or otherwise disclosed relating to the Method and System have
been disclosed or made available in the strictest confidence and,
accordingly, each party hereby covenants and agrees with the
other that they will not disclose or use such information except
in order to fulfill the terms of this Agreement. Licensee further
acknowledges that breach of this Agreement by it or its
Representatives would cause irreparable harm and that damages
would not be an adequate remedy and that the Licensor may obtain
injunctive or other equitable relief to remedy or prevent any
breach or threatened breach of this Agreement by the Licensee or
any of its Representatives. Such remedy shall not be deemed to be
the exclusive remedy for any such breach of this Agreement, but
shall be in addition to all other remedies available at law or in
equity to the disclosing party. This Paragraph 7 shall survive
for three (3) years following any termination of this Agreement.
8. Term and Termination. This Agreement shall continue until
terminated in accordance with this Paragraph 8. This Agreement
shall terminate upon the expiration of the ten (10) year term
unless extended in writing by the parties. Licensee may terminate
this Agreement for non-payment of royalty by giving Licensor ten
(10) days notice of default and right to cure. Either party may
terminate this Agreement with written notice of termination if
the other party is in breach of any covenant hereunder on its
part and such other party fails to cure the breach within sixty
(60) days of receiving written notice to cure such breach.
Termination under this Section shall be effective from the date
written notice is delivered to such other party or the date
specified in the written notice of termination, whichever is
later. Neither party shall be liable to the other for damages of
any sort resulting solely from such party terminating this
Agreement in accordance with its terms.
9. Notices. Any notice required or permitted to be given under
this Agreement shall be made in writing and shall be deemed to
have been given if it is in writing and is delivered in person,
sent by same day or overnight courier, or mailed by certified or
registered mail, return receipt requested, postage prepaid,
addressed to the party at its address set forth first above or at
such other address as such party may subsequently furnish to the
other party by notice hereunder. Notices will be deemed effective
on the date of delivery in the case of personal delivery, or two
(2) business days after mailing or courier pickup.
10. Governing Law. This Agreement shall be construed, enforced,
performed and in all respects governed by and in accordance with
the laws of Colorado. The parties hereto submit and agree to the
exclusive jurisdiction of the courts of Colorado.
11. Waiver. No waiver by any party of any term or condition of
this Agreement or any breach thereof shall be made effective
unless made in writing and signed by the party purporting to give
the waiver. No waiver by any party of any term or condition of
this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
12. Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be deemed automatically amended
so that it is enforceable to the maximum extent permissible under
the laws of that jurisdiction without invalidating the remaining
provisions hereof.
13. Further Assurances. Each of the parties shall execute all
further documents and instruments and do all further and other
things as may be necessary to implement and carry out the terms
of this Agreement.
14. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective
successors and permitted assigns.
15. Independent Parties. In performing their respective
responsibilities under this Agreement, the parties are
independent contractors, and this Agreement is not intended to
create and shall not be construed to create, a relationship of
partner, joint venturer, principal and agent or an association
for profit between the parties.
16. Headings and Plurals. The headings herein have been inserted
as a matter of convenience only and in no way define, limit or
enlarge the scope or meaning of this Agreement or any of its
provisions. Unless the context clearly indicates otherwise, where
appropriate the singular shall include the plural and vice versa,
to the extent necessary to give the terms defined herein and/or
the terms otherwise used in this Agreement their proper meanings.
17. Entire Agreement. This Agreement and those documents
expressly referred to herein embody the entire agreement and
understanding between the parties concerning the subject matter
hereof and supersede all prior understandings, communications and
agreements between the parties, written or oral, with respect to
the subject matter hereof, and all past courses of dealing or
industry custom. This Agreement may only be amended, supplemented
or modified in a written instrument duly executed by or on behalf
of each party hereto. Time is of the essence in this Agreement
and for each and every term and condition hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed.
Vequity Corporation
Licensee
Date: July 1, 2000
By: Ronald E. Moitzfield
____________________________
Ronald E. Moitzfield
Its: Executive Vice-President
Date: July 1, 2000
Thomas H. Moore
_______________________________
Thomas H. Moore
Thomas H. Moore, Licensor
[CAPTION]
Exhibit 10.3
License and Co-Branding Agreement with InfoSpace.com, Inc.
ENHANCEMENTS AND CO-BRANDING AGREEMENT
This Agreement (the Agreement), effective as of August 1, 1999
(the Effective Date), is made by and between InfoSpace.Com, Inc.,
a Delaware corporation having a principal place of business at
15375 NE 90th St., Redmond, WA 98052, including any successor of
InfoSpace.com, Inc. (InfoSpace), and Vequity Corporation, a
Colorado corporation with offices at 2305 East Arapahoe Road,
Suite 220, Littleton, CO 80122 (Vequity).
Recitals
Whereas, Vequity has a web site on the World Wide Web part of the
Internet (WWW) that provides online advertising services located
at Uniform Resource Locator (URL) www.vequity.com (along with any
successor or replacement thereto, the Vequity Site) and various
affiliated sites;
Whereas, InfoSpace provides information and other content to end
users via several sites on the WWW, including without limitation
a national directory system that contains listings for businesses
and residences and other information, the primary home page of
which is located at http://www.infospace.com (along with any
successor or replacement thereto, the InfoSpace Site), on various
affiliated sites, and on the Web sites of certain of its co-brand
partners (collectively, as defined below, the InfoSpace Network);
Whereas, Vequity desires to permit users of the Vequity Site to
access the InfoSpace Network maintained by InfoSpace at the
InfoSpace Site; and
Whereas, Vequity and InfoSpace desire that InfoSpace will include
certain enhancements to listings displayed on the InfoSpace
Network. Vequity will provide these enhancements in accordance
with the terms of this Agreement.
Now Therefore, the parties hereby agree as follows:
Definitions:
"InfoSpace Network" as used herein shall mean: (a) a national
directory system containing listings for businesses and
residences and other located at http://www.infospace.com (or any
successor or replacement thereto); and (b) such other points of
presence maintained by or for InfoSpace on the Internet or any
other public data network as initially designated and
periodically revised by InfoSpace (in its sole discretion) as
being part of the InfoSpace Network for purposes of this
Agreement (which points of presence may include business and
residential directory listing content posted and maintained by or
for InfoSpace on third party web sites pursuant to agreements
between InfoSpace and third parties). The InfoSpace Network for
purposes of this Agreement, includes the InfoSpace Basic Network,
and may include (at InfoSpace's sole discretion) the InfoSpace
Premium Network. If InfoSpace enters into any agreement with any
third party following the date of this Agreement to maintain
points of presence on such third party's web site, InfoSpace
shall have sole discretion on whether to include such third
party's web site, within the definition of "InfoSpace Network"
for purposes of this Agreement.
"InfoSpace Basic Network" as used herein shall mean: (a) a
national directory system containing listings for businesses and
residences and other information located at
http://www.infospace.com (or any successor or replacement
thereto); and (b) such other web pages maintained by or for
InfoSpace from time to time with respect to which InfoSpace has
entered into agreements with certain third parties to provide
access to certain business and residential directory listing
content posted and maintained by InfoSpace on such web pages
through such third parties' web sites whereby InfoSpace is not
obligated to pay such third parties any fee of any kind for such
rights.
"InfoSpace Premium Network" as used herein shall mean: (a) the
InfoSpace Basic Network; and (b) such other web pages maintained
by or for InfoSpace, or portions thereof, with respect to which
InfoSpace has entered into agreements with certain third parties
to provide access to certain business and residential directory
listing content posted and maintained by InfoSpace on such web
pages through such third parties' web sites whereby InfoSpace is
obligated to pay such third parties any fee of any kind for such
rights. InfoSpace will provide Vequity a substantive list of
current Premium Network provider's, and will continue to provide,
on reasonable request but not more than quarterly, an updated
list of Premium Network providers for the duration of the term of
the Vequity/InfoSpace agreement inasmuch as this provision does
not cause InfoSpace to violate any confidentiality agreement.
"National directory system" as used herein shall mean any and all
yellow pages directories or similar databases irrespective of
titling directory which is or will be created, maintained, made
available by, provided or hosted by InfoSpace, at its discretion,
within the InfoSpace Network.
All Listings Section as used herein shall mean the section,
irrespective of titling, of a directory that contains unpaid
listings. This section is always last in priority and therefore
the last section of listings to be made available for viewing by
a user, therefore requiring the Preferred Listing, Enhanced
Listings as well as any other listing sections to be viewed
first. Listings are displayed in alphabetical order.
Enhanced Listings Section as used herein shall mean the section,
irrespective of titling, of a directory, which contains paid
listings. This section is viewed prior to any listings in the All
Listing Section and after the listings in the Preferred Listing
Section. Listings are displayed in alphabetical order.
Preferred Listings Section as used herein shall mean the section,
irrespective of titling, of a directory, which contains paid
listings. This section is always first in priority, meaning the
section is viewed prior to any listings in the All Listings
Section and Enhanced Listing Section, and therefore is the first
section of listings to be made available for viewing by a user.
Listings are displayed in alphabetical order.
Certain Obligations
Vequity Sales Effort. Vequity shall solicit businesses in order
to sell its advertising listing services, including its Internet
yellow pages advertising packages. Within the print directory
areas of Vequity, as set forth in Exhibit A (the Markets),
Vequity will have the right to perform premise
bundled-print-and-Internet-yellow-pages sales of Enhanced Section
Listings of Internet yellow pages Listing Enhancements for
distribution on the InfoSpace Basic Network, subject to Exhibit
A. Within the Markets, Vequity shall have the same right, subject
to Exhibit A, to perform premise
bundled-print-and-Internet-yellow-pages marketing campaigns to
businesses to promote its advertising listing services, and in
connection therewith to use, reproduce, publish, perform and
display the InfoSpace Marks (InfoSpace Marks shall mean those
Trademarks of InfoSpace set forth on Exhibit C hereto and such
other Trademarks as InfoSpace may from time to time notify
Vequity in writing to be InfoSpace Marks within the meaning of
this Agreement) in promotional and marketing materials, and
electronic and printed advertising, publicity, press releases,
newsletters and mailings about Vequity.
Vequity Enhancement Data and Software Integration Tool. Upon
execution of this Agreement, Vequity will use the InfoSpace
web-based software integration tool (InfoSpace Publisher
including InfoSpace PageExpress for web site creation) provided
by InfoSpace to integrate yellow pages advertising listing
enhancements (Listings Enhancements) on a listing-by-listing
basis. Collectively, these Listing Enhancements are the Vequity
Enhancement Data.
Display of Enhancements. InfoSpace will use such Vequity
Enhancement Data to create text and/or graphical advertising and
hyperlinks to be located on the InfoSpace Basic Network (Vequity
Listings Enhancements), as determined in the sole discretion of
InfoSpace, that will point users to the advertising items for the
corresponding listing as indicated. InfoSpace may, as
appropriate, include text and or icon hyperlinks to: customer
provided e-mail, customer provided URL, mapping, driving
directions, and web sites in listings within the InfoSpace Basic
Network's yellow pages, which form may change from time to time
at InfoSpace's sole discretion. In addition, InfoSpace may
provide additional hyperlinks on the InfoSpace Basic Network, the
number, function, design, label and placement of such hyperlinks
to be determined solely by InfoSpace.
Formatting. Provisions for Vequity Listing Enhancements include:
Listing Results Pages Icon Links. See Exhibit B.
Listings. Vequity shall provide to InfoSpace a list of Vequity's
advertisers and such advertisers' listings within the InfoSpace
Basic Network in an acceptable format (each a Listing) and such
Listings shall be placed, subject to Exhibit A, in search results
generated in response to searches of the by InfoSpace Basic
Network. In addition to the free listing features in the
InfoSpace Network maintained by InfoSpace, to the extent the
listing information is available to InfoSpace, each Vequity's
customer advertiser Listing shall include the Basic Listing:
Basic Listing. The Basic Listing may include the following
features:
Enlarged Listing. The font size of the name shall be increased
from the standard listing font size to the largest font size
available.
Emboldened Listing. The font shall be emboldened with the
hypertext markup language bold command making the text bold
whenever possible depending on the user's browser.
Link to E-mail. A text link to an E-mail address of the business
being listed.
Phone Number. Phone number of business being listed.
Link to Vequity's Customer's URL. A text and or graphical link to
a Vequity's customer-provided web site or URL. All web sites
created by Vequity shall have a back button to transport the user
back to the referring page.
Mapping. A map showing the location of the business being listed.
Driving Directions. Driving directions to the location of the
business being listed.
InfoSpace PageExpress. InfoSpace PageExpress is a one-page basic
web site, which may be created by Vequity staff and is able to be
edited by Vequity customers. InfoSpace PageExpress shall be
maintained by InfoSpace on its servers (and/or such third party
servers as periodically designated by InfoSpace in its sole
discretion) as such may be periodically modified, revised,
supplemented or enhanced by InfoSpace in its sole discretion;
provided, however, it is understood that, upon completion of the
release of PageExpress software allowing for multiple pages,
Vequity shall be allowed to create sites with up to four (4)
pages and that any additional-page or e-commerce upgrades to
PageExpress web sites are not covered under this Agreement.
Co-Branding; Grant of Rights; Advertising.
Co-Brand Pages. InfoSpace shall use commercially reasonable
efforts during the term of this Agreement (i) to make the
InfoSpace Basic Network maintained by InfoSpace at the InfoSpace
Site available to users of the Vequity Site as provided below,
(ii) obtain and maintain in effect all telephone lines and other
communications transmission devices to enable the Vequity Site to
access the InfoSpace Basic Network (ii) answer any reasonable
questions that Vequity may from time to time ask of InfoSpace
relating to the InfoSpace Network, (iii) provide quotes for the
terms and conditions of any updates or other modifications
Vequity may from time to time desire InfoSpace to make to the
Vequity Site, or (iv) render other limited incidental consulting
services from time to time requested by Vequity, subject to
agreement by the parties on the terms and conditions for such
services. Advertising and promotions, at InfoSpace's discretion,
may appear on all or any of the Co-branded Web Pages (as defined
below) and, unless otherwise allowed under this Agreement,
InfoSpace shall have the sole right to sell such advertising and
promotions and the right to track the number of impressions on
the Co-Branded Web Pages.
Grant of Rights. Subject to the terms and conditions of this
Agreement, InfoSpace grants to Vequity: (a) the right to include
on the Vequity Site hypertext links (whether in graphical, text
or other format) which enable "point and click" access to
locations of the InfoSpace Site specified by InfoSpace (and
subject to change by InfoSpace from time to time); (b) the right
to permit users to link to Results Pages (as defined below) via
Query Pages (as defined below) hosted on the Vequity Site; (c) a
limited, non-exclusive, non-transferable, non-assignable right to
use, and allow end-users to use, the Page Express web site
building tools solely for purposes of creating, editing and
updating user web sites pursuant to this Agreement; and (d) a
limited, non-exclusive non-transferable, non-assignable right to
use the InfoSpace web-based software integration tool InfoSpace
Publisher for purposes of integrating Listing Enhancements on a
listing by listing basis, under the terms of this Agreement.
"Query Pages" means any page hosted on the Vequity Site which
incorporates the Graphical User Interface and on which users may
input queries and searches. "Results Pages" means any page hosted
on the InfoSpace Network which incorporates the Graphical User
Interface (as defined below) and displays the Directory Content
in response to queries and searches made on a Query Page.
"Co-Branded Pages" means, collectively, the Results Pages and the
Query Pages. It is expressly understood that the rights granted
to Vequity as set forth in this Section for the Markets do not
include the right to redistribute, resell, sublicense, or perform
the licensed activities outside the Markets, which conduct would
be in material breach of the Agreement.
Graphical User Interface. "Graphical User Interface" means a
graphical user interface, which may be designed by InfoSpace and
Vequity and implemented by InfoSpace pursuant to this Agreement
for the Vequity Site, that contains or implements branding,
graphics, navigation, content or other characteristics or
features such that a user reasonably would conclude that such
interface is part of the Vequity Site, and containing InfoSpace's
customary and required content attribution which may include logo
and Powered by InfoSpace. Vequity and InfoSpace will cooperate to
design the user-perceptible elements of the Graphical User
Interface, with the goals of: (a) conforming the display output
of the look and feel associated with the Vequity Site; and (b)
maximizing the commercial effectiveness thereof. Following
agreement by the parties upon the design specifications thereof,
InfoSpace will use commercially reasonable efforts to develop the
Graphical User Interface and to implement the same on the
Co-Branded Pages. InfoSpace shall have no liability or obligation
for failure to develop or implement the Graphical User Interface
or any Co-Branded Pages as contemplated by this Section 1.5.3, or
for any nonconformity with the design specifications agreed upon
by the parties, provided InfoSpace has used commercially
reasonable efforts to develop and implement the same as provided
in this Section 1.5.3.
Limitations. Vequity and its affiliates shall have no right to
reproduce or sub-license, re-sell or otherwise distribute all or
any portion of InfoSpace Network content or any other content
posted on any portion of the InfoSpace Network to any person or
entity, including without limitation via the Internet (including
the World Wide Web) or any successor public or private data
network. This Agreement and delivery of any InfoSpace content or
any portion hereunder to Vequity or any third party pursuant to
this Agreement shall not cause InfoSpace to be in violation of
any law of any jurisdiction or third party agreement, and
InfoSpace may at any time modify its grant of rights to the
extent necessary to ensure compliance. Should InfoSpace agree to
provide content services to any third party introduced to
InfoSpace by Vequity pursuant to this Agreement, InfoSpace may
require as a prerequisite to access to InfoSpace's content
services any third party to execute InfoSpace's standard content
distribution agreement, which may be presented by InfoSpace (at
InfoSpace's option) in the form of an on-line click-wrap
acknowledgment. InfoSpace shall provide only a basic templated
site which shall not require development or customization by
InfoSpace. In addition, neither party or any affiliate shall have
any right to: (a) edit or modify any advertisement submitted for
a Co-branded Page or (b) remove, obscure or alter any notices of
Intellectual Property Rights appearing in or on any content or
other materials.
Advertising and Revenue Share
Placement of Banner Advertisements. Each party shall have the
right to sell banner advertisements (such banner advertisements
adhering to InfoSpace's standards and sized at approximately 60 x
468 pixels Banner Advertisements) on the Co-branded Pages. The
appearance of the Banner Advertisements will be as reasonably
determined by the party selling such Banner Advertisements;
provided, that InfoSpace may reject any Banner Advertisement if
such Banner Advertisement would materially adversely affect the
download time or performance of such page.
Remuneration for Banner Advertisements. The parties agree to
share in the advertising revenues from Banner Advertisement sales
(Advertising Revenues) as set forth on Exhibit D. Advertising
Revenue share payments will be reconciled and paid within thirty
(30) days following the calendar quarter in which the applicable
Advertising Revenues are received. The party that sells the
Banner Advertisement (the Selling Party) will provide with each
such payment a report setting forth Advertising Revenues received
by it for such quarter and the percentage thereof payable to the
other party.
Records and Audit; Late Payments. During the Term, each party
shall maintain accurate records of any and all fees payable to
the other party under this Agreement. Any amounts owed under this
Agreement not paid when due will be subject to a finance charge
equal to one and one-half percent (1.5%) per month or the highest
rate allowable by law, whichever is less, determined and
compounded daily from the date due until the date paid. Payment
of such finance charges will not excuse or cure any breach or
default for late payment.
Co-brand Web Site Referral Program. Vequity shall make referrals
to InfoSpace of opportunities for InfoSpace to provide
InfoSpace's basic templated co-brand service. Vequity shall make
such referrals to its financial planning company affiliates for
an initial technology fee of five thousand dollars ($5,000),
payable to InfoSpace from Vequity which shall collect the payment
from the referred entity, each due prior to activation. Ongoing
payments shall be $5,000 per year and due to InfoSpace on the
anniversary thereof. Details of the referral program shall be at
InfoSpace discretion, and Vequity shall operate and abide by the
guidelines as InfoSpace may determine for the referral program.
Initially, it is contemplated that InfoSpace shall provide a
basic templated site which shall not require development or
customization by InfoSpace. InfoSpace shall have the right to
approve of the referral of any third party introduced to
InfoSpace by Vequity pursuant to this Agreement. InfoSpace shall
require, as a prerequisite to access to InfoSpace's content
services, that a third party must execute InfoSpace's standard
content distribution agreement, which may be presented by
InfoSpace (at InfoSpace's option) in the form of an on-line
click-wrap acknowledgment. InfoSpace shall share revenue with
Vequity for referral program templated web sites as set forth in
Section 2.3 below.
Revenue Share Fee; Remuneration
Revenue Share Fee. InfoSpace grants Vequity a limited right (as
described in Section 1.5.2) to integrate in the Markets an
unlimited number of Vequity Listing Enhancements including (i)
Basic Listings with (ii) PageExpress web sites as described in
this Agreement, and for the period of the Term of this Agreement,
in consideration of the greater of (a) the monthly Revenue Share
Fee as defined by the following matrix or (b) twenty thousand
dollars ($20,000):
<TABLE>
<S> <C> <C> <C>
Number of Websites InfoSpace Revenue Maximum Revenue Cumulative Annual
Sold Per Year Share Per Website) Share Paid to InfoSpace Revenue Share Paid
(Breakpoint Pricing) Per Breakpoint to InfoSpace
------------------ ------------------- ----------------------- ------------------
1 and 5,000 $400 $2,000,000 $2,000,000
5,001 and 10,000 $300 $1,500,000 $3,500,000
10,001 and 20,000 $200 $1,000,000 $4,500,000
Over 20,000 $100 $ 500,000 $5,000,000
For the purposes of the table above, the terms Website and Websites shall mean either (a)
a PageExpress site as defined in this Agreement or (b) a Vequity Listing Enhancement
placed on the InfoSpace Network.
Maximum Annual Revenue Share Fee. In all cases, the maximum Revenue Share Fee Vequity
shall pay is six million dollars ($6,000,000) per year.
Revenue Share for referral program co-branded web sites. InfoSpace shall share revenue
with Vequity as follows: eighty percent (80%) of the initial technology fee (fee minimum
$5,000) payable to InfoSpace from Vequity prior to activation and ongoing payments shall
be split on the same basis. There shall be no maximum to this Revenue Share.
</TABLE>
Payment Terms. Vequity shall remit the first minimum monthly
Revenue Share Fee of twenty thousand dollars ($20,000) on or
before August 20, 1999. The first month to which this first
payment shall apply will be the earlier of October 1999 or the
month of activation of the co-branding of InfoSpace content for
Vequity. Vequity shall remit payment to InfoSpace for the second,
third, and fourth months when the fourth month payment is due
(minimum of $60,000). Thereafter, Vequity shall remit the Revenue
Share Fee for each month, according to Section 2.1, by the
twentieth (20th) day of the month following the month of service,
after which the payment shall be considered late and InfoSpace,
at its sole discretion, may then disengage all services, links
and co-branding supplied to Vequity with fifteen days written
notice to Vequity. Payment shall be made in immediately available
U.S. Dollar funds. Methods of payment may include, without
limitation check, wire transfer, cashier's check, or cash.
Records. Each party shall keep reasonable records in connection
with its respective performance under this Agreement and shall
permit the other party reasonable access to such records at such
other party's expense upon reasonable notice, solely for the
purpose of verifying such party's compliance with the terms of
this Agreement. Vequity shall submit monthly reports of its web
sites sold pursuant to this Agreement in support of Revenue Share
calculations along with its payment of the Revenue Share Fee
payment. Either party, at its expense, and upon ten (10) days'
advance notice to the other party, shall have the right during
the Term to examine or audit such records in order to verify the
listing figures reported in any report and the amounts owned to
such party under this Agreement. Any such audit shall be
conducted, to the extent possible, in a manner that does not
interfere with the ordinary business operations of the audited
party. In the event that any audit shall reveal an underpayment
of more than five percent (5%) of the amounts due to the auditing
party for any quarter, the other party will reimburse such party
for the actual cost of such audit.
Taxes. All fees and payments stated herein exclude, and Vequity
shall pay, any sales, use, property, license, value added,
withholding, excise or similar tax, federal, state or local,
related to the parties' performance of their obligations or
exercise of their rights under this Agreement and any related
duties, tariffs, imposts and similar charges, excluding those
taxes based upon InfoSpace's income.
Disputes. In the event that Vequity disputes the amount of money
owed pursuant to any Listing Invoice, Vequity shall notify
InfoSpace of such dispute and the parties agree to cooperate in
good faith to promptly resolve any dispute, including exchanging
such information and documentation as may be reasonably related
to or likely to resolve any and all amounts in dispute.
Proprietary Rights and Licenses
Ownership.
Vequity. All right, title and interest in and to the Vequity
Site, along with all Intellectual Property Rights, as defined
below, related thereto shall remain with Vequity or its licensors
and/or suppliers. For purposes herein, Intellectual Property
Rights shall include all patents, copyrights, trademarks, service
marks, web site design, computer software tools, URLs, trade
secrets and other proprietary or intellectual property rights
arising under the laws of any jurisdiction.
InfoSpace. All right, title and interest in and to the InfoSpace
Site, the InfoSpace PageExpress web site building tool and the
text, graphics, data, designs, computer programs, computer code,
items, inventions, works of authorship, concepts, materials,
methods, processes and other content and information contained
therein or relating thereto, including the InfoSpace Network and
listings, along with all related Intellectual Property Rights to
any of the foregoing, shall remain with InfoSpace, no rights to
resell, sub-license in any way the Intellectual Property Rights
are granted or shall be inferred.
License Grants. Vequity hereby grants to InfoSpace for the term
of this Agreement a non-exclusive, worldwide, royalty-free
license to reproduce, electronically distribute, publicly
perform, publish, publicly display, digitally perform, post,
reformat as required under standards of the InfoSpace Network,
and maintain the Vequity Listings. In furtherance of this
Agreement, InfoSpace shall have the right to use, reproduce,
publish, perform and display the Vequity Marks (Vequity Marks
meaning those Trademarks of Vequity including those set forth on
Exhibit C hereto and/or such other Trademarks as Vequity may from
time to time notify InfoSpace in writing to be Vequity Marks
within the meaning of this Agreement).
3.3 Limitations; Editorial Control Of InfoSpace Network. Either
party may modify its grant to the other party of the rights to
use of any of its trademarks (as set forth in Sections 1.1, 1.5
and 3.2) upon written notice to the other party. Neither party
shall be in violation of any third party intellectual property
rights, third party contract rights or agreements by virtue of
this Agreement, and should a potential violation arise, the
performance and obligations of either party herein may be
qualified and limited in scope to the extent necessary to avoid
such violation. InfoSpace will have the right (but not the
obligation) to remove, refuse to host or edit any Page Express
web site created (or any portion thereof), co-branded web site,
sponsorship or listing which in its sole discretion InfoSpace
considers actually or potentially obscene, indecent, offensive,
defamatory, unlawful, mis-categorized, infringing of third-party
Intellectual Property Rights or third party contract, or
otherwise objectionable or unsuitable for posting anywhere on
InfoSpace's servers (including, without limitation, hyperlinks,
framed content or meta tags). Notices of Intellectual Property
Rights which may be required by InfoSpace or an InfoSpace content
provider shall not be removed from content supplied by InfoSpace.
Confidentiality
Each party that receives information (the Receiving Party) from
the other party (the Disclosing Party) agrees to use reasonable
best efforts to protect all non-public information and know-how
of the Disclosing Party that is either designated as proprietary
and/or confidential or that, by the nature of the circumstances
surrounding disclosure, ought in good faith to be treated as
proprietary and/or confidential (Confidential Information), and
in any event, to take precautions at least as great as those
taken to protect its own Confidential Information of a similar
nature. Each party agrees that the terms and conditions of this
Agreement shall be Confidential Information, provided that each
party may disclose the terms and conditions of this Agreement to
its immediate legal and financial consultants in the ordinary
course of its business. The parties further agree that Listing
and web site content received by or from InfoSpace shall be
included in the Confidential Information of InfoSpace, and that
Vequity may use such information internally for any lawful
purpose, provided that Vequity shall not disclose such
information to any third party without the prior written consent
of InfoSpace.
The foregoing restrictions shall not apply to any information
that: (a) the Receiving Party can document it had in its
possession prior to disclosure by the Disclosing Party; (b) was
in or entered the public domain through no fault of the Receiving
Party; (c) is disclosed to the Receiving Party by a third party
legally entitled to make such disclosure without violation of any
obligation of confidentiality; (d) is required to be disclosed by
applicable laws or regulations (but in such event, only to the
extent required to be disclosed); or (e) is independently
developed by the Receiving Party without reference to any
Confidential Information of the Disclosing Party. Upon request of
the other party, or in any event upon any termination or
expiration of the Term, each party shall return to the other all
materials, in any medium, that contain, embody, reflect or
reference all or any part of any Confidential Information of the
other party. Each party acknowledges that breach of this
provision by it would result in irreparable harm to the other
party, for which money damages would be an insufficient remedy,
and therefore that the other party shall be entitled to seek
injunctive relief to enforce the provisions of this Section 4.
Nonexclusivity
Each party expressly acknowledges and agrees that the rights
granted to the other party in this Agreement are non-exclusive
and that, without limiting the generality of the foregoing,
nothing in this Agreement shall be deemed or construed to
prohibit either party from soliciting third party content, links,
banner ads or other materials, serving content, links, banner ads
or other materials to third parties' web sites, or hosting or
permitting third parties to place links, content, advertisements
or other materials on such party's web site, whether or not, in
each such case, such content, links, advertisements or other
materials are placed in higher priority than or are competitive
with the products, services, content or advertisements of the
other party.
Warranties and Disclaimers
Representations and Warranties. Each party represents and
warrants to the other party that: (a) it is duly incorporated,
validly existing and in good standing under the laws of the state
of its incorporation, and duly qualified to do business in any
state in which it is required to so qualify; (b) this Agreement
has been duly executed and delivered and constitutes a valid and
binding agreement enforceable against such party in accordance
with its terms; (c) no authorization or approval from any third
party is required in connection with such party's execution,
delivery or performance of this Agreement; and (d) the execution,
delivery and performance of this Agreement does not violate the
laws of any jurisdiction or the terms or conditions of any other
agreement to which it is a party or by which it is bound.
Disclaimer. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY
DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
THIS AGREEMENT, THE OPERATION OF THE RESPECTIVE SITES, OR ANY
SERVICES OR ITEMS PROVIDED HEREUNDER, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT, VEQUITY ACKNOWLEDGES THAT THE WEB SITE BUILDING TOOLS,
THE INFOSPACE SITES, THE CO-BRANDED SERVICE USER WEB SITES, THE
CO-BRANDED PAGES AND ANY AND ALL OTHER ITEMS OR SERVICES
FURNISHED BY INFOSPACE UNDER THIS AGREEMENT (INCLUDING, WITHOUT
LIMITATION, ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER
ITEMS USED OR PROVIDED BY INFOSPACE OR ANY THIRD PARTIES IN
CONNECTION WITH PROVIDING ACCESS TO OR HOSTING ANY OF THE
FOREGOING OR THE PERFORMANCE OF ANY SERVICES BY INFOSPACE
HEREUNDER) ARE PROVIDED BY INFOSPACE "AS IS" AND THAT VEQUITY
HEREBY WAIVES, RELEASES AND DISCLAIMS, ALL WARRANTIES,
OBLIGATIONS AND LIABILITIES OF INFOSPACE, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY OF THE FOREGOING. VEQUITY ACKNOWLEDGES THAT
INFOSPACE MAKES NO WARRANTY THAT IT WILL CONTINUE TO OPERATE ITS
WEB SITES OR THE WEB SITE BUILDING TOOLS IN THEIR CURRENT FORM,
OR THAT ITS WEB SITES OR THE WEB SITE BUILDING TOOLS WILL BE
ACCESSIBLE WITHOUT INTERRUPTION, THAT ITS WEB SITES OR THE WEB
SITE BUILDING TOOLS WILL MEET THE REQUIREMENTS OR EXPECTATIONS OF
VEQUITY OR ANY CO-BRANDED SERVICE USER OR THAT THE CONTENT,
SOFTWARE OR ANY OTHER ANY MATERIALS ON OR THROUGH ITS WEB SITES
OR THE SERVERS AND SOFTWARE THAT MAKES ITS WEB SITES AVAILABLE
(INCLUDING, WITHOUT LIMITATION, THE WEB SITE BUILDING TOOLS) ARE
FREE FROM ERRORS, DEFECTS, DESIGN FLAWS OR OMISSIONS
Indemnity
Vequity hereby agrees to defend, indemnify and hold InfoSpace and
its officers, directors and Affiliates harmless from and against
any and all damages, liabilities, costs and expenses (including
reasonable attorney's fees) incurred by InfoSpace as a result of
any third party claim arising out of (a) a breach or alleged
breach by Vequity of any representation or warranty of this
Agreement or (b) a claim that the Vequity Site, Vequity
Enhancement Data, or any content, ads or other materials on the
Vequity Web Site, Vequity Enhancement Data or PageExpress web
site or affiliated web site is misappropriate, violate or
infringe upon any law, Intellectual Property Rights, contract
rights or privacy rights, provided, however, that InfoSpace (i)
gives Vequity prompt notice of any such claim or action, (ii)
allows Vequity sole control of the defense or any settlement
(provided that Vequity shall not, without the consent of
InfoSpace, enter into any settlement that reasonably can be
expected to require a material affirmative obligation of, result
in any ongoing material liability to or materially prejudice
InfoSpace in any way) and (iii) provides reasonable cooperation,
at Vequity's reasonable expense, in Vequity's defense or
settlement of the claim or action.
InfoSpace hereby agrees to defend, indemnify and hold Vequity and
its officers, directors and Affiliates harmless from and against
any and all damages, liabilities, loss, costs and expenses
(including reasonable attorney's fees) incurred by Vequity as a
result of any third party claim arising out of (a) a breach or
alleged breach by InfoSpace of any representation or warranty of
this Agreement or (b) a claim that InfoSpace Network violates or
infringe upon any Intellectual Property Rights, contract rights
or privacy rights (excepting material provided under Section
7.1), provided, however, that Vequity (i) gives InfoSpace prompt
notice of any such claim or action, (ii) allows InfoSpace sole
control of the defense or any settlement (provided that InfoSpace
shall not, without the consent of Vequity, enter into any
settlement that reasonably can be expected to require a material
affirmative obligation of, result in any ongoing material
liability to or materially prejudice Vequity in any way) and
(iii) provides reasonable cooperation, at InfoSpace's expense, in
InfoSpace's defense or settlement of the claim or action.
Limitation of Liability
EXCEPT WITH RESPECT TO ANY LIABILITY ARISING UNDER SECTION 7
HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF
PROFITS, REVENUES OR DATA, OR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, NOR SHALL INFOSPACE'S LIABILITY
UNDER THIS AGREEMENT EXCEED THE AMOUNTS ACTUALLY PAID BY VEQUITY
TO INFOSPACE HEREUNDER DURING THE SIX (6) MONTHS PRECEDING THE
EVENT GIVING RISE TO SUCH LIABILITY.
Term and Termination
Term. This Agreement shall commence as of the Effective Date and
shall continue for two years from the Effective Date of this
Agreement (the Term), unless earlier terminated as set forth
herein. The Term shall be automatically renewed for successive
one-year periods, unless written notice is given by either party
at least 60 days prior to the termination of any term. After
termination, the parties will cooperate to accommodate Vequity
advertisers that have agreements for advertising or websites on
the InfoSpace Network in effect prior to the termination, for up
to one year after termination (the Phase-Out Period), provided
the terms of continuation of service are acceptable to InfoSpace,
and InfoSpace is compensated reasonably and at least to the same
extent as during the Term.
Termination.
Either party may terminate this Agreement for any reason upon
sixty day's written notice to the other party.
Either party may terminate this Agreement at any time upon thirty
(30) days written notice to the other party in the event that the
other party is in material breach of this Agreement and such
party fails to cure such breach within thirty (30) days following
receipt of such notice.
Either party may terminate this Agreement immediately upon notice
in the event that the other party (i) makes a general assignment
for the benefit of creditors, (ii) files a voluntary petition of
bankruptcy, suffers or permits the appointment of a receiver for
its business or assets, (iii) becomes subject to any proceedings
under any bankruptcy or insolvency law where such proceeding has
not been dismissed within sixty (60) days or (iv) has wound up or
liquidated, voluntarily or otherwise.
Upon the effective date of expiration or termination of this
Agreement, all obligations defined herein, including
prioritization rights, shall expire except for those obligations
set forth in Sections 3.1, 4, 6, 7, 8, 10 and 11, and payment
obligations to the date of termination or other obligations which
would reasonably survive termination, which shall survive.
Publicity
The parties may with the other party's prior approval of the
form, content and timing, issue a press release regarding this
Agreement. In the event the parties agree to issue a press
release regarding the relationship between InfoSpace and Vequity,
such release may contain quotes from the chief executive officers
of each of InfoSpace and Vequity, subject to the mutual consent
of both parties.
General Provisions
Governing Law; Jurisdiction; Venue. This Agreement will be
governed and construed in accordance with the laws of the State
of Washington without giving effect to its conflict of law
principles. The jurisdiction and venue of any action or claim
arising out of this Agreement shall be in King County,
Washington.
Compliance with Laws. At their own expense, Vequity and
InfoSpace shall comply with all applicable laws, regulations,
rules, ordinances and orders regarding their respective
activities related to this Agreement.
Severability; Headings. If any provision of this Agreement is
held to be invalid or unenforceable for any reason, the remaining
provisions will continue in full force without being impaired or
invalidated in any way. The parties agree to replace any invalid
provision with a valid provision, which most closely approximates
the intent and economic effect of the invalid provision.
Headings are for reference purposes only and in no way define,
limit, construe or describe the scope or extent of such section,
or in any way affect this Agreement.
11.4 Independent Contractors. The parties to this Agreement are
independent contractors, and no agency, partnership, joint
venture or employee-employer relationship is intended or created
by this Agreement. Neither party may incur any obligations or
liabilities on behalf of the other party. Without limiting the
foregoing, Vequity shall not make any representations or
warranties to third parties on behalf of InfoSpace.
11.5 Notice. Any notices required or permitted hereunder shall
be given to the appropriate party at the address specified above
or at such other address as the party shall specify in writing.
Unless otherwise specified, such notice shall be deemed given
upon personal delivery, upon confirmation of receipt if sent by
fax, or three (3) days after the date of mailing if sent by
certified or registered mail, postage prepaid.
11.6 Entire Agreement; Waiver. This Agreement and the Exhibits
attached hereto set forth the entire understanding and agreement
of the parties, and supersede any and all prior or
contemporaneous oral or written agreements or understandings
between the parties, as to the subject matter of this Agreement.
In the event of any conflict between the Agreement and an
Exhibit, the terms of the Exhibit shall control. Except as
provided herein, only by writing an addendum, signed by both
parties, may a change be made to this Agreement. Waiver by
either party of a breach of any provision contained herein must
be in writing, and no such waiver shall be construed as a waiver
of any other and/or succeeding breach of such provision or a
waiver of the provision itself.
11.7 Assignment and Transfer of Control. Neither party may
assign this Agreement or any rights hereunder without the prior
written consent of the other party, which consent shall not be
unreasonably delayed or withheld, except that the other party's
prior written consent shall not be required where the assignee
(i) is an Affiliate, as defined below, of the assigning party or
(ii) is the successor entity in any merger, consolidation,
reorganization or similar transaction that is acquiring all or
substantially all of the assets of the assigning party.
Affiliate shall mean any entity that has an equity interest of
fifty percent (50%) or more in the assigning party, or any entity
in which the assigning party has an equity interest of fifty
percent (50%) or more. In any event, the assignee must assume
and agree in writing to perform all of the assigning party's
executory obligations and the assigning party must guarantee
performance by the assignee throughout the Term.
11.8 Force Majeure. "Force Majeure Event" means any act of God,
act of governmental authority, act of public enemy, war, riot,
flood, civil commotion, insurrection, severe weather conditions,
or any other cause beyond the reasonable control of the party
delayed; provided that the inability of any party to pay any
monetary sum when due for any reason will not constitute a "Force
Majeure Event" for purposes of this Agreement. Neither party will
be liable for any losses arising out of the delay or interruption
of its performance of obligations under the Agreement due to any
Force Majeure Event, provided that the party delayed will provide
the other party notice of any such delay or interruption as soon
as reasonably practicable, will use commercially reasonable
efforts to minimize any delays or interruptions resulting from
the Force Majeure Event and in no event will any failure to pay
any monetary sum due under this Agreement be excused for any
Force Majeure Event.
11.8 Counterparts Electronic Signature. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original and all of which shall be deemed to be one
instrument. To expedite the process of entering into this
Agreement, the parties acknowledge that Transmitted Copies of the
Agreement will be equivalent to original documents until such
time as original documents are completely executed and delivered.
"Transmitted Copies" will mean copies that are reproduced or
transmitted via photocopy, facsimile or other process of complete
and accurate reproduction and transmission.
InfoSpace.Com, Inc. Vequity Corporation
By: By:
----------------------- ---------------------
Title: Title:
Date: Date:
Exhibit A
The rights granted under this Agreement shall apply solely to the
areas noted in Exhibit E (the Markets).
InfoSpace and Vequity acknowledge that InfoSpace may grant
superior and sometimes exclusive yellow pages listing
prioritization rights to certain local advertising sales
partners. This Agreement shall not cause InfoSpace to violate any
yellow pages listing prioritization rights previously granted to
its partners, nor shall the Agreement be interpreted to grant
rights outside the Markets defined herein or outside the Markets
in which Vequity operates and distributes through a bona fide
yellow page print publisher premise sales force. InfoSpace
reserves the unlimited right to inform Vequity of restrictions
which are required by InfoSpace potential conflicts with
InfoSpace partners concerning solicitation of customers or
categories of customers (in InfoSpace's sole discretion), or
Vequity solicitation of customers in certain areas of the United
States, and Vequity shall abide by such restrictions. InfoSpace
may make commercially reasonable efforts, as necessary in
InfoSpace's sole discretion, to restructure or address prior or
future agreements to allow Vequity Listings to be included in the
highest available priority listing position.
To the extent possible, Vequity Listings shall be placed in the
Enhanced Listing Section (or successor) within the InfoSpace
Basic Network with the following exceptions:
InfoSpace has previously entered into a contract with local
advertising sales partners which prohibit placement, or such
prioritized placement and said local advertising sales partner
have not agreed to allow Vequity's Listings in said
prioritization position.
2. InfoSpace will use reasonable commercial efforts to keep
Vequity's Listings on distribution sites throughout the InfoSpace
Basic Network. However, Vequity understands that the ultimate
control of listings rests with each distribution site owner.
Exhibit B
The design of a link on the listing results page currently
appears as follows. However, this design is subject to change at
InfoSpace's discretion.
Exhibit C
Trademarks
Vequity Marks
Vequity
Vequity.com
InfoSpace Marks
InfoSpace
InfoSpace.com
Powered By InfoSpace
Powered by InfoSpace.com
The Ultimate Directory
Exhibit D
Banner Advertisement Revenue Share
The Selling Party shall receive a commission of thirty percent
(30%) of all Advertising Revenue derived from Banner
Advertisements, which shall be served by InfoSpace on the
co-branded pages. The remaining Advertising Revenue will be then
shared, quarterly, as follows:
Fifty percent (50%) to InfoSpace
Fifty percent (50%) to Vequity
Exhibit E
Non-Exclusive Enhanced Listing Rights
Subject to InfoSpace's right to inform Vequity of any areas where
Vequity cannot solicit listings or conduct business under this
Agreement, Vequity will have the non-exclusive right to placement
in the Enhanced Listing Section at InfoSpace's discretion for its
Vequity Listing Enhancements during the Term (Non-Exclusive
Rights), in all fifty states of the United States of America.
Exhibit F
The look and feel of a Page Express site shall be similar to the
following. However, this design is subject to change at
InfoSpace's discretion.
Exhibit G
The following list of features is intended to clarify certain
features and aspects but, as to products and services, is not a
comprehensive product description, or warranty of performance.
Vequity will supply in a reasonable time frame the definitions of
the virtual areas for its markets.
A local portal presence to be powered by InfoSpace
Standardized design elements to be decided using all or any
portion of InfoSpace's content and portal-in-a-box features,
including but not limited to and
Yellow Pages
White Pages
Classifieds
City Guides
Investing
News
Sports Scores
Community
Government
E-Shopping (ActiveShopper &
ActivePromotion to be discussed)
International Listings
Business Services
Other items and services that may from time to time be added to
the InfoSpace Web Sites by InfoSpace (in its sole discretion)
Vequity and InfoSpace to decide on specific look and feel
parameters and limitations for the co-branded presence.
A local sales solution and
Distribution
All ad packages will be promoted and distributed on the InfoSpace
Network. Hundreds of top-name and top-used sites carrying
Vequity advertisers.
Base packages:
Silver Package
Enhanced Level listing
Bold Font
Enlarged Font
URL link
Email link
Gold Package
Silver Package
plus Ad Link (any graphic) or PageExpress (web sites,
storefronts)
Access to InfoSpace Publisher, the instant publishing system that
allows for the creation of Internet yellow pages advertising,
including web sites and storefronts.
Web-based application and no special equipment, rote data entry,
worldwide access, no client software, minimal MIS maintenance,
etc.
Instantly publishes across the Basic InfoSpace
Network.
Seller maintains control of advertisers orders.
Geo-scoping functionality
Regardless of the advertisers physical address and location, any
listing and any category sponsorship in any package may be set up
to show in the search results of 7 distinct geographies:
City (one city)
Multi-City (up to 5 cities)
State (all cities in one state)
Multi-State (all cities in up to 5 states)
National (all cities nationwide)
Foreign listings (listings from outside the sales
rights area) always appear in the Enhanced Section
Exhibit H
InfoSpace shall provide to Vequity management training and sales
training as follows:
Initial (a.k.a. Launch or Kick-off) Training
If needed, at a mutually acceptable time and place and for a
mutually acceptable duration, InfoSpace's trainer may conduct
initial training to Vequity management and sales management and
representatives to launch the relationship set forth in this
Agreement. Costs shall be borne by InfoSpace.
Ongoing or Follow-up Training
If needed, at a mutually acceptable time and place and for a
mutually acceptable duration, InfoSpace's trainer may conduct
follow-up training to Vequity management and sales management and
representatives. Travel, lodging, and meals costs shall be born
by Vequity.
Exhibit I
In addition to remuneration set forth in Section 2, Vequity shall
remit two hundred dollars ($200) to InfoSpace for each Vequity
web site sale generated through an InfoSpace banner advertisement
of other marketing program. InfoSpace is not obligated to market
Vequity web sites.
[CAPTION]
Exhibit 23.1
Consent of Experts
We consent to the use in the Registration Statement and
Prospectus of Vequity Corporation of our report dated June 12,
2000, accompanying the financial statements of Vequity
Corporation contained in such Registration Statement, and to the
use of our name and the statements with respect to us, as
appearing under the headings "Experts" and "Selected Financial
Data" in the Prospectus.
Hein + Associates LLP
Denver, Colorado
September 28, 2000
