As filed January 17, 2001 File No. 333-49388
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1/A
Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
I-TRACK, INC.
(Exact name of small business issuer in its charter)
NEVADA 7373 91-1966948
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Idenfication
organization) Code Number) Number)
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(810) 469-3500
(Address and telephone number of principal executive offices)
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(Address of principal place of business or intended principal place of business)
BARBARA CASTANON, PRESIDENT
I-TRACK, INC.
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(810) 469-3500
(Name, address and telephone number of agent for service)
Copies of all communications to:
Adam P. Stapen, Esq.
Dill Dill Carr Stonbraker & Hutchings, P.C.
455 Sherman Street, Suite 300
Denver, Colorado 80203
(303) 777-3737; (303) 777-3823 fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, 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 effective registration statement
for the same offering. [ ] _____
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 2,500,000 Shares $0.10 $250,000 $66.00
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Common Stock
Purchawe Warrants 2,500,000 Warrants -- -- --
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Common Stock
Issuable Upon
Exercise of Warrants 2,500,000 Shares $0.50 $1,250,000 $330.00
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Total $1,500,000 $396.00
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
Disclosure Alternative used (check one) Alternative 1 ____; Alternative 2 X
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SUBJECT TO COMPLETION, DATED JANUARY 17, 2001
I-TRACK, INC.
2,500,000 UNITS
Prior to this offering of units, there has been no public market for
our common stock. We are conducting an initial public offering of 2,500,000
units, with each unit consisting of one share of common stock and one warrant to
purchase one share of common stock. The shares of common stock and the warrants
may not be separately traded until six months after the date of purchase. Each
warrant entitles the holder to purchase one share of common stock at the
exercise price of $0.50 per share, beginning anytime after the date of purchase
until twelve months after the completion of this offering. We are not required
to sell any specific number or dollar amount of units, but will use our best
efforts to sell the maximum number of units offered. This offering of units will
terminate on the earlier of the date all of the units offered are subscribed for
or ___________________ [90 days from the date of this prospectus]. Please note
that we may extend this date for up to an additional 90 days.
We are conducting a direct participation offering with no minimum
offering and no escrow. Therefore any funds received from a purchaser will be
available to us as received and need not be refunded to the purchaser.
There is no market for our common stock. After completing our
registration statement, we will use our best efforts to have our common stock
traded on the local over-the-counter markets.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" ON PAGE 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
We cannot sell our units until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell our units and it is not an offer to buy our units in any state where the
offer or sale is not permitted.
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SELLING AGENT GROSS
UNITS OFFERED BY I-TRACK PRICE TO PUBLIC COMMISSIONS PROCEEDS TO I-TRACK
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<S> <C> <C> <C>
Per Share $0.10 $0.01 $0.09
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Total Offering $250,000 $25,000 $225,000
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Underwriting commissions and discounts: We are acting as the general
selling agent. If broker-dealers are used to sell the shares, we will pay them
up to a 10% commission.
Proceeds to i-Track: These amounts do not reflect the deduction of
expenses of this offering, estimated at $30,000.
I-TRACK, INC.
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(810) 469-3500
The date of this prospectus is January 17, 2001
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY.............................................................3
RISK FACTORS...................................................................5
FORWARD-LOOKING STATEMENTS....................................................10
DILUTION......................................................................11
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......................12
DIVIDEND POLICY...............................................................12
USE OF PROCEEDS...............................................................12
SELECTED FINANCIAL DATA.......................................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND/OR PLAN OF OPERATIONS.................................14
BUSINESS......................................................................15
MANAGEMENT....................................................................19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................21
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.....................22
DESCRIPTION OF SECURITIES.....................................................23
PLAN OF DISTRIBUTION..........................................................24
SEC POSITION ON INDEMNIFICATION...............................................25
LEGAL MATTERS.................................................................25
EXPERTS.......................................................................26
AVAILABLE INFORMATION.........................................................26
REPORTS TO STOCKHOLDERS.......................................................26
Consolidated Financial Statements............................................F-1
You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
<PAGE>
PROSPECTUS SUMMARY
Unless the context otherwise requires, the terms "we," "our," and "us,"
refers to i-Track, Inc.
I-TRACK, INC.
We are a development stage company that was incorporated by AVL
Information Systems Ltd. and its principal officers and directors. AVL
Information Systems Ltd. is a Canadian public company that owns and licenses
certain technology and automatic vehicle location systems. AVL Information
Systems Ltd. has incurred significant operating losses over the past six fiscal
years and has a working capital deficiency which casts doubt upon its ability to
continue as a going concern. AVL Information Systems Ltd. and its principal
officers and directors have incorporated us in an effort to start anew and to
take advantage of what they perceive to be the benefits of a United States
publicly traded company. They believe that a U.S. publicly traded company will
provide a level of credibility in the automatic vehicle location system
industry, access to additional funding in the U.S. markets, and the ability for
us to enter into strategic alliances for the development, manufacturing and sale
of automatic vehicle location systems.
On January 7, 2001, we entered into a non-exclusive worldwide
International Distribution Agreement with AVL Information Systems Ltd. Under the
agreement, we are licensed to market and distribute an automatic vehicle
location system called the Spryte System(TM). The Spryte System(TM) integrates
Global Positioning System technology, cellular-wireless communications and the
Internet to enable companies to efficiently manage their mobile resources with
location-relevant and time-sensitive information. The Spryte System(TM) is
designed to enable customers to use the Internet to track the movement of their
vehicles, employees, and goods and services. While there are several ways to
transmit information from a vehicle to a central location, we believe that the
Spryte System(TM) provides significant value to customers by reducing their
costs of doing business and increasing the productivity of their mobile
resources. At this time, we have not generated any revenues.
THE OFFERING
Securities offered............2,500,000 units, with each unit consisting
of one (1) share of our common stock and one
(1) warrant to purchase one share of our
common stock at a price of $0.50 per share.
Description of the Warrants...The warrants are not transferable separately
from the units until six months after the
date of purchase. Each warrant entitles the
holder to purchase one share of common stock
at a price of $0.50 per share at any time
after the date of purchase until twelve
months after the date of purchase.
Common stock outstanding
before the offering.......18,700,000 shares of common stock (as of
January 17, 2001)
after the offering........21,200,000 shares of common stock.
Warrants outstanding
before the offering.......none
after the offering........2,500,000
Use of Proceeds...............Estimated at $195,000 net of offering
expenses. To be used for general corporate
purposes, including working capital and
capital expenditures.
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DISTRIBUTION
We are acting as the general selling agent in this offering of units.
We intend to enter into agreements with securities broker-dealers who are
members of the NASD so the broker-dealers who are involved in the sale of the
units will be paid a commission of up to ten percent (10%) by us. No
broker-dealer has agreed to participate in this offering as of the date of this
prospectus. The NASD must first approve the arrangements with any broker-dealers
that will participate in the distribution of this offering.
RISK FACTORS
Investing in our units involves a high degree of risk. You should
consider carefully the information under the caption "Risk Factors" in deciding
whether to purchase our units offered under this prospectus.
SUMMARY FINANCIAL INFORMATION
The following summary financial data is derived from our unaudited and
audited financial statements for the nine month period ended September 30, 2000,
and period March 8, 1999 (inception) to December 31, 1999, included elsewhere in
this prospectus. We have prepared our financial statements in accordance with
generally accepted accounting principles in the United States. Our results of
operations for any interim period do not necessarily indicate our results of
operations for the full year. You should read this summary financial data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and/or Plan of Operations," "Business," and our financial statements.
BALANCE SHEET DATA: SEPTEMBER 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
Current Assets $16,694 $471
Total Assets $16,694 $471
Current Liabilities $18,496 $3,500
Stockholders' Deficiency $(1,802) $(3,029)
Working Capital Deficiency $(1,802) $(3,029)
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STATEMENT OF LOSS DATA: MARCH 8, 1999 MARCH 8, 1999
9 MONTHS ENDED THROUGH THROUGH
SEPTEMBER 30, 2000 DECEMBER 31, 1999 SEPTEMBER 30, 2000
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues $0 $0 $0
Net Loss $(14,973) $(3,029) $(18,002)
Net Loss per Share $(0.00) $(0.00) $(0.00)
</TABLE>
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RISK FACTORS
Investing in our units involves a high degree of risk. You should be
able to bear a complete loss of your investment. You should carefully consider
the following risk factors and other information in this prospectus before
deciding to invest in our units. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also harm our business.
WE HAVE NO OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE YOUR
INVESTMENT IN OUR UNITS.
Your evaluation of our business will be difficult because we have no
operating history. We were incorporated in March 1999 and have not licensed,
developed or sold any products. We face a number of risks encountered by
early-stage companies in the automatic vehicle location industry, including:
o the uncertainty of market acceptance;
o our need to license and/or develop reliable and robust
products and services that meet the demanding needs of
potential customers;
o our need to establish our marketing, sales and support
organizations, as well as our distribution channels;
o our ability to anticipate and respond to market competition;
o our need to manage expanding operations;
o our dependence on wireless and digital carriers; and
o our dependence on technology which could become incompatible
or out of date.
Our business strategy may not be successful, and we may not
successfully address these risks.
WE HAVE INCURRED LOSSES AND EXPECT LOSSES TO CONTINUE FOR AT LEAST THE NEXT
YEAR.
To date, we have not generated any revenues to fund our business and
pay our ongoing expenses. We expect to continue to incur additional losses for
at least the next year. We generated a net loss of $14,973 for the nine months
ended September 30, 2000, and had an accumulated net loss of $18,002 for the
period March 8, 1999 (inception) to September 30, 2000. In order to become
profitable and sustain profitability, we will need to generate significant
revenues to offset our cost of revenues, and sales and marketing, research and
development, and general and administrative expenses. We may never be able to
achieve or sustain our revenue or profit goals.
WE DO NOT GENERATE ANY REVENUES AND WE RELY ENTIRELY UPON OUTSIDE FINANCING.
Because of our inability to generate revenues, we rely entirely upon
external sources of financing. Since our inception in March 1999, we have
financed our operations through the sale of our common stock and by borrowing
from affiliates of our company. We will need additional financing in an amount
that we are unable to determine at this time to continue with our operations and
the development of our business plan. If our plans or assumptions change or are
inaccurate, we may be required to seek financing sooner than anticipated.
Sources of external financing may include:
o short-term loans from affiliates;
o bank borrowings;
o joint ventures; and
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o future debt and equity offerings.
We cannot assure you that financing will be available on acceptable
terms, or at all. Any additional financing may result in dilution to our
shareholders, including those people who purchase our units in this offering.
Our failure to obtain external financing will have a material adverse effect on
our results of operations and financial condition. If we cannot obtain external
financing when needed, we may be forced to cease operations and abandon our
business, and you may lose your entire investment.
OUR FUTURE EXISTENCE REMAINS UNCERTAIN.
We have suffered losses from operations, require additional financing,
and just recently entered into a distribution agreement with AVL Information
Systems Ltd. Ultimately we need to generate revenues and attain profitable
operations. These factors raise substantial doubt about our ability to continue
as a going concern. There is no assurance that we will be able to achieve or
sustain profitable operations.
WE RELY ENTIRELY UPON OUR RELATIONSHIP WITH AVL INFORMATION SYSTEMS LTD., OUR
CONTROLLING SHAREHOLDER, WHICH MAKES US VULNERABLE TO CHANGES IN ITS OPERATIONS.
At this time, we rely entirely upon our relationship with AVL
Information Systems Ltd. Our dependence upon AVL Information Systems Ltd. has
made us vulnerable to changes in the operations of AVL Information Systems Ltd.
AVL Information Systems Ltd. has incurred significant operating losses over the
past six fiscal years and has a working capital deficiency which casts doubt
upon its ability to continue as a going concern. The financial position of AVL
Information Systems Ltd. and its prior operating history may have a negative
effect on our intended operations. If we are unable to develop other key
relationships, we may suffer material and adverse consequences. We can give you
no assurance that we will be able to maintain our relationship with AVL
Information Systems Ltd., or that we will be able to develop and maintain other
strategic alliances.
AVL Information Systems Ltd. is a Canadian public company that owns and
licenses certain technology and automatic vehicle location systems. On January
7, 2001, we entered into a non-exclusive worldwide International Distribution
Agreement with AVL Information Systems Ltd. Under the agreement, we are licensed
to market and distribute AVL Information Systems Ltd.'s automatic vehicle
location system called the Spryte System(TM).
AVL Information Systems Ltd. is an affiliate of our company and became
our controlling shareholder by accepting shares of common stock in exchange for
funds advanced. Some of our officers and directors are also officers and
directors of AVL Information Systems Ltd. AVL Information Systems Ltd. and a
common director have provided substantially all funding for our company, and
they are assisting us in discussions with third parties concerning possible
strategic alliances.
WE HAVE ENTERED INTO SEVERAL NON-ARM'S LENGTH TRANSACTIONS WITH OUR
SHAREHOLDERS, OFFICERS AND DIRECTORS, WHICH MAY BE CONSIDERED A CONFLICT OF
INTEREST.
We have issued shares of common stock in exchange for the services of
our promoters, officers and directors. Our determination of the number of shares
issued to them and the price per share was arbitrary and does not necessarily
bear any relationship to the assets, book value or net worth of our company. We
have also accepted several loans from Peter Fisher and AVL Information Systems
Ltd. in exchange for common stock or promises to repay, and we entered into
distribution agreement with AVL Information Systems Ltd. These transactions
could be considered conflicts of interests, and additional conflicts of interest
may arise in the future. A conflict of interest poses the risk that we may enter
into a transaction on terms that would place us in a worse position than if no
conflict existed. Our officers and directors are required by law to act honestly
and in good faith with a view to our best interest and to disclose any interest
which they may have in any project or opportunity of which we are involved.
Although we believe that the transactions were fair to our company, we have no
specific internal policy governing conflicts of interest.
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OUR SUCCESS DEPENDS UPON OUR ABILITY TO DEVELOP AND MAINTAIN OTHER STRATEGIC
RELATIONSHIPS.
We are in the development stage of our business and we believe that our
success will depend on our ability to develop and maintain strategic
relationships with key access control and security system vendors, automation
distribution partners, and customers. We believe these relationships are
important in order to license and develop automatic vehicle location systems,
and create our sales, marketing and distribution capabilities. We have no such
relationships at this time, nor do we have any agreements with third parties.
Our only agreement at this time is with AVL Information Systems Ltd. If we are
unable to develop these key relationships and enter into other commercial
agreements, we will suffer material and adverse consequences. Our dependence on
strategic relationships will make us vulnerable to changes in the operations of
those partners.
IF THE SPRYTE SYSTEM(TM) does not DELIVER THE FEATURES AND FUNCTIONALITY
POTENTIAL CUSTOMERS DEMAND, WE WILL BE UNABLE TO ATTRACT OR RETAIN CUSTOMERS.
Our success depends upon our ability to determine the features and
functionality our anticipated customers demand and to license and implement
systems that meet their needs in an efficient manner. We cannot assure you that
we can successfully determine customer requirements or that our future services
will adequately satisfy customer demands. In addition, we may experience
difficulties that could delay or prevent the successful license, development,
introduction or marketing of new systems and system enhancements. If AVL
Information Systems Ltd.cannot effectively license, develop, deploy, maintain
and enhance the Spryte System(TM), our expenses may increase and we may not be
able to recover our costs.
WE DO NOT KNOW IF THE SPRYTE SYSTEM(TM) WILL BE ACCEPTED BY OUR TARGET MARKET.
The commercial success of the automatic vehicle location systems, and
specifically the Spryte System(TM),wll depend upon their acceptance by the
market as a valuable and useful product. We believe that market acceptance will
depend upon several factors, including the establishment of performance
indicators and endorsement by industry leaders. The automatic vehicle location
industry and its associated products are in its infancy, and we are not certain
that our target customers will widely adopt our intended systems. Even if they
do so, they may not choose the Spryte System(TM), because, among other things,
it may be more expensive, complicated and require a significant amount of
technical support. If our target customers do not widely adopt and purchase the
Spryte System(TM), our business, financial condition and operations will be
adversely affected.
WE HAVE NO EXPERIENCE MARKETING THE SPRYTE SYSTEM(TM), OR ANY OTHER AUTOMATIC
VEHICLE LOCATION SYSTEM.
We have no experience in marketing the automatic vehicle location
system designed and developed by AVL Information Systems Ltd. We intend to
market the system through strategic partners, Internet advertising campaigns,
and traditional media advertising campaigns. Given our lack of marketing
experience, our marketing plans may not be effective in selling the system. If
our marketing plans fail and we are unable to develop new plans, we would not be
able to sell the Spryte System(TM) and we may be forced to cease operations.
WE WILL FACE SUBSTANTIAL COMPETITION FROM EXISTING AND POTENTIAL COMPETITORS IN
THE OVERALL LICENSE, DESIGN, MANUFACTURE AND DISTRIBUTION MARKETS.
We will face substantial competition in the overall license, design,
manufacture and distribution markets as well as the technology market. We
believe that customers in our target market choose the services primarily on the
basis of functionality, price, ease of use, quality and geographic coverage. Due
to our small size, it can be assumed that most if not all of our competitors
have significantly greater financial, technical, marketing and other competitive
resources. Our competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements than we can. In
addition, our current and potential competitors may bundle their products in a
manner that may discourage users from purchasing our systems. Also, our
competitors and potential competitors have greater name recognition and more
extensive customer bases that could be leveraged, for example, to position
themselves as being more experienced, having better products, and being more
knowledgeable than us. To compete, we may be forced to offer lower prices and
narrow our marketing focus, resulting in reduced revenues, if any.
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We will also compete with alternative means of communication between
vehicles and their managers, including wireless telephone, two-way radios and
pagers. In addition, we expect that new competitors will enter the market for
location-relevant wireless information as businesses and consumers increasingly
demand information when they are mobile. Furthermore, the widespread adoption of
industry standards may make it easier for new market entrants or existing
competitors to offer the services we may offer or may offer in the future.
WE MAY ENCOUNTER DIFFICULTIES BY RELYING ON OUR FOREIGN SUPPLIERS AND FOREIGN
MANUFACTURERS.
Under our distribution agreement, we are licensed to market and
distribute certain technology, parts, components and products from AVL
Information Systems Ltd., in Ontario, Canada. The relative value of the United
States dollar against foreign currencies, the imposition of tariffs, import and
export controls, and changes in governmental policies could significantly affect
financial condition.
OUR OFFICERS AND DIRECTORS ARE ONLY DEVOTING A LIMITED TIME TO OUR BUSINESS, AND
THE LOSS OF OUR OFFICERS AND DIRECTORS OR OUR FAILURE TO ATTRACT AND RETAIN
ADDITIONAL PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.
Our success depends largely upon the efforts, abilities, and
decision-making of our executive officers and directors. At this time, our
executive officers and directors are only devoting a limited amount of time to
our business. We have no employees. We do not maintain "key-man" life insurance
on any of our executives or directors, and there is no contract in place
assuring their services for any length of time. There can be no assurance that
the services of our executive officers and directors will remain available to us
for any period of time, or that we will be able to enter into employment
contracts with any additional personnel. The loss of any of our executive
officers and directors could, to varying degrees, have an adverse effect on our
operations and systems development. In the event that we should lose key members
of our executive officers or directors, or if we unable to find suitable
replacements, we may not be able to maintain our business and might have to
cease operations, in which case you might lose all of your investment.
SINCE OUR WARRANTS MAY BE EXERCISED ONLY IF THERE IS A CURRENT PROSPECTUS, THEY
COULD BE NO VALUE.
The warrants may be exercised only if a current prospectus relating to
the underlying shares of common stock is then in effect and only if the shares
are qualified for sale or exempt from registration under the securities laws of
the state or states in which the purchaser resides. So long as the warrants are
outstanding, we have undertaken to file all post-effective amendments to the
registration statement required to be filed under the Securities Act of 1933, as
amended, and to take appropriate action under the federal law and the securities
laws of those states where the warrants were initially offered to permit the
issuance and resale of common stock issuable upon exercise of the warrants.
However, there can be no assurance that we will be in a position to effect such
action, and the failure to do so may prevent the exercise of the warrants and
the resale or other disposition of the common stock issued upon the exercise.
UPON COMPLETION OF THIS OFFERING, YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION IN YOUR INVESTMENT.
The initial public offering price of the shares does not necessarily
bear any relationship to assets, book value or net worth of our company. If you
purchase in this offering, you will suffer immediate and substantial dilution in
your investment, of at least $0.091 per share or approximately 91% of the
offering price of the units.
A LIMITED NUMBER OF STOCKHOLDERS WILL COLLECTIVELY CONTINUE TO OWN A MAJORITY OF
OUR COMMON STOCK AFTER THIS OFFERING AND MAY ACT, OR PREVENT CERTAIN TYPES OF
CORPORATE ACTIONS, TO THE DETRIMENT OF OTHER STOCKHOLDERS.
Even if all of the units offered are sold, our directors, officers and
greater than 5% stockholders will own more than 88% of our outstanding common
stock. Accordingly, these stockholders may, if they act together, exercise
significant influence over all matters requiring stockholder approval, including
the election of a majority of the directors and the determination of significant
corporate actions after this offering. This concentration could also have the
effect of delaying or preventing a change in control that could otherwise be
beneficial to or stockholders.
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WE WILL HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS FROM THIS OFFERING, AND
OUR USE OF THESE PROCEEDS MAY NOT YIELD A FAVORABLE RETURN.
We intend to use the proceeds from this offering for general corporate
purposes, including implementing our non-exclusive distribution agreement with
AVL Information Systems Ltd.. Accordingly, we will have broad discretion in
using these proceeds. You will not have the opportunity to evaluate the
economic, financial or other information that we may use to determine how we use
these proceeds.
"PENNY STOCK" RULES COULD AFFECT THE SECONDARY MARKET FOR OUR COMMON STOCK AND
MAY AFFECT YOUR ABILITY TO SELL SHARES OF OUR COMMON STOCK.
Assuming that a public market for our common stock develops, which
there can be no assurance, our common stock will be subject to rules promulgated
by the SEC relating to "penny stocks," which apply to non-NASDAQ companies whose
stock trades at less than $5.00 per share or whose tangible net worth is less
than $2,000,000. These rules require brokers who sell "penny stocks" to persons
other than established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide investors
with certain information concerning the risks of trading in the security. These
rules may discourage or restrict the ability of brokers to sell our common stock
and may affect the secondary market for the common stock.
RISKS ASSOCIATED WITH THE AUTOMATIC VEHICLE LOCATION INDUSTRY AND GLOBAL
POSITIONING SYSTEM TECHNOLOGY
THE SPRYTE SYSTEM(TM) DEPENDS ON WIRELESS NETWORKS OWNED AND CONTROLLED BY
OTHERS. IF POTENTIAL CUSTOMERS DO NOT HAVE CONTINUED ACCESS TO SUFFICIENT
CAPACITY ON RELIABLE NETWORKS, WE MAY BE UNABLE TO SELL THE SPRYTE SYSTEM(TM).
Our ability to generate revenues will depend on the ability of wireless
carriers to provide sufficient network capacity, reliability and security to our
anticipated customers. Even where wireless carriers provide coverage to entire
metropolitan areas, there are occasional lapses in coverage due to tall
buildings blocking the transmission of data. This effect could make our intended
systems less reliable and useful, and we may not be able to penetrate our target
market. Our financial condition could be seriously harmed if the wireless
carriers were to increase the prices of their services, or to suffer operational
or technical failures. If wireless carriers do not expand coverage, we may be
unable to offer the Spryte System(TM) to potential customers in those areas.
THE SPRYTE SYSTEM(TM) DEPENDS ON GLOBAL POSITIONING SYSTEM TECHNOLOGY OWNED AND
CONTROLLED BY OTHERS. IF WE ARE UNABLE TO ACCESS GLOBAL POSITIONING TECHNOLOGY
AND SATELLITES, WE WILL BE UNABLE TO DELIVER THE SPRYTE SYSTEM(TM) AND WE WILL
NOT BE ABLE TO GENERATE REVENUES.
The Spryte System(TM) relies on signals from Global Positioning System
satellites built and maintained by the U.S. Department of Defense. Global
Positioning System satellites and their ground support systems are subject to
electronic and mechanical failures and sabotage. If one or more satellites
malfunction, there could be a substantial delay before they are repaired or
replaced, if at all, and the Spryte System(TM) may cease and customer
satisfaction, if any, would suffer. In addition, the U.S. government could
decide not to continue to operate and maintain Global Positioning System
satellites over a long period of time or to charge for the use of the Global
Positioning System. Furthermore, because of ever-increasing commercial
applications of the Global Positioning System, other U.S. government agencies
may become involved in the administration or the regulation of the use of Global
Positioning System signals in the future. If the foregoing factors affect the
Global Positioning System, such as by affecting the availability and pricing of
Global Positioning System technology, our business will suffer.
GLOBAL POSITIONING SYSTEM TECHNOLOGY DEPENDS ON THE USE OF RADIO FREQUENCY
SPECTRUM CONTROLLED BY OTHERS.
Global Positioning System technology is dependent on the use of radio
frequency spectrum. An international organization known as the International
Telecommunications Union controls the assignment of spectrum. If the
International Telecommunications Union reallocates radio frequency spectrum, the
Spryte System(TM) may become less useful or less reliable. This would, in turn,
harm our business. In addition, emissions from mobile satellites and other
equipment using other frequency bands may adversely affect the utility and
reliability of the Spryte System(TM).
9
<PAGE>
THE REPORTING OF INACCURATE LOCATION-RELEVANT INFORMATION COULD CAUSE THE LOSS
OF CUSTOMERS AND EXPOSE US TO LEGAL LIABILITY.
The accurate reporting of location-relevant information is critical to
our potential customers' businesses. If our product fails to accurately report
location-relevant information, we could lose customers, our reputation and
ability to attract new customers could be harmed, and we could be exposed to
legal liability. We do not have insurance adequate to cover losses we may incur
as a result of these inaccuracies.
DEFECTS OR ERRORS IN THE SPRYTE SYSTEM(TM) COULD RESULT IN CANCELLATION OR
DELAYS, WHICH WOULD DAMAGE OUR REPUTATION AND HARM OUR FINANCIAL CONDITION.
Automatic vehicle location systems must quickly keep pace with the
rapidly changing Global Positioning System, wireless communications and Internet
markets. Products and services that address these markets are likely to contain
undetected errors or defects, especially when first introduced or when new
versions are introduced. The Spryte System(TM) may not be free from errors or
defects, which could result in the cancellation or disruption of its services.
This would damage our reputation, and result in lost revenues, diverted
development resources, and increased costs.
GOVERNMENTAL REGULATIONS AND STANDARDS MAY HARM OUR BUSINESS AND COULD INCREASE
OUR COSTS OR REDUCE OUR OPPORTUNITY TO EARN REVENUES.
In addition to regulations applicable to businesses in general, we may
also be subject to direct regulation by governmental agencies, including the
Federal Communications Commission and Department of Defense. These regulations
may impose licensing requirements or safety standards with respect to human
exposure to electromagnetic radiation and signal leakage. A number of
legislative and regulatory proposals under consideration by federal, state,
provincial, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, wireless communications
and Global Positioning Technology, including on-line content, user privacy,
taxation, access charges and liability to third-party activities. Additionally,
it is uncertain how existing laws governing issues such as taxation on the use
of wireless networks, intellectual property, libel, user privacy and property
ownership, will be applied to our services and products. The adoption of new
laws or the application of existing laws may expose us to significant
liabilities and additional operational requirements, which could decrease the
demand for our intended products and increase our cost of doing business.
Wireless carriers who may supply us with airtime are subject to regulation by
the Federal Communications Commission and regulations that affect them could
also increase our costs.
FORWARD-LOOKING STATEMENTS
Some information contained in this prospectus may contain
forward-looking statements. These statements include comments relating to the
development of our automatic vehicle location systems, the timing of product
development and related costs and expenses, revenues, financing needs, the
availability of financing on acceptable terms, and the market for the automatic
vehicle location products and services. The use of any of the words
"anticipate", "continue", "estimate", "expect", "may", "will", "project",
"should", "believe", "intend" and similar expressions are subject to business
and economic risks and uncertainties, and our actual results of operations may
differ materially from those contained in the forward-looking statements.
10
<PAGE>
DILUTION
"Dilution" represents the difference between the public offering price
per share of common stock and the adjusted pro forma net tangible book value per
share of common stock immediately after the completion of this offering.
Dilution arises mainly from our arbitrary decision about the offering price per
share of common stock. In this offering, the level of dilution will increase as
a result of our low net tangible book value before this offering.
The following table illustrates the anticipated dilution of a new
investor's equity in a share of common stock at different amounts of success
with this offering, based on our net tangible book value at September 30, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
10% SOLD 50% SOLD 100% SOLD
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Offering price per share of common stock $0.10 $0.10 $0.10
------------------------------------------------------------------------------------------------------------------------------
Net tangible book value per common share before offering $(0.00) $(0.00) $(0.00)
------------------------------------------------------------------------------------------------------------------------------
Increase per share attributable to new investors $0.000 $0.004 $0.009
------------------------------------------------------------------------------------------------------------------------------
Pro forma net tangible book value per common share after offering $0.000 $0.004 $0.009
------------------------------------------------------------------------------------------------------------------------------
Dilution per common share to new investors $0.010 $0.096 $0.091
------------------------------------------------------------------------------------------------------------------------------
Percentage dilution 100% 96% 91%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth, as of September 30, 2000, after giving
effect to the sale of 10%, 50%, and 100% of the offering, a comparison of the
respective investment and equity of the current shareholders and investors
purchasing shares in this offering.
<TABLE>
<CAPTION>
10% OF OFFERING SOLD
------------------------------------------------------------------------------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER
SHARE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 18,700,000 98.7% $18,700 42.8% $0.001
------------------------------------------------------------------------------------------------------------------------------------
New investors 250,000 1.3% $25,000 57.2% $0.10
------------------------------------------------------------------------------------------------------------------------------------
Total 18,950,000 100.0% $43,700 100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
50% OF OFFERING SOLD
------------------------------------------------------------------------------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER
SHARE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 18,700,000 93.7% $18,700 13.0% $0.001
------------------------------------------------------------------------------------------------------------------------------------
New investors 1,250,000 6.3% $125,000 87.0% $0.10
------------------------------------------------------------------------------------------------------------------------------------
Total 19,950,000 100.0% $143,700 100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
100% OF OFFERING SOLD
------------------------------------------------------------------------------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER
SHARE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 18,700,000 88.2% $18,700 7.0% $0.001
------------------------------------------------------------------------------------------------------------------------------------
New investors 2,500,000 11.8% $250,000 93.0% $0.10
------------------------------------------------------------------------------------------------------------------------------------
Total 21,200,000 100.0% $268,700 100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this offering, there has been no public market for our common
stock. An active public market for our common stock may not develop or be
sustained after this offering. If an active market for our common stock does not
develop, the liquidity of your investment may be limited, and the price of our
common stock may decline below its initial public offering price. The initial
public offering price has been determined arbitrarily by us and bears no
relationship to the price that will prevail in the public market..
As of October 30, 2000, there were nine (9) record holders of our
common stock, owning 18,700,000 shares, all of which are restricted and not
free-trading. At this time, none of these shares can be sold under Rule 144 of
the Securities Act of 1933. The holders are entitled to dividends when, and if,
declared by our board of directors.
DIVIDEND POLICY
We have never paid any cash dividends on our common stock and intend to
retain future earnings, if any, to finance the development and expansion of our
business. Our future dividend policy is subject to the discretion of our board
of directors and will depend upon a number of factors, including our future
earnings, capital requirements, and financial condition.
USE OF PROCEEDS
The principal purposes of this offering are to become a U.S. publicly
traded company, and to implement our distribution agreement with AVL Information
Systems Ltd. If we sell all of the units being offered, our net proceeds are
estimated to be $195,000 after the offering expenses estimated at $30,000 and a
10% selling commission on all of the units payable by us. To the extent that we
sell more units without using the services of a placement agent, the net
proceeds will increase. There can be no assurance that we will be able sell any
of the units or receive any proceeds from the offering.
We expect that our cash requirements will exist principally in the
following areas and, based upon the level of success we achieve in this
offering, we anticipate using the proceeds to implement the distribution
agreement as follows:
<TABLE>
LEVEL OF SUCCESS IN THIS OFFERING:
<CAPTION>
10% 50% 100%
--- --- ----
<S> <C> <C> <C>
OPERATING EXPENSES
Commissions & Compensation $ 0 $ 38,500 $ 75,000
Sales and Marketing 0 2,500 5,000
Promotional and Advertising 0 5,000 10,000
Travel 0 7,500 15,000
WORKING CAPITAL 0 12,000 36,000
CAPITAL EXPENDITURES 0 5,000 10,000
GENERAL AND ADMINISTRATIVE EXPENSES
Subscriptions and Fees 0 1,000 2,000
Office and Administration 0 5,000 20,000
Insurance 0 1,000 2,000
Legal 9,500 10,000 10,000
Accounting 10,000 10,000 10,000
TOTAL - $ 19,500 $ 97,500 $ 195,000
----- ======== ======== =========
</TABLE>
12
<PAGE>
If we are only able to achieve a minimum level of success in this
offering, we will require additional financing which may include:
o short-term loans from affiliates;
o bank borrowings;
o joint ventures; and
o future debt and equity offerings.
We cannot assure you that financing will be available on acceptable
terms, or at all. Any additional financing may result in dilution to our
shareholders, including those people who purchase our units in this offering.
Our failure to obtain external financing will have a material adverse effect on
our results of operations and financial condition. If we cannot obtain external
financing when needed, we may be forced to cease operations and abandon our
business, and you may lose your entire investment.
The amount and timing of our actual expenditures for each of these
purposes will vary significantly depending on a number of factors, including our
licensing agreements and related development efforts, competition,
marketing and sales activities, and market acceptance. While we have prepared
internal forecasts, we believe that these forecasts, as they apply to periods
extending beyond the next few months, are inherently unreliable and that our
actual cash requirements will differ materially from those we presently
forecast. Our directors have discretion in the allocation and use of the net
proceeds of this offering. Pending such uses, we intend to invest the proceeds
from this offering in short term, investment-grade, and interest bearing
securities.
Our current business plan has identified total capital requirements
over the next several years that are substantially more than the anticipated
offering proceeds. If we are able to sell all of the units, we believe the net
proceeds of this offering will be sufficient to fund our operations for at least
the next twelve months.
SELECTED FINANCIAL DATA
Our selected financial data for the nine month period ended September
30, 2000 shown below is derived from the unaudited financial statements prepared
by us. In our opinion, we have included all adjustments necessary for a fair
statement of results for this interim period and all such adjustments are of a
normal recurring nature. Interim results may not be indicative of the results of
operations to be expected for a full fiscal year.
Stark Tinter & Associates, LLC, independent auditors, have audited our
financial statements for the period March 8, 1999 (inception) to December 31,
1999. The financial data derived from the statements and shown below should be
read in conjunction with our financial statements and the notes included
elsewhere in this prospectus and to "Management's Discussion and Analysis of
Financial Condition and/or Plan of Operations" which follows.
BALANCE SHEET DATA: SEPTEMBER 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
Current Assets $16,694 $471
Total Assets $16,694 $471
Current Liabilities $18,496 $3,500
Stockholders' Deficiency $(1,802) $(3,029)
Working Capital Deficiency $(1,802) $(3,029)
13
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF LOSS DATA: MARCH 8, 1999 MARCH 8, 1999
9 MONTHS ENDED THROUGH THROUGH
SEPTEMBER 30, 2000 DECEMBER 31, 1999 SEPTEMBER 30, 2000
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues $0 $0 $0
Net Loss $(14,973) $(3,029) $(18,002)
Net Loss per Share $(0.00) $(0.00) $(0.00)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND/OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and the related notes included in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ significantly from those
projected in the forward-looking statements as a result of many factors,
including those discussed in "Risk Factors", "Business" and elsewhere in this
prospectus.
OVERVIEW
We were incorporated in the state of Nevada on March 8, 1999 by AVL
Information Systems Ltd. and its principal officer and directors. AVL
Information Systems Ltd. is a Canadian public company that owns and licenses
certain technology and automatic vehicle location systems. On January 7, 2001,
we entered into a non-exclusive worldwide International Distribution Agreement
with AVL Information Systems Ltd. Under the agreement, we are licensed to market
and distribute an automatic vehicle location system called the Spryte
System(TM). The Spryte System(TM) integrates Global Positioning System
technology, cellular-wireless communications and the Internet to enable
companies to efficiently manage their mobile resources with location-relevant
and time-sensitive information. While there are several ways to transmit
information from a vehicle to a central location, we believe that the Spryte
System(TM) provides significant value to customers by reducing their costs of
doing business and increasing the productivity of their mobile resources.
We are in the development stage and have not generated any revenues. We
have a cumulative net loss of $18,002 through September 30, 2000. We have
suffered losses from operations and require additional financing. , Ultimately
we need to generate revenues and successfully attain profitable operations. The
marketing and distribution of the Spryte System(TM) may take years to complete
and the amount of resulting revenues, if any, is difficult to determine. Our
previous capital needs have been met by equity offerings, and we have issued
common stock in exchange for services rendered and funds advanced by related
parties. These factors raise substantial doubt about our ability to continue as
a going concern. There can be no assurance that we will be able to market and
distribute the Spryte System(TM). Even if we are able to market and distribute
the system, there is no assurance that we will be able to generate revenues and
attain profitable operations.
RESULTS FROM OPERATIONS
We have a limited operating history. We incurred a net loss of $14,973
for the nine months ended September 30, 2000, and had a net loss of $3,029 for
the period ended December 31, 1999.
LIQUIDITY AND FINANCIAL CONDITION
For the nine months ended September 30, 2000, the statement of cash
flows reflects net cash used in operating activities of $13,773, which was
offset by net cash provided by financing activities of $29,996. At September 30,
2000, we had cash of $16,694, and a working capital deficit of $1,802. All of
liabilities consist of advances from related parties. Since we have no source of
revenue, our working capital will be depleted by operating expenses and we will
be dependent upon external sources of cash. If we are able to sell all of the
units in this offering, we believe the net proceeds of this offering will be
sufficient to fund our operations for at least the next twelve months.
14
<PAGE>
PLAN OF OPERATION
At this time, we intend to establish relationships with a number of
other companies to accelerate the implementation of the distribution agreement
and the sale of the Spryte Systems(TM). We believe that our status as a U.S.
publicly traded company will assist us in establishing strategic alliances
because of our perceived level of credibility and access to capital in the U.S.
markets. We intend to create relationships and retain consultants and
contractors with established connections in the telecommunication and
application service provider industries. We forsee that compensation would be
commission based. Depending upon the market acceptance of the Spryte System(TM),
we may hire employees in the forseeable future.
We intend to establish relationships with existing companies engaged in
the automatic vehicle location industry, wireless carriers, manufacturers,
distributors, and Internet companies. We believe that establishing a network of
alliances, while not a small task, can be accomplished in a shorter period of
time and at less cost than building a comparable direct sales infrastructure. It
is our priority to establish a channel partner network in the U.S. and Canada,
and recruit international channel partners as opportunities present themselves.
We expect to generate revenues by selling the Spryte Systems(TM) at
cost plus margin. Under the distribution agreement, all orders are shipped
common carrier FOB destination, and we are required to pay 30% of the total
order price the time of ordering, 30% upon delivery of the order, and 40% within
30 days after installation. We believe the amount of margin will vary depending
on the time, expense, and size of sale. We expect to realize revenues within the
next three months.
We do not expect to purchase any significant equipment during the next
twelve months, nor do we expect to hire a significant number of employees during
that time period. We expect to finance our objectives through the proceeds of
this offering.
BUSINESS
OVERVIEW
We market and distribute the Spryte System(TM) , an automatic vehicle
location system that integrates Global Positioning System technology,
cellular-wireless communications and the Internet to enable companies to
efficiently manage their mobile resources with location-relevant and
time-sensitive information. The management of vehicles and other mobile
resources is complex. We chose the Spryte System(TM) because we believe it is
easy-to-use, cost-effective, and allows customers to efficiently use the
Internet to track the movement of their vehicles, employees, and goods and
services.
INDUSTRY BACKGROUND
GLOBAL POSITIONING SYSTEM TECHNOLOGY. Most location-aware applications
today rely upon Global Positioning System technology. Global Positioning System
technology is based on a system of more than 24 satellites that transmit
longitude, latitude, altitude and time information to Global Positioning System
receiving and processing devices anywhere in the world. Because of improvements
in Global Positioning System receiver technology and reductions in the cost of
Global Positioning System enabling components, there has been a proliferation of
Global Positioning System devices for commercial applications. We believe the
significant areas of growth include vehicle positioning and navigation, mobile
computing devices, and wireless telephones and portable recreational receivers.
Due to the worldwide automotive industry, we expect vehicle location and
navigation to be one of the most promising areas of future deployment of Global
Positioning System technology.
CELLUAR-WIRELESS COMMUNICATIONS. Rapid technology advances in wireless
communications are enabling companies and individuals to efficiently manage
their mobile resources with location-relevant and time-sensitive information.
Wireless communications has grown due to declining usage costs, the
proliferation of wireless telephones and mobile computing devices, expanding
network coverage and the integration of enhanced features
15
<PAGE>
such as voice and text messaging. We believe that as global wireless coverage
increases and broadband wireless transmission technologies are deployed, more
users will be able to access more data over wireless networks, which will
facilitate their access to information and business applications on the
Internet.
INTERNET. The Internet has emerged as a global communications medium to
deliver and share information and to conduct business electronically. The growth
in the number of Internet users has led to the proliferation of information and
services available on the Internet, including e-commerce, e-mail and other
content. Businesses and individuals are using the Internet as a medium for
managing business-critical functions, household items, finances, customer
relationships and communication. We expect businesses and individuals to conduct
an increasing amount of activity over the Internet.
THE SPRYTE SYSTEM(TM)
The Spryte System(TM) is an automatic vehicle location system owned
by AVL Information Systems Ltd. The Spryte System(TM) is designed for the
commercial carrier, and allows a fleet manager, at its base station, to
simultaneously view the location, operational status and event-based indicators
of each fleet vehicle on a digitized computer map display. The information is
displayed in real-time. The platforms of the Spryte System(TM) include a menu of
status indicators which represent the event-based nature of the system. The
status or event-based indicators include a variety of vehicle conditions, such
as the ignition, speed, sirens, emergency lights, excessive speed, collision,
vehicle problems and duress. We believe that event-based indicators will allow a
fleet manager to assemble and adapt its vehicle resources for optimum deployment
as well as respond in a timely manner to delay and unforeseen situations.
The Spryte System(TM) has three software modules: the listener, mapping
and server modules, which collaborate with one another to analyze and present
the status of a vehicle to the fleet manager. The listener module collects data
transmission from various vehicles in a fleet, interprets the information, and
delivers the information to the server module. The mapping module consists of
commercially available software that displays the most current maps of the fleet
manager's area of activity, including roads, highways, street names and address
locations. The mapping module also accommodates map edits and updates, as well
as geographic analyses such as point-to-point distance and distance traveled.
With the assistance of the listener and mapping modules, the server module
displays, in real-time, the location of each vehicle on the map, together with
the current status of the event-based indicators. The Spryte System(TM) also
allows the customer to store and archive the information. This allows a fleet
manager to analyze historical vehicle movement patterns to achieve more
efficient results and/or to use the information to calculate performance
metrics.
The Spryte System(TM) accommodates all three traditional mediums of
communication from a vehicle to the base station: satellite, mobile radio and
cellular. The Spryte System(TM) has the ability to switch automatically from one
medium to another if the signal strength of a medium degrades. We believe the
communication redundancy capability should provide added assurance for our
potential customers.
We believe that the event-based approach will give customers an
advantage over the conventional method of polling each vehicle periodically
according to a routine schedule. We believe the conventional method is cost
prohibitive, ineffective, and fails to report critical events. We believe the
event-based communication uses airtime for data transmission more efficiently,
and will accommodate four times more vehicles than the standard polling
approach. Also, the event-based communication appears to have the ability to
combine polling functions, if needed, with event-based monitoring to meet the
demand of our potential customers.
INTERNATIONAL DISTRIBUTION AGREEMENT WITH AVL INFORMATION SYSTEMS LTD.
We do not own any proprietary or technological right to the Spryte
System(TM). On January 7, 2001, we entered into a worldwide distribution
agreement with AVL Information Systems Ltd. Under the agreement, we are licensed
to market and distribute the Spryte System(TM) for a term of 4 years, with an
automatic option to renew the term for an additional 4 years. The agreement is
non-exclusive, which means that our competitors may have access to the same
technology granted to us. Either party may terminate the agreement by providing
60 day written notice. At this time, we believe our relationship with AVL
Information Systems Ltd. is good and do not foresee any reason to terminate the
agreement.
16
<PAGE>
PROTECTION OF TECHNOLOGY
Under the distribution agreement, we are required to protect the
proprietary information licensed to us. We will rely on a combination of trade
secret, trademark and copyright laws, and nondisclosure and other contractual
agreements.. We intend to enter into nondisclosure agreements with our
employees, consultants, distributors and corporate partners and limit access to
and distribution of all proprietary information. It may be possible for a third
party to misappropriate or infringe on the proprietary information licensed to
us. Third parties may also independently discover or invent competing
technologies or reserve engineer our trade secrets, software or other
technology. In addition, foreign countries may treat the protection of
proprietary rights differently from, and may not protect proprietary rights to
the same extent as, the laws of the U.S. Therefore, the measures we take to
protect the proprietary rights licensed to us may not be adequate.
KEY ALLIANCES AND RELATIONSHIPS
At this time, our only key alliance is with AVL Information Systems
Ltd. AVL Information Systems Ltd. is an affiliate of our company and became our
controlling shareholder by accepting shares of common stock in exchange for
funds advanced. Some of our officers and directors are also officers and
directors of AVL Information Systems Ltd. AVL Information Systems Ltd. and a
common director have provided substantially all of our funding, and they are
assisting us in discussions with third parties concerning possible strategic
alliances.
At this time, we rely entirely upon our relationship with AVL
Information Systems Ltd. and our distribution agreement with AVL Information
Systems Ltd. Our dependence upon AVL Information Systems Ltd. has made us
vulnerable to changes in its operations. AVL Information Systems Ltd. has
incurred significant operating losses over the past six fiscal years and has a
working capital deficiency which casts doubt upon its ability to continue as a
going concern. The financial position of AVL Information Systems Ltd. and its
prior operating history may have a negative effect on our intended operations.
If we are unable to develop other key relationships, we may suffer material and
adverse consequences.
We intend to establish relationships with a number of other companies
to facilitate the implementation of the distribution agreement and to accelerate
the marketing and sale of the Spryte System(TM) We believe that establishing
other strategic relationships will facilitate our business and provide access to
emerging technologies and customers. We intend to establish relationships with
existing companies engaged in the automatic vehicle location industry, wireless
carriers, manufacturers, distributors, and Internet companies. We cannot give
you any assurance that we will be able to develop or maintain other strategic
alliances.
RESEARCH AND DEVELOPMENT
At this time, we do not develop automatic vehicle location systems and
related technology. We have not spent any money on research and development.
MANUFACTURING
At this time, we do not manufacture the Spryte System(TM) and related
technology.
SALES AND MARKETING
We will market the Spryte Systems(TM) in the U.S. and internationally
to shipping and delivery companies, other fleet operators, rental car companies,
railroad and transportation companies, government agencies and municipalities,
and private motor vehicle owners. We anticipate using marketing activities to
establish and build and our name recognition. We intend to use a variety of
target marketing communications techniques to achieve this, such as public
relations programs, advertising, industry and consumer promotions, Internet
advertising, and co-marketing and co-branding with wireless carriers. We
anticipate achieving our marketing objective by establishing a network of
strategic partners. We may also develop a direct sales force to call on
potential customers with large fleets and work with wireless carrier partners
and independent sales agents to increase our customer base.
17
<PAGE>
COMPETITION
We compete with companies that offer the ability to obtain
location-relevant information about their mobile resources. We also compete with
alternative means of communication between vehicles and their managers or
owners, including wireless telephones, two-way radios, and pagers. We expect
competition to increase.
Within each of our markets, we face competition from public and private
companies as well as our potential customers' in-house design efforts. OmniTRACS
is a service from Qualcomm that uses satellite communications technology to
manage fleets of trucks that travel extended distances between urban areas,
referred to as long-haul trucking. Other potential competitors include wireless
Internet companies, such as Aether Systems, Phone.com and Research in Motion,
companies working on emergency working on emergency-911 solutions, such as
TruePosition, companies with solutions that integrate locations, wireless
communications, and call centers, such as General Motors, and companies that
provide wireless, location-relevant applications such as SignalSoft and At Road
Inc.
We compete primarily on the basis of price, ease of use, functionality,
quality and geographic coverage. Due to our small size, it can be assumed that
most if not all of our competitors have significantly greater financial,
technical, marketing and other competitive resources. Our competitors may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements than we can. In addition, our current and potential
competitors may bundle their products in a manner that may discourage users from
purchasing our products. Also, our competitors and potential competitors may
have greater name recognition and more extensive customer bases that could be
leveraged, for example, to position themselves as being more experienced, having
better products, and being more knowledgeable than us. To compete, we may be
forced to offer lower prices and narrow our marketing focus, resulting in
reduced revenues, if any.
EMPLOYEES
We have no employees as of the date of this prospectus. We intend to
implement the distribution agreement with AVL Information Systems Ltd. through
the services of our officers and directors, and by retaining consultants and
independent contractors. We intend to create relationships and retain
consultants and contractors with established connections in the
telecommunication and application service provider industries. We foresee that
compensation would be commission based. Depending upon the market acceptance of
the Spryte System(TM), we may hire employees in the foreseeable future.
FACILITIES
Our principal offices are located at 3031 Commerce Drive, Building B,
Fort Gratiot, Michigan 48058. Under an oral agreement, we are occupying these
offices on a "rent-free" basis from our affiliate, AVL Information Systems Ltd.
We intend to enter into a written sub-lease agreement with AVL Information
Systems Ltd. within the next few months. We believe that our current facilities
are adequate to meet our needs at this time.
LEGAL PROCEEDINGS
There are no legal proceedings pending and, to the best of our
knowledge, there are no legal proceedings contemplated or threatened.
18
<PAGE>
MANAGEMENT
OFFICERS AND DIRECTORS
Our officers and directors are as follows:
NAME AGE POSITION
Barbara Castanon 48 President, Vice President of Sales and
Marketing, and Director since inception.
Peter W. Fisher 54 Secretary, Treasurer and Chairman of the
Board of Directors since April 2000.
Bernd Luwe 53 Vice President of Operations and Chief
Technology Officer since April 2000.
The term of office of each director ends at the next annual meeting of
our stockholders or when such director's successor is elected and qualifies. The
term of office of each officer ends at the next annual meeting of our board of
directors, expected to take place immediately after the next annual meeting of
stockholders, or when such officer's successor is elected and qualifies. Since
our inception, we have not had an annual meeting of our stockholders.
BARBARA CASTANON, DIRECTOR, PRESIDENT, AND VICE PRESIDENT OF SALES AND
MARKETING. Since 1995, Ms. Castanon has been the director of business
development and program manager for international programs/advanced analysis at
GRC International, Inc., an information service provider located in Vienna,
Virginia. In this capacity, Ms. Castanon is responsible for business
development. From 1993 to 1995, she was a private consultant in the fields of
international finance and business development. From 1990 to 1993, Ms. Castanon
was a manager in the international finance and marketing division at Hughes
Network Systems in Germantown, Maryland. During this time, she was also a member
of the board of directors for Sunwize Energy Systems, Inc., in Chicago,
Illinois.
From 1988 to 1990, Ms. Castanon was the senior marketing manager for
Amoco Technologies, Solarex Corp., the solar energy research division in
Rockville, Maryland. During 1985 to 1988, she was the corporate finance, risk
and cash manager for Atlantic Research Corp., an information technology service
provider located in Alexandria, Virginia. From 1980 to 1985, Ms. Castanon was a
manager in the leasing division of Moriah Data Corp., a computer hardware and
software leasing company located in Chantilly, Virginia. Ms. Castanon received a
Bachelor of Science in Business, with emphasis in finance and marketing from the
University of Maryland, College Park, Maryland.
PETER W. FISHER, DIRECTOR, SECRETARY AND TREASURER. Since 1992, Mr.
Fisher has been the chairman and chief executive officer of AVL Information
Systems Ltd., Ontario, Canada, a Canadian public company listed over-the-counter
in Toronto. AVL Information Systems Ltd. develops and markets automatic vehicle
location systems. From 1987 to 1992, Mr. Fisher was the president and chief
executive officer of Tyrae Resources, Sarina, Ontario, a junior capital pool
corporation listed on the Alberta Stock Exchange. In that capacity, Mr. Fisher
assisted in the development of stolen vehicle recovery technology. From 1982 to
1987, he was the president of Par Sar Investment Limited, Sarina, Ontario, a
Canadian private company which provided consulting services relating to funding
and structuring of private and public companies. From 1979 to 1982, Mr. Fisher
was a registered representative with Richardson Securities of Canada, and from
1974 to 1979, he was an account manager and registered representative for
Midland Doherty Inc. of Canada, in Sarina, Ontario.
In 1970, Mr. Fisher received a Bachelor of Arts with a major in
psychology and a minor in mathematics from Simon Fraser University, Burnaby,
British Columbia. He subsequently completed several Canadian securities courses
and in 1980, he became a Fellow of the Canadian Securities Institute. Mr. Fisher
is also a Registered Options Principal and a Registered Commodity Principal.
19
<PAGE>
BERND LUWE, VICE PRESIDENT OF OPERATIONS AND CHIEF TECHNOLOGY OFFICER.
Since June 2000, Mr. Luwe has been the operations manager for AVL Information
Systems Ltd. From 1996 to 2000, Mr. Luwe was the operations manager for Vasogen
Inc., Toronto, Canada, a public company listed on the American Stock Exchange
and the Toronto Stock Exchange. Vasogen, Inc. is a medical device manufacturer
that focuses on sterile disposables. From 1990 to 1995, he was the vice
president of engineering of Surface Mount Technology Centre, Ontario, Canada, a
public company that specializes in the assembly of surface mounted components
for computer circuit boards. From 1981 to 1989, Mr. Luwe was the founder,
president and chief executive officer of Microart Services Inc., Ontario,
Canada, a company engaged in the business of printed circuit design.
From 1975 to 1980, Mr. Luwe was a senior printed circuit designer with
Motorola Canada, in Toronto, Ontario. From 1973 o 1975, he was a mechanical
product designer for ITT Cannon, Whitby, Ontario. From 1968 to 1973, Mr. Luwe
was a mechanical designer and hybrid/printed circuit designer for Collins Radio
in Rockwell, New Mexico. Mr. Luwe has attended several management courses at
Centennial College, in Toronto, Ontarioa, but did not receive a degree.
No other directorships are held by any director in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any company registered as an investment company, under the
Investment Company Act of 1940.
AVL Information Systems Ltd., Ms. Castanon, Mr. Fisher and Mr. Luwe may
be deemed to be our "promoters" and "control persons", as that term in defined
in the Securities Act of 1933.
EXECUTIVE COMPENSATION
The following table sets forth the remuneration from March 8, 1999
(inception) through January 17, 2001 of our three highest paid officers and
directors:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL CAPACITIES IN WHICH AGGREGATE NUMBER OF
OR IDENTITY OF GROUP REMUNERATION WAS RECEIVED REMUNERATION SECURITIES
<S> <C> <C> <C>
Barbara M. Castanon President, Vice President of $100(1) 100,000
Sales and Marketing, and
Director
Peter W. Fisher Secretary, Treasurer and $750(2) 750,000
Chairman of the Board
Bernd Luwe Vice President of Operations $100(3) 100,000
and Chief Technology Officer
</TABLE>
(1) On April 26, 2000, we issued 100,000 shares of common stock to Ms.
Castanon, at a price of $0.001 per share, in exchange for services valued at
$100.
(2) On April 26, 2000, we issued 750,000 shares of common stock to Mr.
Fisher, at a price of $0.001 per Share, in exchange for services valued at
$750.
(3) On April 26, 2000, we issued 100,000 shares of common stock to Mr.
Luwe, at a price of $0.001 per share, in exchange for services valued at
$100.
Other than the above transactions, we do not pay monetary compensation
to our officers and directors, nor do we compensate our directors for attendance
at meetings. We reimburse our officers and directors for reasonable expenses
incurred during the course of their performance. There are no employment
agreements with any of our executive officers, and we have no long-term
incentive or medical reimbursement plans. We anticipate offering some form of
incentive-based monetary compensation in the future.
20
<PAGE>
STOCK OPTION PLAN
We do not have a formal stock option plan. Our board of directors, in
its discretion, may issue options to officers, directors, key alliances and
consultants on a case-by-case basis. In general, options may be exercised by
payment of the option price by either:
(i) cash;
(ii) tender of shares of our common stock which have a fair market
value equal to the option price; or
(iii) by such other consideration as the board of directors may approve
at the time the option is granted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information as to our officers and
directors individually and as a group, and the holders of more than 5% of our
common stock, as of January 17, 2001. Except as otherwise indicated, the persons
named in the table have sole voting and investing power with respect to all
shares of common stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS PERCENT OF CLASS
NAME AND ADDRESS OF OWNER HELD (1) BEFORE OFFERING (2) AFTER OFFERING(2)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter W. Fisher (3) 2,750,000 14.7% 13.0%
2323 Passingham Drive
Sarina, Ontario N7T 7H4
Canada
Barbara M. Castanon 100,000 0.5% 0.5%
25445 Morse Drive
South Riding, Virginia 20152
Bernd Luwe 100,000 0.5% 0.5%
86 Havelock Gate
Markham, Ontario L3S 3P6
Canada
AVL Information Systems Ltd. (4) 15,000,000 80.2% 70.8%
2323 Passingham Drive
Sarina, Ontario N7T 7H4
Canada
Officers and directors, as a group 2,950,000 15.8% 13.9%
(3 persons)
</TABLE>
(1) Management anticipates that it may offer units to Peter Fisher as
partial repayment of the promissory note dated August 2, 2000.
Management does not anticipate that any other person listed will
subscribe for units in this offering.
(2) Based on 18,700,000 shares of common stock outstanding on
January 17, 2001, and 21,200,000 shares outstanding after the offering.
(3) Includes 750,000 shares of common stock owned by Tyler Fisher, a
relative of Peter Fisher.
21
<PAGE>
(4) Peter Fisher is an officer and director of AVL Information Systems
Ltd., and Bernd Luwe is also an officer of AVL Information Systems Ltd.
Mr. Fisher owns approximately 22.6% of the outstanding shares of AVL
Information Systems Ltd., and is the controlling principal of the
company. Mr. Luwe owns approximately 2% of the outstanding shares.
CHANGES IN CONTROL
We are not aware of any arrangements that may result in a change in
control of our company.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
AVL INFORMATION SYSTEMS LTD. AVL Information Systems Ltd., Ontario,
Canada, is a Canadian public company that owns and licenses certain technology
and automatic vehicle location systems. AVL Information Systems Ltd. is our
controlling shareholder.
On March 20, 2000, AVL Information Systems Ltd. advanced $15,000 for
working capital. On August 2, 2000, we repaid AVL Information Systems Ltd. by
issuing 15,000,000 shares of common stock at $0.001 per share. The price per
share was determined arbitrarily by us and did not necessarily bear any
relationship to the assets, book value or net worth of our company.
Under an oral agreement, we are occupying our principal offices on a
"rent-free" basis from AVL Information Systems Ltd. We intend to enter into a
written sub-lease agreement with AVL Information Systems Ltd. within the next
few months.
Peter Fisher, an officer and director of our company, is also an
officer and director of AVL Information Systems Ltd. Tyler Fisher, a relative of
Peter Fisher and a shareholder of our company, is a director of AVL Information
Systems Ltd. Bernd Luwe, an officer of our company, is also an officer of AVL
Information Systems Ltd. Peter Fisher owns approximately 22.6% of the
outstanding shares of AVL Information Systems Ltd., and is the controlling
principal of that company. Mr. Luwe owns approximately 2% of the outstanding
shares.
AVL Information Systems Ltd. and Peter Fisher have provided
substantially all of our funding, and they are assisting us in discussions with
third parties concerning possible strategic alliances. At this time, we rely
entirely upon our relationship with AVL Information Systems Ltd. Our dependence
upon AVL Information Systems Ltd. has made us vulnerable to changes in the
operations of AVL Information Systems Ltd. If we are unable to develop other key
relationships or fail to maintain and enhance our existing relationship with AVL
Information Systems Ltd., we will suffer material and adverse consequences.
On January 7, 2001, we entered into a non-exclusive worldwide
distribution agreement with AVL Information Systems Ltd. We believe that the
terms and conditions of this license agreement is consistent with industry
standards. Since this license agreement is non-exclusive, our competitors may
have access to the same technology.
PETER W. FISHER. On April 26, 1999, Mr. Fisher advanced $3,500 as an
operating advance. There are no written terms or conditions for repayment, and
the loan is without interest.
On March 20, 2000, Mr. Fisher advanced $15,000 for working capital. On
August 2, 2000, we signed a promissory note to repay Mr. Fisher by March 31,
2001. Under the promissory note, we are not required to pay interest on the
money and we may prepay Mr. Fisher in whole or in part at any time prior to
March 31, 2001, without penalty.
On April 26, 2000, we issued 750,000 shares of common stock to Mr.
Fisher, at a price of $0.001 per share, in exchange for services valued at $750.
There was no written agreement between ourselves and Peter Fisher, and the price
per share was determined arbitrarily by us and did not necessarily bear any
relationship to the assets, book value or net worth of our company.
22
<PAGE>
Peter Fisher is an officer and director of AVL Information Systems Ltd.
Mr. Fisher owns approximately 22.6% of the outstanding shares of AVL Information
Systems Ltd., and is the controlling principal of that company.
Tyler Fisher, a shareholder of our company, is related to Peter Fisher.
On April 26, 2000, we issued Tyler Fisher 250,000 shares of common stock, at a
price of $0.001 per share, in exchange for services valued at $250. There was no
written agreement between ourselves and Tyler Fisher, and the price per share
was determined arbitrarily by us and did not necessarily bear any relationship
to the assets, book value or net worth of our company.
DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue of up to 50,000,000 common shares, $0.001
par value per share, and 1,000,000 preferred shares, $0.01 par value per share.
The following summary does not purport to be complete. You may wish to refer to
our articles of incorporation and bylaws, copies of which are available for
inspection.
PREFERRED STOCK
Our articles of incorporation authorize our board of directors to
issue, by resolution, 1,000,000 shares of preferred stock, in classes or series,
having such designations, powers, preferences, rights, and limitations as the
board of directors may from time to time determine. As of the date of this
prospectus, no classes of preferred stock have been designated and no shares
have been issued.
COMMON STOCK
As of January 17, 2001, there were 18,700,000 shares of common stock
issued and outstanding. Our board of directors may issue additional shares of
common stock without the consent of the common stockholders.
VOTING RIGHTS. Each outstanding share of common stock is entitled to
one vote. The common stockholders do not have cumulative voting rights, which
means that the holders of more than 50% of such outstanding shares voting for
the election of directors can elect all of the directors to be elected, if they
so choose.
NO PREEMPTIVE RIGHTS. Holders of common stock are not entitled to any
preemptive rights.
DIVIDENDS AND DISTRIBUTIONS. Holders of common stock are entitled to
receive such dividends as may be declared by our directors out of funds legally
available for dividends and to share pro rata in any distributions to holders of
common stock upon liquidation or otherwise. However, we have never paid cash
dividends on our common stock, and do not expect to pay such dividends in the
foreseeable future.
WARRANTS
Our warrants will be issued in registered form under, governed by, and
subject to the terms of a warrant agreement. The following statements are brief
summaries of certain provisions of the warrant agreement. A copy of a warrant
agreement may be obtained from us and has been filed with the Securities and
Exchange Commission as an exhibit to this registration statement of which this
prospectus is a part.
Each warrant entitles the holder to purchase one share of common stock
at a price of $0.50 per share at any time after the warrant is purchased until
twelve months after the completion of this offering. The warrants may not be
separately traded until six months after the date of purchase. The warrants
contain provisions that protect the warrant holders against dilution by
adjustment of the exercise price in certain events including stock dividends,
split, reverse split or recapitalization. A warrant holder will not possess any
rights as a stockholder of us. The shares of common stock, when issued upon the
exercise of the warrants in accordance with the terms of the warrant agreement,
will be fully paid and non-assessable.
23
<PAGE>
The warrants may be exercised only if a current prospectus relating to
the underlying shares of common stock is then in effect and only if the shares
are qualified for sale or exempt from registration under the securities laws of
the state or states in which the purchaser resides. So long as the warrants are
outstanding, we have undertaken to file all post-effective amendments to the
registration statement required to be filed under the Securities Act of 1933, as
amended, and to take appropriate action under the federal law and the securities
laws of those states where the warrants were initially offered to permit the
issuance and resale of common stock issuable upon exercise of the warrants.
However, there can be no assurance that we will be in a position to effect such
action, and the failure to do so may cause the exercise of the warrants and the
resale or other disposition of the common stock issued upon the exercise to be
unlawful.
TRANSFER AGENT
The registrar and transfer agent for our common stock is Computershare
Trust Company, Inc., 12039 West Alameda Parkway, Suite Z-2, Lakewood, Colorado
80228.
PLAN OF DISTRIBUTION
GENERAL
We are conducting a direct participation offering with no minimum. We
are acting as the general selling agent with respect to the units being offered
at a price of $0.10 per unit. We intend to enter into agreements with securities
broker-dealers, who are members of the NASD, so that broker-dealers who will be
involved in the sale of the units will be paid a commission of up to ten percent
by us. No broker-dealer has agreed to participate in this offering as of the
date of this prospectus. The NASD must first approve the arrangements with any
broker-dealers that will participate in the distribution of this offering. In
addition, Peter Fisher, one of our officers and directors, may also be involved
in the sale of the units but will not receive any sales commission or other
remuneration. This distribution will not involve any reallocations between NASD
members and non-members. We do not intend to register as a broker-dealer under
Section 15 of the Exchange Act. Section 15 requires persons "in the business" of
selling securities to register as broker-dealers. We do not believe that we are
"in the business" of selling securities.
We may provide any sales agent or broker-dealer with a list of persons
whom we believe may be interested in purchasing units in this offering. The
sales agent or broker-dealer may sell a portion of the units to any such person
if he resides in a state where the units can be sold and where the sales agent
or broker-dealer can sell the units. No sales agent or broker-dealer is
obligated to sell any units to any such person and will do so only to the extent
that such sales would not be inconsistent with the public distribution of the
units. We are unaware of any person, including any affiliate, who intends to
finance any portion of the purchase price of the units to be acquired in this
offering. It is not intended that the proceeds from this offering will be used,
directly or indirectly, to enable anyone to purchase units.
In addition, we may offer these units to Peter Fisher as repayment of
our debt at $0.10 per unit.
METHOD OF SUBSCRIBING
You may subscribe by completing and delivering our form of subscription
agreement to us. The subscription price of $0.10 per unit must be paid by check,
bank draft, or postal or express money order payable in United States dollars to
the order of i-Track, Inc. Certificates for shares of common stock and warrants
subscribed for will be issued as soon as practicable after termination of the
offering.
EXPIRATION DATE
The subscription offer will expire _______________________ [90 days
from the date of this prospectus] which period may be extended for an additional
90 days, or on such earlier date as we shall determine in our discretion.
24
<PAGE>
RIGHT TO REJECT
We reserve the right to reject any subscription in our sole discretion
and to withdraw this offer at any time prior to our acceptance of the
subscriptions received, if acceptance of a subscription would result in the
violation of any laws to which we are subject.
NO ESCROW
We have not established an escrow account and we are employing the
funds as they are being raised. THIS OFFERING IS NOT SUBJECT TO ANY MINIMUM
SUBSCRIPTION LEVEL, AND THEREFORE ANY FUNDS RECEIVED FROM A PURCHASER ARE
AVAILABLE TO US AND NEED NOT BE REFUNDED TO THE PURCHASER.
SEC POSITION ON INDEMNIFICATION
As permitted by Nevada law, our articles of incorporation includes a
provision which provides that a director of our company shall not be personally
liable to us or our stockholders for monetary damages for a breach of fiduciary
duty as a director, except:
(i) for any breach of the director's duty of loyalty to us or our
stockholders;
(ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law;
(iii) under the General Corporation Law of the State of Nevada, which
prohibits the unlawful payment of dividends or the unlawful repurchase or
redemption of stock; or
(iv) for any transaction from which the director derives an improper
personal benefit.
This provision is intended to afford directors protection against, and to limit
their potential liability for monetary damages resulting from, suits alleging a
breach of the duty of care by a director.
The provisions diminish the potential rights of action which might
otherwise be available to our shareholders by limiting the liability of officers
and directors to the maximum extent allowable under Nevada law and by affording
indemnification against most damages and settlement amounts paid by a director
of us in connection with any shareholders derivative action. However, the
provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause us to rescind actions already taken, although as a practical matter courts
may be unwilling to grant such equitable remedies in circumstances in which such
actions have already been taken. Also, because we do not presently have
directors liability insurance and because there is no assurance that we will
procure such insurance or that if such insurance is procured it will provide
coverage to the extent directors would be indemnified under the provisions, we
may be forced to bear a portion or all of the cost of the director's claims for
indemnification under such provisions. If we are forced to bear the costs for
indemnification, the value of our common stock may be adversely affected. In the
opinion of the Securities and Exchange Commission, indemnification for
liabilities arising under the Securities Act of 1933 is contrary to public
policy and, therefore, is unenforceable.
LEGAL MATTERS
Dill Dill Carr Stonbraker & Hutchings, P.C., Denver, Colorado will pass
upon the validity of the units offered by i-Track, Inc.
25
<PAGE>
EXPERTS
Our financial statements for the period March 8, 1999 (inception) to
December 31, 1999 included in this prospectus have been audited by Stark Tinter
& Associates, LLC, independent accountants, as set forth in their report on such
financial statements, and are included in this prospectus in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
We have not previously been subject to the reporting requirements of
the SEC. We have filed with the SEC a registration statement on Form SB-1 under
the Securities Act with respect to the securities offered hereby. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedules thereto. For further information with
respect to us and our securities, you should review the registration statement
and the exhibits and schedules thereto. Statements made in this prospectus
regarding the contents of any contract or document filed as an exhibit to the
registration statement are not necessarily complete. You should review the copy
of the contract or document so filed.
You can inspect the registration statement and the exhibits and the
schedules thereto filed with the commission, without charge, at the office of
the SEC at Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549. You
can also obtain copies of these materials from the public reference section of
the commission at 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed
rates. You can obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site on the
Internet that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission at
HTTP://WWW.SEC.GOV.
REPORTS TO STOCKHOLDERS
As a result of filing the registration statement, we will become
subject to the reporting requirements of the Securities Exchange Act of 1934,
and will be required to file periodic reports, proxy statements, and other
information with the SEC. We will furnish our shareholders with annual reports
containing audited financial statements certified by independent public
accountants following the end of each fiscal year, proxy statements, and
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year following the end of such fiscal quarter.
26
<PAGE>
i-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)INC.
AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000
(unaudited)
F-1
<PAGE>
TABLE OF CONTENTS
Financial Statements:
Balance Sheet 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4
F-2
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS
Current assets:
Cash held in trust $ 16,694
=============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Operating advance - related parties $ 18,496
-------------
Total current liabilities 18,496
-------------
Stockholders (deficit):
Preferred stock: 1,000,000 shares authorized, $0.01 par value,
none issued or outstanding 0
Common stock: 50,000,000 shares authorized $0.001 par value,
18,700,000 shares issued and outstanding 18,700
Subscription receivable (2,500)
Deficit accumulated during the development stage (18,002)
-------------
(1,802)
-------------
$ 16,694
=============
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
i-Track, Inc.
F/K/A AVL SYS International, Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the Period For the Period
For the nine months March 8, 1999 (inception) March 8, 1999 (inception)
Ended Through Through
September 30, 2000 September 30, 1999 September 30, 2000
------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Revenue: $ 0 $ 0 $ 0
------------------- ------------------------- -------------------------
Costs and expenses:
General and administrative 14,973 3,029 18,002
------------------- ------------------------- -------------------------
Net (Loss) $ (14,973) $ (3,029) $ (18,002)
=================== ========================= =========================
Per share information: Basic and fully diluted
Weighted average number of common
shares outstanding 18,700,000 18,700,000 18,700,000
=================== ========================= =========================
Net (loss) per common share $ (0.00) $ (0.00) $ (0.00)
=================== ========================= =========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
i-Track, Inc.
F/K/A AVL SYS International, Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the Period For the Period
For the nine months March 8, 1999 (inception) March 8, 1999 (inception)
Ended Through Through
September 30, 2000 September 30, 1999 September 30, 2000
------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Payment of legal fees $ (13,773) $ (3,029) $ (16,802)
------------------- ------------------------ ------------------------
Cash flows from investing activities:
Net cash provided by investing activities 0 0 0
------------------- ------------------------ ------------------------
Cash flows from financing activities:
Proceeds from operating advance-related party 29,996 3,500 33,496
------------------- ------------------------ ------------------------
Net cash provided by financing activities 29,996 3,500 33,496
------------------- ------------------------ ------------------------
Net increase in cash 16,223 471 16,694
Beginning cash 471 0 0
------------------- ------------------------ ------------------------
Ending cash $ 16,694 $ 471 $ 16,694
=================== ======================== ========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
i-Track, Inc.
F/K/A SYS International, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information and Item 310(b) of Regulation SB. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of December 31,
1999, including notes thereto included in this filing.
NOTE 2 NET LOSS PER COMMON SHARE
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings Per Share ("SFAS No. 128"). Basic earnings per common share ("EPS")
calculations are determined by dividing net loss by the weighted average number
of shares of common stock outstanding during the year. Diluted earnings per
common share calculations are determined by dividing net income by weighted
average number of common shares and diluted common share equivalents
outstanding.
NOTE 3 STOCKHOLDERS' (DEFICIT)
On April 26, 2000 the Company issued 1,200,000 shares of common stock to its
founders in exchange for services related to corporate organizational
activities. On September 12, 2000, AVL Information Systems, Ltd. accepted
15,000,000 shares of common stock for full payment of its $15,000 operating
advance. Also during the period, 2,500,000 shares were issued in exchange for a
receivable in the amount of $2,500. All shares of common stock were issued at
$.001 par value. In accordance with Statement of Financial Accounting Standards
No. 123 "Accounting for Stock Based Compensation" these transactions were
recorded at the fair value of the transaction at the date the stock was issued.
Since the common shares described above have been issued for nominal
consideration they have been considered outstanding for the historical periods
presented in the computation of earnings per share.
NOTE 4 RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2000, AVL Information Systems, Ltd.
and the Company's Chairman of the Board, each loaned $15,000 to the Company. On
August 2, 2000, the chairman accepted a non-interest bearing, unsecured
promissory note, due on March 31, 2001. On September 12, 2000, AVL Information
Systems, Ltd. accepted 15,000,000 shares of common stock at $.001 par value for
full payment of its $15,000 operating advance.
F-6
<PAGE>
i-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FOR THE PERIOD MARCH 8, 1999 (INCEPTION)
TO DECEMBER 31, 1999
F-7
<PAGE>
TABLE OF CONTENTS
Financial Statements:
Report of Independent Auditors 1
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' (Deficit) 4
Statement of Cash Flows 5
Notes to Financial Statements 6-9
F-8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
i-Track, Inc.
Clinton Township, Michigan
We have audited the accompanying balance sheet of i-Track, Inc. (A Development
Stage Company) as of December 31, 1999, and the related statements of
operations, stockholders' (deficit), and cash flows for the period March 8, 1999
(inception) to 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of i-Track, Inc. (A Development
Stage Company) as of December 31, 1999, and the results of its operations, and
its cash flows for the period March 8, 1999 (inception) to December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ Stark Tinter & Associates, LLC
Stark Tinter & Associates, LLC
Denver, Colorado
October 11, 2000
F-9
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current assets:
Cash held in trust $ 471
------------
$ 471
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Operating advance - related party $ 3,500
------------
Stockholders' (deficit):
Preferred stock: 1,000,000 shares authorized,
$0.01 par value, none issued or outstanding -
Common stock: 50,000,000 shares authorized,
$0.001 par value, none issued or outstanding -
Deficit accumulated during the development stage (3,029)
-------------
$ 471
=============
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE>
i-TRACK, INC.
F/K/A AVL SYS INTERNATIONA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
Revenue: $ -
---------------
Costs and expenses:
General and administrative expenses 3,029
---------------
Total costs and expenses 3,029
---------------
Net (Loss) $ (3,029)
===============
Per share information: Basic and fully diluted
Weighted average number of common
shares outstanding 18,700,000
===============
Net (loss) per common share $ (0.00)
===============
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE PERIOD MARCH 8, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Deficit Accumulated
------------------------------------ During The Total
Number of Development Stockholders'
Shares Amount Stage (Deficit)
--------------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C>
March 8, 1999 (inception) - $ - $ - $ -
Net (loss) for the period
March 8 through December 31, 1999 - - (3,029) -
-------------- --------------- ------------------- ---------------
December 31, 1999 - $ - $ (3,029) $ (3,029)
============== =============== =================== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 8, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
Cash flows from operating activities:
Net (loss) $ (3,029)
Adjustments to reconcile net (loss) to
net cash used in operating activities: -
-------------
Net cash (used in) operating activities (3,029)
-------------
Cash flows from investing activities:
Net cash provided by investing activities -
-------------
Cash flows from financing activities:
Proceeds from operating advance - related party 3,500
-------------
Net cash provided by financing activities 3,500
-------------
Net Increase in Cash 471
Beginning Cash -
-------------
Ending Cash $ 471
=============
Supplemental cash flow information:
Cash paid for: Income taxes $ -
Interest $ -
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
i-Track, Inc. (formerly AVL SYS International, Inc.), "the Company was
incorporated under the laws of the state of Nevada on March 8, 1999.
Revenue Recognition
The Company recognizes revenue when its products are delivered or services are
provided.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Financial Instruments
Fair value estimates discussed herein are based upon certain marke assumptions
and pertinent information available to management as of December 31, 1999. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
advances payable. Fair values were assumed to approximate carrying values for
these financial instruments because they are short term in nature and their
carrying amounts approximate fair values or they are receivable or payable on
demand.
Long Lived Assets
The carrying value of long lived assets is reviewed on a regular basis for the
existence of facts and circumstances that suggest impairment. To date, no such
impairment has been indicated. Should there be an impairment in the future, the
Company will measure the amount of the impairment based on the undiscounted
expected futur cash flows from the impaired assets.
Net Income (Loss) per Common Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstandin for
the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares
F-14
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Income (Loss) per Common Share (continued)
and dilutive common stock equivalents outstanding. During the periods presented
common stock equivalents were not considered as their effect would be
anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Segment Information
The Company follows SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information." Certain information is disclosed, per SFAS No. 131,
based on the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates in a single
segment and will evaluate additional segment disclosure requirements as it
expands its operations.
Income Taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using th enacted marginal tax rate applicable when the related asset
or liability is expected to be realized or settled. Deferred income tax expenses
or benefits are based on the changes in the asset or liability each period. If
available evidence suggests that it is more likely tha not that some portion or
all of the deferred tax assets will not be realized, a valuation allowance is
required to reduce the deferred tax assets to the amount that is more likely
than no to be realized. Future changes in such valuation allowance are included
in the provision for deferred income taxes in the period of change.
Recent Pronouncements
The FASB recently issued Statement No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". The Statement defers for one year the effective date of FASB Note 1.
F-15
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Pronouncements (continued)
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal years
beginning after June 15, 2000. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The Statement
permits early adoption as of the beginning of any fisca quarter after its
issuance. The Statement will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of derivatives will either
be offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will b immediately recognized in earnings. The
Company has not yet determined if it will early adopt and what the effect of
SFAS No. 133 will be on the earnings and financial position of the Company.
During 1999, the Company did not participate in any hedging activities.
Note 2. STOCKHOLDERS' (DEFICIT)
The Company did not issued any common or preferred shares during the period
presented.
On April 26, 2000 the Company issued 1,200,000 shares of common stock to its
founders in exchange for services related to corporate organizational
activities, valued at $1,200 which management believes is the fair value of the
services provided.
During August and September 2000, the Company issued 15,000,000 shares of common
stock to repay a $15,000 operating advance to a related party and 2,500,000
shares of common stock in exchange for a receivable in the amount of $2,500.
Since the common shares described above have been issued for nominal
consideration they have been considered outstanding for the historical period
presented in the computation of earnings per share.
F-16
<PAGE>
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
Note 3. INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes", which requires use
of the liability method. FAS 109 provides that deferred tax assets and
liabilities are recorde based on the differences between the tax bases of assets
and liabilities and their carryin amounts for financial reporting purposes,
referred to as temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently enacted tax rates applied
to taxable income in the periods in which the deferred tax assets and
liabilities are expected to be settled or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
Income tax provision at
the federal statutory rate 34 %.
Effect of operating losses (34)%
-----
-
=====
As of December 31, 1999, the Company has a net operating loss carryforward of
approximately $3,000, which will be available to offset future taxable income.
If not used, this carryforward will expire in 2019. The deferred tax asset
relating to the operating loss carryforward has been fully reserved at December
31, 1999.
Note 4. RELATED PARTY TRANSACTIONS
During March 1999 an officer advanced the Company $3,500 for operating expenses.
The advance does not bear interest and is due on demand.
Through December 31, 1999 the Company had no business operations other than the
payment of legal fees and had no employees. In addition, it utilized minimal
office space provided by a related entity on a rent free basis. No charges have
been include in the accompanying financial statements for these items as the
amounts would not be material.
F-17
<PAGE>
<PAGE>
[BACK COVER OF PROSPECTUS]
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _________, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Nevada and the registrant's
articles of incorporation permit the registrant to indemnify its officers and
directors and certain other persons against expenses in defense of a suit to
which they are parties by reason of such office, so long as the persons
conducted themselves in good faith and the persons reasonably believed that
their conduct was in the corporation's best interests, not opposed to the
corporation's best interests, or unlawful. Indemnification is not permitted in
connection with a proceeding by or in the right of the corporation in which the
officer or director was adjudged liable to the corporation or in connection.
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the registrant in connection with the securities
being registered are as follows:
Securities and Exchange Commission filing fee...................$ 396
NASD filing fee................................................. 650
Accounting fees and expenses.................................... 5,000
Blue sky fees and expenses...................................... 5,000
Legal fees and expenses......................................... 15,000
Transfer agent fees and expenses................................ 1,000
Printing expenses............................................... 1,000
Miscellaneous expenses.......................................... 1,954
-----
Total...........................................................$ 30,000
=========
All amounts are estimates except the SEC filing fee and NASD filing fee
ITEM 3. UNDERTAKINGS
(A) The small business issuer will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value 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 the
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
II-1
<PAGE>
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(B) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the small business
issuer will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
Since its inception on March 8, 1999, the registrant has sold shares of its
common stock, which sales were not registered under the Securities Act of 1933,
as amended, as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
NUMBER OF PRICE PER DOLLAR REGISTRATION
PURCHASER SHARES SHARE ($) AMOUNT ($) DATE EXEMPTION
--------- ------ --------- ---------- ---- ---------
<S> <C> <C> <C> <C> <C>
Barbara M. Castanon 100,000 0.001 100 April 26, 2000 (1)
Peter W. Fisher 750,000 0.001 750 April 26, 2000 (1)
Tyler Fisher 250,000 0.001 250 April 26, 2000 (1)
Bernd Luwe 100,000 0.001 100 April 26, 2000 (1)
AVL Information Systems Ltd. 15,000,000 0.001 15,000 August 2, 2000 (2)
Ching Shan Hong 500,000 0.001 500 August 2, 2000 (2)
Peter Fisher 1,250,000 0.001 1,250 August 2, 2000 (2)
Tyler Fisher 500,000 0.001 500 August 2, 2000 (2)
Terry Ho 250,000 0.001 250 August 2, 2000 (2)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Section 4(2) of the Securities Act of 1933, as amended. These shares
bear a restrictive legend and were issued in exchange for services rendered.
The services received as consideration for the shares of common stock
included promoter services, investor relations, and development of the
registrant's business plan.
(2) Rule 504 of Regulation D promulgated under the Securities Act of 1933,
as amended. These shares also bear a restrictive legend and were issued in
exchange for cash. This was a private, non-public offering.
With respect to the sales of securities above, no underwriting commissions
or discounts were paid on these sales.
The following securities were sold by AVL Information Systems Ltd., an
affiliated issuer, within one year prior to the registrant's filling of its Form
SB-1:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
NUMBER OF PRICE PER DOLLAR
PURCHASER SHARES(1) SHARE CDN($) AMOUNT CDN($) DATE
--------- --------- ------------ ------------- ----
<S> <C> <C> <C> <C>
Peter Fisher 1,150,000 0.10 115,000 February 22. 2000
Parsh Patel 150,000 0.10 15,000 February 22, 2000
II-2
<PAGE>
Ronald Blitstein 200,000 0.10 20,000 February 22, 2000
Bill Kennedy 100,000 0.10 10,000 February 22, 2000
Valerie Cheer 100,000 0.16 16,000 March 2, 2000
Eelake Liau 100,000 0.16 16,000 March 2, 2000
Bernd Luwe 200,000 0.50 100,000 March 15, 2000
Trevor Burns 200,000 0.50 100,000 March 15, 2000
David Eisley 100,000 0.50 50,000 March 15, 2000
AB 551606 Ltd. c/o Albert Bergsma 50,000 0.16 8,000 March 21, 2000
Sandra Ferguson 60,000 0.16 9,600 March 23, 2000
Richard Groome 200,000 0.16 32,000 March 30, 2000
Brad Looy 400,000 0.10 40,000 April 7, 2000
Robert Smith 350,000 0.10 35,000 April 7, 2000
Mary Luchie 50,000 0.10 5,000 April 7, 2000
Nathan Duckworth 150,000 0.10 15,000 April 7, 2000
Bradley R. Scharfe 100,000 0.16 16,000 April 7, 2000
Norman Campbell 100,000 0.16 16,000 April 12, 2000
Aquila Investments c/o Peter 1,500,000 0.25 375,000 May 15, 2000
Fisher
Peter Fisher 2,000,000 0.25 500,000 June 12, 2000
Renee J. Garnett 50,000 0.16 8,000 June 20, 2000
Tyler Fisher 300,000 0.10 30,000 June 20, 2000
Donald Standridge 20,000 0.16 3,200 July 16, 2000
Bernd Luwe 125,000 0.25 31,250 November 9, 2000
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All shares were issued pursuant to exemptions from registration under
the applicable Canadian securities laws.
<PAGE>
ITEM 5. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Sequential
Exhibit No. Exhibit Page Number
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 Form of Selling Agent Agreement 50
-----------------------------------------------------------------------------------------------------------------------------
2.1 Articles of Incorporation(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
2.2 Bylaws(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
2.3 Certificate of Amendment of Articles of Incorporation(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
4.1 Form of Subscription Agreement(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
4.2 Form of Warrant(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
4.3 Form of Warrant Agreement(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
6.1 Promissory Note dated August 2, 2000, in the amount of $15,000, payable to Peter
Fisher(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
6.2 International Distribution Agreement dated January 7, 2001 54
-----------------------------------------------------------------------------------------------------------------------------
10.1 Consent of Stark Tinter & Associates, LLC. 70
-----------------------------------------------------------------------------------------------------------------------------
10.2 Consent of Dill Dill Carr Stonbraker & Hutchings, P.C. (incorporated by reference
to exhibit 11.1)(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
11.1 Opinion re legality(1) N/A
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Incorporated by reference to our Registration Statement on Form SB-1 filed
on November 6, 2000, File No. 333-49388.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Sarnia,
Province of Ontario, on January 17, 2001.
i-Track, Inc.
(Registrant)
By: /s/ Peter W. Fisher
---------------------------------
Peter W. Fisher
Chairman, Secretary, Treasurer
and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATE
Chairman, Secretary, Treasurer
and Director (Principal Executive,
/s/Peter W. Fisher Financial and Accounting Officer) January 17, 2001
------------------------- ----------------
Peter W. Fisher
/s/ Barbara M. Castanon Director and President January 17, 2001
------------------------- ----------------
Barbara M. Castanon
II-5
<PAGE>
