5,358,681 Shares
HOMESEEKERS.COM, INCORPORATED
Common Stock
This prospectus relates to the proposed sale of 5,358,681 shares of
common stock, $.001 par value per share, of HomeSeekers.com, Incorporated by
certain selling shareholders, of which 960,204 shares are underlying warrants.
The selling shareholders acquired their shares in transactions not
involving a public offering. We will not receive any proceeds from the sale of
the shares by the selling shareholders. However, we will receive the proceeds
from the cash exercise of any warrants.
The selling shareholders may, from time to time, offer their shares of
common stock through public or private transactions at prevailing market prices
or privately negotiated transactions.
Our common stock is traded on the Nasdaq SmallCap Market under the
trading symbol "HMSK." On March 24, 2000, the closing price for our common stock
was $16.4375 per share.
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See "Risk Factors" on page 3 for various risks you should consider
before you purchase any shares.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is March 29, 2000.
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TABLE OF CONTENTS
RISK FACTORS.............................................................3
THE COMPANY.............................................................14
USE OF PROCEEDS.........................................................14
DESCRIPTION OF CAPITAL STOCK............................................14
SELLING SHAREHOLDERS....................................................17
PLAN OF DISTRIBUTION....................................................22
LEGAL MATTERS...........................................................23
EXPERTS.................................................................23
INDEMNIFICATION.........................................................23
WHERE YOU CAN FIND MORE INFORMATION.....................................24
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.........................24
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RISK FACTORS
You should carefully consider the risks described below before buying
shares in this offering. If any of the following risks actually occur, our
business, financial condition and results of operations could be materially and
adversely affected, the trading price of our Common Stock could decline and you
could lose all or part of your investment.
Investing in our Common Stock may expose you to
the following risks inherent in our business.
We currently are not profitable and may record significant losses for the
foreseeable future.
We incurred a net loss of $7.6 million for the six months ended
December 31, 1999 and an aggregate net loss of $7.6 million for the two-year
period ended June 30, 1999, including net losses of $4.8 million and $2.8
million for the years ended June 30, 1999 and 1998, respectively. We have an
accumulated deficit as of December 31, 1999 of $22.8 million. We may record
significantly greater net losses for the foreseeable future, as we expect to
incur significant expenses in the foreseeable future. These expenses will
include product development expenses, sales and marketing costs, general
administrative expenses and acquisition costs. There can be no assurance that we
will achieve sufficient additional revenues to offset anticipated operating and
acquisition costs. We will continue to have high levels of operating expenses
and will be required to make significant expenditures in connection with our
product development activities and our sales and marketing infrastructure
development. We may never achieve profitability. If we fail to achieve
profitability or sustain or increase profitability if we achieve it, our
business, operating results and financial condition will be materially harmed.
Market competition among our existing and potential competitors may adversely
affect our business.
The market for on-line real estate content and e-commerce providers is
rapidly evolving and highly competitive, and we expect competition to intensify
in the future. Our failure to maintain and enhance our competitive position
could seriously harm our business. The technological and other requirements to
remain competitive are changing continually, and we must be able to respond to
changes in the industry in order to remain competitive. Our competitors vary in
size and in the scope and breadth of products and services they offer.
Our principal competitors for real estate professionals, homebuyers,
sellers and renters and related content include:
o Websites offering real estate listings together with other
related services, such as homestore.com, Apartments.com,
CyberHomes, HomeHunter.com, iOwn, LoopNet, Microsoft's
HomeAdvisor, NewHomeNetwork.com and RentNet;
o Websites offering real estate related content and services
such as mortgage calculators and information on the home
buying, selling and renting processes;
o general purpose consumer Websites such as AltaVista and Yahoo!
that also offer real estate-related content on their site; and
o traditional print media such as newspapers and magazines.
Our principal competitors for advertising revenues include:
o Web portals and other general purpose consumer Websites such
as AltaVista, America Online, Excite, Lycos, Netscape's
Netcenter and Yahoo!;
o online ventures of traditional media and classified
advertising services offered through daily and other
newspapers' Websites; and
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o traditional media such as newspapers, magazines and
television.
The barriers to entry for Web-based services and businesses are low,
making it possible for new competitors to proliferate rapidly. In addition,
parties with whom we have listing and marketing agreements could choose to
develop their own Internet strategies or competing real estate sites upon the
termination of their agreements with us. Many of our existing and potential
competitors have longer operating histories in the Internet market, greater name
recognition, larger consumer bases and significantly greater financial,
technical and marketing resources than we do, and thus could respond more
quickly to changing opportunities, technology and consumer demands. Also, some
of our current and potential competitors have better name recognition and more
extensive customer bases that may allow them to gain additional market share to
our detriment. These competitors may be able to undertake more extensive
promotional activities and adopt more competitive pricing policies for
advertising and goods and services than we can. In addition, our competitors,
especially those with greater resources than we have, could significantly
enhance their product offerings by developing improved technology solutions or
offering daily updates of listings. This could significantly reduce or eliminate
any competitive advantage we currently might have and, accordingly, could
significantly harm our business.
Competitive pressures may make it difficult for us to acquire market
share. We cannot be certain that we will be able to compete successfully with
existing or new competitors. If we fail to compete successfully against current
and future competitors, our business and prospects will be seriously harmed.
We are uncertain of our ability to obtain additional financing for our future
capital needs.
Our business is capital intensive, particularly with respect to product
development costs associated with the design and creation of software products,
and our plan to grow through acquisitions and strategic alliances. Accordingly,
we will require additional capital to support and expand our operations. To the
extent that revenues from operations are insufficient and additional funding is
required, public or private financing may not be available when needed or may
not be available on terms favorable or acceptable to us, if at all. Failure to
secure additional financing, if and when needed, may have a material adverse
affect on our ability to implement our proposed business strategy.
We must continue to obtain listings from real estate agents, brokers,
homebuilders, Multiple Listing Services and property owners.
We believe that our success depends in large part on the number of real
estate listings received from agents, brokers, homebuilders, MLSs and
residential, rental and commercial property owners. Many of our agreements with
MLSs, brokers and agents to display property listings have fixed terms,
typically 12 to 30 months. At the end of the term of each agreement, the other
party may choose not to continue to provide listing information to us and may
choose to provide this information to one or more of our competitors instead. In
addition, some of these providers of listings may choose to provide their
listings to one or more of our competitors on an exclusive basis. In particular,
at least one of our competitors has entered into exclusive listing arrangements
with a significant number of MLSs. In order for us to display listings covered
by these arrangements, we seek to obtain the consent of the individual brokers
who provide these listings to the MLSs. Accordingly, these listings can be more
difficult to obtain and involve more recruiting costs to acquire them. Our use
of these listings could potentially subject us to claims by the parties to these
exclusive listing arrangements. If our competitors are successful in increasing
the number of exclusive listing arrangements with MLSs or large groups of
brokers, we may be limited in the number of listings we are able to display on
our Website and our business may be harmed. We have expended significant amounts
to secure agreements for listings of real estate for sale and may be required to
spend additional large amounts or offer other incentives in order to renew these
agreements. If owners of large numbers of property listings, such as large
brokers, MLSs, or property owners in key real estate markets choose not to renew
their relationship with us, our Website could become less attractive to other
real estate industry participants or consumers.
Our quarterly financial results are subject to significant fluctuations.
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Our results of operations could vary significantly from quarter to
quarter. In the near term, we expect to be substantially dependent on sales of
our software, advertising products and services. We also expect to incur
significant sales and marketing expenses to promote our brand and services.
Therefore, our quarterly revenues and operating results are likely to be
particularly affected by the number of persons purchasing advertising products
and services as well as sales and marketing expenses for a particular period. If
revenues fall below our expectations, we may not be able to reduce our spending
rapidly in response to the shortfall.
Other factors that could affect our quarterly operating results include
those described below and elsewhere in this prospectus:
o the amount of advertising sold on our Website and the timing
of payments for this advertising;
o the level of renewals for our advertising products and
services by real estate agents and brokers;
o the amount and timing of our operating expenses and capital
expenditures;
o costs related to acquisitions of businesses or technologies;
o changes in the mix of products and services we sell; and
o increased sales, marketing, administrative and research and
development expenses.
Our quarterly revenues increased 154% from the quarter ended December
31, 1998 to the quarter ended December 31, 1999 and 88% from the quarter ended
September 30, 1999 to the quarter ended December 31, 1999. We do not believe
that these rates of growth are indicative of future growth in revenues, if any,
that we can expect in the future. Accordingly, we believe that period-to-period
comparisons of our operating results may not be meaningful, and you should not
rely on these comparisons as an indication of our future performance. Our
operating results may fall below the expectations of investors. In this event,
the market price of our Common Stock would likely fall.
Our brand may not achieve the broad recognition necessary to succeed.
We believe that broader recognition and a favorable consumer perception
of the HomeSeekers.com brand are essential to our future success. Successful
positioning of the HomeSeekers.com brand will largely depend on the success of
our advertising, marketing and promotion efforts and our ability to continue to
provide high quality real estate content. We intend to pursue an aggressive
brand development strategy, which will include substantially larger advertising,
marketing and promotional programs than those historically undertaken by us.
These initiatives will involve significant expense. If our brand development
strategy is unsuccessful, these expenses may never be recovered and we may never
be able to generate a profit.
It is important to our success that we support our real estate professional
customers.
Since many real estate professionals are not sophisticated computer
users and often spend limited amounts of time in their offices, it is important
that these customers find that our products and services significantly enhance
their productivity and are easy to use. To meet these needs, we provide customer
training and have developed a customer support organization that seeks to
respond to customer inquiries as quickly as possible. If our real estate
professional customer base grows, we may need to expand our support organization
further to maintain satisfactory customer support levels. If we need to enlarge
our support organization, we would incur higher overhead costs. If we do not
maintain adequate support levels, these customers could choose to discontinue
using our service.
Because we have expanded our operations, our success will depend on our ability
to manage our growth.
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We have experienced, and expect to continue to experience, periods of
rapid growth that strain our administrative, financial and operational
resources. Our ability to manage any staff and facilities growth effectively
will require us to continue to improve our operational, financial and management
controls, reporting systems and procedures, to install new management
information and control systems and to train, motivate and manage our employees.
There can be no assurance that we will install such management information and
control systems in an efficient and timely manner or that the new systems will
be adequate to support our future operations. If we are unable to hire, train
and retain qualified systems engineers and consultants to implement these
services or are unable to manage the post-sales process effectively, our ability
to attract repeat sales or provide references could be materially adversely
affected, thereby limiting our growth opportunities. If our management is unable
to manage growth effectively, which would happen if our sales and marketing
efforts exceed our capacity to install, maintain and service our products or if
new employees are unable to achieve adequate performance levels, our business,
financial condition and results of operations would be adversely affected.
Our business operations depend on the continuing contribution of our key
personnel.
Our future success depends to a significant extent on the continued
service of our key technical and senior management personnel. Loss of the
services of any of Gregory L. Costley, our Chairman of the Board and Chief
Executive Officer, John Giaimo, our President and Chief Operating Officer,
Douglas Swanson, our Vice Chairman and Executive Vice President, Greg Johnson,
our Chief Technology Officer, or James A. Dykstra, our Chief Financial Officer,
could have an adverse effect on our business, financial condition and results of
operations.
Mr. Costley joined us in August 1999 and Mr. Dykstra joined us in
September 1999. As a result, our senior management does not have a history of
working together as a team. Failure to maintain an effective team of senior
managers would adversely affect the operation of our business.
We must attract and retain personnel while competition for personnel in our
industry is intense.
We may be unable to retain our key employees or to attract, assimilate
or retain other highly qualified employees. We have from time to time in the
past experienced, and we expect in the future to continue to experience,
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications as a result of our rapid growth and expansion. Attracting and
retaining qualified personnel with experience in the real estate industry, a
complex industry that requires a unique knowledge base, is an additional
challenge for us. In addition, there is significant competition among companies
in the Internet industry for qualified employees. If we do not succeed in
attracting new personnel or retaining and motivating our current personnel, our
business, financial condition and results of operations will be adversely
affected.
We need to continue to develop our content and our product and service
offerings.
To remain competitive we must continue to enhance and improve the ease
of use, responsiveness, functionality and features of our Website. These efforts
may require us to develop internally or to license increasingly complex
technologies. In addition, many companies are continually introducing new
Internet-related products, services and technologies, which will require us to
update or modify our technology. Developing and integrating new products,
services or technologies into our Website could be expensive and time consuming.
For example, we may experience difficulties in integrating, or be unable to
integrate, the technologies that we recently acquired from Terradatum with our
MLS 2000 product to create an enhanced product for MLS data handling solutions.
Any new features, functions or services may not achieve market acceptance or
enhance our brand loyalty. If we fail to develop and introduce or acquire new
features, functions or services effectively and on a timely basis, we may not
continue to attract new users and may be unable to retain our existing users.
Furthermore, we may not succeed in incorporating new Internet technologies or,
in order to do so, we may incur substantial expenses.
Our recent acquisitions and any future acquisitions may result in our not
achieving the desired benefits of the transaction. Risks related to our
acquisitions include:
o difficulties in assimilating the operations of the acquired
businesses;
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o potential disruption of our existing businesses;
o assumption of unknown liabilities and litigation;
o our inability to integrate, train, retain and motivate
personnel of the acquired businesses;
o diversion of our management from our day-to-day operations;
o our inability to incorporate acquired products, services and
technologies successfully into our products;
o potential impairment of relationships with our employees,
customers and strategic partners; and
o inability to maintain uniform standards, controls procedures
and policies.
Our inability to successfully address any of these risks could
adversely affect our business, financial condition and results of operations.
We depend on third-party relationships, many of which are short-term or
terminable, to generate advertising and provide us with content.
We depend, and will continue to depend, on a number of third-party
relationships to increase traffic on HomeSeekers.com and thereby generate
advertising and other revenues. Outside parties on which we depend include
unrelated Website operators that provide links to HomeSeekers.com and providers
of real estate content. Many of our relationships with third-party Websites and
other third-party service providers are not exclusive and are short-term or may
be terminated at the convenience of either party. We cannot assure you that
third parties regard our relationship with them as important to their respective
businesses and operations. They may reassess their commitment to us at any time
in the future and may develop their own competitive services or products.
We cannot assure you that we will be able to maintain relationships
with third parties that supply us with content or related products or services
that are crucial to our success, or that such content, products or services will
be able to sustain any third-party claims or rights against their use. Also, we
cannot assure you that the content, products or services of those companies that
provide access or links to our Website will achieve market acceptance or
commercial success. Accordingly, we cannot assure you that our existing
relationships will result in sustained business partnerships, successful product
or service offerings or the generation of significant revenues for us.
Our success is dependent upon the intellectual property that we use in our
business.
We regard our Internet domain name, copyrights, service marks,
trademarks, trade secrets and similar intellectual property that we use in our
business as critical to our success. We rely on a combination of copyright,
trademark and trade secret laws, confidentiality procedures, contractual
provisions and license and other agreements with employees, customers and others
to protect our intellectual property rights. In addition, we may also rely on
the third party owners of the intellectual property rights we license to protect
those rights. Effective Internet domain name, copyright, service mark, trademark
and trade secret protection may not be available in every country in which our
products and services are made available online. The steps taken by us and other
third parties to protect our intellectual property rights may not be adequate,
and third parties may infringe upon or misappropriate the intellectual property
and similar proprietary rights used in our business, which could have an adverse
effect on our business, financial condition and results of operations.
We are also subject to the risk of adverse claims and litigation
alleging infringement of the intellectual property rights we use. The resolution
of any infringement claims may result in lengthy and costly litigation.
Moreover, resolution of a claim may require us to obtain a license to use those
intellectual property rights or possibly to cease using those rights altogether.
Any of those events could have a material adverse effect on our business,
financial condition and results of operations.
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Our international business is subject to a number of risks associated with doing
business abroad.
Although we have not actively marketed our products and services to
brokers, agents, homebuilders and other real estate professionals located
outside of North America, we intend to market our Website and products and
services globally. Our international business is subject to a number of risks
generally associated with doing business abroad, including:
o fluctuations in currency exchange rates, the impact of
recessions in economies outside the United States and
regulatory and political changes in foreign markets;
o reduced protection for intellectual property rights in some
countries; and
o potential limits on use of some of our trademarks and licensed
trademarks outside the United States.
These factors could adversely affect our business, financial condition
and results of operations. In addition, expansion into new international markets
may present competitive challenges different from those we currently face. We
cannot assure you that we will expand internationally or that any such expansion
will result in profitable operations.
Investors in our Common Stock are subject to the
following risks associated with the real estate industry.
Our business is dependent on the strength of the real estate industry, which is
both cyclical and seasonal.
The real estate industry traditionally has been cyclical. Recently,
sales of real estate in the United States have been at historically high levels.
Economic swings in the real estate industry may be caused by various factors.
When interest rates are high or general national and global economic conditions
are or are perceived to be weak, there typically is less sales activity in real
estate. A decrease in the current level of sales of real estate and products and
services related to real estate could adversely affect demand for our Website
and our advertising products and services. In addition, reduced traffic on our
Website would likely cause our advertising revenues to decline, which would
adversely affect our business, financial condition and results of operations.
We may experience seasonality in our business. The real estate industry
experiences a decrease in activity during the winter. However, because of our
limited operating history under our current business model, it is difficult for
us to fully assess the impact of seasonal factors on our business. If we are
unable to effectively manage our resources in anticipation of any seasonality of
our revenues and the increased costs we may incur during periods of lower
revenues, our business would be materially harmed.
We may particularly be affected by general economic conditions.
Purchases of real property and related products and services are
particularly affected by negative trends in the general economy. The success of
our operations depends to a significant extent upon a number of factors relating
to discretionary consumer and business spending and the overall economy, as well
as regional and local economic conditions in markets where we operate,
including:
o perceived and actual economic conditions;
o interest rates;
o taxation policies;
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o availability of credit;
o employment levels; and
o wage and salary levels.
In addition, because a consumer's purchase of real property and related
products and services is a significant investment and is relatively
discretionary, any reduction in disposable income in general may affect us more
significantly than companies in other industries.
We have risks associated with changing legislation in the real estate industry.
Real estate is a heavily regulated industry in the U.S. These
regulations include the Fair Housing Act, the Real Estate Settlement Procedures
Act and state advertising laws. In addition, states could enact legislation or
regulatory policies in the future that could require us to expend significant
resources to comply. These laws and related regulations may limit or restrict
our activities. For example, we are limited in the criteria upon which we may
base searches of our real estate listings and may not use criteria such as age
or race. As the real estate industry evolves in the Internet environment,
legislators, regulators and industry participants may advocate additional
legislative or regulatory initiatives. Should existing laws or regulations be
amended or new laws or regulations be adopted, we may need to comply with
additional legal requirements and incur resulting costs, or we may be precluded
from certain activities. To date, we have not spent significant resources on
lobbying or related government issues. Any need to significantly increase our
lobbying or related activities could substantially increase our operating costs.
The following risks inherent in doing business
over the Internet could adversely affect our business.
We depend on increased use of the Internet to expand our real estate related
advertising products and services.
If the Internet fails to become a viable marketplace for real estate
content, information and e-commerce, our business will not grow. Broad
acceptance and adoption of the Internet by consumers and businesses when
searching for real estate and related products and services will only occur if
the Internet provides them with greater efficiencies and improved access to
information.
In addition to selling advertising products and services to real estate
professionals, we depend on selling other types of advertisements on our
Website.
Our business would be adversely affected if the market for Internet
advertising fails to develop or develops more slowly than expected. Our ability
to generate advertising revenues from selling banner advertising and
sponsorships on our Website and products targeted at real estate professionals
will depend on, among other factors, the development of the Internet as an
advertising medium, the amount of traffic on our Website and our ability to
achieve and demonstrate demographic characteristics among the users of our
Website and other products and services that are attractive to advertisers. Many
potential advertisers and their advertising agencies have only limited
experience with the Internet as an advertising medium and have not devoted a
significant portion of their advertising expenditures to Internet-based
advertising. No standards have been widely accepted to measure the effectiveness
of Internet advertising. If these standards do not develop, existing advertisers
might reduce their current levels of Internet advertising or eliminate their
spending entirely. The widespread adoption of technologies that permit Internet
users to selectively block out unwanted graphics, including advertisements
attached to Webpages, could also adversely affect the growth of the Internet as
an advertising medium. In addition, advertisers in the real estate industry,
including real estate professionals, have traditionally relied upon other
advertising media, such as newsprint and magazines, and have invested
substantial resources in other advertising methods. These persons may be
reluctant to adopt a new strategy and advertise on the Internet.
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Government regulations and legal uncertainties could affect the growth of the
Internet.
A number of legislative and regulatory proposals under consideration by
federal, state, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, including online
content, user privacy, access charges, liability for third-party activities and
jurisdiction. Additionally, it is uncertain as to how existing laws will be
applied to the Internet. The adoption of new laws or the application of existing
laws may decrease the growth in the use of the Internet, which could in turn
decrease the usage and demand for our services or increase our cost of doing
business.
Some local telephone carriers have asserted that the increasing
popularity and use of the Internet have burdened the existing telecommunications
infrastructure, and that many areas with high Internet use have begun to
experience interruptions in telephone service. These carriers have petitioned
the Federal Communications Commission to impose access fees on Internet service
providers and online service providers. If access fees are imposed, the costs of
communicating on the Internet could increase substantially, potentially slowing
the increasing use of the Internet. This could in turn decrease demand for our
services or increase our cost of doing business.
Our inability to secure and protect our Internet domain name may adversely
affect our business operation.
The www.HomeSeekers.com Internet domain name is our brand on the
Internet. The acquisition and maintenance of Internet domain names generally is
regulated by governmental agencies and their designees. Until recently, Network
Solutions, Inc. was the exclusive registrar for the ".com," ".net" and ".org"
generic top-level Internet domains in the U.S. In April 1999, however, the
Internet Corporation for Assigned Names and Numbers, or ICANN, a new global
non-profit corporation formed to oversee a set of the Internet's core technical
management functions, opened the market for registering Internet domain names to
an initial group of five companies. Network Solutions, Inc. still maintains the
registry containing all the registrations in the generic top-level Internet
domains. The market for registering these Internet domain names in the U.S. and
in foreign countries is expected to undergo further changes in the near future.
We expect the requirements for registering Internet domain names also to be
affected. The relationship between regulations governing Internet domain names
and laws protecting trademarks and similar proprietary rights is unclear. We may
be unable to prevent third parties from acquiring Internet domain names that are
similar to, infringe upon or otherwise decrease the value of our Internet domain
name, the trademarks and other intellectual property rights used by us and we
may need to protect our rights through litigation. If we are unable to
adequately protect our Internet domain name, our trademarks and other
intellectual property rights or incur substantial costs in doing so, it could
have an adverse effect on our business, financial condition and results of
operations.
Taxation of Internet transactions could slow the use of the Internet.
The tax treatment of the Internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by various foreign governments to impose taxes on the sale of goods
and services and other Internet activities. Recently, the Internet Tax
Information Act was signed into law placing a three-year moratorium on new state
and local taxes on Internet commerce. However, future laws may impose taxes or
other regulations on Internet commerce, which could substantially impair the
growth of e-commerce.
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We depend on continued improvements to our computer network and the
infrastructure of the Internet.
Any failure of our computer systems that causes interruption or slower
response time of our Website or services could result in a smaller number of
users of our Website or the Websites and Webpages that we host for real estate
professionals. If sustained or repeated, these performance issues could reduce
the attractiveness of our Website to consumers and our advertising products and
services to real estate professionals, providers of real estate related products
and services and other Internet advertisers. Increases in the volume of our
Website traffic could also strain the capacity of our existing computer systems,
which could lead to slower response times or system failures. This would cause
the number of real property search inquiries, advertising impressions, other
revenue producing offerings and our informational offerings to decline, any of
which could hurt our revenue growth and our brand loyalty. We expect that we
will incur additional costs to upgrade our computer systems in order to
accommodate increased demand if our systems cannot handle current or higher
volumes of traffic.
The recent growth in Internet traffic has caused frequent periods of
decreased performance. Our ability to increase the speed with which we provide
services to consumers and to increase the scope of these services is limited by
and dependent upon the speed and reliability of the Internet. Consequently, the
emergence and growth of the market for our services is dependent on the
performance of and future improvements to the Internet.
Our internal network infrastructure could be disrupted.
Our operations depend upon our ability to maintain and protect our
computer systems, most of which are located at our facilities in Brea,
California and Minden, Nevada. Our systems are vulnerable to damage from
break-ins, unauthorized access, vandalism, fire, floods, earthquakes, power
loss, telecommunications failures and similar events. Although we maintain
insurance against fires and general business interruptions, the amount of
coverage may not be adequate in any particular case.
Experienced computer programmers, or hackers, may attempt to penetrate
our network security from time to time. Although we have not experienced any
material security breaches to date, a hacker who penetrates our network security
could misappropriate proprietary information or cause interruptions in our
services. We might be required to expend significant capital and resources to
protect against, or to alleviate, problems caused by hackers. We also may not
have a timely remedy against a hacker who is able to penetrate our network
security. In addition to purposeful security breaches, the inadvertent
transmission of computer viruses could expose us to litigation or to a material
risk of loss.
We could face liability for information on our Website and for products and
services sold over the Internet.
We provide third-party content on our Website, particularly real estate
listings. We could be exposed to liability with respect to this third-party
information. Persons might assert, among other things, that, by directly or
indirectly providing links to Websites operated by third parties, we should be
liable for copyright or trademark infringement or other wrongful actions by the
third parties operating those Websites. They could also assert that our third
party information contains errors or omissions, and consumers could seek damages
for losses incurred if they rely upon incorrect information.
We enter into agreements with other companies under which we share with
these other companies revenues resulting from advertising or the purchase of
services through direct links to or from our Website. These arrangements may
expose us to additional legal risks and uncertainties, including local, state,
federal and foreign government regulation and potential liabilities to consumers
of these services, even if we do not provide the services ourselves. We cannot
assure you that any indemnification provided to us in our agreements with these
parties, if available, will be adequate.
Even if these claims do not result in liability to us, we could incur
significant costs in investigating and defending against these claims. Our
general liability insurance may not cover all potential claims to which we are
exposed and may not be adequate to indemnify us for all liability that may be
imposed.
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Purchasers of our Common Stock are subject to
the following risks associated with our Common Stock.
A substantial number of our shares are available for sale in the public market
and sales of those shares could adversely affect our stock price.
Sales of a substantial number of shares of Common Stock into the public
market, or the perception that those sales could occur, could adversely affect
our stock price or could impair our ability to obtain capital through an
offering of equity securities. As of February 18, 2000, we have outstanding
17,533,311 shares of Common Stock. Of these shares, 11,855,420 are freely
transferable without restriction under the Securities Act of 1933 and 5,677,891
may be sold subject to the volume restrictions, manner-of-sale provisions and
other conditions of Rule 144 under the Securities Act of 1933.
We have granted various parties registration rights that enable those
parties to require us to register an aggregate of 413,207 of the shares of our
Common Stock outstanding as of February 18, 2000, including shares of Common
Stock issuable upon the exercise of outstanding warrants to purchase Common
Stock. These registration rights also require us to include those shares in
registrations of Common Stock made by us in the future.
The Company anticipates requesting shareholder approval to increase the
number of shares available under the Company's 1996 Stock Options Plan.
Additionally, the Company will request shareholder approval to grant
approximately 2,100,000 options at an average price of $8.00 per share.
The market price for our Common Stock is likely to be highly volatile because
the market for Internet-related and technology companies in particular has been
highly volatile.
Investors may not be able to resell their shares of Common Stock
following periods of volatility because the market reacts adversely to
volatility. The trading prices of many technology and Internet-related
companies' stocks reached historical highs within the last 52 weeks and reflect
relative valuations that are substantially above historical levels.
During the same period, these companies' stocks also have recorded lows
well below historical highs. We cannot assure you that our stock will trade at
the same levels of other Internet stocks or that we can sustain our Common
Stock's trading price.
Many of the factors that might cause volatility in the market price of
our Common Stock are beyond our control. These factors may materially and
adversely affect the market price of our Common Stock, regardless of how we
operate.
We could be required to register as an investment company and become subject to
substantial regulation that would interfere with our ability to conduct our
business.
We plan to invest in short-term government securities consistent with
prudent cash management and not primarily for the purpose of achieving
investment returns. Investment in securities primarily for the purpose of
achieving investment returns could result in our being treated as an "investment
company" under the Investment Company Act of 1940. In addition, the Investment
Company Act requires the registration of companies that are primarily in the
business of investing, reinvesting or trading securities or that fail to meet
various statistical tests regarding the composition of their assets and the
sources of their income even though they consider themselves not to be primarily
engaged in investing, reinvesting or trading securities.
If we are required to register as an investment company pursuant to the
Investment Company Act, we would be subject to substantial regulation with
respect to our capital structure, management, operations, transactions with
affiliated persons and other matters. Application of the provisions of the
Investment Company Act to us would materially and adversely affect our business,
financial condition and results of operations.
12
<PAGE>
We may be liable for prior failures to register securities in a timely manner.
We have, from time to time, issued securities in private offerings and
in connection with business combination transactions and have agreed to register
those securities for subsequent public sale. We have not met our obligation to
timely register those securities. As a result, we may be liable to some of our
securityholders, which could adversely affect our business, financial condition
and results of operations. Some of these registration rights may require us to
register securities in the future. It is possible that we may not meet those
obligations, which would subject us to further liability and could adversely
affect our business, financial condition and results of operations.
Anti-takeover provisions could delay or prevent a change of control.
Provisions of our articles of incorporation and amended and restated
bylaws and Nevada law, as well as provisions in our existing employment
agreements with Gregory L. Costley, our Chairman of the Board and Chief
Executive Officer, John Giaimo, our President and Chief Operating Officer, Doug
Swanson, our Vice Chairman and Executive Vice President, and Greg Johnson, our
Chief Technology Officer, could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders. In
addition, BuySellBid.com has agreed not to vote its shares in favor of various
business combination transactions unless that transaction has been approved by
our board of directors.
Investors should not purchase our Common Stock with the expectation of receiving
cash dividends.
We currently intend to retain any future earnings for funding growth
and, as a result, do not expect to pay any cash dividends in the foreseeable
future.
13
<PAGE>
THE COMPANY
Our company is known as HomeSeekers.com, Incorporated and we are a
leading provider of technology to the North American and International real
estate industries. We provide technology solutions and services targeted to
brokers, agents, Multiple Listing Services (MLS's), builders, consumers and
others involved in the real estate industry. Through HomeSeekers (TM)
(HomeSeekers), our proprietary Internet product available at
www.HomeSeekers.com, or through HomeSeekers/CityNet (TM) (HomeSeekers/City Net),
our proprietary Intranet product, users can search for a home within a specified
geographical area and with desired features such as number of bedrooms and
baths, security, and other added features and apply for a mortgage and title
insurance. HomeSeekers is a Nevada corporation and its principal executive
offices are located at 6490 S. McCarran Boulevard, Suite D-28, Reno, Nevada
89509, telephone number (775) 827-6886.
USE OF PROCEEDS
All shares of common stock being offered hereby will be sold by the
selling shareholders for their own account. HomeSeekers will not receive any
proceeds from such sales. However, we may receive up to $3,398,283 in the event
all of the warrants are exercised (of which there can be no assurance). We
intend to use any proceeds received from the exercise of warrants for general
corporate purposes, including funding working capital requirements.
DESCRIPTION OF CAPITAL STOCK
General
Our authorized capital stock consists of 50,000,000 shares of Common
Stock, 5,000,000 shares of Class A preferred stock, par value $.001 per share,
and 200,000 shares of Class B preferred stock, par value $10.00 per share. As of
February 18, 2000, 17,583,311 shares of Common Stock were issued and outstanding
and no shares of Class A preferred stock or Class B preferred stock were issued
and outstanding.
The additional shares of our authorized stock available for issuance
might be issued at times and under circumstances so as to have a dilutive effect
on earnings per share and on the equity ownership of the holders of our Common
Stock. The ability of our board of directors to issue additional shares of stock
could enhance the board's ability to negotiate on behalf of the stockholders in
a takeover situation but could also be used by the board to make a
change-in-control more difficult, thereby denying stockholders the potential to
sell their shares at a premium and entrenching current management. The following
description is a summary of the material provisions of our capital stock. You
should refer to our articles of incorporation and bylaws for additional
information.
Common Stock
Subject to the dividend rights of the holders of preferred stock,
holders of shares of our Common Stock are entitled to share ratably in any
dividends that may be declared by our board of directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up,
holders of our Common Stock would be entitled to share ratably in all of our
assets available for distribution to holders of Common Stock remaining after
payment of liabilities and liquidation preference of any outstanding preferred
stock.
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of directors
can elect all of the directors standing for election if they choose to do so. In
that event, the holders of the remaining shares will not be able to elect any
directors. Our bylaws provide that only a majority of the issued and outstanding
shares of capital stock entitled to vote need be represented to constitute a
quorum and to transact business at any meeting of stockholders. Our Common Stock
has no preemptive, subscription or conversion rights and is not redeemable by
us. All of the outstanding shares of our Common Stock are fully paid and
nonassessable.
14
<PAGE>
Preferred Stock
Our board of directors has the authority, within the limitations and
restrictions stated in our articles of incorporation, to provide by resolution
for the issuance of shares of preferred stock, and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preference
and the number of shares constituting any series of the designation of such
series. The issuance of preferred stock could have the effect of decreasing the
market price of the Common Stock, impeding or delaying a possible takeover and
adversely affecting the voting and other rights of the holders of our Common
Stock. At present, we have no plans to issue preferred stock.
Stock Options
As of February 18, 2000:
o options to purchase a total of 4,501,943 shares of Common
Stock were outstanding, 3,345,967 of which were vested and
exercisable within 60 days, at a weighted average exercise
price of $3.99 per share; and
o up to 201,651 additional shares of Common Stock may be issued
under our 1996 Stock Option Plan.
Warrants
As of February 18, 2000, there were outstanding warrants to purchase a
total of 1,110,204 shares of Common Stock at a weighted average exercise price
of $3.80 per share.
Anti-takeover Effects of Nevada Law and Some Provisions of our Articles of
Incorporation and Bylaws
Some provisions of our articles of incorporation and bylaws, which
provisions are summarized in the following paragraphs, may be deemed to have an
anti-takeover effect and may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider to be in its best interest, including
those attempts that might result in a premium over the market price for the
shares held by stockholders.
Classified Board of Directors. Our board of directors is divided into
two classes serving staggered two-year terms. As a result, approximately
one-half of the board of directors will be elected each year. These provisions,
when coupled with the provisions of our articles of incorporation and bylaws
authorizing the board of directors to fill vacant directorships or increase the
size of the board of directors, may deter a stockholder from removing incumbent
directors and simultaneously gaining control of the board of directors by
filling the vacancies created by such removal with its own nominees.
Cumulative Voting. Our articles of incorporation expressly deny
stockholders the right to cumulate votes in the election of directors.
Special Meeting of Stockholders. Our bylaws provide that special
meetings of our stockholders may be called only by the chairman of the board of
directors, a majority of the board of directors or by holders of at least 51% of
our issued and outstanding capital stock.
Authorized But Unissued Shares. The authorized but unissued shares of
Common Stock and preferred stock are available for future issuance without
stockholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of Common Stock and preferred stock could render
more difficult or discourage an attempt to obtain control of us by means of a
proxy contest, tender offer, merger or otherwise.
15
<PAGE>
Amendments. The Nevada General Corporation Law provides generally that
the affirmative vote of a majority of the shares entitled to vote on any matter
is required to amend a corporation's articles of incorporation or bylaws.
Section 78.438 of the Nevada General Corporation Law. Section 78.438 of
the Nevada General Corporation Law regulates a wide range of "Combinations"
between a resident domestic corporation that has 200 or more stockholders and
the beneficial owner (or an affiliate of that beneficial owner) of 10% or more
of the voting power of the outstanding voting shares of the corporation, who is
considered to be an "Interested Stockholder." Combinations are broadly defined
to include, among other things,
o mergers or consolidations with,
o sales, leases, mortgages, pledges or other dispositions of assets
having a market value of 5% or more of the market value of the corporation's
assets or outstanding shares, or representing 10% or more of the corporation's
earning power or net income, to,
o various transactions resulting in the issuance or transfer of any
shares having a market value equal to 5% or more of the market value of all
outstanding shares of the corporation to,
o the adoption of a plan or proposal of the liquidation or dissolution
of that corporation proposed by,
o various transactions that would result in increasing the
proportionate share of shares of the corporation owned by, or
o the receipt of benefits, except proportionately as a stockholder, of
any loans, advances or other financial benefits by, an Interested Stockholder.
Section 78.438 provides that an Interested Stockholder may not engage
in a Combination with the corporation for a period of three years from the date
of becoming an Interested Stockholder unless, prior to the date on which the
Interested Stockholder becomes an Interested Stockholder, the Combination or the
purchase of shares by the Interested Stockholder resulting in 10% ownership is
approved by the board of directors of that corporation. Following the expiration
of the three-year period, a Combination with an Interested Stockholder is
permitted if the Combination meets all the requirements specified in the
articles of incorporation of the corporation and either (i)(A) the board of
directors of the corporation approves, prior to that person becoming an
Interested Stockholder, the Combination or the purchase of shares by the
Interested Stockholder resulting in 10% ownership and (B) the Combination is
approved by the affirmative vote of holders of a majority of voting power not
beneficially owned by the Interested Stockholder at a meeting called no earlier
than three years after the Interested Stockholder became an Interested
Stockholder or (ii)(A) the aggregate amount of cash and the market value of
consideration other than cash to be received by holders of common stock and
holders of any other class or series of stock meets the minimum requirements set
forth in Sections 78.441 through 78.443, inclusive, of the Nevada General
Corporation Law and (B) prior to the consummation of the Combination, except in
limited circumstances, the Interested Stockholder will not have become the
beneficial owner of additional voting shares of the corporation.
Transfer Agent and Registrar
The transfer agent and registrar for our securities is Atlas Stock
Transfer Company. Its address is 5899 South State Street, Salt Lake City, Utah
84107, and its telephone number at that location is (801) 266-7151.
16
<PAGE>
SELLING SHAREHOLDERS
Securities Covered by this Prospectus
This prospectus covers a total of 5,358,681 shares of our common stock.
Of these shares, shares were issued in a private offering, which was made solely
to accredited investors and completed during our fourth fiscal quarter of 1999.
In connection with that private offering, we undertook to register the shares
that were sold. Additional shares were issued as all or a portion of the
consideration for several business transactions we completed. As part of these
transactions, we agreed to register the shares we issued.
This prospectus includes 960,204 shares that may be issued in the event
of the exercise of warrants, at exercise prices ranging from $1.47 per share to
$10.19 per share. The warrants were issued for various business and
investment-related purposes, in connection with which we agreed to register the
shares issuable upon exercise of such warrants.
Stock Ownership
The following table sets forth, as of February 29, 2000, the name of
each selling shareholder and the amount of shares of stock held directly or
indirectly underlying the warrants owned by the selling shareholder at the date
thereof. The table also shows the amount of shares of common stock being offered
by the selling shareholder and the amount to be owned by the selling shareholder
following the sale of all such shares of common stock.
<TABLE>
<CAPTION>
Shares
Shares Owned Available Shares Percent of
Selling Securityholder Prior to Pursuant to Owned after Class after Material
this Offering this Prospectus Offering Offering Relationships
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stephen D. Baksa 74,834 74,834 -- * Consultant
Neil G. Berkman Associates 25,000 25,000 -- * Consultant
Medford Bragg 27,667 27,667 -- * Consultant
Ken Burns 8,250 8,250 -- * --
Cogent Alliance, Inc. 137,500 137,500 -- * --
Richard A. Fear 13,260 12,500 760 * --
William B. Fretz 10,625 10,625 -- * --
William B. Fretz Jr. Irrv Trust FBO 10,000 10,000 -- * --
Christopher Bradey Fretz DTD 6-26-98
William B. Fretz Jr. Irrv Trust FBO 5,000 5,000 -- * --
Heather Nicole Fretz DTD 6-26-98
Hemlock Investments 4,300 4,300 -- * --
Lancaster Investment Partners 5,000 5,000 -- * --
Paula Peterson Runnells 8,250 8,250 -- * --
Duane R. South & Genevieve A South 2,500 2,500 -- * --
Specialties Enterprises, LLC 139,723 93,767 45,956 * --
Darin C. Murphy 16,500 16,500 -- * --
The Vernon Corporation 12,500 12,500 -- * --
Topaz Limited 100,000 100,000 -- * Consultant
Conrad VonBibra TTEE Edith Von Bibra 38,203 37,500 703 * --
Conrad VonBibra 26,114 25,000 1,114 * --
Walker Foundation 51,989 50,000 1,989 * --
Robert Patrick White and Francis 13,094 12,500 594 * --
Alexander Hyzer 12,732 12,500 232 * --
Bradley N. Rotter Self Employed Pension 333,333 333,333 -- * Director
Plan & Trust
17
<PAGE>
Shares
Shares Owned Available Shares Percent of
Selling Securityholder Prior to Pursuant to Owned after Class after Material
this Offering this Prospectus Offering Offering Relationships
- -----------------------------------------------------------------------------------------------------------------
Point West Ventures, L.P. 246,500 246,500 -- * (1)
J. Steven Emerson IRA II Bear Stearns, 30,000 30,000 -- * --
Trustee
Worthington Growth, L.P. 80,000 80,000 -- * --
Losty Capital Management 150,000 150,000 -- * --
Circle T Partners, L.P. 100,000 100,000 -- * --
Portner Partner, L.P. 80,000 80,000 -- * --
Express Marine, INC. 18,000 18,000 -- * --
Circle T International, LTD 50,000 50,000 -- * --
David Stone 20,000 20,000 -- * --
Richard B. Stone 65,165 65,165 -- * --
Ram-Potti 6,740 6,740 -- * --
Sen Balasubramanian 8,330 8,330 -- * --
Deepa Bala 4,165 4,165 -- * --
Rupa Bala 4,165 4,165 -- * --
RSMB Investment LLC 7,000 7,000 -- * --
Emmet M. Murphy 25,000 25,000 -- * --
Willis Financial Planning Services, INC. 22,667 22,667 -- * --
Profit Sharing Plan D. Vernon Willis
TTEE FBO
EDJ Limited 20,000 20,000 -- * --
Michael C. Stead 14,000 14,000 -- * --
Gary V. Vanier & Barbara D. Vanier 14,000 14,000 -- * --
TTEES For the Trust Dated June 30,
1992
William Jeffrey III 16,667 16,667 -- * --
John J. Harrision 9,167 9,167 -- * --
Jerry Heymann 8,000 8,000 -- * --
David S. Callan, IRA 5,000 5,000 -- * --
James Robert Phillips & Meredith 10,000 10,000 -- * --
Coleman Phillips Revocable Trust Dated
8/23/93
Laurence D. Keller 2,500 2,500 -- * --
Robert H. Getz 9,999 9,999 -- * --
Robert A. Steininger 9,000 9,000 -- * --
Christopher Allen 2,000 2,000 -- * --
Jeffrey Steingarten 6,667 6,667 -- * --
Justin Tang 5,000 5,000 -- * --
George Getz 2,000 2,000 -- * --
Robert R. Kesner 3,000 3,000 -- * --
Keith A. Donmoyer, IRA 2,000 2,000 -- * --
Eli Jacobson 27,334 27,334 -- * --
Rutgers Casualty Insurance Company 10,000 10,000 -- * --
Kentucky National Insurance Company 10,000 10,000 -- * --
Nachum Stein 5,000 5,000 -- * --
Theodore B. Smith III 5,000 5,000 -- * --
Michail Shapiro 2,000 2,000 -- * --
Carroll Weinberg, M.D. 5,000 5,000 -- * --
Charlotte C. Weinberg 5,000 5,000 -- * --
James E. Schwalbe 500 500 -- * --
18
<PAGE>
Shares
Shares Owned Available Shares Percent of
Selling Securityholder Prior to Pursuant to Owned after Class after Material
this Offering this Prospectus Offering Offering Relationships
- -----------------------------------------------------------------------------------------------------------------
Octagon Worldwide LTD 50,000 50,000 -- * Consultant
RANDCO, INC. 150,000 150,000 -- * Consultant
Griffin Partners 150,000 150,000 -- * Consultant
Mihajlo Basic 26,364 25,000 1,364 * --
Renato Bautista 50,000 50,000 -- * --
Charles Billings 3,124 3,124 -- * --
Stephen Fish 5,000 5,000 -- * --
H.M. Furbee 2,146 2,000 146 * --
Stephen Gardner TTEE Gardner Fam 7,500 7,500 -- * --
Trust of 1995 DTD 12-29-95
Janet Gookin 1,626 1,626 -- * --
Ronald Hadan 22,500 22,500 -- * --
Ray Harbert 10,000 10,000 -- * --
The Friends of St. Michael 10,000 10,000 -- * --
Thomas Lamb 47,800 47,800 -- * --
Randall Lazar 5,000 5,000 -- * --
Jeff Neil 2,750 2,750 -- * --
Quantum James Harrison 1,450 1,450 -- * --
Donald Rowe 33,216 15,624 17,592 * --
Brian Salonen 6,250 6,250 -- * --
Seascape 32,161 28,522 3,639 * --
Brenda Sensenig 7,500 7,500 -- * --
Ruth Swanson 10,000 10,000 -- * --
David Wood 2,269 2,269 -- * --
Leonard Bokert 1,000 1,000 -- * --
Vasant Chheda 25,000 25,000 -- * --
Gregory Costley 3,000 3,000 -- * (2)
Tom Morgan TTEE Morgan Rev Trust 12,867 12,500 367 * --
UA DTD 1-4-88
Robert Poh 25,219 12,500 12,719 * --
Jackson Spears 115,000 95,000 20,000 * Consultant
Capstone International Inc. 71,500 71,500 -- * Consultant
William Tomerlin 643,263 127,500 515,763 * Former Director
E. Andrew Sensenig, custodian for 2,500 2,500 -- * --
Kathryn Rae Sensenig
E. Andrew Sensenig, custodian for 2,500 2,500 -- * --
Margaret Louise Sensenig
Leah Alperin 30,000 30,000 -- * --
Carol Dinner 9,900 9,900 -- * --
Boenning & Scattergood, Inc. 75,000 75,000 -- * (3)
Robert A. Berlacher 15,054 15,054 -- * (4)
Ronald S. Spangler 12,556 12,556 -- * (4)
Richard Johnson 1,000 1,000 -- * (4)
Robert A. Powers 1,000 1,000 -- * (4)
Alan Swerdloff 5 5 -- * (5)
John Gallagher 20,719 20,719 -- * (5)
The Kelly Family Trust 110,840 16,500 94,340 * Former Director
Kathleen Farwell, Trustee of the Zoe 120,000 120,000 -- * Consultant
Trust
St. Tropez Funding LTD. 60,000 60,000 -- * Consultant
19
<PAGE>
Shares
Shares Owned Available Shares Percent of
Selling Securityholder Prior to Pursuant to Owned after Class after Material
this Offering this Prospectus Offering Offering Relationships
- -----------------------------------------------------------------------------------------------------------------
Lighthouse Partners USA, LP 96,615 96,615 -- * --
Lighthouse Investment Fund L.P. 65,645 65,645 -- * --
Ernich R. Ozada, IRA 20,000 20,000 -- * --
Pharos Fund Limited 274,190 274,190 -- * --
Erinch R. Ozada 95,000 95,000 -- * Consultant
Balkin Zihnali 5,000 5,000 -- * --
Jaqualine J. Holloway 75,436 75,436 -- * Employee's
Spouse
Steven H. Holloway 41,836 41,836 -- * Employee
David Sherry 2,858 2,858 -- * Employee
Diane Jacobson 1,875 1,875 -- * Employee
Frank Wenzl 5,000 5,000 -- * Employee
Peter Davis 3,636 3,636 -- * Employee
Peter Krause 120,000 120,000 -- * Employee
Richard Bellamy 3,636 3,636 -- * Employee
Steven Hightower 140,976 140,976 -- * Employee
Terradatum, LLC 87,291 87,291 -- * --
Suzanne Croft 6,250 6,250 -- * Employee
Rita Godinez 2,484 2,484 -- * Employee
Lauri Harris 556 556 -- * Employee
Brenda Krueger 7,143 7,143 -- * Employee
Marcus Litchfield 714 714 -- * Employee
Greg Moore 3,125 3,125 -- * Employee
Rob Overman 2,500 2,500 -- * Employee
Thomas Dashiel 1,589 1,589 -- * --
Gregg Larson 6,000 6,000 -- * Consultant
William D Biggs 159,183 159,183 -- * Employee
Ed Morris 8,400 8,400 -- * Employee
Kevin J. McCarthy 19,600 19,600 -- * Employee
John Peretz 18,100 18,100 -- * Consultant
Clifford Baird 25,000 25,000 -- * Employee
BRIT&I LLC 50,000 50,000 -- * Consultant
BuySellBid.com 257,615 257,615 -- * --
Mark A. Spraetz 37,301 37,301 -- * Employee
D. Lynn Spraetz 37,301 37,301 -- * Employee's
Spouse
Dawn Bertsche, TTEE Spraetz Children's 6,488 6,488 -- * Employee's Trust
Trust
Terry Pullan 13,077 13,077 -- * Employee
John Crary 10,000 10,000 -- * Consultant
Robert Anhert 4,000 4,000 -- * --
Phil A. Worack 10,000 10,000 -- * Consultant
Paul A. Schemmel 10,000 10,000 -- * Consultant
Orlando House & Home 3,318 3,318 -- * --
Pamela Johnson Inc. 15,000 15,000 -- * Consultant
Wall Street Investor Relations Corp. 1,702 1,702 -- * Consultant
John Reinhardt 20,000 20,000 -- * Consultant
BMC Communication Group 1,500 1,500 -- * Consultant
The Trout Group LLC 1,500 1,500 -- * Consultant
20
<PAGE>
Shares
Shares Owned Available Shares Percent of
Selling Securityholder Prior to Pursuant to Owned after Class after Material
this Offering this Prospectus Offering Offering Relationships
- -----------------------------------------------------------------------------------------------------------------
Brad Rotter 50,000 50,000 -- * Director
David Holmes 50,000 50,000 -- * Director
Grand Total 6,075,959 5,358,681 717,278
</TABLE>
* less than three percent
(1) Mr. Bradley N. Rotter, a Director of the Company, is the
chairman of Point West Ventures, L.P. Mr. Rotter disclaims
beneficial ownership of all such shares except to the extent
of his pecuniary interest therein.
(2) Mr. Costley is the Chairman of the Board, Chief Executive
Officer and a Director of the Company.
(3) Boenning & Scattergood, Inc. acted as Placement Agent in
connection with the Company's Private Placement dated December
8, 1998.
(4) Employees of Boenning & Scattergood, Inc. who acted as
Placement Agent in connection with the Company's Private
Placement dated December 8, 1998.
(5) Employees of Sunrise Securities, Inc. who acted as Placement
Agent in connection with the Company's Private Placement dated
December 8, 1998.
We have agreed to pay full costs and expenses in connection with the
issuance, offer, sale and delivery of the shares, including but not limited to,
all fees and expenses in preparing, filing and printing the registration
statement and prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. We will not pay selling commissions and
expenses associated with any sale by the selling shareholders.
Beneficial ownership is determined in accordance with rules promulgated
by the Securities and Exchange Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. As of
February 29, 2000, we believe that each person named in the table has sole
voting and investment power with respect to all of the shares of our common
stock listed as beneficially owned by it. The information contained in the
foregoing table is derived from the books and records of the Company, as well as
the Company's transfer agent.
The selling shareholders identified above may have sold, transferred or
otherwise disposed of all or a portion of such securities since February 29,
2000 in transactions exempt from the registration requirements of the Securities
Act of 1933. The selling shareholders may sell all, part or none of the shares
of common stock listed above.
Generally, only selling shareholders identified in the foregoing table
who beneficially own the shares of common stock set forth opposite their
respective names may sell such offered shares pursuant to the Registration
Statement of which this prospectus forms a part. We may from time to time
include additional selling shareholders in supplements to this prospectus.
21
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market (including the Nasdaq SmallCap Market of The Nasdaq
Stock Market), or otherwise at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
shares may be sold by one or more of the following methods:
(a) a block trade in which the broker-dealer so engaged
will attempt to sell the shares as agent, but may
position and resell a portion of the block as
principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account
pursuant to this prospectus;
(c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and
(d) face-to-face or other direct transactions between the
selling shareholders and purchasers without a
broker-dealer or other intermediary.
In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate in the
resales. Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders in amounts to be
negotiated in connection with the sale. Such broker-dealers and agents and any
other participating broker-dealers or agents may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, in connection with such sales.
In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 of the Securities Act of 1933 might be sold under Rule
144 rather than pursuant to this prospectus.
In connection with distributions of the shares or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered hereunder in the course of hedging the positions they
assume with selling shareholders. The selling shareholders may also sell shares
short and deliver the shares to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the shares
registered hereunder, which the broker-dealer may resell pursuant to this
prospectus. The selling shareholders may also pledge the shares registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this prospectus.
Information as to whether an underwriter(s) who may be selected by the
selling shareholders, or any other broker-dealer, is acting as principal or
agent for the selling shareholders, the compensation to be received by
underwriters who may be selected by the selling shareholders, or any
broker-dealer, acting as principal or agent for the selling shareholders and the
compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Any dealer or broker participating in any distribution of the shares
may be required to deliver a copy of this prospectus to any person who purchases
any of the shares from or through such dealer or broker.
We have advised the selling shareholders that during such time as they
may be engaged in a distribution of the shares included herein they are required
to comply with Regulation M promulgated under the Securities Exchange Act of
1934. With certain exceptions, Regulation M precludes any selling shareholders,
any affiliated purchasers and any broker-dealer or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the. Page 34
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in
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order to stabilize the price of a security in connection with the distribution
of that security. All of the foregoing may affect the marketability of our
common stock.
It is anticipated that the selling shareholders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of our common stock.
Except as specifically set forth herein, none of the selling
shareholders has, or within the past three years has had, any position, office
or other material relationship with us or any of our predecessors or affiliates.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for us by Jenkins & Carter, Reno, Nevada. Jones, Day, Reavis, &
Pogue, Chicago, Illinois and Cleveland, Ohio from time to time acts as counsel
for HomeSeekers and its subsidiaries.
EXPERTS
The financial statements of HomeSeekers as of June 30, 1999 and 1998,
and for each of the two fiscal years in the period ended June 30, 1999,
incorporated by reference into this prospectus, have been audited by Albright,
Persing & Associates, Limited, independent certified public accountants to the
extent and for the periods set forth in their report, and are incorporated by
reference herein in reliance upon such report given upon the authority of said
firm as experts in accounting and auditing.
INDEMNIFICATION
The Nevada General Corporation Law allows a corporation to indemnify
any person who was or is threatened to be made a party to any threatened,
pending or completed suit or proceeding. This applies whether the matter is
civil, criminal, administrative or investigative because he or she is or was a
director, officer, employee or agent of the corporation. In addition, a Nevada
corporation may indemnify against expenses, including attorney's fees, and,
except for an action by or in the name of the corporation, against judgments,
fines and amounts paid in settlement as part of such suit or proceeding. This
applies only if the person indemnified acted in good faith and in a manner he or
she reasonably believed to be in the best interest of the corporation, and, with
respect to any criminal action or proceeding, the person had no reasonable cause
to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim as to which the person has
been found to be liable to the corporation. The exception is if the court in
which such action was brought determines that the person is reasonably entitled
to indemnity for expenses.
The Nevada General Corporation Law further provides that if a director,
officer, employee or agent of the corporation has been successful in the defense
of any suit, claim or proceeding described above, he or she will be indemnified
for expenses, including attorneys' fees, actually and reasonably incurred by him
or her.
Our by-laws provide that our officers and directors shall be
indemnified and held harmless to the fullest extent legally permissible under
Nevada General Corporation Law from time to time. Such right of indemnification
shall be a contract right which may be enforced in any manner desired by such
person. In addition, we have procured officers and directors liability insurance
providing for coverage in the aggregate amount of $3,000,000.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 is permitted as to our directors, officers and controlling persons,
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities, other than our payment in
the successful defense of any action, suit or
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proceeding, is asserted, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy. We will be governed by the final adjudication of such
issue.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements,
information statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
that we file with the Securities and Exchange Commission at the public reference
facilities the Securities and Exchange Commission maintains at:
Room 1024, Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
and at the Securities and Exchange Commission's Regional Offices located at:
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Chicago Regional Office New York Regional Office
Citicorp Center 13th Floor, Seven World Trade Center
Suite 1400, Northwestern Atrium Center New York, NY 10048
500 West Madison Street
Chicago, IL 60661
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and you may also obtain copies of such material by mail from the Public
Reference Section of the Securities and Exchange Commission at:
Public Reference Room
450 Fifth Street, N.W.
Washington, DC 20549
at prescribed rates. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms.
The Securities and Exchange Commission also maintains a Web site on the
World Wide Web, the address of which is http://www.sec.gov. That site also
contains our Securities and Exchange Commission filings. Our Securities and
Exchange Commission filings and other information concerning us may also be
inspected at the offices of the Nasdaq Stock Market, Reports Section, at:
1735 K Street, N.W.
Washington, DC 20006
This prospectus is part of a Registration Statement filed by us with
the Securities and Exchange Commission. It does not contain all the information
included or incorporated by reference in the Registration Statement. The full
Registration Statement can be obtained from the Securities and Exchange
Commission as indicated above or from us.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" information from other documents that we file with them, which means
that we can disclose important information to you by referring to
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those documents. The information incorporated by reference is considered to be a
part of this prospectus, and information that we file later with the Securities
and Exchange Commission will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior
to the sale of all the shares of common stock covered by this prospectus:
o our annual report on Form 10-KSB for the year ended June 30,
1999;
o our quarterly reports on Form 10-QSB for the periods ended
September 30, 1999 (as amended) and December 31, 1999;
o our current reports on Form 8-K filed with the Securities and
Exchange Commission on October 5, 1999 (as amended on December
1, 1999), October 15, 1999 (as amended on December 1, 1999)
and December 15, 1999;
o the description of our Common Stock contained in Amendment No.
3 to our registration statement on Form 10-SB, Commission File
No. 000-23835, as filed with the Securities and Exchange
Commission on October 6, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us using the following contact information:
Chief Financial Officer
HomeSeekers.com, Incorporated
6490 South McCarran Boulevard, Suite D-28
Reno, Nevada 89509
(775) 827-6886
You should rely only on the information incorporated by reference,
provided in this prospectus or any supplement or that we have referred you to.
We have not authorized anyone else to provide you with different information.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
However, you should realize that the affairs of HomeSeekers may have changed
since the date of this prospectus. This prospectus will not reflect such
changes. You should not consider this prospectus to be an offer or solicitation
relating to the securities in any jurisdiction in which such an offer or
solicitation relating to the securities is not authorized. Furthermore, you
should not consider this prospectus to be an offer or solicitation relating to
the securities if the person making the offer or solicitation is not qualified
to do so, or if it is unlawful for you to receive such an offer or solicitation.
We have not authorized any person to make a statement that differs from
what is in this prospectus. If any person does make a statement that differs
from what is in this prospectus, you should not rely on it. This prospectus is
not an offer to sell, nor is it seeking an offer to buy, these securities in any
state in which the offer or sale is not permitted. The information in this
prospectus is complete and accurate as of its date, but the information may
change after that date.
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HOMESEEKERS.COM, INCORPORATED
5,358,681 SHARES
OF COMMON STOCK
---------------------------
PROSPECTUS
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MARCH 29, 2000
