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PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(5)
(to Prospectus dated December 18, 2000) File No. 333-32586
980,392 SHARES OF COMMON STOCK
WARRANTS TO PURCHASE 196,078 SHARES OF COMMON STOCK
HOMESEEKERS.COM, INCORPORATED
----------
We are offering all of the 980,392 shares of our common stock and
warrants to purchase 196,078 shares of our common stock being offered by this
prospectus. Our common stock is quoted on The Nasdaq SmallCapMarket under the
symbol "HMSK." On December 15, 2000, the last reported sale price of the common
stock on the Nasdaq SmallCapMarket was $0.46875 per share.
Alpha Venture Capital, Inc. has agreed to purchase 980,392 shares
of our common stock at a price of $0.51 per share. Alpha Venture Capital will
also receive warrants to purchase 196,078 shares of our common stock at an
exercise price of $0.75 per share, which warrants will expire on December 19,
2003. This sale will result in total proceeds to us of approximately $500,000,
before deducting expenses payable by us, estimated to be approximately $50,000.
We expect to deliver the shares against payment in Reno, Nevada on December 19,
2000.
SEE "RISK FACTORS" ON PAGE 4 OF THE ACCOMPANYING PROSPECTUS FOR VARIOUS
RISKS YOU SHOULD CONSIDER BEFORE YOU PURCHASE ANY SECURITIES.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 18, 2000.
<PAGE>
We have not authorized any other person to provide you with any
information or to make any representations not contained in this prospectus
supplement or the attached prospectus. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not making an
offer of any securities other than the 980,392 shares of our common stock and
warrants to purchase 196,078 shares of our common stock. This prospectus
supplement is part of, and you must read it in addition to, the attached
prospectus dated December 18, 2000. You should assume that the information
appearing in this prospectus supplement and the attached prospectus, as well
as the information incorporated by reference, is accurate as of the date in
the front cover of this prospectus supplement only.
The distribution of this prospectus supplement and the attached
prospectus, and the offering of the common stock, may be restricted by law in
some jurisdictions. You should inform yourself about, and observe, any of
these restrictions. This prospectus supplement and the attached prospectus do
not constitute, and may not be used in connection with, an offer or
solicitation by anyone in any jurisdiction in which the offer or solicitation
is not authorized nor in which the person making the offer or solicitation is
not qualified to do so, or to any person to whom it is unlawful to make the
offer or solicitation.
USE OF PROCEEDS
We will receive net proceeds from the sale of the securities offered by us,
before deducting estimated offering expenses of $50,000 payable by us, of
approximately $500,000. We intend to use all of the net proceeds from this
sale of securities to fund general corporate purposes.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Equity Line of
Credit Agreement, dated as of December 4, 2000, between us and Alpha Venture
Capital, we have agreed to sell to Alpha Venture Capital, and Alpha Venture
Capital has agreed to purchase from us, 980,392 shares of our common stock at
a price of $0.51 per share and warrants to purchase 196,078 shares of our
common stock at an exercise price of $0.75 per share. The warrants will
expire on December 18, 2003 and will be evidenced by a warrant agreement in
substantially the form that was filed as an exhibit to the Current Report on
Form 8-K relating to the Alpha Venture Capital transaction. The Equity Line
of Credit Agreement provides that Alpha Venture Capital will be obligated to
purchase all of the shares of common stock and warrants set forth above if
any are purchased by Alpha Venture Capital.
Alpha Venture Capital has advised us that it does not have any
agreement with any third party relating to the distribution of our common
stock and warrants.
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HOMESEEKERS.COM, INCORPORATED
$75,000,000
COMMON STOCK
COMMON STOCK WARRANTS
---------------------------------------
We may offer from time to time in one or more issuances, (1) shares
of our Common Stock and (2) Warrants to purchase shares of our Common Stock.
The Common Stock and the Warrants are collectively referred to in this
prospectus as the "Securities." The aggregate public offering price of the
Securities that are offered will not exceed $75,000,000. We will offer the
Securities in an amount and on terms to be determined by market conditions at
the time of the offering. Our Common Stock is quoted on the Nasdaq SmallCap
Market under the trading symbol "HMSK."
SEE "RISK FACTORS" ON PAGE 4 FOR VARIOUS RISKS THAT YOU SHOULD
CONSIDER BEFORE YOU PURCHASE ANY SECURITIES.
We will provide you with the specific terms of the particular
Securities being offered in supplements to this prospectus. You should read
this prospectus and any supplement carefully before you invest. This
prospectus may not be used to sell Securities unless accompanied by a
prospectus supplement.
---------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------
The date of this Prospectus is December 18, 2000.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ABOUT THIS PROSPECTUS......................................................... 2
WHERE YOU CAN FIND MORE INFORMATION........................................... 2
RISK FACTORS.................................................................. 4
FORWARD-LOOKING INFORMATION................................................... 14
ABOUT HOMESEEKERS............................................................. 14
USE OF PROCEEDS............................................................... 14
DESCRIPTION OF CAPITAL STOCK.................................................. 15
DESCRIPTION OF COMMON STOCK WARRANTS.......................................... 17
PLAN OF DISTRIBUTION.......................................................... 19
LEGAL MATTERS................................................................. 20
EXPERTS....................................................................... 20
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that
HomeSeekers.com, Incorporated ("we" or "HomeSeekers") filed with the Securities
and Exchange Commission using a "shelf" registration process. Using this
process, we may offer the Securities described in this prospectus in one or more
offerings with a total public offering price of up to $75,000,000. This
prospectus provides you with a general description of the Securities we may
offer. Each time we offer Securities, we will provide you a prospectus
supplement and any pricing supplement that will contain information about the
specific terms of that particular offering. The prospectus supplement or pricing
supplement may also add, update or change information contained in this
prospectus. To obtain additional information that may be important to you, you
should read the exhibits filed by us with this registration statement or our
other filings with the Securities and Exchange Commission. You also should read
this prospectus and any prospectus supplement or pricing supplement together
with the additional information described under the heading "Where You Can Find
More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can read
and copy any materials we file with the Securities and Exchange Commission at
its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549
and at its regional offices located at Seven World Trade Center, New York,
New York 10048 and at 500 West Madison Street, Chicago, Illinois 60661. You
can obtain information about the operations of the Securities and Exchange
Commission Public Reference Room by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains a Website that contains information we file electronically with the
Securities and Exchange Commission, which you can access over the Internet at
http://www.sec.gov. Our Common Stock is quoted on the Nasdaq SmallCap Market
under the trading symbol "HMSK," and you can obtain information about us at
the offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C.
20006.
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission relating to the Securities. As permitted
by Securities and Exchange Commission rules, this prospectus does not contain
all of the information we have included in the registration statement and the
accompanying exhibits we file with the Securities and Exchange Commission. You
may refer to the registration statement and the exhibits for more information
about us and the Securities. The registration statement and the exhibits are
available at the Securities and Exchange Commission's Public Reference Room or
through its Web site.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information we incorporate by reference is an important part of this prospectus,
and later information that we file with the Securities and Exchange Commission
will automatically update and supersede some of this information. We incorporate
by reference the documents listed below, and any future filings we make with the
Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until we sell all of the Securities. The
documents we incorporate by reference are:
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- our annual report on Form 10-KSB for the year ended June 30,
2000 (as amended on October 30, 2000);
- our quarterly report on Form 10-Q for the quarter ended
September 30, 2000;
- our current reports on Form 8-K filed with the Securities and
Exchange Commission on August 7, 2000 (as amended on
October 6, 2000) and October 6, 2000; and
- 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 (other than an exhibit to the
filings unless we have specifically incorporated that exhibit by reference into
the filing), at no cost, by writing or telephoning us at the following address:
HomeSeekers.com, Incorporated
6490 South McCarran Boulevard
Suite D-28
Reno, Nevada 89509
Attention: Chief Financial Officer
(775) 827-6886
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We may only use this
prospectus to sell Securities if it is accompanied by a prospectus supplement.
We are only offering these Securities in states where the offer is permitted.
You should not assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE BUYING
SECURITIES 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 SECURITIES MAY EXPOSE YOU
TO THE FOLLOWING RISKS INHERENT IN OUR BUSINESS.
THE REPORT OF OUR INDEPENDENT AUDITORS EXPRESSES SUBSTANTIAL DOUBT ABOUT THE
COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN.
Because of our significant operating losses, accumulated deficit and
uncertainty as to our ability to secure additional financing, the report of our
independent auditors on our consolidated financial statements for the year ended
June 30, 2000 contained an explanatory paragraph indicating there is substantial
doubt about the Company's ability to continue as a going concern. This
uncertainty is further discussed in note 2 of the notes to our consolidated
financial statements, which are incorporated by reference from our Annual Report
on Form 10-KSB for the fiscal year ended June 30, 2000.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING FOR OUR FUTURE CAPITAL
NEEDS.
Our operations to date have consumed substantial amounts of capital. Our
business is capital intensive, particularly with respect to product development
costs associated with the design and creation of software products. Accordingly,
it is imperative that we complete a significant financing in the near future to
fund our operations and allow us to continue as a going concern. 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. If we are unable to obtain
additional financing in the near future, or it is not available on acceptable
terms, we will be unable to implement any operating plans or meet our operating
obligations. Should this occur, we would likely cease operations.
WE CURRENTLY ARE NOT PROFITABLE AND MAY RECORD SIGNIFICANT LOSSES FOR THE
FORESEEABLE FUTURE.
We incurred a net loss of $8.7 million for the quarter ended September 30,
2000 and a net loss of $25.0 million for the year ended June 30, 2000, and had
an accumulated deficit as of September 30, 2000 of $49.6 million. We may record
significantly greater net losses in the future, as we expect to incur
significant expenses in the foreseeable future. These expenses will include
product development expenses, sales and marketing costs, general and
administrative expenses and amortization of purchased intangible assets. 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 and we could be forced to cease operations.
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.
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Our principal competitors for real estate professionals, homebuyers, sellers
and renters and related content include:
- 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;
- Websites offering real estate related content and services such as
mortgage calculators and information on the home buying, selling and
renting processes;
- general purpose consumer Websites such as AltaVista and Yahoo! that also
offer real estate-related content on their site; and
- traditional print media such as newspapers and magazines.
Our principal competitors for advertising revenues include:
- Web portals and other general purpose consumer Websites such as AltaVista,
America Online, Excite, Lycos, Netscape's Netcenter and Yahoo!;
- online ventures of traditional media and classified advertising services
offered through daily and other newspapers' Websites; and
- 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 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
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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.
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
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:
- the amount of advertising sold on our Website and the timing of payments
for this advertising;
- the level of renewals for our advertising products and services by real
estate agents and brokers;
- the amount and timing of our operating expenses and capital expenditures;
- costs related to acquisitions of businesses or technologies;
- changes in the mix of products and services we sell; and
- increased sales, marketing, administrative and research and development
expenses.
Our quarterly revenues increased 78% from the quarter ended September 30,
1999 to the quarter ended December 31, 1999, 32% from the quarter ended
December 31, 1999 to the quarter ended March 31, 2000, 8% from the quarter ended
March 31, 2000 to the quarter ended June 30, 2000, and 20% from the quarter
ended June 30, 2000 to the quarter ended September 30, 2000. 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.
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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.
We have experienced, and may 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 John Giaimo, our Chief Executive Officer, Douglas Swanson,
our Executive Vice President, Greg Johnson, our Chairman of the Board and
Chief Technology Officer, or Dennis Gauger, our Chief Financial Officer,
could have an adverse effect on our business, financial condition and results
of operations.
Mr. Gauger joined us in May 2000 on an interim, part-time basis and
became our full-time Chief Financial Officer in October 2000. 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.
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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:
- addition of significant additional expenses;
- difficulties in assimilating the operations of the acquired businesses;
- potential disruption of our existing businesses;
- assumption of unknown liabilities and litigation;
- our inability to integrate, train, retain and motivate personnel of the
acquired businesses;
- diversion of our management from our day-to-day operations;
- our inability to incorporate acquired products, services and technologies
successfully into our products;
- potential impairment of relationships with our employees, customers and
strategic partners; and
- 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
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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.
OUR INTERNATIONAL BUSINESS IS SUBJECT TO A NUMBER OF RISKS ASSOCIATED WITH
DOING BUSINESS ABROAD.
Although we have to date marketed our products and services to brokers,
agents, and other real estate professionals located outside of North America on
a limited basis, we intend to market our Website and products and services on a
more extensive global basis. Our international business is subject to a number
of risks generally associated with doing business abroad, including:
- fluctuations in currency exchange rates, the impact of recessions in
economies outside the United States and regulatory and political changes
in foreign markets;
- reduced protection for intellectual property rights in some countries; and
- 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 SECURITIES 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
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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:
- perceived and actual economic conditions;
- interest rates;
- taxation policies;
- availability of credit;
- employment levels; and
- 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.
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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.
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
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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.
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.
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
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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.
PURCHASERS OF OUR SECURITIES ARE SUBJECT
TO THE FOLLOWING RISKS ASSOCIATED WITH OUR COMMON STOCK.
HOLDERS OF, AND INVESTORS IN, OUR COMMON STOCK MAY EXPERIENCE SUBSTANTIAL
DILUTION BECAUSE WE COULD BE OBLIGATED TO ISSUE ADDITIONAL SHARES IN CONNECTION
WITH PREVIOUSLY COMPLETED ACQUISITIONS.
We may be required to issue additional shares of common stock to the
previous owners of companies and businesses that we have acquired since
September 1999. The definitive agreements relating to these acquisitions require
us to issue additional shares if the trading price of our common stock remains
below agreed upon levels for specified periods or if operating results of the
businesses acquired reach certain levels. At current trading prices, we could be
obligated to issue up to an additional 6,300,000 shares of common stock to the
previous owners on dates ranging from December 2000 through July 2002. This
would cause holders of our common stock to experience substantial dilution. In
addition, holders may experience further dilution upon exercise of outstanding
options and warrants and other derivative securities we may grant in the future.
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.
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 any cash on hand in short-term government securities
consistent with prudent cash management and not primarily for the purpose of
achieving investment returns. We have also invested, and may continue to invest,
in the securities of companies with whom we have strategic business
relationships. 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
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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.
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 John Giaimo, our Chief Executive Officer, Doug Swanson, our
Executive Vice President, Greg Johnson, our Chairman of the Board and Chief
Technology Officer, and Dennis Gauger, our Chief Financial 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 to fund operations and, as
a result, do not expect to pay any cash dividends in the foreseeable future.
FORWARD-LOOKING INFORMATION
Some of the statements contained in this prospectus and the documents
incorporated herein by reference constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. In some
cases, you can identify forward-looking statements by terms such as "may,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," or "continue," or the negative of these terms or other
comparable terminology. The forward-looking statements contained or incorporated
by reference in this prospectus involve known and unknown risks, uncertainties
and other factors that may cause our or our industry's actual results, level of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these statements. These factors include those listed under "Risk Factors" and
elsewhere in this prospectus and the documents incorporated herein by reference.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. You should not place undue
reliance on these forward-looking statements.
ABOUT HOMESEEKERS
We are a provider of real estate information and technology targeted
for use by real estate professionals, consumers and other parties who have an
interest in the real estate industry. One of our major objectives is to
enable professionals, through the use of our technology, to be better
equipped to engage in real estate transactions with consumers, who, through
the use of our products and services, can be better educated and prepared for
those transactions.
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we will
use the net proceeds from the sale of the Securities offered by this prospectus
for general corporate purposes. These purposes may include repayment and
refinancing of debt, acquisitions, working capital, capital expenditures and
repurchases and redemptions of securities. Pending any specific application, we
may initially invest funds in short-term marketable securities or apply them to
the reduction of short-term indebtedness.
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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 December 5, 2000, 25,722,621 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.
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 December 5, 2000:
- options to purchase a total of 6,737,890 shares of Common
Stock were outstanding, 5,056,788 of which were vested and
exercisable within 60 days, at a weighted average exercise
price of $3.45 per share; and
- up to 3,774,125 additional shares of Common Stock may be
issued under our 1996 Stock Option Plan.
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WARRANTS
As of December 5, 2000, there were outstanding warrants to purchase a
total of 4,816,034 shares of Common Stock at a weighted average exercise price
of $3.40 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 or a majority of the board of directors.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must
be delivered to or mailed and received at our principal executive offices not
less than 60 days nor more than 90 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders. However, in the event
that the annual meeting is called for a date that is not within 30 days
before or after such anniversary date, notice by the stockholder in order to
be timely must be received not later than the close of business on the tenth
day following the date on which notice of the date of the annual meeting was
mailed to stockholders or made public, whichever first occurs. In the case of
a special meeting of stockholders called for the purpose of electing
directors, notice by the stockholder in order to be timely must be received
not later than the close of business on the tenth day following the day on
which notice of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made, whichever first
occurs. Our bylaws also specify certain requirements as to the form and
content of a stockholder's notice. These provisions may impede stockholders'
ability to bring matters before an annual meeting of stockholders or make
nominations for directors at an annual meeting of stockholders.
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.
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,
- mergers or consolidations with,
- 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,
- 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,
- the adoption of a plan or proposal of the liquidation or
dissolution of that corporation proposed by,
- various transactions that would result in increasing the
proportionate share of shares of the corporation owned by, or
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- 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.
DESCRIPTION OF COMMON STOCK WARRANTS
We may issue, separately or together with other securities, Warrants to
purchase shares of our Common Stock. Warrants may be attached to or separate
from those other securities. We will issue the Warrants under warrant agreements
which may be entered into between us and a bank or trust company, as stock
warrant agent, or directly with holders of the Warrants, as set forth in the
applicable prospectus supplement. We have summarized selected provisions of the
form of Warrant agreement below. This is a summary and is not complete. It does
not describe some exceptions and qualifications contained in the Warrant
agreement or the certificates representing the Warrants. If you would like more
information on the provisions of an agreement, you should review the form of
agreement, including the Warrant certificate, which we have filed as an exhibit
to the registration statement for the securities.
A supplement to this prospectus will describe specific terms relating
to the Warrants being offered. These terms will include some or all of the
following:
- the manner in which Warrants may be exercised;
- the number of shares of Common Stock purchasable upon exercise
of each Warrant and the exercise price;
- the date on which the right to exercise the Warrants commences
and the expiration date;
- whether we can call the Warrants for redemption and if so,
when we can do so, whether the right to purchase or convert
the Warrants will be forfeited unless it is exercised by the
date specified in the redemption notice, the expiration date
of the Warrants and the kinds and timing of notice of
redemption; and
- any other material terms of the Warrants.
Prior to the exercise of their Warrants, holders will not have any of
the rights of holders of the Common Stock purchasable upon such exercise and
will not be entitled to dividend payments on those shares of Common Stock.
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EXERCISE OF WARRANTS
Each Warrant will entitle its holder to purchase for cash the number of
shares of Common Stock at the exercise price set forth in the applicable
prospectus supplement. Commencing on the date the Warrants become exercisable,
holders may exercise their Warrants at any time up to the close of business on
the expiration date, after which time any unexercised Warrants will become void.
Upon receipt of the exercise price and the Warrant certificate properly
completed and executed, we will forward to the holder, as soon as practicable, a
certificate representing the number of shares of Common Stock purchased upon
such exercise. If less than all the Warrants represented by a certificate are
exercised, we will issue a new Warrant certificate for the remaining amount of
Warrants.
ANTIDILUTION PROVISIONS
Unless otherwise described in a prospectus supplement, the exercise
price payable and number of shares of Common Stock purchasable upon exercise of
a Warrant will be adjusted to prevent the holder's beneficial interest in the
Common Stock from being diluted in the event we:
- issue a stock dividend to holders of Common Stock or combine,
subdivide or reclassify our Common Stock;
- issue rights, warrants or options to all holders of Common
Stock entitling them to purchase shares of our Common Stock at
a price per share less than the current market price per share
of Common Stock; or
- distribute to holders of Common Stock any of our assets or
evidences of our indebtedness which are not payable out of our
capital surplus.
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PLAN OF DISTRIBUTION
We may sell the Securities offered under this prospectus through
underwriters, agents or dealers or directly to purchasers.
UNDERWRITERS
The applicable prospectus supplement will identify any agents or
underwriters and describe their compensation, including underwriting discount.
The prospectus supplement will also describe other terms of the offering,
including any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchanges on which the offered Securities may be listed.
The distribution of Securities under this prospectus may occur from
time to time in one or more transactions at a fixed price or prices, which may
be changed, at market prices prevailing at the time of sale, at prices related
to those prevailing market prices or at negotiated prices.
DEALERS OR AGENTS
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by various institutions to purchase
offered Securities from us pursuant to contracts that provide for payment and
delivery on a future date. We must approve all institutions, but they may
include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
The institutional purchaser's obligations under a contract will be
subject only to the condition that the purchase of the offered Securities at the
time delivery is allowed by any laws that govern the purchaser. The dealers and
our agents will not be responsible for the validity or performance of the
contracts.
DIRECT SALES
We may sell Securities directly to the public, without the use of
underwriters, dealers or agents.
GENERAL INFORMATION
Underwriters, dealers and agents participating in a sale of Securities
may be deemed to be underwriters as defined in the Securities Act of 1933, and
any discounts and commissions received by them and any profit realized by them
on resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. We may have agreements with the agents,
underwriters and dealers to indemnify them against various civil liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the agents, underwriters or dealers may be required to make as a result of
those civil liabilities.
Unless we indicate differently in a prospectus supplement, we will not
list the Securities on any securities exchange. If we sell a security offered
under this prospectus to an underwriter for public offering and sale, the
underwriter may make a market for that security but is not obligated to do so.
Therefore, we cannot give any assurances to you concerning the liquidity of any
security offered under this prospectus.
Agents and underwriters and their affiliates may be customers of,
engage in transactions with, or perform services for us or our subsidiary
companies in the ordinary course of business.
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LEGAL MATTERS
The validity of the Securities will be passed upon for HomeSeekers 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
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements included in our Annual Report on Form
10-KSB/A (Amendment No. 1) for the year ended June 30, 2000, as set forth in
their report (which contains an explanatory paragraph describing conditions
that raise substantial doubt about the Company's ability to continue as a
going concern as described in Note 2 to the consolidated financial
statements), which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our consolidated financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Our financial statements as of June 30, 1999 and for the year then
ended included in our Annual Report on Form 10-KSB and Form 10-KSB/A
(Amendment No. 1) for the year ended June 30, 2000 have been incorporated by
reference herein in reliance upon the report of Albright, Persing &
Associates, Limited, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
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