UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM SB-2/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Amendment 3 COMMUNICATE NOW.COM, INC. DELAWARE (State or jurisdiction of incorporation or organization) 731900 (Primary Std. Industrial Classification Code Number) 74-2945581 (IRS Employer ID Number) 2015 Bird Creek Terrace, Suite 101/102 P.O. Box 2309 Temple, TX 76502 254-771-0999 (Address and telephone number of principal executive offices) ATTN: David Hancock 2015 Bird Creek Terrace, Suite 101/102 P.O. Box 2309 Temple, TX 76502 254-771-0999 or 254-718-1956 (Address of principal place of business or intended principal place of business) The Company Corporation 1013 Centre Road Wilmington, DE 19805 (302) 636-5440 or 800-315-9420 (ext. 3214) (Name, address and telephone number of agent for service) ----------------------------------------------------------------------- 3,488,820 SHARES ARE BEING OFFERED BY SELLING SECURITY HOLDERS Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective. If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE (1)(2)(3) ----------------------------------------------------------------------- Title of Each Amount Proposed Proposed Amount of Class of Being Maximum Maximum Registration Securities to be Offered Offering Aggregate Fee Registered Price per Offering Share(1)(2) Price(1)(2) Common 3,488,820 .0078 $27,202.80 $ 7.57 Total Registration Fee: (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(h) (1). (2) Selling shareholders hold all of the shares, which we are registering. These shares will be sold at prevailing market prices. We will not receive proceeds from the sale of shares from the selling shareholders. We hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until we shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine. 2The information in this prospectus is not complete and may be changed. Our selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 20, 2001 Communicate Now.com, Inc. 3,488,820 shares of Common Stock Our current shareholders are offering 3,488,820 shares of our common stock. Our common stock is not now listed on any national securities exchange or the NASDAQ stock market. The selling security holders may offer their shares at any price. We will pay all expenses of registering the securities. THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 10. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this prospectus is not complete and may be changed. Our selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to sell these securities in any state where the offer or sale is not permitted. The date of this preliminary prospectus is March 20, 2001. ------------------------------------------------------------------ Offering Information TOTAL PER SHARE ------------- --------------- Estimated offering expenses (1) $0.00 $0.00 3 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to sell these securities in any state where the offer or sale is not permitted. The date of this preliminary prospectus is March 20, 2001 TABLE OF CONTENTS Page PART I - INFORMATION REQUIRED IN PROSPECTUS ITEM 1. Front of Registration Statement and Outside Front Cover of Prospectus........................................................... 1 ITEM 2. Inside Front and Outside Back Cover Pages of Prospectus.............. 2 ITEM 3. Summary Information.................................................. 7 o Our poor financial condition raises substantial doubt about our ability to continue as a going concern; you will be unable to determine whether we will ever become profitable............. 10 o We are a development stage company in the business of Internet advertising and we have a limited operating history, accordingly, you will be unable to evaluate whether our Internet advertising business will be successful.............. 10 o Because our common stock is considered a penny stock, any investment in our common stock is considered to be a high-risk investment and is subject to restrictions on marketability; you may be unable to sell your shares........................ 11 o Because there is no public market for our common stock, you may be unable to sell your investment in our common stock.....12 o If our common stock becomes tradable on the Over-the-Counter Bulletin Board, sales of our common stock by selling shareholders could reduce the price of our common stock and decrease the public interest in our common stock..............12 o Our business is dependent upon obtaining and retaining advertising customers; if we fail to obtain a sufficient number of advertising customers to sustain our operations, we may have to seek alternative revenue sources that would cause substantial delays in our operations or failure of our Internet display advertising as our sole source....................... 12 o We will rely upon third parties for the development and maintenance of our technological components; any failures on the part of our third party providers may negatively impact our Internet connections and the security and integrity of our software and accounting......................13 o We have only two methods of promoting our Internet display advertising business; if these methods are inadequate, we will have to adopt new methods of promoting our Internet advertising which may increase our costs and cause substantial interruptions to our operations.............................. 13 o We have no insurance to cover risk of loss from theft or damage to the personal computers and digital cameras that we will provide to our sales force; because we will be forced to expend additional funds to replace this equipment in the event of theft or damage, our total operating costs will increase.. 14 4 o We devote substantial resources to our business information database from which we receive no direct revenues; if our costs related to the information database exceed our revenue sources, we may have to charge fees for business information searches, which may reduce or eliminate our revenues from sales of our Internet display advertisements..................14 o Our agreements with Acxiom Corporation and Interliant may be terminated by either party at any time; if either or both of these agreements are terminated by any of the contracting parties, we will lose these third party services requiring us to seek other third party services which may cause substantial delays in our operations......................................14 o Our sales force will be compensated solely on a commission basis; if we are unable to retain sales personnel and/or hire replacement sales persons on a timely basis, our advertising revenues will be negatively impacted and/or we will be required to provide a salary to our sales personnel....................15 o We have no contracts or arrangements with computer, database or network personnel to provide technical assistance to our operations; if we fail to establish these contracts or arrangements, the presentational and technical aspects of our website, business database and Internet display advertisements will be negatively impacted....................15 o Our vulnerability to security breaches, glitches and other computer failures, could negatively affect our ability to broaden our customer base and promote our brand name......... 15 o Because our capital requirements may vary substantially at certain times, we may need to obtain additional capital, if we fail to obtain additional capital when required, our marketing plans and operation of our business database may be hindered.................................................. 16 o If we are unable to attract and retain qualified personnel, we may be unable to develop or retain a sufficient customer base to fund our operations, or implement our business plan...17 o If we are unable to obtain a trademark for Communicate now.com and/or Bizfinders.com., we may not be able to develop our brand name....................................... 17 o Any reduction in our sales force could negatively impact sales of our Internet display advertisements..................17 o Because we face competition, we may be unable to successfully market our Internet display advertisements.......17 o Because our principal stockholders retain control over a majority of the issued and outstanding shares, you will be severely limited in your ability to affect change in how we do business................................................18 o Because conflicts of interest exist among our directors, you should exercise caution before you invest in our common stock.........................................................18 o Because we have never paid dividends, you should exercise caution before making an investment in our common stock.......19 5 ITEM 4. Use of Proceeds................................................... 19 ITEM 5. Determination of Offering Price................................... 19 ITEM 6. Dilution.......................................................... 19 ITEM 7. Selling Security Holders.......................................... 19 ITEM 8. Plan of Distribution.............................................. 22 ITEM 9. Legal Proceedings..................................................24 ITEM 10. Directors, Executive Officers, Promoters and Control Persons.......24 ITEM 11. Security Ownership of Certain Beneficial Owners....................26 ITEM 12. Description of Securities..........................................27 ITEM 13. Interest of Named Experts and Counsel..............................29 ITEM 14. Disclosure of Commission Position on Indemnification...............29 ITEM 15. Organization Within Last Five Years................................30 ITEM 16. Description of Business............................................31 ITEM 17. Management's Discussion and Analysis or Plan of Operation.........40 ITEM 18. Description of Property............................................44 ITEM 19. Certain Relationships and Related Transactions.....................45 ITEM 20. Market for Common Equity and Related Stockholder Matters...........46 ITEM 21. Executive Compensation.............................................48 ITEM 22. Financial Statements...............................................49 ITEM 23. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure............................... x PART II - INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. Indemnification of Directors and Officers......................... x ITEM 25. Other Expenses of Issuance and Distribution....................... x ITEM 26. Recent Sales of Unregistered Securities........................... x ITEM 27. Exhibits.......................................................... x ITEM 28. Undertakings...................................................... x ITEM 3. SUMMARY INFORMATION AND RISK FACTORS PROSPECTUS SUMMARY This prospectus contains statements about our future business operations that involve risks and uncertainties. Our actual results could differ significantly from our anticipated future operations, as a result of many factors, including those identified under the "Risk Factors" section of this prospectus beginning on page 9. The prospectus summary contains a summary of all material terms of the prospectus. You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under the Financial Statements section beginning on page 49, prior to making an investment decision. 6 OUR COMPANY: We were incorporated in the State of Delaware on January 31, 2000 to engage in an Internet based advertising business. We are a development stage company. Our principal executive offices are located at 2015 Bird Creek Terrace, Suites 101 and 102, Temple, TX 76502. Our telephone number is 254-771-0999. We are authorized to issue 100,000,000 shares of common stock of which 22,998,820 shares are issued and outstanding. We are not currently authorized to issue preferred stock. Our fiscal year end is December 31. OUR BUSINESS: We have had limited operations and revenues and we have sustained losses since our inception. We have developed a website at www.bizfinders.com that began operations on November 1, 2000. This website contains a business information database consisting of names, addresses and phone numbers of approximately 11 million U.S. businesses through which visitors to our website may use a search engine to locate businesses. Searches may be made under subject category, city, state, actual name of business and zip code. We obtained the license to use this business database from Acxiom Corporation. We will obtain no revenue from the searches of our database; instead our revenue will be derived from Internet display advertisements that appear on our website, which are developed through real time face to face interaction with our advertising customers. Our Internet display advertisements are accessed through the public searches of our business information database. Our services do not involve the development or design of websites on behalf of our customers. Our current business plans are to develop and expand our Internet advertising business. In March 2000, we began limited operations consisting of our sales personnel conducting personal visits to small businesses to demonstrate our Internet display advertisements. Our marketing plans are to expand the promotion of our Internet display advertisements throughout major metropolitan areas in the State of Texas by using our sales force and billboard advertising to demonstrate the advantages of our advertisements. There are no assurances that we will have sufficient funds to develop our business plan, including hiring sales personnel and purchasing personal computers and digital cameras to enable our sales personnel to construct the Internet display advertisements. THE OFFERING: As of the date of this prospectus, we had 22,998,820 shares of common stock outstanding and no shares of preferred stock outstanding. This offering is comprised entirely of shares of our common stock held by our selling security holders. Although we have agreed to pay all offering expenses, we will not receive any proceeds from the sale by the selling security holders of their securities. We anticipate offering expenses of approximately $50,000. We may borrow funds from our management or others to pay the offering expenses. OUR FINANCIAL SUMMARY: Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should also 7 carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision. - ----------------------------------- ----------------------------------- STATEMENT OF PERIOD FROM OPERATIONS INCEPTION TO DECEMBER 31, 2000. - ----------------------------------- ----------------------------------- Net Sales $1,046 - ----------------------------------- ----------------------------------- Cost of Sales N/A - ----------------------------------- ----------------------------------- Gross Profit $0.00 - ----------------------------------- ----------------------------------- Operating Expenses $1,676,471 - ----------------------------------- ----------------------------------- Loss from Operations ($1,675,425) - ----------------------------------- ----------------------------------- Other Expenses, Net $3,165 - ----------------------------------- ----------------------------------- Net Loss ($1,678,590) - ----------------------------------- ----------------------------------- Net Loss per Common Share ($0.08) - ----------------------------------- ----------------------------------- BALANCE SHEET PERIOD FROM INCEPTION TO DECEMBER 31, 2000. - ----------------------------------- ----------------------------------- ASSETS - ----------------------------------------------------------------------- Total Current Assets $486,294 - ----------------------------------- ----------------------------------- Other Assets $319,143 - ----------------------------------- ----------------------------------- Total Assets $805,437 - ----------------------------------- ----------------------------------- LIABILITIES & STOCKHOLDER'S EQUITY - ----------------------------------------------------------------------- Current Liabilities: - ----------------------------------------------------------------------- Accounts Payable & Accrued Liabilities $73,447 - ----------------------------------- ----------------------------------- Note Payable - Current Portion $6,514 8 - ----------------------------------- ----------------------------------- Note Payable to Stockholder $17,000 - ----------------------------------- ----------------------------------- Deferred revenue $11,346 - ----------------------------------- ----------------------------------- Total Current Liabilities $108,307 - ----------------------------------- ----------------------------------- Long Term Liabilities: - ----------------------------------------------------------------------- Note Payable - Net of Current Portion $10,161 - ----------------------------------- ----------------------------------- Total Liabilities $118,468 - ----------------------------------- ----------------------------------- Total Stockholder's Equity $686,969 - ----------------------------------- ----------------------------------- Total Liabilities and Stockholder Equity $805,437 RISK FACTORS AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED IN THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. WE CANNOT ASSURE PROSPECTIVE INVESTORS THAT WE WILL CONTINUE OPERATIONS, GENERATE REVENUES OR MAKE A PROFIT IN THE FUTURE. Our poor financial condition raises substantial doubt about our ability to continue as a going concern; you will be unable to determine whether we will ever become profitable. We are a development stage company with no revenues through October 31, 2000 and limited revenues since November, 2000 totaling only $6,376, as follows: o November 2000 $182 o December 2000 $1,048 o January 2001 $2,573 o February 2001 $2,573 From our inception to December 31, 2000, we incurred operating losses of $1,678,590 and had a working capital of $377,987. In addition, as of December 31, 2000, we had only $486,294 of current assets, only $465,724 of which is cash. Our current cash resources of $465,294 is insufficient to satisfy our cash requirements for a period of twelve months; accordingly there are no assurances that our cash and revenues will be sufficient to satisfy anticipated capital expenditures of 9 $1,094,600 over the next twelve months. Our ability to continue as a going concern is dependent on our ability to raise additional capital or obtain financing and implement our business plan; however there is no assurance that such capital or financing will be available. As such, there is substantial doubt about our ability to continue as a going concern over the next twelve months. We anticipate that we will experience continued losses, even if we obtain funding through various financing means. Our poor financial condition could adversely affect our ability to hire employees, develop our website or purchase equipment and inventory. Because we are currently operating at a substantial loss, with a limited operating history and no reliable revenue source, an investor cannot determine if we will ever become profitable. We are a development stage company in the business of Internet advertising and we have a limited operating history; accordingly, you will be unable to evaluate whether our Internet advertising business will be successful. Our business has consisted only of our development of a business database website and limited sales of our Internet advertisements. You must consider the risks and difficulties frequently encountered by development stage companies in the Internet advertising business, which have little or no operating history, including whether we will be able to overcome the following challenges: o Whether we can establish a presence on the Internet or develop a customer base; o Our ability to adequately train our sales force in how to sell and construct our Internet display advertisements; o Inordinate development expenses; o Dependence on our Internet display advertising business and consumer search services that have had only limited market acceptance; o Whether we are able to compete effectively against established Internet websites offering the same type of business database search services; o Our ability to generate sufficient revenues to offset the substantial costs of implementing a sales force, developing customer support and administrative infrastructure, and enhancing technologies pertaining to our website and operations; and o Our ability to attract and retain customers despite traditionally high attrition rates among Internet-related start-ups. Because significant up-front advertising, sales, and other expenses are required to develop and expand our Internet display advertisements, we anticipate that we may incur losses until revenues are sufficient to cover our operating costs. Future losses are likely before our operations become profitable. As a result of our limited operating history, you will have no basis upon which to accurately forecast our: o Total Revenues; o Gross and operating margins; and o Labor costs 10 Accordingly, you have no basis upon which to judge our ability to develop our business and you will be unable to forecast our future growth. Because our common stock is considered a penny stock, any investment in our common stock is considered to be a high-risk investment and is subject to restrictions on marketability; you may be unable to sell your shares. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission which require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock and as a result you may be subject to the risk of being unable to sell your shares. Broker-dealer practices in connection with transactions in penny stocks are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00. Penny stock rules require a broker dealer prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer makes a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Our shares may someday be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities. 11 For additional information regarding penny stocks, please refer to Item 20, "Market for Common Equity and Related Stockholder Mattes" under "Penny Stock Considerations" on pages 45-46. Because there is not public market for our common stock, you may be unable to sell your investment in our common stock. There is no established public trading market or maker for our securities. There can be no assurance that a market for our common stock will be established or, that if established, a market will be sustained. Therefore, if you purchase or have already purchased our common stock, you may be unable to sell it. Accordingly, you should be able to bear the financial risk of losing your entire investment. For additional information referring to the absence of a trading market in our common stock, please refer to Item 20, "Market for Common Equity and Related Stockholder Matters" on page 45. 12 If our common stock becomes tradable on the Over-the-Counter Bulletin Board, sales of our common stock by selling shareholders could reduce the price of our common stock and decrease the public interest in our common stock. By our filing of this registration statement, we are attempting to register 3,488,820 shares of our common stock held by the selling shareholders. If this registration statement is declared effective, the selling shareholders will be able to sell their shares at negotiated prices. If our common stock becomes tradable on the Over the Counter Bulletin Board, prospective purchasers will be able to purchase and our selling shareholders will be able to sell our common stock in the open market. If a substantial amount of the selling shareholders' shares of common stock are sold, especially if the nine selling shareholders that each have share holdings in excess of 100,000 shares, sell their shares, which in the aggregate total 2,625,000 shares, there may be downward price pressures on our common stock price. This selling activity could: o Cause the market price of our common stock to decrease in value o Decrease the level of public interest in our common stock; o Inhibit buying activity that might otherwise help support the market price of our common stock; and o Prevent possible upward price movements in our common stock. Our business is dependent upon obtaining and retaining advertising customers; if we fail to obtain a sufficient number of advertising customers to sustain our operations, we may have to seek alternative revenue sources that would cause substantial delays in our operations or failure of our Internet display advertising as our sole revenue source. Our ability to develop and expand our business is dependent upon the number of advertisers that advertise on our website. To date, we have only sold a limited number of Internet display advertisers that appear on our website. The use of the Internet as an advertising medium is a relatively new form of advertising that has only achieved limited market acceptance. Many advertisers have limited experience on the Internet and are reluctant to use Internet advertising. Their are no assurances that our sales force will be successful in generating advertising revenues. Accordingly, our advertising services may not be successful. Accordingly, if we are unsuccessful in making advertising sales, we may be forced to revise our business plan by seeking alternative revenue sources. For instance, we could charge an access fee or search fee for the business searches conducted on our business database website; however, because the same information will be available elsewhere at no cost, our implementation of these fees may discourage persons from using our business database. Moreover, any changes we make to our fee structure will cause substantial delays in our operations or failure of our Internet display advertising as our sole revenue source. We will rely upon third parties for the development and maintenance of our technological components; any failures on the part of our third party providers may negatively impact our Internet connections and the security and integrity of our software and accounting. We will rely on third parties to maintain, house and operate the Internet servers that host our website and business database. Although our agreements with these third parties include service agreements, in the event of any technical failures, there is no assurance that the third parties will comply with the terms of the service agreements. Any service interruptions resulting from failures by third party maintenance providers would have a negative impact on confidence in our services. In addition, we will rely upon third parties to process our billings and payments due to us. Any service interruptions by these third party providers due to computer failures, labor problems, credit card fraud, or other unforeseen developments, could cause accounting errors or possible cash flow disruptions. We also rely upon third party providers to write and improve our software per our specifications. These third parties may be unable to keep up with new technology that may be required in order to adjust to the rapidly changing Internet arena. Any failure to meet the demands of new technology may undermine any present or future attempts to gain market awareness and acceptance. 13 Any failures on the part of our third party providers could negatively impact the operation of our website and business database. We have only two methods of promoting our Internet display advertising business; if these methods are inadequate, we will have to adopt new methods of promoting our Internet advertising which may increase our costs and cause substantial interruptions to our operations. We now have only our billboard advertising and our sales visits to businesses that promote our Internet display advertising business. There are no assurances that our billboard advertising or personal sales visits will be an effective means by which to attract customers to our form of advertising. If these methods of attracting advertising revenue are ineffective, we will be forced to develop new methods of promoting our Internet display advertisements, which may increase our costs of conducting business and cause interruptions in our operations. We have no insurance to cover risk of loss from theft or damage to the personal computers and digital cameras that we will provide to our sales force; because we will be forced to expend additional funds to replace this equipment in the event of theft or damage, our total operating costs will increase. We will be providing our salespersons with personal computers to construct the Internet advertisements and digital cameras to take pictures of businesses that will be incorporated into the advertisements. We may experience loss from theft or damage to this equipment; however, we have no insurance coverage to cover any such risk of loss. If we have to absorb the cost of replacing or repairing the damaged or lost equipment, our total operating costs will increase. We devote substantial resources to our business information database from which we receive no direct revenues; if our costs related to the information database exceed our revenue sources, we may have to charge fees for business information searches, which may reduce or eliminate our revenues from sales of our Internet display advertisements. We pay Axciom Company a fee for the right to use their business information database software. We also have other costs associated with our business database including the leasing and maintenance of our servers, which contain our website and business database. Despite these costs, we derive no direct revenues from or searches conducted on our business database. Although increased visitation to our business database may enhance our prospects for increased advertising sales, there are no assurances that we will be successful in attracting increased visitation to our website or even that an increase in visitation to our website will result in increased advertising sales. If the costs of maintaining our information database exceed our advertising revenues, we may have to charge fees for business information searches. Because the same information will be available elsewhere at no cost, the implementation of these fees may discourage visitation to our website. In turn, because prospective advertisers may interpret that decreased visitation to our website may decrease exposure of an advertiser's business, sales of our Internet advertisements may decrease. Accordingly, the implementation of these fees may reduce or eliminate revenues from sales of our Internet advertisements. 14 Our agreements with Acxiom Corporation and Interliant may be terminated by either party at any time; if either or both of these agreements are terminated by any of the contracting parties, we will lose these third party services requiring us to seek other third party services which may cause substantial delays in our operations. Our agreement with Acxiom Corporation, our data base supplier, may be terminated by either contracting party, at any time, with a 90-day notice. In addition, either contracting party may terminate the Interliant agreement, our server supplier, at any time, with a 30-day notice. Our existing business database is essential to our operations because it is the primary incentive for our prospective advertisers to purchase our Internet display advertisements. Our server is essential because persons wishing to access our business database will be unable to do so if our server ceases providing such services. Accordingly, if these agreements are terminated and we fail to find companies to replace these services, we may experience substantial delays in our operations until such time that we find suitable replacements to provide such services. Our sales force will be compensated solely on a commission basis; if we are unable to retain sales personnel and/or hire replacement sales persons on a timely basis, our advertising revenues will be negatively impacted and/or we will be required to provide a salary to our sales personnel. Our sales personnel will be compensated only on a commission basis. If our sales personnel fail to generate enough advertising sales to provide them with what they perceive to be adequate compensation, they will seek other employment. Accordingly, we may experience high attrition rates among our sales force. If we fail to maintain an adequate sales force on a continual basis, our advertising revenues will be negatively impacted. In addition, if we determine that compensating our sales personnel solely on a commission basis is no longer a viable way of conducting our business, we will be forced to provide our sales personnel with a wage or salary that will increase our total costs of doing business. Moreover there are no assurances that the implementation of a wage or salary for our sales personnel will be a successful means of retaining or hiring sales personnel. We have no contracts or arrangements with computer, database or network personnel to provide technical assistance to our operations; if we fail to establish these contracts or arrangements, the presentational and technical aspects of our website, business database and Internet display advertisements will be negatively impacted. Our management has no Internet management, marketing or technology related work experience. We will require substantial assistance from third parties to manage, market and develop our product and services. Unless our current management has the financial resources to hire qualified computer, database or network personnel, the overall presentation and technical aspects of our website and quality of our information database and Internet display advertising may be negatively impacted. Our vulnerability to security breaches, glitches and other computer failures, could negatively affect our ability to broaden our customer base and promote our brand name. The secure transmission of confidential information over public networks is a critical element of our operations. A party who is able to circumvent security 15 measures could misappropriate proprietary information or cause interruptions in our operations. If we are unable to prevent unauthorized access to our user's information and transactions, the computer component of our business could be harmed. Although we intend to implement industry-standard security measures, we cannot assure that these measures will prevent future security breaches. Because our software and services are dependent upon the integrity of software and hardware systems we obtain from third parties, security breaches in these systems could materially adversely affect our business, financial condition and operating results. In this regard we face the following risks: o Heavy stress placed on our systems that could cause systems failures or operation of our systems at unacceptably low speeds; o Failures in our system could also be caused by acts beyond our control, such as failures caused by our online service providers; and o Failures or shortcomings in our record-keeping and data processing functions performed by third parties: Any significant compromise of our system's security could hinder our ability to broaden our customer base and positively promote our brand name. Because our capital requirements may vary substantially at certain times, we may need to obtain additional capital, if we fail to obtain additional capital when required, our marketing plans and operation of our business database may be hindered. We require substantial amounts of revenue to implement our business plan. Our capital requirements may vary substantially depending on our rate of development and other factors. We plan to generate revenue from the sale of Internet display advertisements. Even if we begin sales and marketing campaigns, we may not generate enough revenue to achieve profitability. Furthermore, as we continue to develop our business, we expect that our operating expenses will increase. We plan to increase our operating expenses as we: o Continue to develop and improve our website and database; o Increase marketing activities and advertising efforts; o Hire and train salespersons and other necessary employees and consultants; o Purchase computer hardware for salespersons; o Purchase or lease other assets; and o Increase our general and administrative functions to support our developing operations. In addition, the actual costs of implementing and developing our business may be more expensive than we currently anticipate. Increases in expenditures will depend on many factors including but not limited to, our advertising and marketing expenses, the number of personnel we hire, the amount and quality of the equipment we purchase, and the assets we decide to purchase or lease. We cannot assure that we will have sufficient financial resources to meet our capital needs or to operate profitably. If adequate financing is not available, we may be required to curtail operations or to obtain funds by entering into 16 agreements on unattractive terms. Our inability to obtain financing or raise capital could impair our ability to market our Internet display advertisements and operate our business database. If we are unable to attract and retain qualified personnel, we may be unable to develop or retain a sufficient customer base to fund our operations, or implement our business plan. Our current and future success depends on our ability to identify, attract, hire, train, retain and motivate various employees and consultants, including skilled technical, managerial and professional personnel as well as sales, marketing and customer service personnel. Competition for Internet-specific employees is intense and we may be unable to attract or retain the technical professionals necessary to maintain an effective website and business database. Even if we out-source our Internet-related work, we may not be able to afford the fees associated with doing so. If we fail to attract and retain the necessary managerial, sales, marketing and customer service personnel, we will be unable to develop or retain a sufficient customer base to fund our operations or implement our business plan. If we are unable to obtain a trademark for Communicate now.com and/or Bizfinders.com., we may be unable to develop our brand name. We will attempt to obtain brand name recognition and protection for our Internet names, Communicate Now.Com and BizFinders.Com. The regulations regarding the protection of domain names as trademarks are evolving and unpredictable. We may be unable to prevent third parties from acquiring domain names similar to our domain names. If a third party was to infringe upon our domain names we may become involved in litigation that may be costly and time- consuming. In addition, any challenge to our domain names may decrease the value of our trademarks or other proprietary rights. If we fail to obtain a trademark for our business names or there is a decrease in the value of our domain names our ability to develop our brand name recognitions , will be negatively impacted. Any reduction in our sales force could negatively impact sales of our Internet display advertisements. We plan to employ a sales staff of approximately 126 sales persons and 3 sales managers over the next twelve months. We cannot assure that we will have available financial resources needed to implement a sales force of this size. The costs associated with hiring our anticipated sales force and equipping them with computers and digital cameras may exceed our financial resources, in which case we will be unable to hire the anticipated number of sales persons. Any reduction in our sales force may negatively impact sales of our Internet display advertisements. Because we face competition, we may be unable to successfully market our Internet display advertisements. The Internet business database and Internet phone book market is becoming increasingly competitive with hundreds of competitors. Some of our biggest competitors include: o The Southwestern Bell Yellow Pages; o The AT&T Phone Books; and o On-line Directories including: 17 o The Any Who Internet Directory; o GTE Internet Directories and Business Phone Books; and o The Big Yellow Internet Directory. Our ability to compete will be based on our success in distinguishing our website from our competitors. Because we do not operate an exclusive database of information, we will encounter difficulties in distinguishing our website from others. In addition, the business information accessible through our website will be available elsewhere on the Internet and in other informational formats offered by our competitors. We also do not have an established brand name or reputation while our competitors have significantly greater brand recognition, customer bases, operating histories and financial and other resources. There can be no assurance that we will be able to compete in the Internet advertising business, which may negatively impact market awareness and acceptance of our business. Because our principal stockholders retain control over a majority of the issued and outstanding shares, you will be limited in your ability to affect change in how we do business. Our principal stockholders, Mr. David Hancock and Damber Production Company, collectively own approximately 82% of our common stock and the remaining stockholders own approximately 18% of our common stock. As a result, our two principal stockholders have significant influence over all matters requiring approval by our stockholders without the approval of minority stockholders. In addition, they are able to elect all of the members of our Board of Directors, which allows them to significantly control our affairs and management. They are also able to affect most corporate matters requiring stockholder approval by written consent, without the need for a duly noticed and duly held meeting of stockholders. Such control could adversely affect the market value of our common stock or delay or prevent a change in our control. Accordingly, you will be limited in your ability to affect change in how we conduct our business. Because conflicts of interest exist among our directors, you should exercise caution before you invest in our common stock. Because some of our officers, directors and stockholders are, and may, in the future, become involved in other business activities, our officers and directors may face a conflict of interest in selecting between us and their other business interests. We have not formulated a policy for the resolution of such conflicts. One of our directors, Randal Leblanc is also the principle owner of JCL Associates and holds 125,000 of our common stock options. JCL Associates has a software development agreement with us and has developed the software we use in our Internet display advertising business. JCL Associates received 50,000 shares of our common stock which are being registered on this registration agreement in return for their development of this software. Mr. Leblanc's position as our director and as the principal owner of a company that provides services to us may create a conflict of interest. Because there are no assurances that any such conflicts or other potential conflicts will be resolved in our best interests, you should exercise caution before your purchase our common stock. Because we have never paid dividends, you should exercise caution before making an investment in our common stock. As a new company, we have never paid dividends nor do we anticipate the declaration or payments of any dividends in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our 18 business. Our Board of Directors will determine future dividend policy at their sole discretion and future dividends will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions and other factors. Future dividends may also be affected by covenants contained in loan or other financing documents, which may be executed by us in the future. Therefore, there can be no assurance that cash dividends of any kind will ever be paid. ITEM 4. USE OF PROCEEDS Not Applicable. We will not receive any proceeds from the sale of the securities by the selling security holders. ITEM 5. DETERMINATION OF OFFERING PRICE Not Applicable. The selling security holders will be able to determine the price at which they sell their securities. ITEM 6. DILUTION Not Applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders. ITEM 7. SELLING SECURITY HOLDERS The selling security holders named below are selling the securities. The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling security holders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling security holders upon termination of this offering. We believe that the selling security holders listed in the table have sole voting and investment powers with respect to the securities indicated. We will not receive any proceeds from the sale of the securities by the selling security holders. - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Name Relationship Amount Amount To Be Amount Percentage With Issuer Beneficially Registered Beneficially Owned Owned Prior to Owned Before/After Offering After Offering Offering (1) (2) - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Amos, Charles D. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Atanian, Debra M. 2,000 2,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Best, William Consultant 16,000 16,000 0 Less than 1% 19 - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Birdwell, James Jr. 30,000 30,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Bitters, Charles 600,000 600,000 0 2.6%/Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Bitters, Helen 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Boatwright, Nika M. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Brandt, Chance Wade 30,000 30,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Burson, Byron 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Butler, Tim D. 2,500 2,500 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Carruth, Johnny Bob 425,000 375,000 50,000 1.6%/Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Chance Research Corp. 250,000 250,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Cleveland, Charlie 500,000 450,000 50,000 1.9%/Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Crabtree, Peter 1,250 1,250 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Damber Productions, Corp. 9,450,000 250,000 9,200,000 41%/40% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Dlugosch, Pete 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Drum, Max 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Dunn, Hal 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Eudaly, Tom R. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Gann, Brandy 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Glenn Pattern Family, L.P. 50,000 50,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Hall, Barrett 100,000 100,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Hallford, Mike 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Law Offices of Brenda Lee Law Firm 100,000 100,000 0 Less than 1% Hamilton, P.A. - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Hamilton, John 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Hancock, David President and 9,441,500 250,000 9,191,500 41%/40% Director - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Hanson, Thomas 1,000 1,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Harless, Sheila 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Harris, Carolyn 1,000 1,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Harris, Henry 21,000 21,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Irby, Jim 30,000 30,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Jacoby, Allen, J. 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- JCL Associates, Inc. 50,000 50,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Lacy, Chad 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Lancaster, B. Joye 1,000 1,000 0 Less than 1% 20 - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Lane, Charlene 120,000 100,000 20,000 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Langerhans, Roy R. 2,000 2,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Lisner, Tracy 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Lynam, Bruce 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- McCarthy, Elsie 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- McDonald, Christel 1,000 1,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- McGregor, Chris 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- McNeely, Lance 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Michael, Richard 150,000 150,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Mitchell, J. Brad 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Morrison, Jeff 3,500 3,500 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Newton, Tommy 2,500 2,500 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Oplinger, T. 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Ozgo, Tom 3,920 3,920 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Ozgo, Thomas W. 1,250 1,250 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Petree, Monte 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Petter, Roger A. 25,000 25,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Powers, Jimmy 50,000 50,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Reider, John L. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Rideout, John T. 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Rhoads, Michael 2,000 2,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Roth, David 2,500 2,500 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Sanderson, Bruce 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Scheible, Margarette 15,000 15,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Seay, Jimmy 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Sims, John F. 5,000 5,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Smith, Carl 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Smith, Jackie 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Smith, Shane D. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Stephenson, James A. 900 900 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Texas Industrial Scrap 25,000 25,000 0 Less than 1% Metal, Inc. - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Vaca, Gabriel 2,500 2,500 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Vogel, Luther N. 1,000 1,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Wang, Margaret Yuk Chu 100,000 100,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Waskom, Sam D. 2,000 2,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Weatherford, David 2,000 2,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Williams, Clay 1,000 1,000 0 Less than 1% 21 - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Williams, J. Marvin 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Winkler, Jack 10,000 10,000 0 Less than 1% Motors, Inc. - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Winkler, Jack 10,000 10,000 0 Less than 1% Resource Limited Partnership - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Winkler, John 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Ying Wai Lam, Patrick 20,000 20,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- Zerr, Stephen J. 10,000 10,000 0 Less than 1% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- TOTAL 22,000,320 3,488,820 18,511,500 95.6%/80.5% - --------------------------- ----------------- ---------------- ---------------- ------------------ ------------------- (1) Assumes all registered selling shareholders shares will be sold. (2) Assumes the sale of 3,488,820 shares of Common Stock held by the selling shareholders We intend to seek qualification for sale of the securities in those states where the securities will be offered. That qualification is necessary to resell the securities in the public market and only if the securities are qualified for sale or are exempt from qualification in the states in which the selling shareholders or proposed purchasers reside. There is no assurance that the states in which we seek qualification will approve of the security resales. ITEM 8. PLAN OF DISTRIBUTION Our Selling Shareholders are offering 3,488,820 shares of our common stock. The selling shareholders may sell their shares at any price. We will not receive proceeds from the sale of shares by the selling shareholders. The securities offered by this prospectus will be sold by the selling security holders or by those to whom such shares are transferred. We are not aware of any underwriting arrangements that have been entered into by the selling security holders. The distribution of the securities by the selling security holders may be effected in one or more transactions that may take place in the over-the-counter market, including broker's transactions, privately negotiated transactions or through sales to one or more dealers acting as principals in the resale of these securities. Any of the selling security holders, acting alone or in concert with one another, may be considered statutory underwriters under the Securities Act of 1933, if they are directly or indirectly conducting an illegal distribution of the securities on behalf of our corporation. For instance, an illegal distribution may occur if any of the selling security holders were to provide us with cash proceeds from their sales of the securities. If any of the selling shareholders are determined to be underwriters, they may be liable for securities violations in connection with any material misrepresentations or omissions made in this prospectus. 22 In addition, the selling security holders and any brokers and dealers through whom sales of the securities are made may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, and the commissions or discounts and other compensation paid to such persons may be regarded as underwriters' compensation. The selling security holders may pledge all or a portion of the securities owned as collateral for margin accounts or in loan transactions, and the securities may be resold pursuant to the terms of such pledges, accounts or loan transactions. Upon default by such selling security holders, the pledgee in such loan transaction would have the same rights of sale as the selling security holders under this prospectus. The selling security holders may also enter into exchange traded listed option transactions, which require the delivery of the securities listed under this prospectus. The selling security holders may also transfer securities owned in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer without consideration, and upon any such transfer the transferee would have the same rights of sale as such selling security holders under this prospectus. In addition to the above, each of the selling security holders and any other person participating in a distribution will be affected by the applicable provisions of the Securities Exchange Act of 1934, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling security holders or any such other person. There can be no assurances that the selling security holders will sell any or all of the securities. In order to comply with state securities laws, if applicable, the securities will be sold in jurisdictions only through registered or licensed brokers or dealers. In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. Under applicable rules and regulations of the Securities Exchange Act of 1934, as amended, any person engaged in a distribution of the securities may not simultaneously engage in market-making activities in these securities for a period of one or five business days prior to the commencement of such distribution. All of the foregoing may affect the marketability of the securities. Pursuant to the various agreements we have with the selling security holders, we will pay all the fees and expenses incident to the registration of the securities, other than the selling security holders' pro rata share of underwriting discounts and commissions, if any, which is to be paid by the selling security holders. Should any substantial change occur regarding the status or other matters concerning the selling security holders, we will file a Rule 424(b) prospectus disclosing such matters. ITEM 9. LEGAL PROCEEDINGS We are not aware of any pending or threatened legal proceedings, in which we are involved. 23 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS DIRECTORS AND EXECUTIVE OFFICERS The Board of Directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. There are no family relationships between any of the directors and executive officers. Our directors and executive officers are as follows: - -------------------------------------------------------------------------------------------------- Name Age Position Term - -------------------------------------------------------------------------------------------------- David Hancock 44 Director, Chairman One Year* of the Board of Directors, President - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- Bill Elliott 53 Director One Year* - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- Randal Leblanc 51 Director One Year* - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- John C. Winkler 55 Director One Year* - ------------------------------------------------------------------------------------------------- *Our Director's current terms, subject to re-election, expire on the second Tuesday of April 2001, or within 60 days thereof. Mr. David Hancock has served as our President, Chief Executive Officer, and a Director since our inception. From 1992 until February 2000, Mr. Hancock served as a Technical Service Manager for Wilsonart International, where he was responsible for customer technical sales and support, customer complaints, and quality assurance for high pressure laminates, flooring products, solid surfacing sheets and shape goods, and adhesives. Mr. Hancock earned a Bachelors Degree in Industrial Arts Education from Abilene Christian University in 1979. Mr. Hancock does not hold any other directorships or managerial positions. Mr. Bill Elliott has been one of our directors since August 19, 2000. Mr. Elliott has been the owner and operator of Bill Elliot Homes, a custom home-building company in Temple, Texas since 1985. Mr. Elliott earned a Bachelors degree in Agri-business from Tarleton State University in 1973. Mr. Elliott does not hold any other directorships. 24 Mr. Randal Leblanc has been one of our directors since August 19, 2000. From 1990 to present, Mr. Leblanc has been a part owner and President of JCL Associates, Inc., a provider of computer programming and consulting services to the Texas state area. Mr. Leblanc earned a bachelor's degree in Accounting from McNeese State University in 1971. Mr. Leblanc does not hold any other directorships. Mr. John C. Winkler has been one of our directors since August 19, 2000. Mr. Winkler has been the owner and operator of a "Four-line General Motors New Car Franchise" and two affiliated used car lots since 1968. Mr. Winkler earned a Bachelor's degree in Business Administration from Trinity University in 1968. Mr. Winkler does not hold any other directorships. SIGNIFICANT EMPLOYEES Ms. Sheila Diane Llewellyn has been our corporate secretary since November 2000. Ms. Llewellyn served as a sales coordinator for the flooring division of Wilsonart, International from 1995 to 2000. Mr. Dennis Bash has been our Vice President of Operations and Technology since March 15, 2000. Mr. Bash served as an Operations Manager for Wilsonart International from 1986 until March 15, 2000. As a Technical Representative, Mr. Bash was responsible for technical support, product development, technical analysis, process development, technical sales support and technical training. Mr. Bash earned an Associates Degree in Applied Science - Solar Engineering from Texas State Technical College in 1982. In 1992, Mr. Bash earned a Bachelors Degree in Management Information Systems from University of Houston. Ms. Bernadatee Pate has been Manager of our Training and Development Division since December 15, 2000 and is responsible for training our sales personnel. Ms. Pate was an educator and curriculum consultant for the Temple, Texas Independent School District from 1990 to 2000. Ms. Pate received a Bachelors of General Studies Degree with a concentration in Religious Education from Howard Payne University located in Brownwood, Texas in 1986. Ms. Pate received her Teacher Certification from the University of Mary Hardin Baylor located in Belton, Texas in 1991. Ms. Pate also received a Masters Degree of Agriculture in Plant Science from Texas A&M University located in Bryan College Station, Texas in 1999. FAMILY RELATIONSHIPS There are no family relationships among our officers, directors, or persons nominated for such positions. LEGAL PROCEEDINGS. 25 No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in legal proceedings that would be material to an evaluation of our management. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following tables set forth the ownership, as of March 20, 2001, of our common stock (a) by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, and (b) by each of our directors, by all executive officers and our directors as a group. To the best of our knowledge, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control of our company. Security Ownership of Certain Beneficial Owners - -------------------- ---------------------------- ----------------- -------------------- -------------------- Title of Class Name& Address # Of Shares Nature of Current Current % Ownership - -------------------- ---------------------------- ----------------- -------------------- -------------------- - -------------------- ---------------------------- ----------------- -------------------- -------------------- Common David Hancock 3402 Red Bud Road 9,441,500 Direct 41% Temple, Texas 76502 - -------------------- ---------------------------- ----------------- -------------------- -------------------- - -------------------- ---------------------------- ----------------- -------------------- -------------------- Common Damber Production Corp. Amanda Bitters (sole owner) 9,450,000 Direct 41% P.O. Box 1136 Mineral Wells, Texas 76068 - -------------------- ---------------------------- ----------------- -------------------- -------------------- - -------------------- ---------------------------- ----------------- -------------------- -------------------- TOTAL 18,891,500 Direct 82% - -------------------- ---------------------------- ----------------- -------------------- -------------------- Security Ownership of Officers and Directors - -------------------- ------------------------------ -------------- --------------------- -------------------- Title of Class Name & Address # Of Shares Nature of Current Current % Ownership - -------------------- ------------------------------ -------------- --------------------- -------------------- - -------------------- ------------------------------ -------------- --------------------- -------------------- Common David Hancock President & Chairman of the 9,441,500 Direct 41% Board of Directors 3402 Red Bud Road Temple, Texas 76502 - -------------------- ------------------------------ -------------- --------------------- -------------------- - -------------------- ------------------------------ -------------- --------------------- -------------------- Common William Elliott (Director) Option for 26 88 Oakmount Circle 125,000 0.005% Morgan Point Resort, Texas 76513 - -------------------- ------------------------------ -------------- --------------------- -------------------- - -------------------- ------------------------------ -------------- --------------------- -------------------- Common Jackie Winkler (Director) Option for 1209 Shady Lane 125,000 0.005% Hondo, Texas 78861 - -------------------- ------------------------------ -------------- --------------------- -------------------- - -------------------- ------------------------------ -------------- --------------------- -------------------- Common Randal Leblanc Option for 6200 Savoy Drive #1200 125,000 0.005% Houston, Texas 76502 - -------------------- ------------------------------ -------------- --------------------- -------------------- - -------------------- ------------------------------ -------------- --------------------- -------------------- Total 9,816,500 41.02% - -------------------- ------------------------------ -------------- --------------------- -------------------- ITEM 12. DESCRIPTION OF SECURITIES The following description is a summary of the material terms of our Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part. COMMON STOCK GENERAL: We are authorized to issue 100,000,000 shares of common stock with a par value of $.0001 per share. As of March 20, 2001, there were 22,998,820 common shares issued and outstanding held by 90 shareholders of record. All shares of common stock outstanding are validly issued, fully paid and non-assessable. VOTING RIGHTS: Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the holders of common stock holding, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of the such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law. DIVIDEND POLICY: 27 Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally available. We have not paid any dividends since our inception and presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors. MISCELLANEOUS RIGHTS AND PROVISIONS: Holders of our common stock have no preemptive rights. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. All outstanding shares of our common stock are, and the common stock to be outstanding upon completion of this offering will be fully paid and assessable. There are not any provisions in our Articles of Incorporation or our by-laws that would prevent or delay change in our control. SHARES ELIGIBLE FOR FUTURE SALE. Once this registration statement is effective, the 3,488,820 shares being offered by our selling shareholders will be freely tradable without restrictions under the Securities Act of 1933, except for any shares held by our "affiliates", which will be restricted by the resale limitations of Rule 144 under the Securities Act of 1933. In general, under Rule 144 as currently in effect, any of our affiliates and any person or persons whose sales are aggregated who has beneficially owned his or her restricted shares for at least one year, may be entitled to sell in the open market within any three-month period a number of shares of common stock that does not exceed the greater of (i) 1% of the then outstanding shares of our common stock, or (ii) the average weekly trading volume in the common stock during the four calendar weeks preceding such sale. Sales under Rule 144 are also affected by limitations on manner of sale, notice requirements, and availability of current public information about us. Non-affiliates who have held their restricted shares for one year may be entitled to sell their shares under Rule 144 without regard to any of the above limitations, provided they have not been affiliates for the three months preceding such sale. Further, Rule 144A as currently in effect, in general, permits unlimited resales of restricted securities of any issuer provided that the purchaser is an institution that owns and invests on a discretionary basis at least $100 million in securities or is a registered broker-dealer that owns and invests $10 million in securities. Rule 144A allows our existing stockholders to sell their shares of common stock to such institutions and registered broker-dealers without regard to any volume or other restrictions. Unlike under Rule 144, restricted securities sold under Rule 144A to non-affiliates do not lose their status as restricted securities. As a result of the provisions of Rule 144, all of the restricted securities could be available for sale in a public market, if developed, beginning 90 days 28 after the date of this prospectus. The availability for sale of substantial amounts of common stock under Rule 144 could adversely affect prevailing market prices for our securities. ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL Our Financial Statements for the period ending December 31, 2000 have been included in this prospectus in reliance upon Salberg & Company, P.A., independent Certified Public Accountants, as experts in accounting and auditing. The Law Offices of Hamilton, Lehrer and Dargan, P.A. opined upon the validity of the securities being offered and other legal matters. Brenda Lee Hamilton of the Law Firm of Hamilton, Lehrer and Dargan, received compensation of $10,000 cash and 100,000 shares of stock as consideration for legal services. ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES The By-laws of this corporation, subject to the provisions of Section 145 of Delaware General Corporation Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS On January 31, 2000 at our inception, we issued 10,000,000 shares of our common stock to David Hancock. On January 31, 2000 at our inception, we issued 10,000,000 shares of our common stock to Damber Productions Corp., a Texas corporation, a Texas corporation that operates an oil and gas lease and exploration business in Mineral Wells, Texas. These shares were issued in exchange for services rendered in our corporate formation by the sole shareholder, officer and director of Damber Productions Corp., Amanda Bitters. Specifically, Ms. Bitters formulated our business concept of operating an Internet display advertising business supported by operation of a business database search service. In addition, Ms. Bitters assisted in the preparation of our business plan. On March 26, 2000, we entered into a Software Development Agreement with JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary point-of-sale software and administrative support software that will allow for the integration of sales, billing and payments. JCL Associates also agreed to provide us with technical services. The software development fee of $200,000.00 29 was payable in two installments of $90,000.00 and $110,000.00, both of which have been paid. Mr. Randal Leblanc is the President and a principle owner of JCL Associates. Mr. Leblanc holds 33,000 of 100,000 total outstanding shares of JCL Associates. On August 19, 2000, we nominated and elected Mr. Randal Leblanc to serve as our Director. In November 2000, JCL Associates received 50,000 shares of common stock in return for software enhancements JCL Associates provided to us. In consideration for his services as our Director, Mr. Leblanc may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as one of our Directors Because Mr. Leblanc is a principal of JCL Associates and one of our directors, a possible conflict of interest exists. On April 16, 2000, we entered into a consulting agreement with Charles Bitters for general business start-up consulting. In consideration for his services, we paid Mr. Charles Bitters $10,000. Mr. Bitters is the father of Amanda Bitters who is the President and sole Director of Damber Production Company. Damber Production Company is a beneficial owner of 41% our common stock. On August 19, 2000, we nominated and elected Mr. William Elliott to serve as a Director. In consideration for his services as our Director, Mr. Elliott may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as our Director. On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as a Director. In consideration for his services as our Director, Mr. Winkler may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as our Director. On October 20, 2000, we entered into a second consulting agreement with Charles Bitters. In consideration for his services, we paid Mr. Charles Bitters $16,500 and 600,000 shares of our common stock. Mr. Bitters is the father of Amanda Bitters, who is the President and sole Director of Damber Production Company. Damber Production Company is the beneficial owner of 41% of our common stock. Other than the above transactions, we have not entered into any material transactions with any director, executive officer, and nominee for director, beneficial owner of five percent or more of our common stock, or family members of such persons. Also, we have not had any transactions with any promoter. We are not a subsidiary of any company. ITEM 16. DESCRIPTION OF BUSINESS BUSINESS DEVELOPMENT. We were incorporated in Delaware on January 31, 2000 for the purpose of engaging in an Internet based advertising business. We have operated as a development stage company since our inception. We have devoted all of our efforts to: o Financial planning; o Formulating our business plan; o Raising capital; 30 o Research and development of our product and services; o Establish our back office operations; o Developing proprietary software to create our electronic display advertisements; and o Establishing our website. We have never been the subject of any bankruptcy or receivership action. We have had no material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets outside the ordinary course of business. We began implementing our business plan in March 2000 that consisted of the above activities. We began actively attempting to sell our Internet display advertisements in November 2000. PRINCIPAL PRODUCT & SERVICES: DATABASE SEARCHES THROUGH OUR WEBSITE: We are currently operating a business information website located at www.Bizfinders.com. Our search directory allows users the ability to search for and locate businesses and business information by providing any of the following identifying information: o Business name; o Business location; o Name of service or product or subject category; o City; o State; and o Zip code We obtained a license to use this business information database from Acxiom Corporation. This database includes the names, addresses and phone numbers of approximately eleven million U.S. businesses. Visitors to our website can also choose to download maps and directions to any business included on the database. Our business database search service is offered to the public free of charge and we receive no revenue from this aspect of our business. Our business database is a means by which to attract visitors to our website to purchase our Internet display advertisements. INTERNET DISPLAY ADVERTISEMENTS We have developed a point of sale software tool that builds Internet display advertisements that are personally constructed by our sales personnel at our customer's place of business. Through this process, the customer has the ability to view our lap top computer screen while our sales persons configures an advertisement to the exact specifications of the customer as it will be seen on the our Bizfinders database. The sales person uses a laptop computer to design and configure the advertisement and a digital camera to take pictures of the business as they will appear in the advertisement. SOFTWARE TECHNOLOGY TO CONSTRUCT THE ADVERTISEMENTS Our software technology includes twelve templates to format and design the 31 advertisements. Each template has various colors, font sizes, and graphics that when used in combination with each other create thousands of combinations in design. The customer may view the advertisement on the salesperson's computer screen exactly as it will appear on our Bizfinders website. Our sales persons will work with the customer to modify and change the advertisement until such time that it specifically meets customer specifications. We plan to have the finished product include a one-page color advertisement with digital images of the customer's facilities or products. We anticipate that the advertisement's creation will take approximately forty minutes. The following day, the customer will be able to view his advertisement by visiting our website. We plan to utilize our own proprietary Point-of-Sale software that will allow our salespersons to submit invoice receipts to a central server via an Internet transmission. At the central server, sales commissions are calculated and forwarded to our payroll service, Time Plus Company. We plan to have the central server send billing invoice information to a billing service, Express Bill that will process and send the actual bill to the customer. The customer will then return payment to our Bank, Bank One Texas, N.A.'s billing fulfilling center for payment acceptance and processing. ADDITIONAL ADVERTISING OPTIONS THAT MAY BE PURCHASED AND THEIR COST The following table illustrates the pricing of our products and services: ------------------------ ------------- ----------------------------------------------------------------------- Product Description Price (Per Description Year) ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- "Electronic Display $179.00 This charge is for a full-page color advertisement created real Ad" (EDA) time. Customer may print the advertisement himself or pay printing specialty service to download and print. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Permanent Data File $100.00 This charge involves the addition of a permanent data file to the electronic display advertisement. Examples of permanent data files include menus, price sheets, or inventory descriptions the business may want to accompany the electronic display advertisement. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Alpha Search Listing $29.00 This charge involves in advertisement listing in more than one Option category. For example, an automobile dealership may be listed in the new car section as well as the used car section, and in multiple cities. Each additional listing cost $29. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Unscheduled Change $0.00 No charge if within one week of purchase. We plan to have a toll-free phone line available. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Change Options $200.00 For 12 modifications of existing ad over one year. Otherwise, $50.00 per modification. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Additional Page $75.00 Additional advertisement pages are $75.00 for each page. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Additional City Listing $49.00 A business may choose to be listed in more than one city. Additional city listings cost $49.00 for each additional city. 32 ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Link to Website or $49.00 The cost for links to a company's existing website or to their e-mail Email is $49 per year. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Language Options Per $49.00 The advertisement may be written in multiple languages for a $49.00 Page fee per year. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Mini Website $279.00 A non-interactive website of up to 3 pages that fully details the business and its goods and services may be purchased for $279.00 per year. ------------------------ ------------- ----------------------------------------------------------------------- ------------------------ ------------- ----------------------------------------------------------------------- Mini Website with $379.00 A non-interactive website of up to 3 pages that fully details the Permanent Data files business and its goods and services, including permanent data files such as restaurant menus, price sheets, or detailed inventory descriptions the business wants to feature. The fee for his service is $379.00 per year. ------------------------ ------------- ----------------------------------------------------------------------- DISTRIBUTION OF PRODUCTS & SERVICES: We currently deliver our licensed business information through our website located at www.bizfinders.com. Users of our website utilize a search engine to locate the business information stored on our database servers. We provide our Internet display advertisements through personal visits by our sales staff. Because we are a development stage company, we cannot assure that we will ever have the resources available to continue distributing business information through our website or begin distribution of our Internet display advertisements and other services. MATERIAL AGREEMENTS: JCL ASSOCIATES SOFTWARE DEVELOPMENT AGREEMENT On May 26, 2000, we executed a software development agreement with JCL Associates that required JCL Associates to provide us with technical services and develop our proprietary Internet display advertisement development software, point-of-sale software and administrative support software. We paid JCL Associates $200,000.00 in two installments for these services. The first installment of $90,000.00 was paid at the time the agreement was executed and the remainder was paid upon completion of the software development on July 31, 2000. This agreement also commits us to minimum maintenance fees of $3,200 per month from July 2000 through the expiration of the agreement on May 25, 2001. All software programs and code developed under this agreement will remain our property. ACXIOM CORPORATION DATABASE LICENSE AGREEMENT On May 1, 2000, we entered into a licensing agreement with The Acxiom Corporation for the use of a United States business database on our website. The size of this database is approximately eleven 11 million United States businesses. This license fee of $75,000 per year, payable in twelve monthly 33 installments of $6,250, expires on April 30, 2001. As of December 31, 2000, the total licensing fees charged to our operations was $50,000. Either contracting party may terminate the agreement at any time with a 90 day notice. CONSULTING AGREEMENT WITH RICHARD MICHAEL On December 5, 2000, we entered into a consulting agreement with Richard Michael to create and produce on demand general business start-up services pertaining to our future business in the state of Florida, including but not limited to: o Advertising campaign to be conducted in the State of Florida; o Recruitment of our sales employees in the State of Florida; and o Compliance with all state laws pertaining to the conduct of business in the State of Florida. The term of the agreement is for three months with a provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Mr. Michael received 150,000 shares of our common stock in return for his services. CONSULTING AGREEMENT WITH CHANCE RESEARCH CORPORATION On December 5, 2000, we entered into a consulting agreement with Chance Research Corporation of Temple, Texas to create and produce on demand general business start-up services pertaining to the review and testing of software necessary to create for our Internet display advertisements a shopping cart interactive Internet Display Advertisement and an interactive reservation/scheduling function. The term of the agreement is for three months with a provision for an automatic 3 month renewal unless either party terminates the agreement in writing. Chance Research Corporation received 250,000 shares of our common stock in return for these services. CONSULTING AGREEMENT WITH CHARLIE CLEVELAND On November 13, 2000, we entered into a consulting agreement with Charlie Cleveland of Lubbock, Texas to create and produce on demand general business start-up services pertaining to the creation, review and testing of software and hardware necessary to bill customers and receive and collect/credit customer payments. The term of the agreement is for three months with a provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Mr. Cleveland received 150,000 shares of our common stock in return for these services. Additionally, On December 04, 2000, we entered into a second Consulting Agreement for further services related to the creation, review and testing of software and hardware necessary to bill customers and receive and collect/credit customer payments. The term of this second agreement is for three months with a provision for an automatic 3-month renewal, unless either party terminates the agreement in writing. Mr. Cleveland received 125,000 shares of our common stock in return for these services. CONSULTING AGREEMENT WITH CHARLES BITTERS On April 16, 2000, we entered into a consulting agreement with Charles Bitters of Mineral Wells, Texas to create and produce on demand general business start-up services. The term of the agreement is for three months with a 34 provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Charles Bitters received $10,000 in return for these services. Additionally, on October 20, 2000 we entered into a second Consulting Agreement for further services related to our start-up and development, such as the review of software and hardware necessary to bill customers and receive and collect customer payments, review and negotiation of advertising contracts for bill board advertising, creation and review/testing of payroll software, overseeing the negotiation and agreements between us and Standard and Poor listing service, oversee and review the agreements between us and a stock transfer agent and all other aspects of our start-up and development as needed. The term of this second agreement is for three months with a provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Charles Bitters received 600,000 shares of our common stock and $16,500 in return for these services. Mr. Bitters is the father of Amanda Bitters who is the President and sole Director of Damber Production Company. Damber Production Company is a beneficial owner of 41% of our common stock. CONSULTING AGREEMENT WITH BILL BEST On May 1, 2000, we entered into a consulting agreement with Bill Best of Nolanville, Texas to create and produce on demand general business start-up services. The term of the agreement is for three months with a provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Mr. Best received 11,000 shares of our common stock in return for these services. CONSULTING AGREEMENT WITH JOHNNY CARRUTH On December 4, 2000, we entered into a consulting agreement with Johnny Carruth of Lubbock, Texas to create and produce on demand our general business start-up services pertaining to the State of Texas, including but not limited to, the Texas advertising campaign, employee recruitment, and ensuring that we meet all Texas State Government requirements applicable to do business in Texas. The term of the agreement is for three months with a provision for an automatic 3-month renewal unless either party terminates the agreement in writing. Mr. Carruth received 125,000 shares of our common stock in return for these services. INTERLIANT, INC. NETWORK SERVICE AGREEMENT In July of 2000, we entered into a one 1-year lease agreement with Interliant, Inc. for the use of their servers which will store, among other things, our website, our proprietary software, and our databases. This one-year network service agreement included a onetime fee of approximately $4,250 and will require the payment by us of a monthly fee of approximately $6,640. Either contracting party may terminate the agreement at any time with a 30 day notice. BILLING SERVICE ARRANGEMENT WITH EXPRESS BILL, INC. We have an arrangement with Express Bill, Inc. whereby they provide billing services. EMPLOYMENT AGREEMENT WITH BERNADETTE PATE. 35 On November 21, 2000 we entered into an Employment Agreement with Bernadette Pate to perform the duties of our Manager of Training and Development. The term of the agreement is for one year and if after the term of agreement has expired, the parties continue to do business together as if the Agreement were still in effect, the Agreement shall be renewed and continue in effect until on of the parties notifies the other in writing of its termination. This one year Employment Agreement included a sign on bonus of 5,000 shares of our restricted common stock and $1,000 cash. In accordance with the agreement, Ms. Pate receives a base pay of $52,500 per year. EMPLOYMENT AGREEMENT WITH SHEILA D. LLEWELLYN On November 15, 2000 we entered into an Employment Agreement with Sheila Llewellyn to perform the duties of our Corporate Secratary. The term of the agreement is for one year and if after the term of agreement has expired, the parties continue to do business together as if the Agreement were still in effect, the Agreement shall be renewed and continue in effect until on of the parties notifies the other in writing of its termination. This one year Employment Agreement included a sign on bonus of 5,000 shares of our restricted common stock and $1,000 cash. In accordance with the agreement, Ms. Llewellyn receives a base pay of $38,500 per year. LAMAR ADVERTISING AGREEMENT Lamar Advertising will be furnishing us with billboard advertising in the designated metropolitan areas that we will target during our first year of operations. Our current agreement with Lamar Advertising pertains only to billboard advertising for the Central Texas area for a one-time fee of $7,900 and $10,000 per month with a ninety-day cancellation term. Their services include the design, graphics and billboard space lease. COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET: The Internet business database and Internet phone book market is increasingly competitive with hundreds of competitors on the Internet alone. In addition, because barriers to market entry are relatively low and new competitors can establish new sites at a relatively low cost by utilizing a variety of market available software, we expect competition to increase in the future. There are no assurances that we can compete in this market. There are hundreds of websites that operate similar businesses to us. Some of our biggest existing competitors include the following companies in the following categories: YELLOW PAGE ADVERTISING: o Southwestern Bell Yellow Pages; o AT&T Yellow Page Phone Books; and o Business Phone Books ON LINE DIRECTORIES o AnyWho Internet Directory; o GTE Internet Directories; and o Big Yellow Internet Directory; o Hoovers; o Comfind.com 36 These companies have substantially longer operating histories, greater name recognition, larger customer bases, and greater financial and technical resources than us. Accordingly, these companies are able to conduct extensive marketing campaigns that we are financially unable to accomplish. In addition, these companies may offer more attractive pricing to potential advertisers. Our ability to compete will be limited by our success in distinguishing our website and business database. We will be limited in this endeavor because we do not and will not operate an exclusive database of information. The information available on our website will be available elsewhere on the Internet and in other informational formats such as phone books. We will be further limited in our ability to promote our product and services because computer hardware/software products are available at less cost to customers if they wish to construct their own advertisement, instead of using our advertising services. In addition, we do not have an established brand name or reputation while our competitors have significantly greater brand recognition, customer bases, operating histories and financial and other resources. There can be no assurance that we will be able to compete in the sale of Internet advertising products and services, which could have a materially negative impact upon market awareness and acceptance of our products and services. We believe the following aspects of our website will enable us to compete effectively: Convenience to the customer: Our point of sale software allows our salesperson to build Internet display advertisements typically in one visit to the customer's place of business. In contrast, most of our competitors build advertisements only at their own business location that may require multiple visits. Accordingly, because the customer does not have to visit our business location or have multiple communications with us, we provide convenience to the customer. In addition, other advertisers require their customers to supply camera ready art work, photographs and detailed text, all of which require the customers to spend extra time and cost. Because our sales personnel can create advertisements with the use of our software, laptop computer and digital camera, we do not need or require our customers to furnish us with these items. Our prospective customers are not required to have computer or Internet capability because our sales personnel are equipped with personal computers and other equipment to display the capabilities of our Internet advertising. Therefore, by choosing our method of Internet display advertising, the customer saves time and expense compared with other advertising competitors. Quicker production time to advertisements: We service the customer's needs by constructing advertisements for them at their place of business in a short period of time, usually in approximately 40 minutes. In contrast, many of our competitors need days or weeks to complete an advertising project and do not offer the convenience of offering services at the customers place of business. Cost advantage to customers: Our basic advertisements may be purchased without additional advertising options for less than $200 while some of our competitors may charge from $300 to $1,500 for their advertising services. In addition, our customers can actually 37 view draft advertisements and make corrections prior to spending or committing to expend any money. In contrast, many advertisers will require full payment or a down payment prior to undertaking advertising projects. Varied uses of our Internet display advertising: Once our advertisement is constructed it may be printed from the Internet in a clean flyer format. Once printed in this clean flyer format, the advertisements can be folded and mailed or otherwise be available for our customer's use to promote their business. Most of our competitors do not have this additional feature to their advertising. There are no assurances that we will be successful in these components of our business or that these aspects of our business will act as competitive forces. In addition, many of our competitors produce advertisements that are more elaborate and intricate requiring more time and cost and facilities to complete such products. SOURCES AND AVAILABILITY OF RAW MATERIALS: We do not require raw materials in our business. CUSTOMER DEPENDENCY: We currently have approximately 18 customers. We plan to market our services to a variety of businesses. Although we do not plan on being dependent upon one single customer or just a few customers, there are no assurances that we will not become dependent upon a single or a few customers. INTELLECTUAL PROPERTY: At present, we have applied for service mark protection for our Bizfinder.com domain name and for our corporate name, CommunicateNow.com. Our software technology is fully owned by us and is copyright protected. We do not have any patents or royalty agreements. GOVERNMENTAL APPROVAL REQUIREMENTS: We are not aware of the need for any government approval of our principal product or services. EFFECT OF EXISTING GOVERNMENTAL REGULATIONS: Other than federal and state employment regulations such as those administered and regulated by the Occupational Safety and Health Administration, we are not aware of any governmental regulations that will affect our business plan. However, due to increasing usage of the Internet, a number of laws and regulations may be adopted relating to the Internet, covering user privacy, pricing, and characteristics and quality of products and services. Furthermore, the growth and development for Internet commerce may prompt more stringent consumer protection laws imposing additional burdens on those companies conducting business over the Internet. The adoption of any additional laws or regulations may decrease the growth of the Internet, which, in turn, could decrease the demand for Internet services and increase the cost of doing business on the Internet. These factors may have an adverse effect on our business, results of operations and financial condition. 38 Moreover, the interpretation of sales tax, libel and personal privacy laws applied to Internet commerce is uncertain and unresolved. We may be required to qualify to do business as a foreign corporation in each such state or foreign country. Our failure to qualify as a foreign corporation in a jurisdiction where we are required to do so could subject us to taxes and penalties. Any such existing or new legislation or regulation, including state sales tax, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have a material adverse effect on our business, results of operations and financial condition. RESEARCH AND DEVELOPMENT: During the period from our inception to December 31, 2000, we have not spent funds on research. We have spent $200,000 on software development. COSTS ASSOCIATED WITH ENVIRONMENTAL COMPLIANCE: We currently have no costs associated with compliance with environmental regulations. We do not anticipate any costs associated with environmental compliance because delivery and distribution of our products and services should not involve substantial discharge of environmental pollutants. However, there can be no assurance that we will not incur such costs in the future. EMPLOYEES: We currently have four (4) full time salaried employees, one part time hourly employee, and eight (8) commissioned sales people. All of our employees are based at our corporate office in Temple, Texas. We have employment agreements with all of our salaried employees. Our salaried employees and part time employees positions are as follows: Salaried Employees o Mr. David Hancock, President and CEO. o Mr. Dennis Bash, Vice President of Operations and Technology. o Sheila Llewellyn, Corporate Secretary o Bernadette Pate, Manager of Training and Development Part Time Employees o Kris Jones, Book keeper REPORTS TO SECURITY HOLDERS: After the effective date of this document, we will be a reporting company under the requirements of the Securities Exchange Act of 1934 and will file quarterly, annual and other reports with the Securities and Exchange Commission. Our annual report will contain the required audited financial statements. We are not required to deliver an annual report to security holders and will not voluntarily deliver a copy of the annual report to the security holders. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 39 Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Website on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. ITEM 17. PLAN OF OPERATIONS The discussion contained in this prospectus contains "forward-looking statements' that involve risk and uncertainties These statements may be identified by the use of terminology such as 'believes","expects", "may", "will", or " should", or " anticipates", or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this prospectus should be read as being applicable to all related forward-looking statements wherever they appear in this prospectus. Our actual results could differ materially from those discussed in this prospectus. Important factors that could cause or contribute to such differences include those discussed under the caption entitled "risk factors," as well as those discussed elsewhere in this prospectus. We are a development stage company with no revenues or significant operations. We plan to implement a sales staff that will attempt to sell Internet single-page display advertisement's, primarily to small business owners in various metropolitan markets. We plan to include these Internet display advertisements in a separate database that may be accessed through our website. We have developed a website containing a business information database consisting of names, addresses and phone numbers of approximately 11 million U.S. businesses through which visitors to our site will use a search engine to locate businesses. Searches may be made under subject category, city, state, actual name of business and zip code. We obtained the license to use this database from Acxiom Corporation. We will obtain no revenue from the searches of our database; instead our revenue will be derived from Internet display advertisements through real time face-to face interaction with the customer. During the next twelve months, we will need to hire and train sales persons, purchase laptop computers, and digital cameras to enable for our sales staff to compose the Internet display advertisements and conduct our marketing campaign composed primarily of billboard advertising. We can continue to satisfy our current cash requirements for a period of 12 months through our existing capital and revenue from advertising sales. We anticipate total estimated capital expenditures of $1,094,600 over the next twelve months, as follows: o $70,000 for the purchase of four automobiles that will be used by our sales managers; o $219,600 for the purchase of 126 laptop computers and digital cameras that will be used by our sales personnel and management; o $805,000 for our billboard advertising to promote our brand name, Bizfinders.com; o $158,000 for training of our sales force 40 We intend to satisfy these capital expenditures by: o Our cash on hand of $465,724, as of December 31, 2000; o Our sales revenue; o Controlling the pace of the growth of our sales force throughout our 12 month developmental period from 8 sales people to a total for the year of 126 sales people that will not exceed our existing capital; and o Compensating our sales persons solely on a commission basis, rather than cash outlays in the form of guaranteed salaries. Although we believe that our capital costs will satisfy our capital expenditures, there are no assurances that they will be satisfactory. Accordingly, if our revenues from our sales of our Internet display advertisements is not adequate, will be forced to seek additional financing through financial institutions. We have not arranged for any sources of additional capital through outside financing. Our president has a line of credit with Bank One for $42,000.00 which he is prepared to use under these circumstances; however, there are no assurances that he will utilize this line of credit for our purposes. We may seek our own financing from financial institutions if our revenues are insufficient to conduct our operations; however, there are no assurances that such financing will be available on attractive terms or at all. Over the next twelve months, we plan to continue to develop our website and implement our current business plan. We have taken the following steps towards the implementation of this plan. CONDUCTED MARKET RESEARCH From approximately February 2000 to approximately September 2000 we conducted research into the markets for Internet Phone Directory Databases by conducting focus studies. Based on our research, we decided to plan to sell our products and services to small businesses that want to become involved in Internet advertising, but lack the required knowledge to do so. RAISED CAPITAL We have raised $1,423,900 before offering expenses for our operations through the sale of a private placement of our securities. DEVELOPMENT OF A WEBSITE From approximately May 2000 to approximately August 2000, our management developed a website with access to a searchable database that contains the names, addresses and phone numbers of approximately 11 million businesses in the United States. REGISTERED DOMAIN NAME We have registered "Bizfinders.com" and "Communicate Now" USA.com with the U.S. Department of Commerce as our Internet domain names. DEVELOPMENT OF OUR BACK OFFICE INFRASTRUCTURE From approximately March 2000 through November 2000 we researched, designed and established our back office, the key components of which are: 41 1. OUR OFFICES: We have building space of approximately 2000 square feet for our operations area that includes a conference room, two offices, employee break room and 9 cubicle work areas that will be used for customer support purposes. We also have building space of approximately 700 square feet to house our executive office. 2. QUALITY ASSURANCE SERVER Through our agreement with Interliant, Inc. we have a server-based phone system through which our customer support staff will be able to modify our Internet display advertisements and bill for such modifications. 3. MAIN SERVER We have secured, through a lease agreement with Interliant, Inc., a server for the hosting of our business database. Software associated with the server operates the Bizfinders.com database and captures and tracks customer billing as well as commissions to our salespersons. II. Our Plan Of Operations Over The Next Twelve Months HIRE A SALES FORCE: o We will hire a sales force through the following methods: o Contacts of our management; o Classified advertising; and o If necessary, hire a staffing agency. TRAINING A SALES FORCE From approximately June 2000 to approximately November 2000, our training was handled through a consulting agreement with one individual. In December 2000 we hired Ms. Bernadette Pate as a full-time training person to train our sales personnel. Training will consist of two eight-hour sessions covering the following subjects: o How to build an Internet display advertisement through the personal computer furnished to each sales person; o How to operate the digital camera; and o Sales techniques DEPLOY OUR SALES FORCE INTO MAJOR METROPOLITAN AREAS We plan to deploy our sales force into the following geographic areas over the next twelve months with a specified number of salespersons as indicated below: Central Texas area including: Temple, Killeen and surrounding areas o January 2001 - We planned to have 8 sales representatives deployed to this area, which we have accomplished. 42 Houston, Texas Metropolitan Area o March 2001 - 15 sales representatives and 1 sales manager will be deployed to this area o April 2001 - an additional 15 sales representatives will be deployed to this area Beaumont - Port Arthur, Texas Area o May 2001 - 10 sales representatives will be deployed to this area Dallas/Fort Worth, Texas Metropolitan Area o June 2001 - 15 sales representatives and one sales manager will be deployed to this area o July 2001 - 15 additional sales representatives will be deployed to this area San Antonio/New Braunfels, Texas Area o September 2001 - 15 sales representatives and one sales manager will be deployed to this area o October 2001 - 10 additional sales representatives will be deployed to this area Lubbock, Texas Area o November 2001 - 8 sales representatives will be deployed to this area Austin/San Marcos, Texas Area o December 2001 - 15 sales representatives will be deployed to this area Our plans then are to deploy a total of 126 sales representatives and 3 sales managers in the various Texas metropolitan areas named above. The sales person will demonstrate the following advantages of our Internet display advertising: o Inexpensive cost, especially compared to yellow page advertising; o Quick production of Internet display advertisements, typically within Twenty-four hours; o Advertising made to customer specifications; and o Additional functions of print and brochure capability DEVELOPING CUSTOMER LEADS Our customer leads will be derived from our BizFinders database, prior business contacts, yellow pages and any other sources indicating small businesses with a business telephone listing. OUR PLANNED COMPENSATION TO OUR SALES FORCE Our sales force will be compensated through a combination of 35% commission, allowances and draws. A sales person will receive a base pay against commission of $1,250 per month. In addition, they will receive $250 per month for use towards transportation and Internet service. 43 BILLBOARD ADVERTISING CAMPAIGN Two to four weeks prior to deploying our sales force in a respective metropolitan area, Lamar Advertising and/or other similar companies will launch a billboard campaign in that particular area. RESEARCH AND DEVELOPMENT We do not expect to conduct any direct market research and development over the next twelve months. We have entered into a consulting agreement with Chance Research for the review and testing of our third party software to create a shopping car interactive Internet display advertisements and an interactive reservation/scheduling function that can be integrated as part of an Internet display advertisement. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains certain forward-looking statements that are subject to business and economic risks and uncertainties, and the Company's actual results could differ materially from those forward-looking statements. The following discussion regarding the financial statements of the Company should be read in conjunction with the financial statements and notes thereto. RESULTS OF OPERATIONS The Company was incorporated on January 31, 2000. The period from inception (January 31, 2000) through October 2000, the Company conducted market research, raised capital of $1,423,900 before offering costs through a private placement, and developed its back office infrastructure and website. As of December 31, 2000, the Company had total capital resources of $465,724 and working capital of $378,417. During the year 2000, the Company paid stock base compensation, primary to consultants of $847,657 for service pertaining to the Company start up and software development, legal fees of $120,881, software maintenance expenses of $88,340 and employee compensation of $287,479. Depreciation and amortization for the year 2000 was $23,102. In November 2000, the Company began selling its Internet display advertisements to small business in the Central Texas area, resulting in gross sales contracts for November 2000 of $2,195. Because the Company is selling an advertisement that has a one-year term, the Company accounts for sales by recognizing the gross sales amount pro-rata over the 12-month term. Using this methodology, the Company's realized revenue for November 2000 was $182. In December 2000, the Company's gross sales contracts were $10,197 and the realized revenue for November through December grew to $1046. As of December 31, 2000, the Company had a deferred revenue liability balance of $11,346 and accounts receivable related to gross sales contracts of $13,470. Accounts receivable included sale tax charges, which were netted against operating expenses in the period, ended December 31, 2000. SALES FOR TWO MONTHS ENDING FEBRUARY 2001 COMPARED TO SALES FOR TWO MONTHS ENDING DECEMBER 2000. In January 2001, the Company's gross sales contracts were $18,303 and its realized revenue was $2,573. In February 2001, the Company's gross sales contracts were $24,634 and its realized revenue was $4,600. The gross sales contracts for this two month period was $42,937 and the realized revenue for this two month period was $7,174, compared to November and December of 2000 which had gross sales contracts of $12,392 and realized revenue of $1,046. This sales growth trend is a result of increasing our sales force from 1 to 8 sales people. MATERIAL TRENDS OR EVENTS The Company's plan includes the growth of our sales force from its present level of 8 sales people to a total of 124 sales people by the end of the year; however there can be no assurance the Company will be successful in its efforts to grow its sales force. We anticipate total estimated capital expenditures of approximately $1,094,600 which would be required over the next twelve months in order to realize this planned growth of the sales force. The capital expenses are estimated as follows: o $70,000 for the purchase of four automobiles that will be used by sales management; o $219,000 for the purchase of 126 lap top computers and digital cameras; o $805,000 for our billboard advertising to brand our name Bizfinders.com and o $158,000 for the training of the sales force. We plan to satisfy these estimated capital expenditures by: o Using our cash on hand as of December 31, 2000 of $465,724; o Our sales revenue; o Controlling the pace of the growth of our sales force throughout the 12-month period beginning January 31, 2001 and o Compensating our sales force solely on a commission basis. LIQUIDITY AND CAPITAL RESOURCES The Company as of December 31, 2000 has limited cash capital resources of approximately $465,724. The Company believes that these funds along with expected revenues and realization of other current assets will be sufficient to cover working capital requirements for twelve months. Current assets of $486,294 and current liabilities of $108,307 result in working capital at December 31, 2000 of $377,987. Total assets of $805,437 and total liabilities of $118,468, result in a net worth at December 31, 2000 of $686,969. Deferred stock based consulting expense of $628,261 is expected to be recognized during fiscal year 2001. Our existing cash and future revenues from sales of our Internet Display advertisements may be insufficient to fund our operations and we may be forced to seek additional financing through financial institutions or other sources. The Company maintains a line of credit of $42,000 with Bank One, which is personally guaranteed by our President. At December 31, 2000 no amounts were outstanding, however in January the Company borrowed $42,000 against this line of credit. With the exception of this line of credit the Company has not secured any sources of funding that may be required. The ability of the company to implement its business plan is dependent upon continued sales revenue growth. Should revenue levels expected by the Company not be achieved, the Company would require additional financing during such period to support its operations and continued growth of the sales force. In this event the Company would seek sources of financing such as loans from officers and directors, loans from banks or other financial institutions, additional equity financings or debt offerings. The Company has made no arrangements or commitments for such financing and there can be no assurance the Company will be able to obtain such financing on satisfactory terms, if at all. MATERIAL SEASONAL ASPECTS The Company has not identified any seasonal aspects that would have a material effect on its ability to sell its Internet display advertisements. ITEM 18. DESCRIPTION OF PROPERTY We do not own any property nor do we have any plans to own any property in the future. We are currently leasing office suites 101,102 and 103 on a property located at 2015 Birdcreek Terrace, in the City of Temple, Bell County, Texas. Suite 101 contains approximately 705 square feet of space. Suites 102 and 103 contain approximately 1100 square feet of space. Suite 101 is being leased for a period of nine months commencing on July 15, 2000 and terminating on April 30, 2001. Rent is $600.00 per month. The renewable rate will be $630 per month. Suites 102 and 103 are being leased for a period of one year commencing on May 1, 2000 and terminating on April 30, 2001. Rent is $1151.25 per month. The renewable rate for the second year will be $1228 per month. The renewable rate thereafter will be $1304.75 per month. We are required to obtain general liability and damage insurance over the leased premises in the amount of $1,000,000. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities. ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On January 31, 2000 at our inception, we issued 10,000,000 shares of our Common stock to our president, David Hancock for services rendered in connection with our corporate formation. On January 31, 2000 at our inception, we issued 10,000,000 shares of our common stock to Damber Productions Corp., a Texas corporation that operates an oil and gas lease and exploration business in Mineral Wells, Texas. These shares were issued in exchange for services rendered in our corporate formation by the sole shareholder, officer and director of Damber Productions Corp., Amanda 44 Bitters. Specifically, Ms. Bitters formulated our business concept of operating an Internet display advertising business supported by operation of a business database search service. In addition, Ms. Bitters assisted in the preparation of our business plan. We have no continuing business arrangement with Damber Productions Corp., or Ms. Bitters. On November 15, 2000 we entered into an Employment Agreement with Sheila Llewellyn to perform the duties of Corporate Secretary and Office Manager. The term of the agreement is for one year and if after the term of agreement has expired, the parties continue to do business together as if the Agreement were still in effect, the Agreement shall be renewed and continue in effect until on of the parties notifies the other in writing of its termination. This one year Employment Agreement included a signing bonus of 5,000 shares of our restricted common stock and $1,000 cash. In accordance with the agreement, Ms. Llewellyn receives a base pay of $38,500 per year. On March 26, 2000, we entered into a Software Development Agreement with JCL Associates. We paid JCL Associates $200,000.00 to develop our proprietary point-of-sale software and administrative support software that will allow for the integration of sales, billing and payments. JCL Associates also agreed to provide us with technical services. The software development fee of $200,000.00 was payable in two installments. The first installment of $90,000.00 was paid at the time the agreement was executed and the second installment of $110,000.00 was paid upon completion of the software package on July 31, 2000. Mr. Randal Leblanc, is the President and a principle owner of JCL Associates. Mr. Leblanc holds 33,000 of 100,000 total outstanding shares of JCL Associates. On August 19, 2000, we nominated and elected Mr. Randal Leblanc to serve as our Director. In November 2000, JCL Associates received 50,000 shares of common stock in return for software enhancements. In consideration for his services as our Director, Mr. Leblanc may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as our Director. Because Mr. Leblanc is a principal of JCL Associates and one of our directors, a possible conflict of interest exists. On August 19, 2000, we nominated and elected Mr. William Elliott to serve as a Director. In consideration for his services as our Director, Mr. Elliott may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as our Director. On August 19, 2000, we nominated and elected Mr. John C.Winkler to serve as our Director. In consideration for his services as our Director, Mr. Winkler may exercise a non-transferable option to purchase up to 125,000 shares of our common stock at $1.00 per share while he serves as our Director. Other than the above transactions, we have not entered into any material transactions with any director, executive officer, nominee for director, beneficial owner of five percent or more of our common stock, or family members of such persons. Also, we have not had any transactions with any promoter. We are not a subsidiary of any company. Under the provisions of our Articles of Incorporation, our directors, Mr. William Elliott, Mr. Randal Leblanc and Mr. John Winkler, have the option to purchase 125,000 shares of our common stock at $1.00 per share. Directors Elliott, Leblanc and Winkler may exercise these options to purchase in whole or in part at any time as long as they remain members of our Board of Directors; however, to the date of this registration statement Directors Elliott, Leblanc or Winkler have not exercised this right. Directors Elliott, Leblanc and Winkler have not received any other form of cash or securities compensation. We have no plans to provide Directors Elliott, Leblanc and Winkler with any other form of cash or securities compensation. ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 45 There is no established public trading market for our securities. Management has not discussed market making with any market maker or broker dealer. No market exists for our securities and there is no assurance that a regular trading market will develop, or if developed will be sustained. A shareholder in all likelihood, therefore, will not be able to resell their securities should he or she desire to do so when eligible for public resales. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in any of our securities. We currently have no shares of preferred stock outstanding. There are 3,488,820 shares of our common stock held by non-affiliates and 19,510,000 shares of our common stock held by affiliates that Rule 144 of the Securities Act of 1933 defines as restricted securities. No shares have been sold pursuant to Rule 144 of the Securities Act of 1933 and no shares are eligible to be resold pursuant to Rule 144. We have agreed to register all of the shares held by our existing non-affiliate selling shareholders. We plan to issue common stock subject to an employee benefit plan. Options. 375,000 shares of our common equity are subject to outstanding options to purchase. 375,000 shares are issuable pursuant to three Director Agreements where each Director is entitled to exercise an option to purchase 125,000 shares of our common stock for one dollar per share while he is acting as our Director. The remainder of these outstanding options are based on annual bonus packages available to our two executive employees. These remaining options are renewable on an annual basis and vest only after a certain number of our products and services are sold. Penny Stock Considerations. Our Shares are "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 as equity securities with a price of less than $5.00. Our shares may be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or "accredited investor" must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to: o Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt; o Disclose commissions payable to the broker-dealer and its registered representatives and current bid and offer quotations for the securities; o Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value and information regarding the limited market in penny stocks. o Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account. Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling security holders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be adversely affected, with a corresponding decrease in the price of our securities. Our shares may someday be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities. Holders. As of the date of this registration, we had 90 holders of record of our common stock. We have one class of common stock outstanding. Dividends. We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payment of dividends will depend on our earnings and financial position and such other factors, as the Board of Directors deems relevant. ITEM 21. EXECUTIVE COMPENSATION We have entered into employment agreements with our employees and we have arrangements under which we are obligated to compensate our officers or employees in 46 the future. The following Executive Compensation Chart highlights the terms of compensation for our Executives. - ----------------------------- ------------------------------------------- -------------------------------------------------- Summary Annual Compensation Long Term Compensation Compensation Chart - ----------------------------- ------------------------------------------- -------------------------------------------------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- Name & Position Year Salary Bonus Other Restricted Options L/Tip All ($) ($) ($) Stock Awards ($) ($) Other - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- $120,000 David Hancock, 2000 Equal to Cell Phone 10 million None None None President/Director/CEO that paid and Laptop shares of to VP of Computer common stock S&M; No Bonus yet paid - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- Dana M. Ransom, 2000 $100,000 Based on Company Car, Based on Based on None None Jr., Sales* Cell Phone Sales * Sales* Vice President of and Laptop Sales & Marketing** Computer - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- Dennis Bash, 2000 $100,000 Based on Cell Phone Based on Based on None None Vice President of Sales* and Laptop Sales * Sales* Operations & Computer Technology - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- William Elliott, 2000 NONE NONE NONE NONE Option to NONE NONE Director purchase 125,000 shares of common stock at a price of $1.00 per share*** - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- Randal LeBlanc, 2000 NONE NONE NONE NONE Option to NONE NONE Director purchase 125,000 shares of common stock at a price of $1.00 per share*** - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - ----------------------------- ------------------------------------------- -------------------------------------------------- Summary Annual Compensation Long Term Compensation Compensation Chart - ----------------------------- ------------------------------------------- -------------------------------------------------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- Name & Position Year Salary Bonus Other Restricted Options L/Tip All ($) ($) ($) Stock Awards ($) ($) Other - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- John C. Winkler, 2000 NONE NONE NONE NONE Option to NONE NONE Director purchase 125,000 shares of common stock at a price of $1.00 per share*** - -------------------- -------- --------------- ------------ -------------- -------------- ------------- ---------- ---------- * Mr. Bash and Mr. Ransom each received a cash bonus of $172.50 per the terms of their employment agreement. Please see immediately below for details on each Executive's compensation plan as applicable. ** Our employment agreement with Mr. Ransom provides for a term of employment from March 1, 2000 to March 1, 2001. We have not renewed Mr. Ransom's employment agreement. Mr. Ransom is no longer employed with us in any capacity. *** There are no expiration dates or vesting periods for the options granted to our Directors Elliott, LeBlanc and Winkler as long as they are members of our Board of Directors. The options granted to them may be exercised in whole or in part at any time; however, to the date of this registration statement none of these Directors have exercised this right. On January 31, 2000, Mr. Hancock received 10,000,000 shares of our common stock for services rendered in our corporate formation. Our March 1, 2000 employment agreement with Mr. David Hancock provides for a term of one-year as our President and Chief Executive Officer, commencing on March 1, 2000. The agreement provides that if after the term of the agreement has expired, the parties continue to do business together as if the agreement were still in effect, the agreement shall be renewed and continue in effect until one of the parties notifies the other in writing. As of the date of this registration statement, Mr. Hancock is our President and Chief Executive Officer. Accordingly, his employment agreement has been renewed and continues to be in effect. Mr. Hancock will receive a base pay of $120,000.00 per year, exclusive of bonuses, benefits and other compensation, with the exception that he will receive additional cash compensation in the form of a base salary which is at a minimum 20% greater than the base salary of the Vice President of Sales and Marketing. We also offer our president an annual cash bonus that is equal to the cash bonus paid to the Vice President of Sales and Marketing. As of the date of this registration statement, our president has not received a bonus. Our March 1, 2000 employment agreement with Mr. Ransom provides for a one-year term of his employment as our Vice President, commencing on March 1, 2000. The agreement provides that: - If, after the term of the agreement has expired, the parties continue to do business together as if the agreement were still in effect, the agreement shall be renewed and continue in effect until one of the parties notifies the other in writing. - Mr. Ransom will receive a base pay of $100,000.00 per year, exclusive of bonuses, benefits and other compensation. - Mr. Ransom will be supplied with a company car. - Mr. Ransom will receive a yearly bonus, paid in December based on the number of sales as follows: a) If a minimum of 36,100 customers are sold: a. $125,000 and b. 25,000 shares of restricted stock and c. an option to purchase 125,000 shares at a price of $1.00 per share during employment. b) If fewer than 36,100 customers are sold, then a bonus of $3.45 per customer sold will be awarded. c) If more than 36,100 customers are sold, a. $125,000.00 and b. an additional $2.00 per share bonus for every customer sold above 36,100 and c. one share of restricted stock per customer for each above 36,100. 47 Mr. Ransom received a cash bonus of $172.50 per the terms of his employment agreement; however, he will receive no further bonus because he is no longer employed with us in any capacity. Our March 2, 2000 employment agreement with Mr. Bash provides for a one-year term of his employment as our Vice President, commencing on March 15, 2000. The agreement provides that: - If, after the term of the agreement has expired, the parties continue to do business together as if the agreement were still in effect, the Agreement shall be renewed and continue in effect until one of the parties notifies the other in writing. - Mr. Bash will receive a base pay of $100,000.00 per year, exclusive of bonuses, benefits and other compensation. - Mr. Bash will receive a yearly bonus paid in December of each year based upon the number of sales as follows: (a) the bonus will be $125,000 provided business plan objectives of a minimum of 36,100 sales to customers and, in addition, Mr. Bash will receive 25,000 shares of restricted stock and a stock option to purchase an additional 125,000 shares of stock at a price of $1.00 per shares; and (b) in the event that 36,100 sales have not been made due to the companies inability to start selling in June 2000, the December 2000 bonus will be paid based on $3.45 per customer sold. As of the date of this registration statement, Mr. Bash has received a bonus of $172.50 per the terms of his employment agreement. Our August 19, 2000 agreement with Mr. William Elliott provides for Mr. Elliott to serve as our Director until the next annual meeting of the shareholders, that must take place in accordance with our corporate resolution on the second Tuesday of April, 2001 or at a time within 60 days of this date if appropriate resolution of the Board of Directors is made. Mr. Elliott has been granted a stock option that entitles him to purchase from the Company 125,000 shares of the Company's common stock for a purchase price of $1.00 per share. There are no specific expiration dates or vesting periods for the options. Mr. Elliott may exercise this right to purchase in whole or in part at any time as long as he is a member of the Company's Board of Directors; however, to the date of this registration statement, Mr. Elliott has not exercised this right. Mr. Elliott has not received any other form of cash or securities compensation from us. We have no plans to provide Mr. Elliott with any other form of cash or securities compensation. Our August 19, 2000 agreement with Mr. Randal Leblanc provides for Mr. Leblanc to serve as our Director until the next annual meeting of the shareholders, that must take place in accordance with our corporate resolution on the second Tuesday of April, 2001 or at a time within 60 days of this date if appropriate resolution of the Board of Directors is made. Mr. Leblanc has been granted a stock option that entitles him to purchase from the Company 125,000 shares of the Company's common stock for a purchase price of $1.00 per share. There are no specific expiration dates or vesting periods for the options. Mr. Leblanc may exercise this right to purchase in whole or in part at any time as long as he is a member of the Company's Board of Directors; however, to the date of this registration statement, Mr. Leblanc has not exercised this right. Mr. Leblanc has not received any other form of cash or securities compensation from us. We have no plans to provide Mr. Leblanc with any other form of cash or securities compensation. Our August 19, 2000 agreement with Mr. John Winkler provides for Mr. Winkler to serve as our Director until the next annual meeting of the shareholders, that must take place in accordance with our corporate resolution on the second Tuesday of April, 2001 or at a time within 60 days of this date if appropriate resolution of the Board of Directors is made. Mr. Winkler has been granted a stock option that entitles him to purchase from the Company 125,000 shares of the Company's common stock for a purchase price of $1.00 per share. There are no specific expiration dates or vesting periods for the options. Mr. Winkler may exercise this right to purchase in whole or in part at any time as long as he is a member of the Company's Board of Directors; however, to the date of this registration statement, Mr. Winkler has not exercised this right. Mr. Winkler has not received any other form of cash or securities compensation from us. We have no plans to provide Mr. Winkler with any other form of cash or securities compensation. ITEM 22. FINANCIAL STATEMENTS Statements included in this prospectus that do not relate to present or historical conditions are "forward-looking statements." We may make future forward-looking statements, which may be included in documents that we file with the Commission other than this registration statement. Forward-looking statements involve risks and uncertainties that may differ materially from actual results, and may relate to our plans, strategies, objectives, expectations, intentions and adequacy of resources. 48 Communicate Now.com, Inc. (A Development Stage Company) Financial Statements December 31, 2000 Communicate Now.Com, Inc. (A Development Stage Company) Contents Page Independent Auditors' Report 1 Balance Sheet at December 31, 2000 2 Statement of Operations from January 31, 2000 (Inception) to December 31, 2000 3 Statement of Changes in Stockholders' Equity from January 31, 2000 (Inception) to December 31, 2000 4 Statement of Cash Flows from January 31, 2000 (Inception) to December 31, 2000 5 Notes to Financial Statements 6 - 14 Independent Auditors' Report To the Board of Directors of: Communicate Now.Com, Inc. (A Development Stage Company) We have audited the accompanying balance sheet of Communicate Now.Com, Inc. (a development stage company) as of December 31, 2000 and the related statements of operations, changes in stockholders' equity and cash flows from January 31, 2000 (inception) to December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Communicate Now.Com, Inc. (a development stage company) as of December 31, 2000, and the results of its operations and its cash flows from January 31, 2000 (inception) to December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company's operating losses of $1,678,590 and need for additional cash to fund operations over the next year raise substantial doubt about its ability to continue as a going concern. Management's Plan in regards to these matters is also described in Note 11. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. SALBERG & COMPANY, P.A. Boca Raton, Florida February 7, 2001 Communicate Now.Com, Inc. (A Development Stage Company) Balance Sheet December 31, 2000 Assets Current Assets Cash and cash equivalents $ 465,724 Accounts receivable 13,470 Employee advances 6,100 Prepaid expenses 1,000 ---------------- Total Current Assets 486,294 ---------------- Property and Equipment, net 130,254 ---------------- Other Assets Software development costs, net 188,889 ---------------- Total Other Assets 188,889 ---------------- Total Assets $ 805,437 ================ Liabilities and Stockholders' Equity Current Liabilities Note payable - current portion $ 6,514 Note payable to stockholder 17,000 Accounts payable and accrued liabilities 73,447 Deferred revenue 11,346 ---------------- Total Current Liabilities 108,307 ---------------- Long Term Liabilities Note payable - net of current portion 10,161 ---------------- Total Liabilities 118,468 ---------------- Stockholders' Equity Common stock, $0.0001 par value, 100,000,000 shares authorized, 22,998,820 shares issued and outstanding 2,300 Additional paid-in capital 2,991,520 Deficit accumulated during development stage (1,678,590) ---------------- 1,315,230 Less deferred consulting expense (628,261) ---------------- Total Stockholders' Equity 686,969 ---------------- Total Liabilities and Stockholders' Equity $ 805,437 ================ 3 See accompanying notes to financial statements. Communicate Now.Com, Inc. (A Development Stage Company) Statement of Operations From January 31, 2000 (Inception) to December 31, 2000 Revenues $ 1,046 Operating Expenses Compensation 287,47 Consulting 854,657 Depreciation and amortization 23,102 General and administrative 302,012 Legal fees 120,881 Software maintenance 88,340 ---------------- ---------------- Total Operating Expenses 1,676,471 ---------------- Loss from Operations (1,675,425) Other Expense Interest expense 3,165 ---------------- Net Loss $ (1,678,590) ================ ================ Net loss per share - basic and diluted $ (0.08) ================ Weighted average number of shares outstanding during the period - basic and diluted 20,710,276 ================ Communicate Now.Com, Inc. (A Development Stage Company) Statement of Changes in Stockholders' Equity from January 31, 2000 (Inception) to December 31, 2000 Deficit Accumulated Additional During Deferred Common Stock Paid-In Development Consulting ------------------------- Shares Amount Capital Stage Expense Total ---------- ----------- ----------- ------------ ------------ ----------- Common stock issued for services to founders 20,000,000 $ 2,000 $ - $ - $ - $ 2,000 Common stock issued for cash 1,423,900 143 1,423,757 - - 1,423,900 Common stock issued for services 1,574,920 157 1,574,763 - (628,261) 946,659 Offering costs - - (7,000) - - (7,000) Net loss from January 31, 2000 (inception) to December 31, 2000 - - - (1,678,590) - (1,678,590) ----------- ----------- ----------- ------------ ----------- ----------- Balance, December 31, 2000 22,998,820 $ 2,300 $ 2,991,520 $ (1,678,590) $ (628,261) $ 686,969 =========== =========== =========== ============ =========== =========== 4 See accompanying notes to financial statements. Communicate Now.Com, Inc. (A Development Stage Company) Statement of Cash Flows from January 31, 2000 (Inception) to December 31, 2000 Cash flows from operating activities Net loss $ (1,678,590) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 23,102 Stock issued for services 948,659 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable (13,470) Employee advances (6,100) Prepaid expenses (1,000) Increase (decrease) in: Accounts payable and accrued liabilities 73,447 Deferred revenue 11,346 ------------------ Net cash (used in) operating activities (642,606) ------------------ Cash flows from investing activities Purchase of property and equipment (125,570) Payment of software development costs (200,000) ------------------ Net cash (used in) investing activities (325,570) ------------------ Cash flows from financing activities Borrowings from bank 42,000 Repayment of debt to bank (42,000) Borrowing from stockholder 35,000 Repayment of debt to stockholder (18,000) Proceeds from sale of common stock 1,423,900 Offering costs (7,000) ------------------ Net cash provided by financing activities 1,433,900 ------------------ Net increase in cash 465,724 Cash and cash equivalents at beginning of period - ------------------ Cash and cash equivalents at end of period $ 465,724 ================== Cash paid during the year for: Interest $ 3,165 ================== 5 See accompanying notes to financial statements. Communicate Now.Com, Inc. (A Development Stage Company) Notes to Financial Statements December 31, 2000 Note 1 Summary of Significant Accounting Policies and Organization (A) Description of Business and Summary of Significant Accounting Policies Communicate Now.Com, Inc. (the "Company") was incorporated on January 31, 2000 under the laws of the State of Delaware and has elected a fiscal year end of December 31. The Company is in the development stage and operates a website, www.bizfinders.com, containing a business information database consisting of names, addresses and phone numbers of approximately 11 million U.S. businesses. Visitors to this website may use a search engine to locate businesses. The website became operational on November 1, 2000. Revenue is derived from Internet display advertisements, that appear on the website, which are developed at point-of-sale visits by the Company's sale representative to customer sites. Activities during the development stage include raising capital, development of the Company's website, technology and infrastructure, and the implementation of the Company's business plan. (B) Use of Estimates In preparing financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results may differ from these estimates. (C) Cash Equivalents For the purpose of the cash flow statement, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. (D) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided using the straight-line method over the estimated useful life's of the assets of five to seven years. (E) Software Development Costs In accordance with EITF Issue No. 00-2, the Company accounts for its website advertisement development software in accordance with Statement of Position No. 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires the expensing of all costs of the preliminary project stage and the training and application maintenance stage and the capitalization of all internal or external direct costs incurred during the application development stage. The Company amortizes the capitalized cost of software developed or obtained for internal use over an estimated life of three years. Internal use software license fees paid to third parties are charged to operations as incurred. F-6 (F) Long-Lived Assets During 1995, Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" ("SFAS 121"), was issued. SFAS 121 requires the Company to review long-lived assets and certain identifiable assets related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the non-discounted future cash flows of the enterprise are less than their carrying amount, their carrying amounts are reduced to fair value and an impairment loss is recognized. The adoption of this pronouncement did not have a significant impact on the Company's financial statements for the period from January 31, 2000 (inception) to December 31, 2000. (G) Revenue Recognition The Company records advertisement sales at the time of the contract as accounts receivable and a deferred revenue liability. Revenues are recognized over the one-year contract period as earned. (H) Advertising In accordance with Accounting Standards Executive Committee Statement of Position 93-7, ("SOP 93-7") costs incurred for producing and communicating advertising of the Company, are charged to operations as incurred. Advertising costs for the period ended December 31, 2000 was $31,652. (I) Stock-Based Compensation The Company accounts for stock options issued to employees in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation cost is measured on the date of grant as the excess of the current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant. The Company adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," which permits entities to provide pro forma net income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method defined in SFAS No. 123 had been applied. The Company accounts for stock options issued to non-employees for goods or services in accordance with SFAS 123. The Company accounts for stock issued for goods or services at the stock's fair market value on the grant dates. F-7 (J) Income Taxes The Company accounts for income taxes under the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period which includes the enactment date. (K) Net Loss Per Common Share Basic net income (loss) per common share (Basic EPS) excludes dilution and is computed by dividing net income (loss) available to common stockholder by the weighted-average number of common shares outstanding for the period. Diluted net income per share (Diluted EPS) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The assumed exercise of common stock equivalents was not utilized since the effect was antidilutive. At December 31, 2000, there were 375,000 common stock options outstanding, which may dilute future earnings per share. (L) Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 109, "Disclosures about Fair Value of Financial Instruments", requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of the Company's short-term financial instruments, including accounts payable and accrued liabilities, and notes payable, approximate fair value due to the relatively short period to maturity for these instruments. The carrying value of the Company's long-term debt approximates fair value because the interest rate on this instrument approximates the Company's borrowing rate at December 31, 2000. F-8 (M) New Accounting Pronouncements The Financial Accounting Standards Board has recently issued one new accounting pronouncement. Statement No. 133 as amended by Statement No. 137 and 138, "Accounting for Derivative Instruments and Hedging Activities" established accounting and reporting standards for derivative instruments and related contracts and hedging activities. This statement is effective for all fiscal quarters and fiscal years beginning after June 15, 2000. The adoption of this pronouncement did not have a material effect on the Company's financial position or results of operations. Note 2 Property and Equipment Property and equipment consists of the following at December 31, 2000: Automobile $ 28,557 Machinery and equipment 95,761 Furniture and fixtures 17,927 ------------ ------------ 142,245 Less: Accumulated depreciation (11,991) ------------ $ 130,254 ============ Depreciation was $11,991 for the period from January 31, 2000 (inception) to December 31, 2000. Note 3 Software Development Costs Pursuant to SOP 98-1, as of December 31, 2000, the Company capitalized $200,000 in software application development costs paid to a third party contractor to develop their website advertisement development and maintenance software (See Notes 1(A), 1(F) and 5(D)(iii)). The Company placed the software in service on November 1, 2000 and began amortizing it over three years at that date. Amortization for the period ended December 31, 2000 was $11,111. During the period from January 31, 2000 (inception) to December 31, 2000, the Company expensed $50,000 in database license fees and $6,207 of other software and product development costs. Note 4 Notes Payable Notes payable to unrelated parties consists of the following at December 31, 2000: Note payable due in monthly installments of $697, including interest at $ 16,675 13.48%, due May 2003, secured by vehicle Less current portion (6,514) ----------- $ 10,161 =========== The note payable to stockholder of $17,000 is at 6.5%, due by October 16, 2001 and unsecured. F-9 The Company maintains a $42,000 line of credit with a bank, interest at prime plus 2% and due on demand. This line is secured by all present and future equipment of the Company, right of offset against the Company's bank account and is guaranteed by the principal stockholder. At December 31, 2000 no amounts were outstanding. Subsequent to year-end, during January 2001 the Company borrowed $42,000 against this line. Long-term debt maturities are as follows: Year ended December 31, 2000: 2001 $ 23,514 2002 7,448 2003 2,713 ---------------- ---------------- $ 33,675 ================ Note 5 Commitments and Contingencies (A) Leases The Company currently leases office space under an Operating Lease Agreement, which started May 1, 2000 and expires April 30, 2001. Rent under this lease is $1,228 per month. On July 15, 2000, the Company leased additional space in the same office building under a new lease at $600 per month. This lease also expires April 30, 2001. Total rent expense under the office leases for the period ended December 31, 2000, was $13,661. Future minimum lease payments under the operating lease are approximately $7,312 in the year 2001. (B) Employment Agreements In March 2000, the Company entered into three one-year employment agreements to pay two employees a base salary of $100,000 and the third employee $120,000. The two employees will also receive a performance based bonus consisting of $125,000, 25,000 shares of restricted stock and stock options to purchase 25,000 shares at $1.00 per share. If the performance bonus objectives are not met, a second tier bonus will pay each employee $3.45 for each customer sale up to 36,100 customers. One employee will receive an additional $2.00 and one restricted common share for each customer sale made over 36,100 if the original bonus objectives are met. As of December 31, 2000, the performance bonuses have not been paid. During December 2000 the Company entered into two one-year employment agreements with salaries of $38,500 and $52,500 and sign-on bonuses of 5,000 common shares and $1,000 each. F-10 (C) Advertising and Promotional Services Agreements On June 20, 2000 (the "effective date") the Company entered into two agreements (the "Agreements") with service providers (the "Service Providers") to receive advertising and promotional services as stipulated in the Agreements. Through November 2000, no services were performed by the service providers and no payments were made by the Company. In November 2000 these agreements were cancelled and both parties released each other from any obligations or liabilities. (D) Other Agreements (i) A legal services agreement entered into in June 2000 requiring payment of $10,000 and 100,000 shares of common stock for services rendered relating to the Company filing a proposed SB-2 with the Securities and Exchange Commission. As of the date of the accompanying audit report, such services were substantially complete and the stock was issued. (ii) A database license fee of $75,000 per year, payable in twelve monthly installments of $6,250, commencing May 2000 and expiring April 2001. (See Notes 1(E) and 3). As of December 31, 2000 total license fees charged to operations was $50,000. (iii) A software development fee of $200,000 paid as of December 31, 2000 and reflected as software development costs at $188,889 net of accumulated amortization on the balance sheet. (See Notes 1(E) and 3). The agreement also commits the Company to minimum maintenance charges of $3,200 per month from July 2000 through the expiration of the agreement on May 25, 2001. All software programs and code developed under this agreement, remain the property of the Company. (See Note 8) (iv) A one-year network service agreement entered into in July 2000 with a onetime fee of approximately $4,250 and a monthly fee of approximately $6,640. Total expense as of December 31, 2000 was $47,608. Note 6 Stockholders' Equity (A) Stock Issuances The Company issued 20,000,000 shares of common stock to its founders on January 31, 2000 in exchange for services valued at $2,000. On February 23, 2000, the Company issued a private placement memorandum, as amended, pursuant to Regulation D, Rule 506, offering up to 11,000,000 shares of its common stock at $1 per share or a maximum of $11,000,000. Through December 31, 2000 the Company issued 1,423,900 shares for cash of $1,423,900 and issued 1,574,920 shares for services performed and to be performed, valued at $1,574,920 based on the cash offering price. Deferred consulting expense of $628,261 was deducted from equity based on services not yet performed. Deferred offering costs of $7,000 were charged to additional paid-in capital as of December 31, 2000. F-11 (B) Stock Options In August 2000 the Company granted a total of 375,000 common stock options to three directors at an exercise price of $1.00 per share. The options vest immediately, have no definitive expiration date and may be exercised only as long as the individual is a member of the Board of Directors. In accordance with SFAS 123, for options issued to employees, the Company applies APB Opinion No. 25 and related interpretations. Accordingly, no compensation cost has been recognized for options issued as of December 31, 2000. Had compensation cost for the Company's options issued to directors been determined on the fair value at the grant dates consistent with SFAS 123, the Company's net loss for the period ended December 31, 2000 would have been increased to the pro-forma amounts indicated below. Net loss As reported $ (1,678,590) Pro forma $ (1,742,340) Net loss per share - basic and diluted As reported $ (0.08) Pro forma $ (0.08) The effect of applying Statement No. 123 is not likely to be representative of the effects on reported net income (loss) for future years due to, among other things, the effects of vesting. For financial statement disclosure purposes, the fair market value of each stock option granted to directors was estimated on the date of grant using the Black-Scholes Model in accordance with SFAS 123 using the following weighted-average assumptions: fair market value of common stock $1.00, expected dividend yield 0%, risk-free interest rate of 6.17%, volatility 0% and expected term of three years. A summary of the options issued as of December 31, 2000 and changes during the year is presented below: Weighted Average Number of Options Exercise Price -------------------- ------------------------- Stock Options Balance at beginning of period - $ - Granted 375,000 $ 1.00 Exercised - $ - Forfeited - $ - ------------------------- -------------------- Balance at end of period 375,000 $ 1.00 ==================== ========================= Options exercisable at end of period 375,000 $ 1.00 Weighted average fair value of options granted during the period $ 0.17 ========================= The following table summarizes information about stock options outstanding at December 31, 2000: Options Outstanding Options Exercisable ------------------------------------------------------------------------------ ------------------------------- Number Weighted Weighted Exercisable Weighted Range of Number Average Average at Average Exercise Outstanding at Remaining Exercise December 31, Exercise Price December 31, 2000 Contractual Life Price 2000 Price ------------ ------------------ ----------------- ------------ --------------- ------------ ----------------- $ 1.00 375,000 N/A 1.00 375,000 1.00 ----------------- ------------------ ----------------- ------------ --------------- ------------ 375,000 N/A $ 1.00 375,000 $ 1.00 ================== ================= ============ =============== ============ F-12 (C) Deferred Consulting Expense The Company enters into various short-term consulting agreements, generally for three months, whereby cash and/or capital stock is paid. The expenses incurred under consulting agreements are recognized over the terms of the agreements. Capital stock issued for services under the consulting agreements is valued at its fair market value on the grant dates, which generally is the date of the agreement (see Note 5). At December 31, 2000, $628,261 of stock based consulting expense was deferred to be recognized in fiscal year 2001. Note 7 Income Taxes There was no income tax expense for the period ended December 31, 2000 due to the Company's net losses. The Company's tax expense differs from the "expected" tax expense for the period ended December 31, 2000, (computed by applying the Federal Corporate tax rate of 34% to loss before taxes), as follows: Computed "expected" tax expense (benefit) $ (570,721) Effect of net operating losses 570,721 -------------- $ - ============== The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2000 are as follows: Deferred tax assets: Net operating loss carryforward 570,721 -------------- Total gross deferred tax assets 570,721 Less valuation allowance (570,721) -------------- Net deferred tax assets $ - ============== The Company has a net operating loss carryforward of approximately $1,678,590 available to offset future taxable income through 2020. There was no valuation allowance at January 31, 2000 (inception). The net change in valuation allowance during the period ended December 31, 2000 was an increase of $570,721. F-13 Note 8 Related Parties During 2000, the Company paid $26,500 in cash and 600,000 common shares, as consulting fees to a party related to a principal stockholder. A director of the Company is also a principal stockholder of a vendor that developed the Company's software and provides software maintenance services to the Company. The Company appointed him director on December 1, 2000, effective August 19, 2000. Since December 1, 2000 the Company incurred $38,340 in software maintenance expense. Since August 2000 the Company incurred $88,340 in software maintenance expense of which $50,000 consisted of 50,000 shares of common stock valued at $1.00 per share, the cash-offering price. (See Notes 5 and 6) Note 9 Concentrations There were no customers that provided more than 10% of the Company's revenues. The Company obtains its business database from one supplier. Management believes there are several suppliers of such databases should the need arise. Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. At December 31, 2000, the Company had $225,000 of cash in excess of Federal insurance limits. In assessing its risk, the Company has policies whereby its banks only with reputable financial institutions. Note 10 Segment Information The Company has a single reportable segment as discussed in Note 1(A). All revenues as of December 31, 2000 are derived from customers in the United States of America. Note 11 Going Concern As reflected in the accompanying financial statements, the Company is a development stage company with nominal revenues and losses of $1,678,590 through December 31, 2000. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company has begun operations and generated sales and related revenues starting November 1, 2000. The Company is currently preparing a Securities and Exchange Commission Form SB-2 to register the selling security holders outstanding common stock in order to become quoted on the OTC Bulletin Board. Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. F-14 ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The accounting firm of Salberg Company, P.A., Certified Public Accountants, audited our Financial Statements for the period from January 31, 2000 (inception) to October 31, 2000. Prior to this, the accounting firm of Weinberg & Company, PA, Certified Public Accountants, audited our Financial Statements for the period from January 31, 2000 (inception) to June 30, 2000. Weinberg & Company P.A. was dismissed effective November 16, 2000. Weinberg & Company's report contained a going concern opinion due to the development stage nature of the company. Our board of directors approved the change in accountants. Since inception, we have had no disagreements with our former and new accountants. DEALER PROSPECTUS DELIVERY OBLIGATION Until ninety days after the effectiveness of the registration statement of which this prospectus is a part, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. PART II - INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS Our Bylaws provide that we may indemnify any persons who: (a) were or are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as an officer, director, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, for criminal proceedings, had no reasonable cause to believe that his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 51 (b) were or are, or are threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred y him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of nay claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that despite he adjudication of liability but in view of all the circumstances of the case such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper. Any indemnification under subsections (a) and (b) of this section, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Section 145 of the Delaware General Corporation Law provides that a Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director actually and reasonably incurred. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. INDEMNIFICATION AGREEMENTS We have agreed to indemnify and hold harmless all of our Directors, Officers, employees, consultants, sales placement agents, and fiduciaries, (the "indemnified party"), by entering into indemnification agreements with such persons, to the fullest extent permitted by applicable law. The agreement includes indemnification against expenses, including reasonable attorneys' fees, judgments, penalties, fines, and mounts paid in settlement actually and reasonably incurred by the Indemnified Party in connection with any civil or criminal action or administrative proceeding arising out of the Indemnified Party's performance of their duties in regard to all aspects arising from this Offering of our securities. Our bylaws and Certificate of Incorporation provide 52 a blanket indemnification that we shall indemnify to the fullest extent under the law our directors and officers against certain liabilities incurred with respect to their service in such capacities. In addition, our Certificate of Incorporation provides that the personal liability of directors and officers to us and our shareholders for monetary damages will be limited. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table is an itemization of all expenses, without consideration to future contingencies, incurred or expected to be incurred by our Corporation in connection with the issuance and distribution of the securities being offered by this prospectus. Items marked with an asterisk (*) represent estimated expenses. We have agreed to pay all the costs and expenses of this offering. Selling security holders will pay no offering expenses. ITEM EXPENSE ---- ------ SEC Registration Fee $7.57 Legal Fees and Expenses $10,000 Accounting Fees and Expenses $12,705 Miscellaneous* $ 7,400 ============================================= Total* $30,112.57 * Estimated Figure ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES Between February 23, 2000 and December 8, 2000, we sold 1,423,900 shares of our common stock to 71 accredited investors at a price of $1.00 per share. As of the date of this prospectus, we have raised proceeds of $1,423,900. We relied upon the exemption from registration provided by Section 4(2) and Rule 506 of Regulation D of the Act, as amended. We believed this exemption is available because these issuances were transactions not involving a public offering and were made only to accredited investors. There was no general solicitation or advertising used to offer our shares; we had a prior relationship with each investor. Each investor had the knowledge and experience in financial and business matters to evaluate the merits and risks of this prospective investment and therefore was either accredited or sufficiently sophisticated to undertake Such an investment. All of the accredited investors had access to our documents at our business offices in Temple, Texas. 53 On January 31, 2000, we issued 10,000,000 shares to David Hancock and 10,000,000 to Damber Production, Inc. for services rendered in the course of our corporate formation. We relied upon the exemption from registration provided by Section 4(2) of the Act. Mr. Hancock's position as our president and a director provides him with a clear opportunity for access and right to all relevant information regarding our business. We relied upon the exemption from registration provided by Section 4(2) of the Act. On June 28, 2000 we issued 100,000 shares of our common stock to Brenda Lee Hamilton, Esq. in exchange for legal services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On July 6, 2000, we issued 2,205 shares to Tom Ozgo for brokerage services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On July 24, 2000, we issued 11,000 shares to William Best for consulting services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On August 1, 2000, we issued 1,715 shares to Tom Ozgo for brokerage services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On November 13, 2000 we issued 50,000 shares to JCL Associates for services rendered in connection with software development. . We relied upon the exemption from registration provided by Section 4(2) of the Act. On November 13, 2000 we issued 600,000 shares to Charles Bitters for consulting services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On November 13, 2000 we issued 150,000 shares to Charlie Cleveland for consulting services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On November 15, 2000 we issued 5,000 shares to Sheila Llewellyn as an employee sign-on bonus. We relied upon the exemption from registration provided by Section 4(2) of the Act. On November 16, 2000 we issued 150,000 shares to Richard Michael for consulting services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On December 4, 2000 we issued 125,000 shares to Charlie Cleveland for consulting services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. On December 5, 2000 we issued 5,000 shares to Bernadette Pate as an employee sign-on bonus. We relied upon the exemption from registration provided by Section 4(2) of the Act. On December 5, 2000 we issued 250,000 shares to Chance Research Corporation for services rendered. We relied upon the exemption from registration provided by Section 4(2) of the Act. The aforementioned securities that were issued for services and as an employee-signing bonus were issued under the exemption from registration provided by Section 4(2) of the Act, as amended. We believed this exemption is available because these issuances were transactions not involving a public offering. There was no general solicitation or advertising used to offer our shares; each investor had a prior relationship with the Company. Each investor had the knowledge and experience in financial and business matters to evaluate the merits and risks of this prospective investment and therefore was either accredited or sufficiently sophisticated to undertake such an investment. 54 ITEM 27. EXHIBITS - --------------------------- ---------------------------------------------------- EXHIBIT NUMBER EXHIBIT DESCRIPTION - --------------------------- ---------------------------------------------------- 3.1 Articles of Incorporation ** - --------------------------- ---------------------------------------------------- 3.2 Bylaws ** - --------------------------- ---------------------------------------------------- 5 Legal Opinion of Hamilton, Lehrer & Dargan, P.A. - --------------------------- ---------------------------------------------------- 8 Consent of Salberg & Company, P.A.** - ---------------------------- --------------------------------------------------- 10.1 Database Licensing Agreement between COMMUNICATE NOW.COM, INC. and Acxiom Corporation. ** - ---------------------------- --------------------------------------------------- 10.2 Software Development Agreement between COMMUNICATE NOW.COM, INC. and JCL Associates. ** - ---------------------------- --------------------------------------------------- 10.3 Networking Agreement between COMMUNICATE NOW.COM, INC. and Interliant, Inc. ** - ---------------------------- --------------------------------------------------- 10.4 Website Mapping Licensing Agreement between COMMUNICATE NOW.COM, INC. and ESRI. ** - ---------------------------- --------------------------------------------------- 10.5 Billing Agreement between COMMUNICATE NOW.COM, INC. and ExpressBill, Inc. ** - ---------------------------- --------------------------------------------------- 10.6 Leasing Agreement between COMMUNICATE NOW.COM, INC. and 3513 L.C. ** - ---------------------------- --------------------------------------------------- 10.7 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Chance Research Corporation.** - ---------------------------- --------------------------------------------------- 10.8 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Johnny Carruth** 55 - ---------------------------- --------------------------------------------------- 10.9 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Richard Michaels** - ---------------------------- --------------------------------------------------- 10.10 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Bill Best** - ---------------------------- --------------------------------------------------- 10.11 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Charles Cleveland.** - ---------------------------- --------------------------------------------------- 10.12 Consulting Agreement between COMMUNICATE NOW.COM, INC. and Charles Bitters** - ---------------------------- --------------------------------------------------- 10.13 Employment Agreement between Dennis J. Bash and COMMUNICATE NOW.COM, INC.** - ---------------------------- --------------------------------------------------- 10.14 Employment Agreement between David Hancock and COMMUNICATE NOW.COM, INC.** - ---------------------------- --------------------------------------------------- 10.15 Employment Agreement between Bernadette Pate and COMMUNICATE NOW.COM, INC.** - ---------------------------- --------------------------------------------------- 10.16 Employment Agreement between Sheila Llewellyn and COMMUNICATE NOW.COM, INC.** - ---------------------------- --------------------------------------------------- 10.17 The Lamar Companies Bulletin Contract with Mel Ransom** - ---------------------------- --------------------------------------------------- 10.18 The Lamar Companies Poster or Poster Paper Contract with Mel Ransom** - ---------------------------- --------------------------------------------------- 10.19 The Lamar Companies Poster or Poster Paper Contract with Mel Ransom ** - ---------------------------- --------------------------------------------------- 10.20 Director letter for Bill Elliot** - ---------------------------- --------------------------------------------------- 10.21 Director letter for Jackie Winkler** - ---------------------------- --------------------------------------------------- 10.22 Director letter for Randal Leblanc** - ---------------------------- --------------------------------------------------- 16.1 Change in certifying accountant by Weinberg & Company, P.A.** - ---------------------------- --------------------------------------------------- 16.2 Change in certifying accountant by Weinberg & Company, P.A.** - ---------------------------- --------------------------------------------------- 23 Accountants consent of Salberg & Co. - ---------------------------- --------------------------------------------------- 27 Financial Data Schedule ** Denotes previously filed exhibits. ITEM 28. UNDERTAKINGS The undersigned Registrant hereby undertakes: 56 1. To file, during any period in which it offers or sells securities, a post- effective amendment to this registration statement to: a. Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; b. Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; c. Include any additional or changed material information on the plan of distribution. 2. That, for determining liability under the Securities Act of 1933, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. 3. To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. 4. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. 5. In the event that a claim for indemnification against such liabilities, other than the payment by the Registrant of expenses incurred and paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 57 SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Temple, State of Texas on March 20, 2001. (REGISTRANT) COMMUNICATE NOW.COM, INC. By David Hancock David Hancock President (Signatures and Title) In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated. /s/ David Hancock /s/ Bill Elliott - ------------------------------ ------------------------------ David Hancock Bill Elliott (President, Chairman of the Board, (Director) Chief Executive Officer) March 20, 2001 March 20, 2001 ------------------------------ - ------------------------------ /s/ Randal Leblanc - ------------------------------ Randal Leblanc (Director) March 20, 2001 - ------------------------------ /s/ John C. Winkler - ------------------------------ John C.Winkler (Director) March 20, 2001 - ------------------------------ 58
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SB-2/A Filing
American Energy Production (AENP) Inactive SB-2/ARegistration of securities for small business issuer (amended)
Filed: 20 Mar 01, 12:00am