Filed On 7/6/00 1:34pm ET ˇ SEC File 0-30953 ˇ Accession Number 1028596-0-177
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
7/06/00 Net X America Inc 10SB12G 7:64 Schvaneveldt & Co
Registration of Securities of a Small-Business Issuer ˇ Form 10-SB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10SB12G Form 10sb 31 89K
2: EX-2 Articles of Incorporation 3 9K
3: EX-2 Amendment to Articles of Incorporation 4 8K
4: EX-2 Bylaws 9 33K
5: EX-12 Stock Option Plan 14 57K
6: EX-23 Consent of Independent Auditor 2 5K
7: EX-27 Financial Data Schedule 1 5K
U.S. Securities and Exchange Commission
Washington, D.C. 20549
-----------------------------
Form 10-SB
----------------------------
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
NET:X AMERICA, INC.
--------------------
(Name of Small Business Issuer in its charter)
OREGON 93-1216387
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Salina 149-B
Willemstad, Curacao
Netherlands, Antilles N/A
--------------------------------------- ----------
(Address of principal executive Offices) (Zip Code)
Issuer's telephone number: 599 9 465-1260
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None.
Securities to be registered under Section 12(g) of the Act:
COMMON
(Title of Class)
</Page>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
This Form 10 contains certain forward-looking statements within the
meaning of the Private Securities Litigation reform Act of 1995, which act
contains a safe harbor for forward looking statements. Statements made in
connection with initial public offerings, however, are not protected by the
safe harbor of the Private Securities Reform Act of 1995. Nonetheless, the
Company believes that investors would be benefitted by the cautionary
language included in this paragraph. Therefore, any statements contained
in this Form 10-SB that are not statements of historical fact may be deemed
to be forward-looking statements and, accordingly, involve risks and
uncertainties which could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and
underlying assumptions and other statements which are other than statements
of historical facts. The Company's expectations, beliefs and projections
are expressed in good faith and are believed by the Company to have a
reasonable basis, including without limitations, managements's examination
of historical operating trends, data contained in the Company's records and
other data available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result or be
achieved or accomplished.
Without limiting the foregoing, words such as "may", "will", "expect",
"believe", "anticipate", "estimate" or "continue" or comparable terminology
are intended to identify forward- looking statements. These statements by
their nature involve substantial risks and uncertainties, and actual
results may differ materially depending on a variety of factors, many of
which are not within the Company's control. These factors include but are
not limited to economic conditions generally and in the industries in which
the Company may participate; competition within the Company's chosen
industry, including competition from much larger competitors;
technological advances and failure by the Company to successfully develop
business relationships. In addition to other factors and matters discussed
elsewhere herein, the following are important factors that, in the view of
the Company, could cause actual results to differ materially from those
discussed in the forward-looking statements: the ability of the Company's
management to operate on a global basis; the ability of the Company to
effectuate and successfully operate acquisitions and new operations; the
ability of the Company to obtain acceptable forms and amounts of financing
to fund current operations and planned acquisitions; the political,
economic and military climate in nations where the Company may have
interests in foreign countries; and competition and the ever-changing
nature of the Internet and e-commerce. The Company has no obligation to
update or revise these forward-looking statements to reflect the occurrence
of future events or circumstances.
2
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Item 1. Description of Business
---------------------------------
Company History.
----------------
Net:X America Inc. (the "Company" or "Net:X") was organized under the
laws of the State of Oregon on June 22, 1987 as WESTAQ Network, Inc. The
Company was dormant until June 20, 1996, when it changed its name to Net:X
America, Inc., and began limited business operations. The Company is still
in the developmental stage. In June 1998, the Company exchanged 6,400,000
shares of Company common stock for the licensing rights to Island Product
Management's Investor Account Manager ("IAM") software. Since acquiring
the IAM software, which offers reporting and account management
capabilities, the Company has worked to integrate it with the Company's
proprietary StockEX software, which enables brokerage houses to offer
online securities trading. Now that the Company has fully integrated the
two software packages, its primary business focus is licensing its software
products to brokers wishing to offering online trading and account
management capabilities to their clients.
Industry Background
-------------------
In the past, investors could access the financial markets only through
a full-commission broker. These brokers provided investment advice and
executed trades for investors. With the deregulation of brokerage
commissions in 1975, investors discovered they could separate financial
advisory services from securities trading. This led to changes in the
industry including increased access to information about public companies
and the advent of discount brokerage firms, which allow investors who are
willing to engage in their own research, a less expensive alternative to
traditional full-commission brokers. With the advent of the internet and
online commerce, additional innovation is occurring in the industry as it
expands and evolves to integrate these technological advances.
The market for equity securities has grown dramatically in recent
years, with equity capitalization in the U.S. market doubling in the past
five years to over $15 trillion. During this time, there has been a large
increase in the average daily trading volume in the United States.
In June 1999, International Data Corporation, a leading information
technology research firm, estimated that the number of internet users
worldwide exceeded 95 million at the end of 1998, will exceed170 million by
the end of 2000, and should exceed 500 million by the end of 2003. The
internet is revolutionizing the way organizations and consumers interact
and conduct business. The explosive growth of the internet has been
driven, in part, by the internet's ability to offer businesses and
consumers an accessible, convenient and cost-effective medium for
communication and commerce and its ability to interact on a real-time
basis. The increasing prevalence of online commerce options such as
purchases and sales, funds transfers, online banking, and bill payment have
likewise contributed to this growth by simplifying and automating financial
transactions for consumers, and in many cases, significantly reducing costs
by eliminating the need for intermediaries that traditionally charge fees
to provide products, services, or information.
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Online trading is the fastest growing segment of the brokerage
industry and is expected to grow significantly. The internet has
fundamentally changed the way many investors manage their financial
affairs. The speed, convenience, choice, cost savings and information the
internet offers have driven many investors online. The following industry
reports support the Company's belief that the rapid development of the
online brokerage industry will continue:
International Data Corporation estimates that the number of U.S.
online brokerage accounts will grow from 6.7 million at the end of
1998 and to over 24 million by 2003;
Forrester Research, Inc., a leading information technology data
research firm, estimates that online trades of retail customers in
the U.S. will grow from 25% of all retail stock trades in the first
quarter 1999 to 50% by 2002. Similarly, Industry Standard reported
that online trading currently accounts for 30% of the volume on Nasdaq
and the NYSE and could represent 50% of all trades over the next three
years; and
International Data Corporation estimates that the value of assets held
by customers in accounts with online brokerage firms will grow from
$324 billion in the U.S. at the end of 1998 to over $3 trillion in
2003.
Clearly, the projected growth in the U.S. market for online brokerage
services over the next few years is expected to be significant. The
Company believes even greater opportunities are available in the
international markets including Europe, the Caribbean, and Latin America.
According to International Data Corporation, while current web usage in
Europe and Asia trails U.S. rates, it is anticipated that over the next
several years, web penetration in these areas will grow faster than in the
U.S.
Our Opportunity
---------------
We believe the evolution of online commerce has contributed to growing
opportunities for all providers of online financial services. As investors
continue to desire greater control over their own financial decisions, they
are demanding more from their financial service providers. To assist
financial service providers meet the needs and demands of their clients,
particularly in the area of online trading and account management, the
Company has developed software which enables brokerages to offer these
capabilities to their clients.
The Company has identified a significant need within the offshore
security brokerage houses of the Caribbean to offer their offshore trust
and other clients the ability to trade online. The Caribbean financial
markets have experienced significant growth recently as foreign investors,
particularly from Canada, Latin America and Europe have moved their assets
to this region. With this increased growth has come increased pressure on
investment professionals to provide online capabilities. The Net:X
software provides these offshore brokerage houses the ability to offer
online trading without the significant expense of developing their own
proprietary systems.
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Products
--------
The Company's primary software product is made up of two software
programs, StockEX and Investor Account Manager ("IAM"). By integrating
these two software packages, the Company has developed software it can
license to brokerages that will enable them to offer customized online
trading, reporting and account management to their clients.
StockEX
-------
StockEX is a proprietary transaction-based software program which
provides an interface between the investor's computer and the brokerage's
web site. Via StockEX, the investor can setup online trading accounts
through the brokerage's web site. In addition to providing online trading,
the StockEX program also offers such record keeping features as trade
confirmations and records of all transactions executed by the client.
Investor Account Manager
------------------------
IAM is an easy to operate, cost effective and customizable PC based
software program designed to manage client transactions. This software
offers several account management programs that interface with one another.
These include managing cash accounts, pooled funds, assets and securities
trading accounts along with client account reporting via the internet.
This software will allow a brokerage house, investment manager or trustee
to access and provide full client account information to their clients.
"CASH MANAGEMENT ACCOUNT" which is a cash account management
system for checking and savings type accounts. It can be linked to an
investment account to facilitate withdrawals and deposits of funds in
conjunction with security trading.
"FUND ACCOUNT" which is a cash/share management system which
allows a broker, mutual fund or trust manager to process investor
contributions, withdrawals, dividends, and earnings in accordance with
the time value of each transaction for accurate distribution of income
to each investor. This feature is capable of calculating proper
income distributions to an unlimited number of investors or accounts.
"INVESTMENT ACCOUNT" is an asset/investment management system
which allows an investment manager to trade and manage assets for the
Fund Account and/or individual investors. For buy and sell
transactions, funds will automatically be drawn from or deposited to a
designated "Trading Cash Account" for easy cash management.
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In addition to aggressively marketing its software products, the
Company is investigating the possibility of offering a secure server to
host the web pages for offshore brokerage houses. To date, the Company
does not offer these services.
Distribution
------------
Net:X will undertake an aggressive direct marketing program in the
Caribbean markets to take advantage of the strong growth in the offshore
industry in that region. This growth is evidenced by the numerous
international banks and trust companies opening new facilities in the
Caribbean, in addition to the over 2,400 financial facilities already in
existence in the Caribbean and Latin America.
Specifically, Net:X will seek to establish license agreements with
brokerage houses in the Caribbean. Pursuant to these license agreements,
the brokerage houses will distribute the Net:X software to their brokers,
and clients, including fund and investment managers, trust managers, and
individual investors. The brokers, managers and clients will then be able
to trade online via pre-established securities trading accounts linked to
the brokerage house from whom the broker, manager or investor received the
software. That way, they will continue to trade through the brokerage from
whom the software was received.
The Company believes that having brokerage houses distribute the
Company's software to their existing and new brokers, managers and clients
will speed market penetration of the software. Moreover, by distributing
the software through brokerage houses, Net:X does not need to offer its own
brokerage services, with all the inherent costs, risks and regulations.
Consistent with current trends in the internet software industry, the
Company will provide its software to interested brokerages and their
clients with no up-front charge. The licensing agreement will provide that
the brokerage houses will pay Net:X on a per use basis. The licensing fee
will be $10.00 per trade executed via the Company's software. The Net:X
software is programmed to record each trade reconciled through each
brokerage. The system is also programmed to download to the Company
information regarding the number of trades executed online through each
brokerage. The licensing agreement will provide that each brokerage pay
the license fee on a bi-weekly basis or monthly basis. Thus, the licensing
fee to be paid by the brokerage will be equal to the number of trades
executed within the appropriate time frame multiplied by $10.00 per trade.
The Company is aware that services such as E*Trade, Ameritrade,
Charles Schwab, and others offer low costs per trade. Offshore brokerage
houses, however, are not subject to the regulations of the NASD, the
S.E.C., and other U.S. and State regulatory agencies, with their commission
and price restrictions. Based on its research, the Company has found that,
of the few offshore brokerages offering online trading, the fees range from
$19.99 to $75.00 per trade, with most charging quite a bit more than the
going rate in the United States. Because the price per trade being charged
by the offshore brokerages is quite a bit higher than in the domestic
market, the Company believes that offshore brokerages will be willing to
pay the $10.00 per trade licensing fee.
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Reports to Security Holders
---------------------------
Prior to the filing of this registration statement on Form 10-SB, the
Company was not subject to the reporting requirements of Section 13(a) or
15(d) of the Exchange Act. Upon effectiveness of this registration
statement, the Company will file annual and quarterly reports with the
Securities and Exchange Commission ('SEC"). The public may read and copy
any materials filed by the Company with the SEC at the SEC's Public
Reference Room at 150 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The Company is an electronic filer
and the SEC maintains an Internet site that contains reports and other
information regarding the Company which may be viewed at
http://www.sec.gov.
-------------------
Item 2. Plan of Operation
---------------------------
For a complete understanding, this Plan of Operations should be read
in conjunction with Part I, Item 1, Description of Business and Part F/S -
Financial Statements to this Form 10-SB.
During the period from June 30, 1998 to March 31, 2000, the Company
has not generated any revenue.
As of March 31, 2000, the Company had no cash on hand. As of March
31, 2000, the Company had accumulated deficit of ($2,629,212) funded by
paid-in capital. During the nine months ended March 31, 2000, and the
years ended June 30, 1998 and 1999, the Company had losses from operations
of ($5,523), ($626,358) and ($1,880,230) respectively. The Company expects
that operating losses will continue until such time as product sales
generate sufficient revenue to fund its continuing operations, as to which
there can be no assurance.
As of the date of this Form 10-SB, the Company has yet to generate
positive cash flow. The Company has financed its operations primarily
through the sale of its common stock and has been entirely dependent on
such for continuation of operations. Specifically, in June 1998, the
Company issued 4,000,000 shares of common stock in exchange for $400,000.
The Company exhausted these funds in developing and testing the Net:X
software system and in administrative and other expenses. The Company
anticipates that within the next twelve months, it will need additional
capital to fund its marketing efforts, product development, regulatory
monitoring and compliance, and operational costs. To fund these expenses,
the Company may seek equity financing through the sale of additional
securities. The Company will also consider the possibility of debt
financing such as loans and lines of credit.
Given the Company's lack of operations and revenue, there can be no
guarantee that the Company will be able to obtain additional capital to
meet its needs. If additional capital cannot be obtained, or if a market
for the Company's product does not develop, the Company's business,
financial condition and results of operations could be adversely effected.
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Similarly, because the financial services, online trading and computer
software industries are intensely competitive and rapidly evolving the
Company will need to continue improving its products to keep pace with its
competitors. This may require additional capital to fund ongoing research
and development. There can be no assurance that the Company will obtain
necessary funds to continue developing its products to keep them current
and competitive in the market.
The Company is also currently investigating the possibility of
offering a secure server to host web sites which its offshore brokerage
clients can use to offer online trading. To date, the Company does not
currently offer this service. Should the Company determine it to be in its
best business interest to provide such a service, the Company may incur
significant additional expense, estimated to be anywhere from $75,000 to
$140,000 to purchase and install the necessary hardware and software to
provide this service. Clearly, to offer such a service, the Company will
need to raise additional capital, which it would likely do by either
selling its securities, or seeking debt financing.
Finally, the report from the Company's independent accountants
includes an explanatory paragraph which describes substantial doubt
concerning the ability of the Company to continue as a going concern
without additional contributions to capital. See "Financial Statements -
Report of Independent Accountants" and Note 2 - Going Concern.
Item 3. Description of Property
---------------------------------
In June 1998, the Company exchanged 6,400,000 shares of common stock
of the Company for the licensing rights to the Island Product Management
Investor Account Manager ("IAM") software.
Property & Facilities
---------------------
The Company currently leases 500 square feet of office space located
at Salina 149-B Willemsted, Curacao in the Netherlands, Antilles. The
Company pays $500 per month on a year lease agreement which expires
December 31, 2000, after which, the lease is renewable for another year at
the same rate. The Company believes this lease to be no more or less
favorable than the current market rates.
The Company also owns approximately $5,000 worth of computers and
related equipment.
Investment Policies
-------------------
Currently the Company does not own any real property. In addition,
the Company has no intention to purchase any real property at this time.
Therefore, the Company does not have any policies with respect to
investments in real estate or interests in real estate, real estate
mortgages, or securities of/or interests in persons primarily engaged in
real estate activities. The Company, however, may pursue the purchase of
real property if the need arises. These properties would not be pursued
for investment purposes. Rather, they will be used to carry out the
business of the Company.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
The following table sets forth as of June 1, 2000, the name and the
number of shares of the Company's Common Stock, par value $.001 per share,
held of record or beneficially by each person who held of record, or was
known by the Company to own beneficially, more than 5% of the 11,023,609
issued and outstanding shares of the Company's Common Stock, and the name
and shareholdings of each director and of all officers and directors as a
group.
[Download Table]
Title of Name and Address of Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership(2) of Class
-------- ----------------------------- ---------------------- -------------
Common Island Product Management 4,288,000 38.90%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common Cede & Co 1,443,677 13.10%
PO Box 222
Bowling Green Station
New York, NY 10274
Common Andrew Dong(1)(2) 1,210,000 10.98%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common BSA Development LTD (2) 1,210,000 10.98%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common Temple Trust(3) 708,000 6.42%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common Interval Vacation Centre, LTD 704,000 6.39%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common Lanvin International LTD. 704,000 6.39%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
Common Portorford Communications LTD. 704,000 6.39%
2001 Leeward Highway
Turks & Caicos Isles, B.W.I.
------------------------------------------------------------------------------------
Common Officers, Directors and
Nominees as a Group: 1,210,000 10.98%
------------------------------------------------------------------------------------
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The term "beneficial owner" refers to both the power of investment
(the right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person,
each person who has a beneficial ownership interest in shares is deemed the
beneficial owners of the same shares because there is shared power of
investment or shared rights of ownership.
(1) Officer and/or Director of the Company
(2) Andrew Dong is a beneficial owner of BSA Development LTD. Therefore,
shares that are in the registered name of BSA Development LTD are counted
as shares for Mr. Dong.
(3) Temple Trust is the beneficial owner of Temple Mortgage Corporation
LTD, record holder of 198,000 shares, and Temple Securities LTD, record
holder of 510,000 shares. Therefore, shares held by Temple Mortgage
Corporation LTD and Temple Securities LTD are counted as shares for Temple
Trust.
There are no arrangements which would result in a change in control of
the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
----------------------------------------------------------------------
[Download Table]
Name Age Position(s) Director or Officer Since
----------------- ------ --------------- -------------------------
William D. Jones 40 CEO/President January 2000
Secretary
Treasurer
Director
Andrew Dong 38 Director May 1998
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The following sets forth certain biographical information relating to
the Company's Officers and Directors:
William D. Jones, CEO/President, Secretary, Treasurer and Director,
age 40.
--------------------------------------------------------------------
Before founding IsleASP, ASPen and OSIA he was the president and co-
founder of Network Technology Professionals Inc. (NTP), a multi-million
dollar Western Canadian organization that still operates successfully
today. He has over 20 years of technical and business experience in
management, systems analysis, consultation, and instruction, and has worked
for such organizations as Crowntek and Professional Computing Center. He
is exceptionally versed in a wide range of business matters including
public corporate entities, offshore structures, global markets and
innovative management strategies.
As one of the most diversified and talented individuals in the
technology industry, Mr. Jones has been called upon by organizations such
as Novell to create innovative solutions to customer issues and to develop
key white papers. He has extensive technical knowledge and skill in system
programming, network engineering, key systems implementations over a vast
array of computing technologies and holds many certifications and
authorizations with IBM, Novell, Compaq and Microsoft. He designed and
implemented the largest LAN server in the world that is still servicing
more than 7,000 end users. For the last five years Mr. Jones has primarily
served as President of OSIA and has founded two other networking companies,
IsleASP and ASPen. He currently resides at 1 Scenic Way NW, Calgary, AB
Canada.
Andrew Dong, Director, age 38.
------------------------------
Mr. Dong received his Bachelor of Math degree in 1985 from the
University of Waterloo, Waterloo, Ontario and currently resides at 2001
Leeward Highway, Providenciales, Turks and Caicos Islands, B.W.I. Mr. Dong
worked for eleven years in the Information Systems field. He was a Vice
President of Business Development of Saville Systems, a Galaway, Ireland
based company that creates telecommunications billing software, before
retiring in 1996. During his eight year tenure at Saville, Mr. Dong was
involved in all aspects of the software industry including development,
sales, and customer relations. He also worked in the Product Development,
Research and Development, and Consulting Services departments of Saville.
Since his retirement in 1996 Mr. Dong has served as a Director of Net:X
America, Inc.
Dependence Upon Key Personnel
-----------------------------
The Company believes that its success will depend significantly upon
the efforts and abilities of a small group of executive, programming and
marketing personnel. The loss of the services of one or more of these key
individuals could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company's
future success will depend upon its ability to continue to attract and
retain qualified personnel. There can be no assurance that the Company
will be successful in attracting and retaining such personnel.
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Family Relationships
--------------------
None.
Involvement in Legal Proceedings
--------------------------------
To the knowledge of management, during the past five years, no present
or former director, executive officer or person nominated to become a
director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of
which he was an executive officer at or within two years before the time of
such filing;
(2) was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations or other minor
offenses);
(3) was the subject of any order, judgement or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or otherwise
limiting, the following activities;
(i) acting as a future commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, of
engaging in or continuing any conduct or practice in connection with such
activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) was the subject of any order, judgement, or decree, not
subsequently reversed, suspended, or vacated, of any federal or state
authority barring, suspending, or otherwise limiting for more than 60 days
the right of such person to engage in any activity described above under
this Item, or to be associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission to have violated any federal
or state securities law, and the judgment in such civil action or finding
by the Securities and Exchange Commission has not been subsequently
reversed, suspended, or vacated;
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(6) was found by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
Item 6. Executive Compensation
--------------------------------
The following chart sets forth certain summary information
concerning the compensation paid or accrued for each of the Registrant's
last three completed fiscal years to the Registrant's or its principal
subsidiaries' chief executive officers and each of its other executive
officers that received compensation in excess of $100,000 during such
period (as determined at December 31, 1999, the end of the Registrant's
last completed fiscal year).
[Enlarge/Download Table]
SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------
Annual Compensation Payouts
--------------------- Awards --------
Other ------- All
Name and Annual Restricted Other
Principal Bonus Compen- Stock Options LTIP Compen-
Position Year Salary $ sation Awards /SARs sation
-------------------------------------------------------------------------------------
William D.
Jones 1999 0 0 0 0 0 0 0
CEO/President,
Secretary 1998 0 0 0 0 0 0 0
Treasurer and
Director 1997 0 0 0 0 0 0 0
Andrew Dong 1999 0 0 0 0 0 0 0
Director 1998 0 0 0 0 100,000(1) 0 0
1997 0 0 0 0 0 0 0
Jerry Joiner 1999 $20,000 0 0 0 0 0 0
Former-CEO/
President 1998 $60,000 0 0 0 300,000(1) 0 0
Former-Director 1997 0 0 0 0 0 0 0
Ronald J.
McFadyen 1999 0 0 0 0 0 0 0
Former-
Secretary/ 1998 0 0 0 0 200,000(1) 0 0
Treasurer 1997 0 0 0 0 0 0 0
Former-
Director
-------------------------------------------------------------------------------------
(1) Stock Options were granted by the Company on August 21, 1998 at an
exercise price of $0.11 per share. These options were granted for a period
of one year beginning August 21, 1998. They have since expired without
being exercised.
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Compensation of Directors
-------------------------
None
Employment Contracts and Termination of Employment and Change in Control
Arrangement
------------------------------------------------------------------------
None.
Item 7. Certain Relationships and Related Transactions
--------------------------------------------------------
The Company is not expected to have significant dealings with
affiliates. If there are such dealings, however, the parties will attempt
to deal on terms competitive in the market and on the same terms that
either party would deal with a third person.
Item 8. Description of Securities
-----------------------------------
The Company's authorized capital stock consists of 200,000,000 shares
of common stock with $.001 par value. The Company has11,023,609
outstanding shares of its common stock, all of which are validly issued,
fully paid and nonassessable. Holders of the common stock are entitled to
receive dividends when and as declared by the Board of Directors out of
funds legally available therefore. Any such dividends may be paid in cash,
property, or shares of the Company's common stock.
All shares of the Company's common stock have equal voting rights and,
when validly issued and outstanding, will have one vote per share on all
matters to be voted upon by the shareholders.
The Company has appointed Interwest Transfer Company, Inc. as the
transfer agent and registrar for the Company's securities.
PART II
-------
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and other Shareholder Matters.
--------------------------------------------------------------------------
The Company's common stock is listed on the Over the Counter Bulletin
Board ("OTCBB"), under the symbol "NXAME". As of June 1, 2000 the Company
had 109 shareholders holding 11,023,609 shares of common stock. Of the
issued and outstanding common stock 4,599,849 are free trading, the balance
are restricted stock as that term is used in Rule 144. The Company has
never declared a dividend on its common Stock.
14
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[Download Table]
CLOSING BID CLOSING ASK
--------------------- ---------------------
HIGH LOW HIGH LOW
---------- ---------- ---------- ----------
Second Quarter
Oct.1, 1997-
Dec. 31, 1997 1.0625 .0625 1.3125 .25
Third Quarter
Jan. 1, 1998-
March 31, 1998 .0625 .02 .375 .15
Fourth Quarter
April 1, 1998-
April 24, 1998 .02 .02 .15 .15
Fourth Quarter(1)
April 27, 1998-
June 30, 1998 .20 .01 .30 .15
First Quarter
July 1, 1998-
Sept. 30, 1998 .12 .01 .28 .28
Second Quarter
Oct.1, 1998-
Dec. 31, 1998 .30 .03125 .51 .15
Third Quarter
Jan. 1, 1999-
March 31, 1999 .30 .04 .51 .125
Fourth Quarter
April 1, 1999-
June 30, 1999 .0625 .02 .15 .05
First Quarter
July 1, 1999-
Sept. 30, 1999 .20 .02 .35 .05
Second Quarter
Oct.1, 1999-
Dec. 31, 1999 .07 .06 .11 .08
Third Quarter
Jan. 1, 2000-
Mar. 31, 2000 .25 .02 .20 .125
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15
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(1) On April 24, 1998, the Company reverse split its stock on a five shares
for one basis.
The above quotations, as provided by the National Quotation Bureau,
LLC., represent prices between dealers and do not include retail markup,
markdown or commission. In addition, these quotations do not represent
actual transactions.
Item 2. Legal Proceedings.
----------------------------
See "Involvement in Legal Proceedings" above.
Item 3. Changes in and Disagreements with Accountants.
--------------------------------------------------------
None.
Item 4. Recent Sales of Unregistered Securities.
--------------------------------------------------
[Download Table]
a. Date Title Amount Sold
----------------- -------------- ---------------
February 25, 1997 Common 121,888(1)
August 27, 1997 Common 477,653(1)
June 12, 1998 Common 4,000,000
June 12, 1998 Common 6,400,000
(1) The number of shares issued have not been retroactively restated to
reflect the two-for-one forward stock split or the one-for-five reverse
stock split.
b. February 25, 1997 - 121,888 Common Shares were issued to
accredited investors for $121,888. The shares were issued without
registration under the Securities Act in reliance on an exemption from
registration provided by Regulation D promulgated under the Securities Act.
August 27, 1997 - 475,653 Common Shares were issued to accredited
investors for $475,653. The shares were issued without registration under
the Securities Act in reliance on an exemption from registration provided
by Regulation D promulgated under the Securities Act.
June 12, 1998 - 4,000,000 Common Shares were issued to accredited
investors for $400,000. The shares were issued without registration under
the Securities Act in reliance on an exemption from registration provided
by Regulation D promulgated under the Securities Act.
June 12, 1998 - 6,400,000 Common Shares were issued to acquire
the licensing rights to Island Product Management's Investor Account
Manager (IAM) software. The shares were issued without registration under
the Securities Act in reliance on an exemption from registration provided
by Rule 4(2) of the Securities Act.
16
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The Company also granted Stock Options to purchase up to 1,000,000
shares of Company common stock at an exercise price of $0.11 per share to
seven individuals on August 21, 1998. These options were granted for a
period of one year beginning August 21, 1998. All of the options expired
without being exercised.
Item 5. Indemnification of Directors and Officers
---------------------------------------------------
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers of the
registrant are insured or indemnified in any manner against any liability
which they may incur in such capacity are as follows:
The Company's bylaws provide that the corporation shall indemnify any
individual made a party to a proceeding because such individual was a
director of the corporation to the extent permitted by and in accordance
with Section 60.387, et. Seq. of the Oregon Revised Statutes or any
amendments of successor section of like tenor.
The Company's bylaws also provide that the board of directors may
authorize the corporation to indemnify and advance expenses to any officer,
employee, or agent of the corporation who is not a director of the
corporation to the extent permitted by the Oregon Revised statutes.
Section 60.391 of the Oregon Revised Statutes provides that directors
may be indemnified:
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred in
the proceeding if:
(a) The conduct of the individual was in good faith;
(b) The individual reasonably believed that the individual's conduct
was in the best interests of the corporation, or at least not opposed to
its best interests; and
(c) In the case of any criminal proceeding, the individual had no
reasonable cause to believe the individual's conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for
a purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subsection (1)(b) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of
conduct described in this section.
17
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(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(b) In connection with any other proceeding charging improper personal
benefit to the director in which the director was adjudged liable on the
basis that personal benefit was improperly received by the director.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding. [1987 c.52 s.95]
Section 60.394 of the Oregon Revised Statutes provides for mandatory
indemnification of directors in the following circumstances:
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise,
in the defense of any proceeding to which the director was a party because
of being a director of the corporation against reasonable expenses incurred
by the director in connection with the proceeding.
Pursuant to ORS 60.397, the Company may reimburse directors for
reasonable expenses incurred by a director who is a party to a proceeding
in advance of final disposition of the proceeding if:
(a) The director furnishes the corporation a written affirmation of
the director's good faith belief that the director has met the standard of
conduct described in ORS 60.391; and
(b) The director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it
is ultimately determined that the director did not meet the standard of
conduct.
(2) The undertaking required by subsection (1)(b) of this section must
be an unlimited general obligation of the director but need not be secured
and may be accepted without reference to financial ability to make
repayment.
(3) Any authorization of payments under this section may be made by
provision in the articles of incorporation, or bylaws, by a resolution of
the shareholders or board of directors or by contract.
A director of the Company who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court
of competent jurisdiction pursuant to ORS 60.401. On receipt of an
application, the court after giving any notice the court considers
necessary may order indemnification if it determines:
18
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(1) The director is entitled to mandatory indemnification under ORS
60.394, in which case the court shall also order the corporation to pay the
director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether or not the director met
the standard of conduct set forth in ORS 60.391 or was adjudged liable as
described in ORS 60.391 (4), whether the liability is based on a judgment,
settlement or proposed settlement or otherwise.
The Company may not indemnify a director under ORS 60.391 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because
the director has met the standard of conduct set forth in ORS 60.391.
(2) A determination that indemnification of a director is permissible
shall be made:
(a) By the board of directors by majority vote of a quorum consisting
of directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under paragraph (a) of this
subsection, by a majority vote of a committee duly designated by the board
of directors consisting solely of two or more directors not at the time
parties to the proceeding. However, directors who are parties to the
proceeding may participate in designation of the committee;
(c) By special legal counsel selected by the board of directors or its
committee in the manner prescribed in paragraph (a) or (b) of this
subsection or, if a quorum of the board of directors cannot be obtained
under paragraph (a) of this subsection and a committee cannot be designated
under paragraph (b) of this subsection, the special legal counsel shall be
selected by majority vote of the full board of directors, including
directors who are parties to the proceeding; or
(d) By the shareholders.
(3) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be
made by those entitled under subsection (2)(c) of this section to select
counsel.
The Company may indemnify its officers, employees and agents as
follows:
(1) An officer of the corporation is entitled to mandatory
indemnification under ORS 60.394, and is entitled to apply for
court-ordered indemnification under ORS 60.401, in each case to the same
extent as a director under ORS 60.394 and 60.401.
(2) The corporation may indemnify and advance expenses under ORS
60.387 to 60.411 to an officer, employee or agent of the corporation to the
same extent as to a director. See ORS 60.407.
19
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The Company may purchase and maintain insurance on behalf of an
individual against liability asserted against or incurred by the individual
who is or was a director, officer, employee or agent of the corporation or
who, while a director, officer, employee or agent of the corporation, is or
was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise. The corporation may purchase and maintain the insurance
even if the corporation has no power to indemnify the individual against
the same liability under ORS 60.391 or 60.394. See ORS 60.411.
The indemnification and provisions for advancement of expenses
provided herein shall not be deemed exclusive of any other rights to which
directors, officers, employees or agents may be entitled under the
corporation's articles of incorporation or bylaws, any agreement, general
or specific action of its board of directors, vote of shareholders or
otherwise, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. Specifically and not
by way of limitation, a corporation shall have the power to make or agree
to make any further indemnification, including advancement of expenses, of:
(a) Any director as authorized by the articles of incorporation, any
bylaws approved, adopted or ratified by the shareholders or any resolution
or agreement approved, adopted or ratified, before or after such
indemnification or agreement is made, by the shareholders, provided that no
such indemnification shall indemnify any director from or on account of
acts or omissions for which liability could not be eliminated under ORS
60.047 (2)(d); and
(b) Any officer, employee or agent who is not a director as authorized
by its articles of incorporation or bylaws, general or specific action of
its board of directors or agreement. Unless the articles of incorporation,
or any such bylaws, agreement or resolution provide otherwise, any
determination as to any further indemnity under this paragraph shall be
made in accordance with ORS 60.404.
(2) If articles of incorporation limit indemnification or advance of
expenses, any indemnification and advance of expenses are valid only to the
extent consistent with the articles of incorporation.
(3) The Company's may also pay or reimburse expenses incurred by a
director in connection with the director's appearance as a witness in a
proceeding at a time when the director has not been made a named defendant
or respondent to a proceeding. See ORS 60.414.
PART F/S
The following financial statements of the Company are filed as a part
of this report:
Report of Independent Accountants
Balance Sheets as of June 30, 1999, and the interim period
through March 31, 2000 (unaudited);
Statements of Operations for the years ended June 30, 1999, 1998,
and the interim period ended March 31, 2000 (unaudited);
Statements of Stockholders' Equity for the years ended June 1998,
1999, and the interim period through March 31, 2000 (unaudited);
Statements of Cash Flows for the years ended June 1998, 1999, and
the interim period through March 31, 2000, (unaudited);
Notes to Financial Statements.
20
</Page>
PART III
--------
Item 1. Index to Exhibits
[Download Table]
Exhibit
Number Title of Document Location
----------- --------------------------------------------- ------------
2.01 Articles of Incorporation See Attached
2.02 Amendments to the Articles of Incorporation See Attached
2.03 By-laws See Attached
12.01 Stock Option Plan See Attached
23.01 Consent of Independent Auditors See Attached
27.01 Financial Data Schedule See Attached
Item 2. Description of Exhibits
---------------------------------
See Item 1.
21
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf, thereunto duly authorized.
NET:X AMERICA, INC.
Date: June 22, 2000 By: /s/ William D. Jones
-------------------------
William D. Jones, CEO,
President and Chief Financial
Officer
22
</Page>
NET:X AMERICA, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999 and 1998
</Page>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity (Deficit) . . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . 8
</Page>
[Letterhead]
INDEPENDENT AUDITORS' REPORT
-----------------------------
To the Board of Directors
Net:X America, Inc.
(A Development Stage Company)
Netherlands, Antilles
We have audited the accompanying balance sheet of Net:X America, Inc. (a
development stage company) as of June 30, 1999 and the related statements
of operations, stockholders' equity (deficit), and cash flows for the years
ended June 30, 1999 and 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Net:X America, Inc. (a
development stage company) as of June 30, 1999 and the results of its
operations and its cash flows for the years ended June 30, 1999 and 1998,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with
recurring losses which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/S/ Jones, Jensen & Company
Jones, Jensen & company
Salt Lake City, Utah
May 30, 2000
</Page>
NET:X AMERICA, INC.
(A Development Stage Company)
Balance Sheets
[Download Table]
ASSETS
--------
March 31, June 30,
2000 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ - $ 950
------------ ------------
Total Current Assets - 950
------------ ------------
TOTAL ASSETS $ - $ 950
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 11,468 $ 13,243
------------ ------------
Total Current Liabilities 11,468 13,243
------------ ------------
STOCKHOLDERS' EQUITY
Common stock; 200,000,000 shares
authorized of $0.001 par value,
11,023,609 and 11,023,609 shares
issued and outstanding, respectively 11,024 11,024
Additional paid-in capital 2,606,720 2,600,403
Deficit accumulated during the
development stage (2,629,212) (2,623,720)
------------ ------------
Total Stockholders' Equity (Deficit) (11,468) (12,293)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ - $ 950
============ ============
The accompanying notes are an integral part of these financial statements
4
</Page>
NET:X AMERICA, INC.
(A Development Stage Company)
Statements of Operations
[Download Table]
From
For the Inception on
Nine Months For the Years Ended June 22,
Ended June 30, 1987 Through
March 31, --------------------------- March 31,
2000 1999 1998 2000
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
REVENUES $ - $ - $ - $ -
------------- ------------- ------------- -------------
EXPENSES
General and administrative 5,523 626,358 1,880,230 2,653,628
------------- ------------- ------------- -------------
Total Expenses 5,523 626,358 1,880,230 2,653,628
------------- ------------- ------------- -------------
Loss From Operations ( 5,523) ( 626,358) ( 1,880,230) ( 2,653,628)
------------- ------------- ------------- -------------
OTHER INCOME
Interest income 31 4,385 - 4,416
License fees - 20,000 - 20,000
------------- ------------- ------------- -------------
Total Other Income 31 24,385 - 24,416
------------- ------------- ------------- -------------
NET LOSS $ (5,492) $ (601,973) $ (1,880,230) $ (2,629,212)
============= ============= ============= =============
BASIC LOSS PER SHARE $ (0.00) $ (0.05) $ (0.60)
============= ============= =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 11,023,609 11,023,609 3,118,037
============= ============= =============
The accompanying notes are an integral part of these financial statements
5
</Page>
NET:X AMERICA, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
[Enlarge/Download Table]
Deficit
Accumulated
Common Stock Additional During the
-------------------------- Paid In Development
Shares Amount Capital Stage
------------------------------------------------------
Balance, June 22, 1987 - $ - $ - $ -
Common stock issued for cash
on July 1, 1995 at $0.0025
per share 480,000 480 720 -
Common stock issued for
revenue rights on July 9,
1996 at $2.50 per share 14,000 14 34,986 -
Common stock issued for cash
at $0.40 per share 57,195 57 34,986
Stock offering costs - - (16,700) -
Loss from inception on June
22, 1987 through June 30, 