As
filed with the Securities and Exchange Commission on February 4,
2008
Registration
No. 333-149036
U.
S. SECURITIES AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
S-1/A
Pre-Effective
Amendment No. 2 to Form SB-2
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
TITLE
STARTS ONLINE, INC.
(Name
of
Registrant in its Charter)
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Nevada
(State
or Jurisdiction of
Incorporation
or Organization)
|
6541
(Primary
Standard Industrial
Classification
Code Number)
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26-1394771
(I.R.S.
Employer
Identification
No.)
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7007
College Boulevard
Suite
270
Overland
Park, KS 66211
(Address
and Telephone Number of Principal Executive Offices)
Mark
DeFoor
President
and Chief Executive Officer
Title
Starts Online, Inc.
7007
College Boulevard
Suite
270
Overland
Park, KS 66211
913.832.0072
(Name,
Address and Telephone Number of Agent for Service)
Copies
of all communications to:
Bartly
J.
Loethen
Synergy
Law Group, LLC
730
West
Randolph Street, 6th
Floor
Chicago,
IL 60661
312.454.0015
Approximate
Date of Commencement of Proposed Sale to the Public:
As soon
as practicable after the effective date of this Registration Statement.
If
any of
the securities being registered on this form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act, check the
following box. o
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
Indicate
by check mark whether the registrant is a large accelerated file, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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o
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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CALCULATION
OF REGISTRATION FEE
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Title of Each Class of
Securities to Be Registered
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Amount to Be
Registered
|
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Proposed Maximum
Offering Price per Share(1)
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Proposed Maximum
Aggregate Offering Price
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Amount of
Registration Fee(2)
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Common
Stock
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900,000
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$ |
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0.25
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$
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225,000
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$ |
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8.84 |
(3) |
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(1)
(2)
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This
price was arbitrarily determined by the Company.
Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457 under the Securities Act.
|
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(3)
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Previously
paid.
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The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY
NOTE:
Title
Starts Online, Inc. previously filed a registration statement on Form SB-2
(SEC
File No. 333-149036) on February 4, 2008 to register 900,000 shares of common
stock. This pre-effective amendment amends the registration statement to update
certain information contained therein and is filed as a registration statement
on Form S-1 to comply with SEC rules and regulations which became effective
February 4, 2008.
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 buy these securities
in
any jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, dated _____________, 2008
PRELIMINARY
PROSPECTUS
TITLE
STARTS ONLINE, INC.
900,000
SHARES OF COMMON STOCK
This
prospectus relates to the offering of a minimum of 200,000 and a maximum
of
900,000 shares of common stock of Title Starts Online, Inc., (the “Company”) in
a self-underwritten direct public offering, without any participation by
underwriters or broker-dealers. The shares will be sold through the efforts
of
our officers and director. The offering price is $0.25 per share (the “Offering
Price”). The offering period will begin on the date this registration statement
is declared effective by the Securities and Exchange Commission (the “SEC”) and
continue, unless extended or terminated, until 5:00 P.M. Local Time, on
September 30, 2008 (the “Offering Period”). In the event that a minimum of
200,000 shares are not sold within the Offering Period, all money received
by us
will be promptly returned without interest or deduction of any kind.
Subscription funds will be held until closing by Synergy Law Group, LLC,
as
escrow agent, in an escrow account at Charter One Bank. The minimum purchase
requirement for each investor in this offering is $1,250 or 5,000 shares.
Prior
to this offering, there has been no public market for the common
stock.
THE
PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 7.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of the securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
You
should rely only on the information contained in this Prospectus and the
information we have referred you to. We have not authorized any person to
provide you with any information about this Offering, the Company, or the shares
of our Common Stock offered hereby that is different from the information
included in this Prospectus. If anyone provides you with different information,
you should not rely on it.
The
date
of this prospectus is _______________, 2008
TABLE
OF CONTENTS
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5
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Risk
Factors
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7
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Forward
Looking Statements
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12
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Use
of Proceeds
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12
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Determination
of Offering Price
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13
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Plan
of Distribution
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13
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Legal
Proceedings
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15
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Directors
and Officers
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15
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Beneficial
Ownership
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16
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Description
of Securities
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16
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Interests
of Named Experts and Counsel
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17
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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17
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Description
of Business
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18
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Management's
Discussion and Analysis or Plan of Operation
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21
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Description
of Property
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22
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Experts
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22
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Certain
Relationships and Related Transactions
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22
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Market
for Common Equity and Related Stockholder Matters
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23
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Executive
Compensation
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24
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24
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Financial
Statements
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25
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Prospectus
Summary
This
summary highlights information contained elsewhere in this Prospectus and may
not contain all of the information you should consider before investing in
the
shares. You are urged to read this Prospectus in its entirety, including the
information under “Risk Factors. Unless the context indicates otherwise, the
words “we,” “us” “our” or the “Company” refer to Title Starts Online, Inc.
Overview
This
Prospectus relates to the offering of shares by Title Starts Online, Inc.,
a
Nevada corporation. The Company proposes to raise a minimum amount of $50,000
(the “Minimum Offering Amount”) and an maximum amount of $225,000 (the “Maximum
Offering Amount”) through the sale of a minimum of 200,000 shares and a maximum
of 900,000 shares of Company common stock with a par value $.001 (each a
“Share”
and collectively the “Shares”) at the price of $0.25 per Share (the “Offering”)
as more fully described in “Plan
of Distribution.”
Subscription funds will be held until closing by Synergy Law Group, LLC,
as
escrow agent, in an escrow account at Charter One Bank. The Report of the
independent registered public accounting firm which audited the Company’s
financial statements for the year ended December 31, 2007 contains an opinion
that there is substantial doubt about the Company’s ability to continue as a
going concern because the Company has no business operations, has negative
working capital and minimal stockholders’ equity. See “Risk Factors” beginning
on page 7.
The
Company
Title
Starts Online, Inc. was incorporated under the laws of the state of Nevada
on
November 13, 2007. The Company's principal offices are located at 7007 College
Boulevard, Suite 270, Overland Park, KS 66211. Our telephone number there is
913.832.0072. Our fax number is 913.747.3001. We are also in the process of
creating a website which will be www.titlestarts.com. Information included
on
our website is not a part of this Prospectus.
The
Company is in its development stage with no revenues to date. The majority
of
the activities to date have revolved around defining requirements from
residential title abstractors in the Kansas City area to determine the value
proposition of a consolidated title start website business. In the title
insurance business, abstractors are required to research any and all
encumbrances on specific properties which are in the process of being refinanced
or sold. This search is completed by merging data from a variety of sources,
some online and some in log books physically maintained by local governmental
entities and private production plants. The research results are then compiled
into a commitment of title insurance which is submitted to the entity requesting
the information. The Company intends to develop a central repository for
title
starts and plans to deliver two categories of products - title starts and
a
title search template - along with a tips and tools area via the Company’s
website. The website will have the functionality to manage new title search
findings based on unique user identification to facilitate order processing,
to
offer remote storage and minimize redundant data entry. Users will also have
the
ability to shop for existing title starts and utilize innovative search
techniques to expedite their search. The Company’s products remain in the
developmental stage. The Company’s next step is to conduct focus groups to test
utility and function of the products. After the function and utility are
established, the Company plans to market its product within the title insurance
industry.
Mark
DeFoor, the primary founder of the Company, is also a Director, President and
Chief Executive Officer. Mr. DeFoor earned a Bachelor’s of Business
Administration (1993) and a Master’s of Business Administration (1995) from the
University of Missouri at Kansas City. Mr. DeFoor’s previous experience includes
the development of the National Association of Insurance Commissions Central
Repository of Producer Agents as well as the operation, purchase and sale of
several title insurance companies.
The
Company anticipates that title abstractors will represent a significant segment
of the total subscribers in this Offering. The Company’s registration of the
Shares with the potential development of a market to sell the Shares is intended
to provide its investors with an additional incentive to become part of the
Company. While the registration of its Shares is for the purpose of creating
a
public market, there is no guarantee that a public market will ever exist
for
the Company’s Shares or that, if developed, can be
sustained.
The
Offering
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Securities
Being Offered
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The
Company is offering for sale a minimum of 200,000 and a maximum of
900,000
shares of its common stock.
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Initial
Offering Price
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The
Offering Price is $0.25 per Share. The Offering Price was determined
arbitrarily by the Company.
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Terms
of the Offering
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The
Shares will be sold through the efforts of our officers and director
beginning on the date this registration statement is declared effective
by
the SEC.
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Termination
of the Offering
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The
Offering will conclude on September 30, 2008. We may, in our sole
discretion, terminate the Offering prior to the end of the Offering
Period
for any reason whatsoever. No subscription will be accepted unless
payment
is received by September 30,
2008.
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Risk
Factors
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The
securities offered hereby involve a high degree of risk and should
not be
purchased by investors who cannot afford the loss of their entire
investment. See ‘‘Risk Factors’’ beginning on page
7.
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Common
Stock Issued And Outstanding Before Offering
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3,100,000
shares of our common stock are issued and outstanding as of the date
of
this Prospectus.
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Common
Stock Issued And Outstanding After Offering
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Upon
completion of the Offering, we will have 3,300,000 shares of common
stock
issued and outstanding if we sell the minimum number of shares
offered in
this Offering. We will have 4,000,000 shares of common stock issued
and
outstanding upon completion of the Offering if we sell the maximum
number
of Shares offered in this Offering.
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Use
of Proceeds
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The
Company will use the net proceeds from the Offering substantially
for
general corporate purposes primarily in the areas of product development,
marketing, advertising, promotion, acquiring relationships and
general
working capital.
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Summary
Financial Information
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Balance
Sheet Data
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12/31/07
(Audited)
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3/31/08
(Unaudited)
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Cash
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0
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2,500
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Total
Assets
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18,391
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30.442
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Liabilities
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17,091
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30,062
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Total
Stockholders’ Equity
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1,300
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380
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Statement
of Loss and Deficit
From
Incorporation on November 13, 2007
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To 12/31/07
(Audited
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To
3/31/08
(Unaudited
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Revenue
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0
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0
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Net
Loss and Deficit
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(1,800
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(2,720
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)
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Risk
Factors
You
should carefully consider the risks and uncertainties described below and the
other information in this Prospectus before deciding whether to invest in the
Shares we are offering. The risks described below are not the only ones we
will
face. Additional risks and uncertainties not presently known to us or that
we
currently deem immaterial may also impair our financial performance and business
operations. If any of these risks actually occur, our business and financial
condition or results of operation may be materially adversely affected, the
trading price of our common stock could decline and you may lose all or part
of
your investment.
Risks
Related to Our Company
The
report of the independent registered public accounting firm which audited
the
Company’s financial statements as of December 31, 2007 expresses substantial
doubt as to the Company’s ability to continue as a going
concern.
In
the
report dated April 24, 2008 of the independent registered public accounting
firm
which audited the Company’s financial statements as of December 31, 2007, the
independent registered public accounting firm expressed substantial doubt
as to
the Company’s ability to continue as a going concern. Underlying the accounting
firm’s opinion are the absence of any business operations by the Company, its
negative working capital position and minimal stockholders’ equity. The notes to
the Company’s audited financial statements provide that continuation as a going
concern is dependent upon the operations of the Company which in turn are
dependent upon the Company’s ability to meet its financial requirements, raise
additional capital and the success of its future operations, and there is
no
assurance that the Company will be successful in accomplishing these
objectives.
Purchasers
may have difficulty evaluating the Company’s business because of the absence of
any operating history.
The
Company was incorporated on November 13, 2007, and to date, we have been
involved primarily in organizational activities. The Company has no revenue
history, no operating history and has not delivered any products or
product-related services to customers. Potential investors should be aware
of
the difficulties normally encountered by development stage companies and the
high rate of failure of such enterprises. There is no guarantee that we will
commence business operations or that our business operations will be profitable.
For this reason, investors are encouraged to review the Company’s financial
information and prospects, to have discussions with representatives of the
Company and to engage professional advisors to evaluate an investment in the
Company.
If
we do not obtain additional financing, our business will fail.
Our
business plan calls for ongoing expenses in connection with the development
of
the business of the Company. We have not generated any revenue from operations
to date. We may not be able to implement our business plan without obtaining
additional financing. If this financing is not available or obtainable,
investors may lose a substantial portion or all of their investment. If adequate
funds are not available to satisfy our immediate or intermediate capital
requirements, we will limit our operations significantly. There can be no
assurance that such additional financing will be available to us on acceptable
terms, or at all. The most likely source of future funds presently available
to
us is through the sale of additional shares of common stock, which could result
in dilution to existing shareholders.
The
Company has a lack of profit and uncertain profit outlook.
The
Company has no history in operating its business on which to evaluate the
Company and its prospects. If customers do not adopt the Company’s products and
services due to the Company’s operating history, the Company’s profits will be
significantly and negatively affected. The Company's prospects must be
considered in light of the risks, uncertainties, expenses and difficulties
frequently encountered in this context.
If
the Company does not generate sales in a timely manner, the Company may run
out
of cash.
The
Company’s business plan is dependent on sales and anticipates that such sales
will commence in the third quarter of 2008. The Company will hire staff and
incur recurring expenses and plans to increase staffing and expense levels
in
anticipation of revenues assuming proceeds from this Offering make such
expenditures feasible. In the event that revenues do not occur in a timely
manner, the Company will need to dramatically reduce costs and may run out
of
cash.
If
the market chooses to buy competitive products and services, the Company will
not be financially viable.
Although
the Company believes that its products will be of commercial usefulness, there
is no verification by the marketplace that the Company’s products and services
will be purchased by customers. If the market chooses to buy competitive
products and services, it may be more difficult for the Company to be profitable
and the Company's business would be substantially harmed. The Company believes
that the purchase of its products is also highly dependent on perceptions of
risk, financial viability of the Company, ability to provide related services
and support, and other factors including brand perception, references, and
commercial linkage between these sales and other products and services. If
the
Company is not able to manage these perceptions, it may not be able to meet
its
forecasts and projections.
The
Company’s competitors are larger and have greater resources, giving them the
ability to utilize commercial practices that prevent customers from buying
the
Company’s products and services.
The
Company's competitors are larger and have resources greater than those of the
Company; therefore, there can be no assurance that potential customers will
buy
from the Company, as opposed to the Company's competitors. If potential
customers do not buy from the Company, the Company's business would be
significantly harmed. Competitors may also have greater leverage and stronger
relationships with their customers, as well as the ability to offer lower
prices, which could affect the Company’s ability to procure customers or cause
customers to change vendors.
The
Company’s results may fluctuate significantly from
projections.
The
Company’s anticipated revenues are based on projections, and results may vary
widely from such projections.
The
Company is reliant on senior management.
The
Company believes that its success is significantly dependent upon the continued
participation and collective skills of the executive officers. In addition,
certain knowledge and skills possessed by executive officers and key Company
employees may not be able to be replaced quickly or at all. Members of senior
management are under no obligations to remain with the Company. If several
senior management members do not remain with the Company, the Company's business
would be significantly harmed.
The
Company plans significant expenses for research and
development.
The
Company’s market is characterized by rapidly changing technologies and evolving
industry standards. The Company plans to incur significant research and
development expenses intended to adapt and expand to this evolving industry
and
achieve competitive advantage. If the Company does not generate sufficient
profit, the business could be harmed. If it is necessary to raise additional
funds to pay for further research and development through the issuance of equity
securities, the current stockholders would be diluted and their interests might
become subordinate to the rights and preferences of the holders of new equity
securities.
The
Company has an uncertain ability to meet future cash
needs.
It
is
likely that the Company will need additional financing in the future, either
as
a result of adverse developments, or as a result of rapid growth or volatility
in business levels or business conditions. If such financing is unavailable,
it
could have a serious adverse effect on the Company’s ability to
survive.
The
Company must develop delivery and support infrastructure to be viable in the
market.
The
Company is in an early stage of development, and if the Company does not develop
the necessary infrastructure to support its customers, its business could suffer
or fail.
The
Company’s business plan is highly sensitive to many factors, and thus Company
performance is not easily predictable.
The
title
insurance industry is sensitive to many factors, including competition with
larger companies, market demand, research and development expenditures, and
the
ability to stay competitive in the industry. Given these and other market
factors, the Company cannot predict with certainty its short- and long-term
performance and profitability. In addition, even if the Company achieves
profitability, given these many factors affecting the Company’s business, the
Company may not be able to maintain profitability in the future.
If
the Company does not manage growth effectively, the Company’s business could be
harmed.
Resource
infrastructure and geographic expansion will be required to realize the
Company’s growth strategy. Operations growth will place significant demands on
the management and other resources of the Company, which demands are likely
to
continue. To manage future growth, the Company will need to continue to attract,
hire and retain highly skilled and motivated officers, managers and employees
for:
1. Sales,
marketing, business development and customer service;
2. Technical
support, software development and integration;
3. Operational
and financial management; and
4. Training,
integrating and managing the growing employee base.
The
Company may not be successful in selecting, managing or expanding its operations
and markets or maintaining adequate management, financial and operating systems
and controls. The Company may not be able to achieve desired geographic
expansion without additional investment.
Experience
of management may not be adequate to achieve projections.
While
Company’s officers have history and experience in the title industry, there is
no guarantee that such experience will ensure that they are able to reach the
Company’s projections.
Any
additional financing through sales of our common stock will result in dilution
to existing shareholders.
We
will
require additional capital in order to achieve our business plan. Our most
likely source of additional capital will be through the sale of additional
shares of common stock. The sale of additional shares of common stock will
result in dilution to our existing stockholders and will negatively affect
the
value of an investor’s Shares.
Risks
Related To the Title Insurance Industry
The
title insurance industry is intensely competitive, and if the Company fails
to
successfully compete in this industry, its market share and business will be
harmed.
The
markets for the products and services offered by the Company are intensely
competitive and characterized by rapidly changing technology, evolving
regulatory requirements and changing consumer demands. Large companies may
at
any time attain positions of competitive advantage that the Company will find
difficult to counteract.
There
can
be no assurance that the Company will be able to successfully compete with
any
current or potential providers of products and services competitive with those
of the Company.
The
Company’s success depends, in part, on its ability to protect, develop and
secure proprietary information and intellectual property.
Although
the Company intends to pursue protection of its intellectual property, there
is
no assurance that such protection will be available or sufficient to preclude
competition. Competitors may develop similar or superior products, software,
business models and intellectual property. This could have serious impact on
the
ability of the Company to succeed. If the Company fails to protect, develop
and
secure proprietary information and intellectual property, the value of the
Company could be impaired.
If
the Company is unable to adapt to the rapid technological change in its
industry, the Company will not remain competitive and its business will
suffer.
The
Company’s market is characterized by rapidly changing technologies and evolving
industry standards. The recent growth of the Internet and intense competition
in
the industry exacerbate these market characteristics. The Company’s future
success will depend on the Company’s ability to adapt to rapidly changing
technologies by continually improving the features and reliability of its
products. The Company may experience difficulties that could delay or prevent
the successful introduction or marketing of new products and services. In
addition, new enhancements must achieve significant market acceptance. The
Company could also incur substantial costs if the Company needs to modify its
service or infrastructures or adapt its technology to respond to these changes.
The
title insurance industry is subject to natural fluctuation.
The
title
business is seasonal for purchase transactions and depends largely on interest
rates in connection with refinance transactions. It is likely that the Company
will be subject to these same types of performance fluctuations. The real
estate
market is subject to fluctuation and is currently is a state of decline.
The
condition of the real estate market and economic conditions in general will
strongly affect the viability of the Company’s plans.
Risks
Related To Regulations
The
Company's failure to comply with existing regulations and future regulations
could subject the Company to penalties.
The
Company will provide products and services in multiple jurisdictions. Any
failure of the Company to comply with existing regulations or regulations
adopted in the future in those jurisdictions could subject the Company to
penalties. Compliance matters could also increase the Company’s costs and affect
the Company’s ability to meet its projections. The Company will assess
regulations and requirements of certain jurisdictions for its products and
may
need to retain outside experts in order to ensure compliance. While the Company
does not believe that its current structure will require it to obtain insurance
licenses or other types of licenses, it is possible that state insurance
commissions would take an alternate view, which could subject the Company to
penalties and fines and require the Company to go through the costly and
time-consuming licensing application process in each such jurisdiction which
takes the position that the Company must hold an insurance license
therein.
Risks
Related To Customers
The
Company’s products are not yet proven with customers.
Until
the
Company has finished developing its products, there is uncertainty regarding
the
products’ acceptability to customers and as a result, their viability within the
customers’ sales channels. In the event that acceptance is delayed, or in the
event that customers promote competitive products, the Company would be
seriously harmed.
Risks
Related To The Offering And
The
Purchase and Ownership of Stock
The
Company will hold subscription funds in escrow during the Offering Period
which
may extend to September 30, 2008.
Subscription
funds submitted by subscribers will be held at Charter One Bank in an escrow
account by Synergy Law Group, LLC, the Company’s escrow agent, during the
Offering Period which expires on September 30, 2008 unless earlier terminated
by
the Company. During such time, subscribers will have no right to the issuance
of
the shares for which they have subscribed. If the Company fails to receive
subscriptions for at least the Minimum Offering Amount or terminates or
withdraws the Offering for any reason or if the subscriber’s subscription is
rejected in whole or in part for any reason, subscription funds will be returned
to subscribers without any interest earned on the funds.
The
Offering Price of the Shares is arbitrary.
The
price
of the Shares has been determined arbitrarily by the Company and bears no
relationship to the Company's assets, book value, potential earnings or any
other recognized criteria of value.
The
Company has a lack of dividend payments.
The
Company has no plans to pay any dividends in the foreseeable
future.
Certain
Company actions and the interests of stockholders may
differ.
The
voting control of the Company could discourage others from initiating a
potential merger, takeover or another change of control transaction that could
be beneficial to stockholders. As a result, the value of stock could be harmed.
Purchasers should be familiar with the equity breakdowns among stockholders
of
the Company.
The
Company’s management team will have broad discretion over the use of
proceeds.
The
Company’s management will retain broad discretion as to the allocation of the
proceeds of this Offering, and the Company may not be able to invest these
proceeds to yield a significant return.
Purchasers
will experience immediate and substantial book value
dilution.
The
price
of the Shares offered hereunder is expected to be substantially higher than
the
net tangible book value of each outstanding share of stock. Investors who
purchase Shares in this Offering will suffer immediate and substantial dilution.
The
Company may be subject to rights of preferred stockholders including mandatory
redemption.
At
some
point in the future, the Company may authorize and issue preferred stock. The
rights attached to preferred shares could affect the Company’s ability to
operate, which could force the Company to seek other financing. Such financing
may not be available on commercially reasonable terms or at all and could cause
substantial dilution to existing stockholders.
Our
Common Stock may be subject to “penny stock” rules which may be detrimental to
investors.
The
SEC
has adopted regulations which generally define “penny stock” to be any equity
security that has a market price (as defined) of less than $5.00 per share
or an
exercise price of less than $5.00 per share. Such securities are subject to
rules that impose additional sales practice requirements on broker-dealers
who
sell them. For transactions covered by these rules, the broker-dealer must
make
a special suitability determination for the purchaser of such securities and
have received the purchaser’s written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the
market. Finally, among other requirements, monthly statements must be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
We
have the right to issue up to 75,000,000 shares of preferred stock, which may
adversely affect the voting power of the holders of other of our securities
and
may deter hostile takeovers or delay changes in management control.
We
may
issue up to 75,000,000 shares of our preferred stock from time to time in one
or
more series, and with such rights, preferences and designations as our board
of
directors may determine from time to time. To date, we have not issued any
shares of preferred stock. Our board of directors
is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights, liquidation preferences and other rights and
restrictions relating to any series of our preferred stock. Issuances of shares
of preferred stock, while providing flexibility in connection with possible
financings, acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of our common stock
and
may, under certain circumstances, have the effect of deterring hostile takeovers
or delaying changes in management control.
Forward
Looking Statements
This
Prospectus contains projections and statements relating to Company that
constitute "forward-looking statements." These forward-looking statements may
be
identified by the use of predictive, future-tense or forward-looking
terminology, such as "intends," "believes," "anticipates," "expects,"
"estimates," "may," "will," or similar terms. Such statements speak only as
of
the date of such statement, and the Company undertakes no ongoing obligation
to
update such statements. These statements appear in a number of places in this
Prospectus and include statements regarding the intent, belief or current
expectations of the Company, and its respective directors, officers or advisors
with respect to, among other things: (1) trends affecting the Company’s
financial condition, results of operations or future prospects, (2) the
Company’s business and growth strategies and (3) the Company’s financing plans
and forecasts. Potential investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that, should conditions change or should any one
or
more of the risks or uncertainties materialize or should any of the underlying
assumptions of the Company prove incorrect, actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors, some of which are unknown. The factors that could adversely affect
the
actual results and performance of the Company include, without limitation,
the
Company’s inability to raise additional funds to support operations and capital
expenditures, the Company’s inability to effectively manage its growth, the
Company’s inability to achieve greater and broader market acceptance in existing
and new market segments, the Company’s inability to successfully compete against
existing and future competitors, the Company’s reliance on independent
manufacturers and suppliers, disruptions in the supply chain, the Company’s
inability to protect its intellectual property, other factors described
elsewhere in this Prospectus, or other reasons. Potential investors are urged
to
carefully consider such factors. All forward-looking statements attributable
to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the foregoing cautionary statements and the "Risk Factors" described
herein.
Use
of
Proceeds
Assuming
900,000 Shares are subscribed for in this Offering, and after netting
anticipated Offering expenses, the net proceeds from the sale of the Shares
will
be approximately $188,800. If subscriptions are received for 200,000 shares,
after netting anticipated Offering expenses, the net proceeds from the sale
of
the Shares will be approximately $13,800. The Company intends to use the
net
proceeds from the Offering substantially for general corporate purposes
primarily in the areas of marketing, advertising, promotion, acquiring
relationships with title abstractors and title agencies and general working
capital. In allocating the proceeds, the Company’s highest priority will be to
develop the product to a functional stage. After the product is functional,
the
Company’s next priority will be to market, advertise and promote the product.
The Company believes that receipt of only the minimum proceeds will be
sufficient to develop a functional product. Receipt of the minimum proceeds
will
support a lesser marketing and product promotion campaign which could result
in
slower sales of the product. The Company anticipates that the momentum of
marketing efforts within the community of title abstractors will be enhanced
because of the nature of the title insurance industry. There tends to be
significant and frequent communication in the community of title abstractors
which would allow a means for exposure of the Company’s product without a
corresponding expenditure by the Company for marketing efforts. We believe
these
proceeds will be sufficient to fund our operations for a period of six months.
Set forth below is the Company’s proposed use of proceeds assuming the sale of
all of the Shares offered hereunder:
Working
Capital
The
Company plans to hire employees with technical expertise to refine its products
and services. Working capital will support personnel costs as well as the
general administration and management of the Company’s start-up
phase.
Research
and Development
The
Company anticipates continuing its research and development efforts to enhance
its sales and market position by developing an electronic central title starts
repository. Proceeds of this Offering will support the Company’s ongoing
research and development efforts. Initially, the Company’s primary focus will be
to develop its products for entry into the market. After it sufficiently
refines
its products, the Company’s principal area of concentration will shift to
marketing and promotion of its products.
Marketing/Advertising/Promotion
The
Company expects to explore the most advantageous means of marketing, advertising
and promotion of the Company’s products and services. The funds generated from
this Offering will support the Company’s marketing strategies. Proceeds in the
Minimum Offering Amount will allow the Company to pursue marketing campaigns
in
limited markets. Proceeds in excess of the Minimum Offering Amount will permit
the Company to expand the scope of promotional efforts for its
products.
Because
of the number and variability of factors that determine the use of the net
proceeds from this Offering, we cannot assure you that the actual uses of the
net proceeds from this Offering will not vary substantially from our currently
planned uses. Pending use of the net proceeds from this Offering, we intend
to
invest the net proceeds from this Offering in money market accounts at insured
institutions.
Determination
of
Offering Price
Prior
to
this Offering, there has been no market for our common stock. The Offering
Price
of the Shares offered hereunder was arbitrarily determined by the Company and
bears no direct relationship to the value of our assets, book value, net worth,
historical or prospective earnings, actual results of operations, trading price
of our stock, or any other recognized criteria of value. The Offering Price
of
the Shares should not be considered as an indication of the actual or trading
value of a share of our common stock.
Plan
of Distribution
General
There
is
no public market for our common stock. Therefore, the current and potential
market for our common stock is limited and the liquidity of our shares may
be
severely limited. To date, we have made no effort to obtain listing or quotation
of our securities on a national stock exchange or association. We have not
identified or approached any broker/dealers with regard to assisting us to
apply
for such listing. We are unable to estimate if or when we expect to undertake
this endeavor. No market may ever develop for our common stock, or if developed,
such market may not be sustained in the future. Accordingly, the Shares should
be considered totally illiquid, which inhibits investors’ ability to sell their
Shares. The market price of the Shares of common stock is likely to be highly
volatile and may be significantly affected by factors such as actual or
anticipated fluctuations in the Company’s operating results, announcements of
technological innovations, new products and/or services or new contracts by
the
Company or its competitors, developments with respect to copyrights or
proprietary rights, adoption of new accounting standards or regulatory
requirements affecting the insurance business, general market conditions and
other factors. In addition, the stock market from time to time experiences
significant price and volume fluctuations that may adversely affect the market
price for the Company’s common stock.
The
Offering
The
Company is offering to sell a minimum of 200,000 and a maximum of 900,000
Shares
pursuant to the terms of this Prospectus in a self-underwritten direct public
offering, without any participation by underwriters or broker-dealers. The
Offering Price is $0.25 per Share. The Offering Period will begin on the
date
this registration statement is declared effective by the Securities and Exchange
Commission and will expire on September 30, 2008. We may, within our sole
discretion, terminate the Offering prior to the end of the Offering Period.
No
subscription will be accepted unless payment is received by September 30,
2008.
The
closing of the Offering and the disbursement of funds are conditioned upon
our
receipt of subscriptions aggregating no less than $50,000, the Minimum Offering
Amount. The minimum dollar amount of Shares that may be purchased by any
subscriber is $1,250, unless the Company waives this minimum dollar requirement.
Until
the
Company receives and accepts subscriptions for a minimum of $50,000, all
subscription funds will be held by the Company at Charter One Bank in an
escrow
account in the name of Synergy Law Group, LLC, as escrow agent. If subscriptions
for at least $50,000 have not been received before the expiration of the
Offering Period, all subscription funds will be returned to the subscribers,
without any interest earned on the funds. If an investor subscribes for at
least
$1,250 and its subscription is accepted by Company, the subscription funds,
together with any interest earned on the funds, will be drawn upon and used
by
the Company following the closing of the Offering.
The
affiliates, officers, directors, employees and stockholders of the Company
reserve the right at their option to purchase Shares, but all such purchases
shall be without discount and at the full Offering Price per Share. Any such
purchase will be counted in determining if the Minimum Offering Amount has
been
satisfied.
Shares
will be sold through the efforts of the officers and director of the Company.
There will be no participation by underwriters or broker-dealers. The Shares
will be qualified or registered for sale under the “blue sky” laws of certain
states. The states in which the Company currently plans to offer the Shares
include California, Florida, Kansas, Missouri and Nevada.
Expenses
of Offering
The
Company will pay all of the costs and expenses in connection with the Offering,
including but not limited to all expenses incurred to prepare, reproduce or
print this Prospectus, legal expenses and other expenses incurred in qualifying
the Offering for sale under federal securities laws and applicable state
securities, or “blue sky,” laws. It is estimated that the expenses of the
Offering will not exceed $36,200.
Subscription
Procedures
If
after
carefully reviewing and studying this Prospectus, you desire to purchase Shares,
you must do the following:
(1) Complete,
execute, date and deliver to us the Subscription Agreement which accompanies
this Prospectus.
(2) Forward
the Subscription Agreement to Carol McMahan, Synergy Law Group, LLC, 730
West
Randolph, Suite 600, Chicago, IL 60661, with a wire transfer to Charter One
Bank
in an amount equal to the total purchase price for the number of Shares you
desire to purchase, as per the following instructions:
CHARTER
ONE BANK
FED
ABA#
241070417
C/O
TITLE
STARTS ESCROW # 4512173977
All
wire
transfers should be accompanied by a facsimile notification of the wire to
the
attention of Carol McMahan at 312.454.0261.
All
funds
received in connection with the sale of the Shares shall be held until Closing
in escrow by Synergy Law Group, LLC, as escrow agent for the Company, at
Charter
One Bank.
Right
to Reject Subscriptions
We
have
the right to accept or reject subscriptions in whole or in part for any reason
or for no reason. We will return all monies from rejected subscriptions to
the
subscriber without interest or deduction.
Legal
Proceedings
There
are
no pending, nor to our knowledge threatened, legal proceedings against the
Company.
Directors and
Officers
The
directors of the Company hold office for annual terms and will remain in their
positions until successors have been elected and qualified. The officers are
appointed by the board of directors of the Company and hold office until their
death, resignation or removal from office. The ages, positions held, and
duration of terms of the directors and executive officers are as
follows:
|
Name
|
|
Age
|
|
Position
|
|
Mark
DeFoor
|
|
37
|
|
Director,
President and Chief Executive Officer
|
|
Melissa
Yarnell
|
|
40
|
|
Secretary
|
Mark
DeFoor, Director, President, Chief Executive Officer:
Mark
DeFoor is a Director, President and Chief Executive Officer of Title Starts
Online, Inc. Mr. DeFoor earned a Bachelor’s of Business Administration (1993)
and a Master’s of Business Administration (1995) from the University of Missouri
at KC. Mr. DeFoor’s previous experience includes the development of the National
Association of Insurance Commissions Central Repository of Producer Agents
as
well as the purchase, operation and sale of several title insurance
companies.
Melissa
Yarnell, Secretary:
Melissa
Yarnell is the Secretary of Title Starts Online, Inc. Mrs. Yarnell attended
Kansas City Kansas Community College and has been in the title insurance
business since 1990. From 1990 to 1994 Mrs. Yarnell served as an Escrow Closer
at ATI/American Land Title Agency and from 1994 to 2003 served as Escrow Manager
of Nations Title Agency, Inc. Mrs. Yarnell is currently the Vice President
of
Escrow Services for Capital Title Agency, Inc. in Kansas City, MO.
Term
of Office
Our
directors are appointed for one-year terms to hold office until the next annual
meeting of our shareholders or until removed from office in accordance with our
By-Laws. Our officers are appointed by our board of directors and hold office
until removed by the board.
Director
Independence
Our
determination of independence of directors is made using the definition of
‘‘independent director’’ contained under Rule 4200(a)(15) of the Rules of the
Financial Industry Regulatory Authority (“FINRA”). However, we are not at this
time required to have our board comprised of a majority of “independent
directors” because we are not subject to the listing requirements of any
national securities exchange or national securities
association.
Employees
At
the
present time, we have no paid employees. Mark DeFoor, our President and Chief
Executive Officer, is currently managing the start-up operations of the Company
without compensation.
Beneficial
Ownership
The
following table sets forth certain information as of the date of this prospectus
and following the Offering with respect to the beneficial ownership of the
outstanding common stock of the Company by (i) any holder of more than five
(5%)
percent; (ii) each of the Company’s executive officers and directors; and (iii)
the Company’s directors and executive officers as a group. Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power with respect to all shares beneficially owned.
The
percentage of class is based on 3,100,000 shares of common stock issued and
outstanding as of the date of this Prospectus. Unless otherwise indicated
below,
the address for each individual is 7007 College Boulevard, Suite 270, Overland
Park, KS 66211.
| |
|
Prior to Offering
|
|
Following Offering
Assuming Minimum
Shares Are Sold
|
|
Following Offering
Assuming Maximum
Shares Are Sold
|
|
|
Name and Address of
Beneficial Owner
|
|
Amount of
Beneficial
Ownership
|
|
Percentage
of Class
|
|
Amount of
Beneficial
Ownership
|
|
Percentage
of Class
|
|
Amount of
Beneficial
Ownership
|
|
Percentage
of Class
|
|
|
Mark
DeFoor
|
|
|
3,100,000
|
|
|
100
|
%
|
|
3,100,000
|
|
|
93.9
|
%
|
|
3,100,000
|
|
|
77.5
|
%
|
|
Melissa
Yarnell
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers as a Group (2
persons)
|
|
|
|
|
|
100
|
%
|
|
|
|
|
93.9
|
%
|
|
|
|
|
77.5
|
%
|
Description
of
Securities
The
following statements are qualified in their entirety by reference to the
detailed provisions of our Articles of Incorporation and By-Laws. The Shares
registered pursuant to the registration statement of which this prospectus
is a
part are shares of common stock, all of the same class and entitled to the
same
rights and privileges as all other shares of common stock.
Capital
Stock
The
authorized capital stock of the Company is 500,000,000 shares of capital stock,
consisting of 425,000,000 shares of common stock with full voting rights and
with a par value of $0.001 per share, and 75,000,000 shares of preferred stock,
with a par value of $0.001 per share (the “Preferred Stock”).
Preferred
Stock may be issued from time to time in one or more series with such
designations, preferences and relative participating, optional or other special
rights and qualifications, limitations or restrictions thereof, as shall be
provided by Board resolution authorizing the issuance of such Preferred Stock
or
series thereof; and the Board is vested with authority to fix such designations,
preferences and relative participating, optional or other special rights or
qualifications, limitations, or restrictions for each series, including the
power to fix the redemption and liquidation preferences, the rate of dividends
payable and the time for and the priority of payment thereof and to determine
whether such dividends shall be cumulative or not and to provide for and fix
the
terms of conversion of such Preferred Stock or any series thereof into the
common stock of the Company and fix the voting power, if any, of shares of
Preferred Stock or any series thereof.
As
of the
date of this prospectus, there are 3,100,000 shares of common stock issued
outstanding. There are no outstanding shares of Preferred Stock.
As
of the
date of this prospectus, there is one (1) holder of record of the Company’s
common stock, who is an affiliate of the Company.
Options
and Warrants
There
are
no outstanding options or warrants or other securities that are convertible
into
our common stock.
Voting
Rights
Each
shareholder is entitled to one (1) vote for each share of voting stock.
Shareholders are not entitled to cumulative voting rights.
Dividend
Policy
We
intend
to retain and use any future earnings for the development and expansion of
our
business and do not anticipate paying any cash dividends in the foreseeable
future.
Transfer
Agent
The
transfer agent for our common stock will be Empire Stock Transfer Inc. upon
completion of this Offering. Its address and telephone number are 2470 Saint
Rose Pkwy, Suite 304, Henderson, NV 89074, 702.818.5898. Until the present
time, we have acted as our own transfer agent and registrar.
Penny
Stock Regulation
The
SEC
has adopted regulations which generally define “penny stock” to be any equity
security that has a market price (as defined) of less than $5.00 per share
or an
exercise price of less than $5.00 per share. Such securities are subject to
rules that impose additional sales practice requirements on broker-dealers
who
sell them. For transactions covered by these rules, the broker-dealer must
make
a special suitability determination for the purchaser of such securities and
have received the purchaser’s written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the
market. Finally, among other requirements, monthly statements must be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
Interests
of
Named
Experts and Counsel
No
expert
or counsel named in this prospectus as having prepared or certified any part
of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the Shares was employed on a contingency basis, or had, or is
to
receive, in connection with the Offering, a substantial interest, direct or
indirect, in the Company, nor was any such person connected with the Company
as
a promoter, managing or principal underwriter, voting trustee, director, officer
or employee.
Disclosure
of Commission
Position on Indemnification
for
Securities Act Liabilities
Our
Articles of Incorporation and By-Laws provide for the indemnification of Company
officers and directors in regard to their carrying out the duties of their
offices. We have been advised that in the opinion of the SEC indemnification
for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment
by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by one of our directors, officers or controlling persons
in connection with the securities being registered, we will, unless in the
opinion of our legal counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Description
of Business
Company
Overview
Title
Starts Online, Inc. is a corporation, incorporated in the State of Nevada on
November 13, 2007. The Company's principal offices are currently located at
7007
College Boulevard, Suite 270, Overland Park, KS 66211. Our telephone number
there is 913.832.0072. Our fax number is 913.747.3001. All operations, from
administration to product development, take place at this location. The Company
occupies space within a customer facility owned by our President and Chief
Executive Officer, Mark DeFoor, for which it currently pays no rent. There
is no
obligation for or guarantee that this arrangement will continue in the
future.
The
Company is in its development stage with no current revenues to date. The
majority of the activities to date have revolved around defining requirements
from residential title abstractors in the Kansas City area to determine the
value proposition of a consolidated title start website business. In the title
insurance business, abstractors are required to research any and all
encumbrances on specific properties which are in the process of being refinanced
or sold. This search is completed by merging data from a variety of sources,
some online and some in log books physically maintained by local governmental
entities and private production plants. The research results are then compiled
into a commitment of title insurance which is submitted to the entity requesting
the information.
Organizational
Structure
Our
President and Chief Executive Officer, Mark DeFoor, is the only individual
currently participating in the Company’s start-up activities. At present, he is
contributing less than 10 hours per week to handle the operational business
functions including corporate administration and development
responsibility.
Upon
the
successful acquisition of funding or an increase in sales, we plan to expand
the
current staff by adding employees with technical expertise. We anticipate the
cost of each of these technical employment positions to be approximately
$80,000.00 per year, and we may choose to compensate these employees with
consideration other than cash, such as shares of common stock or options to
purchase shares of common stock.
Assuming
the availability of funds from this Offering or future sales of products,
we
expect to hire employees to fill the following positions:
DBA
–
Database Administrator
.Net
Systems Developer
Document
Management Specialist
We
would
also like to retain commissioned sales representatives or partner with national
insurance underwriters to cross-sell our services. As sales increase, we will
be
in a position to add customer service representatives to handle inbound calls,
handle setup, and assist in operational troubleshooting.
Products
and Services
The
mission of the Company is to provide fast and reliable title starts to
abstractors of small and large title agencies and underwriters.
The
Company intends to develop a central repository for title starts and plans
to
deliver two categories of products – title starts and a title search template –
along with a tips and tools area via the Company’s website. The website will
have the functionality to manage new title search findings based on unique
user
identification to facilitate order processing, to offer remote storage and
minimize redundant data entry. Users will also have the ability to shop for
existing title starts and utilize innovative search techniques to expedite
their
search.
The
existing inventory of title starts will be indexed by multiple categories.
This
database-driven approach will allow users the ability to search by a number
of
separate of variables including addresses, names and/or property legal
descriptions. The Company will not store any nonpublic information such as
social security numbers or dates of birth on the website.
Users
will play a unique role in the population of the data on the Company website.
As
a user places a new title start online, that user will be able to access one
of
the existing starts placed by another user. Users will then have the capability
of ranking the accuracy and completeness of another user’s search.
The
Company will use a ranking system for users similar to the ranking system used
for sellers on e-bay. Abstractors will be ranked by their peers as to the
completeness and accuracy of their searches. If the ranking of an abstractor
falls below our pre-determined acceptance level, they will have a “restricted”
ranking which will alert purchasers to the quality of the title start requested
from a “restricted” user.
Startup
and Plan
of Operation
The
Data
Model (Database back-end which houses the physical data logically for efficient
access) has entered its second stage of development. Tables within the database
have been completed and the relationships between those tables have been
connected to ensure data integrity. We have made arrangements for an advisory
panel of front line abstractors to test the Data Model to test the primary
data
components. This proof of concept at this stage will allow for a more efficient
development phase of version I of the GUI interface.
The
GUI
(Graphical User Interface), the portion of the web application which is viewable
by the public, is approximately 25% complete. Testing on the GUI interface
will begin with a group of title abstractors who have agreed to volunteer
their
time to participate in a focus group to ensure the functionality and usability
of the application. Alterations stemming from that focus group will begin
with the data model and follow through to the GUI interface. The GUI design
is
pending approval of the Data Model with the advisory panel/focus group. We
are
planning two separate interfaces for the initial launch. The first is the
information entry screen which will give abstractors at the plant the ability
to
upload and utilize a standard process to search title. The second will be
a
search engine which will give the abstractors the ability to access property
information.
Over
time, we see a third component to the system. This final component will allow
imports from industry standard software through an easy-to-use interface. This
component may need to be non-standard as each import would require a small
amount of mapping to ensure that the load would match our Data Model. If we
are
successful in acquiring a large, national agency or underwriter as a business
partner, we will elevate the priority of the development of this component.
Sales
Strategies
We
are
currently in the development stage of sales strategies. Initially, it appears
that the most cost-effective way to generate sales will be to direct as many
users as possible to the Company’s website. The site should be developed in a
manner which would allow screens to be exported to media for
distribution.
Technology
/ Platform
The
web
real estate of titlestarts.com is currently being developed utilizing the
following products offered remotely by godaddy.com:
| |
|
SQLServer
|
| |
GUI:
|
Microsofts
.net framework
|
Both
products run on the Microsoft’s Server platform.
Godaddy.com
is also hosting the Company’s email services and storage of
information.
Future
Products and Services
As
the
use of the website grows, the repository of information will become increasingly
valuable and, in turn, marketable. Real estate property-related entities, such
as property and casualty insurers, home improvement businesses and pest control
companies, will be able to see what starts have been viewed and, therefore,
ascertain the identity of the properties being transferred.
We
also
see a cross-marketing potential with the American Land Title Association wherein
the website could provide continuing education to abstractor members who use
the
product. The Company website could easily provide an online tutorial on proper
search methods which would promote good practices and which could potentially
reduce claims against agencies and underwriters.
Market
Needs
Abstractors,
also known as searchers, spend a significant portion of their time searching
paper documents in local county offices or production plants. Production plants
are repositories for real estate property records where plant members have
the
ability to view information. These production plants are expensive to maintain
and are used exclusively by medium or large title agencies and underwriters.
The
Company intends to offer to small and large title agencies and underwriters
electronic access to the same information which is available at production
plants. This will allow all abstractors the ability to acquire title starts
on a
transaction fee basis.
An
electronic central title start repository offers the potential for an enormous
reduction in the time involved in research by abstractors. The online repository
would allow the work of an already researched property to be reutilized for
a
small transaction fee.
Market
Trends
Almost
every insurance agency and underwriter in the title industry is intensely
interested in the developments in and benefits of technological advances in
the
industry. These companies are developing brand specific applications to speed
the delivery of title commitments to market. While they are spending tremendous
amount of time and money on these systems, the systems themselves are not
benefiting the front line abstractors.
It
is our
thought that the future will bring a consolidation of information across
agencies and underwriters. Such a vehicle does not currently exist, and the
Company hopes to be in a position to offer a central repository of property
information to all abstractors eliminating travel and search time in many
areas.
Market
Growth
Business
in all aspects of the real estate industry has constricted over the past year.
Mortgage applications have declined, and the ability of the mortgage
professionals to place those applications has also declined. Most mortgage
lenders have either closed or tightened the guild lines associated with placing
the loans.
Title
Starts Online, Inc can utilize this time to create, implement and market our
solution. The Company hopes that when an upswing in the real estate market
occurs, it will be in a position to capture market share.
Competition
The
title
industry does not currently have a public online resource for title starts.
Information is fragmented between legacy log books within local county records
and company records within a variety of insurance agencies and
underwriters.
The
primary competition will be our customers themselves. As a title insurance
agency searches a property, the “title start” or searched information is saved
within a customer’s file. This record can be either a physical paper file or an
image of the documents stored electronically. If, by chance, a title company
is
asked to research the property again, then the old customer file is opened
and
the title start will be utilized. In most cases, customers are not in the
position of having multiple searches on the same property.
Some
title agencies currently have an internal system which will access county
records remotely and import them into their system. This system requests new
searches from the county each time a property is searched. A system of this
type
would require data mapping for every county in the United States which is
currently web enabled.
Management's
Discussion and
Analysis
or Plan
of Operation
The
following discussion of our financial condition and plan of operation should
be
read in conjunction with the Company’s financial statements, the notes to those
statements and the information included elsewhere in this prospectus. This
discussion includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, such as those set forth under
“Risk
Factors”
and
elsewhere in this prospectus, our actual results may differ materially from
those anticipated in these forward-looking statements.
Overview
The
Company plans to develop its business in three stages: (1) Ensuring market
demand through concentrated research and analysis conducted with a group
of
title abstractors who have volunteered their time to participate in a focus
group; (2) Ensuring usability and functionality of the GUI interface by testing
the developing product in focus group settings in all phases of product
development; and (3) Utilizing a grass roots effort among title abstractors
to
propel the product into use during the initial phases of the business
model. Title abstractors are our target market for the Company’s products.
Input from title abstractors during the development phase and introduction
of
the products to title abstractors will enhance the likelihood of the usability
of the products and validate support from the commercial consumer. In the
event that the Minimum Offering Amount is raised in this Offering, the proceeds
received will provide the means for the Company to continue testing of its
theories and products and allow for limited marketing. If the Company raises
the
Maximum Offering Amount, those proceeds will be used for the same purposes,
but
the Company will be able to proceed with product development at a faster
pace
and move ahead with a broader promotional campaign.
Plan
of Operation
We
are a
start-up company and have not yet generated or realized any revenues from our
business operations.
Limited
Operating History; Need for Additional Capital
There
is
no historical financial information about us upon which to base an evaluation
of
our performance. We are in the start-up phase of development, have not generated
any revenues from operations and cannot guarantee we will be successful in
our
business operations.
Liquidity
and Capital Resources
We
are
attempting to raise money from this Offering to generate cash to begin
operations. As of December 31, 2007, our total assets were $18,391, and our
total liabilities were $17,091. As of March 31, 2008, our total assets were
$30,442, and our total liabilities were $30,062.
The
Company has no firm cash commitments for capital expenditures. The Company’s
anticipated capital requirements are modest in part due to characteristics
inherent to the title starts industry which relies on existing repositories
of
title information. The Company will use godaddy.com for website hosting and
has
no associated infrastructure cost. The Company expects that the minimum proceeds
from this Offering will be sufficient to support its business plan for twelve
months. If the Company receives proceeds in excess of the Minimum Offering
Amount, the pace at which the Company can pursue its business plan will be
accelerated. Initially, the Company anticipates conducting marketing efforts
through the use of outside sales representatives on a commission basis. If
it
receives only minimum proceeds, the Company will limit the number of markets
it
can target in initial promotional product campaigns. Although unlikely because
the Company does not anticipate an imminent expenditure of funds, the Company
may fulfill capital needs by borrowing funds from Mark DeFoor, currently
the
Company’s sole shareholder. Mr. DeFoor has made a firm commitment to loan up to
$25,000 to the Company on an interim basis pending closing of the Offering.
Important
Assumptions
The
recent downturn in the mortgage refinance market has significantly reduced
the
number of transactions we believe will be able to be performed. Although the
numbers of transactions are not expected to be as high as in recent years,
the
quantity of companies requiring our product will also decrease. This reduction
in the number of companies in the market will make it easier for market
penetration and standardization of data inputs.
Description
of
Property
The
Company owns no real estate. Title Starts Online, Inc. is currently utilizing
space within a customer facility in Overland Park, KS. The facility is owned
by
our President and Chief Executive Officer, Mark DeFoor, and the Company
presently pays no rent to occupy the space. There is no obligation for or
guarantee that this arrangement will continue in the future.
The
website is co-located with www.godaddy.com to insure favorable service times
while offering the flexibility of increasing data storage and bandwidth without
the delay of acquisition and installation of owned services. When revenues
and/or raised capital allows, a development environment will be created within
the physical location to speed access. Long term, the Chief Technology Officer
will make a determination as to the operational location of the production
website.
Experts
The
financial statements of Title Starts Online, Inc. as of December 31, 2007 and
for the period from November 13, 2007 (inception) through December 31, 2007,
included in this Registration Statement have been audited by
Schumacher & Associates, Inc., independent registered public
accounting firm, and have been so included in reliance upon the report of
Schumacher & Associates, Inc. given on the authority of such firm
as experts in accounting and auditing.
Certain
Relationships and
Related Transactions
Since
inception, the following transactions were entered into with our shareholders.
Our
sole
shareholder, Mark DeFoor, acquired his shares with the intent to hold the shares
for investment purposes and not with a view to further resale or distribution,
except as permitted under exemptions from registration requirements under
applicable securities laws.
The
certificate was issued with a restrictive legend with respect to the issuance
of
securities pursuant to exemptions from registration requirements under the
Securities Act.
Our
sole
shareholder, Mark DeFoor, made a firm commitment to loan up to $25,000 to
the
Company as needed to aid development and start-up of Company operations pending
receipt of proceeds from this Offering if a critical need arises for the
expenditure of funds prior to Closing. Any such loan will be made on
commercially reasonable terms and will be documented by a promissory
note.
Market
for
Common Equity and Related Stockholder Matters
No
Public Market for Common Stock
There
is
no public market for our common stock. Therefore, the current and potential
market for our common stock is limited and the liquidity of our shares may
be
severely limited. To date, we have made no effort to obtain listing or quotation
of our securities on a national stock exchange or association. We have not
identified or approached any broker/dealers with regard to assisting us to
apply
for such listing. We are unable to estimate if or when we expect to undertake
this endeavor. No market may ever develop for our common stock, or if developed,
may not be sustained in the future. Accordingly, our shares should be considered
totally illiquid, which inhibits investors’ ability to sell their Shares. The
market price of the Shares of common stock is likely to be highly volatile
and
may be significantly affected by factors such as actual or anticipated
fluctuations in the Company’s operating results, announcements of technological
innovations, new products and/or services or new contracts by the Company or
its
competitors, developments with respect to copyrights or proprietary rights,
adoption of new accounting standards or regulatory requirements affecting the
insurance business, general market conditions and other factors. In addition,
the stock market from time to time experiences significant price and volume
fluctuations that may adversely affect the market price for the Company’s common
stock.
Shareholders
of Our Common Shares
As
of the
date of this prospectus, we have one shareholder of record.
Rule
144 Shares
There
are
currently no outstanding warrants for the purchase of shares of common stock
and
no shares of common stock reserved under any employee stock option plans. As
of
the date of this prospectus, 3,100,000 shares of common stock are issued and
outstanding. There currently are no shares of common stock or common stock
equivalents which can be resold in the public market in reliance upon the safe
harbor provisions of Rule 144, as promulgated under the Securities Act of 1933.
Upon
the
date this Registration Statement becomes effective, a total of 900,000 shares
of
our common stock will become available for sale to the public. The 3,100,000
shares of common stock outstanding as of the date of this prospectus are
considered “restricted securities” because they were issued in reliance upon an
exemption from the registration requirements of the Securities Act and not
in
connection with a public offering. Pursuant to Rule 144 under the Securities
Act, at such time as the Company has become a reporting issuer under Section
13
or 15(d) of the Securities Exchange Act of 1934, as amended, these restricted
shares will become available for resale to the public at the rate of one
percent
(1%) of total issued and outstanding shares of the Company during a three-month
period. In general, under Rule 144, as amended and effective February 15,
2008,
an affiliate of a reporting company may resell restricted securities after
a
six-month holding period, subject to the current public information
requirements, volume limitations, manner of sale requirements and notice
of
proposed sale requirements.
As
of the
date of this prospectus, one person, who is an affiliate, holds 100% of our
outstanding shares of common stock.
Stock
Option Grants
To
date,
we have not granted any stock options.
Registration
Rights
We
have
not granted registration rights to any holder of shares of our common stock.
Dividends
There
are
no restrictions in our Articles of Incorporation or By-Laws that prevent us
from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
| |
1.
|
We
would not be able to pay our debts as they become due in the usual
course
of business; or
|
| |
2.
|
Our
total assets would be less than the sum of our total liabilities
plus the
amount that would be needed, if the Company were to be dissolved
at the
time of the distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior
to
those receiving the distribution.
|
We
have
not declared any dividends, and we do not plan to declare any dividends in
the
foreseeable future.
Executive
Compensation
We
have
not entered into any contracts for employment or alternative compensation for
any directors or executive officers. There are also no arrangements or plans
to
provide retirement, pension or similar benefits. We do not currently have any
bonus or incentive plans available. However, stock options may be granted at
the
direction of the board of directors.
Reports
to
Security Holders
We
have
filed with the SEC a Registration Statement on Form S-1/A (including exhibits)
under the Securities Act with respect to the shares to be sold in this Offering.
This prospectus, which forms part of the registration statement, does not
contain all the information set forth in the Registration Statement as some
portions have been omitted in accordance with the rules and regulations of
the
SEC. For further information with respect to our Company and the Shares offered
in this prospectus, reference is made to the Registration Statement, including
the exhibits filed thereto, and the financial statements and notes filed as
a
part thereof. With respect to each such document filed with the SEC as an
exhibit to the Registration Statement, reference is made to the exhibit for
a
more complete description of the matter involved. We are not currently subject
to the informational requirements of the Securities Exchange Act of 1934 (the
“Exchange Act”). As a result of the offering of the Shares of our common stock,
we will become subject to the informational requirements of the Exchange Act,
and, in accordance therewith, we will file quarterly and annual reports and
other information with the SEC and send a copy of our annual report together
with audited consolidated financial statements to each of our shareholders.
The
Registration Statement, such reports and other information may be inspected
and
copied at the Public Reference Room of the SEC located at 100 F Street, N.
E.,
Washington, D. C. 20549. Copies of such materials, including copies of all
or
any portion of the Registration Statement, may be obtained from the Public
Reference Room of the SEC at prescribed rates. You may call the SEC at
1-800-SEC-0330 to obtain information on the operation of the Public Reference
Room. Such materials may also be accessed electronically by means of the SEC’s
home page on the internet (http://www.sec.gov).
TITLE
STARTS ONLINE, INC.
AS
OF
DECEMBER 31, 2007
AND
FOR
THE PERIOD NOVEMBER 13, 2007 (INCEPTION)
THROUGH
DECEMBER 31, 2007
AND
FOR
THE PERIOD ENDED MARCH 31, 2008
(UNAUDITED)
Financial
Statements
Previously
filed in the Pre-Effective Amendment No. 1 to the Company’s Registration
Statement on Form S-1/A (File No. 333-149036) filed with the SEC on May 5,
2008
and incorporated herein by reference
Part
II
Information
Not Required in Prospectus
Item
24. Indemnification
of Directors and Officers
The
Company’s directors and executive officers are indemnified as provided by the
Nevada Revised Statutes and its By-Laws. These provisions state that certain
persons (hereinafter called "lndemnitees") may be indemnified by a Nevada
corporation pursuant to the provisions of applicable law, namely, any person
(or
the heirs, executors or administrators of such person) who was or is a party
or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by
reason of the fact that such person is or was a director, officer, employee
or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The Company will
indemnify the Indemnitees in each and every situation where the Company is
obligated to make such indemnification pursuant to the aforesaid statutory
provisions. The Company will also indemnify the Indemnitees in each and every
situation where, under the aforesaid statutory provisions, the Company is not
obligated, but is nevertheless permitted or empowered, to make such
indemnification. Before making such indemnification with respect to any
situation covered under the foregoing sentence, the Company will make a
determination as to whether each Indemnitee acted in good faith and in a manner
such Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, in the case of any criminal action or proceeding,
had no reasonable cause to believe that such Indemnitee's conduct was unlawful.
No such indemnification shall be made (where not required by statute) unless
it
is determined that such Indemnitee acted in good faith and in a manner such
Indemnitee reasonably believed to be in or not opposed to the best interests
of
the Company, and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that such Indemnitee's conduct was
unlawful.
We
have
been advised that in the opinion of the SEC indemnification for liabilities
arising under the Securities Act is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for
indemnification against such liabilities (other than payment by the Company
of
expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by one of our directors, officers or controlling persons in connection with
the
securities being registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed
by
the final adjudication of such issue.
Item
25. Other
Expenses of Issuance and Distribution
The
following table sets forth all estimated costs and expenses payable by the
Company in connection with the Offering for the securities included in this
registration statement:
|
SEC
registration fee
|
|
$ |
9.00
|
|
|
Blue
Sky fees and expenses
|
|
$ |
500.00
|
|
|
Printing
and shipping expenses
|
|
$ |
91.00
|
|
|
Legal
fees and expenses
|
|
$ |
30,000.00
|
|
|
Accounting
fees and expenses
|
|
$ |
5,000.00
|
|
|
Transfer
agent and miscellaneous expenses
|
|
$ |
600.00
|
|
|
Total
|
|
$ |
36,200.00
|
|
All
expenses are estimated except the SEC filing fee.
Item
26. Recent
Sales Of Unregistered Securities
In
connection with the organization of the Company, the sole shareholder of the
Company purchased an aggregate of 3,100,000 shares of Company common stock
on
November 13, 2007.
The
foregoing sale to a director with superior access to all corporate and financial
information of the Company was exempt from the registration requirements of
the
Securities Act on the basis that the transaction did not involve a public
offering.
Item
27. Exhibits
|
Exhibit No.
|
|
Description
|
|
3.1
|
|
Articles
of Incorporation1
|
|
3.2
|
|
By-Laws1
|
|
4.1
|
|
Specimen
common stock certificate1
|
|
5.1
|
|
Opinion
of Synergy Law Group, LLC2
|
|
10.1
|
|
Escrow
Agreement
|
|
10.2
|
|
Subscription
Agreement
|
|
23.1
|
|
Consent
of Synergy Law Group, LLC (see Exhibit 5.1)
|
|
23.2
|
|
Consent
of Schumacher & Associates, Inc. for use of their
report2
|
1Previously
filed as an exhibit to the Company’s Registration Statement on Form SB-2 (File
No. 333-149036) filed with the SEC on February 4, 2008.
2Previously
filed as an exhibit to the Pre-Effective Amendment No. 1 to the Company’s
Registration Statement on Form S-1/A (File No. 333-149036) filed with the
SEC on
May 5, 2008.
Item
28. Undertakings
We
hereby
undertake:
1. To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933.
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and
any
deviation from the low or high end of the estimated maximum offering range
may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no
more than a 20 percent change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective Registration
Statement; and
(iii) To
include any additional or changed material information on the plan of
distribution.
2. That,
for
the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time to be the initial bona fide offering thereof.
3. To
remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the
offering.
4. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
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 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or
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, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
5. For
determining any liability under the Securities Act of 1933:
(i) we
shall
treat the information omitted from the form of prospectus filed as part of
this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by us under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective. For determining any liability under the
Securities Act of 1933, we shall treat each post-effective amendment that
contains a form of prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of the securities
at
that time as the initial bona fide offering of those securities.
(ii) we
shall
treat each prospectus filed by us pursuant to Rule 424(b)(3) as part of the
registration statement as of the date the filed prospectus was deemed part
of
and included in the registration statement. Each prospectus required to be
filed
pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on rule 430B relating to an offering made pursuant to
Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act shall be deemed to be part
of
and included in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the prospectus.
As
provided in Rule 430B, for liability purposes of the issuer and any person
that
is at that date an underwriter, such date shall be deemed to be a new effective
date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made
in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as
to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement
or
prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
(iii) we
shall
treat each prospectus filed pursuant to Rule 424 (b) as part of a registration
statement relating to an offering, other than registration statement relying
on
Rule 430B or other than prospectuses filed in reliance on rule 430A, shall
be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement
made
in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to
such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made
in
any such document immediately prior to such date of first use.
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 S-1/A and authorized this registration statement
to be signed on its behalf by the undersigned in the City of Overland Park,
State of Kansas on July 1, 2008.
Title
Starts Online, Inc.
By:
/s/
Mark DeFoor
President
and Chief Executive Officer
In
accordance with the requirements of the Securities Act, this Registration
Statement was signed by the following persons in the capacities and on the
dates
stated.
|
SIGNATURE
|
TITLE
|
DATE
|
| |
|
|
|
/s/
Mark DeFoor
|
President,
Chief Executive Officer and Director (principal executive officer;
principal financial and accounting officer)
|
July
1, 2008
|
| |
|
|
|
/s/
Melissa Yarnell
|
Secretary
|
July
1, 2008
|