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<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">As
filed with the Securities and Exchange Commission on October 6,
2006</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 528pt; text-align: right; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Registration No.
333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:14pt;  width: 528pt; text-align: center; font-style: normal; line-height: 16pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">UNITED
STATES<br>SECURITIES AND EXCHANGE
COMMISSION</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">Washington, DC
20549</p>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">REGISTRATION
STATEMENT<br>UNDER<br>THE SECURITIES ACT OF
1933</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:16pt;  width: 528pt; text-align: center; font-style: normal; line-height: 18pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">SendTec,
Inc.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:8pt;  width: 528pt; text-align: center; font-style: normal; line-height: 10pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">(Exact Name of Registrant as
Specified in Its
Charter)</p>
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<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Delaware</font></td>
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<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">43-2053462</font></td>
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<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">(State
or Other Jurisdiction of<br> Incorporation or
Organization)</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">(I.R.S. Employer<br> Identification
No.)</font></td>
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<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="127"></td>
<td><img src="spacer.gif" height="1" width="285"></td>
<td><img src="spacer.gif" height="1" width="570"></td>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">877
Executive Center Drive West, Suite 300<br>St. Petersburg, Florida
33702<br>Telephone: (727)
576-6630</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:8pt;  width: 528pt; text-align: center; font-style: normal; line-height: 10pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">(Address of Principal Executive
Offices)</p>
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<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="127"></td>
<td><img src="spacer.gif" height="1" width="285"></td>
<td><img src="spacer.gif" height="1" width="570"></td>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">2005 Incentive
Stock Plan<br>2005 Non-Employee Directors Stock Option Plan<br>2006
Incentive Stock Plan</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:8pt;  width: 528pt; text-align: center; font-style: normal; line-height: 10pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">(Full Title of the
Plans)</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">Paul Soltoff<br>Chief Executive
Officer<br>877 Executive Center Drive West, Suite 300<br>St.
Petersburg, Florida 33702<br>Telephone: (727)
576-6630</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:8pt;  width: 528pt; text-align: center; font-style: normal; line-height: 10pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">(Name, Address and telephone
number, including area code, of agent for
service)</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: italic; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">Copy to:</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 14pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">Harvey J.
Kesner, Esq.<br>Haynes &amp; Boone, LLP<br>153 East 53<sup style="vertical-align:top;">rd</sup>
Street<br>New York, New York 10022<br>Telephone: (212)
659-7300<br>Facsimile: (212)
918-8989</p>
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<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="127"></td>
<td><img src="spacer.gif" height="1" width="285"></td>
<td><img src="spacer.gif" height="1" width="570"></td>
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<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 528pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 6pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">CALCULATION
OF REGISTRATION FEE</p>
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<td><img src="spacer.gif" height="1" width="224"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="12.82"></td>
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<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="50"></td>
<td><img src="spacer.gif" height="1" width="11"></td>
<td><img src="spacer.gif" height="1" width="12.82"></td>
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<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="31"></td>
<td><img src="spacer.gif" height="1" width="32"></td>
<td><img src="spacer.gif" height="1" width="12.82"></td>
<td><img src="spacer.gif" height="1" width="12.82"></td>
<td><img src="spacer.gif" height="1" width="17"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="61"></td>
<td><img src="spacer.gif" height="1" width="17"></td>
<td><img src="spacer.gif" height="1" width="12.82"></td>
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<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="35"></td>
<td><img src="spacer.gif" height="1" width="26"></td>
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<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Title
of Each Class of<br> Securities to be Registered</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Amount To
Be<br> Registered<sup style="vertical-align:top;">(1)</sup></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Proposed Maximum<br> Offering
Price<br> Per Share</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Proposed Maximum<br> Aggregate<br>
Offering Price</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Amount of<br> Registration
Fee</font></td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Common stock, par value $0.001 per share: shares
subject to outstanding
options</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">4,352,000</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">1.67<sup style="vertical-align:top;">(2</sup></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">7,267,840.00</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">777.66</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Common
stock, par value $0.001 per share: restricted shares issued and
outstanding</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">184,027</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">0.35<sup style="vertical-align:top;">(4</sup></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">64,409.45</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">6.89</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Common
stock, par value $0.001 per share: shares reserved for future issuance
under the
plans</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">2,773,973</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">0.35<sup style="vertical-align:top;">(4</sup></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">970,890.55</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #000000"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">103.88</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">TOTAL</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">7,310,000<sup style="vertical-align:top;">(3</sup></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">&nbsp;</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">8,303,140.00</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom">$</td>
<td align="right" style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">888.43</td>
<td style="font-size: 8pt;  line-height:10pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<table cellpadding="0" cellspacing="0" border="0" width="697">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="697"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left">(1)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 6pt;">Pursuant
to Rule 416 of the Securities Act of 1933, as amended (the
&lsquo;&lsquo;Securities Act&rsquo;&rsquo;), this registration
statement also registers such indeterminate number of additional shares
of common stock that may be offered pursuant to the anti-dilution
provisions set forth in the 2005 Incentive Stock Plan, the 2005
Non-Employee Directors Stock Option Plan and the 2006 Incentive Stock
Plan (collectively, the
&lsquo;&lsquo;Plans&rsquo;&rsquo;).</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="697">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="697"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left">(2)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 6pt;">Pursuant
to Rule 457(h)(1) under the Securities Act, calculated on the basis of
the weighted average exercise price of outstanding options to purchase
shares of common stock under the Plans.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="697">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="697"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left">(3)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 6pt;">Does not include options to purchase
600,000 shares of common stock and 90,000 shares of restricted stock
issued pursuant to the 2005 Incentive Stock Plan that were previously
registered on the Company&rsquo;s Registration Statement on Form SB-2
initially filed on March  20,
2006.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="697">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="697"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-left: 0pt; text-align: left">(4)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 8pt;  padding-bottom: 6pt;">Estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(c)
under the Securities Act, calculated on the basis of the average of the
high and low prices reported for shares of common stock of the
Registrant on the OTC Bulletin Board on October 4,
2006.</font></td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" width="697">
<tr>
<td><img src="spacer.gif" height="3" width="1"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="1" width="1"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="1" width="1"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="3" width="1"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="3" width="1"></td>
</tr>
</table>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="page"></a><font style="font-family:serif;font-weight:normal;color:#000000;font-size:8pt;  text-align: left; font-style: normal; line-height: 10pt; background-color: #ffffff"><a href="#toc">Table of Contents</a></font>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">EXPLANATORY
NOTES</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">SendTec, Inc. has prepared this registration statement in
accordance with the requirements of Form S-8 under the Securities Act
of 1933, as amended (the &lsquo;&lsquo;Securities
Act&rsquo;&rsquo;), to register shares of our common stock, $0.001
par value per share, issuable under our 2005 Incentive Stock Plan, 2005
Non-Employee Directors Stock Option Plan and 2006 Incentive Stock Plan,
which we refer to collectively as the
&lsquo;&lsquo;Plans.&rsquo;&rsquo;</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">This Form S-8 includes a
reoffer prospectus prepared in accordance with Part I of Form S-3 under
the Securities Act. The reoffer prospectus may be used for reoffers and
resales of control securities (as such term is defined in General
Instruction C to Form S-8) acquired pursuant to the Plans by selling
stockholders who may be deemed
&lsquo;&lsquo;affiliates&rsquo;&rsquo; (as such term is defined in
Rule 405 Securities Act) of the Company.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">PART
I.&nbsp;&nbsp;&nbsp;&nbsp;INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">ITEM 1.&nbsp;&nbsp;&nbsp;&nbsp;Plan Information.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The
documents containing the information concerning the Plans required by
Item 1 of this Registration Statement on Form S-8, and the statement of
availability of registrant information, employee benefit plan annual
reports and other information required by Item 2 of Form S-8, will be
sent or given to persons eligible to participate in the Plans as
specified by Rule 428(b)(1) under the Securities Act. We will maintain
a file of such documents in accordance with the provisions of Rule 428
and, upon request, shall furnish to the Commission or its staff a copy
or copies of documents included in such file. Pursuant to the
instructions to Form S-8, these documents are not required to be and
are not being filed either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act. These documents and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Part II
of Form S-8, taken together, constitute part of a prospectus that meets
the requirements of Section 10(a) of the Securities Act.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">ITEM
2.&nbsp;&nbsp;&nbsp;&nbsp;Registrant Information and Employee Plan Annual
Information.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Any of the documents incorporated by reference in
Item 3 of Part II of this Registration Statement (which documents are
incorporated by reference in this Section 10(a) prospectus) and the
other documents required to be delivered to employees pursuant to Rule
428(b) will be available without charge to participants in the Plans
upon written or oral request by
contacting:</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:12pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">SendTec, Inc.<br>877 Executive Center
Drive West, Suite 300<br>St. Petersburg, FL 33702<br>Telephone: (727)
576-6630<br>Attn: Corporate
Secretary</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="page"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">PROSPECTUS</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:12pt;  width: 456pt; text-align: center; font-style: normal; line-height: 14pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">SENDTEC,
INC.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">3,333,000 SHARES OF COMMON
STOCK&nbsp;</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">2005 Incentive Stock Plan<br>2005
Non-Employee Directors Stock Option Plan<br>2006 Incentive Stock
Plan</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">This prospectus relates to the reoffer and resale by the
selling stockholders of 3,333,000 shares of our common stock consisting
of:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">375,000 shares of common stock that
may be issued by us upon the exercise of stock options granted under
our 2005 Incentive Stock Plan, 2005 Non-Employee Directors Stock Option
Plan and 2006 Incentive Stock Plan (collectively, the
&lsquo;&lsquo;Plans&rsquo;&rsquo;);</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">183,334
shares of restricted stock issued under the Plans to selling
stockholders and 693 shares of restricted stock issued to certain
unnamed non-affiliates who may use this prospectus for reoffers and
resales of the shares; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">2,773,973
shares of common stock underlying options that have not, as of this
date, been granted. If and when such options are granted to persons
required to use this prospectus to reoffer and resell the shares
underlying such options, we will distribute a prospectus
supplement.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The shares are being reoffered and resold for the
account of the selling stockholders. We will not receive any of the
proceeds from the resale of the shares.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The selling stockholders
have advised us that the resale of their shares may be effected from
time to time in one or more transactions on the OTC Bulletin Board or
other stock market or exchange on which our common stock may be listed
or quoted, in negotiated transactions or otherwise, at market prices
prevailing at the time of the sale or at prices otherwise negotiated.
See &lsquo;&lsquo;Plan of Distribution.&rsquo;&rsquo; We will bear
all expenses in connection with the preparation of this
prospectus.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our common stock is quoted on the OTC Bulletin Board
maintained by the National Association of Securities Dealers, Inc.
under the symbol &lsquo;&lsquo;SNDN.&rsquo;&rsquo; The last
reported sale price on the OTC Bulletin Board for our common stock on
September  15,  2006 was $0.35 per share.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our
principal executive offices are located at 877 Executive Center Drive
West, Suite 300, St. Petersburg, Florida 33702 and our telephone number
is (727) 576-6630.</p>
<!--0--><table border="0" cellpadding="0" cellspacing="0" width="602">
<tr>
<td><img src="spacer.gif" width="1" height="8"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="602"></td>
<td><img src="spacer.gif" height="1" width="0"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="8" width="1"></td>
</tr>
</table>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">Investing in our common
stock involves risks that are described in the &lsquo;&lsquo;Risk
Factors&rsquo;&rsquo; section beginning on page 3 of this
prospectus.</p>
<!--0--><table border="0" cellpadding="0" cellspacing="0" width="602">
<tr>
<td><img src="spacer.gif" width="1" height="8"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="602"></td>
<td><img src="spacer.gif" height="1" width="0"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="8" width="1"></td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 0pt; background-color: #ffffff">NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">
<font style="font-weight: normal; font-style: normal">The date of this Prospectus is October
6,  2006.</font>
</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="pagei"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 6pt; background-color: #ffffff;">TABLE OF
CONTENTS</p>
<img src="spacer.gif" height="10" width="1"><br>
<a name="toc"></a>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 12px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="572"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="7.00"></td>
<td><img src="spacer.gif" height="1" width="0"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="13"></td>
<td><img src="spacer.gif" height="1" width="0"></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page1">INCORPORATION
BY REFERENCE</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page1">1</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page2">THE
COMPANY</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page2">2</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page3">RISK
FACTORS</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page3">3</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page18">FORWARD-LOOKING
STATEMENTS</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page18">18</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page19">USE OF
PROCEEDS</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page19">19</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page19">SELLING
STOCKHOLDERS</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page19">19</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page19">PLAN OF
DISTRIBUTION</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page19">19</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page20">LEGAL
MATTERS</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page20">20</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page20">WHERE YOU CAN FIND MORE
INFORMATION</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page20">20</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 12pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><a href="#page21">DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES</a></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom"><a href="#page21">21</a></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 12pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">You should rely only on the
information contained in this prospectus. We have not authorized any
other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not
rely on it. The selling stockholders will not make an offer to sell
these securities in any jurisdiction where an offer or sale is not
permitted. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this
prospectus only, regardless of the time of delivery of this prospectus
or of any sale of our common stock. Our business, financial condition,
results of operations and prospects may have changed since that
date.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">i</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="page1"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">INCORPORATION BY
REFERENCE</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The following documents filed by us with the SEC are
incorporated by reference in this
prospectus:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(1)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Prospectus filed
Pursuant to Rule  424(b)(3) on July  14,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(2)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on
Form  8-K filed February  9,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(3)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on
Form  8-K filed February  13,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(4)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed March  21,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(5)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed April  4,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(6)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed April  13,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(7)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K/A, filed April  17,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(8)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed May  8,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(9)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Quarterly Report on Form
10-QSB for the quarter ended March  31,  2006, filed
May  22,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(10)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed June  6,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(11)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed June  21,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(12)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed July  14,  2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(13)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2006 filed on August  21,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(14)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K
filed on August  24,  2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(15)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K filed on
September  12,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(16)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K
filed on September 27, 2006; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(17)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Description of Common Stock in our
Registration Statement on Form 8-A, filed December  30,
2005.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">All documents subsequently filed with the SEC by us
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, prior to the filing of a
post-effective amendment which indicates that all securities offered
herein have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be part hereof from the respective dates of filing of
such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof or of the
related prospectus to the extent that a statement contained herein or
in any other subsequently filed document which is also incorporated or
deemed to be incorporated herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
registration statement.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">You may request a copy of these filings,
excluding the exhibits to such filings which we have not specifically
incorporated by reference in such filings, at no cost, by writing us at
the following address: SendTec, Inc., 877 Executive Center Drive West,
Suite 300, St. Petersburg, Florida 33702, Attention: Corporate
Secretary. You may also call our Corporate Secretary at (727)
576-6630.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">1</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page2"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">THE COMPANY</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We are a holding
company organized for the purpose of acquiring, owning, and managing
various marketing and advertising businesses, primarily involving the
Internet. In July  2006 our name was changed from RelationServe
Media, Inc. to SendTec, Inc. Since February  2006 our
wholly-owned subsidiary, SendTec Acquisition Corp.
(&lsquo;&lsquo;STAC&rsquo;&rsquo;), has become our dominant
operation. For the twelve months ended December  31,  2005,
we reported revenues of $11,302,780 derived solely from our former
subsidiary RelationServe Access and Friendsand.com businesses, all of
which was attributable to our RelationServe Access business. In
July  2006, we sold our RelationServe Access business and
discontinued operations of Friendsand.com. On a pro-forma basis (prior
to the sale of RelationServe Access), our consolidated revenues for
2005, including STAC&rsquo;s revenues as if it had been owned during
the entire 2005 fiscal year, was $49,072,522. In addition, for the six
months ended June  30,  2006, we had revenues of
approximately $17.8  million. However, on a combined pro forma
basis for the year ended December  31,  2005 (prior to the
sale of RelationServe Access) we had a net loss for the 2005 fiscal
year of $15,068,650 (including the pro forma effect of $8,737,500 of
non-cash interest associated with financing the transaction and
stock-based compensation of $4,774,323) and for six months ended
June  30,  2006 we had a net loss of approximately
$11,744,575. We are unable to predict if we will achieve profitability
in future periods.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">STAC is a marketing company, primarily
involved in direct response marketing, a type of advertising that sells
products and services directly to the consumer using the internet,
television, print, radio and other forms of advertising media.
STAC&rsquo;s clients include national advertisers in over 50
industries, including but not limited: publishing, entertainment
services, auto, financials services, retail, health and beauty, public
storage and software. STAC&rsquo;s services include: (1) developing
marketing and advertising plans, (2) producing Internet advertising
such as emails, websites, display ads and other forms of Internet
advertising tactics to sell products and services, or generate consumer
leads, (3) producing television commercials, print advertisements, and
radio commercials to sell products and generate consumer leads, (4)
planning, buying and selling media on the Internet and in other media
channels such as television, radio, print, etc., and; (5) producing
sales or leads for advertising clients by using media we own, or
venturing with internet media outlets and traditional media outlets. In
providing services to our clients, STAC generates revenue in the
following ways: First, receiving media commissions as a percentage of
media purchased. In other words, the advertiser pays STAC $1,000 and
STAC retains a 15% agency commission equating to $150 in
consideration for planning and facilitating the media purchase. Second,
buying or venturing unsold media inventory to generate sales and leads
for STAC&rsquo;s clients. The industry refers to this as
performance-based media, and in this example, STAC retains the net
difference between what the advertisers pays STAC for producing a sale
or generating a consumer lead, and what the media outlet, such as an
Internet publisher or television station, charges STAC. For example,
STAC is paid $100 to generate a customer, and the media outlet agrees
to charge STAC $75 for using its media time to generate the customer.
We consider this performance-based media, because if sale or lead does
not result, then STAC does not have to pay for the media, and the
advertiser client does not owe STAC anything. Third, providing
marketing and business consulting services on an hourly basis. Fourth,
charging for production services at cost plus
markups.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">2</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="page3"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">RISK
FACTORS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: normal; font-style: italic">You should carefully consider the risks described
below before making an investment decision. If any of the following
circumstances occur, our business, financial condition or results of
operations could be materially adversely affected. In that event, the
trading price of our common stock could decline and you may lose part
or all of your investment. Unless otherwise indicated, all references
in this prospectus to &lsquo;&lsquo;SendTec,&rsquo;&rsquo;
&lsquo;&lsquo; we,&rsquo;&rsquo; &lsquo;&lsquo;us&rsquo;&rsquo;
and &lsquo;&lsquo;our&rsquo;&rsquo; refer to SendTec, Inc. and its
subsidiaries and affiliates.</font>
</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">RISKS RELATING TO THE
COMPANY</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We previously amended financial covenants to ensure
that we were not in default under Debentures and we received a waiver
for our failure to comply with financial covenants for the periods
ended March  31,  2006 and June  30,  2006, and
we are in negotiations to further amend the financial covenants and the
terms of the Debentures.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">On October  31,  2005,
STAC issued $34.95  million of 6% Senior Secured
Convertible Debentures due October  30,  2009 (the
&lsquo;&lsquo;Debentures&rsquo;&rsquo;). Following our acquisition
of STAC we became subject to certain financial covenants required under
the Securities Purchase Agreement (the
&lsquo;&lsquo;SPA&rsquo;&rsquo;) relating to the Debentures. We
recognized we would not meet the requirements of certain of these
financial covenants for the fourth quarter of 2005, and first and
second quarters of 2006. These covenants included STAC having minimum
EBITDA of $1,725,000 and $5,200,000, for the fourth quarter of 2005 and
fiscal 2005, respectively. As a result on February  3,
2006, in consideration of us issuing 525,000 shares of our common stock
to the holders of the Debentures in accordance with their respective
ownership of the Debentures, the covenants in the Debentures were
revised so that STAC was required to have minimum EBITDA for the fourth
quarter of 2005 and the fiscal year ended December  31,
2005 of $625,000 and $4,350,000, respectively. In addition, based on
our own view that we could potentially be in default of certain
financial covenants for 2006, certain of our financial covenants were
revised for 2006. These include requiring us to have EBITDA of
$8,434,000 for fiscal 2006 (including EBITDA of at least $1,257,000,
$2,013,000, $2,824,000 for the first quarter, second quarter, third
quarter and fourth quarter of 2006, respectively) as opposed to
$9,730,000 and thereafter quarterly EBITDA of $2,840,000 until the
Debentures are paid in full as opposed to $2,875,000.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">While we
were able to satisfy the EBITDA financial covenants for the fourth
quarter of 2005 and fiscal 2005 because we had EBITDA for such periods
of $714,542 and $4,415,277, respectively, for the first quarter of
2006, we only had EBITDA of ($2,507,544) which is below the required
covenant amount. Our failure to comply with the first quarter EBITDA
requirement is due to decreased activity and increased losses in the
RelationServe Access and Friendsand businesses, among other things. On
May  19,  2006, the holders of at least 75% of the
Debentures granted us a waiver for our failure to comply with the
EBITDA financial covenant for the first quarter of 2006.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">For the
second quarter of 2006 we had EBITDA of $(550,995), which was below the
required covenant amount. On August  21,  2006, the
Company, STAC and at least 75% of the Debenture holders entered
a letter agreement waiving our non-compliance with the financial
covenants for the quarters ended June  30,  2006 and
September  30,  2006 pending entry into a definitive
agreement to amend the terms of the Debentures and revise the financial
covenants of the SPA in accordance with the terms of the letter
agreement. On September 27, 2006, the Company and at least 75%
of the Debenture holders entered into such a definitive agreement to
amend the Debentures. Among other provisions, the agreement would amend
the financial covenants to use our net revenues, determined in
accordance with GAAP, rather than EBITDA as a benchmark for the
financial covenants. We would be required to have net revenues of
$4,675,000 for the third and fourth quarters of 2006, and net revenues
of $5,025,000, $5,175,000, $5,450,000, and $5,700,000 for the first,
second, third and fourth quarters of 2007, respectively.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The
agreement to amendment the Debentures includes, among other things,
reducing the conversion price of the Debentures to $0.50 per share from
the present conversion price of $1.50. At the reduced conversion price,
we would be required to issue more shares of our common stock upon the
conversion of the Debentures than are presently authorized under our
certificate of incorporation. Consequently, the holders of the
Debentures have made the effectiveness of the definitive agreement
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">3</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page4"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
to amend the Debentures contingent on
stockholder approval of an amendment to our certificate of
incorporation to increase the number of authorized shares of our common
stock to 190,000,000 shares from 90,000,000 shares. We filed a
preliminary proxy statement relating to these matters on
September  12,  2006.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In the event that our
stockholders do not approve the amendment to our certificate of
incorporation and we are unsuccessful in revising the terms of the
financial covenants and we are unable to comply with the financial
covenants for the periods subsequent to March  31,  2006,
the Debenture holders could declare our Debentures to be in default,
and accelerate the maturity of the Debentures, plus increased interest,
and any default penalties. Because all of our subsidiaries are pledged
to the Debenture holders and are guarantors of the debt owing to
Debenture holders, such action would have a material adverse effect on
our business and operations, and our ability to continue to
operate.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If an event of default occurs under the Debentures
other than a covenant default, it could result in a material adverse
effect on our business, operating results, or financial condition as
the Debenture holders maintain a first priority security interest on
all of our assets and on the assets of our
subsidiaries.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Effective February  3,  2006, the
Debentures became convertible into shares of our Common Stock at a
conversion price of $1.50 per share and are guaranteed by us and each
of our subsidiaries. Under the terms of the Debentures STAC is
obligated to pay interest of 6% per annum on the outstanding
principal amount of the Debentures, payable quarterly beginning on
February  1,  2006. Commencing on October  15,
2007 STAC is required to make a quarterly redemption payment equal to
6.25% of the original principal amount of the Debentures in
cash. The Debenture holders have a first priority security interest on
all of our assets and on the assets of our subsidiaries. In addition to
failing to satisfy financial covenants in the securities purchase
agreement, events of default include, but are not limited to, the
following:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">failure to pay interest,
principal payments or liquidated damages if and when
due;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a breach of any material covenant
or term or condition of the Debenture or any of the transaction
documents;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a default or event of default
(subject to any grace or cure period provided for in the applicable
agreement, document or instrument) under any of the transaction
documents, or any other material agreement, lease, document or
instrument;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a breach of any
representation or warranty made in the Debenture or the other
transaction documents;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">certain
bankruptcy and bankruptcy related
matters;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a default by us or any of our
subsidiaries in any of its material obligations under any mortgage,
credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by
which there may be secured or evidenced, any indebtedness for borrowed
money or money due under any long term leasing or factoring arrangement
of any of them in an amount exceeding $75,000 ($150,000 in the case of
the Company); and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">failure to maintain
an effective registration statement covering the resale of shares of
our common stock issuable upon the conversion of the Debentures and the
exercise of certain warrants issued to the Debenture holders.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In
addition to the foregoing, the failure to satisfy financial covenants
in the securities purchase agreement could be deemed an event of
default under the Debentures. If we default on our obligations under
our Debentures or related agreements, the cash required to pay such
amounts will most likely come out of our working capital. Since we rely
on our working capital for our day-to-day operations, such a default
would have a material adverse effect on our business, operating
results, or financial condition. In such event, we may be forced to
restructure, file for bankruptcy, sell assets, or </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">4</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page5"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
cease operations, any of which would put our
Company, our investors and the value of our Common Stock, at
significant risk. Further, our obligations under the Debentures are
secured by substantially all of our assets. Failure to fulfill our
obligations under the Debentures and related agreements could lead to
loss of these assets, which would be detrimental to our
operations.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">The restrictions on our activities contained in
the Debentures could negatively impact our ability to obtain financing
from other sources.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">So long as any portion of the Debentures
remain outstanding, we are restricted from incurring additional
indebtedness other than certain permitted indebtedness consisting of
(i) a working capital credit facility up to $3,000,000 which may have a
second priority interest in our accounts receivables and inventory,
(ii) trade payables and indebtedness consisting of capitalized lease
obligations and purchase money indebtedness incurred in connection with
the acquisition of capital assets and obligations under sale-leaseback
arrangements with respect to newly acquired or leased assets and<br>
(iii) such obligations which are not secured by liens on any of our
assets or STAC assets existing as of the date that the Debentures were
originally issued. To the extent that additional debt financing is
required for us to conduct our operations, the restrictions from
incurring additional indebtedness in the Debentures could materially
adversely impact our ability to achieve our operational
objective.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We had a net loss for the six months ended
June  30,  2006 and on a combined pro forma basis we
experienced a significant loss for the year ended December
31,  2005.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">While we had $1,095,993 of operating income
on a combined pro forma basis for the year ended December
31,  2005, we experienced a net loss of $15,068,650 on a combined
pro forma basis for the year ended December  31,  2005 and
we had a net loss of $11,744,575 for the six months ended June
30,  2006. We are unable to predict if we will achieve
profitability in future periods. In order to achieve and maintain
profitability, we will need to generate significant revenues. If we do
not continue to increase our revenues, our business, results of
operations, and financial condition could be materially and adversely
affected.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">RISKS RELATED TO OUR BUSINESS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Any decrease
in demand for our online marketing services could substantially reduce
our revenues.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">To date, a substantial portion of our revenues
have been derived from Internet advertising. We expect that online
advertising will continue to account for a substantial portion of our
revenues for the foreseeable future. However, our revenues from
Internet advertising may decrease in the future for a number of
reasons, including the following:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">the
rate at which Internet users click on advertisements or take action in
response to an advertisement has always been low and could decline as
the volume of Internet advertising increases;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Internet users can install software
programs that allow them to prevent advertisements from appearing on
their screens or block the receipt of emails;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">advertisers may prefer an alternative
Internet advertising format, product or service which we might not
offer at that time; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">we may be
unable to make the transition to new Internet advertising formats
preferred by advertisers.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If our pricing models are not
accepted by our advertiser clients, we could lose clients and our
revenues could decline.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Most of our services are offered to
advertisers based on cost-per-action or cost-per-click pricing models,
under which advertisers only pay us if we provide the results they
specify. These results-based pricing models differ from the fixed-rate
pricing model used by many Internet advertising companies, under which
the fee is based on the number of times the advertisement is shown
without regard to effectiveness. Our ability to generate significant
revenues from advertisers will depend, in part, on our </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">5</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page6"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
ability to demonstrate the effectiveness of
these primary pricing models to advertisers, who may be more accustomed
to a fixed-rate pricing model.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Furthermore, intense competition
among websites and other Internet advertising providers has led to the
development of a number of alternative pricing models for Internet
advertising. The proliferation of multiple pricing alternatives may
confuse advertisers and make it more difficult for them to
differentiate among alternatives. In addition, it is possible that new
pricing models may be developed and gain widespread acceptance that are
not compatible with our business model or our technology. These
alternatives, and the likelihood that additional pricing models will be
introduced, make it difficult for us to project the levels of
advertising revenues or the margins that we, or the Internet
advertising industry in general, will realize in the future. If
advertisers do not understand the benefits of our pricing models, then
the market for our services may decline or develop more slowly than us
expects, which may limit our ability to grow their revenues or cause
their revenues to decline.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We depend on a limited number of
clients for a significant percentage of our revenues, and the loss of
one or more of these advertisers could cause our revenues to
decline.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">For the year ended December  31,  2005,
revenues from our two largest clients, Sureclick Promotions and Real
Networks accounted for an aggregate of 43.8% of our total
revenues. We believe that a limited number of clients will continue to
be the source of a substantial portion of our revenues for the
foreseeable future. Key factors in maintaining our relationships with
these clients include our performance on individual campaigns, the
strength of our professional reputation, and the relationships of our
key executives with client personnel. To the extent that our
performance does not meet client expectations, or our reputation or
relationships with one or more major clients are impaired, our revenues
could decline and our operating results could be adversely
affected.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We generally do not have long-term contracts with
our clients.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our clients typically hire us on a
project-by-project basis or on an annual contractual relationship.
Moreover, our clients generally have the right to terminate their
relationships with us without penalty and with relatively short or no
notice. Once a project is completed we cannot assure that a client will
engage us for further services. From time to time, highly successful
engagements have ended because our client was acquired and the new
owners decided not to retain us. A client that generates substantial
revenue for us in one period may not be a substantial source of revenue
in a subsequent period. We expect a relatively high level of client
concentration to continue, but not necessarily involve the same clients
from period to period. The termination of our business relationships
with any of our significant clients, or a material reduction in the use
of our services by any of their significant clients, could adversely
affect our future financial performance.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Any limitation on our
use of data derived from clients&rsquo; advertising campaigns could
significantly diminish the value of our services and cause us to lose
clients and revenues.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">When an individual visits our
clients&rsquo; websites, we use technologies, including cookies and
web beacons, to collect information such as the user&rsquo;s IP
address, advertisements delivered by us that have been viewed by the
user, and responses by the user to such advertisements. We aggregate
and analyze this information to determine the placement of
advertisements across our affiliate network of advertising space.
Although the data we collect from campaigns of different clients, once
aggregated, are not identifiable, our clients might decide not to allow
us to collect some or all of this data or might limit our use of this
data. Any limitation on our ability to use such data could make it more
difficult for us to deliver online marketing programs that meet client
demands.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In addition, although our contracts generally permit us
to aggregate data from advertising campaigns, our clients might
nonetheless request that we discontinue using data obtained from their
campaigns that have already been aggregated with other clients&rsquo;
campaign data. It would be difficult, if not impossible, to comply with
these requests, and such requests could result in significant
expenditures of resources, interruptions, failures or defects or use in
our data collection, mining, and storage systems. Privacy concerns
regarding the collection or use of user data, could also limit our
ability to aggregate and analyze data from our clients. Under such
circumstances, we may lose clients and our revenues may
decline.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">6</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page7"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If the market for internet advertising
fails to continue to develop, our revenues and operating results could
be harmed.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our future success is highly dependent on the
continued use and growth of the Internet as an advertising medium. The
Internet advertising market is relatively new and rapidly evolving, and
it uses different measurements than traditional media to gauge
effectiveness. As a result, demand for and market acceptance of
Internet advertising services is uncertain and subject to change. Many
of our current or potential advertiser clients have little or no
experience using the Internet for advertising purposes and have
allocated only limited portions of their advertising budgets to the
Internet. The adoption of Internet advertising, particularly by those
entities that have historically relied upon traditional media for
advertising, requires the acceptance of a new way of conducting
business, exchanging information, measuring success, and evaluating new
advertising products and services. Such clients find Internet
advertising to be less effective for promoting their products and
services than traditional advertising media. We cannot give any
assurance that the market for Internet advertising will continue to
grow or become sustainable. If the market for Internet advertising
fails to continue to develop or develops more slowly than we expect,
our revenues and business could be harmed.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">RISKS RELATED TO THE
SUPPLY OF ADVERTISING SPACE</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We depend on online publishers
for advertising space to deliver our clients&rsquo; advertising
campaigns, and any decline in the supply of advertising space available
through our network could cause our revenues to decline.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The
websites, search engines, and email publishers that sell or venture
their advertising space to or with us are not bound by long-term
contracts that ensure a consistent supply of advertising space, which
we refer to as their inventory. We generate a significant portion of
revenues from the advertising inventory provided by a limited number of
publishers. In most instances, publishers can change the amount of
inventory they make available to us at any time, as well as the price
at which they make it available. In addition, publishers may place
significant restrictions on our use of their advertising inventory.
These restrictions may prohibit advertisements from specific
advertisers or specific industries, or restrict the use of certain
creative content or format. If a publisher decides not to make
inventory available to us, or decides to increase the price, or places
significant restrictions on the use of such inventory, we may not be
able to replace this with inventory from other publishers that satisfy
our requirements in a timely and cost-effective manner. If this
happens, our revenues could decline or our cost of acquiring inventory
may increase.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our growth may be limited if we are unable to
obtain sufficient advertising inventory that meets our pricing and
quality requirements.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our growth depends on our ability to
effectively manage and expand the volume of our inventory of
advertising space. To attract new advertisers, we must increase our
supply of inventory that meets our performance and pricing
requirements. Our ability to purchase or venture sufficient quantities
of suitable advertising inventory will depend on various factors, some
of which are beyond our control. These factors include:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">our ability to offer publishers a
competitive price for their inventory;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">our ability to estimate the quality of the
available inventory; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">our ability to
efficiently manage our existing advertising inventory.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In
addition, the number of competing Internet advertising networks that
purchase advertising inventory from websites, search engine and email
publishers continues to increase. We cannot give any assurance that we
will be able to purchase or venture advertising inventory that meets
our performance, price, and quality requirements, and if we cannot do
so, our ability to generate revenues could be
limited.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">7</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page8"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Any limitation on our ability to post
advertisements throughout our network of advertising space could harm
our business.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We execute advertising programs for clients
primarily by posting advertisements, which we refer to as ad delivery,
on our affiliate network of advertising space. Our business could
suffer from a variety of factors that could limit or reduce our ability
to post advertisements across our affiliate network, including:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">technological changes that render the
delivery of our advertisements obsolete or incompatible with the
operating systems of consumers and/or the systems of online
publishers;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">lawsuits or injunctions
based on claims that our ad delivery methodologies violate the
proprietary rights of other parties and regulatory or legal
restrictions; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">interruptions,
failures or defects in our ad delivery and tracking
systems.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Consolidation of online publishers may impair our
ability to provide marketing services, acquire advertising inventory at
favorable rates and collect campaign data.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The consolidation
of Internet advertising networks, web portals, search engines and other
online publishers could eventually lead to a concentration of desirable
advertising inventory on a very small number of networks and large
websites. Such concentration
could:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">increase our costs if these
publishers use their greater bargaining power to increase rates for
advertising inventory;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">impair our
ability to provide marketing services if these publishers prevent us
from distributing our clients&rsquo; advertising campaigns on their
websites or if they adopt ad delivery systems that are not compatible
with our ad delivery methodologies.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our business could be
harmed if the use of tracking technology is restricted or becomes
subject to new regulation.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In conjunction with the delivery
of advertisements to websites, we typically place small files of
information, commonly known as cookies, on an Internet user&rsquo;s
hard drive, generally without the user&rsquo;s knowledge or consent.
Cookie information is passed to us through an Internet user&rsquo;s
browser software. We use cookies to collect information regarding the
advertisements we deliver to Internet users and their interaction with
these advertisements. We use this information to identify Internet
users who have received our advertisements in the past and to monitor
and prevent potentially fraudulent activity. In addition, our
technology uses this information to monitor the performance of ongoing
advertising campaigns and plan future campaigns.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Some Internet
commentators and privacy advocates have proposed limiting or
eliminating the use of cookies and other Internet tracking
technologies, and legislation has been introduced in some jurisdictions
to regulate Internet tracking technologies. The European Union has
already adopted a directive requiring that when cookies are used, the
user must be informed and offered an opportunity to opt-out of the
cookies&rsquo; use. If there is a further reduction or limitation in
the use of Internet tracking technologies such as
cookies:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">we may have to replace or
re-engineer our tracking technology, which could require significant
amounts of our time and resources, may not be completed in time to
avoid losing clients or advertising inventory, and may not be
commercially or technically feasible;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">we
may have to develop or acquire other technology to prevent fraud;
and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">we may become subject to costly and
time-consuming litigation or investigations due to our use of cookie
technology or other technologies designed to collect Internet usage
information.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Any one or more of these occurrences could result in
increased costs, require us to change our business practices or divert
management&rsquo;s attention.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">8</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page9"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we or our advertiser or publisher
clients fail to comply with regulations governing consumer privacy, we
could face substantial costs and our business could be
harmed.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our collection, maintenance and sharing of
information regarding Internet users could result in lawsuits or
government inquiries. These actions may include those related to U.S.
federal and state legislation or European Union directives limiting the
ability of companies like ours to collect, receive and use information
regarding Internet users. Litigation and regulatory inquiries are often
expensive and time-consuming and the outcome is uncertain. Any
involvement by us in any of these matters could require us
to:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">spend significant amounts on our
legal defense;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">divert the attention of
senior management from other aspects of our business;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">defer or cancel new product launches as a
result of these claims or proceedings; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">make changes to our present and planned
products or services.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Further, we cannot give any assurance that
our advertiser and publisher clients are currently in compliance, or
will remain in compliance, with their own privacy policies, regulations
governing consumer privacy or other applicable legal requirements. We
may be held liable if our clients use our technology or our data or we
collect on their behalf in a manner that is not in compliance with
applicable laws or regulations or our or their own stated privacy
standards.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may be liable for content in the advertisements
we deliver for our clients.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may be liable to third parties
for content in the advertisements they deliver if the artwork, text or
other content involved violates copyrights, trademarks, or other
intellectual property rights of third parties or if the content is
defamatory. Although we generally receive warranties from our
advertisers that they have the right to use any copyrights, trademarks
or other intellectual property included in an advertisement and are
normally indemnified by the advertisers, a third party may still file a
claim against us. Any claims by third parties against us could be
time-consuming, could result in costly litigation and adverse
judgments, and could require us to change our business or
practices.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Misappropriation of confidential information held
by us could cause us to lose clients or incur liability.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We
retain highly confidential information on behalf of our clients in our
systems and databases. Although we maintain security features in our
systems, our operations may be susceptible to hacker interception,
break-ins and other disruptions. These disruptions may jeopardize the
security of information stored in and transmitted through our systems.
If confidential information is compromised, we could be subject to
lawsuits by the affected clients or Internet users, which could damage
our reputation among our current and future potential clients, require
significant expenditures of capital and other resources, and cause us
to lose business and revenues.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">ADDITIONAL RISKS RELATED TO OUR
BUSINESS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may require additional funding to support our
operations and capital expenditures, which may not be available and
which lack of availability could adversely affect our
business.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may need additional funds to support our growth,
fund future acquisitions, pursue business opportunities, react to
unforeseen difficulties and to respond to competitive pressures. There
can be no assurance that any financing arrangements will be available
in amounts or on terms acceptable, if at all. Furthermore, the sale of
additional equity or convertible debt securities may result in further
dilution to existing stockholders. If we raise additional funds through
the issuance of debt, we will be required to service that debt and we
are likely to become subject to restrictive covenants and other
restrictions contained in the instruments governing that debt, which
may limit our operational flexibility. If adequate additional funds are
not available, we may be required to delay, reduce the scope of, or
eliminate material parts of the implementation of our business
strategy, including the possibility of additional acquisitions or
internally developed businesses.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">9</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page10"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may make additional acquisitions,
which could divert management&rsquo;s attention, cause ownership
dilution, and be difficult to integrate.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our business
strategy depends in part upon our ability to identify, structure, and
integrate acquisitions that are complementary with our business model.
Acquisitions, strategic relationships, and investments in the
technology and Internet sectors involve a high degree of risk. We may
also be unable to find a sufficient number of attractive opportunities,
if any, to meet our objectives. Although many technology and Internet
companies have grown in terms of revenue, few companies are profitable
or have competitive market share. Our potential acquisitions,
relationships, investment targets, and partners may have histories of
net losses and may expect net losses for the foreseeable
future.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Acquisition transactions are accompanied by a number of
risks that could harm us and our business, operating results, and
financial condition. These risks apply to our completed acquisitions
and acquisitions we may undertake in the future, including:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">We could experience a substantial strain on
our resources, including time and money, and may not be successful;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Our management&rsquo;s attention may be
diverted from our ongoing business concerns;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">While integrating new companies, we may
lose key executives or other employees of these
companies;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">We could experience customer
dissatisfaction or performance problems with an acquired company or
technology;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">We may become subject to
unknown or underestimated liabilities of an acquired entity or incur
unexpected expenses or losses from such acquisitions; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">We may incur possible impairment charges
related to goodwill or other intangible assets or other unanticipated
events or circumstances, any of which could harm our
business.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Consequently, we might not be successful in integrating
any acquired businesses, products or technologies, and might not
achieve anticipated revenue and cost benefits.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may be
unable to attract and retain key employees.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Failure to
attract and retain necessary technical personnel and skilled management
could adversely affect our business. Our success depends to a
significant degree upon our ability to attract, retain and motivate
highly skilled and qualified personnel. If we fail to attract, train
and retain sufficient numbers of highly qualified people, our
prospects, business, financial condition, and results of operations
will be materially and adversely affected. Our success also depends on
the skills, experience, and performance of key members of our
management team. The loss of any key employee, could have an adverse
effect on our prospects, business, financial condition, and results of
operations.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The lack of experience of our management team puts us
at a competitive disadvantage. Our management team lacks public company
experience, which could impair our ability to comply with legal and
regulatory requirements such as those imposed by Sarbanes-Oxley Act of
2002. The individuals who now constitute management have never had
responsibility for managing a publicly traded company. Such
responsibilities include complying with federal securities laws and
making required disclosures on a timely basis. There can be no
assurance that our management will be able to implement and affect
programs and policies in an effective and timely manner that adequately
respond to such increased legal, regulatory compliance, and reporting
requirements. Our failure to do so could lead to penalties, loss of
trading liquidity, and regulatory actions and further result in the
deterioration of our business.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">10</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page11"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Adversely affected in the event of
uninsured or inadequately insured loss or damage. Our ability to
effectively recruit and retain qualified officers and directors could
also be adversely affected if we experience difficulty in obtaining
adequate directors&rsquo; and officers&rsquo; liability
insurance.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may not be able to obtain insurance policies on
terms affordable to us that would adequately insure our business and
property against damage, loss, or claims by third parties. To the
extent our business or property suffers any damages, losses, or claims
by third parties that are not covered or adequately covered by
insurance, our financial condition may be materially adversely
affected.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may be unable to secure or maintain insurance as a
public company to cover liability claims made against our officers and
directors. If we are unable to adequately insure our officers and
directors, we may not be able to retain or recruit qualified officers
and directors. The Debentures require us to maintain $8  million
of directors and officers insurance coverage and key man insurance on
the life of Paul Soltoff, without which the Debentures may be in
default.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we are unable to compete in the highly competitive
performance-based advertising and search marketing industries, we may
experience reduced demand for our products and services.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We
expect to operate in a highly competitive environment. We principally
compete with other companies in the following main areas:</p>
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<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">sales to merchant advertisers of
performance-based advertising;
and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">services that allow merchants to
manage their advertising campaigns across multiple networks and track
the success of these campaigns.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Although we expect to pursue a
strategy that allows us to potentially partner with all relevant
companies in the industry, there are certain companies in the industry
that may not wish to partner with us.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We expect competition to
intensify in the future because current and new competitors can enter
our market with little difficulty. The barriers to entering such
markets are relatively low. In fact, many current Internet and media
companies presently have the technical capabilities and advertiser
bases to enter the search marketing service industry. Further, if the
consolidation trend continues among the larger media and search engine
companies with greater brand recognition, the share of the market
remaining for us and other smaller search marketing services providers
could decrease, even though the number of smaller providers could
continue to increase. These factors could adversely affect our
competitive position in the search marketing services
industry.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Some of our competitors, as well as potential entrants
into our market, may be better positioned to succeed in this market.
They may have:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">longer operating
histories;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">more management
experience;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">an employee base with more
extensive experience;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a better ability
to service customers in multiple cities in the United States and
internationally by virtue of the location of sales
offices;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">larger customer
bases;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">greater brand recognition;
and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">significantly greater financial,
marketing and other resources.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In addition, many current and
potential competitors can devote substantially greater resources than
we can to promotion, web site development, and systems development.
Furthermore, there are numerous larger, more well-established and
well-financed entities with which we will compete and that could
acquire or create competing companies and/or invest in or form joint
ventures in categories or countries of interest to us, all of which
could adversely impact our business. Any of these trends could increase
competition and reduce the demand for any of our
services.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">11</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page12"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We are susceptible to general economic
conditions, and a downturn in advertising and marketing spending by
merchants could adversely affect our operating results.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our
operating results will be subject to fluctuations based on general
economic conditions, in particular those conditions that impact
merchant-consumer transactions. If there were to be a general economic
downturn that affected consumer activity in particular, however slight,
then we would expect that business entities, including our merchant
advertisers and potential merchant advertisers, could substantially and
immediately reduce their advertising and marketing budgets. We believe
that during periods of lower consumer activity, merchant spending on
advertising and marketing is more likely to be reduced, and more
quickly, than many other types of business expenses. These factors
could cause a material adverse effect on our operating
results.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we fail to manage our growth effectively, our
expenses could increase and our management&rsquo;s time and attention
could be diverted.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">As we continue to increase the scope of
our operations, we will need an effective planning and management
process to implement our business plan successfully in the rapidly
evolving Internet or we may be unable to manage our expanding
operations effectively. We plan to continue to expand our sales and
marketing, customer support and research and development organizations.
Past growth has placed, and any future growth will continue to place, a
significant strain on our management systems and resources. We will
likely need to continue to improve our financial and managerial
controls and our reporting systems and procedures. In addition, we will
need to expand, train and manage our work force. Our failure to manage
our growth effectively could increase our expenses and divert
management&rsquo;s time and attention.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">If we are unable to
manage our growth or our operations, our financial results could be
adversely affected.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we fail to establish, maintain and
expand our technology business, and marketing alliances and
partnerships, our ability to grow could be limited.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In order
to grow our technology business, we must generate, retain and
strengthen successful business and marketing alliances with advertising
agencies.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We depend, and expect to continue to depend, on our
business and marketing alliances with companies with which we have
written or oral agreements to provide services to our clients and to
refer business from their clients and customers to us. If companies
with which STAC has business and marketing alliances do not refer their
clients and customers to us to perform their online campaign and
message management, our revenue and results of operations would be
severely harmed.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we are not able to respond to rapid
technological changes characteristic of our industry, our products and
services may not be competitive.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The market for our services
is characterized by rapid change in business models and technological
infrastructure, and we need to constantly adapt to changing markets and
technologies to provide competitive services. Our future success will
depend, in part, upon our ability to develop our services for both our
target market and for applications in new markets. We may not, however,
be able to successfully do so, and our competitors may develop
innovations that render our products and services obsolete or
uncompetitive.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our technical systems will be vulnerable to
interruption and damage that may be costly and time-consuming to
resolve and may harm our business and reputation.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">A natural
or man-made disaster or other cause could interrupt our services for an
indeterminate length of time and severely damage our business,
prospects, financial condition, and results of operations. Our systems
and operations are vulnerable to damage or interruption from fire,
floods, network failure, hardware failure, software failure, power
loss, telecommunications failures, break-ins, terrorism, war or
sabotage, computer viruses, denial of service attacks, penetration of
our network by unauthorized computer users and
&lsquo;&lsquo;hackers,&rsquo;&rsquo; and other similar events, and
other unanticipated problems.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">12</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page13"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We presently may not posses and may not
have developed or implemented adequate protections or safeguards to
overcome any of these events. We also may not have anticipated or
addressed many of the potential events that could threaten or undermine
our technology network. Any of these occurrences could cause material
interruptions or delays in our business, result in the loss of data,
render us unable to provide services to our customers, expose us to
material risk of loss or litigation and liability, materially damage
our reputation and our visitor traffic may decrease as a result. In
addition, if a person is able to circumvent our security measures, he
or she could destroy or misappropriate valuable information or disrupt
our operations, which could cause irreparable damage to our reputation
or business. Similar industry-wide concerns or events could also damage
our reputation or business. Our insurance, if obtained, may not be
adequate to compensate us for all losses that may occur as a result of
a catastrophic system failure or other loss, and our insurers may not
be able or may decline to do so for a variety of reasons.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">If we
fail to address these issues in a timely manner, we may lose the
confidence of our merchant advertisers, our revenue may decline, and
our business could suffer.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may rely on third party
co-location providers, and a failure of service by these providers
could adversely affect our business and reputation.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may
rely upon third party co-location providers to host our main servers.
In the event that these providers experience any interruption in
operations or cease operations for any reason or if we are unable to
agree on satisfactory terms for continued hosting relationships, we
would be forced to enter into a relationship with other service
providers or assume hosting responsibilities ourselves. If we are
forced to switch hosting facilities, we may not be successful in
finding an alternative service provider on acceptable terms or in
hosting the computer servers ourselves. We may also be limited in our
remedies against these providers in the event of a failure of service.
In the past, short-term outages have occurred in the service maintained
by co-location providers that could recur. We also may rely on third
party providers for components of our technology platform, such as
hardware and software providers, credit card processors, and domain
name registrars. A failure or limitation of service or available
capacity by any of these third party providers could adversely affect
our business and reputation.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our results of operations might
fluctuate due to changes in the search engine based algorithms, which
could adversely affect our revenue and in turn the market price of our
common stock.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our revenue will be heavily dependent on how
search engines treat our content in their indexes. In the event search
engines determine that our content is not high quality, such search
engines may not rank our content as highly in their indexes resulting
in a reduction in our traffic, which may cause lower than expected
revenues. We are greatly dependent on a small number of major search
engines, namely Google, Yahoo!, MSN, and AOL. Search engines tend to
adjust their algorithms periodically and each adjustment tends to have
an impact on how our content ranks in their indexes. These constant
fluctuations could make it difficult for us to predict future
revenues.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We depend on the growth of the internet and internet
infrastructure for our future growth and any decrease or less than
anticipated growth in internet usage could adversely affect our
business prospects.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our future revenue and profits, if any,
depend upon the continued widespread use of the Internet as an
effective commercial and business medium. Factors that could reduce the
widespread use of the Internet
include:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">possible disruptions or other
damage to the Internet or telecommunications
infrastructure;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">failure of the
individual networking infrastructures of our merchant advertisers and
distribution partners to alleviate potential, overloading and delayed
response times;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">a decision by merchant
advertisers to spend more of their marketing dollars in offline
areas;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">increased governmental regulation
and taxation; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">actual or perceived
lack of security or privacy protection.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">13</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page14"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In particular, concerns over the security
of transactions conducted on the Internet and the privacy of users may
inhibit the growth of the Internet and other online services,
especially online commerce. In order for the online commerce market to
develop successfully, we, and other market participants, must be able
to transmit confidential information, including credit card
information, securely over public networks. Any decrease or less than
anticipated growth in Internet usage could have a material adverse
effect on our business prospects.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We are exposed to risks
associated with credit card fraud and credit payment, and we may suffer
losses as a result of fraudulent data or payment failure by merchant
advertisers.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may suffer losses as a result of payments
made with fraudulent credit card data. Our failure to adequately
control fraudulent credit card transactions could reduce any gross
profit margin. In addition, under limited circumstances, we extend
significant amounts of credit to clients and merchant advertisers who
may default on their accounts payable to us.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Government
regulation of the internet may adversely affect our business and
operating results.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may be subject to additional operating
restrictions and regulations in the future. Companies engaging in
online search, commerce, and related businesses face uncertainty
related to future government regulation of the Internet. Due to the
rapid growth and widespread use of the Internet, legislatures at the
federal and state levels are enacting and considering various laws and
regulations relating to the Internet. Furthermore, the application of
existing laws and regulations to Internet companies remains somewhat
unclear. Our business and operating results may be negatively affected
by new laws, and such existing or new regulations may expose us to
substantial compliance costs and liabilities and may impede the growth
in use of the Internet.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The application of these statutes and
others to the Internet search industry is not entirely settled.
Further, several existing and proposed federal laws could have an
impact on our business:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">The Digital
Millennium Copyright Act and its related safe harbors, are intended to
reduce the liability of online service providers for listing or linking
to third-party web sites that include materials that infringe
copyrights or other rights of
others.</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">The CAN-SPAM Act of 2003 and
certain state laws are intended to regulate interstate commerce by
imposing limitations and penalties on the transmission of unsolicited
commercial electronic mail via the Internet.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">With respect to the
subject matter of each of these laws, courts may apply these laws in
unintended and unexpected ways. As a company that provides services
over the Internet, we may be subject to an action brought under any of
these or future laws governing online services. Many of the services of
the Internet are automated and companies, such as ours, may be
unknowing conduits for illegal or prohibited materials. It is not known
how courts will rule in many circumstances. For example, it is possible
that courts could find strict liability or impose &lsquo;&lsquo;know
your customer&rsquo;&rsquo; standards of conduct in certain
circumstances in which case we could be liable for actions by
others.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may also be subject to costs and liabilities with
respect to privacy issues. Several Internet companies have incurred
costs and paid penalties for violating their privacy policies. Further,
it is anticipated that new legislation will be adopted by federal and
state governments with respect to user privacy. Additionally, foreign
governments may pass laws that could negatively impact our business or
may prosecute us for our products and services based upon existing
laws. The restrictions imposed by, and costs of complying with, current
and possible future laws and regulations related to our business could
harm our business and operating results.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Future regulation of
search engines may adversely affect the commercial utility of our
search marketing services.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The Federal Trade Commission
(&lsquo;&lsquo;FTC&rsquo;&rsquo;) has recently reviewed the way in
which search engines disclose paid placements or paid inclusion
practices to Internet users. In 2002, the FTC issued guidance
recommending that all search engine companies ensure that all paid
search results are clearly distinguished from non-paid results, that
the use of paid inclusion is clearly and conspicuously </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">14</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page15"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
explained and disclosed and that other
disclosures are made to avoid misleading users about the possible
effects of paid placement or paid inclusion listings on search results.
Such disclosures, if ultimately mandated by the FTC or voluntarily made
by us, may reduce the desirability of any paid placement and paid
inclusion services that we offer. We believe that some users may
conclude that paid search results are not subject to the same relevancy
requirements as non-paid search results, and will view paid search
results less favorably. If such FTC disclosure reduces the desirability
of our paid placement and paid inclusion services, and
&lsquo;&lsquo;click-throughs&rsquo;&rsquo; of our paid search
results decrease, the commercial utility of our search marketing
services could be adversely affected.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Government regulations
and legal uncertainties relating to the internet and online commerce
could negatively impact our internet business.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Online
commerce is relatively new and rapidly changing, and federal and state
regulations relating to the Internet and online commerce are evolving.
Currently, there are few laws or regulations directly applicable to the
Internet or online commerce on the Internet, and the laws governing the
Internet that exist remain largely unsettled. New Internet laws and
regulations could dampen growth in use and acceptance of the Internet
for commerce. In addition, applicability to the Internet of existing
laws governing issues such as property ownership, copyrights and other
intellectual property issues, libel, obscenity, and personal privacy is
uncertain. The vast majority of those laws were adopted prior to the
advent of the Internet and related technologies and, as a result, do
not expressly contemplate or address the unique issues presented by the
Internet and related technologies. Further, growth and development of
online commerce have prompted calls for more stringent consumer
protection laws, both in the U.S. and abroad. The adoption or
modification of laws or regulations applicable to the Internet could
have a material adverse effect on our Internet business operations. We
also will be subject to regulation not specifically related to the
Internet, including laws affecting direct marketers and
advertisers.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In addition, in 1998, the Internet Tax Freedom Act
was enacted, which generally placed a three-year moratorium on state
and local taxes on Internet access and on multiple or discriminatory
state and local taxes on electronic commerce. This moratorium was
recently extended until November  1,  2007. We cannot
predict whether this moratorium will be extended in the future or
whether future legislation will alter the nature of the moratorium. If
this moratorium is not extended in its current form, state and local
governments could impose additional taxes on Internet-based
transactions, and these taxes could decrease our ability to compete
with traditional retailers and could have a material adverse effect on
our business, financial condition, results of operations, and cash
flow.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In addition, several telecommunications carriers have
requested that the Federal Communications Commission
(&lsquo;&lsquo;FCC&rsquo;&rsquo;) regulate telecommunications over
the Internet. Due to the increasing use of the Internet and the burden
it has placed on the current telecommunications infrastructure,
telephone carriers have requested the FCC to regulate Internet service
providers and impose access fees on those providers. If the FCC imposes
access fees, the costs of using the Internet could increase
dramatically. This could result in the reduced use of the Internet as a
medium for commerce, which could have a material adverse effect on our
Internet business operations.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may incur liabilities for the
activities of users of our service, which could adversely affect our
service offerings.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The law relating to the liability of
providers of online services for activities of their users and for the
content of their merchant advertiser listings and other postings or
usage (such as our social networking community Friendsand.com) is
currently unsettled and could damage our business, financial condition,
and operating results. Our insurance policies may not provide coverage
for liability arising out of activities of our users or merchant
advertisers for the content of our listings or other services (such as
our social networking community Friendsand.com). Furthermore, we may
not be able to obtain or maintain adequate insurance coverage to reduce
or limit the liabilities associated with our businesses. We may not
successfully avoid civil or criminal liability for unlawful activities
carried out by consumers or other users of our services or for the
content of our or their listings or posting therein. Our potential
liability for unlawful activities of users of our services or for the
content of our or their listings or postings therein could require us
to implement measures to reduce our exposure to </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">15</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page16"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
such liability, which may require us, among
other things, to spend substantial resources or to discontinue certain
service offerings.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">If we do not maintain and grow a critical
mass of merchant advertisers, our operating results could be adversely
affected.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our success depends, in part, on our and any
additional acquired business&rsquo;s maintenance and growth of a
critical mass of merchant advertisers and a continued interest in our
and any additional acquired business&rsquo;s performance-based
advertising and search marketing services. If, through our or any
additional acquired business, we are unable to achieve a growing base
of merchant advertisers, we may not successfully develop or market
technologies, products or services that are competitive or accepted by
merchant advertisers. Any decline in the number of merchant advertisers
could adversely affect our operating results generally.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We are
dependent upon several of the major search engines to continue to
provide us traffic that merchant advertisers deem to be of value, and
if they do not, it could have a material adverse effect on the value of
our services.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We are dependent upon several of the major
Internet search engines namely Google, Yahoo!, MSN and AOL to provide
traffic that merchant advertisers deem to be of value. We monitor the
traffic delivered to our merchant advertisers in an attempt to optimize
the quality of traffic we deliver. We review factors such as non-human
processes, including robots, spiders, scripts (or other software),
mechanical automation of clicking and other sources and causes of
low-quality traffic, including, but not limited to, other non-human
clicking agents. Even with such monitoring in place, there is a risk
that a certain amount of low-quality traffic will be provided to our
merchant advertisers, which, if not contained, may be detrimental to
those relationships. Low-quality traffic (or traffic that is deemed to
be less valuable by our merchant advertisers) may prevent us from
growing our base of merchant advertisers and cause us to lose
relationships with existing merchant advertisers or any additional
acquired business.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We may be subject to litigation for
infringing the intellectual property rights of others.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our
success will depend, in part, on our ability to protect our
intellectual property and to operate without infringing on the
intellectual property rights of others. There can be no guarantee that
any of our intellectual property will be adequately safeguarded, or
that it will not be challenged by third parties. We may be subject to
patent infringement claims or other intellectual property infringement
claims that would be costly to defend and could limit our ability to
use certain critical technologies.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Any additional patent
litigation could negatively impact our business by diverting resources
and management attention from other aspects of the business and adding
uncertainty as to the ownership of technology and services that we view
as proprietary and essential to our business. In addition, a successful
claim of patent infringement against us and our failure or inability to
license the infringed or similar technology on reasonable terms, or at
all, could have a material adverse effect on our business.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We
may be involved in lawsuits to protect or enforce any patents that we
currently hold or may be granted, which could be expensive and time
consuming.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We may initiate patent litigation against third
parties to protect or enforce our patent rights, although we presently
do not own any patents, and we may be similarly sued by others. We may
also become subject to interference proceedings conducted in the patent
and trademark offices of various countries to determine the priority of
inventions. The defense and prosecution, if necessary, of intellectual
property suits, interference proceedings and related legal and
administrative proceedings is costly and may divert our technical and
management personnel from their normal responsibilities. We may not
prevail in any of these suits. An adverse determination of any
litigation or defense proceedings could put our patents at risk of
being invalidated or interpreted narrowly and could put our patent
applications at risk of not being issued.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Furthermore, because of
the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our
confidential information could be </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">16</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page17"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
compromised by disclosure during this type
of litigation. In addition, during the course of this kind of
litigation, there could be public announcements of the results of
hearings, motions or other interim proceedings or developments in the
litigation. If securities analysts or investors perceive these results
to be negative, they could have an adverse effect on the trading price
of our Common Stock.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">RISKS RELATING TO OUR COMMON
STOCK</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our ability to raise capital and the market price of
our common stock could be negatively impacted by our significant number
of outstanding warrants, options and the Debentures as well as by the
registration of the shares in this offering.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Currently, we
have outstanding warrants and options exercisable into an aggregate of
16,076,452 shares of Common Stock and outstanding Debentures
convertible into 23,300,000 shares of Common Stock. The exercise or
conversion of all of such outstanding warrants, options or Debentures
would dilute the then-existing stockholders&rsquo; percentage
ownership of our Common Stock, and any sales in the public market of
the Common Stock underlying such securities could adversely affect
prevailing market prices for the Common Stock. The market price of our
common stock could also be negatively impacted by the fact that the
Registration Statement on Form SB-2 initially filed on March
20,  2006 relates to the resale of 75,042,845 shares of common
stock (which includes 35,698,952 shares underlying the aforementioned
warrants, options and Debentures). We have also registered in the
Registration Statement an additional 3,388,820 shares pursuant to the
material terms of our securities purchase agreement and registration
rights agreement with the Debenture holders. In addition to negatively
impacting the market price of our Common Stock, the foregoing could
impact the terms upon which we would be able to obtain additional
equity capital since the holders of such securities can be expected to
exercise or convert them at a time when we would, in all likelihood, be
able to obtain needed capital on terms more favorable to us than those
provided by such securities.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Applicable SEC rules governing
the trading of &lsquo;&lsquo;penny stocks&rsquo;&rsquo; limits the
trading and liquidity of our common stock.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our Common Stock
is quoted on the OTC Bulletin Board, and currently trades, and may
continue to trade below $5.00 per share. Therefore, the Common Stock is
considered a &lsquo;&lsquo;penny stock&rsquo;&rsquo; and subject to
SEC rules and regulations that impose limitations upon the manner in
which such shares may be publicly traded. These regulations require the
delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the
associated risks. Under these regulations, certain brokers who
recommend such securities to persons other than established customers
or certain accredited investors must make a special written suitability
determination regarding such a purchaser and receive such
purchaser&rsquo;s written agreement to a transaction prior to sale.
These regulations have the effect of limiting the trading activity of
our Common Stock and reducing the liquidity of an investment in our
Common Stock.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">The market price of our common stock is likely
to be highly volatile and subject to wide fluctuations.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The
market price of our Common Stock is likely to be highly volatile and
could be subject to wide fluctuations in response to a number of
factors, including:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">announcements of
new products or services by our
competitors;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">fluctuations in revenue
attributable to changes in the search engine based algorithms that rank
the relevance of our
content;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">announcements of technological
innovations or new products or services by us;
and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">sales of our Common Stock by our
founders or other selling stockholders.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">Our operating results
may fluctuate significantly, and these fluctuations may cause our
common stock price to fall.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our operating results will likely
vary in the future primarily as the result of fluctuations in our
revenues and operating expenses. If our results of operations do not
meet the expectations of current or potential stockholders, the price
of our Common Stock may decline.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">17</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page18"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">There may be a limited public market
for shares of our common stock, which may make it difficult for
stockholders to sell their shares.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">An active public market
for shares of our Common Stock may not develop, or if one should
develop, it may not be sustained. Therefore, stockholders may not be
able to find purchasers for their shares of Common Stock.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We
filed a preliminary proxy statement relating to a proposal to amend our
certificate of incorporation to increase the number of authorized
shares of our common stock to 190,000,000 shares from
90,000,000.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In connection with the proposed amendments to the
Debentures described above, on September  12,  2006, we
filed a preliminary proxy statement relating to a proposal to amend our
certificate of incorporation to increase the number of authorized
shares of our common stock to 190,000,000 shares. Existing holders of
common stock have no preemptive rights to purchase or subscribe for any
newly issued shares of common stock. Therefore, the authorization and
subsequent issuance of additional shares of common stock may, among
other things, have a dilutive effect on the voting power, earnings per
share and equity of existing holders of common stock and could
negatively effect the market price of our common stock.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">
<font style="font-weight: bold; font-style: normal;">We do
not expect to pay dividends for the foreseeable future.</font>
</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We
currently intend to retain any future earnings to support the
development and expansion of our business and do not anticipate paying
cash dividends in the foreseeable future. In addition, the terms of the
Debentures prohibit the payment of dividends. Our payment of any future
dividends will be at the discretion of our board of directors after
taking into account various factors, including but not limited to our
financial condition, operating results, cash needs, growth plans, and
the terms of any credit agreements that we may be a party to at the
time. Accordingly, stockholders must rely on sales of their Common
Stock after price appreciation, which may never occur, as the only way
to realize a return on their investment.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">FORWARD-LOOKING
STATEMENTS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">This prospectus contains forward-looking statements.
To the extent that any statements made in this prospectus contain
information that is not historical, these statements are essentially
forward-looking. Forward-looking statements can be identified by the
use of words such as &lsquo;&lsquo;expects,&rsquo;&rsquo;
&lsquo;&lsquo;plans&rsquo;&rsquo;
&lsquo;&lsquo;will,&rsquo;&rsquo;
&lsquo;&lsquo;may,&rsquo;&rsquo;
&lsquo;&lsquo;anticipates,&rsquo;&rsquo; believes,&rsquo;&rsquo;
&lsquo;&lsquo;should,&rsquo;&rsquo;
&lsquo;&lsquo;intends,&rsquo;&rsquo;
&lsquo;&lsquo;estimates,&rsquo;&rsquo; and other words of similar
meaning. These statements are subject to risks and uncertainties that
cannot be predicted or quantified and consequently, actual results may
differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
without limitation, risks associated with the uncertainty of future
financial results, additional financing requirements, development of
new products, the effectiveness, profitability, and marketability of
such products, the ability to protect proprietary information, the
impact of current, pending, or future legislation and regulation on the
electronic marketing industry, the impact of competitive products or
pricing, technological changes, the effect of general economic and
business conditions and other risks and uncertainties detailed from
time to time in our filings with the SEC. We do not undertake any
obligation to publicly update any forward-looking statements. As a
result, you should not place undue reliance on these forward-looking
statements.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We also use market data and industry forecasts and
projections throughout this prospectus, which we have obtained from
market research, publicly available information and industry
publications. These sources generally state that the information they
provide has been obtained from sources believed to be reliable, but
that the accuracy and completeness of the information are not
guaranteed. The forecasts and projections are based on industry surveys
and the preparers&rsquo; experience in the industry, and the projected
amounts may not be achieved. Similarly, although we believe that the
surveys and market research others have performed are reliable, we have
not independently verified this information. Forecasts and other
forward-looking information obtained from these sources are subject to
the same qualifications and the additional uncertainties accompanying
any estimates of future market size, revenue and market acceptance of
products and services.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">18</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="page19"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">USE OF
PROCEEDS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We will not receive any of the proceeds from the
reoffer and resale of the shares of common stock by the selling
stockholders. We will receive the exercise price of the options when
exercised by the holders thereof. Such proceeds will be used for
working capital purposes.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">SELLING STOCKHOLDERS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">This
prospectus relates to the reoffer and resale of shares of our common
stock issued to the stockholders who exercised stock options or who
received awards of restricted stock prior to the initial filing of this
Registration Statement or that may be issued to the stockholders who
are deemed to be affiliates of our company under the Plans or other
grants to non-employee directors. This prospectus may also be used by
certain unnamed non-affiliates with respect to the reoffer and resale
of 693 shares of our restricted stock.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The following table sets
forth (i) the number of shares of our common stock beneficially owned
by the selling stockholder at September  15,  2006, (ii)
the number of shares of our common stock to be offered for resale by
the selling stockholder, and (iii) the number and percentage of shares
of our common stock to be held by the selling stockholder, after
completion of the
offering:</p>
<img src="spacer.gif" height="10" width="1"><br>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 12px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="215"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="16"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="43"></td>
<td><img src="spacer.gif" height="1" width="16"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="15"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="43"></td>
<td><img src="spacer.gif" height="1" width="15"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="35"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="16"></td>
<td><img src="spacer.gif" height="1" width="35"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="6.59"></td>
<td><img src="spacer.gif" height="1" width="35"></td>
<td><img src="spacer.gif" height="1" width="1"></td>
<td><img src="spacer.gif" height="1" width="16"></td>
<td><img src="spacer.gif" height="1" width="35"></td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Name</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Shares
of<br> Common Stock<br> Owned Prior to<br>the
Offering<sup style="vertical-align:top;">(1)</sup></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Shares of<br> Common Stock<br>to be
Sold</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Shares of<br> Common Stock<br> Owned<br> After the
Offering</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="4"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Percentage of<br> Common Stock<br> Owned<br> After
the Offering</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #cceeff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #cceeff;">Shawn
McNamara<sup style="vertical-align:top;">(2)</sup></font></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">103,334</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(3</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">103,334</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(3</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Vincent
Addonisio</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #cceeff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #cceeff;">Robert
Beauregard</font></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Anthony
Abat&eacute;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">50,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(4</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #cceeff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #cceeff;">Ohad
Jehassi<sup style="vertical-align:top;">(2)</sup></font></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">105,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(5</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">105,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(5</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #cceeff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #cceeff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 10pt; text-indent: -10pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Mandee
Heller
Adler<sup style="vertical-align:top;">(2)</sup></font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">200,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(6</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">200,000</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<sup style="vertical-align:top;">(6</sup><sup style="vertical-align:top;">)</sup>
</div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff;"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal;" align="right" valign="bottom"><img src="spacer.gif" width="1"></td>
<td align="right" style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff;font-weight: normal; font-style: normal; " valign="bottom">-0-</td>
<td style="font-size: 10pt;  line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-top: 0pt; background-color: #ffffff; font-weight: normal; font-style: normal; " valign="bottom" align="left">
<div style="position:relative;width:100%;height:0;vertical-align:bottom;">
<div style="position:absolute;overflow:visible;width:100pt;bottom:0;">
<img src="spacer.gif" width="1"></div>
</div>
</td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<!--0-->
<table border="0" cellpadding="0" cellspacing="0" width="602">
<tr>
<td><img src="spacer.gif" width="1" height="8"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="95"></td>
<td><img src="spacer.gif" height="1" width="507"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="8" width="1"></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(1)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">Includes
all options being registered for resale regardless of whether these
options are currently exercisable within 60
days.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(2)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">The selling stockholder is a former
executive officer of our company.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(3)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">Includes
(i)&nbsp;3,334 shares of restricted stock issued under our 2005
Incentive Stock Plan and (ii) an option to purchase 100,000 shares of
common stock granted pursuant to our 2006 Incentive Stock Plan that are
presently exercisable.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(4)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">Represents an option
to purchase 50,000 shares of common stock granted pursuant to our 2005
Non-Employee Directors Stock Option Plan that are not currently
exercisable.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(5)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">Includes (i) 80,000 shares of
restricted stock issued under our 2005 Incentive Stock Plan and (ii) an
option to purchase 25,000 shares of common stock granted pursuant to
our 2005 Incentive Stock Plan that are presently
exercisable.</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">(6)</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">Includes (i) 100,000 shares of
restricted stock issued under our 2005 Incentive Stock Plan and (ii) an
option to purchase 100,000 shares of common stock granted pursuant to
our 2005 Incentive Stock Plan that are presently
exercisable.</font></td>
</tr>
</table>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">PLAN OF DISTRIBUTION</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">This offering is
self-underwritten; neither we nor the selling stockholders have
employed an underwriter for the sale of shares of common stock by the
selling stockholders. We will bear all expenses in connection with the
preparation of this prospectus. The selling stockholders will bear all
expenses associated with the sale of the shares of common
stock.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">19</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page20"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The selling stockholders may offer their
common stock directly or through pledgees, donees, transferees or other
successors in interest in one or more of the following
transactions:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">On any stock exchange on
which the shares of common stock may be listed at the time of
sale;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">In negotiated
transactions;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">In the over-the-counter
market; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">In a combination of any of
the above transactions.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The selling stockholders may offer their
shares of common stock at any of the following
prices:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Fixed prices that may be
changed;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Market prices prevailing at the
time of sale;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Prices related to such
prevailing market prices; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">Negotiated
prices.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The selling stockholders may effect such transactions by
selling shares to or through broker-dealers, and all such
broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the selling stockholders and/or the
purchasers of shares of common stock for whom such broker-dealers may
act as agents or to whom they sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of
customary commissions).</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Any broker-dealer acquiring shares of
common stock from the selling stockholders may sell the shares either
directly, in its normal market-making activities, through or to other
brokers on a principal or agency basis or to its customers. Any such
sales may be at prices then prevailing on the OTC Bulletin Board or at
prices related to such prevailing market prices or at negotiated prices
to its customers or a combination of such methods. The selling
stockholders and any broker-dealers that act in connection with the
sale of the shares of common stock hereunder may be deemed to be
&lsquo;&lsquo;underwriters&rsquo;&rsquo; within the meaning of
Section 2(11) of the Securities Act; and any commissions received by
them and any profit on the resale of shares as principal may be deemed
to be underwriting discounts and commissions under the Securities Act.
Any such commissions, as well as other expenses incurred by the selling
stockholders and applicable transfer taxes, are payable by the selling
stockholders.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The selling stockholders, together with any agent
of the selling stockholders, reserve the right to accept or reject in
whole or in part any proposed purchase of shares of common stock
offered hereby. The selling stockholders will pay any sales commissions
or other compensation payable to any such agent with respect to any
such transaction.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We have not registered or qualified offers and
sales of shares of common stock under the laws of any country other
than the United States. To comply with certain states&rsquo;
securities laws, if applicable, the selling stockholders will offer and
sell their shares of common stock in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain
states the selling stockholders may not offer or sell shares of common
stock unless we have registered or qualified such shares for sale in
such states or we have complied with an available exemption from
registration or qualification.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">There can be no assurance that the
selling stockholders will sell any or all of the shares offered by them
hereunder or otherwise.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">LEGAL MATTERS</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The validity of the
securities being offered by this prospectus has been passed upon for us
by Haynes and Boone, LLP, New York, New York. A limited liability
company controlled by a member of Haynes and Boone, LLP holds 15,000
shares of our common stock.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">WHERE YOU CAN FIND MORE
INFORMATION</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">We have filed a registration statement on Form S-8
with the SEC for our common stock offered in this offering. This
prospectus does not contain all the information set forth in the
Registration </p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">20</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="page21"></a>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: pt; background-color: #ffffff">
Statement. You should refer to the
Registration Statement and its exhibits for additional information.
Whenever we make references in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits to the Registration
Statement for copies of the actual contracts, agreements or other
documents.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The SEC maintains an Internet site at
<u>www.sec.gov</u> that contains reports, proxy and information
statements, and other information regarding us. You may also read and
copy any document we file with the SEC at its Public Reference Room at
100 F Street NE, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public
Reference Room. Our SEC filings are also available on the SEC&rsquo;s
website at www.sec.gov.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">DISCLOSURE OF COMMISSION POSITION
ON<br>INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers or persons controlling us, we have
been advised that it is the SEC&rsquo;s opinion that such
indemnification is against public policy as expressed in the Securities
Act and is, therefore,
unenforceable.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">21</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="pageII-1"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">PART
II</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 3.&nbsp;&nbsp;&nbsp;&nbsp;Incorporation of Certain Documents by
Reference</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">The following documents filed by SendTec, Inc. (the
&lsquo;&lsquo;Company&rsquo;&rsquo;,
&lsquo;&lsquo;we&rsquo;&rsquo; or
&lsquo;&lsquo;our&rsquo;&rsquo;) with the SEC are incorporated by
reference in this registration statement on Form S-8 (the
&lsquo;&lsquo;Registration
Statement&rsquo;&rsquo;):</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(1)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Prospectus
filed Pursuant to Rule  424(b)(3) on July  14,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(2)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on
Form  8-K filed February  9,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(3)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on
Form  8-K filed February  13,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(4)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed March  21,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(5)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed April  4,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(6)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed April  13,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(7)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K/A, filed April  17,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(8)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K,
filed May  8,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(9)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Quarterly Report on Form
10-QSB for the quarter ended March  31,  2006, filed
May  22,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(10)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed June  6,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(11)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed June  21,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(12)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form
8-K, filed July  14,  2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(13)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Quarterly Report on Form 10-QSB for
the quarter ended June  30, 2006 filed on August
21,  2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(14)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report
on Form 8-K filed on August  24,  2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(15)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K filed on
September  12,
2006;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(16)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Current Report on Form 8-K
filed on September 27, 2006; and</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="40"></td>
<td><img src="spacer.gif" height="1" width="536"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 30pt">(17)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 406pt">Description of Common Stock in our
Registration Statement on Form 8-A, filed December  30,
2005.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">In addition, all documents filed by the Company with the
SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, subsequent to the date of this
Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been
sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the respective dates of filing of
such documents with the SEC. Any statement contained in this
Registration Statement or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof or of the related prospectus to the
extent that a statement contained herein (or in any other subsequently
filed document which is also incorporated or deemed to be incorporated
herein) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration
Statement.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 4.&nbsp;&nbsp;&nbsp;&nbsp;Description of Securities</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Not
Applicable.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 5.&nbsp;&nbsp;&nbsp;&nbsp;Interests of Named Experts and
Counsel.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Not Applicable.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">II-1</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="pageII-2"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 6.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Directors
and Officers</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our Amended and Restated Certificate of
Incorporation limits the liability of the directors of the Company to
the fullest extent permitted under Delaware corporate law.
Specifically, our directors will not be liable to the Company or our
stockholders for monetary damages for any breach of fiduciary duty by a
director, except for liability:</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">for any
breach of the director&rsquo;s duty of loyalty to the Company or our
stockholders;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">under Section 174 of
the Delaware General Corporation Law;
or</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 3pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">&bull;&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:3pt; padding-bottom: 3pt; text-align: left; font-style: normal; width: 413pt">for any transaction from which a
director derived an improper personal benefit.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">If the Delaware
General Corporation Law is amended to authorize corporate action
further eliminating or limiting the personal liability of directors,
then the liability of a director of the Company will be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Our Amended and Restated
Certificate of Incorporation provides that the we will, in certain
situations, indemnify to the fullest extent permitted under and in
accordance with the laws of the State of Delaware any person made or
threatened to be made a party to a proceeding by reason of that
person&rsquo;s former or present official capacity with the Company
against expenses (including attorneys&rsquo; fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such proceeding. Directors of the Company are
and certain other persons may be, subject in each case to certain
limitations, entitled to payment or reimbursement of reasonable
expenses in advance of the final disposition of the proceeding. In
addition, the employment agreements to which the Company is a party
provide for indemnification of the employees who are party
thereto.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item 7.&nbsp;&nbsp;&nbsp;&nbsp;Exemption from Registration
Claimed</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Not applicable.</p>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 6pt; background-color: #ffffff;">Item
8.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</p>
<img src="spacer.gif" height="10" width="1"><br>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 6px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="79"></td>
<td><img src="spacer.gif" height="1" width="12"></td>
<td><img src="spacer.gif" height="1" width="12"></td>
<td><img src="spacer.gif" height="1" width="491"></td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Exhibit
No.</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Description of
Exhibits</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">4.1</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Form
of Restricted Stock Agreement (incorporated herein by reference to
Exhibit 10.15 to the Company&rsquo;s Quarterly Report on Form 10-QSB
for the quarter ended June  30,  2005 filed with the SEC on
August  15,  2005)</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">4.2</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Form of
Option Certificate (incorporated herein by reference to Exhibit 10.14
to the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter
ended June  30,  2005 filed with the SEC on August
15,  2005)</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">4.3</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">SendTec, Inc. 2006
Incentive Stock Plan (incorporated herein by reference to Exhibit 10.33
to the Company&rsquo;s Annual Report on Form 10-KSB for the year ended
December  31,  2005 filed with the SEC on March
20,  2006)</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">4.4</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">SendTec, Inc. 2005
Non-Employee Directors Stock Option Plan (incorporated herein by
reference to Exhibit 10.1 to the Company&rsquo;s Current Report on
Form 8-K filed with the SEC on August  12,
2005)</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">4.5</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">SendTec, Inc. 2005 Incentive Stock
Plan (incorporated herein by reference to Exhibit 10.1 to the
Company&rsquo;s Current Report on Form 8-K filed with the SEC on
July  18,  2005)</font></td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">II-2</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>
<page>
<a name="pageII-3"></a><img src="spacer.gif" height="10" width="1"><br>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 0px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="79"></td>
<td><img src="spacer.gif" height="1" width="12"></td>
<td><img src="spacer.gif" height="1" width="12"></td>
<td><img src="spacer.gif" height="1" width="491"></td>
</tr>
<tr>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="left" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Exhibit
No.</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 8pt; line-height:10pt; color: #000000; border-bottom: 1px solid #000000;padding-top: 0pt; background-color: #ffffff; " align="center" valign="bottom" colspan="1"><font style="font-family: serif; font-size: 8pt; line-height:10pt; color: #000000; font-weight: bold; font-style: normal;background-color: #ffffff;">Description of
Exhibits</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">5.1*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Opinion of Haynes and
Boone, LLP</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">23.1*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Consent of Marcum &amp;
Kliegman LLP</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">23.2*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Consent of McKean Paul
Chrycy Fletcher &amp; Co.</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">23.3*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Consent of
Gregory, Sharer and Stuart,
P.A.</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">23.4*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Consent of Haynes and Boone, LLP
(contained in Exhibit 5)</font></td>
</tr>
<tr>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="center" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">24*</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 10pt; line-height:12pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 10pt; line-height:12pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Powers of
Attorney (included on the signature page of this Registration
Statement)</font></td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<!--0-->
<table border="0" cellpadding="0" cellspacing="0" width="602">
<tr>
<td><img src="spacer.gif" width="1" height="8"></td>
</tr>
<tr>
<td bgcolor="#000000"><img src="spacer.gif" height="1"><img src="spacer.gif" height="1" width="95"></td>
<td><img src="spacer.gif" height="1" width="507"></td>
</tr>
<tr>
<td><img src="spacer.gif" height="8" width="1"></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="23"></td>
<td><img src="spacer.gif" height="1" width="602"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-left: 0pt; text-align: left">*</font></td>
<td align="left" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 3pt;"><font style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt;  padding-bottom: 6pt;">filed
herewith.</font></td>
</tr>
</table>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: 0pt; padding-bottom: 0pt; background-color: #ffffff;">Item
9.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings</p>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="572"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">1.&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 433pt">The undersigned Registrant
hereby undertakes that it will:</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">(a)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 413pt">file, during
any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement to include any additional or
changed material information on the plan of
distribution;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">(b)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 413pt">for determining liability of
the undersigned small business issuer under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that time to
be the initial <font style="font-weight: normal; font-style: italic">bona fide</font>
offering;</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="26"></td>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="545"></td>
</tr>
<tr>
<td align="left" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; font-style: normal; width: 20pt"></td>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">(c)&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 413pt">file a post-effective amendment to
remove from registration any of the securities that remain unsold at
the end of the offering.</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="572"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">2.&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 433pt">The undersigned
registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the
registrant&rsquo;s annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan&rsquo;s annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.</td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" border="0" width="602">
<tr>
<td><img src="spacer.gif" height="1" width="30"></td>
<td><img src="spacer.gif" height="1" width="572"></td>
</tr>
<tr>
<td align="right" valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top: 6pt; padding-left: 0pt; text-align: left;  font-style: normal; width: 23pt">3.&nbsp;</td>
<td valign="top" style="font-family:serif;font-weight:normal;color:#000000;font-size: 10pt; padding-top:6pt; padding-bottom: 6pt; text-align: left; font-style: normal; width: 433pt">Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 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, the registrant will,
unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such
issue.</td>
</tr>
</table>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">II-3</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>






<page>
<a name="pageII-4"></a>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">SIGNATURES</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 13pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Pursuant
to 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 for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of St. Petersburg, State of
Florida, on this 6<sup style="vertical-align:top;">th</sup> day of October,
2006.</p>
<img src="spacer.gif" height="10" width="1"><br>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 12px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="285"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="24"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="269"></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="4"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;"><font style="font-weight: bold; font-style: normal;">SENDTEC,
INC.</font></font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 22pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 22pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 22pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Paul
Soltoff</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Paul Soltoff, Chairman of
the Board and<br>Chief Executive Officer</font></td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<p style="font-family:serif;font-weight:bold;color:#000000;font-size:10pt;  width: 456pt; text-align: center; font-style: normal; line-height: 12pt; padding-top: 12pt; padding-left:0pt; padding-right:0pt; margin: 0pt; text-indent: pt; padding-bottom: 0pt; background-color: #ffffff;">POWER
OF ATTORNEY</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 0pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Paul Soltoff and
Donald Gould as his true and lawful attorney-in-fact, each acting
alone, with full power of substitution and resubstitution for him and
in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments to this
registration statement, and any related registration statement filed
pursuant to Rule 462(b) of the Act and to file the same, with exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact or their substitutes, each acting along,
may lawfully do or cause to be done by virtue hereof.</p>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt;  width: 456pt; text-align: left; font-style: normal; line-height: 12pt; padding-top:6pt; padding-left:0pt; padding-right:0pt; padding-bottom: 6pt; margin: 0pt; text-indent: 20pt; background-color: #ffffff">Pursuant to
the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities
and on the date
indicated.</p>
<img src="spacer.gif" height="10" width="1"><br>
<div style="border: 1px solid #FFFFFF; width: 602px; padding-top: 12px; border-left:none;" align="left">
<div class="WhiteBorder" style="padding:0;margin:0;text-align:center;">
<table style="border-top:none; border-bottom:none;border-left:none; border-right:none; " cellpadding="0" cellspacing="0" border="0" width="602" bgcolor="#ffffff">
<tr style="background-color:none">
<td><img src="spacer.gif" height="1" width="12"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="281"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="6"></td>
<td><img src="spacer.gif" height="1" width="309"></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="t" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Paul
Soltoff</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="t" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">October 6,  2006</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Paul
Soltoff, Chairman of the Board and Chief Executive Officer (Principal
Executive
Officer)</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Donald Gould</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">October
6,  2006</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Donald Gould, Chief
Financial Officer (Principal Financial Officer and Principal Accounting
Officer)</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Anthony
Abat&eacute;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">October 6,
2006</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Anthony Abat&eacute;,
Director</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Robert
G. Beauregard</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">October 6,
2006</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Robert G. Beauregard,
Director</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">By:</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #000000;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">/s/&nbsp;Vincent
Addonisio</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 16pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">October 6,
2006</font></td>
</tr>
<tr>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">Vincent Addonisio,
Director</font></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="background-color: #ffffff;border-bottom: 1px solid #ffffff"><img src="spacer.gif" width="1" height="1"></td>
<td style="font-size: 9pt; line-height:11pt; color: #000000; border-bottom: 1px solid #ffffff;padding-left: 0pt; text-indent: 0pt;padding-top: 0pt; background-color: #ffffff; " align="left" valign="top" colspan="1"><font style="font-family: serif; font-size: 9pt; line-height:11pt; color: #000000; font-weight: normal; font-style: normal;background-color: #ffffff;">&nbsp;</font></td>
</tr>
<tr>
<td><img src="spacer.gif" height="10" width="1"></td>
</tr>
</table>
</div>
</div>
<p style="font-family:serif;font-weight:normal;color:#000000;font-size:10pt; text-align: center; width: 456pt;">II-4</p>
<br>
<hr width="760" style="padding-left: 0pt;" align="left">
<br>



</BODY>
</HTML>
[{"type": "S-8", "sequence": "1", "filename": "file1.htm", "secsgml_size_bytes": 398866}]
{"company-data": {"conformed-name": "SENDTEC, INC.", "cik": "0001296001", "assigned-sic": "4899", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-137883", "film-number": "061134454"}, "business-address": {"phone": "727-576-6630"}, "mail-address": {"street1": "877 EXECUTIVE CENTER DRIVE WEST", "street2": "SUITE 300", "city": "ST. PETERSBURG", "state": "FL", "zip": "33702"}, "former-company": [{"former-conformed-name": "RELATIONSERVE MEDIA INC", "date-changed": "20050621"}, {"former-conformed-name": "CHUBASCO RESOURCES CORP.", "date-changed": "20050311"}, {"former-conformed-name": "CHUBASCO RESOURCES INC", "date-changed": "20040630"}]}
As
filed with the Securities and Exchange Commission on October 6,
2006
Registration No.
333-
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC
20549
FORM S-8
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
SendTec,
Inc.
(Exact Name of Registrant as
Specified in Its
Charter)
Delaware
43-2053462
(State
or Other Jurisdiction of
Incorporation or
Organization)
(I.R.S. Employer
Identification
No.)
877
Executive Center Drive West, Suite 300
St. Petersburg, Florida
33702
Telephone: (727)
576-6630
(Address of Principal Executive
Offices)
2005 Incentive
Stock Plan
2005 Non-Employee Directors Stock Option Plan
2006
Incentive Stock Plan
(Full Title of the
Plans)
Paul Soltoff
Chief Executive
Officer
877 Executive Center Drive West, Suite 300
St.
Petersburg, Florida 33702
Telephone: (727)
576-6630
(Name, Address and telephone
number, including area code, of agent for
service)
Copy to:
Harvey J.
Kesner, Esq.
Haynes & Boone, LLP
153 East 53
rd
Street
New York, New York 10022
Telephone: (212)
659-7300
Facsimile: (212)
918-8989
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of
Securities to be Registered
Amount To
Be
Registered
(1)
Proposed Maximum
Offering
Price
Per Share
Proposed Maximum
Aggregate
Offering Price
Amount of
Registration
Fee
Common stock, par value $0.001 per share: shares
subject to outstanding
options
4,352,000
$
1.67
(2
)
$
7,267,840.00
$
777.66
Common
stock, par value $0.001 per share: restricted shares issued and
outstanding
184,027
$
0.35
(4
)
$
64,409.45
$
6.89
Common
stock, par value $0.001 per share: shares reserved for future issuance
under the
plans
2,773,973
$
0.35
(4
)
$
970,890.55
$
103.88
TOTAL
7,310,000
(3
)
$
8,303,140.00
$
888.43
(1)
Pursuant
to Rule 416 of the Securities Act of 1933, as amended (the
''Securities Act''), this registration
statement also registers such indeterminate number of additional shares
of common stock that may be offered pursuant to the anti-dilution
provisions set forth in the 2005 Incentive Stock Plan, the 2005
Non-Employee Directors Stock Option Plan and the 2006 Incentive Stock
Plan (collectively, the
''Plans'').
(2)
Pursuant
to Rule 457(h)(1) under the Securities Act, calculated on the basis of
the weighted average exercise price of outstanding options to purchase
shares of common stock under the Plans.
(3)
Does not include options to purchase
600,000 shares of common stock and 90,000 shares of restricted stock
issued pursuant to the 2005 Incentive Stock Plan that were previously
registered on the Company's Registration Statement on Form SB-2
initially filed on March  20,
2006.
(4)
Estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(c)
under the Securities Act, calculated on the basis of the average of the
high and low prices reported for shares of common stock of the
Registrant on the OTC Bulletin Board on October 4,
2006.
Table of Contents
EXPLANATORY
NOTES
SendTec, Inc. has prepared this registration statement in
accordance with the requirements of Form S-8 under the Securities Act
of 1933, as amended (the ''Securities
Act''), to register shares of our common stock, $0.001
par value per share, issuable under our 2005 Incentive Stock Plan, 2005
Non-Employee Directors Stock Option Plan and 2006 Incentive Stock Plan,
which we refer to collectively as the
''Plans.''
This Form S-8 includes a
reoffer prospectus prepared in accordance with Part I of Form S-3 under
the Securities Act. The reoffer prospectus may be used for reoffers and
resales of control securities (as such term is defined in General
Instruction C to Form S-8) acquired pursuant to the Plans by selling
stockholders who may be deemed
''affiliates'' (as such term is defined in
Rule 405 Securities Act) of the Company.
PART
I.    INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS
ITEM 1.    Plan Information.
The
documents containing the information concerning the Plans required by
Item 1 of this Registration Statement on Form S-8, and the statement of
availability of registrant information, employee benefit plan annual
reports and other information required by Item 2 of Form S-8, will be
sent or given to persons eligible to participate in the Plans as
specified by Rule 428(b)(1) under the Securities Act. We will maintain
a file of such documents in accordance with the provisions of Rule 428
and, upon request, shall furnish to the Commission or its staff a copy
or copies of documents included in such file. Pursuant to the
instructions to Form S-8, these documents are not required to be and
are not being filed either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act. These documents and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Part II
of Form S-8, taken together, constitute part of a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
ITEM
2.    Registrant Information and Employee Plan Annual
Information.
Any of the documents incorporated by reference in
Item 3 of Part II of this Registration Statement (which documents are
incorporated by reference in this Section 10(a) prospectus) and the
other documents required to be delivered to employees pursuant to Rule
428(b) will be available without charge to participants in the Plans
upon written or oral request by
contacting:
SendTec, Inc.
877 Executive Center
Drive West, Suite 300
St. Petersburg, FL 33702
Telephone: (727)
576-6630
Attn: Corporate
Secretary
PROSPECTUS
SENDTEC,
INC.
3,333,000 SHARES OF COMMON
STOCK
2005 Incentive Stock Plan
2005
Non-Employee Directors Stock Option Plan
2006 Incentive Stock
Plan
This prospectus relates to the reoffer and resale by the
selling stockholders of 3,333,000 shares of our common stock consisting
of:
•
375,000 shares of common stock that
may be issued by us upon the exercise of stock options granted under
our 2005 Incentive Stock Plan, 2005 Non-Employee Directors Stock Option
Plan and 2006 Incentive Stock Plan (collectively, the
''Plans'');
•
183,334
shares of restricted stock issued under the Plans to selling
stockholders and 693 shares of restricted stock issued to certain
unnamed non-affiliates who may use this prospectus for reoffers and
resales of the shares; and
•
2,773,973
shares of common stock underlying options that have not, as of this
date, been granted. If and when such options are granted to persons
required to use this prospectus to reoffer and resell the shares
underlying such options, we will distribute a prospectus
supplement.
The shares are being reoffered and resold for the
account of the selling stockholders. We will not receive any of the
proceeds from the resale of the shares.
The selling stockholders
have advised us that the resale of their shares may be effected from
time to time in one or more transactions on the OTC Bulletin Board or
other stock market or exchange on which our common stock may be listed
or quoted, in negotiated transactions or otherwise, at market prices
prevailing at the time of the sale or at prices otherwise negotiated.
See ''Plan of Distribution.'' We will bear
all expenses in connection with the preparation of this
prospectus.
Our common stock is quoted on the OTC Bulletin Board
maintained by the National Association of Securities Dealers, Inc.
under the symbol ''SNDN.'' The last
reported sale price on the OTC Bulletin Board for our common stock on
September  15,  2006 was $0.35 per share.
Our
principal executive offices are located at 877 Executive Center Drive
West, Suite 300, St. Petersburg, Florida 33702 and our telephone number
is (727) 576-6630.
Investing in our common
stock involves risks that are described in the ''Risk
Factors'' section beginning on page 3 of this
prospectus.
NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is October
6,  2006.
TABLE OF
CONTENTS
INCORPORATION
BY REFERENCE
1
THE
COMPANY
2
RISK
FACTORS
3
FORWARD-LOOKING
STATEMENTS
18
USE OF
PROCEEDS
19
SELLING
STOCKHOLDERS
19
PLAN OF
DISTRIBUTION
19
LEGAL
MATTERS
20
WHERE YOU CAN FIND MORE
INFORMATION
20
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
21
You should rely only on the
information contained in this prospectus. We have not authorized any
other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not
rely on it. The selling stockholders will not make an offer to sell
these securities in any jurisdiction where an offer or sale is not
permitted. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this
prospectus only, regardless of the time of delivery of this prospectus
or of any sale of our common stock. Our business, financial condition,
results of operations and prospects may have changed since that
date.
i
INCORPORATION BY
REFERENCE
The following documents filed by us with the SEC are
incorporated by reference in this
prospectus:
(1)
Prospectus filed
Pursuant to Rule  424(b)(3) on July  14,
2006;
(2)
Current Report on
Form  8-K filed February  9,
2006;
(3)
Current Report on
Form  8-K filed February  13,
2006;
(4)
Current Report on Form 8-K,
filed March  21,
2006;
(5)
Current Report on Form 8-K,
filed April  4,
2006;
(6)
Current Report on Form 8-K,
filed April  13,
2006;
(7)
Current Report on Form
8-K/A, filed April  17,
2006;
(8)
Current Report on Form 8-K,
filed May  8,
2006;
(9)
Quarterly Report on Form
10-QSB for the quarter ended March  31,  2006, filed
May  22,
2006;
(10)
Current Report on Form
8-K, filed June  6,
2006;
(11)
Current Report on Form
8-K, filed June  21,
2006;
(12)
Current Report on Form
8-K, filed July  14,  2006;
(13)
Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2006 filed on August  21,
2006;
(14)
Current Report on Form 8-K
filed on August  24,  2006;
(15)
Current Report on Form 8-K filed on
September  12,
2006;
(16)
Current Report on Form 8-K
filed on September 27, 2006; and
(17)
Description of Common Stock in our
Registration Statement on Form 8-A, filed December  30,
2005.
All documents subsequently filed with the SEC by us
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, prior to the filing of a
post-effective amendment which indicates that all securities offered
herein have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be part hereof from the respective dates of filing of
such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof or of the
related prospectus to the extent that a statement contained herein or
in any other subsequently filed document which is also incorporated or
deemed to be incorporated herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
registration statement.
You may request a copy of these filings,
excluding the exhibits to such filings which we have not specifically
incorporated by reference in such filings, at no cost, by writing us at
the following address: SendTec, Inc., 877 Executive Center Drive West,
Suite 300, St. Petersburg, Florida 33702, Attention: Corporate
Secretary. You may also call our Corporate Secretary at (727)
576-6630.
1
THE COMPANY
We are a holding
company organized for the purpose of acquiring, owning, and managing
various marketing and advertising businesses, primarily involving the
Internet. In July  2006 our name was changed from RelationServe
Media, Inc. to SendTec, Inc. Since February  2006 our
wholly-owned subsidiary, SendTec Acquisition Corp.
(''STAC''), has become our dominant
operation. For the twelve months ended December  31,  2005,
we reported revenues of $11,302,780 derived solely from our former
subsidiary RelationServe Access and Friendsand.com businesses, all of
which was attributable to our RelationServe Access business. In
July  2006, we sold our RelationServe Access business and
discontinued operations of Friendsand.com. On a pro-forma basis (prior
to the sale of RelationServe Access), our consolidated revenues for
2005, including STAC's revenues as if it had been owned during
the entire 2005 fiscal year, was $49,072,522. In addition, for the six
months ended June  30,  2006, we had revenues of
approximately $17.8  million. However, on a combined pro forma
basis for the year ended December  31,  2005 (prior to the
sale of RelationServe Access) we had a net loss for the 2005 fiscal
year of $15,068,650 (including the pro forma effect of $8,737,500 of
non-cash interest associated with financing the transaction and
stock-based compensation of $4,774,323) and for six months ended
June  30,  2006 we had a net loss of approximately
$11,744,575. We are unable to predict if we will achieve profitability
in future periods.
STAC is a marketing company, primarily
involved in direct response marketing, a type of advertising that sells
products and services directly to the consumer using the internet,
television, print, radio and other forms of advertising media.
STAC's clients include national advertisers in over 50
industries, including but not limited: publishing, entertainment
services, auto, financials services, retail, health and beauty, public
storage and software. STAC's services include: (1) developing
marketing and advertising plans, (2) producing Internet advertising
such as emails, websites, display ads and other forms of Internet
advertising tactics to sell products and services, or generate consumer
leads, (3) producing television commercials, print advertisements, and
radio commercials to sell products and generate consumer leads, (4)
planning, buying and selling media on the Internet and in other media
channels such as television, radio, print, etc., and; (5) producing
sales or leads for advertising clients by using media we own, or
venturing with internet media outlets and traditional media outlets. In
providing services to our clients, STAC generates revenue in the
following ways: First, receiving media commissions as a percentage of
media purchased. In other words, the advertiser pays STAC $1,000 and
STAC retains a 15% agency commission equating to $150 in
consideration for planning and facilitating the media purchase. Second,
buying or venturing unsold media inventory to generate sales and leads
for STAC's clients. The industry refers to this as
performance-based media, and in this example, STAC retains the net
difference between what the advertisers pays STAC for producing a sale
or generating a consumer lead, and what the media outlet, such as an
Internet publisher or television station, charges STAC. For example,
STAC is paid $100 to generate a customer, and the media outlet agrees
to charge STAC $75 for using its media time to generate the customer.
We consider this performance-based media, because if sale or lead does
not result, then STAC does not have to pay for the media, and the
advertiser client does not owe STAC anything. Third, providing
marketing and business consulting services on an hourly basis. Fourth,
charging for production services at cost plus
markups.
2
RISK
FACTORS
You should carefully consider the risks described
below before making an investment decision. If any of the following
circumstances occur, our business, financial condition or results of
operations could be materially adversely affected. In that event, the
trading price of our common stock could decline and you may lose part
or all of your investment. Unless otherwise indicated, all references
in this prospectus to ''SendTec,''
'' we,'' ''us''
and ''our'' refer to SendTec, Inc. and its
subsidiaries and affiliates.
RISKS RELATING TO THE
COMPANY
We previously amended financial covenants to ensure
that we were not in default under Debentures and we received a waiver
for our failure to comply with financial covenants for the periods
ended March  31,  2006 and June  30,  2006, and
we are in negotiations to further amend the financial covenants and the
terms of the Debentures.
On October  31,  2005,
STAC issued $34.95  million of 6% Senior Secured
Convertible Debentures due October  30,  2009 (the
''Debentures''). Following our acquisition
of STAC we became subject to certain financial covenants required under
the Securities Purchase Agreement (the
''SPA'') relating to the Debentures. We
recognized we would not meet the requirements of certain of these
financial covenants for the fourth quarter of 2005, and first and
second quarters of 2006. These covenants included STAC having minimum
EBITDA of $1,725,000 and $5,200,000, for the fourth quarter of 2005 and
fiscal 2005, respectively. As a result on February  3,
2006, in consideration of us issuing 525,000 shares of our common stock
to the holders of the Debentures in accordance with their respective
ownership of the Debentures, the covenants in the Debentures were
revised so that STAC was required to have minimum EBITDA for the fourth
quarter of 2005 and the fiscal year ended December  31,
2005 of $625,000 and $4,350,000, respectively. In addition, based on
our own view that we could potentially be in default of certain
financial covenants for 2006, certain of our financial covenants were
revised for 2006. These include requiring us to have EBITDA of
$8,434,000 for fiscal 2006 (including EBITDA of at least $1,257,000,
$2,013,000, $2,824,000 for the first quarter, second quarter, third
quarter and fourth quarter of 2006, respectively) as opposed to
$9,730,000 and thereafter quarterly EBITDA of $2,840,000 until the
Debentures are paid in full as opposed to $2,875,000.
While we
were able to satisfy the EBITDA financial covenants for the fourth
quarter of 2005 and fiscal 2005 because we had EBITDA for such periods
of $714,542 and $4,415,277, respectively, for the first quarter of
2006, we only had EBITDA of ($2,507,544) which is below the required
covenant amount. Our failure to comply with the first quarter EBITDA
requirement is due to decreased activity and increased losses in the
RelationServe Access and Friendsand businesses, among other things. On
May  19,  2006, the holders of at least 75% of the
Debentures granted us a waiver for our failure to comply with the
EBITDA financial covenant for the first quarter of 2006.
For the
second quarter of 2006 we had EBITDA of $(550,995), which was below the
required covenant amount. On August  21,  2006, the
Company, STAC and at least 75% of the Debenture holders entered
a letter agreement waiving our non-compliance with the financial
covenants for the quarters ended June  30,  2006 and
September  30,  2006 pending entry into a definitive
agreement to amend the terms of the Debentures and revise the financial
covenants of the SPA in accordance with the terms of the letter
agreement. On September 27, 2006, the Company and at least 75%
of the Debenture holders entered into such a definitive agreement to
amend the Debentures. Among other provisions, the agreement would amend
the financial covenants to use our net revenues, determined in
accordance with GAAP, rather than EBITDA as a benchmark for the
financial covenants. We would be required to have net revenues of
$4,675,000 for the third and fourth quarters of 2006, and net revenues
of $5,025,000, $5,175,000, $5,450,000, and $5,700,000 for the first,
second, third and fourth quarters of 2007, respectively.
The
agreement to amendment the Debentures includes, among other things,
reducing the conversion price of the Debentures to $0.50 per share from
the present conversion price of $1.50. At the reduced conversion price,
we would be required to issue more shares of our common stock upon the
conversion of the Debentures than are presently authorized under our
certificate of incorporation. Consequently, the holders of the
Debentures have made the effectiveness of the definitive agreement
3
to amend the Debentures contingent on
stockholder approval of an amendment to our certificate of
incorporation to increase the number of authorized shares of our common
stock to 190,000,000 shares from 90,000,000 shares. We filed a
preliminary proxy statement relating to these matters on
September  12,  2006.
In the event that our
stockholders do not approve the amendment to our certificate of
incorporation and we are unsuccessful in revising the terms of the
financial covenants and we are unable to comply with the financial
covenants for the periods subsequent to March  31,  2006,
the Debenture holders could declare our Debentures to be in default,
and accelerate the maturity of the Debentures, plus increased interest,
and any default penalties. Because all of our subsidiaries are pledged
to the Debenture holders and are guarantors of the debt owing to
Debenture holders, such action would have a material adverse effect on
our business and operations, and our ability to continue to
operate.
If an event of default occurs under the Debentures
other than a covenant default, it could result in a material adverse
effect on our business, operating results, or financial condition as
the Debenture holders maintain a first priority security interest on
all of our assets and on the assets of our
subsidiaries.
Effective February  3,  2006, the
Debentures became convertible into shares of our Common Stock at a
conversion price of $1.50 per share and are guaranteed by us and each
of our subsidiaries. Under the terms of the Debentures STAC is
obligated to pay interest of 6% per annum on the outstanding
principal amount of the Debentures, payable quarterly beginning on
February  1,  2006. Commencing on October  15,
2007 STAC is required to make a quarterly redemption payment equal to
6.25% of the original principal amount of the Debentures in
cash. The Debenture holders have a first priority security interest on
all of our assets and on the assets of our subsidiaries. In addition to
failing to satisfy financial covenants in the securities purchase
agreement, events of default include, but are not limited to, the
following:
•
failure to pay interest,
principal payments or liquidated damages if and when
due;
•
a breach of any material covenant
or term or condition of the Debenture or any of the transaction
documents;
•
a default or event of default
(subject to any grace or cure period provided for in the applicable
agreement, document or instrument) under any of the transaction
documents, or any other material agreement, lease, document or
instrument;
•
a breach of any
representation or warranty made in the Debenture or the other
transaction documents;
•
certain
bankruptcy and bankruptcy related
matters;
•
a default by us or any of our
subsidiaries in any of its material obligations under any mortgage,
credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by
which there may be secured or evidenced, any indebtedness for borrowed
money or money due under any long term leasing or factoring arrangement
of any of them in an amount exceeding $75,000 ($150,000 in the case of
the Company); and
•
failure to maintain
an effective registration statement covering the resale of shares of
our common stock issuable upon the conversion of the Debentures and the
exercise of certain warrants issued to the Debenture holders.
In
addition to the foregoing, the failure to satisfy financial covenants
in the securities purchase agreement could be deemed an event of
default under the Debentures. If we default on our obligations under
our Debentures or related agreements, the cash required to pay such
amounts will most likely come out of our working capital. Since we rely
on our working capital for our day-to-day operations, such a default
would have a material adverse effect on our business, operating
results, or financial condition. In such event, we may be forced to
restructure, file for bankruptcy, sell assets, or
4
cease operations, any of which would put our
Company, our investors and the value of our Common Stock, at
significant risk. Further, our obligations under the Debentures are
secured by substantially all of our assets. Failure to fulfill our
obligations under the Debentures and related agreements could lead to
loss of these assets, which would be detrimental to our
operations.
The restrictions on our activities contained in
the Debentures could negatively impact our ability to obtain financing
from other sources.
So long as any portion of the Debentures
remain outstanding, we are restricted from incurring additional
indebtedness other than certain permitted indebtedness consisting of
(i) a working capital credit facility up to $3,000,000 which may have a
second priority interest in our accounts receivables and inventory,
(ii) trade payables and indebtedness consisting of capitalized lease
obligations and purchase money indebtedness incurred in connection with
the acquisition of capital assets and obligations under sale-leaseback
arrangements with respect to newly acquired or leased assets and
(iii) such obligations which are not secured by liens on any of our
assets or STAC assets existing as of the date that the Debentures were
originally issued. To the extent that additional debt financing is
required for us to conduct our operations, the restrictions from
incurring additional indebtedness in the Debentures could materially
adversely impact our ability to achieve our operational
objective.
We had a net loss for the six months ended
June  30,  2006 and on a combined pro forma basis we
experienced a significant loss for the year ended December
31,  2005.
While we had $1,095,993 of operating income
on a combined pro forma basis for the year ended December
31,  2005, we experienced a net loss of $15,068,650 on a combined
pro forma basis for the year ended December  31,  2005 and
we had a net loss of $11,744,575 for the six months ended June
30,  2006. We are unable to predict if we will achieve
profitability in future periods. In order to achieve and maintain
profitability, we will need to generate significant revenues. If we do
not continue to increase our revenues, our business, results of
operations, and financial condition could be materially and adversely
affected.
RISKS RELATED TO OUR BUSINESS
Any decrease
in demand for our online marketing services could substantially reduce
our revenues.
To date, a substantial portion of our revenues
have been derived from Internet advertising. We expect that online
advertising will continue to account for a substantial portion of our
revenues for the foreseeable future. However, our revenues from
Internet advertising may decrease in the future for a number of
reasons, including the following:
•
the
rate at which Internet users click on advertisements or take action in
response to an advertisement has always been low and could decline as
the volume of Internet advertising increases;
•
Internet users can install software
programs that allow them to prevent advertisements from appearing on
their screens or block the receipt of emails;
•
advertisers may prefer an alternative
Internet advertising format, product or service which we might not
offer at that time; and
•
we may be
unable to make the transition to new Internet advertising formats
preferred by advertisers.
If our pricing models are not
accepted by our advertiser clients, we could lose clients and our
revenues could decline.
Most of our services are offered to
advertisers based on cost-per-action or cost-per-click pricing models,
under which advertisers only pay us if we provide the results they
specify. These results-based pricing models differ from the fixed-rate
pricing model used by many Internet advertising companies, under which
the fee is based on the number of times the advertisement is shown
without regard to effectiveness. Our ability to generate significant
revenues from advertisers will depend, in part, on our
5
ability to demonstrate the effectiveness of
these primary pricing models to advertisers, who may be more accustomed
to a fixed-rate pricing model.
Furthermore, intense competition
among websites and other Internet advertising providers has led to the
development of a number of alternative pricing models for Internet
advertising. The proliferation of multiple pricing alternatives may
confuse advertisers and make it more difficult for them to
differentiate among alternatives. In addition, it is possible that new
pricing models may be developed and gain widespread acceptance that are
not compatible with our business model or our technology. These
alternatives, and the likelihood that additional pricing models will be
introduced, make it difficult for us to project the levels of
advertising revenues or the margins that we, or the Internet
advertising industry in general, will realize in the future. If
advertisers do not understand the benefits of our pricing models, then
the market for our services may decline or develop more slowly than us
expects, which may limit our ability to grow their revenues or cause
their revenues to decline.
We depend on a limited number of
clients for a significant percentage of our revenues, and the loss of
one or more of these advertisers could cause our revenues to
decline.
For the year ended December  31,  2005,
revenues from our two largest clients, Sureclick Promotions and Real
Networks accounted for an aggregate of 43.8% of our total
revenues. We believe that a limited number of clients will continue to
be the source of a substantial portion of our revenues for the
foreseeable future. Key factors in maintaining our relationships with
these clients include our performance on individual campaigns, the
strength of our professional reputation, and the relationships of our
key executives with client personnel. To the extent that our
performance does not meet client expectations, or our reputation or
relationships with one or more major clients are impaired, our revenues
could decline and our operating results could be adversely
affected.
We generally do not have long-term contracts with
our clients.
Our clients typically hire us on a
project-by-project basis or on an annual contractual relationship.
Moreover, our clients generally have the right to terminate their
relationships with us without penalty and with relatively short or no
notice. Once a project is completed we cannot assure that a client will
engage us for further services. From time to time, highly successful
engagements have ended because our client was acquired and the new
owners decided not to retain us. A client that generates substantial
revenue for us in one period may not be a substantial source of revenue
in a subsequent period. We expect a relatively high level of client
concentration to continue, but not necessarily involve the same clients
from period to period. The termination of our business relationships
with any of our significant clients, or a material reduction in the use
of our services by any of their significant clients, could adversely
affect our future financial performance.
Any limitation on our
use of data derived from clients' advertising campaigns could
significantly diminish the value of our services and cause us to lose
clients and revenues.
When an individual visits our
clients' websites, we use technologies, including cookies and
web beacons, to collect information such as the user's IP
address, advertisements delivered by us that have been viewed by the
user, and responses by the user to such advertisements. We aggregate
and analyze this information to determine the placement of
advertisements across our affiliate network of advertising space.
Although the data we collect from campaigns of different clients, once
aggregated, are not identifiable, our clients might decide not to allow
us to collect some or all of this data or might limit our use of this
data. Any limitation on our ability to use such data could make it more
difficult for us to deliver online marketing programs that meet client
demands.
In addition, although our contracts generally permit us
to aggregate data from advertising campaigns, our clients might
nonetheless request that we discontinue using data obtained from their
campaigns that have already been aggregated with other clients'
campaign data. It would be difficult, if not impossible, to comply with
these requests, and such requests could result in significant
expenditures of resources, interruptions, failures or defects or use in
our data collection, mining, and storage systems. Privacy concerns
regarding the collection or use of user data, could also limit our
ability to aggregate and analyze data from our clients. Under such
circumstances, we may lose clients and our revenues may
decline.
6
If the market for internet advertising
fails to continue to develop, our revenues and operating results could
be harmed.
Our future success is highly dependent on the
continued use and growth of the Internet as an advertising medium. The
Internet advertising market is relatively new and rapidly evolving, and
it uses different measurements than traditional media to gauge
effectiveness. As a result, demand for and market acceptance of
Internet advertising services is uncertain and subject to change. Many
of our current or potential advertiser clients have little or no
experience using the Internet for advertising purposes and have
allocated only limited portions of their advertising budgets to the
Internet. The adoption of Internet advertising, particularly by those
entities that have historically relied upon traditional media for
advertising, requires the acceptance of a new way of conducting
business, exchanging information, measuring success, and evaluating new
advertising products and services. Such clients find Internet
advertising to be less effective for promoting their products and
services than traditional advertising media. We cannot give any
assurance that the market for Internet advertising will continue to
grow or become sustainable. If the market for Internet advertising
fails to continue to develop or develops more slowly than we expect,
our revenues and business could be harmed.
RISKS RELATED TO THE
SUPPLY OF ADVERTISING SPACE
We depend on online publishers
for advertising space to deliver our clients' advertising
campaigns, and any decline in the supply of advertising space available
through our network could cause our revenues to decline.
The
websites, search engines, and email publishers that sell or venture
their advertising space to or with us are not bound by long-term
contracts that ensure a consistent supply of advertising space, which
we refer to as their inventory. We generate a significant portion of
revenues from the advertising inventory provided by a limited number of
publishers. In most instances, publishers can change the amount of
inventory they make available to us at any time, as well as the price
at which they make it available. In addition, publishers may place
significant restrictions on our use of their advertising inventory.
These restrictions may prohibit advertisements from specific
advertisers or specific industries, or restrict the use of certain
creative content or format. If a publisher decides not to make
inventory available to us, or decides to increase the price, or places
significant restrictions on the use of such inventory, we may not be
able to replace this with inventory from other publishers that satisfy
our requirements in a timely and cost-effective manner. If this
happens, our revenues could decline or our cost of acquiring inventory
may increase.
Our growth may be limited if we are unable to
obtain sufficient advertising inventory that meets our pricing and
quality requirements.
Our growth depends on our ability to
effectively manage and expand the volume of our inventory of
advertising space. To attract new advertisers, we must increase our
supply of inventory that meets our performance and pricing
requirements. Our ability to purchase or venture sufficient quantities
of suitable advertising inventory will depend on various factors, some
of which are beyond our control. These factors include:
•
our ability to offer publishers a
competitive price for their inventory;
•
our ability to estimate the quality of the
available inventory; and
•
our ability to
efficiently manage our existing advertising inventory.
In
addition, the number of competing Internet advertising networks that
purchase advertising inventory from websites, search engine and email
publishers continues to increase. We cannot give any assurance that we
will be able to purchase or venture advertising inventory that meets
our performance, price, and quality requirements, and if we cannot do
so, our ability to generate revenues could be
limited.
7
Any limitation on our ability to post
advertisements throughout our network of advertising space could harm
our business.
We execute advertising programs for clients
primarily by posting advertisements, which we refer to as ad delivery,
on our affiliate network of advertising space. Our business could
suffer from a variety of factors that could limit or reduce our ability
to post advertisements across our affiliate network, including:
•
technological changes that render the
delivery of our advertisements obsolete or incompatible with the
operating systems of consumers and/or the systems of online
publishers;
•
lawsuits or injunctions
based on claims that our ad delivery methodologies violate the
proprietary rights of other parties and regulatory or legal
restrictions; and
•
interruptions,
failures or defects in our ad delivery and tracking
systems.
Consolidation of online publishers may impair our
ability to provide marketing services, acquire advertising inventory at
favorable rates and collect campaign data.
The consolidation
of Internet advertising networks, web portals, search engines and other
online publishers could eventually lead to a concentration of desirable
advertising inventory on a very small number of networks and large
websites. Such concentration
could:
•
increase our costs if these
publishers use their greater bargaining power to increase rates for
advertising inventory;
•
impair our
ability to provide marketing services if these publishers prevent us
from distributing our clients' advertising campaigns on their
websites or if they adopt ad delivery systems that are not compatible
with our ad delivery methodologies.
Our business could be
harmed if the use of tracking technology is restricted or becomes
subject to new regulation.
In conjunction with the delivery
of advertisements to websites, we typically place small files of
information, commonly known as cookies, on an Internet user's
hard drive, generally without the user's knowledge or consent.
Cookie information is passed to us through an Internet user's
browser software. We use cookies to collect information regarding the
advertisements we deliver to Internet users and their interaction with
these advertisements. We use this information to identify Internet
users who have received our advertisements in the past and to monitor
and prevent potentially fraudulent activity. In addition, our
technology uses this information to monitor the performance of ongoing
advertising campaigns and plan future campaigns.
Some Internet
commentators and privacy advocates have proposed limiting or
eliminating the use of cookies and other Internet tracking
technologies, and legislation has been introduced in some jurisdictions
to regulate Internet tracking technologies. The European Union has
already adopted a directive requiring that when cookies are used, the
user must be informed and offered an opportunity to opt-out of the
cookies' use. If there is a further reduction or limitation in
the use of Internet tracking technologies such as
cookies:
•
we may have to replace or
re-engineer our tracking technology, which could require significant
amounts of our time and resources, may not be completed in time to
avoid losing clients or advertising inventory, and may not be
commercially or technically feasible;
•
we
may have to develop or acquire other technology to prevent fraud;
and
•
we may become subject to costly and
time-consuming litigation or investigations due to our use of cookie
technology or other technologies designed to collect Internet usage
information.
Any one or more of these occurrences could result in
increased costs, require us to change our business practices or divert
management's attention.
8
If we or our advertiser or publisher
clients fail to comply with regulations governing consumer privacy, we
could face substantial costs and our business could be
harmed.
Our collection, maintenance and sharing of
information regarding Internet users could result in lawsuits or
government inquiries. These actions may include those related to U.S.
federal and state legislation or European Union directives limiting the
ability of companies like ours to collect, receive and use information
regarding Internet users. Litigation and regulatory inquiries are often
expensive and time-consuming and the outcome is uncertain. Any
involvement by us in any of these matters could require us
to:
•
spend significant amounts on our
legal defense;
•
divert the attention of
senior management from other aspects of our business;
•
defer or cancel new product launches as a
result of these claims or proceedings; and
•
make changes to our present and planned
products or services.
Further, we cannot give any assurance that
our advertiser and publisher clients are currently in compliance, or
will remain in compliance, with their own privacy policies, regulations
governing consumer privacy or other applicable legal requirements. We
may be held liable if our clients use our technology or our data or we
collect on their behalf in a manner that is not in compliance with
applicable laws or regulations or our or their own stated privacy
standards.
We may be liable for content in the advertisements
we deliver for our clients.
We may be liable to third parties
for content in the advertisements they deliver if the artwork, text or
other content involved violates copyrights, trademarks, or other
intellectual property rights of third parties or if the content is
defamatory. Although we generally receive warranties from our
advertisers that they have the right to use any copyrights, trademarks
or other intellectual property included in an advertisement and are
normally indemnified by the advertisers, a third party may still file a
claim against us. Any claims by third parties against us could be
time-consuming, could result in costly litigation and adverse
judgments, and could require us to change our business or
practices.
Misappropriation of confidential information held
by us could cause us to lose clients or incur liability.
We
retain highly confidential information on behalf of our clients in our
systems and databases. Although we maintain security features in our
systems, our operations may be susceptible to hacker interception,
break-ins and other disruptions. These disruptions may jeopardize the
security of information stored in and transmitted through our systems.
If confidential information is compromised, we could be subject to
lawsuits by the affected clients or Internet users, which could damage
our reputation among our current and future potential clients, require
significant expenditures of capital and other resources, and cause us
to lose business and revenues.
ADDITIONAL RISKS RELATED TO OUR
BUSINESS
We may require additional funding to support our
operations and capital expenditures, which may not be available and
which lack of availability could adversely affect our
business.
We may need additional funds to support our growth,
fund future acquisitions, pursue business opportunities, react to
unforeseen difficulties and to respond to competitive pressures. There
can be no assurance that any financing arrangements will be available
in amounts or on terms acceptable, if at all. Furthermore, the sale of
additional equity or convertible debt securities may result in further
dilution to existing stockholders. If we raise additional funds through
the issuance of debt, we will be required to service that debt and we
are likely to become subject to restrictive covenants and other
restrictions contained in the instruments governing that debt, which
may limit our operational flexibility. If adequate additional funds are
not available, we may be required to delay, reduce the scope of, or
eliminate material parts of the implementation of our business
strategy, including the possibility of additional acquisitions or
internally developed businesses.
9
We may make additional acquisitions,
which could divert management's attention, cause ownership
dilution, and be difficult to integrate.
Our business
strategy depends in part upon our ability to identify, structure, and
integrate acquisitions that are complementary with our business model.
Acquisitions, strategic relationships, and investments in the
technology and Internet sectors involve a high degree of risk. We may
also be unable to find a sufficient number of attractive opportunities,
if any, to meet our objectives. Although many technology and Internet
companies have grown in terms of revenue, few companies are profitable
or have competitive market share. Our potential acquisitions,
relationships, investment targets, and partners may have histories of
net losses and may expect net losses for the foreseeable
future.
Acquisition transactions are accompanied by a number of
risks that could harm us and our business, operating results, and
financial condition. These risks apply to our completed acquisitions
and acquisitions we may undertake in the future, including:
•
We could experience a substantial strain on
our resources, including time and money, and may not be successful;
•
Our management's attention may be
diverted from our ongoing business concerns;
•
While integrating new companies, we may
lose key executives or other employees of these
companies;
•
We could experience customer
dissatisfaction or performance problems with an acquired company or
technology;
•
We may become subject to
unknown or underestimated liabilities of an acquired entity or incur
unexpected expenses or losses from such acquisitions; and
•
We may incur possible impairment charges
related to goodwill or other intangible assets or other unanticipated
events or circumstances, any of which could harm our
business.
Consequently, we might not be successful in integrating
any acquired businesses, products or technologies, and might not
achieve anticipated revenue and cost benefits.
We may be
unable to attract and retain key employees.
Failure to
attract and retain necessary technical personnel and skilled management
could adversely affect our business. Our success depends to a
significant degree upon our ability to attract, retain and motivate
highly skilled and qualified personnel. If we fail to attract, train
and retain sufficient numbers of highly qualified people, our
prospects, business, financial condition, and results of operations
will be materially and adversely affected. Our success also depends on
the skills, experience, and performance of key members of our
management team. The loss of any key employee, could have an adverse
effect on our prospects, business, financial condition, and results of
operations.
The lack of experience of our management team puts us
at a competitive disadvantage. Our management team lacks public company
experience, which could impair our ability to comply with legal and
regulatory requirements such as those imposed by Sarbanes-Oxley Act of
2002. The individuals who now constitute management have never had
responsibility for managing a publicly traded company. Such
responsibilities include complying with federal securities laws and
making required disclosures on a timely basis. There can be no
assurance that our management will be able to implement and affect
programs and policies in an effective and timely manner that adequately
respond to such increased legal, regulatory compliance, and reporting
requirements. Our failure to do so could lead to penalties, loss of
trading liquidity, and regulatory actions and further result in the
deterioration of our business.
10
Adversely affected in the event of
uninsured or inadequately insured loss or damage. Our ability to
effectively recruit and retain qualified officers and directors could
also be adversely affected if we experience difficulty in obtaining
adequate directors' and officers' liability
insurance.
We may not be able to obtain insurance policies on
terms affordable to us that would adequately insure our business and
property against damage, loss, or claims by third parties. To the
extent our business or property suffers any damages, losses, or claims
by third parties that are not covered or adequately covered by
insurance, our financial condition may be materially adversely
affected.
We may be unable to secure or maintain insurance as a
public company to cover liability claims made against our officers and
directors. If we are unable to adequately insure our officers and
directors, we may not be able to retain or recruit qualified officers
and directors. The Debentures require us to maintain $8  million
of directors and officers insurance coverage and key man insurance on
the life of Paul Soltoff, without which the Debentures may be in
default.
If we are unable to compete in the highly competitive
performance-based advertising and search marketing industries, we may
experience reduced demand for our products and services.
We
expect to operate in a highly competitive environment. We principally
compete with other companies in the following main areas:
•
sales to merchant advertisers of
performance-based advertising;
and
•
services that allow merchants to
manage their advertising campaigns across multiple networks and track
the success of these campaigns.
Although we expect to pursue a
strategy that allows us to potentially partner with all relevant
companies in the industry, there are certain companies in the industry
that may not wish to partner with us.
We expect competition to
intensify in the future because current and new competitors can enter
our market with little difficulty. The barriers to entering such
markets are relatively low. In fact, many current Internet and media
companies presently have the technical capabilities and advertiser
bases to enter the search marketing service industry. Further, if the
consolidation trend continues among the larger media and search engine
companies with greater brand recognition, the share of the market
remaining for us and other smaller search marketing services providers
could decrease, even though the number of smaller providers could
continue to increase. These factors could adversely affect our
competitive position in the search marketing services
industry.
Some of our competitors, as well as potential entrants
into our market, may be better positioned to succeed in this market.
They may have:
•
longer operating
histories;
•
more management
experience;
•
an employee base with more
extensive experience;
•
a better ability
to service customers in multiple cities in the United States and
internationally by virtue of the location of sales
offices;
•
larger customer
bases;
•
greater brand recognition;
and
•
significantly greater financial,
marketing and other resources.
In addition, many current and
potential competitors can devote substantially greater resources than
we can to promotion, web site development, and systems development.
Furthermore, there are numerous larger, more well-established and
well-financed entities with which we will compete and that could
acquire or create competing companies and/or invest in or form joint
ventures in categories or countries of interest to us, all of which
could adversely impact our business. Any of these trends could increase
competition and reduce the demand for any of our
services.
11
We are susceptible to general economic
conditions, and a downturn in advertising and marketing spending by
merchants could adversely affect our operating results.
Our
operating results will be subject to fluctuations based on general
economic conditions, in particular those conditions that impact
merchant-consumer transactions. If there were to be a general economic
downturn that affected consumer activity in particular, however slight,
then we would expect that business entities, including our merchant
advertisers and potential merchant advertisers, could substantially and
immediately reduce their advertising and marketing budgets. We believe
that during periods of lower consumer activity, merchant spending on
advertising and marketing is more likely to be reduced, and more
quickly, than many other types of business expenses. These factors
could cause a material adverse effect on our operating
results.
If we fail to manage our growth effectively, our
expenses could increase and our management's time and attention
could be diverted.
As we continue to increase the scope of
our operations, we will need an effective planning and management
process to implement our business plan successfully in the rapidly
evolving Internet or we may be unable to manage our expanding
operations effectively. We plan to continue to expand our sales and
marketing, customer support and research and development organizations.
Past growth has placed, and any future growth will continue to place, a
significant strain on our management systems and resources. We will
likely need to continue to improve our financial and managerial
controls and our reporting systems and procedures. In addition, we will
need to expand, train and manage our work force. Our failure to manage
our growth effectively could increase our expenses and divert
management's time and attention.
If we are unable to
manage our growth or our operations, our financial results could be
adversely affected.
If we fail to establish, maintain and
expand our technology business, and marketing alliances and
partnerships, our ability to grow could be limited.
In order
to grow our technology business, we must generate, retain and
strengthen successful business and marketing alliances with advertising
agencies.
We depend, and expect to continue to depend, on our
business and marketing alliances with companies with which we have
written or oral agreements to provide services to our clients and to
refer business from their clients and customers to us. If companies
with which STAC has business and marketing alliances do not refer their
clients and customers to us to perform their online campaign and
message management, our revenue and results of operations would be
severely harmed.
If we are not able to respond to rapid
technological changes characteristic of our industry, our products and
services may not be competitive.
The market for our services
is characterized by rapid change in business models and technological
infrastructure, and we need to constantly adapt to changing markets and
technologies to provide competitive services. Our future success will
depend, in part, upon our ability to develop our services for both our
target market and for applications in new markets. We may not, however,
be able to successfully do so, and our competitors may develop
innovations that render our products and services obsolete or
uncompetitive.
Our technical systems will be vulnerable to
interruption and damage that may be costly and time-consuming to
resolve and may harm our business and reputation.
A natural
or man-made disaster or other cause could interrupt our services for an
indeterminate length of time and severely damage our business,
prospects, financial condition, and results of operations. Our systems
and operations are vulnerable to damage or interruption from fire,
floods, network failure, hardware failure, software failure, power
loss, telecommunications failures, break-ins, terrorism, war or
sabotage, computer viruses, denial of service attacks, penetration of
our network by unauthorized computer users and
''hackers,'' and other similar events, and
other unanticipated problems.
12
We presently may not posses and may not
have developed or implemented adequate protections or safeguards to
overcome any of these events. We also may not have anticipated or
addressed many of the potential events that could threaten or undermine
our technology network. Any of these occurrences could cause material
interruptions or delays in our business, result in the loss of data,
render us unable to provide services to our customers, expose us to
material risk of loss or litigation and liability, materially damage
our reputation and our visitor traffic may decrease as a result. In
addition, if a person is able to circumvent our security measures, he
or she could destroy or misappropriate valuable information or disrupt
our operations, which could cause irreparable damage to our reputation
or business. Similar industry-wide concerns or events could also damage
our reputation or business. Our insurance, if obtained, may not be
adequate to compensate us for all losses that may occur as a result of
a catastrophic system failure or other loss, and our insurers may not
be able or may decline to do so for a variety of reasons.
If we
fail to address these issues in a timely manner, we may lose the
confidence of our merchant advertisers, our revenue may decline, and
our business could suffer.
We may rely on third party
co-location providers, and a failure of service by these providers
could adversely affect our business and reputation.
We may
rely upon third party co-location providers to host our main servers.
In the event that these providers experience any interruption in
operations or cease operations for any reason or if we are unable to
agree on satisfactory terms for continued hosting relationships, we
would be forced to enter into a relationship with other service
providers or assume hosting responsibilities ourselves. If we are
forced to switch hosting facilities, we may not be successful in
finding an alternative service provider on acceptable terms or in
hosting the computer servers ourselves. We may also be limited in our
remedies against these providers in the event of a failure of service.
In the past, short-term outages have occurred in the service maintained
by co-location providers that could recur. We also may rely on third
party providers for components of our technology platform, such as
hardware and software providers, credit card processors, and domain
name registrars. A failure or limitation of service or available
capacity by any of these third party providers could adversely affect
our business and reputation.
Our results of operations might
fluctuate due to changes in the search engine based algorithms, which
could adversely affect our revenue and in turn the market price of our
common stock.
Our revenue will be heavily dependent on how
search engines treat our content in their indexes. In the event search
engines determine that our content is not high quality, such search
engines may not rank our content as highly in their indexes resulting
in a reduction in our traffic, which may cause lower than expected
revenues. We are greatly dependent on a small number of major search
engines, namely Google, Yahoo!, MSN, and AOL. Search engines tend to
adjust their algorithms periodically and each adjustment tends to have
an impact on how our content ranks in their indexes. These constant
fluctuations could make it difficult for us to predict future
revenues.
We depend on the growth of the internet and internet
infrastructure for our future growth and any decrease or less than
anticipated growth in internet usage could adversely affect our
business prospects.
Our future revenue and profits, if any,
depend upon the continued widespread use of the Internet as an
effective commercial and business medium. Factors that could reduce the
widespread use of the Internet
include:
•
possible disruptions or other
damage to the Internet or telecommunications
infrastructure;
•
failure of the
individual networking infrastructures of our merchant advertisers and
distribution partners to alleviate potential, overloading and delayed
response times;
•
a decision by merchant
advertisers to spend more of their marketing dollars in offline
areas;
•
increased governmental regulation
and taxation; and
•
actual or perceived
lack of security or privacy protection.
13
In particular, concerns over the security
of transactions conducted on the Internet and the privacy of users may
inhibit the growth of the Internet and other online services,
especially online commerce. In order for the online commerce market to
develop successfully, we, and other market participants, must be able
to transmit confidential information, including credit card
information, securely over public networks. Any decrease or less than
anticipated growth in Internet usage could have a material adverse
effect on our business prospects.
We are exposed to risks
associated with credit card fraud and credit payment, and we may suffer
losses as a result of fraudulent data or payment failure by merchant
advertisers.
We may suffer losses as a result of payments
made with fraudulent credit card data. Our failure to adequately
control fraudulent credit card transactions could reduce any gross
profit margin. In addition, under limited circumstances, we extend
significant amounts of credit to clients and merchant advertisers who
may default on their accounts payable to us.
Government
regulation of the internet may adversely affect our business and
operating results.
We may be subject to additional operating
restrictions and regulations in the future. Companies engaging in
online search, commerce, and related businesses face uncertainty
related to future government regulation of the Internet. Due to the
rapid growth and widespread use of the Internet, legislatures at the
federal and state levels are enacting and considering various laws and
regulations relating to the Internet. Furthermore, the application of
existing laws and regulations to Internet companies remains somewhat
unclear. Our business and operating results may be negatively affected
by new laws, and such existing or new regulations may expose us to
substantial compliance costs and liabilities and may impede the growth
in use of the Internet.
The application of these statutes and
others to the Internet search industry is not entirely settled.
Further, several existing and proposed federal laws could have an
impact on our business:
•
The Digital
Millennium Copyright Act and its related safe harbors, are intended to
reduce the liability of online service providers for listing or linking
to third-party web sites that include materials that infringe
copyrights or other rights of
others.
•
The CAN-SPAM Act of 2003 and
certain state laws are intended to regulate interstate commerce by
imposing limitations and penalties on the transmission of unsolicited
commercial electronic mail via the Internet.
With respect to the
subject matter of each of these laws, courts may apply these laws in
unintended and unexpected ways. As a company that provides services
over the Internet, we may be subject to an action brought under any of
these or future laws governing online services. Many of the services of
the Internet are automated and companies, such as ours, may be
unknowing conduits for illegal or prohibited materials. It is not known
how courts will rule in many circumstances. For example, it is possible
that courts could find strict liability or impose ''know
your customer'' standards of conduct in certain
circumstances in which case we could be liable for actions by
others.
We may also be subject to costs and liabilities with
respect to privacy issues. Several Internet companies have incurred
costs and paid penalties for violating their privacy policies. Further,
it is anticipated that new legislation will be adopted by federal and
state governments with respect to user privacy. Additionally, foreign
governments may pass laws that could negatively impact our business or
may prosecute us for our products and services based upon existing
laws. The restrictions imposed by, and costs of complying with, current
and possible future laws and regulations related to our business could
harm our business and operating results.
Future regulation of
search engines may adversely affect the commercial utility of our
search marketing services.
The Federal Trade Commission
(''FTC'') has recently reviewed the way in
which search engines disclose paid placements or paid inclusion
practices to Internet users. In 2002, the FTC issued guidance
recommending that all search engine companies ensure that all paid
search results are clearly distinguished from non-paid results, that
the use of paid inclusion is clearly and conspicuously
14
explained and disclosed and that other
disclosures are made to avoid misleading users about the possible
effects of paid placement or paid inclusion listings on search results.
Such disclosures, if ultimately mandated by the FTC or voluntarily made
by us, may reduce the desirability of any paid placement and paid
inclusion services that we offer. We believe that some users may
conclude that paid search results are not subject to the same relevancy
requirements as non-paid search results, and will view paid search
results less favorably. If such FTC disclosure reduces the desirability
of our paid placement and paid inclusion services, and
''click-throughs'' of our paid search
results decrease, the commercial utility of our search marketing
services could be adversely affected.
Government regulations
and legal uncertainties relating to the internet and online commerce
could negatively impact our internet business.
Online
commerce is relatively new and rapidly changing, and federal and state
regulations relating to the Internet and online commerce are evolving.
Currently, there are few laws or regulations directly applicable to the
Internet or online commerce on the Internet, and the laws governing the
Internet that exist remain largely unsettled. New Internet laws and
regulations could dampen growth in use and acceptance of the Internet
for commerce. In addition, applicability to the Internet of existing
laws governing issues such as property ownership, copyrights and other
intellectual property issues, libel, obscenity, and personal privacy is
uncertain. The vast majority of those laws were adopted prior to the
advent of the Internet and related technologies and, as a result, do
not expressly contemplate or address the unique issues presented by the
Internet and related technologies. Further, growth and development of
online commerce have prompted calls for more stringent consumer
protection laws, both in the U.S. and abroad. The adoption or
modification of laws or regulations applicable to the Internet could
have a material adverse effect on our Internet business operations. We
also will be subject to regulation not specifically related to the
Internet, including laws affecting direct marketers and
advertisers.
In addition, in 1998, the Internet Tax Freedom Act
was enacted, which generally placed a three-year moratorium on state
and local taxes on Internet access and on multiple or discriminatory
state and local taxes on electronic commerce. This moratorium was
recently extended until November  1,  2007. We cannot
predict whether this moratorium will be extended in the future or
whether future legislation will alter the nature of the moratorium. If
this moratorium is not extended in its current form, state and local
governments could impose additional taxes on Internet-based
transactions, and these taxes could decrease our ability to compete
with traditional retailers and could have a material adverse effect on
our business, financial condition, results of operations, and cash
flow.
In addition, several telecommunications carriers have
requested that the Federal Communications Commission
(''FCC'') regulate telecommunications over
the Internet. Due to the increasing use of the Internet and the burden
it has placed on the current telecommunications infrastructure,
telephone carriers have requested the FCC to regulate Internet service
providers and impose access fees on those providers. If the FCC imposes
access fees, the costs of using the Internet could increase
dramatically. This could result in the reduced use of the Internet as a
medium for commerce, which could have a material adverse effect on our
Internet business operations.
We may incur liabilities for the
activities of users of our service, which could adversely affect our
service offerings.
The law relating to the liability of
providers of online services for activities of their users and for the
content of their merchant advertiser listings and other postings or
usage (such as our social networking community Friendsand.com) is
currently unsettled and could damage our business, financial condition,
and operating results. Our insurance policies may not provide coverage
for liability arising out of activities of our users or merchant
advertisers for the content of our listings or other services (such as
our social networking community Friendsand.com). Furthermore, we may
not be able to obtain or maintain adequate insurance coverage to reduce
or limit the liabilities associated with our businesses. We may not
successfully avoid civil or criminal liability for unlawful activities
carried out by consumers or other users of our services or for the
content of our or their listings or posting therein. Our potential
liability for unlawful activities of users of our services or for the
content of our or their listings or postings therein could require us
to implement measures to reduce our exposure to
15
such liability, which may require us, among
other things, to spend substantial resources or to discontinue certain
service offerings.
If we do not maintain and grow a critical
mass of merchant advertisers, our operating results could be adversely
affected.
Our success depends, in part, on our and any
additional acquired business's maintenance and growth of a
critical mass of merchant advertisers and a continued interest in our
and any additional acquired business's performance-based
advertising and search marketing services. If, through our or any
additional acquired business, we are unable to achieve a growing base
of merchant advertisers, we may not successfully develop or market
technologies, products or services that are competitive or accepted by
merchant advertisers. Any decline in the number of merchant advertisers
could adversely affect our operating results generally.
We are
dependent upon several of the major search engines to continue to
provide us traffic that merchant advertisers deem to be of value, and
if they do not, it could have a material adverse effect on the value of
our services.
We are dependent upon several of the major
Internet search engines namely Google, Yahoo!, MSN and AOL to provide
traffic that merchant advertisers deem to be of value. We monitor the
traffic delivered to our merchant advertisers in an attempt to optimize
the quality of traffic we deliver. We review factors such as non-human
processes, including robots, spiders, scripts (or other software),
mechanical automation of clicking and other sources and causes of
low-quality traffic, including, but not limited to, other non-human
clicking agents. Even with such monitoring in place, there is a risk
that a certain amount of low-quality traffic will be provided to our
merchant advertisers, which, if not contained, may be detrimental to
those relationships. Low-quality traffic (or traffic that is deemed to
be less valuable by our merchant advertisers) may prevent us from
growing our base of merchant advertisers and cause us to lose
relationships with existing merchant advertisers or any additional
acquired business.
We may be subject to litigation for
infringing the intellectual property rights of others.
Our
success will depend, in part, on our ability to protect our
intellectual property and to operate without infringing on the
intellectual property rights of others. There can be no guarantee that
any of our intellectual property will be adequately safeguarded, or
that it will not be challenged by third parties. We may be subject to
patent infringement claims or other intellectual property infringement
claims that would be costly to defend and could limit our ability to
use certain critical technologies.
Any additional patent
litigation could negatively impact our business by diverting resources
and management attention from other aspects of the business and adding
uncertainty as to the ownership of technology and services that we view
as proprietary and essential to our business. In addition, a successful
claim of patent infringement against us and our failure or inability to
license the infringed or similar technology on reasonable terms, or at
all, could have a material adverse effect on our business.
We
may be involved in lawsuits to protect or enforce any patents that we
currently hold or may be granted, which could be expensive and time
consuming.
We may initiate patent litigation against third
parties to protect or enforce our patent rights, although we presently
do not own any patents, and we may be similarly sued by others. We may
also become subject to interference proceedings conducted in the patent
and trademark offices of various countries to determine the priority of
inventions. The defense and prosecution, if necessary, of intellectual
property suits, interference proceedings and related legal and
administrative proceedings is costly and may divert our technical and
management personnel from their normal responsibilities. We may not
prevail in any of these suits. An adverse determination of any
litigation or defense proceedings could put our patents at risk of
being invalidated or interpreted narrowly and could put our patent
applications at risk of not being issued.
Furthermore, because of
the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our
confidential information could be
16
compromised by disclosure during this type
of litigation. In addition, during the course of this kind of
litigation, there could be public announcements of the results of
hearings, motions or other interim proceedings or developments in the
litigation. If securities analysts or investors perceive these results
to be negative, they could have an adverse effect on the trading price
of our Common Stock.
RISKS RELATING TO OUR COMMON
STOCK
Our ability to raise capital and the market price of
our common stock could be negatively impacted by our significant number
of outstanding warrants, options and the Debentures as well as by the
registration of the shares in this offering.
Currently, we
have outstanding warrants and options exercisable into an aggregate of
16,076,452 shares of Common Stock and outstanding Debentures
convertible into 23,300,000 shares of Common Stock. The exercise or
conversion of all of such outstanding warrants, options or Debentures
would dilute the then-existing stockholders' percentage
ownership of our Common Stock, and any sales in the public market of
the Common Stock underlying such securities could adversely affect
prevailing market prices for the Common Stock. The market price of our
common stock could also be negatively impacted by the fact that the
Registration Statement on Form SB-2 initially filed on March
20,  2006 relates to the resale of 75,042,845 shares of common
stock (which includes 35,698,952 shares underlying the aforementioned
warrants, options and Debentures). We have also registered in the
Registration Statement an additional 3,388,820 shares pursuant to the
material terms of our securities purchase agreement and registration
rights agreement with the Debenture holders. In addition to negatively
impacting the market price of our Common Stock, the foregoing could
impact the terms upon which we would be able to obtain additional
equity capital since the holders of such securities can be expected to
exercise or convert them at a time when we would, in all likelihood, be
able to obtain needed capital on terms more favorable to us than those
provided by such securities.
Applicable SEC rules governing
the trading of ''penny stocks'' limits the
trading and liquidity of our common stock.
Our Common Stock
is quoted on the OTC Bulletin Board, and currently trades, and may
continue to trade below $5.00 per share. Therefore, the Common Stock is
considered a ''penny stock'' and subject to
SEC rules and regulations that impose limitations upon the manner in
which such shares may be publicly traded. These regulations require the
delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the
associated risks. Under these regulations, certain brokers who
recommend such securities to persons other than established customers
or certain accredited investors must make a special written suitability
determination regarding such a purchaser and receive such
purchaser's written agreement to a transaction prior to sale.
These regulations have the effect of limiting the trading activity of
our Common Stock and reducing the liquidity of an investment in our
Common Stock.
The market price of our common stock is likely
to be highly volatile and subject to wide fluctuations.
The
market price of our Common Stock is likely to be highly volatile and
could be subject to wide fluctuations in response to a number of
factors, including:
•
announcements of
new products or services by our
competitors;
•
fluctuations in revenue
attributable to changes in the search engine based algorithms that rank
the relevance of our
content;
•
announcements of technological
innovations or new products or services by us;
and
•
sales of our Common Stock by our
founders or other selling stockholders.
Our operating results
may fluctuate significantly, and these fluctuations may cause our
common stock price to fall.
Our operating results will likely
vary in the future primarily as the result of fluctuations in our
revenues and operating expenses. If our results of operations do not
meet the expectations of current or potential stockholders, the price
of our Common Stock may decline.
17
There may be a limited public market
for shares of our common stock, which may make it difficult for
stockholders to sell their shares.
An active public market
for shares of our Common Stock may not develop, or if one should
develop, it may not be sustained. Therefore, stockholders may not be
able to find purchasers for their shares of Common Stock.
We
filed a preliminary proxy statement relating to a proposal to amend our
certificate of incorporation to increase the number of authorized
shares of our common stock to 190,000,000 shares from
90,000,000.
In connection with the proposed amendments to the
Debentures described above, on September  12,  2006, we
filed a preliminary proxy statement relating to a proposal to amend our
certificate of incorporation to increase the number of authorized
shares of our common stock to 190,000,000 shares. Existing holders of
common stock have no preemptive rights to purchase or subscribe for any
newly issued shares of common stock. Therefore, the authorization and
subsequent issuance of additional shares of common stock may, among
other things, have a dilutive effect on the voting power, earnings per
share and equity of existing holders of common stock and could
negatively effect the market price of our common stock.
We do
not expect to pay dividends for the foreseeable future.
We
currently intend to retain any future earnings to support the
development and expansion of our business and do not anticipate paying
cash dividends in the foreseeable future. In addition, the terms of the
Debentures prohibit the payment of dividends. Our payment of any future
dividends will be at the discretion of our board of directors after
taking into account various factors, including but not limited to our
financial condition, operating results, cash needs, growth plans, and
the terms of any credit agreements that we may be a party to at the
time. Accordingly, stockholders must rely on sales of their Common
Stock after price appreciation, which may never occur, as the only way
to realize a return on their investment.
FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking statements.
To the extent that any statements made in this prospectus contain
information that is not historical, these statements are essentially
forward-looking. Forward-looking statements can be identified by the
use of words such as ''expects,''
''plans''
''will,''
''may,''
''anticipates,'' believes,''
''should,''
''intends,''
''estimates,'' and other words of similar
meaning. These statements are subject to risks and uncertainties that
cannot be predicted or quantified and consequently, actual results may
differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
without limitation, risks associated with the uncertainty of future
financial results, additional financing requirements, development of
new products, the effectiveness, profitability, and marketability of
such products, the ability to protect proprietary information, the
impact of current, pending, or future legislation and regulation on the
electronic marketing industry, the impact of competitive products or
pricing, technological changes, the effect of general economic and
business conditions and other risks and uncertainties detailed from
time to time in our filings with the SEC. We do not undertake any
obligation to publicly update any forward-looking statements. As a
result, you should not place undue reliance on these forward-looking
statements.
We also use market data and industry forecasts and
projections throughout this prospectus, which we have obtained from
market research, publicly available information and industry
publications. These sources generally state that the information they
provide has been obtained from sources believed to be reliable, but
that the accuracy and completeness of the information are not
guaranteed. The forecasts and projections are based on industry surveys
and the preparers' experience in the industry, and the projected
amounts may not be achieved. Similarly, although we believe that the
surveys and market research others have performed are reliable, we have
not independently verified this information. Forecasts and other
forward-looking information obtained from these sources are subject to
the same qualifications and the additional uncertainties accompanying
any estimates of future market size, revenue and market acceptance of
products and services.
18
USE OF
PROCEEDS
We will not receive any of the proceeds from the
reoffer and resale of the shares of common stock by the selling
stockholders. We will receive the exercise price of the options when
exercised by the holders thereof. Such proceeds will be used for
working capital purposes.
SELLING STOCKHOLDERS
This
prospectus relates to the reoffer and resale of shares of our common
stock issued to the stockholders who exercised stock options or who
received awards of restricted stock prior to the initial filing of this
Registration Statement or that may be issued to the stockholders who
are deemed to be affiliates of our company under the Plans or other
grants to non-employee directors. This prospectus may also be used by
certain unnamed non-affiliates with respect to the reoffer and resale
of 693 shares of our restricted stock.
The following table sets
forth (i) the number of shares of our common stock beneficially owned
by the selling stockholder at September  15,  2006, (ii)
the number of shares of our common stock to be offered for resale by
the selling stockholder, and (iii) the number and percentage of shares
of our common stock to be held by the selling stockholder, after
completion of the
offering:
Name
Shares
of
Common Stock
Owned Prior to
the
Offering
(1)
Shares of
Common Stock
to be
Sold
Shares of
Common Stock
Owned
After the
Offering
Percentage of
Common Stock
Owned
After
the Offering
Shawn
McNamara
(2)
103,334
(3
)
103,334
(3
)
-0-
-0-
Vincent
Addonisio
50,000
(4
)
50,000
(4
)
-0-
-0-
Robert
Beauregard
50,000
(4
)
50,000
(4
)
-0-
-0-
Anthony
Abaté
50,000
(4
)
50,000
(4
)
-0-
-0-
Ohad
Jehassi
(2)
105,000
(5
)
105,000
(5
)
-0-
-0-
Mandee
Heller
Adler
(2)
200,000
(6
)
200,000
(6
)
-0-
-0-
(1)
Includes
all options being registered for resale regardless of whether these
options are currently exercisable within 60
days.
(2)
The selling stockholder is a former
executive officer of our company.
(3)
Includes
(i) 3,334 shares of restricted stock issued under our 2005
Incentive Stock Plan and (ii) an option to purchase 100,000 shares of
common stock granted pursuant to our 2006 Incentive Stock Plan that are
presently exercisable.
(4)
Represents an option
to purchase 50,000 shares of common stock granted pursuant to our 2005
Non-Employee Directors Stock Option Plan that are not currently
exercisable.
(5)
Includes (i) 80,000 shares of
restricted stock issued under our 2005 Incentive Stock Plan and (ii) an
option to purchase 25,000 shares of common stock granted pursuant to
our 2005 Incentive Stock Plan that are presently
exercisable.
(6)
Includes (i) 100,000 shares of
restricted stock issued under our 2005 Incentive Stock Plan and (ii) an
option to purchase 100,000 shares of common stock granted pursuant to
our 2005 Incentive Stock Plan that are presently
exercisable.
PLAN OF DISTRIBUTION
This offering is
self-underwritten; neither we nor the selling stockholders have
employed an underwriter for the sale of shares of common stock by the
selling stockholders. We will bear all expenses in connection with the
preparation of this prospectus. The selling stockholders will bear all
expenses associated with the sale of the shares of common
stock.
19
The selling stockholders may offer their
common stock directly or through pledgees, donees, transferees or other
successors in interest in one or more of the following
transactions:
•
On any stock exchange on
which the shares of common stock may be listed at the time of
sale;
•
In negotiated
transactions;
•
In the over-the-counter
market; and
•
In a combination of any of
the above transactions.
The selling stockholders may offer their
shares of common stock at any of the following
prices:
•
Fixed prices that may be
changed;
•
Market prices prevailing at the
time of sale;
•
Prices related to such
prevailing market prices; and
•
Negotiated
prices.
The selling stockholders may effect such transactions by
selling shares to or through broker-dealers, and all such
broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the selling stockholders and/or the
purchasers of shares of common stock for whom such broker-dealers may
act as agents or to whom they sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of
customary commissions).
Any broker-dealer acquiring shares of
common stock from the selling stockholders may sell the shares either
directly, in its normal market-making activities, through or to other
brokers on a principal or agency basis or to its customers. Any such
sales may be at prices then prevailing on the OTC Bulletin Board or at
prices related to such prevailing market prices or at negotiated prices
to its customers or a combination of such methods. The selling
stockholders and any broker-dealers that act in connection with the
sale of the shares of common stock hereunder may be deemed to be
''underwriters'' within the meaning of
Section 2(11) of the Securities Act; and any commissions received by
them and any profit on the resale of shares as principal may be deemed
to be underwriting discounts and commissions under the Securities Act.
Any such commissions, as well as other expenses incurred by the selling
stockholders and applicable transfer taxes, are payable by the selling
stockholders.
The selling stockholders, together with any agent
of the selling stockholders, reserve the right to accept or reject in
whole or in part any proposed purchase of shares of common stock
offered hereby. The selling stockholders will pay any sales commissions
or other compensation payable to any such agent with respect to any
such transaction.
We have not registered or qualified offers and
sales of shares of common stock under the laws of any country other
than the United States. To comply with certain states'
securities laws, if applicable, the selling stockholders will offer and
sell their shares of common stock in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain
states the selling stockholders may not offer or sell shares of common
stock unless we have registered or qualified such shares for sale in
such states or we have complied with an available exemption from
registration or qualification.
There can be no assurance that the
selling stockholders will sell any or all of the shares offered by them
hereunder or otherwise.
LEGAL MATTERS
The validity of the
securities being offered by this prospectus has been passed upon for us
by Haynes and Boone, LLP, New York, New York. A limited liability
company controlled by a member of Haynes and Boone, LLP holds 15,000
shares of our common stock.
WHERE YOU CAN FIND MORE
INFORMATION
We have filed a registration statement on Form S-8
with the SEC for our common stock offered in this offering. This
prospectus does not contain all the information set forth in the
Registration
20
Statement. You should refer to the
Registration Statement and its exhibits for additional information.
Whenever we make references in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits to the Registration
Statement for copies of the actual contracts, agreements or other
documents.
The SEC maintains an Internet site at
www.sec.gov
that contains reports, proxy and information
statements, and other information regarding us. You may also read and
copy any document we file with the SEC at its Public Reference Room at
100 F Street NE, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public
Reference Room. Our SEC filings are also available on the SEC's
website at www.sec.gov.
DISCLOSURE OF COMMISSION POSITION
ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers or persons controlling us, we have
been advised that it is the SEC's opinion that such
indemnification is against public policy as expressed in the Securities
Act and is, therefore,
unenforceable.
21
PART
II
INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT
Item 3.    Incorporation of Certain Documents by
Reference
The following documents filed by SendTec, Inc. (the
''Company'',
''we'' or
''our'') with the SEC are incorporated by
reference in this registration statement on Form S-8 (the
''Registration
Statement''):
(1)
Prospectus
filed Pursuant to Rule  424(b)(3) on July  14,
2006;
(2)
Current Report on
Form  8-K filed February  9,
2006;
(3)
Current Report on
Form  8-K filed February  13,
2006;
(4)
Current Report on Form 8-K,
filed March  21,
2006;
(5)
Current Report on Form 8-K,
filed April  4,
2006;
(6)
Current Report on Form 8-K,
filed April  13,
2006;
(7)
Current Report on Form
8-K/A, filed April  17,
2006;
(8)
Current Report on Form 8-K,
filed May  8,
2006;
(9)
Quarterly Report on Form
10-QSB for the quarter ended March  31,  2006, filed
May  22,
2006;
(10)
Current Report on Form
8-K, filed June  6,
2006;
(11)
Current Report on Form
8-K, filed June  21,
2006;
(12)
Current Report on Form
8-K, filed July  14,  2006;
(13)
Quarterly Report on Form 10-QSB for
the quarter ended June  30, 2006 filed on August
21,  2006;
(14)
Current Report
on Form 8-K filed on August  24,  2006;
(15)
Current Report on Form 8-K filed on
September  12,
2006;
(16)
Current Report on Form 8-K
filed on September 27, 2006; and
(17)
Description of Common Stock in our
Registration Statement on Form 8-A, filed December  30,
2005.
In addition, all documents filed by the Company with the
SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, subsequent to the date of this
Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been
sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the respective dates of filing of
such documents with the SEC. Any statement contained in this
Registration Statement or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof or of the related prospectus to the
extent that a statement contained herein (or in any other subsequently
filed document which is also incorporated or deemed to be incorporated
herein) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration
Statement.
Item 4.    Description of Securities
Not
Applicable.
Item 5.    Interests of Named Experts and
Counsel.
Not Applicable.
II-1
Item 6.    Indemnification of Directors
and Officers
Our Amended and Restated Certificate of
Incorporation limits the liability of the directors of the Company to
the fullest extent permitted under Delaware corporate law.
Specifically, our directors will not be liable to the Company or our
stockholders for monetary damages for any breach of fiduciary duty by a
director, except for liability:
•
for any
breach of the director's duty of loyalty to the Company or our
stockholders;
•
for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law;
•
under Section 174 of
the Delaware General Corporation Law;
or
•
for any transaction from which a
director derived an improper personal benefit.
If the Delaware
General Corporation Law is amended to authorize corporate action
further eliminating or limiting the personal liability of directors,
then the liability of a director of the Company will be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Our Amended and Restated
Certificate of Incorporation provides that the we will, in certain
situations, indemnify to the fullest extent permitted under and in
accordance with the laws of the State of Delaware any person made or
threatened to be made a party to a proceeding by reason of that
person's former or present official capacity with the Company
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such proceeding. Directors of the Company are
and certain other persons may be, subject in each case to certain
limitations, entitled to payment or reimbursement of reasonable
expenses in advance of the final disposition of the proceeding. In
addition, the employment agreements to which the Company is a party
provide for indemnification of the employees who are party
thereto.
Item 7.    Exemption from Registration
Claimed
Not applicable.
Item
8.    Exhibits
Exhibit
No.
Description of
Exhibits
4.1
Form
of Restricted Stock Agreement (incorporated herein by reference to
Exhibit 10.15 to the Company's Quarterly Report on Form 10-QSB
for the quarter ended June  30,  2005 filed with the SEC on
August  15,  2005)
4.2
Form of
Option Certificate (incorporated herein by reference to Exhibit 10.14
to the Company's Quarterly Report on Form 10-QSB for the quarter
ended June  30,  2005 filed with the SEC on August
15,  2005)
4.3
SendTec, Inc. 2006
Incentive Stock Plan (incorporated herein by reference to Exhibit 10.33
to the Company's Annual Report on Form 10-KSB for the year ended
December  31,  2005 filed with the SEC on March
20,  2006)
4.4
SendTec, Inc. 2005
Non-Employee Directors Stock Option Plan (incorporated herein by
reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed with the SEC on August  12,
2005)
4.5
SendTec, Inc. 2005 Incentive Stock
Plan (incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed with the SEC on
July  18,  2005)
II-2
Exhibit
No.
Description of
Exhibits
5.1*
Opinion of Haynes and
Boone, LLP
23.1*
Consent of Marcum &
Kliegman LLP
23.2*
Consent of McKean Paul
Chrycy Fletcher & Co.
23.3*
Consent of
Gregory, Sharer and Stuart,
P.A.
23.4*
Consent of Haynes and Boone, LLP
(contained in Exhibit 5)
24*
Powers of
Attorney (included on the signature page of this Registration
Statement)
*
filed
herewith.
Item
9.    Undertakings
1.
The undersigned Registrant
hereby undertakes that it will:
(a)
file, during
any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement to include any additional or
changed material information on the plan of
distribution;
(b)
for determining liability of
the undersigned small business issuer under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that time to
be the initial
bona fide
offering;
(c)
file a post-effective amendment to
remove from registration any of the securities that remain unsold at
the end of the offering.
2.
The undersigned
registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3.
Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 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, the registrant will,
unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such
issue.
II-3
SIGNATURES
Pursuant
to 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 for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of St. Petersburg, State of
Florida, on this 6
th
day of October,
2006.
SENDTEC,
INC.
By:
/s/ Paul
Soltoff
Paul Soltoff, Chairman of
the Board and
Chief Executive Officer
POWER
OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Paul Soltoff and
Donald Gould as his true and lawful attorney-in-fact, each acting
alone, with full power of substitution and resubstitution for him and
in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments to this
registration statement, and any related registration statement filed
pursuant to Rule 462(b) of the Act and to file the same, with exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact or their substitutes, each acting along,
may lawfully do or cause to be done by virtue hereof.
Pursuant to
the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities
and on the date
indicated.
By:
/s/ Paul
Soltoff
October 6,  2006
Paul
Soltoff, Chairman of the Board and Chief Executive Officer (Principal
Executive
Officer)
By:
/s/ Donald Gould
October
6,  2006
Donald Gould, Chief
Financial Officer (Principal Financial Officer and Principal Accounting
Officer)
By:
/s/ Anthony
Abaté
October 6,
2006
Anthony Abaté,
Director
By:
/s/ Robert
G. Beauregard
October 6,
2006
Robert G. Beauregard,
Director
By:
/s/ Vincent
Addonisio
October 6,
2006
Vincent Addonisio,
Director
II-4