HITSGALORE.COM (HITT) Message Board

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Microcap & Penny Stocks : HITSGALORE.COM (HITT)

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To: Jeffrey S. Mitchell who wrote (1592)	5/27/1999 3:00:00 PM
From: wonk	Read Replies (1) of 7056

Oops! <PAGE> 7 Certain Matters related to the Offer and Sale of Local City Edition Licenses- Beginning in January 1999 and ending in April 1999, the Company offered LCEs for sale on its web site. During that period, it sold LCEs to 37 persons, plus The Life Foundation Trust. Each LCE is granted a limited non-exclusive use of the proprietary software, the website and the programming and content therein. Some of the LCEs also entitle the LCE to earn a performance bonus equal to the price paid for the license, if the LCE earns commission income from the sale of the Company's products during the first six months of the license period equal to or in excess of the price of the license. The performance bonus is payable in shares of the Company's common stock at no additional cost to the LCE. The Company has been advised by counsel that the Company's offering of the stock performance bonus feature may constitute an unregistered public offering of securities. Accordingly, the Company has made an undertaking to notify all LCEs to which the stock performance feature applies that the Company will not deliver shares of its common stock in payment of the performance bonus, but that the performance bonus will be paid in cash. The Company ceased offering LCEs in April 1999 as a result of the sale in a negotiated transaction of LCEs for up to 200 major metropolitan areas and other cities to Life Foundation Trust. The Company is reviewing whether the offer and sale of the limited number of LCEs complied with all applicable state and federal regulations. The Company believes that up to twelve months will be required for it to initiate operation of the 200 LCEs under its agreement with Life Foundation Trust. After the Company has established operations under the LCEs purchased by the Life Foundation Trust, the Company may again offer LCEs to others. The Company has not made any decision on this matter. In the event the Company again offers LCEs, the Company intends to comply with the requirements of state and federal laws governing the sale of securities, franchises and business opportunities, as may be appropriate at that time.

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