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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
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ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: Commission file number:
March 31, 1998 000-20865
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e-Net, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware 52-1929282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12800 Middlebrook Road, Suite 200,
Germantown, MD 20874
(Address of principal executive offices) (Zip code)
(301) 601-8700
(Company's telephone number, including area code)
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Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange
------------------- on Which Registered
Not Applicable -------------------
Not Applicable
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of Class
Common Stock, $.01 Par Value
Warrants
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Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year: $722,800.
The aggregate market value of the issuer's voting stock held by
non-affiliates was approximately $110,600,000, based upon the closing price of
the common stock on July 29, 1998, as quoted by the Nasdaq SmallCap Market.
State the number of shares outstanding of the issuer's common equity as
of the latest practicable date: on July 29, 1998, the number of issued and
outstanding shares of common stock was 8,220,924.
Transitional Small Business Disclosure Format: Yes / / No /X/
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Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The officers and directors of e-Net, Inc. (the "Company") as of the
date hereof are as follows:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Alonzo E. Short 58 Chairman of the Board
Robert A. Veschi 35 President, Chief Executive Officer, Director
Donald J. Shoff 43 Vice President, Finance and Chief Financial
Officer
Christina L. Swisher 33 Vice President, Operations and Secretary
William W. Rogers, Jr. 56 Director
Clive Whittenbury, Ph.D. 64 Director
William L. Hooton 46 Director
</TABLE>
Each of the directors of the Company holds office until his or her
successor is elected and qualified. There are no family relationships among any
officers or directors of the Company and none of the Company's officers and
directors had been involved in any material legal proceedings during the past
five years. Mr. Veschi served as a promoter of the Company and the consideration
received for such services has been limited to the compensation disclosed under
Item 10. The officers of the Company devoted full time to the business of the
Company.
The principal occupation and business experience for each officer and
director of the Company for at least the last five years are as follows:
ALONZO E. SHORT, JR., Lt. Gen., USA (ret.), 58, has been chairman of
the board of the Company since January 1996. General Short has more than 30
years experience in executive management, operations and the engineering, design
and development of large-scale telecommunications and data systems. General
Short retired from the service in 1994 following a career that included serving
as deputy commanding general (1988-1990) and commanding general (1990-1991) of
the U.S. Army Information Systems Command, a major information technology
organization, which was responsible for all telecommunications during the Desert
Shield/Desert Storm operation, among other responsibilities. From 1991 to 1994,
General Short was director of the Defense Information Systems Agency, a major
information technology organization which is responsible for telecommunications
and related services to the President of the United States, Secret Service,
Joint Chiefs of Staff, Secretary of Defense, among other high level federal
entities. From 1994-1997, General Short was president and chief executive
officer of MICAH Systems, Inc., a Washington, D.C. metropolitan area based
information, technologies management and consulting firm. In September 1997,
General Short joined Lockheed Martin, an aerospace, defense, and information
technology company, as a Vice-President. Since January 1996, General Short has
been instrumental in the organization and development of the business of the
Company.
ROBERT A. VESCHI, 35, has been president, chief executive officer, and
a director of the Company since January 1995. Mr. Veschi is the founder of the
Company, which began its operations in June 1995. Mr. Veschi has significant
experience in executive management, operations and the engineering, design and
development of telecommunications and computer products and systems. From 1986
to 1990, Mr. Veschi was manager of systems engineering for International
Telemanagement, Inc., a Washington, D.C. metropolitan area based information,
data and network systems firm. From 1990 to 1994, Mr. Veschi was a group
president of I-Net, Inc., a Washington, D.C. metropolitan area based
information, data and network systems firm. From December 1994 to May 1995, for
approximately six months, Mr. Veschi was president and chief executive officer
of Octacom, Inc., a Washington, D.C. metropolitan area based information, data
and network systems firm, and a wholly-owned subsidiary of Octagon, Inc., an
Orlando, Florida metropolitan area based publicly held technical services firm.
From July 1994 to May 1995, for approximately nine months, Mr. Veschi was a vice
president of telecommunications for Octagon, Inc., and from January 1995 to May
1995, for approximately four months, Mr. Veschi was a member of
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the board of directors of such company. Since June 1995, Mr. Veschi has been
instrumental in the organization, development and promotion of the Company.
DONALD J. SHOFF, CPA, 43, has been vice president of finance and chief
financial officer since November 1997. Prior to that, Mr. Shoff was director of
finance and assisted the Company as a consultant prior to employment. Mr. Shoff
has 21 years of significant experience in both public accounting firms and with
high technology companies, both public and private. From 1977 to 1981, Mr. Shoff
was a staff accountant and senior accountant on the staff of local Washington,
D.C. public accounting firms. From 1982 to 1986, Mr. Shoff was the corporate
cost accounting manager and a group controller for Science Applications
International Corporation, a high technology products and professional services
public corporation, where he was responsible for the corporate cost accounting
functions and controllership of a high technology services operation group. From
1987 to 1992 and from 1993 to 1996, Mr. Shoff consulted independently and as a
Senior Manager of Grant Thornton LLP, a major accounting and management
consulting firm, with public and privately held high technology companies doing
business with the Federal government. From 1992 to 1993 Mr. Shoff was vice
president of finance and administration for Comsis Corporation, a Washington,
D.C. based privately held engineering and technology company doing business with
the Federal and various state governments. Mr. Shoff holds a B.B.A. degree from
the Pennsylvania State University and is a certified public accountant.
CHRISTINA L. SWISHER, 33, has been vice president of operations since
December 1996 and secretary of the Company since February 1997. Ms. Swisher has
significant experience in the computer networking management, systems and
operations. From 1991 to 1993, Ms. Swisher was a technical and graphics
specialist with the Air Force Association, a Washington, DC area based national
services organization, where she was responsible for technical and statistical
analyses. From 1993 to 1995, Ms. Swisher was the manager for computer networks
for computer network systems and operations for I-Net, Inc., a Washington, DC
metropolitan area based information, data and network systems firm. Since 1995,
Ms. Swisher has been director of technical services with the Company, becoming
vice president of operations in December 1996. Since June 1995, Ms. Swisher has
been instrumental in the organization and development of the business of the
company.
WILLIAM W. ROGERS, JR., 56, has been a director of the Company since
January 1997. Mr. Rogers has substantial senior management, operations and
technical and engineering services experience. From 1972 to 1987, Mr. Rogers was
a general manager engaged in operations, technical and engineering services for
Boeing Computer Services, Inc. From 1987 to 1989, Mr. Rogers was president and
chief executive officer of International Telemanagement , Inc., a McLean,
Virginia based telecommunications and systems engineering and services company.
From 1989 to 1991, Mr. Rogers was a vice president of Fluor-Daniel, where he was
responsible for telecommunications and systems integration services. Since 1991,
Mr. Rogers has been a vice president with Computer Sciences Corporation, a
McLean, Virginia based technology products, systems and services company, where
he is responsible for systems integration and related technical services. Since
January 1997, Mr. Rogers has been instrumental in the organization and
development of the Company. Mr. Rogers holds a B.A. degree from West Virginia
University.
WILLIAM L. HOOTON, 46, has been a director of the Company since January
1996. Mr. Hooton has substantial experience in the management, design,
operation, marketing and sales of image conversion systems, electronic imaging
system integration, data automation and high performance data storage
subsystems. From 1990 to 1993, Mr. Hooton was vice president of operations and
technical and business development of the Electronic Information Systems Group
of I-Net, Inc., a Washington, D.C. metropolitan area based information, data and
network systems firm. Since 1993, Mr. Hooton has been president and chief
executive officer of Q Corp., a Washington, D.C. metropolitan area high
technology consulting firm specializing in digital imaging systems and other
complex imagery in media. Since January 1996, Mr. Hooton has been a director of
the Company and has been instrumental in the organization and development of the
Company. Mr. Hooton holds a B.B.A. degree from the University of Texas.
CLIVE G. WHITTENBURY, PH.D., 64, has been a director of the Company
since June 1996. Dr. Whittenbury has substantial senior management, operations
and technical advisory experience. From 1972 to 1979, Dr. Whittenbury was a
senior vice president and, from 1976 to 1986, a director of Science Applications
International Corporation ("SAIC"), a La Jolla, California based major
international systems engineering firm with current annual revenues of
approximately $2 billion. Since 1979, Dr. Whittenbury has been executive vice
president and a director of the Erickson Group, Inc., a major international
diversified products firm. Since 1994, Dr. Whittenbury has been a director of
MVSI, Inc., a publicly held (NASDAQ: "MVSI") McLean, Virginia based laser vision
robotics company. Dr. Whittenbury is a member of the International Advisory
Board for the British
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Columbia Advanced Systems Institute, which manages commercialization programs in
technology at the three major Vancouver/Victoria universities, a member of the
Advisory Board of Compass Technology Partners, an investment fund, and is
chairman of the Advisory Board (Laser Directorate) for the Lawrence Livermore
National Laboratory. Dr. Whittenbury has also served as a technical advisor to
three U.S. Congressional Committees, the Grace Commission and numerous major
U.S. and foreign companies. Since June 1996, Dr. Whittenbury has been
instrumental in the organization and development of the Company. Dr. Whittenbury
holds a B.S. degree (physics) from Manchester University (England) and a Ph.D.
degree (aeronautical engineering) from the University of Illinois.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities (collectively, "Reporting Persons") to file
reports and changes in ownership of such securities with the Commission and the
Company. During the Company's fiscal year ended March 31, 1998, in which the
Company's officers and directors became subject to the requirements of Section
16(a), no such Section 16(a) reports were furnished to the Company by any
Reporting Persons.
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Item 10. Executive Compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
fiscal years ended March 31, 1996, 1997 and 1998 with regard to the Named
Officers::
Summary Compensation Table
<TABLE>
<CAPTION>
Other
Annual
Name of Individual Position with Company Year Salary Bonus Compensation(1)
- ------------------ --------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C> <C>
Robert A. Veschi President, Chief Executive 1998 175,000 87,500 ---
Officer, Director 1997 175,000 87,500 ---
1996 --- 25,000 ---
Christina L. Swisher Vice President, Operations 1998 88,333 21,000 ---
and Secretary 1997 57,917 5,607 ---
1996 6,250 4,167 ---
</TABLE>
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(1) The officers of the Company may receive remuneration as part of an
overall group insurance plan providing health, life and disability
insurance benefits for employees of the Company. The amount allocable
to each Named Officer cannot be specifically ascertained, but, in any
event, did not in any reported fiscal year exceed the lesser of $50,000
and such Named Officer's combined salary and bonus. The Company has
purchased key-man term life insurance on Mr. Veschi in the amount of $2
million, which designates the Company as the owner and beneficiary of
the policy. The Company has agreed to grant to Ms. Swisher options to
purchase 60,000 shares of Common Stock, in consideration of services
during fiscal year 1998. However, such options have not yet been
granted by the Company and the terms thereof have not yet been set.
DIRECTOR COMPENSATION
The directors of the Company, with the exception of Mr. Veschi, are
entitled to annual remuneration of $24,000 pursuant to oral agreements between
such directors and the Company. In addition, General Short receives $1,000 per
month under a consulting services agreement for his additional specific business
services on behalf of the Company.
Each outside director of the Company is entitled to receive reasonable
expenses incurred in attending meetings of the Board of Directors of the
Company. The members of the Board of Directors intend to meet at least quarterly
during the Company's fiscal year, and at such other times as duly called. The
Company presently has four outside directors.
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EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement (the "Agreement")
with Robert A. Veschi, the president and chief executive officer of the Company,
dated as of April 1, 1996. The Agreement will expire on March 31, 2001. The
current annual salary under the Agreement is $175,000, which salary may be
increased to reflect annual cost of living increases and may be supplemented by
discretionary merit and performance increases as determined by the Board of
Directors of the Company. Mr. Veschi is entitled to an annual bonus equal to 50
percent of the salary provided under this Agreement, which bonus is not subject
to any performance criteria.
The Agreement provides, among other things, for participation in an
equitable manner in any profit-sharing or retirement plan for employees or
executives and for participation in other employee benefits applicable to
employees and executives of the Company. The Agreement provides for the use of
an automobile, payment of club dues and other fringe benefits commensurate with
his duties and responsibilities. The Agreement also provides for benefits in the
event of disability. The Agreement also contains non-compete provisions which
are limited in geographical scope to the Washington, D.C. metropolitan area.
Pursuant to the Agreement, Mr. Veschi's employment may be terminated by
the Company with cause or by Mr. Veschi with or without good reason. Termination
by the Company without cause, or by Mr. Veschi for good reason, would subject
the Company to liability for liquidated damages in an amount equal to Mr.
Veschi's current salary and a pro rata portion of his bonus for the remaining
term of the Agreement, payable in a lump sum cash payment, without any set-off
for compensation received from any new employment. In addition, Mr. Veschi would
be entitled to continue to participate in and accrue benefits under all employee
benefit plans and to receive supplemental retirement benefits to replace
benefits under any qualified plan for the remaining term of the Agreement to the
extent permitted by law.
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Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the
Company's Common Stock owned as of July __, 1998 by (i) each person who is known
by the Company to own beneficially more than five percent of the Company's
Common Stock; (ii) each of the Company's officers and directors; and (iii) all
officers and directors as a group. Unless otherwise indicated and subject to
applicable community property and similar statutes, insofar as is known by the
Company, all persons listed below have sole voting and investment power over all
shares of Common Stock beneficially owned. Share ownership has been computed in
accordance with the Securities and Exchange Commission rules and does not
necessarily indicate beneficial ownership for any other purpose.
<TABLE>
<CAPTION>
Number
Name and Address Position with Company of Shares Percentage of Shares
- ---------------- --------------------- --------- --------------------
<S> <C> <C> <C>
Alonzo E. Short, Jr., Lt. Gen., Chairman of the Board 90,000 1.08
USA (ret.) (1)
Robert A. Veschi (2) President, Chief Executive 1,375,000 16.49
Officer, Director
Christina Swisher (2) Vice President, Secretary 120,000 1.44
Donald J. Shoff (2) Vice President, Chief 50,000 .60
Financial Officer
William L. Hooton (3) Director 50,000 .60
Clive W. Whittenbury, Ph.D. (4) Director 50,000 .60
William W. Rogers, Jr. (5) Director 5,000 .06
Edward Ratkovich, Maj. Gen. Stockholder 500,000 6.00
USA (ret.) (6)
Arthur Henley (7) Stockholder 537,500 6.45
Thomas T. Prousalis (8) Stockholder 450,000 5.40
All Officers and Directors as a 1,740,000 20.87
Group (7 persons) (9)
</TABLE>
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(1) c/o Lockheed Martin, 5203 Leesburg Pike, Suite 1501, Falls Church, Virginia
22041.
(2) c/o e-Net, Inc., 12800 Middlebrook Road, Suite 200, Germantown, Maryland
20874.c/o e-Net, Inc., 12800 Middlebrook Road, Suite 200, Germantown,
Maryland 20874.
(3) 13333 Glen Taylor Lane, Herndon, Virginia 22071.
(4) 511 Trinity Avenue, Yuba City, California 95991. Does not include 250,000
shares that are, to the Company's knowledge, beneficially owned by MVSI,
Inc. Dr. Whittenbury is, to the Company's knowledge, a director of
MVSI, Inc.
(5) c/o CACI, 14200 Park Meadow Drive, Suite 200, Chantilly, Virginia 20151.
(6) 1030 Delf Drive, McLean, Virginia 22101. Does not include 250,000 shares
that are, to the Company's knowledge, beneficially owned by MVSI, Inc.
Gen. Ratkovich is, to the Company's knowledge, a significant shareholder,
chairman and chief executive officer of MVSI, Inc.
(7) 10705 Bay Laurel Trail, Austin, Texas 78750. Includes vested options to
purchase 50,000 shares of Common Stock. Also includes 487,500 shares
owned by The Arthur Henley Family Trust.
(8) 1919 Pennsylvania Avenue, N.W., Suite 800, Washington, D.C. 20006. Does not
include 250,000 shares that are, to the Company's knowledge, beneficially
owned by MVSI, Inc. Mr. Prousalis is, to the Company's knowledge, a
significant shareholder of MVSI, Inc.
(9) Includes vested options to purchase 50,000 shares of Common Stock.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
e-NET, INC.
July 29, 1997
By: /s/ DONALD J. SHOFF
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Donald J. Shoff
Vice President,
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
Chairman of the Board July 29, 1997
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Alonzo E. Short, Jr., Lt. Gen., USA (ret.)
/s/ ROBERT A. VESCHI President, Chief July 29, 1997
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Robert A. Veschi Executive Officer,
Director
/s/ DONALD J. SHOFF Vice President, July 29, 1997
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Donald J. Shoff Chief Financial Officer
(Principal Accounting Officer)
Director July 29, 1997
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William L. Hooton
/s/ CLIVE WHITTENBURY, PH.D. Director July 29, 1997
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Clive Whittenbury, Ph.D.
/s/ WILLIAM W. ROGERS, JR. Director July 29, 1997
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William W. Rogers, Jr.
</TABLE>
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