As filed with the Securities and Exchange Commission on May 19, 2000
Registration No. _______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BARPOINT.COM, INC.
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(Exact name of registrant as specified in its charter)
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DELAWARE 7375 11-2780723
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(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
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ONE EAST BROWARD BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
(954) 745-7500
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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JOHN MACATEE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ONE EAST BROWARD BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
(954) 745-7500
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
GARY EPSTEIN, ESQ.
MICHELE L. KEUSCH, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ] _______________
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount Proposed Maximum Amount of
Securities to be Registered to be Registered Aggregate Offering Registration Fee
Price(1)
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Common Stock, $0.001 par value..................... 5,033,061 $45,297,549 $ 11,959
- ------------------------------------------------------ -------------------------- ------------------------- ------------------------
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(1) Estimated solely for the purpose of calculating the registration fee, and
pursuant to Rule 457(c), based on the average of the high and low sales
price for the Common Stock as reported by the OTC Bulletin Board on May17,
2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
securities and exchange commission is effective. This prospectus is not an offer
to sell these securities, and we are not soliciting offers to buy these
securities, in any jurisdiction where the offer or sale is not permitted.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 19, 2000
BARPOINT.COM, INC.
5,033,061 SHARES
COMMON STOCK
The selling stockholders are offering 5,033,061 shares of common stock
of BarPoint.com, Inc. We will not receive any proceeds from the sale of stock by
the selling stockholders under this prospectus. The selling stockholders
acquired the shares of common stock being sold under this prospectus from us in
private placement transactions.
Our common stock is traded on the OTC Bulletin Board under the symbol
"BPNT.OB." On May 16, 2000 the closing price of our common stock as reported by
the OTC Bulletin Board was $9.375 per share.
The selling stockholders may offer shares through public or private
transactions, on or off the OTC Bulletin Board, at prevailing market prices or
at privately negotiated prices. The selling stockholders may make sales directly
to purchasers or through agents, dealers or underwriters.
------------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED 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 ________, 2000
<PAGE>
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling stockholders are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock. In this
prospectus, references to "BarPoint," "we," "our" and "us" refer to
BarPoint.com, Inc. and our subsidiaries, unless the context requires otherwise.
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TABLE OF CONTENTS
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Prospectus Summary................................................................................................1
Risk Factors......................................................................................................4
Note Regarding Forward-Looking Statements.........................................................................9
Use of Proceeds..................................................................................................10
Price Range of Common Stock and Dividend Policy..................................................................10
Capitalization...................................................................................................11
Selected Financial Data..........................................................................................12
Management's Discussion and Analysis of Financial Condition and Results of Operations............................13
Business.........................................................................................................16
Management.......................................................................................................22
Certain Transactions.............................................................................................28
Principal Stockholders...........................................................................................31
Selling Stockholders.............................................................................................33
Description of Capital Stock.....................................................................................35
Shares Eligible for Future Sale..................................................................................37
Plan of Distribution.............................................................................................38
Legal Matters....................................................................................................38
Experts..........................................................................................................39
Where You can Find Additional Information........................................................................39
Index to Financial Statements....................................................................................F-1
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We own or have rights to the product names, tradenames and
trademarks that we use in conjunction with the sale of our
products. This prospectus also contains product names,
tradenames and trademarks of other companies.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY.
OUR BUSINESS
BarPoint has developed and recently launched a product information
service utilizing proprietary reverse search technology that enables consumers
to access BarPoint's Internet database and search for product-specific
information using unique product identifiers including universal product codes,
known as UPCs or barcode numbers. UPC Barcode numbers are an international
standard identifier for retail products. BarPoint is compiling an extensive
product database, consisting of millions of retail products with UPC barcode
numbers. The BarPoint service can be accessed from a desktop computer or a wide
variety of Internet-enabled handheld mobile devices, including personal digital
assistants known as PDAs, interactive pagers and cellular phones. By typing or
scanning the barcode number that manufacturers assign to their products,
consumers can easily access a variety of product specific information gathered
by BarPoint, including:
o manufacturer contact information;
o product reviews, specifications and other related information;
o comparative pricing from a variety of sources; and
o links to purchase the item from a variety of vendors.
On December 6, 1999, we "soft-launched" our preview website,
www.barpoint.com, where consumers can access our database to search for
information in the following select categories: audio books, books, computers,
DVD, music, software and video. In addition, visitors to our preview website can
download free software for the Palm VII PDA manufactured by Palm Computing,
which enables them to access our database from the Palm VII on a wireless basis.
We intend to improve our website with additional categories and features
throughout 2000 and intend to launch a more complete version of our website and
service by October 2000. We also plan to release versions of our technology for
additional wireless mobile devices, including other Palm OS and Microsoft Pocket
PC handheld computers, interactive pagers from Research in Motion and Motorola,
and Internet and digital enabled cellular phones. Our technology will allow the
consumer or business to comparison shop with a handheld wireless device and to
purchase products through our e-commerce and retail partners. We believe that
BarPoint has the potential to revolutionize the way consumers and businesses
make buying decisions by providing easy and efficient access to the
product-specific information required to make those buying decisions. As of May
15, 2000, we had e-commerce agreements with 375 e-commerce vendors including
Amazon.com, eToys and Tower Records.
OUR STRATEGY
Our objective is to establish ourselves as the leading product-specific
comparative information and shopping service for mobile and on-line commerce.
To achieve this goal we intend to:
o Integrate our technology into new and existing avenues of
Internet access;
o Pursue strategic relationships with retailers, manufacturers
and technology partners;
o Establish a brand identity; and
o Capitalize on multiple avenues of generating revenues.
OUR STRATEGIC RELATIONSHIPS
We have recently established a number of strategic relationships to
further our business objectives, including:
o a strategic relationship with Verizon Wireless to integrate
our BarPoint Shopper technology into Verizon's mobile web
access services.
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o a strategic partnership with AT&T Wireless Services to include
our BarPoint Shopper technology as one of their mobile
channels.
o an agreement with Symbol Technologies, Inc., in which Symbol
granted us a royalty free license to use Symbol's scanner
patents, we agreed to sell Symbol SPT 1500 devices and Symbol
purchased 1,315,789 shares of our common stock which currently
is approximately 7.7% of our outstanding common stock.
o an agreement with Motorola to make our service available
through their Internet capable phones.
o an agreement with JP Systems, Inc. to integrate our BarPoint
Shopper technology into JP Systems' "Info Beam" content
package for wireless devices.
o an agreement with Omnisky to offer the BarPoint service to
their wireless Palm V customers.
OUR HISTORY
We were originally incorporated in Delaware on December 19, 1995 under
the name The Harmat Organization, Inc. In June 1999, we acquired all the shares
of BarPoint.com, Inc., a Florida corporation and changed our name to
BarPoint.com, Inc. Because this transaction is accounted for as a reverse
acquisition, only information with respect to Florida BarPoint's operations
prior to the acquisition is provided. Our principal executive offices are
located at One East Broward Boulevard, Suite 410, Fort Lauderdale, Florida
33301. Our telephone number is (954) 745-7500 and our website is
www.barpoint.com.
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SUMMARY FINANCIAL DATA
The summary financial data as of and for the year ended September 30,
1999 have been derived from our audited consolidated financial statements
included in this prospectus. The summary financial data as of and for the six
months ended March 31, 2000 have been derived from our unaudited consolidated
financial statements included in this prospectus. On June 3, 1999, Harmat
acquired all issued and outstanding shares of BarPoint.com, Inc. a Florida
corporation, which commenced business in October 1998 as more fully, described
in Note F to the financial statements. The transaction was accounted for as a
reverse acquisition, as if Florida BarPoint acquired Harmat. Florida BarPoint
had no income or expense through March 31, 1999 and therefore, comparative
financial statements are not included as a result of this reverse acquisition.
You should read this table together with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statement
and notes on page F-1 of this prospectus.
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SIX MONTHS FROM INCEPTION
YEAR ENDED ENDED OCTOBER 1998
SEPTEMBER 30, MARCH 31 THROUGH
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1999 2000 MARCH 31, 2000
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(UNAUDITED) (UNAUDITED)
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STATEMENT OF OPERATIONS DATA:
Revenues:
Total revenues ....................................... $ -- $ 220,290 $ 220,290
Cost of Sales ........................................ -- 15,925 15,925
------------ ------------ ------------
Gross profit ............................................ -- 204,365 204,365
Operating expenses:
Sales, general and administration ..................... 832,290 4,897,532 5,729,802
Research and development .............................. 77,912 609,147 687,059
Total operating expenses ................................ 910,202 5,506,679 6,416,861
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Loss from operations .................................... (910,202) (5,302,314) (6,212,496)
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Other Income:
Interest Income ...................................... 63,607 286,700 350,307
Gain on sale of marketable securities and other assets -- 23,422,663 23,422,663
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Total Other Income ...................................... 63,607 23,709,363 23,772,970
Income (Loss) before Income Tax ......................... (846,595) 18,407,049 17,560,474
Income Tax Benefit (Expense) ............................ 408,000 (6,155,000) (5,734,000)
------------ ------------ ------------
Net Income (Loss) ....................................... $ (438,595) $ 12,252,049 $ 11,826,474
============ ============ ============
Net income (loss) per common share:
Basic ................................................ $ (0.05) $ 0.81 $ 0.99
Diluted .............................................. $ (0.05) $ 0.71 $ 0.88
Weighted average common shares outstanding - Basic ...... 8,211,278 15,144,561 11,854,828
Weighted average common shares outstanding - Diluted .... 8,211,278 17,119,446 13,371,160
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SEPTEMBER 30, MARCH 31,
1999 2000
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(UNAUDITED)
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BALANCE SHEET DATA:
Cash and cash equivalents ............................... $ 5,973,956 $ 27,122,552
Working capital ......................................... 3,197,808 510,221
Total assets ............................................ 9,941,151 35,743,839
Total stockholders' equity .............................. 9,387,615 26,503,916
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RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF VARIOUS
RISKS DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS,
TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE
YOU DECIDE WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK. ADDITIONAL RISKS NOT
PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DO NOT BELIEVE WILL BE MATERIAL MAY
ALSO IMPAIR OUR BUSINESS OPERATIONS.
OUR OPERATING HISTORY IS LIMITED.
While our company was founded in 1995, we only began our current
operations with the acquisition of BarPoint in June 1999. When we acquired
BarPoint it had been in existence since October 1998. Therefore our results of
operations from prior periods are not indicative of our future results. We face
substantial difficulties as an early stage company in a new and rapidly evolving
industry, and do not have historical financial results which are relevant to
evaluate our business and our prospects.
WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT TO CONTINUE TO POST LOSSES.
We incurred a net loss from operations of $6.2 million from our
inception through March 31, 2000. Prior to the launch of our preview website on
December 6, 1999, we had no revenues. We expect to continue to incur operating
losses in the foreseeable future due to the costs associated with advertising,
research and development, selling, general and administration expenses involved
in launching and marketing our service. We are just beginning to generate
operating revenues and we are unable to assure our shareholders that we will
achieve operating profitability, or sustain it if attained in the future.
Substantially all of our revenues were derived from the sale of marketable
securities of other companies.
RAPID TECHNOLOGICAL CHANGES IN ELECTRONIC COMMERCE AND INTERNET ACCESS DEVICES
MAY INCREASE OUR COSTS AND COMPETITION AND MAY ADVERSELY AFFECT OUR BUSINESS.
The electronic and mobile commerce markets are relatively new. These
markets have undergone and are expected to continue to undergo significant and
rapid technological changes. Market penetration and customer acceptance of our
business will depend upon our ability to develop successful marketing strategies
as well as our ability to adapt to rapid technological changes in the industry
and integrate our technology into emerging wireless access devices and other
Internet appliances. If our technology is not accessible from widely-used
wireless access devices and other Internet appliances, our business and
prospects will be adversely affected. We also expect that new competitors may
introduce systems or services that are directly or indirectly competitive with
ours. These competitors may succeed in developing systems and services that have
greater functionality or are less costly than our systems and services, and may
be more successful in marketing such systems and services.
Technological changes have lowered the cost of operating communications
and computer systems and purchasing software. These changes reduce our cost of
providing services but also facilitate increased competition by reducing
competitors' costs in providing similar services. This competition could
increase price competition and reduce anticipated profit margins.
WE RECENTLY LAUNCHED OUR WEBSITE AND MAY NOT ACHIEVE MARKET ACCEPTANCE.
We launched our preview website in December 1999 along with a preview
version of our application for the Palm VII personal digital assistant. Our
success depends on a sufficient number of end users and business affiliates
utilizing our specific technology to enable us to achieve profitable operations.
We cannot predict whether the technology, licenses, and business plan we have
developed will appeal as a package to Internet users. Wide market acceptance
will be necessary to generate profits and enable us to continue in the
marketplace.
WE ARE DEPENDENT ON THE INTERNET AND OUR HOST PROVIDER TO CONDUCT BUSINESS.
We are dependent on the Internet and third party Internet providers to
conduct our business. If the Internet were to experience technical difficulties
that limit our ability to provide information through our website, limit our
customers' access to our website, or impair our ability to effectively process
information through the Internet, our business would be adversely affected. We
have an agreement with a third party to host our website from their
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facility in California. We do not have a redundant host center. If our host
center in California experiences technical difficulties, our website may be
unavailable and our business, reputation, financial condition and results of
operation may suffer.
OUR CURRENT OFFICERS AND DIRECTORS CAN ACT TOGETHER TO CONTROL THE ACTIONS OF
OUR COMPANY.
As of May 15, 2000, our executive officers and directors own a total of
1,679,957 shares, representing approximately 9.9% of our outstanding common
stock. In addition, Leigh Rothschild holds three shares of Series A Preferred
Stock that vote with the common stock and have a total of 671,766 votes. Jay
Linn, one of our directors, is the trustee of Irrevocable Trust No. III, one of
our shareholders who owns 4,702,495 shares of our common stock. Mr. Linn
disclaims all beneficial ownership of these shares. As a result, our officers
and directors are able to control the election of directors and the outcome of
other matters that come before the shareholders. They may defeat a proposed
merger or acquisition which some of our stockholders may consider to be in their
best interest. Management's stock ownership and voting control may also
discourage potential acquirers from making a tender offer or other proposal to
obtain control of our company, even at a premium to the then prevailing stock
price.
WE ARE UNCERTAIN AS TO THE ISSUANCE OF PATENTS FOR OUR TECHNOLOGY.
We have filed six patent applications and may file additional
applications. Because of the growth of the Internet and Internet related
businesses, a significant number of patent applications are being filed in our
areas of interest. We cannot assure you that a patent will be issued protecting
the BarPoint technology. If we do not receive patent protection for our
technology, other companies may be able to use our technology to compete with
us. Even if a patent is issued, we cannot assure you that it will be upheld
against challenges or that other patents do not already exist upon which our
product infringes. Any challenges to the validity of our current and future
patents and patent applications may result in requests or mandates to modify our
systems accordingly or even discontinue our operations. In addition, we are
aware of third parties who hold patents relating to the use of barcodes and/or
scanning equipment. While we do not believe our intellectual property infringes
on the intellectual property of these third parties, we cannot assure you that
third parties will not assert claims of infringement against us. Any claims
asserted against us may potentially lead to costly and time-consuming
litigation.
WE MAY NEED TO INCUR LITIGATION EXPENSES IN ORDER TO DEFEND OUR INTELLECTUAL
PROPERTY RIGHTS AND MIGHT NEVERTHELESS BE UNABLE TO ADEQUATELY PROTECT THESE
RIGHTS.
We believe that our future success will depend on our ability to
protect our trademarks and internally developed technologies, including our
Internet systems, which we seek to protect through a combination of patent,
trademark, copyright and trade secret laws. Protection of our trademarks is
crucial as we attempt to build our brand name and reputation. Despite actions we
take to protect our intellectual property rights, it may be possible for third
parties to copy or otherwise obtain and use our intellectual property without
authorization or to develop similar technology independently. We may need to
engage in costly litigation to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of the
intellectual property rights of others. We cannot assure you that our efforts to
prevent misappropriation or infringement of our intellectual property will be
successful. An adverse determination in any litigation of this type could
require us to make significant changes to the structure and operation of our
online services and features or to license alternative technology from another
party. Implementation of any of these alternatives could be costly and
time-consuming and may not be successful. Any intellectual property litigation
would be likely to result in substantial costs and diversion of resources and
management attention.
In addition, legal standards relating to the validity, enforceability
and scope of protection of intellectual property rights in Internet-related
businesses are uncertain and still evolving.
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WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE INTERNET
CONSUMER BUSINESS.
The Internet consumer market is a new and rapidly emerging area. We
face competition from a number of established competitors who offer consumer
goods and items on the Internet, including Yahoo, Lycos and Excite, which
provide search engines to potential consumers. In addition to these search
engines additional comparative price shopping websites that compete with us
include mysimon.com, dealtime.com, checkout.com, iChoose.com and upcsmart.com.
These websites offer comparative price shopping services similar to ours and are
expected to be among our main competitors. Many of our competitors have greater
financial, technical, marketing and other resources. We expect competition to
intensify in the future. As the Internet continues to displace the traditional
ways of shopping and consumer spending, we believe that the companies involved
in providing online consumer information and comparative price shopping, will
increase their efforts to develop services and marketing programs that compete
with our approach. We are unable to anticipate which other companies are likely
to offer competitive services and marketing approaches in the future.
WE ARE DEPENDENT ON THE PROLIFERATION OF INTERNET ACCESS PRODUCTS MANUFACTURED
AND MARKETED BY THIRD PARTIES.
One aspect of our strategy depends on integrating our technology and
software into mobile Internet access devices such as PDAs, interactive pagers
and cellular phones including the Palm VII and Internet capable phones. If the
devices that contain our software or for which our software is available, do not
achieve market acceptance, we will not generate sufficient traffic and revenues
to offset the costs associated with this strategy. Even if these devices achieve
market acceptance, technical difficulties that limit access to our database
could adversely affect our business. Failure of consumers to be able to attain
easy access to our technology through the widespread distribution of these
products would have a negative impact on our business and our ability to grow.
In addition, our success depends upon our ability to enter into
additional agreements with third parties to make our technology available
through new computer devices and renew our current and future agreements on
favorable terms after their expiration. If these agreements terminate, or if the
third party experiences technical difficulties causing us to lose access to
these devices, our business would be materially and adversely affected.
WE HAVE A NEED FOR HIGHLY QUALIFIED PERSONNEL.
The success of our business will depend upon our ability to attract and
retain personnel with a wide range of technical capabilities. Competition for
such personnel is intense, and is expected to increase in the future. If we are
unable to attract and retain qualified personnel, our business and results of
operations will be adversely affected.
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WE MAY BE VULNERABLE TO ATTEMPTS BY UNAUTHORIZED COMPUTER USERS TO PENETRATE OUR
NETWORK SECURITY.
Someone may be able to misappropriate proprietary information and cause
interruptions in our services. We may need to expend significant capital and
resources to protect against the threat of such security breaches or to
alleviate problems caused by such breaches. In addition to security breaches,
inadvertent transmission of computer viruses could expose us to risk of loss or
litigation and possible liability.
WE MAY EXPERIENCE THE ADVERSE EFFECT OF ECONOMIC DOWNTURN.
Our system is dependent upon our customers' shopping habits, consumer
spending capability and their ability to access the Internet. In the event of an
economic downturn or change in consumer patterns, our business could be
adversely affected. For example, if the economy declines, the public's ability
and desire to shop or spend money may significantly decrease. A shift in the
economic environment may cause the public to limit their consumer spending. In
addition, a customers' ability to purchase a computer or mobile access device
and access the Internet may equally be affected in an economic downturn.
AN ACTIVE MARKET FOR OUR COMMON STOCK MAY NOT BE SUSTAINED.
Our shares have been trading on the OTC Bulletin Board since our
initial public offering in September 1996. Since our acquisition of BarPoint and
our commencement of our current Internet business on June 3, 1999, we have been
trading at a significantly increased volume and at higher prices than
previously. We cannot assure you that an active market for our securities will
be sustained in the future.
The market price for our common stock may be significantly affected by
such factors as our financial results, changes in technology, changes in the
Internet, new competition, consumer demands, a shift in products that carry our
technology, any change to the UPC barcode number system, or any change in
consumer spending habits.
Additionally, in recent years, the stock market has experienced a high
level of price and volume volatility, and market prices for many companies,
particularly small and emerging growth companies as well as Internet/high tech
companies, the stocks of which trade in the over-the-counter market, have
experienced wide price fluctuations not necessarily related to the operating
performance of such companies. The market price for our common stock may be
affected by general stock market volatility.
WE MAY BE SUBJECT TO INCREASED GOVERNMENT REGULATIONS IN THE FUTURE.
We are subject to the risks associated with changes in United States
regulatory requirements. If more stringent regulatory requirements and/or safety
and quality standards are issued in the future, they may have an adverse effect
on our business. In addition, use of our website could be adversely affected if
our Internet system provider or the Internet system providers of our customers,
adopts stricter safety standards or become more heavily regulated by the Federal
Communications Commission.
OUR SUCCESS DEPENDS ON THE SUCCESS OF THIRD PARTY RETAILERS, SUPPLIERS AND
DISTRIBUTORS.
We expect to derive a significant portion of our future revenues from
commissions on sales by other companies. While the customer accesses information
regarding the product from our website, the products are sold by third party
retailers and suppliers and distributed by third party distributors. Our success
depends on the success of these third parties. The retailers, suppliers and
distributors we rely on are subject to a number of risks, including credit,
inventory and business concentration risks. Failure of these distributors,
retailers and suppliers to satisfy our customers' needs could harm our
reputation, decrease traffic to our site and adversely affect our results of
operations.
THE SALE OF OUR INVESTMENT SECURITIES MAY AFFECT OUR LIQUIDITY AND CAPITAL
RESOURCES.
As of March 31, 2000, we had $7.1 million in marketable securities.
These securities consist of 278,836 common shares of Socket Communications, Inc.
and 425,000 shares of common stock of Financial Web.com, Inc. The Socket shares
are unrestricted securities and may be traded at any time. The shares of
FinancialWeb.com, Inc.
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are subject to a lock-up agreement and may not be sold until January 31, 2001.
In the event these marketable securities substantially decline in value, our
liquidity and capital resources could be materially and adversely affected.
OUR AUTHORIZED AND UNISSUED PREFERRED STOCK MAY HAVE ANTI-TAKEOVER EFFECTS.
Our certificate of incorporation authorizes the issuance of up to
5,000,000 shares of preferred stock, $.001 par value per share. Only three
shares of preferred stock have been designated and issued. Our board of
directors is authorized to issue shares of preferred stock from time to time
with the relative conversion rights, voting rights, terms of redemption and
liquidation preferences the directors designate. If shares of preferred stock
with voting rights are issued, such issuance could affect the voting rights of
the holders of our common stock by increasing the number of outstanding shares
having voting rights, and by the creation of class or series voting rights. If
our board of directors authorizes the issuance of shares of preferred stock with
conversion rights, the number of shares of our common stock outstanding could
potentially be increased by up to the authorized amount. Issuance of shares of
preferred stock could, under certain circumstances, have the effect of delaying
or preventing a change in control of our company and may adversely affect the
rights of holders of our common stock. Also, the preferred stock could have
preferences over the common stock (and other series of preferred stock) with
respect to dividends and liquidation rights. In addition, the terms of any
series of preferred stock, could adversely affect the rights of holders of the
common stock. The issuance of preferred stock could make the possible takeover
of our company or the removal of our management more difficult, discourage
hostile bids for control of our company in which stockholders may receive
premiums for their shares of common stock or otherwise dilute the rights of
holders of common stock and the market price of the common stock.
WE MAY NOT BE ACCEPTED FOR LISTING ON THE NASDAQ SMALLCAP MARKET.
We have filed an application to have our common stock listed on the
Nasdaq SmallCap Market. While we believe we meet the listing requirements, we
cannot assure you that our application will be accepted. If our application is
not accepted, our stock may not develop as active a trading market as stocks
that are listed on Nasdaq or other national securities exchanges. Our
stockholders may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of our stock. In addition we will have more
difficulty attracting the attention of market analysts to research our company.
SALES OF SUBSTANTIAL AMOUNTS OF SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY
AFFECT OUR STOCK PRICE.
As of the date of this prospectus, we had issued and outstanding
16,982,577 shares of our common stock and approximately 4,252,512 shares of
common stock are issuable upon exercise of outstanding options and warrants. The
shares covered by this prospectus are freely tradeable. The possibility that
substantial amounts of our common stock may be issued and/or freely resold in
the public market may adversely affect prevailing market prices for our common
stock and could impair our ability to raise capital through the sale of our
equity securities. We believe approximately 13,441,307 shares of our common
stock are "restricted securities", as that term is defined under Rule 144
promulgated under the Securities Act, and may be resold in compliance with Rule
144. We believe that remaining shares will become tradable under Rule 144 as
follows:
June 3, 2000 820,391 shares
June 14, 2000 541,318 shares
August 4, 2000 2,116,446 shares
September 10, 2000 526,315 shares
April 5, 2001 1,848,333 shares
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Approximately 7,709,074 shares of our outstanding common stock are
subject to lock-up agreements in connection with a private placement and will be
eligible for sale at the later of (x) October 2, 2000 and (y) the date the
registration statement of which this prospectus is a part is declared effective.
In general, under Rule 144, a person (or persons whose shares are
aggregated) including an affiliate, who has beneficially owned such shares for
one year, may sell in the open market within any three-month period a number of
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of our common stock or (ii) the average weekly trading volume in our common
stock on the OTC Bulletin Board during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain limitations on the manner
of sale, notice requirements and availability of current public information
about us. A person (or persons whose shares are aggregated) who is deemed not to
have been an "affiliate" of ours at any time during the 90 days preceding a sale
by that person and who has beneficially owned his shares for at least two years,
will be able to sell his shares in the public market under Rule 144(k) without
regard to the volume limitations, manner of sale provisions, notice requirements
or availability of current information referred to above. Restricted shares
properly sold in reliance upon Rule 144 are thereafter freely tradable without
restrictions or registration under the Securities Act, unless thereafter held by
an "affiliate" of ours.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements, trend analyses and other information contained in this
prospectus regarding markets for our products and trends in net revenues, gross
margin and anticipated expense levels, and any statement that contains the words
"anticipate," "believe," "plan," "estimate," "expect," "should," "intend" and
other similar expressions, constitute forward-looking statements. These
forward-looking statements are subject to business and economic risks, including
those risks identified in "Risk Factors" and elsewhere in this prospectus and
our actual results of operations may differ significantly from those contained
in the forward-looking statements because of those risks. The cautionary
statements made in this prospectus apply to all forward-looking statements
wherever they appear in this prospectus.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
common stock by the selling stockholders under this prospectus. We estimate that
our expenses in connection with this offering will be approximately $100,000.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is traded on the OTC Bulletin Board under the symbol
BPNT.OB. Before we changed our name to BarPoint, our common stock traded on the
OTC Bulletin Board under the symbol HMAT. Our common stock began public trading
on September 9, 1996. The following table sets forth the high and low closing
bid quotations for our common stock:
FISCAL YEAR HIGH LOW
---------------------------------- -------- -------
2000
First Quarter $ 14 1/8 $ 4 3/4
Second Quarter $ 28 $ 8 1/2
Third Quarter (through May 16) $ 17 3/4 $ 7 1/4
1999
First Quarter $ 5/8 $ 1/4
Second Quarter $ 31/2 $ 9/16
Third Quarter $ 6 3/16 $ 3 1/8
Fourth Quarter $ 5 19/32 $ 4 1/16
1998
First Quarter $ 3/8 $ 1/8
Second Quarter $ 1/4 $ 1/8
Third Quarter $ 13/32 $ 1/4
Fourth Quarter $ 3/8 $ 1/8
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission. These quotes are not necessarily
representative of actual transactions or of the value of our common stocks, and
are in all likelihood not based upon any recognized criteria of securities
valuation as used in the investment banking community.
As of May 15, 2000 there were 1,035 record holders of our common stock.
DIVIDEND POLICY
Generally we do not pay dividends and we have no present intention of
paying cash dividends in the foreseeable future. However, we declared a stock
dividend to stockholders of record on June 2, 1999 payable pro rata to
stockholders on October 19, 1999, of an aggregate of 878,770 shares of our
common stock.
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CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2000:
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
(UNAUDITED)
<S> <C>
Cash and cash equivalents........................................... $27,122,552
===========
Shareholders' (deficit) equity:
Series A Preferred Stock, $0.001 par value; 3 shares authorized;
3 shares issued and outstanding.................................. --
Common Stock, $0.001 par value; 100,000,000 shares authorized;
15,430,077 shares issued and outstanding......................... 15,430
Paid in capital.................................................. 12,953,728
Accumulated earnings in development stage........................ 11,826,474
Accumulated comprehensive income................................. 1,708,284
-----------
Total shareholders' equity....................................... 26,503,916
-----------
Total capitalization............................................. 26,503,916
===========
</TABLE>
This table should be read together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and the Notes thereto included elsewhere in this prospectus. See
"Management--Employee Benefit Plans."
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<PAGE>
SELECTED FINANCIAL DATA
The selected financial data as of and for the year ended September 30,
1999 have been derived from our audited consolidated financial statements
included in this prospectus. The selected financial data as of and for the six
months ended March 31, 2000 have been derived from our unaudited consolidated
financial statements included in this prospectus. On June 3, 1999, Harmat
acquired all issued and outstanding shares of BarPoint.com, Inc. a Florida
corporation, which commenced business in October 1998 as more fully, described
in Note F to the financial statements. The transaction was accounted for as a
reverse acquisition, as if Florida BarPoint acquired Harmat. Florida BarPoint
had no income or expense through March 31, 1999 and therefore, comparative
financial statements are not included as a result of this reverse acquisition.
You should read this table together with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statements
and Notes beginning on page F-1 of this prospectus.
<TABLE>
<CAPTION>
FROM INCEPTION
YEAR ENDED SIX MONTHS ENDED OCTOBER 1998
SEPTEMBER, MARCH 31 THROUGH
------------ ---------------- ---------------
1999 2000 MARCH 31, 2000
------------ ---------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Total revenues ....................................... $ -- $ 220,290 $ 220,290
Cost of Sales ........................................ -- 15,925 15,925
------------ ------------ ------------
Gross profit ............................................ -- 204,365 204,365
Operating expenses:
Sales, general and administration ..................... 832,290 4,897,532 5,729,802
Research and development .............................. 77,912 609,147 687,059
------------ ------------ ------------
Total operating expenses ................................ 910,202 5,506,679 6,416,861
------------ ------------ ------------
Loss from operations .................................... (910,202) (5,302,314) (6,212,496)
Other Income:
Interest Income ...................................... 63,607 286,700 350,307
Gain on sale of marketable securities and other assets -- 23,422,663 23,422,663
------------ ------------ ------------
Total Other Income ...................................... 63,607 23,709,363 23,772,970
Income (Loss) before Income Tax ......................... (846,595) 18,407,049 17,560,474
Income Tax Benefit (Expense) ............................ 408,000 (6,155,000) (5,734,000)
------------ ------------ ------------
Net Income (Loss) ....................................... $ (438,595) $ 12,252,049 $ 11,826,474
============ ============ ============
Net income (loss) per common share:
Basic ................................................ $ (0.05) $ 0.81 $ 0.99
Diluted .............................................. $ (0.05) $ 0.71 $ 0.88
Weighted average common shares outstanding - Basic ...... 8,211,278 15,144,561 11,854,828
Weighted average common shares outstanding - Diluted .... 8,211,278 17,119,446 13,371,160
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 2000
------------ -------------
(UNAUDITED)
BALANCE SHEET DATA:
<S> <C> <C>
Cash and cash equivalents................................ $ 5,973,956 $ 27,122,552
Working capital.......................................... 3,197,808 510,221
Total assets............................................. 9,941,151 35,743,839
Total stockholders' equity............................... 9,387,615 26,503,916
</TABLE>
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ TOGETHER WITH OUR FINANCIAL STATEMENTS AND THE NOTES
TO THOSE STATEMENTS INCLUDED IN THIS PROSPECTUS.
BACKGROUND
On June 3, 1999, we acquired all the issued and outstanding shares of
BarPoint.com, Inc., a Florida corporation in exchange for 6,634,042 shares of
our common stock. The transaction was accounted for as a reverse acquisition, as
if BarPoint--Florida acquired us, because the former shareholders of
BarPoint--Florida owned a majority of our common stock after the transaction. As
a result of a post-closing adjustment provision we issued a total of 878,770
shares of our common stock as a stock dividend to owners of shares of Harmat
common stock as of June 2, 1999. The consolidated financial statements presented
herein for the periods prior to the effective date of the acquisition only
include the accounts of BarPoint--Florida, because of the reverse acquisition
accounting. The consolidated statement of shareholders' equity has been
converted from BarPoint--Florida's capital structure to Harmat's capital
structure to reflect the exchange of shares pursuant to the merger agreement.
Comparative financial statements are not included as a result of this reverse
acquisition.
The financial statements reflect the financial position and results of
operations of BarPoint and our subsidiaries on a consolidated basis, which
reflects our current organizational structure.
We soft-launched our preview website in December 1999 and frequently
update it. We intend to launch a more complete version of our website and
service by October 2000. The website, www.barpoint.com, features a
patent-pending search engine and software technology that allows businesses and
consumers to use the standard UPC barcode which appears on approximately 100
million retail items to search for product-specific information from our
database. The BarPoint service provides businesses and consumers easy and
efficient access to meaningful product specific information required to make
better buying decisions.
RESULTS OF OPERATIONS
Net loss was $438,595 or $.05 per common share for the year ended
September 30, 1999. Net income was $12,252,049 or $.71 per common share diluted
for the six months ended March 31, 2000. Most of our income derived from the
sale of marketable securities. As of March 31, 2000, we had no significant
revenue stream; however with our December 6, 1999 launch of our preview website,
and our more complete launch later in 2000, we expect to begin to book revenues
by the end of the year 2000. We also expect that operating losses will continue
in the foreseeable future as a result of advertising, research and development
and administrative expenses for the foreseeable future. We intend to generate
future revenues from commissions, advertising and other sources.
Selling, general and administration expenses were $832,290 for the year
ended September 30, 1999 and $4,897,532 for the six months ended March 31, 2000.
Selling, general and administration expenses consist primarily of professional
fees, hiring of personnel, travel and entertainment.
Research and development expenses were $77,912 for the year ended
September 30, 1999 and $609,147 for the six months ended March 31, 2000.
Research and development spending was primarily due to the development of our
product database, content and technology infrastructure. We anticipate research
and development expenses will increase significantly in the upcoming year as we
continue to build and develop our database and technology infrastructure.
Advertising expenses were $90,800 for the year ended September 30, 1999
and $715,452 for the six months ended March 31, 2000. Advertising expenses were
primarily related to developing brand recognition and the launch of our preview
website. These amounts are included in selling, general and administration
expenses.
Interest income was $63,607 for the year ended September 30, 1999 and
$286,700 for the six months ended March 31, 2000. Interest income was primarily
due to interest earned from our money market account.
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<PAGE>
Gain on sale of marketable securities was $23,422,663 for the six
months ended March 31, 2000. The gain was primarily the result of selling
approximately 1,675,000 common shares of Socket Communications, Inc. at a net
gain of approximately $23.4 million.
LIQUIDITY AND CAPITAL RESOURCES
On November 4, 1999 we converted 750,000 shares of our Socket
Communications, Inc. Preferred Series D holdings into 1,307,190 shares of Socket
Communications, Inc. common stock. On February 7, 2000, we exercised warrants to
purchase 578,836 Socket Communications, Inc. common shares at a total exercise
price of $671,703. During the six months ended March 31, 2000 we sold 1,675,254
Socket Communications, Inc. common shares totaling approximately $24.6 million
in cash and cash equivalents.
As of March 31, 2000, we had approximately $27.1 million in cash and
cash equivalents and $7.1 million in marketable securities. These marketable
securities consisted of 278,836 shares of common stock of Socket Communications,
Inc. and 425,000 shares of common stock of FinancialWeb.com, Inc. The shares of
FinancialWeb are under a lock-up agreement and are not saleable until January
31, 2001.
For the year ended September 30, 1999 , we had cash flow used in
operations of $679,294. For the six months ended March 31, 2000 we had cash used
in operations of $3,862,713. The negative cash flows are primarily the result of
losses incurred from operations.
For the year ended September 30, 1999, net cash provided by investing
activities of $361,549 was primarily the result of the reverse acquisition by
The Harmat Organization, Inc. For the six months ended March 31, 2000, net cash
provided by investing activities of $23,872,308 was primarily the result of the
sale of marketable securities.
For the year ended September 30, 1999, net cash provided by financing
activities of $6,290,670 was primarily the result of proceeds from the sales of
common stock in private placements. For the six month ended March 31, 2000, net
cash provided by financing activities of $1,139,002 was primarily the result of
proceeds from the exercise of stock options and warrants. From June through
August 1999, we issued a total of 4,499,868 shares of our common stock in
private placements to accredited investors for gross proceeds of approximately
$7,195,000, which includes a subscription note receivable of $750,000 The
subscription note receivable was paid in full on February 11, 2000.
We have federal net operating loss carryforwards, or NOLs, of
approximately $1,680,000 for the year ended September 30, 1999 and we expect
these NOLs to be available in the future to reduce our federal income tax
liability. However, due to the ownership change, resulting from the stockholders
of BarPoint--Florida gaining more than half of our common stock in the merger,
our ability to utilize the NOLs is restricted under Section 382 of the Internal
Revenue Code. Therefore, a tax benefit has been reflected only to the extent
allowable in the current year.
We believe that cash, cash equivalents and marketable securities,
together with projected cash flow from operations, will be sufficient to meet
our liquidity and capital requirements for the next year, although no assurance
exists that we will not require additional capital prior to the end of such
period.
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<PAGE>
SUBSEQUENT EVENTS
On April 5, 2000 we completed a private equity offering selling
1,848,333 common shares at a price of $12 per share by us and selling
stockholders to institutional investors. Included in the total number of shares
were 370,833 shares sold by two shareholders. Matthew Schilowitz, a former
director and our founder, sold 100,000 shares and the Irrevocable Trust III, of
which Jay Linn, a director, serves as trustee and the beneficiaries of which are
family members of Leigh Rothschild, our chairman, sold 270,833 shares. We
received gross proceeds of approximately $17.7 million for the sale of 1,477,500
shares of our common stock.
YEAR 2000 ISSUES
We did not experience any significant effects of the Year 2000 issue on
January 1, 2000. We will continue to address this issue and the impact it might
have on operations and financial reporting. We believe that by modifying or
replacing systems, and by monitoring the Year 2000 readiness of key external
parties, we are mitigating the Year 2000 risks. However, we cannot assure our
stockholders that the uncertainties surrounding the Year 2000 issue will not
materially and adversely affect us in the future.
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<PAGE>
BUSINESS
OVERVIEW
BarPoint has developed and recently launched a product information
service utilizing proprietary reverse search technology that enables consumers
to access BarPoint's Internet database and search for product-specific
information using unique product identifiers including UPCs or barcode numbers.
UPC barcode numbers are an international standard identifier for retail
products. BarPoint is compiling an extensive product database, which includes
information on millions of retail products with UPC barcode numbers. The
BarPoint service can be accessed from a desktop computer or a wide variety of
Internet-enabled handheld mobile devices, including personal digital assistants
known as PDAs, interactive pagers and cellular phones. By typing or scanning the
barcode number that manufacturers assign to their products, consumers can easily
access a variety of product specific information gathered by BarPoint including:
o manufacturer contact information;
o product reviews, specifications and other related information;
o comparative pricing from a variety of sources; and
o links to purchase the item from a variety of vendors.
On December 6, 1999, we "soft-launched" our preview website,
www.barpoint.com, where consumers can access our database to search for
information in the following select categories: audio books, books, computers,
DVD, music, software and video. In addition, visitors to our preview website can
download free software for the Palm VII PDA manufactured by Palm Computing,
which enables them to access our database from the Palm VII on a wireless basis.
We intend to improve our website with additional categories and features
throughout 2000 and intend to launch a more complete version of our website and
service by October 2000. We also plan to release versions of our technology for
additional wireless mobile devices, including other Palm OS and Microsoft Pocket
PC handheld computers, interactive pagers from Research in Motion and Motorola,
and Internet and digital enabled cellular phones. Our technology will allow the
consumer to comparison shop with a handheld wireless device and to purchase
products through e-commerce and retail partners. We believe that BarPoint has
the potential to revolutionize the way consumers and business make buying
decisions by providing easy and efficient access to the product specific
information requried to make those buying decisions. As of May 15, 2000, we had
e-commerce agreements with 375 e-commerce vendors including Amazon.com, eToys
and Tower Records.
COMPANY HISTORY
Our company was incorporated in Delaware on December 19, 1995 under the
name The Harmat Organization, Inc. and began operations as a construction,
architectural landscape design and real estate development firm. Beginning in
1997, we believed that it was in the best interest of the shareholders of our
company to change our direction away from the real estate business and we began
making strategic investments in technology oriented companies.
On June 3, 1999, we acquired all of the shares of BarPoint.com, Inc., a
Florida corporation, and began to develop our current line of business. The
transaction was accounted for as a reverse acquisition, as if the Florida
corporation had acquired us, because the former shareholders of BarPoint.com,
Inc. owned a majority of our outstanding common stock after the transaction.
Following the acquisition, we changed our name to BarPoint.com, Inc. The Florida
corporation that we acquired is now our wholly-owned subsidiary.
INDUSTRY OVERVIEW
We believe that the development of alternative Internet access devices
is a principal factor in the growth of Internet traffic. According to
International Data Corporation, 92% of all Internet access is achieved from
personal computers. However, International Data Corporation projects that in
2002 only 67% of Internet access will be
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<PAGE>
through personal computers. Alternative Internet access devices include NetTV,
Internet screenphones, and handheld devices. We believe that handheld devices,
including PDAs, will become more prevalent. The mobile nature of the Internet
access that will be developing over the next few years will allow users to
undertake "point-of-sale" comparative shopping, using enhanced product-specific
search technology like the BarPoint Shopper.
The Internet provides consumers with numerous sources of information
and numerous sites to purchase items electronically. An increasing number of
Internet users are spending an increasing amount of money online. International
Data Corporation estimates that the number of U.S. Internet users was
approximately 62.8 million in 1998 and will grow to approximately 148.6 million
by the end of 2002. Jupiter Communications, Inc. projected that online shopping
in the U.S. was approximately $7.8 billion in 1998 and will reach approximately
$41.0 billion by 2002. We believe that, as the number of electronic commerce
transactions increases, more efficient product-specific search capabilities will
be increasingly attractive.
Most current search technology is text-based, relying on the searcher
to identify "key words" to search for the item. This search methodology can be
useful for searching text archives, but can be inexact and inefficient for
searching for particular products. To find a product using current search
methodologies, users often undertake multiple levels of searches in a
time-consuming process. In contrast, UPC barcode numbers provide an efficient
search criteria to locate detailed information regarding a particular product.
Each UPC barcode number is unique to a specific manufacturer's product. By using
these barcodes and adding a wide range of supplemental product information, we
believe we have created a powerful and efficient way to track and search for
product-specific information regarding the manufacturer, product and pricing.
STRATEGY
BarPoint intends to establish itself as the leading product-specific
comparative information and shopping service for mobile and online commerce.
BarPoint seeks to achieve this goal by:
o INTEGRATING BARPOINT'S TECHNOLOGY INTO NEW AND EXISTING
AVENUES OF INTERNET ACCESS. In addition to access through
desktop computers, we provide consumers the opportunity to
enter a UPC barcode number into a handheld device and access
information about the product, including competing prices and
reviews. Currently this is possible by downloading our
BarPoint Shopper /trademark/ application for the Palm VII
device. We are also developing additional applications for use
with other PDAs and portable wireless devices, and are working
with manufacturers to bundle our technology into their
existing and future products. Also, we may choose to license
our patent pending technology to other portal and search
engine sites in the future.
o PURSUING STRATEGIC RELATIONSHIPS. Through a strategic
relationship with Symbol Technologies, Inc., we were granted a
royalty-free license to specified scanner patents and sold
Symbol approximately 7.7% of our currently outstanding common
stock. We intend to establish and expand strategic
relationships with content providers, technology
manufacturers, distributors, manufacturers, retailers and
others. We plan to capitalize on existing relationships by
offering opportunities to sponsor categories of products on
the BarPoint web site and mobile devices and by entering into
co-branding relationships. We are currently planning to
cross-promote and/or bundle products with a wide range of
wireless Internet devices including those manufactured by
Symbol, AT&T Wireless, Verizon and Palm Computing among
others.
o ESTABLISHING A BRAND IDENTITY. BarPoint will seek to build its
brand identity through traditional advertising and promotional
vehicles in order to generate high traffic levels to the
BarPoint web site and consumer awareness of the BarPoint name.
o CAPITALIZING ON MULTIPLE AVENUES OF GENERATING REVENUES. While
many Internet sites hope to generate revenues from advertising
and e-commerce commissions, BarPoint intends to generate
revenues from these sources as well as product promotions,
manufacturer listings, category and
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<PAGE>
product sponsorship and data-mining. As with other heavily
trafficked web sites, www.barpoint.com will sell banner
advertisements and sponsorship buttons throughout its pages.
Manufacturers and retailers may have the opportunity, for a
fee, to add supplemental product specific information to the
BarPoint search results and to ensure that their products
appear in the comparative and related products sections when
searches are conducted for similar and/or competitive
products. In return for monthly and/or annual fees, retailers
and e-commerce sites will have the opportunity to "sponsor"
product categories resulting in their link being given premium
placement when a user views a product information page in the
sponsored product category. As of May 15, 2000, we had
agreements with 375 e-commerce affiliates to pay BarPoint, on
a percentage basis, for each referral that results in a sale.
In addition, we plan to offer data mining opportunities
provided that we are completely in compliance with the
strictest interpretation of existing regulations relating to
the privacy of confidential consumer information.
DATABASE AND PRODUCTS
The BarPoint technology can be accessed via the Internet at
www.barpoint.com from desktops or handheld wireless devices. It is presently
available on a variety of hand-held and wireless devices including the Palm VII
from Palm Computing, interactive pagers such as those from Research In Motion
and Motorola, Internet capable phones, and the SPT 1500, a Palm III with a
built-in scanning device, manufactured by Symbol Technologies. Our web site
currently allows UPC searches in the following categories:
o audio books;
o books;
o computers;
o DVDs;
o music;
o software; and
o videos.
In the future, we expect to add search capabilities for additional
categories of products, including office supplies, pet supplies, toys, hardware,
consumer electronics and more.
Additional features we are developing include the My BarPoint service,
BarPoints /trademark/, and the sale of barcode input devices. The My BarPoint
service will allow members to store product UPC barcode numbers and receive free
e-mail messages about the products, such as coupon information, warranty
registration, new product releases, rebates, special offers, recalls and
auctions. BarPoints /trademark/ is a loyalty rewards program for frequent users
of our BarPoint technology. We plan to offer for sale new products containing
barcode scanning features including the SPT 1500, a Palm Computing PDA
manufactured by Symbol Technologies.
STRATEGIC RELATIONSHIPS AND ACQUISITIONS
As part of our strategy, we have entered into strategic relationships
and agreements with content providers, technology manufacturers and
distributors, including the following:
o In May 2000 we announced a strategic partnership with AT&T
Wireless Services. AT&T provides their consumers with wireless
Internet access. AT&T will include our BarPoint Shopper
technology as one of their mobile channels which AT&T wireless
customers can access.
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o In March 2000, we announced a strategic relationship with
Verizon Wireless to integrate our BarPoint Shopper technology
into Verizon's mobile web access services.
o In August 1999, we announced a strategic partnership with
Symbol Technologies, Inc. As part of the strategic partnership
Symbol Technologies purchased 1,315,789 shares of our common
stock representing approximately 7.7% of our currently
outstanding common stock and granted us a royalty free license
to use Symbol's scanner patents. We agreed to sell Symbol SPT
1500 machines and grant Symbol the right to designate one
designee to our board of directors. Symbol manufactures a wide
range of barcode scanning hardware that is compatible with
BarPoint's service, including the SPT 1500, a handheld
organizer using the popular Palm platform with a built in
laser barcode scanner.
o In August 1999, we announced a partnership with JP Systems,
Inc. to integrate our BarPoint Shopper technology into JP
Systems' "Info Beam" content package for wireless devices.
InfoBeam software provides on-demand access to data and is
available for a number of popular handheld devices and PDAs
working with two-way pagers, wireless modems or cell phones.
In November 1999, Motorola announced that it would be offering
JP Systems' Info Beam, including BarPoint's UPC search
service, on its new Pagewriter 2000x Interactive Pager.
o On November 5, 1999, BarPoint acquired Synergy Solutions,
Inc., which creates commercial applications for Palm Computing
devices, for 75,000 shares of BarPoint common stock, $100,000
and additional earn out payments. Synergy Solutions' products
are currently sold at major on-line, retail, and catalog
software vendors. We hope that Synergy Solutions, as a
wholly-owned subsidiary of BarPoint, will drive the core
development of handheld applications and mobile e-commerce
solutions to further enable and enhance consumer buying
decisions and shopping experiences through UPC barcode
numbers, while continuing to provide the high level of quality
of the Palm OS applications.
TECHNOLOGY
BarPoint utilizes patent pending "reverse search" technology that
enables consumers to access our Internet database and search for
product-specific information using UPC barcode numbers. When a UPC barcode
number is entered, BarPoint's technology and database is used to first identify
the item, as well as its manufacturer and product category. Then, using that
information, BarPoint's search technology collects a wide range of product
details, links and related information. All of this information is returned to
the consumer in the BarPoint search results page.
Currently, our web site is hosted on Unix based equipment from Sun
Microsystems and our primary database is stored using Oracle 8i software. The
server equipment is located at Global Crossings, Inc., which we believe to be a
tier 1 Internet provider.
The BarPoint service is available through accessing www.barpoint.com
through which UPC barcode number searches can be executed by simply typing or
scanning in a UPC barcode number. If a consumer visiting the BarPoint site does
not have the UPC barcode number handy for the product they are interested in,
they can also conduct a search by entering a text description of the desired
item. We have also introduced the BarPoint Shopper /trademark/ web clipping
application for the Palm VII wireless organizer from Palm Computing, and will be
releasing versions of the BarPoint Shopper /trademark/ for many wireless mobile
devices including other Palm OS and Microsoft Pocket PC handheld computers,
interactive pagers from RIM and Motorola and cellular phones. When consumers or
business see an item they wish to purchase or want to know more about, they can
enter the item's barcode into a handheld device and obtain detailed product
information, including comparative prices from a variety of vendors.
SALES AND MARKETING
We plan to generate revenue from the BarPoint portal and BarPoint
Shopper in the following ways:
o entering into sponsorship agreements and providing promotional
opportunities for product lines and product categories with
retailers and manufacturers, both on our website and on mobile
devices;
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o selling advertising;
o offering manufacturers and retailers the opportunity to list
supplemental product information with the BarPoint search
results for their products;
o offering manufacturers and retailers the opportunity to list
their product in BarPoint's comparative and related product
sections when searches are done for similar or competitive
products;
o entering into revenue sharing arrangements with e-commerce
partner sites for any BarPoint referred online customer;
o selling bar code scanning hardware and proprietary BarPoint
software through our website; and
o licensing fees from other Internet sites that license our
technology.
As of May 15, 2000, we have entered into e-commerce agreements with
375 e-commerce vendors including companies such as Amazon.com, eToys and Tower
Records. These e-commerce agreements are industry standard agreements that
Internet companies enter into in order to provide links from the company's
website to an e-commerce vendor's website. When a customer visits BarPoint and
links to one of the e-commerce vendor companies websites to purchase an item,
BarPoint receives a commission. Typically, these commissions range from 3% to
10% of the sale price.
When the My BarPoint service becomes available, we intend to provide
manufacturers, retailers and others the ability to send e-mail or other
notifications to persons who store a particular UPC barcode number on the
service and desire this information. My BarPoint users will indicate when they
register if they would like to receive such messages.
RESEARCH AND DEVELOPMENT
We believe that strong product development capabilities are essential
to our strategy of continuing to enhance and improve our product offerings both
on our web site and on mobile devices. This process involves continued
investment in equipment, services and qualified personnel to optimize our
ability to adapt to rapidly changing technologies and evolving customer
expectations. Our patent-pending "reverse search" technology has been developed
to provide access to our database of UPC linked product information from a
variety of Internet capable devices, using industry standard software platforms.
Our in-house web development team includes programmers, engineers, graphic
designers, and database administrators.
Research and development expenses were $77,912 for the year ended
September 30, 1999 and $609,147 for the six months ended March 31, 2000.
Research and development expenses were primarily due to development of our large
database of products and information linked to the manufacturer's UPC barcode
number, as well as the hiring of personnel. These numbers do not reflect
research and development expenses that were capitalized. We expect that research
and development expenses in fiscal year 2000 will significantly exceed our
research and development expenses for fiscal year 1999. See "Risk Factors" for a
discussion of certain risks related to our research and development.
INTELLECTUAL PROPERTY
BarPoint's future success and ability to compete depend significantly
on our proprietary technology. We have applied for six patents related to our
technology. We cannot assure our stockholders that any of these patents will
be issued, or if issued that any of them will be upheld against challenges. In
addition, we rely on copyright, trademark and trade secret laws and
confidentiality agreements with our employees and third parties to protect our
intellectual property. We have applied for registration of several trademarks,
including the BarPoint name and our logo in the United States and will seek to
register additional service marks and trademarks as appropriate.
Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use our proprietary
information or technology. The laws of some foreign countries do not protect
proprietary rights to the same extent as the laws of the United States and we
currently do not have any patents or
20
<PAGE>
patent applications in any foreign country. In addition, others could possibly
independently develop substantially equivalent intellectual property. If we do
not effectively protect our intellectual property, our business could suffer.
Companies in the computer software industry frequently resort to
litigation regarding intellectual property rights. We may have to litigate to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of other parties' proprietary rights. This type
of litigation, even if we are successful, could be time-consuming and expensive,
divert management's attention, cause product or service delays or require us to
enter into royalty or licensing agreements on terms that may not be acceptable
to us. A successful claim of infringement against us could materially adversely
affect our business, financial condition and results of operations.
COMPETITION
The electronic and mobile commerce markets are relatively new and are
growing rapidly. We face competition from a number of established competitors
who offer consumer goods and product information on the Internet including
Yahoo!, Lycos, Excite, My Simon, Comparenet, dealtime.com, checkout.com,
Infospace.com, iChoose.com and pcsmart.com. Many of our competitors have greater
financial, technical, marketing and other resources than BarPoint. Because
barriers to entry are low, new competitors will continue to emerge.
Our ability to compete successfully depends in part upon our ability to
attract and retain personnel with a wide range of technical capabilities.
Competition for experienced and technically capable personnel is intense, and is
expected to increase in the future. We cannot assure our shareholders that we
will be able to attract and retain the necessary personnel to develop and expand
our business.
We believe that BarPoint is the first system utilizing reverse search
technology on the Internet to provide detailed product specific information
using UPC barcode numbers as the primary search parameter. If another company
develops similar or superior capabilities or if our concept and technology do
not achieve market acceptance, our business, financial condition and results of
operations will be materially adversely affected.
LEGAL PROCEEDINGS
On April 4, 2000, PriceBee.com, Inc. submitted a claim for arbitration
to the American Arbitration Association with respect to our termination of an
agreement and plan of merger, whereby we had agreed to acquire PriceBee.
PriceBee alleges that our termination of the agreement and plan of merger was
wrongful and seeks specific performance and/or $5.0 million in damages. We have
submitted a counterclaim against PriceBee alleging breach of the agreement and
plan of merger on the part of PriceBee and are seeking $7.0 million in damages.
We and PriceBee each have selected an arbitrator and a third independent
arbitrator will be selected shortly.
We are not a party to any other material legal proceedings.
EMPLOYEES
As of March 31, 2000, we had 50 full-time employees. Our employees are
not represented by any collective bargaining agreements, and we have never
experienced a work stoppage. We believe our employee relations are good.
PROPERTIES
Our corporate headquarters are located in Fort Lauderdale, Florida. We
lease approximately 10,284 square feet of space in Fort Lauderdale, Florida
under a lease which expires in 2004.
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
Our executive officers, directors and key employees, and their ages as
of May 15, 2000, are as follows:
NAME AGE POSITION
---- --- --------
Leigh M. Rothschild................. 49 Chairman of the Board
John C. Macatee..................... 49 President, Chief Executive
Officer and Director
Jeffrey W. Sass..................... 41 Chief Operating Officer,
Executive Vice President,
Secretary and Director
Seymour G. Siegel................... 51 Director
David W. Sass....................... 64 Assistant Secretary and Director
Jay Howard Linn..................... 65 Director
Kenneth Jaeggi...................... 53 Director
David Wachter....................... 36 Director
LEIGH M. ROTHSCHILD. Mr. Rothschild became Chairman of the Board in
June 1999 and served as our Chief Executive Officer from June 1999 through March
2000. Prior to founding Florida BarPoint in October 1998, Mr. Rothschild was
President and Chief Executive Officer of Intracorp Entertainment, Inc., a
consumer software company with worldwide product distribution that he founded in
1984. Mr. Rothschild is a former presidential appointee to the High-Resolution
Board for the United States under former President George Bush. He has served
two Florida governors on technology boards and served as a special advisor to
the Florida Secretary of Commerce (now governor) Jeb Bush. Prior to founding
Intracorp, Mr. Rothschild was a real estate investor and founded several high
technology companies. Mr. Rothschild has an undergraduate degree from and has
also done post graduate work at the University of Miami.
JOHN C. MACATEE. Mr. Macatee joined BarPoint as its President and Chief
Executive Officer in March 2000. Mr. Macatee was President and Chief Operating
Officer and a director of Office Depot, Inc. from August 1997 until October
1999. Prior to joining Office Depot, Mr. Macatee was President of
Sherwin-Williams Paint Stores Group, a Division of The Sherwin-Williams Company,
a New York Stock Exchange listed company, a position he held from 1992 to 1997.
At Sherwin-Williams, Mr. Macatee was responsible for more than 2,000 stores and
commercial branches, as well as a professional sales force serving corporate and
industrial customers. Prior to becoming the president of Sherwin-Williams Paint
Stores Group, Mr. Macatee held a number of other positions during his 26 years
with that company. Mr. Macatee has a Master of Science degree in Business from
Columbia University in New York.
JEFFREY W. SASS. Mr. Sass has worked with BarPoint since our inception
in October 1998 and became Chief Operating Officer, Executive Vice President and
a director in June 1999. Prior to joining BarPoint in June 1999, Mr. Sass
formed, in July 1997, the Marketing Machine, a full-service marketing agency and
consultant firm, servicing clients in computer hardware, software and other
industries. From April 1995 through July 1997 he served as Vice President of
marketing at Intracorp Entertainment. From July 1994 through April 1995 Mr. Sass
was the director of marketing of Gametek, Inc. Mr. Sass is a graduate of Cornell
University.
SEYMOUR G. SIEGEL. Mr. Siegel became a director of our company in July
1995. Mr. Siegel is a CPA and from 1969-1990 was senior partner and founder of
Siegel Rich & Co. P.C., an accounting firm specializing in privately owned
businesses and high net worth individuals. In 1990, Siegel Rich merged with M.R.
Weiser & Co. Mr. Siegel stayed on as a senior partner until 1994, when he
co-founded Siegel Rich Incorporated, a firm providing advisory services to
businesses regarding mergers and acquisitions, long-range planning and problem
resolution. Mr. Siegel is also a former director of the Oak Hall Capital Fund
and Prime Motor Inns, L.P.
DAVID W. SASS. Mr. Sass has been a director of our company since July
1995. For the past 39 years, Mr. Sass has been a practicing attorney in New York
City and is currently a senior partner in the law firm of
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McLaughlin & Stern, LLP, counsel to our company. Mr. Sass is a director of
Genisys Reservation Systems, Inc., a company engaged in the Internet travel
business; an officer of Westbury Metals Group, Inc. a company engaged in the
refining of precious metals; a director of Pallet Management Systems, Inc. a
company engaged in the manufacture and repair of wooden pallets and other
packaging services and a member and Vice Chairman of the Board of Trustees of
Ithaca College.
JAY HOWARD LINN. Mr. Linn has been a director of our company since July
1999. Since 1957, Mr. Linn has been practicing certified Public Accountant in
the Miami-Dade County area. He currently practices in his own name in Bay Harbor
Islands, Florida. Prior to opening this office in 1995, Mr. Linn was, for
fourteen years, a partner in the CPA firm of Moss & Linn in North Miami,
Florida.
KENNETH JAEGGI. Mr. Jaeggi became a director of our company in
September 1999. He is the Senior Vice President of Finance and the Chief
Financial Officer of Symbol Technologies, Inc. From May 1996 to May 1997, he was
a member of the Office of the Chairman and the Operating Committee of
Electromagnetic Sciences in Atlanta, GA. From December 1992 until May 1996, Mr.
Jaeggi served as Senior Vice President, Chief Financial Officer and consultant
of Scientific-Atlanta, Inc., a leading producer of cable network and satellite
communications systems.
DAVID WACHTER. Mr. Wachter became a director of our company in May
2000. Since July 1999, he has been a managing director of Jefferies & Company,
Inc. Prior to joining Jefferies, David was a Managing Director, head of
Corporate Finance and member of Executive Committee and Commitment Committee at
C.E. Unterberg, Towbin from 1990 to July 1999. Prior to Unterberg, David was an
investment banker at Lehman Brothers from 1987 through 1990.
David W. Sass, one of our directors, is the father of Jeffrey W. Sass,
our Chief Operating Officer and Executive Vice President.
Messrs. Leigh Rothschild and Jeffrey Sass were previously employed by a
company, Intracorp Entertainment, Inc. which on October 4, 1996 filed a
voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code. Messrs. Jeffrey Sass and Leigh Rothschild were officers of Intracorp. The
filing of this bankruptcy petition was caused, in part, by the failure and
subsequent bankruptcy of two of Intracorp's largest accounts receivable debtors.
Intracorp operated as a debtor-in-possession under case number 96-16276-BKC-RAM,
United States Bankruptcy Court for the Southern District of Florida. On March
20, 1998, the Bankruptcy Court entered its order converting Intracorp's
bankruptcy case to a case under Chapter 7 of the U.S. Bankruptcy Code. A Chapter
7 Trustee was appointed who undertook liquidating the remaining assets of
Intracorp.
BOARD OF DIRECTORS AND COMMITTEES
The board of directors has a compensation committee and an audit
committee.
COMPENSATION COMMITTEE. The compensation committee of the board of
directors reviews and makes recommendations to the board regarding all forms of
compensation provided to the executive officers and directors of BarPoint and
its subsidiaries including stock compensation and loans. In addition, the
compensation committee reviews and makes recommendations on stock compensation
arrangements for all employees of BarPoint. The compensation committee also
administers our 1999 Equity Incentive Plan. The current members of the
compensation committee are Seymour Siegel, Jay Linn, David Sass and Leigh
Rothschild.
AUDIT COMMITTEE. The audit committee of the board of directors reviews
and monitors the corporate financial reporting and the audits of BarPoint,
including, among other things, the results and scope of the annual audit and
other services provided by our independent auditors and our compliance with
legal requirements that have a significant impact on our financial reports. The
audit committee also consults with our management and our independent auditors
regarding the preparation of financial statements and, as appropriate, initiates
inquiries into aspects of our financial affairs. In addition, the audit
committee has the responsibility to consider and recommend the appointment of,
and to review fee arrangements with, our independent auditors. The current
members of the audit committee are Seymour Siegel, Jay Linn and Kenneth Jaeggi
with Seymour Siegel chairing the committee.
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<PAGE>
DIRECTOR COMPENSATION
Each of our directors receives an annual stipend of $10,000 paid
quarterly and options to purchase 10,000 shares per year. Historically, we
granted new directors options to purchase 40,000 shares of our common stock upon
election at an exercise price equal to the market price on the date of election.
The board intends to grant new independent directors, who serve on our audit
and/or compensation committees, options to purchase 50,000 shares of our common
stock upon election, at an exercise price equal to market price on the date of
election.
EXECUTIVE COMPENSATION
The following table sets forth compensation information for the fiscal
year ended September 30, 1999 paid by us for services by our Chief Executive
Officer and our other executive officer whose total salary and bonus for that
fiscal year exceeded $100,000, collectively referred to below as the "named
executive officers":
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------- ------------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS COMPENSATION UNDERLYING OPTIONS
- --------------------------- ---- --------- ----- ($) ------------------
------------
<S> <C> <C> <C>
Leigh M. Rothschild(1) 1999 $ 66,667
Chief Executive Officer
Jeffrey W. Sass (1) 1999 $ 50,000
Executive Vice President
Matthew Schilowitz(2) 1999 $ 150,000 190,615 shares of common stock
Director/Consultant 1998 $ 155,000 576,748 shares of common stock
1997 $ 105,000 346,049 shares of common stock
</TABLE>
- ------------
(1) Messrs. Rothschild and Sass were employed by us for only four months of
our fiscal year ended September 30, 1999. Salary payment amounts
reflect payments for a partial year
(2) The Plan for Incentive Compensation of Matthew Schilowitz was adopted
by our board of directors and approved by our stockholders on March 1,
1996, amended August 3, 1996, March 24, 1997 and June 19, 1998.
Pursuant to the plan, Mr. Schilowitz has been granted an option to
purchase up to an aggregate of 500,000 shares of common stock at $.35
per share, which has been adjusted to 576,748 shares exercisable at
$.30 per share.
On March 24, 1997, as part of our company's 1996 Incentive Stock Option
Plan, Mr. Schilowitz was granted options to purchase 300,000 shares of
our company's common stock at an exercise price of $2.337 per share,
being 110% of the fair market value of such shares which has been
adjusted to 346,049 shares exercisable at $.30 per share. On June 19,
1998 our company reduced the exercise price of such options to $.35,
and then later reduced to its current price at $.30 per share as a
result of dilution protection provided in the plan. The options have a
duration of five years.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options during the
fiscal year ended September 30, 1999 to each of the named executive officers. No
stock appreciation rights were granted to these individuals during that year.
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<PAGE>
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SH) DATE
- ------------------------------ ------- ----------- ------------ ----
<S> <C> <C> <C> <C>
Leigh Rothschild(1)........... -0- 0% -- --
CEO and Chairman
Jeffrey Sass.................. -0- 0% -- --
Chief Operating Officer,
Executive Vice President
and Secretary
Matthew Schilowitz(2)......... 190,615 32.7% $1.90 6/3/2004
Former CEO, consultant
</TABLE>
- -------------------
(1) Mr. Rothschild resigned as CEO in March 2000 but retains his position
as Chairman.
(2) Mr. Schilowitz resigned as CEO in June 1999 but continues to be a
consultant.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Option Exercises and Values for 1999
The table below sets forth the following information with respect to
option exercises during fiscal 1999 by each of the named executive officers and
the status of their options at September 30, 1999 (1) the number of shares of
common stock acquired upon exercise of options during fiscal 1999, (2) the
aggregate dollar value realized upon the exercise of such options, (3) the total
number of exercisable and non exercisable stock options held at September 30,
1999, and (4) the aggregate dollar value of in-the-money exercisable options at
September 30, 1999.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999
AND
OPTION VALUES ON SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 9/30/99 AT 9/30/99(1)
-------------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Leigh Rothschild........ -0- -0- -0- -0-
Jeffery Sass............ -0- -0- -0- -0-
Matthew Schilowitz...... 1,113,412 -0- $4,580,111 -0-
</TABLE>
- -------------------
(1) Values are calculated by subtracting the exercise price from the fair
market value of the underlying common stock. For purposes of this
table, fair market value is deemed to be $4.6875, the average of the
high and low bids for our common stock price on the OTC Bulletin Board
on September 30, 1999.
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<PAGE>
EMPLOYMENT AGREEMENTS
In March 2000, we entered into an employment agreement with John
Macatee, our President and Chief Executive Officer which was amended in April
2000. His employment agreement, as amended, provides for a term of two years,
with automatic one year renewals unless either party gives written notice. Mr.
Macatee's base salary is $400,000 in the first year and $450,000 in the second
year and he is eligible for bonuses under a bonus plan to be established by us.
In addition, he receives a monthly car allowance of $750 plus insurance and
maintenance. Upon entering into the employment agreement, Mr. Macatee was
granted options to purchase 300,000 shares of BarPoint common stock at an
exercise price of $12.75 per share. These options vest 100,000 each year for
three years beginning on the first anniversary of his employment and expire
after five years. The employment agreement also includes non-competition and
confidentiality provisions.
Also in March 2000, we entered into new employment agreements with each
of Leigh Rothschild and Jeffrey Sass. The original employment agreements were
entered into in June 1999. Our new agreement with Mr. Rothschild provides that
he shall serve as the Chairman of the Board with annual salary of $300,000 and a
$50,000 increase in one year. Our new employment agreement with Mr. Sass
provides that he shall serve as our Executive Vice President, Chief Operating
Officer and Secretary with an annual salary of $250,000 and a $50,000 increase
in one year. The new employment agreements for Messrs. Rothschild and Sass also
provide for two year terms with automatic renewals unless either party gives
written notice, participation in our bonus incentive plan, participation in our
employee benefits plans and a car allowance of $750 per month. Upon termination
other than for death or disability, each will continue to receive his base
salary for the remainder of the term and retain any stock options whether or not
vested or exercisable.
We entered into a consulting agreement with Mr. Schilowitz in June
1999, under which he receives a fee of $150,000 for the first year, $175,000 for
the second year and $200,000 for the third year. He may participate in our
employee benefit plans to the extent eligible and receives a car allowance of
$750 per month. In addition, he will receive a bonus in the amount of 60% of the
bonus granted to Mr. Rothschild, if and when Mr. Rothschild receives a bonus
pursuant to his employment agreement. Upon termination other than for death or
disability, Mr. Schilowitz will continue to receive his base fee for the
remainder of the term and retain any stock options whether or not vested or
exercisable.
STOCK OPTION PLANS
In March 1996, we adopted a plan for incentive compensation of Matthew
Schilowitz, who is currently a director and consultant and was our chairman and
president. This plan was amended in August 1996, March 1997 and June 1998. Under
this plan, Mr. Schilowitz has been granted an option to purchase up to an
aggregate of 500,000 shares of common stock at $.35 per share, which has been
adjusted to 576,748 shares of common stock at an exercise price of $.30 per
share. In conjunction with the acquisition of BarPoint all such options have
become fully vested.
In February 1996, the Board of Directors adopted the 1996 Incentive
Stock Option Plan providing for awards of up to a total of 400,000 shares of our
common stock. In January 1997, we granted five year options under the Plan
providing for 10,000 shares at a price of $2.125 per share ($.35 as amended) to
four directors and three key employees of The Harmat Organization. During the
year ended September 30, 1999, 60,000 options were exercised. On March 24, 1997,
as part of our company's 1996 Incentive Stock Option Plan adopted in February
1996, Mr. Schilowitz was granted options to purchase 300,000 shares of common
stock at an exercise price of $2.337 per share, being 110% of the fair market
value of such shares, which has been adjusted to 346,049 shares exercisable at
$.30 per share. On June 19, 1998 our company reduced the exercise price of such
options to $.35, and then later reduced to its current price at $.30 per share.
The options have a duration of five years. These options reflect adjustments
made as a result of dilution protection.
As part of the acquisition we authorized five year options to purchase
800,000 shares of our common stock at an exercise price of $1.90 per share. Such
options vest as follows: one-third after June 3, 2000; one-third after June 3,
2001 in the event we achieve revenues of $24,500,000 in the second year and one
third after June 3, 2002 in
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<PAGE>
the event we achieve revenues of $89,500,000 in the third year. To date all of
the options have been granted to certain of our employees, management and the
original BarPoint shareholders.
The 1999 Equity Incentive Plan was adopted by the Board of Directors on
September 17, 1999, and approved by our stockholder in April 2000, authorizing
us to grant five year options to purchase 1,500,000 shares of our common stock
at fair market value at date of grant, with the exception of certain officer's
to be granted common stock at 85% of the fair market value at the date of grant.
On April 4, 2000, the board of directors amended the 1999 Equity Incentive Plan,
subject to stockholder approval, authorizing us to grant options to purchase an
additional 1,500,000 shares of our common stock under the plan, for a total of
3,000,000 shares. To date, 1,729,000 options have been granted.
On April 4, 2000 the annual meeting of shareholders was held and the
shareholders approved the election of directors, adopting the 1999 Equity
Incentive Plan, ratified the granting of certain options to officers and
directors and adopting an amendment to our Certificate of Incorporation
increasing the authorized shares of common stock to 100,000,000 shares.
On April 4, 2000 the Board of Directors approved an employee benefits
program including a 401(k) Retirement Plan and an employee Stock Purchase Plan.
The 401(k) Plan provides for us to match 25% of the first six percent of
employee contributions and an additional 25% of the first six percent of
employee contributions if specified annual goals are achieved. The employee
Stock Purchase Plan provides for us to contribute up to 15% of the common stock
purchased by the employee.
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<PAGE>
CERTAIN TRANSACTIONS
THE JUNE 3, 1999 ACQUISITION
Our present business and technology was acquired from a Florida
corporation by the name of BarPoint.com, Inc. We acquired the Florida
corporation of BarPoint.com, Inc. when our company, then The Harmat
Organization, Inc., purchased all of the outstanding shares of the Florida
corporation. The transaction was accounted for as a reverse acquisition, as if
the Florida BarPoint acquired our company, due to the fact that the former
shareholders of the Florida BarPoint owned a majority of our common stock after
the transaction. Upon the closing of the acquisition, we changed our name from
The Harmat Organization, Inc. to BarPoint.com, Inc.
The consideration for the acquisition was 6,634,042 shares of our
common stock based upon a negotiated value of $1.90 per share. The purchase
price was subject to adjustment depending upon the value of specified assets at
the date of closing (June 3, 1999) and over a 45 day period following the
closing.
A group of investors headed by Matthew Schilowitz, a shareholder and
former President and director of our company, made a capital contribution to the
company of 250,000 shares of FinancialWeb.com, Inc. and certain other assets.
The then board of directors of our company declared a stock dividend of our
common stock to our shareholders of record on June 2, 1999, prior to the date
the shareholders of the acquired company received our common stock in the
transaction. The number of shares to be distributed in the dividend was
determined based upon the value of the FinancialWeb Stock over a 45 day period,
plus the agreed upon value of the other assets contributed. The payment of the
dividend was made on October 19, 1999, of an aggregate of 878,770 shares of our
common stock distributed pro rata.
As part of the transaction our company sold to Leigh Rothschild,
President of the Florida corporation of BarPoint.com, Inc., and our current
Chairman, three (3) shares of our company's Series A Preferred Stock for a
purchase price of $10.00 per share. The preferred stock shall vote on a
pari-passu basis with our common stock. The first share of preferred stock has
216,667 votes, the second share has 108,333 votes and the third share of
preferred stock has 346,766 votes. In no event will any of the preferred stock
have any votes after June 7, 2004.
As part of the acquisition we authorized five year options to purchase
800,000 shares of our common stock at an exercise price of $1.90 per share. To
date, all of the options have been granted to certain of our employees,
management and the original BarPoint shareholders. Such options vest as follows:
one-third immediately after one year from the date of the closing of the
acquisition (June 3, 1999), one-third after the second year from the date of the
closing of the acquisition, in the event our company achieves revenues of
$24,500,000 in the second year, and the balance of one-third after the third
year from the date of closing of the acquisition, in the event our company
achieves revenues of $89,500,000 in the third year.
OTHER RELATED TRANSACTIONS
On April 5, 2000, we completed a private placement of 1,477,600 shares
of our common stock to institutional investors at a purchase price of $12 per
share. Jefferies & Company, Inc. acted as placement agent and received a
commission of 5% of the gross proceeds and warrants to purchase 250,000 shares
of our common stock at an exercise price of $7.38 per share, the market price at
the time of the engagement, expiring December 7, 2004. David Wachter, who became
one of our directors following the private placement and in connection with the
transaction is a managing director of Jefferies & Company. He received 25,000 of
the warrants paid to Jefferies & Company.
On November 4, 1999, we converted 750,000 of Socket Communications,
Inc. preferred Series D holdings into 1,307,190 of Socket Communications common
shares. We have sold and may continue to sell these shares at various times to
enhance our cash position.
In August 1999, we announced a strategic partnership with Symbol
Technologies, Inc. As part of the strategic partnership Symbol Technologies
purchased 1,315,789 shares of our common stock which currently is approximately
7.7% of our outstanding common stock and granted us a royalty free license to
use Symbol's scanner patents. We agreed to sell Symbol SPT 1500 machines and
grant Symbol the right to designate one designee to our
28
<PAGE>
board of directors. Ken Jaeggi, CFO and Senior Vice President of finance of
Symbol Technology, was designated as Symbol's designee to our board of
directors. Symbol manufactures a wide range of barcode scanning hardware that is
compatible with BarPoint's service, including the SPT 1500, a handheld organizer
using the popular Palm platform with a built in laser barcode scanner.
David W. Sass, a director of our company, is the father of Jeffrey W.
Sass, our Chief Operating Officer and Executive Vice President. Mr. David Sass
is a partner with McLaughlin & Stern, LLP, counsel to our company. McLaughlin &
Stern received 76,609 shares and options to purchase at $1.90 per share, 8,498
shares in our company, representing less than 1% of our outstanding shares as of
December 31, 1999, as part of the acquisition transaction. In addition,
McLaughlin & Stern received aggregate legal fees of $69,000 during 1999, $19,000
during 1998 and $120,000 during the six months ended March 31, 2000, for
services rendered to our company.
We had a loan receivable from Mr. Schilowitz, which bears interest at
the Prime Rate charged by Chase Manhattan Bank, NA, and is collateralized by
500,000 shares of our common stock. The balance of this loan as of June 30, 1999
was $218,655. During August 1999 Mr. Schilowitz was paid a finders fee for funds
raised; this finders fee was applied to the loan receivable as payment in full
plus expenses of approximately $27,800.
In August 1999, we repaid an advance from Leigh Rothschild, president
of the company, in the amount of $110,000. The advance was unsecured and
non-interest bearing.
The 1999 Equity Incentive Plan was adopted by our board of directors on
September 17, 1999. In November 1999, options were granted to Leigh Rothschild
and Jeffrey W. Sass to purchase 300,000 and 255,000 shares of common stock
respectively, exercisable at $8.20. In addition Matthew Schilowitz was granted
180,000 shares, exercisable at $6.97 per share. In addition options to purchase
40,000 were granted to each of David W. Sass, Jay Howard Linn, Seymour Siegel
and Ken Jaeggi. Mr. Jaeggi's shares are currently owned by Symbol Technologies.
A Plan for Incentive Compensation of Matthew Schilowitz was adopted by
our board of directors and approved by our company's stockholders on March 1,
1996, amended August 3, 1996, March 24, 1997 and June 19, 1998. The plan is
currently fully vested and can be exercised for a period of 10 years expiring
April 1, 2006. Pursuant to this plan, Mr. Schilowitz has been granted an option
to purchase up to an aggregate of 500,000 shares of common stock at $.35 per
share, which has been adjusted to 576,748 shares exercisable at $.30 per share.
On January 23, 1997, our board of directors voted to grant options to
four directors , (David W. Sass, Scott Prizer, David Eiten, and Seymour Siegel)
under the terms of our company's 1996 Stock Option Plan. Each board member
abstained from voting for himself. Each individual was granted a five year
option to purchase 10,000 shares at a price of $2.125. On June 19, 1998 the
exercise price was reduced to $.35. All of such shares have been exercised.
On March 24, 1997, as part of our company's 1996 Qualified Stock Option
Plan, Mr. Schilowitz was granted an option of 300,000 shares (which was later
adjusted after a stock dividend to 370,649 shares) of our company's common stock
at an exercise price of $2.337 per share, being 110% of the fair market value of
such shares. On June 19, 1998, our board of directors voted to reduce the
exercise price of such options for Mr. Schilowitz to $.35 ($.30, as amended).
This option has a duration of five-years.
In July 1997, Matthew Schilowitz became personally indebted to us
pursuant to a certain promissory note in the original principal amount of
$225,000.00. Pursuant to an agreement between Mr. Schilowitz and us, such note
and all accrued interest thereon deemed satisfied and paid in full in exchange
for Mr. Schilowitz's waiver of commissions in the amount of $246,548.95.
During 1997 and 1998 we made loans to related parties in the amount of
$67,600 and $186,696, respectively. These loans had no stated interest rate and
are due on demand.
In April 1997 we purchased a building lot from Emerald Woods
Development Corp. (of which Matthew Schilowitz is a 50% owner) for $195,000 and
constructed and sold a house on such lot. We purchased two
29
<PAGE>
additional building lots from Emerald Woods in December 1997 for $190,000 and
simultaneously sold them to an unaffiliated third party.
In October 1997 we purchased a 2.5% Class A Limited Partnership
interest in Woodland Development Associates (of which Matt Schilowitz owns
11.1%) for a purchase price of $50,000.
During 1998 we purchased a building lot from Crossings Associates, L.P.
(of which Matthew Schilowitz is a 11.1% owner) and constructed and sold a house
on such lot.
30
<PAGE>
PRINCIPAL SHAREHOLDERS
The table below sets forth information regarding the beneficial
ownership of BarPoint's common stock as of May 15, 2000, by the following
individuals or groups:
o each person or entity who is known by BarPoint to own
beneficially more than 5.0% of BarPoint's outstanding stock;
o each of the named executive officers;
o each director of BarPoint; and
o all directors and executive officers as a group.
Percentage ownership in the following table is based on 16,982,577
shares of common stock outstanding as of May 15, 2000, 2000. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of our common stock subject to options that are
presently exercisable or exercisable within 60 days of May 15, 2000 are deemed
to be outstanding and beneficially owned by the person holding the options for
the purpose of computing the percentage of ownership of that person, but are not
treated as outstanding for the purpose of computing the percentage of any other
person.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME & ADDRESS OWNED PERCENT OF CLASS
- ------------------------------------ ---------------- ----------------
<S> <C> <C>
Leigh M. Rothschild (1)(4) 926,818 5.5%
c/o BarPoint.com
One East Broward Blvd.
Suite 410
Ft. Lauderdale, FL 33301
Irrevocable Trust No. III (2) 4,702,495 27.7%
c/o Jay Howard Linn, Trustee
1160 Kane Concourse, Suite 205
Miami, Fl. 33154
David W. Sass (3)(7) 69,817 *
c/o McLaughlin Stern, LLP
260 Madison Avenue
New York, NY 10016
Matthew C. Schilowitz (5) 1,713,412 10.1%
PO BOX 108
Remsenburg, NY 11960
Jeffrey W. Sass (6) 487,192 2.9%
c/o BarPoint.com
One East Broward Blvd.
Suite 410
Ft. Lauderdale, FL 33301
Seymour G. Siegel(8) 59,817 *
c/o Siegel Rich, Inc.
295 Madison Avenue
Suite 926
New York, NY 10017
Jay Howard Linn(9) 71,313 *
1160 Kane Concourse, Suite 205
Miami, Fl. 33154
</TABLE>
31
<PAGE>
NUMBER OF SHARES
NAME & ADDRESS OWNED PERCENT OF CLASS
- ------------------------------------ ---------------- ----------------
Kenneth Jaeggi(10) 0 *
Symbol Technologies
One Symbol Plaza
Holtsville, NY 11742-1300
Symbol Technologies(11) 1,355,789 8.0%
One Symbol Plaza
Holtsville, NY 11742-1300
John C. Macakee 0 *
c/o BarPoint
One East Broward Blvd.
Suite 410
Fort Lauderdale, FL 33301
David Wachter (12) 65,000 *
520 Madison Avenue
New York, NY 10022
All Officers and Directors as a Group (7 1,679,957 9.9%
persons) (1)(3)(4)(5)(6)(7)(8)(9)(10)
- -------------------
* Less than one percent.
(1) Does not include 156,736 shares and options to purchase 16,730 shares
at an exercise price of $1.90 per share, owned by Mr. Leigh M.
Rothschild's brother or 156,736 shares and options to purchase 16,730
shares at an exercise price of $1.90 per share owned by the Rothschild
Children Present Interest Trust, nor 4,973,328 shares and options to
purchase 548,660 shares at an exercise price of $1.90 per share, owned
by the Irrevocable Trust No. III, in all of which shares Mr. Leigh M.
Rothschild disclaims any beneficial ownership. Mr. Rothschild owns 3
shares of Series A Preferred Stock with 671,766 votes.
(2) Does not include 156,736 shares and options to purchase 16,730 shares
at an exercise price of $1.90 per share, owned by The Rothschild
Children's Present Interest Trust nor 31,213 shares and options to
purchase 3,343 shares at an exercise price of $1.90 per share, owned by
Jay Howard Linn, the trustee of both trusts, nor options to purchase
548,660 shares at an exercise price of $1.90 per share.
(3) Does not include 79,609 shares and options to purchase 8,498 shares at
an exercise price of $1.90 per share, owned by McLaughlin & Stern, LLP,
our counsel, of which firm David W. Sass is a member. David W. Sass is
the father of Jeffrey W. Sass.
(4) Does not include options to purchase 66,908 shares at an exercise price
of $1.90 per share. Includes options to purchase 300,000 shares at
$8.20 pursuant to our 1999 Equity Incentive Plan.
(5) Includes options to purchase 190,615 shares at $1.90 per share, options
to purchase 180,000 shares at $6.97 per share, options to purchase
346,049 shares pursuant to the 1996 Stock Option Plan exercisable at
$.30 per share and options to purchase 576,748 shares at $.30 per share
under his former employment agreement.
(6) Does not include options to purchase 66,650 shares at an exercise price
of $1.90 per share. Includes options to purchase 255,000 shares at
$8.20 pursuant to our company's 1999 Equity Incentive Plan.
(7) Includes options to purchase 40,000 shares pursuant to our 1999 Equity
Incentive Plan.
(8) Includes options to purchase 20,000 shares pursuant to our 1999 Equity
Incentive Plan.
(9) Includes options to purchase 40,000 shares pursuant to our 1999 Equity
Incentive Plan. Does not include shares or options (as set forth in
this table) owned by the Rothschild Children's Present Interest Trust
or the Irrevocable Trust Agreement III. Mr. Linn is a trustee of both
trusts. Does not include options to purchase 3,344 shares at an
exercise price of $1.90 per share.
(10) Does not include 1,315,789 shares owned by Symbol Technologies, which
company Mr. Jaeggi is Senior Vice President and Chief Financial Officer
and disclaims any beneficial ownership thereof.
(11) Includes options to purchase 40,000 shares pursuant to the Company's
1999 Equity Incentive Plan.
(12) Includes warrants to purchase 25,000 shares but does not include
warrants to purchase 225,000 shares granted to Jefferies & Company,
Inc. of which Mr. Wachter is a managing director. Also includes options
to purchase 40,000 shares pursuant to our 1999 Equity Incentive Plan.
32
<PAGE>
SELLING STOCKHOLDERS
The following table provides information regarding the beneficial
ownership of shares of common stock by the selling shareholders as of the date
of this prospectus and as adjusted to reflect the sale of all of their shares.
Each of the selling shareholders received their shares in a private placement
transaction with BarPoint. Seymour Siegel and David Wachter are directors of
BarPoint and Mr. Wachter is a managing director of Jefferies & Company, Inc.
In connection with those agreements, we have agreed to file and
maintain the effectiveness of the registration statement of which this
prospectus forms a part and to pay all fees and expenses incident to the
registration of this offering, including all registration and filing fees, all
fees and expenses of complying with state blue sky or securities laws, all costs
of preparation of the registration statement and fees and disbursements of our
counsel and independent accountants.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING SHARES BENEFICIALLY OWNED
------------------------------ AFTER THE OFFERING
NUMBER OF ---------------------------------
SHARES
UNDERLYING NUMBER OF
OPTIONS SHARES
NAME OF BENEFICIAL OWNER NUMBER OR WARRANTS PERCENT OFFERED NUMBER PERCENT
- ---------------------------------------- ------ ----------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Hartford Capital Appreciation Fund...... 918,100 5.4% 918,100 0 *
NZFunds Global Small Companies Trust.... 36,800 * 36,800 0 *
Hazelbrook Partners, L.P................ 25,100 * 25,100 0 *
JB Were Global Small Companies Fund..... 20,000 * 20,000 0 *
Galleon Technology Partners I, L.P...... 62,500 * 62,500 0 *
Galleon Technology Partners II, L.P..... 254,167 1.5% 254,167 0 *
Galleon Technology Offshore, Ltd........ 516,666 3.0% 516,666 0 *
Cohanzick Partners, L.P................. 15,000 * 15,000 0 *
Kevin Kimberlin Partners, LP............ 848,819 5.0% 848,819 0 *
Jeffrey Braun........................... 526,315 3.1% 526,315 0 *
Midas Investment Group, Inc............. 227,500 1.3% 227,500 0 *
MTF Inc................................. 131,579 * 131,579 0 *
Michael B. Targoff...................... 71,500 * 71,500 0 *
Alan Pinstein........................... 64,415.5 23,079 * 87,494 0 *
G. Tyler Runnels........................ 52,632 * 52,632 0 *
David Rosenberg......................... 50,000 * 50,000 0 *
Steven M. Oliveira...................... 50,000 * 50,000 0 *
Gross Foundation, Inc................... 50,000 * 50,000 0 *
Rose Pscherofer......................... 50,000 * 50,000 0 *
Gemilas Chesed Ach Tov.................. 50,000 * 50,000 0 *
Steven M. Payne......................... 47,619 * 47,619 0 *
Seymour G. Siegel....................... 39,817 25,000 * 64,817 0 *
YMSF Family Partnership LP.............. 36,000 * 36,000 0 *
Scott Prizer............................ 35,080 * 35,080 0 *
Murray Sternfeld........................ 35,000 * 35,000 0 *
Lee M. Rough............................ 32,500 * 32,500 0 *
Robert Denton........................... 32,500 * 32,500 0 *
Daniel Hewins........................... 32,207.8 11,540 * 32,207 0 *
Boaz Harel.............................. 27,000 * 27,000 0 *
Raymond J.H. McKinstry.................. 25,000 * 25,000 0 *
Joshua Teitelbaum....................... 22,000 * 22,000 0 *
Blake William Johnson................... 21,472.2 8,181 * 29,653 0 *
Eugene Dworkis.......................... 21,333 8,333 * 29,666 0 *
Congregation Sharei Chesed.............. 20,000 * 20,000 0 *
HT Partners............................. 18,000 * 18,000 0 *
William P. Dioguardi.................... 17,763 * 17,763 0 *
Magsi Partners.......................... 15,000 * 15,000 0 *
Michael A. Nader........................ 12,000 * 12,000 0 *
Howard Commander........................ 12,000 * 12,000 0 *
Michael Rosenblum....................... 12,000 * 12,000 *
Shuvu Bonim............................. 11,050 * 11,050 0 *
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING SHARES BENEFICIALLY OWNED
------------------------------ AFTER THE OFFERING
NUMBER OF ---------------------------------
SHARES
UNDERLYING NUMBER OF
OPTIONS SHARES
NAME OF BENEFICIAL OWNER NUMBER OR WARRANTS PERCENT OFFERED NUMBER PERCENT
- ---------------------------------------- ------ ----------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Alfred Schonberger...................... 11,000 * 11,000 0 *
S.O.E. Trust............................ 11,000 * 11,000 0 *
Frank K. Kriz Jr........................ 10,476 * 10,476 0 *
Norman McKinstry........................ 10,000 * 10,000 0 *
Abraham L. Slomovics.................... 10,000 * 10,000 0 *
Abe New................................. 10,000 * 10,000 0 *
BBEG, LLP............................... 10,000 * 10,000 0 *
Madeline Broitman....................... 10,000 * 10,000 0 *
Michael Spitzer......................... 10,000 * 10,000 0 *
Dr. Gerald Cochran...................... 10,000 * 10,000 0 *
David Dworkis........................... 8,334 8,334 * 16,668 0 *
Steven Cooper........................... 7,950 * 7,950 0 *
Ferdinand Landau........................ 5,000 * 5,000 0 *
Norman Peltz............................ 5,000 * 5,000 0 *
Andrew Oh............................... 4,637 * 4,637 0 *
Martin L. Pinstein...................... 2,967.9 * 2,967 0 *
Michele R. Pinstein..................... 2,967.9 * 2,967.9 0 *
Phil Pinstein........................... 2,225.85 * 2,225.85 0 *
Alan K. Jones........................... 1,236.6 10,000 * 11,236 0 *
Radu Duta............................... 618.3 7,200 * 7,818 0 *
Mark T. Satisky......................... 1,483.9 * 1,483.9 *
Loren J. Donelson....................... 123.7 * 123 0 *
Gregory A. Haas......................... 1,484 * 1,484 0 *
Jefferies & Company, Inc................ 225,000 1.3% 225,000 0 *
David Wachter........................... 25,000 * 25,000 0 *
</TABLE>
- -------------------------
* Represents ownership of less than 1%.
34
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 105,000,000 shares of capital
stock, 100,000,000 of which are common stock, $.001 par value, and 5,000,000
shares of which are preferred stock, $.001 par value. We currently have
16,982,577 shares of common stock issued and outstanding. We have authorized
three shares of Series A preferred stock, which are all issued and outstanding.
COMMON STOCK
VOTING RIGHTS. Each share of common stock entitles its holder to one
vote on all matters submitted to a vote of the shareholders. The holders of
common stock do not have cumulative voting rights or preemptive rights. In the
event of our liquidation, dissolution or winding up, holders of common stock
have the right to a ratable portion of the assets remaining after payment of
liabilities and the liquidation preference of the holders of any preferred
stock. All of the outstanding shares of common stock are duly authorized,
validly issued, fully paid and non-assessable.
DIVIDENDS. Holders of shares of common stock are entitled to dividends
when and as our board of directors declares dividends from funds legally
available for dividends.
PREFERRED STOCK
In June 1999, we designated three shares of preferred Stock as Series A
Preferred Stock. Each share was designated as a separate class of Series A
Preferred Stock. The Class I share of Series A Preferred Stock is entitled to
vote pari passu with the common stock having one vote for each share of common
stock issued upon exercise of outstanding Class A Warrants. All Class A Warrants
have been exercised or canceled and 216,667 shares of common stock were issued
upon exercise of these warrants.
The Class II share of Series A Preferred Stock is entitled to vote pari
passu with the common stock having one vote for each share of common stock
issued upon exercise of outstanding Class B Warrants. All Class B Warrants have
been exercised or canceled and 108,333 shares of common stock were issued upon
exercise of these warrants.
The Class III share of Series A Preferred Stock is entitled to vote
pari passu with the common stock having 346,766 votes.
The voting rights of all shares of Series A Preferred Stock shall end
five years from the date of issuance. All three shares of Series A Preferred
Stock were issued on June 7, 1999.
The shares of Series A Preferred Stock are not entitled to any
dividends and are entitled to a liquidation preference upon the liquidation,
dissolution or winding up of our business equal to the par value of each share.
ANTITAKEOVER EFFECTS OF DELAWARE LAW
DELAWARE ANTITAKEOVER LAW. BarPoint is subject to Section 203 of the
Delaware General Corporation Law, an antitakeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless the
"business combination" or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a
"business combination" includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns or within three years prior to the determination of
interested stockholder status, did own, 15.0% or more of a corporation's voting
stock. The existence of this provision may have an antitakeover effect with
respect to transactions not approved in advance by the board of directors,
including discouraging attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.
35
<PAGE>
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is American Stock
Transfer & Trust Company.
36
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this prospectus, we had issued and outstanding
16,982,577 shares of our common stock and approximately 4,252,512 shares of
common stock are issuable upon exercise of outstanding options and warrants. The
possibility that substantial amounts of our common stock may be issued and/or
freely resold in the public market may adversely affect prevailing market prices
for our common stock and could impair our ability to raise capital through the
sale of our equity securities.
Of the 16,982,577 shares of common stock issued and outstanding, we
believe that approximately 3,541,270 of the shares are freely tradable without
restriction or further registration under the Securities Act, excluding any
shares held or purchased by one of our "affiliates" (in general, a person who
has a control relationship with us). We believe the remaining approximately
13,441,307 shares of our common stock are "restricted securities", as that term
is defined under Rule 144 promulgated under the Securities Act, and may be
resold thereafter in compliance with Rule 144. We believe that such remaining
shares will become tradable under Rule 144 as follows:
June 3, 2000 820,391 shares
June 14, 2000 541,318 shares
August 4, 2000 2,116,446 shares
September 10, 2000 526,315 shares
April 5, 2001 1,848,333 shares
The 1,848,333 shares sold in the private placement in April 2000 and
the warrants to purchase 250,000 shares issued to Jefferies & Company, Inc. and
its affiliates in connection with the private placement are being registered by
this registration statement in accordance with our agreements. An additional
4,499,868 shares have piggyback registration rights. The purchasers of these
shares may demand that we file one registration statement at any time after one
year from the date of the purchase of these shares from us. In addition, Symbol
Technologies, which owns 1,315,789 of the shares with piggyback registration
rights and demand registration rights, may demand a second registration
statement be filed no sooner than six months following the first demand
registration statement if it then holds more than five percent of the
outstanding shares of our common stock, provided that the requested registration
statement offers shares held by Symbol Technologies representing at least 2% of
the outstanding shares of our common stock. Many of the shares that have
piggyback registration rights are included in this registration statement.
Approximately 7,709,074 shares of our outstanding common stock,
including those shares owned by Symbol Technologies, are subject to lock-up
agreements in connection with this offering and will be eligible for sale at the
later of (x) October 2, 2000 and (y) the date the registration statement of
which this prospectus is a part is declared effective.
In general, under Rule 144, a person (or persons whose shares are
aggregated) including an affiliate, who has beneficially owned such shares for
one year, may sell in the open market within any three-month period a number of
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of our common stock or (ii) the average weekly trading volume in our common
stock on the OTC Bulletin Board during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain limitations on the manner
of sale, notice requirements and availability of current public information
about us. A person (or persons whose shares are aggregated) who is deemed not to
have been an "affiliate" of ours at any time during the 90 days preceding a sale
by that person and who has beneficially owned his shares for at least two years,
will be able to sell his shares in the public market under Rule 144(k) without
regard to the volume limitations, manner of sale provisions, notice requirements
or availability of current information referred to above. Restricted shares
properly sold in reliance upon Rule 144 are thereafter freely tradable without
restrictions or registration under the Securities Act, unless thereafter held by
an "affiliate" of ours.
37
<PAGE>
PLAN OF DISTRIBUTION
GENERAL
TRANSACTIONS. The selling stockholders may offer and sell the common
stock in one or more of the following transactions:
o on the OTC Bulletin Board,
o in negotiated transactions or
o in a combination of any of these transactions.
PRICES. The selling stockholders may sell their shares of common stock
at any of the following prices:
o fixed prices which may be changed,
o market prices prevailing at the time of sale,
o prices related to prevailing market prices or
o negotiated prices.
DIRECT SALES; AGENTS, DEALERS AND UNDERWRITERS. The selling
stockholders may effect transactions by selling the shares of common stock in
any of the following ways:
o directly to purchasers or
o to or through agents, dealers or underwriters designated from
time to time.
Agents, dealers or underwriters may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom they act as agent or to whom they sell
as principals, or both. The selling stockholders and any agents, dealers or
underwriters that act in connection with the sale of shares might be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discount or commission received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts or commissions
under the Securities Act.
SUPPLEMENTS. To the extent required, we will set forth in a supplement
to this prospectus filed with the SEC the number of shares to be sold, the
purchase price and public offering price, the name or names of any agent, dealer
or underwriter, and any applicable commissions or discounts with respect to a
particular offering.
STATE SECURITIES LAW. Under the securities laws of some states, the
selling shareholders may only sell the shares in those states through registered
or licensed brokers or dealers. In addition, in some states the selling
shareholders may not sell the shares unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is satisfied.
EXPENSES; INDEMNIFICATION. We will not receive any of the proceeds from
the sale of the common stock sold by the selling shareholders hereunder and will
bear all expenses related to the registration of this offering but will not pay
for any underwriting commissions, fees or discounts, if any. We will indemnify
the selling shareholders against some civil liabilities, including some
liabilities which may arise under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be
passed upon for BarPoint by Greenberg Traurig, P.A., Miami, Florida.
38
<PAGE>
EXPERTS
Marks Paneth & Shron LLP (f/k/a Marks Shron & Company), independent
certified public accountants, have audited our consolidated financial statements
at September 30, 1999, as set forth in their report. We have included our
financial statements in this prospectus and elsewhere in the registration
statement in reliance on Marks Shron & Company LLP's report, given on their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a registration statement on Form S-1 under the Securities Act with
respect to the common stock offered by this prospectus. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules to the registration statement. For further information
with respect to BarPoint and the common stock offered by this prospectus, refer
to the registration statement and the exhibits and schedules filed as a part of
the registration statement. Statements contained in this prospectus concerning
the contents of any contract or any other document referred to are not
necessarily complete; refer in each instance to the copy of the contract or
document filed as an exhibit to the registration statement. Each statement of
the type referred to in the preceding sentence is qualified in all respects by
reference to the exhibit. You may inspect a copy of the registration statement
without charge at the Securities and Exchange Commission's principal office in
Washington, D.C. and obtain copies of all or any part thereof upon payment of a
fee from the Public Reference Room of the Securities and Exchange Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, or at the Securities and
Exchange Commission's regional offices in New York, located at 7 World Trade
Center, Suite 1300, New York, New York 10048, or in Chicago, located at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information
on the operation of the Public Reference Room by calling the Securities and
Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
maintains an Internet site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Securities and Exchange Commission. The Securities and Exchange
Commission's World Wide Web address is www.sec.gov.
We intend to furnish holders of our common stock with annual reports
containing, among other information, audited financial statements certified by
an independent public accounting firm and quarterly reports containing unaudited
condensed financial information for the first three quarters of each fiscal
year. We do intend to furnish other reports as we may determine or as may be
required by law.
39
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets as of September 30, 1999 and March 31, 2000
(Unaudited) F-3
Consolidated Statements of Operations for the year ended September 30,
1999, the six months ended March 31, 2000 (Unaudited) and the
period from inception to March 31, 2000 (Unaudited) F-4
Consolidated Statements of Cash Flows for the year ended September 30,
1999, and the six months ended March 31, 2000 (Unaudited) and the
period from inception to March 31, 2000 (Unaudited) F-5
Consolidated Statements of Stockholders' Equity for the year ended
September 30, 1999, the six months ended March 31, 2000 (Unaudited)
and the period from inception to March 31, 2000 (Unaudited) F-7
Notes to Consolidated Financial Statements F-9
F-1
<PAGE>
MARKS SHRON & COMPANY LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of BarPoint.com, Inc.
We have audited the accompanying consolidated balance sheet of
BarPoint.com, Inc. and subsidiaries (a development stage company) as of
September 30, 1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of BarPoint.com, Inc. and subsidiaries as of September 30,
1999, and the results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
Great Neck, New York
December 15, 1999
F-2
<PAGE>
BARPOINT.COM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, MARCH 31,
1999 2000
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ........................................ $ 5,973,956 $ 27,122,552
Marketable securities ............................................ 3,223,123 7,181,221
Accounts receivable .............................................. -- 57,908
Inventory ........................................................ -- 46,076
Mortgage receivable .............................................. 210,436 60,000
Other assets ..................................................... 101,886 158,045
------------ ------------
Total Current Assets ............................................. 9,509,401 34,625,802
------------ ------------
Property-land .................................................... 149,750
Equipment - net of accumulated depreciation of
$2,207 and $21,611 ............................................ 22,602 205,686
------------ ------------
172,352 205,686
------------ ------------
OTHER ASSETS
Escrow deposit ................................................... -- 190,000
Goodwill-net ..................................................... -- 490,285
Software development - net ....................................... 259,398 232,066
------------ ------------
259,398 912,351
------------ ------------
TOTAL ASSETS ..................................................... $ 9,941,151 $ 35,743,839
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses ............................ $ 337,637 $ 1,059,029
Income taxes payable ............................................. -- 5,934,000
------------ ------------
Total Current Liabilities ........................................ 337,637 6,993,029
------------ ------------
OTHER LIABILITIES
Deferred taxes ................................................... 215,899 2,246,894
------------ ------------
215,899 2,246,894
------------ ------------
TOTAL LIABILITIES ................................................ 553,536 9,239,923
============ ============
STOCKHOLDERS' EQUITY
Preferred stock .................................................. -- --
Common stock ..................................................... 13,846 15,430
Paid in capital .................................................. 11,578,029 12,953,728
Subscription receivable .......................................... (750,000)
Accumulated Earnings- In Development Stage ....................... (438,595) 11,826,474
Accumulated Comprehensive Income ................................. (1,015,665) 1,708,284
------------ ------------
Total Stockholders' Equity ....................................... 9,387,615 26,503,916
------------ ------------
Total Liabilities and Stockholders' Equity ....................... $ 9,941,151 $ 35,743,839
============ ============
</TABLE>
F-3
<PAGE>
BARPOINT.COM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR FROM INCEPTION
ENDED SIX MONTHS OCTOBER 1998
SEPTEMBER 30, ENDED MARCH 31, THROUGH MARCH 31,
1999 2000 2000
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues:
Total revenues ............................. $ -- $ 220,290 $ 220,290
Cost of Sales .............................. -- 15,925 15,925
------------ ------------ ------------
Gross Profit ............................... -- 204,365 204,365
Operating Expenses:
Selling, General and ....................... 832,270 4,897,532 5,729,802
Administration
Research and Development ................... 77,912 609,147 687,059
------------ ------------ ------------
Total Operating Expenses ................... 910,182 5,506,679 6,416,861
------------ ------------ ------------
Loss from Operations ....................... (910,182) (5,302,314) (6,212,496)
------------ ------------ ------------
Other Income:
Interest Income ............................ 63,607 286,700 350,307
Gain on Sale of Marketable
Securities and Other Assets ............. -- 23,422,663 23,422,663
------------ ------------ ------------
Total Other Income ......................... 63,607 23,709,363 23,772,970
Income before Income Tax ................... (846,575) 18,407,049 17,560,474
Income Tax Benefit (Expense) ............... 408,000 (6,155,000) (5,734,000)
------------ ------------ ------------
Net Income ................................. $ (438,595) $ 12,252,049 $ 11,826,474
============ ============ ============
Net Income per Common Share--
Basic .................................. $ (0.05) $ 0.81 $ 0.99
============ ============ ============
Diluted ................................ $ 0.71 $ 0.88
============ ============
Weighted Average Common Shares
Shares Outstanding--Basic ............... 8,221,278 15,144,561 11,854,828
============ ============ ============
Weighted Average Common
Shares ..................................
Shares Outstanding--
Diluted ................................. 17,119,446 13,371,160
============ ============
</TABLE>
F-4
<PAGE>
BARPOINT.COM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR FROM INCEPTION
ENDED SIX MONTHS OCTOBER 1998
SEPTEMBER 30, ENDED MARCH 31, THROUGH MARCH 31,
1999 2000 2000
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ (438,595) $ 12,252,049 $ 11,826,474
Adjustments to reconcile net income
to net cash (used for) operating
activities:
Tax asset (408,000)
Gain on sale of marketable securities 0 (23,422,663) (23,422,663)
Depreciation and Amortization 15,678 54,886 70,564
Non-Cash administration & development 20,500 580,000 600,500
expenses
Non-Cash acquisition costs 9,997 9,997
------------ ------------ ------------
(810,417) (10,525,731) (10,915,128)
Increase (decrease) in cash flows due
to changes
in operating assets and liabilities:
Change in liabilities and tax asset 167,582 6,794,108 6,540,670
Change in assets (36,459) (131,090) (167,549)
------------ ------------ ------------
Total Adjustments 131,123 6,663,018 6,373,121
------------ ------------ ------------
Net Cash (Used) by Operating
Activities (679,294) (3,862,713) (4,542,007)
------------ ------------ ------------
INVESTING ACTIVITIES:
Cash received on acquisition 628,227 628,227
Acquisition costs (189,000) (189,000) (189,000)
Acquisition of Synergy Solutions, 0 (100,000) (100,000)
Inc.*
Sale of land held for sale 149,750 149,750
Sales of marketable securities 24,683,232 24,683,232
Software development costs (53,019) (53,019)
Purchase of marketable securities (671,704) (671,704)
Equipment (24,659) (188,970) (213,629)
------------ ------------ ------------
Net Cash Provided by Investing
Activities 361,549 23,872,308 24,233,857
------------ ------------ ------------
FINANCING ACTIVITIES:
Payment on subscription receivable 750,000 750,000
Private placements - net of 6,273,170 6,273,170
commissions
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR FROM INCEPTION
ENDED SIX MONTHS OCTOBER 1998
SEPTEMBER 30, ENDED MARCH 31, THROUGH MARCH 31,
1999 2000 2000
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Exercise of stock options and
warrants 17,500 389,002 407,532
------------ ------------ ------------
Net Cash Provided by Financing
Activities 6,290,670 1,139,002 7,430,702
------------ ------------ ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 5,972,925 21,148,597 27,122,552
CASH AND CASH EQUIVALENTS - beginning
of period -- 5,973,955 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - end of
period 5,973,955 $27,122,552 $27,122,552
============ ============ ============
SUPPLEMENTAL
DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Taxes $ 591 $ -- $ 591
============ ============ ============
Interest $ -- $ -- $ --
============ ============ ============
SUPPLEMENTAL DISCLOSURE
OF NONCASH
TRANSACTIONS:
Software Development Costs for
Services Rendered by Certain
Stockholders $ 220,000 $ -- $ 220,000
============ ============ ============
Non-Cash Administrative,
Marketing & Development
Expenses $ 20,500 $ 580,000 $ 600,500
============ ============ ============
Finders fee applied to stockholders
loan receivable $ 218,655 $ -- $ 218,655
============ ============ ============
Common stock dividend of
878,770 shares $ 879 $ 879
============ ============
*Acquisition of Synergy Solutions,
Inc.
75,000 common shares $ 408,207 $ 408,207
============ ============
Acquisition of BarPoint- Note A
Cashless exercise of warrants $ 195,372 $ 195,372
============ ============
</TABLE>
F-6
<PAGE>
BARPOINT.COM INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION TO MARCH 31, 2000
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------
# OF SHARES
OF PREFERRED ADDITIONAL PAID-
STOCK SHARES PAR VALUE IN CAPITAL
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Balance-September 30, 1998 ............... 0 2,612,500 $ 2,612 $ 4,253,604
Contribution of 250,000 shares of
Financial Web stock and 60,000
warrants of Socket Communications,
Inc ................................... 108,956
Stock Options, Net Loss and Unrealized
Gain on Marketable Securities (Net of
Income Taxes) October 1,1998 -
June 3, 1999 .......................... 775,000
Executive Compensation to Board of
Directors ............................. 50,000 50 24,950
---------- ---------- ------------ ------------
Balance June 3, 1999 ..................... 0 2,662,500 2,662 5,162,510
Acquisition of The Harmat Organization ... (447,842)
BarPoint.com, Inc. Equity at June 3, 1999 100 100 241,400
Recapitalization of BarPoint.com, Inc. ... 6,633,942 6,534 (6,534)
Acquisition Costs ........................ (189,000)
Private Placements ....................... 4,499,868 4500 6,800,015
Exercise of Stock Options ................ 50,000 50 17,450
Issuance of Preferred Stock .............. 3 -- 30
Net Loss and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................
---------- ---------- ------------ ------------
Balance - September 30, 1999 ............. 3 13,846,410 $ 13,846 $ 11,578,029
---------- ---------- ------------ ------------
Common Stock Dividend to Shareholders
of record June 2, 1999 ................ 878,770 879 (879)
Acquisition of Synergy Solutions, Inc. ... 75,000 75 408,207
Exercise of Stock Options ................ 11,600 12 3,468
Cancellation of all Class A Warrants and
Class B Warrants, plus $50,000 ........ 325,000 325 (50,325)
Cashless exercise of Warrants ............ 195,372 195 (195)
Exercise of Warrants ..................... 17,391 18 78,362
<CAPTION>
NOTE
RECEIVABLE
FROM ACCUMULATED COMPREHENSIVE
STOCKHOLDER (DEFICIT) INCOME TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance-September 30, 1998 ............... (1,666,869) $ 0 $ 2,589,347
Contribution of 250,000 shares of
Financial Web stock and 60,000
warrants of Socket Communications,
Inc ................................... 108,956
Stock Options, Net Loss and Unrealized
Gain on Marketable Securities (Net of
Income Taxes) October 1,1998 -
June 3, 1999 .......................... (1,161,558) 2,380,585 1,994,027
Executive Compensation to Board of
Directors ............................. 25,000
------------ ------------ ------------ ------------
Balance June 3, 1999 ..................... (2,828,427) 2,380,585 4,717,330
Acquisition of The Harmat Organization ... 2,828,427 (2,380,585)
BarPoint.com, Inc. Equity at June 3, 1999 (89,602) 151,898
Recapitalization of BarPoint.com, Inc. ... 0
Acquisition Costs ........................ (189,000)
Private Placements ....................... (750,000) 6,054,515
Exercise of Stock Options ................ 17,500
Issuance of Preferred Stock .............. 30
Net Loss and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................ (348,993) (1,015,665) (1,364,658)
------------ ------------ ------------ ------------
Balance - September 30, 1999 ............. ($ 750,000) ($ 438,595) ($ 1,015,665) $ 9,387,615
------------ ------------ ------------ ------------
Common Stock Dividend to Shareholders
of record June 2, 1999 ................ --
Acquisition of Synergy Solutions, Inc. ... 408,283
Exercise of Stock Options ................ 3,480
Cancellation of all Class A Warrants and
Class B Warrants, plus $50,000 ........ (50,000)
Cashless exercise of Warrants ............ --
Exercise of Warrants ..................... 78,380
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------
# OF SHARES
OF PREFERRED ADDITIONAL PAID-
STOCK SHARES PAR VALUE IN CAPITAL
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net Loss and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................
Reclassification adjustment of Unrealized
Gain on Marketable Securities Sold ....
---------- ---------- ------------ ------------
Balance - December 31, 1999 (Unaudited)... 3 15,349,543 15,350 12,016,668
---------- ---------- ------------ ------------
Payment of subscription note receivable ..
Exercise of Stock Options ................ 586 1 1,113
Exercise of Warrants ..................... 79,948 79 355,947
Issues of stock options below market ..... 220,000
Issues of warrants to a vendor ........... 360,000
Net Income and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................
Reclassification adjustment of Unrealized
Gain on Marketable Securities Sold ....
---------- ---------- ------------ ------------
Balance - March 31, 2000 (Unaudited)...... 3 15,430,077 15,430 12,953,728
---------- ---------- ------------ ------------
<CAPTION>
NOTE
RECEIVABLE
FROM ACCUMULATED COMPREHENSIVE
STOCKHOLDER (DEFICIT) INCOME TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Loss and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................ (874,881) 4,205,918 3,331,037
Reclassification adjustment of Unrealized
Gain on Marketable Securities Sold .... (39,089) (39,089)
------------ ------------ ------------ ------------
Balance - December 31, 1999 (Unaudited)... (750,000) (1,276,456) 3,151,164 13,156,726
------------ ------------ ------------ ------------
Payment of subscription note receivable .. 750,000 750,000
Exercise of Stock Options ................ 1,114
Exercise of Warrants ..................... 356,026
Issues of stock options below market ..... 220,000
Issues of warrants to a vendor ........... 360,000
Net Income and Unrealized Gain on
Marketable Securities (Net of Income
Taxes) ................................ 13,102,930 3,165,274 16,268,204
Reclassification adjustment of Unrealized
Gain on Marketable Securities Sold .... (4,608,154) (4,608,154)
------------ ------------ ------------ ------------
Balance - March 31, 2000 (Unaudited)...... -- 11,826,474 1,708,284 26,503,916
------------ ------------ ------------ ------------
</TABLE>
F-8
<PAGE>
BarPoint.Com, Inc.
Notes to Consolidated Financial Statements
September 30, 1999 and March 31, 2000 (Unaudited)
NOTE A PRINCIPLES OF CONSOLIDATION AND BUSINESS
The company was incorporated in Delaware on December 19, 1995 under the
name The Harmat Organization, Inc. ("Harmat") and began operations as a
construction, architectural landscape design and real estate development firm.
Beginning in 1997, Harmat believed that it was in the best interest of the
shareholders of the Company to change its direction away from the real estate
business. The real estate market in which Harmat concentrated changed, and
management felt that there were fewer prospects for significant profit in the
future. The Company began making strategic investments in technologically
oriented companies.
On June 3, 1999, Harmat acquired all issued and outstanding shares of
BarPoint.com, Inc. ("BarPoint"), as more fully described in Note F below. The
transaction was accounted for as a reverse acquisition, as if BarPoint acquired
Harmat, due to the fact that the former shareholders of BarPoint owned a
majority of Harmat common stock after the transaction. The consolidated
financial statements presented herein for the periods prior to the effective
date of the acquisition only include the accounts of BarPoint since its
inception. The consolidated statement of stockholders' equity has been converted
from BarPoint's capital structure to Harmat's capital structure to reflect the
exchange of shares pursuant to the Agreement. The consolidated group of
companies are collectively referred to herein as the "Company". Comparative
financial statements are not included as a result of this reverse acquisition.
The financial statements reflect the financial position and results of
operations of BarPoint.com, Inc. and its subsidiaries on a consolidated basis.
The Company's policy is to consolidate all majority - owned subsidiaries. All
inter-company amounts have been eliminated in consolidation and necessary
adjustments have been made to the interim financial statements.
The Company has concluded private placements of securities pursuant to
which it issued an aggregate of 4,499,868 shares of common stock and received
net proceeds of approximately $6,054,000 and a subscription note receivable of
$750,000. (See Note D)
The Company "soft launched" its preview website in December 1999 and
intends to launch the more complete version of its web site and service in early
2000. The web site, www.BarPoint.com, will feature a patent-pending search
engine and software technology that allows consumers to use the standard UPC
barcode that appears on approximately 100 million retail items to search for
product specific information from the internet. The website will offer consumers
the opportunity to search for product specific information and shop for products
by entering any UPC barcode number.
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash
equivalents.
Concentrations of Credit Risk Financial instruments which potentially
subject the Company to concentrations of credit risk are cash and cash
equivalents. The Company places its cash and cash equivalents with high credit
quality financial institutions. The amount of deposit in any one institution
that exceeds federally insured limits is subject to credit risk. Such amount was
approximately $5,814,000 at September 30, 1999.
MARKETABLE SECURITIES. The Company accounts for its investments
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". SFAS No. 115
addresses the accounting and reporting for investments in equity securities that
have readily determinable fair values and for all investments in debt
securities. Those investments are to be classified into the following three
categories: held-to-maturity debt securities; trade securities; and
available-for-sale securities.
F-9
<PAGE>
Management determines the appropriate classification of its investments
in debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. At September 30, 1999 investments were
classified as available for sale securities. Unrealized gains and losses for
available-for-sale securities are excluded from earnings and reported as a net
amount as a separate component of stockholders' equity as comprehensive income
until realized. The Company primarily uses the specific identification method
for gains and losses on the sales of marketable securities (see Note C).
Property and Equipment Property and equipment are stated at cost.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets ranging from five to ten years for furniture,
fixtures and office equipment and three to five years for computer equipment.
EARNINGS (LOSS) PER SHARE. The Company has adopted Statement of
Financial Accounting Standards No.128, Earnings Per Share, (SFAS 128) requires
the presentation of two earnings per share (EPS) amounts, basic and diluted.
Basic EPS is calculated on the weighted average number of shares outstanding
and diluted EPS includes the effect of outstanding options and warrants.
The reconciliation of the basic and diluted earning per common share is
as follows:
<TABLE>
<CAPTION>
FOR THE YEAR SIX MONTHS FROM INCEPTION
ENDED ENDED OCTOBER 1998 TO
SEPTEMBER 30, MARCH 31, MARCH 31,
1999 2000 2000
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average common shares outstanding... 8,221,278 15,144,561 11,854,828
Diluted effect of:
Employee stock options..................... -- 1,892,422 1,488,265
Warrants................................... -- 82,463 28,047
---------- ---------- ----------
Weighted average common shares
Outstanding, assuming dilution............. 8,221,278 17,119,446 13,371,160
</TABLE>
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
GOODWILL. The goodwill related to the acquisition of Synergy Solutions,
Inc. is being amortized over 15 years on a straight line basis.
SOFTWARE DEVELOPMENT COSTS. Costs relative to the initial software
development related to the Company's underlying technology are capitalized and
carried at book value and include $220,000 for services rendered by certain
stockholders. Such costs are being amortized over 5 years, subject to periodic
evaluation for impairment. Costs to maintain such technology going forward, and
ongoing web development costs will be expensed.
INCOME TAXES. The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases
of assets and liabilities using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to be recovered.
ADVERTISING. The Company recognizes advertising expense in accordance
with Statement of Position ("SOP") 93-7 "Reporting on Advertising Costs". As
such, the Company expenses the costs of advertising when incurred. For the year
ended September 30, 1999 the Company incurred advertising expense of $90,800.
For the six months ended March 31, 2000 the Company incurred advertising expense
of $923,252. These amounts are included in selling, general and administration
expenses.
STOCK-BASED COMPENSATION. The Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB
No. 25"), and related interpretations, in accounting for its employee stock
options rather than the alternative fair value accounting allowed by SFAS No.
123, Accounting for Stock-Based Compensation. APB No. 25 provides that the
compensation expense relative to the Company's employee stock options is
measured based on the intrinsic value of the stock option. SFAS No. 123 requires
companies that continue to follow APB No. 25 to provide a pro forma disclosure
of the impact of applying the fair value method of SFAS No. 123
COMPREHENSIVE INCOME (LOSS). The Company adopted SFAS No. 130,
Reporting Comprehensive Income, which establishes standards for the reporting
and display of comprehensive income and its components in the financial
statements. The only item of comprehensive income (loss) that the Company
currently reports is unrealized gains (losses) on marketable securities.
NOTE C MARKETABLE SECURITIES
Marketable securities consist of investments in equity securities at
discounted market value, since they are unregistered or constrained securities.
The unrealized gain, net of deferred federal income tax, at acquisition date was
$2,380,585. For the period ended September 30, 1999 the unrealized gain, net of
deferred federal income tax, was $1,364,920. For the period ended March 31, 2000
the unrealized gain, net of deferred federal income tax, was $4,088,869.
F-10
<PAGE>
NOTE D SUBSCRIPTION AND LOANS RECEIVABLE
A subscription note receivable in the amount of $750,000 bears interest
at 8% per annum and maturing on February 12, 2000. The note was secured by
394,737 shares of common stock of the Company. The subscription note receivable
for $750,000 plus accrued interest of $35,178 was paid in full on February 11,
2000.
Other Harmat loaned $175,000 to Axxess, Inc. now known as Financial
Web.Com, Inc., an unaffiliated third party. The loan is evidenced by a $175,000
Promissory Note dated August 15, 1997 which bears interest at 2% above the prime
rate and unpaid interest and principal were due August 15, 1998. Axxess, Inc.
pledged 600,000 shares of its common stock as collateral and authorized warrants
to purchase its common stock for a price of $.25 per share (as amended) expiring
August 14, 2000. On of December 15, 1998 Harmat notified Axxess, Inc. that it
was exercising its warrants to purchase 175,000 shares of Axxess, Inc. for an
aggregate subscription price of $43,750. The subscription price was applied
against the loan balance. A new promissory note was issued for $150,436 (the
remaining principal balance plus accrued interest). The new note bears interest
at 9.75% per annum and matures December 15, 1999. The Company granted an
extension on this loan to February 15, 2000. The promissory note for $150,436
plus accrued interest of $16,012 was paid in full on January 21, 2000.
In connection with the sale of property in Quogue, New York, the buyer
mortgaged $60,000 of the purchase price to Harmat. The mortgage is payable
monthly (interest only) at an interest rate of 12% per annum and matures May 7,
2000. As of May 15, 2000, the mortgage receivable note had not been paid.
In March 2000 an escrow deposit of $190,000 was made in connection with
the PriceBee merger and acquisition.
NOTE E FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective December 31, 1995, the Company adopted SFAS No. 107,
"Disclosure about Fair Value Financial Instruments", which requires disclosing
fair value to the extent practicable for financial instruments which are
recognized or unrecognized in the balance sheet. The fair value of the financial
instruments disclosed herein is not necessarily representative of the amount
that could be realized or settled, nor does the fair value amount consider the
tax consequences of realization or settlement. The Company's financial
instruments include cash and cash equivalents, payables and short-term loans. It
is estimated that the carrying amount approximated fair value because of the
near term maturities of such obligations.
NOTE F ACQUISITION OF ASSETS OF BARPOINT.COM, INC.
On June 3, 1999, Harmat acquired all of the issued and outstanding
shares of BarPoint.com, Inc. (Fla.) (a Company which commenced business in
October, 1998) pursuant to an Acquisition Agreement dated May 20,1999. The
transaction was accounted for as a reverse acquisition, as if BarPoint acquired
Harmat, due to the fact that the former shareholders of BarPoint owned a
majority of Harmat common stock after the transaction.
The consideration for the acquisition was 6,634,042 shares of the
Company's common stock based upon a negotiated value of $1.90 per share. The
purchase price was subject to adjustment depending upon the value of certain of
the Company's assets at the date of closing and over a 45-day period following
the closing.
In connection with the acquisition, a shareholder of Harmat made a
capital contribution to the Company of 250,000 shares of FinancialWeb.com, Inc.
(the "Fweb Stock") and certain other assets. The Company declared a stock
dividend to the shareholders of record as of June 2, 1999 calculated subsequent
to the 45-day period following closing and payable to shareholders on October
20, 1999, excluding the shareholders of BarPoint.com, Inc. The dividend declared
was 878,770 shares of common stock.
As part of the acquisition the Company authorized five (5) year options
to purchase 800,000 shares of the Company's common stock at an exercise price of
$1.90 per share. BarPoint's management is authorized to determine the
distribution of such options. Such options vest as follows: one-third (1/3)
immediately after one year from the date of Closing, one-third (1/3) after the
second year from the date of Closing, in the event BarPoint achieves 50% of its
revenue projection of $49,000,000 in such second year, and the balance of
one-third (1/3) after the third year
F-11
<PAGE>
from the date of Closing, in the event BarPoint achieves 50% of its revenue
projection of $179,000,000 in such third year.
As part of the transaction, the Company sold to Leigh Rothschild, the
Chairman of the Company, three (3) shares of the Company's Series A Preferred
Stock, one Class I share, one Class II share and one Class III share, for an
aggregate purchase price of $10. All of the shares of Series A Preferred Stock
vote on a pari passu basis with the Company's Common Stock. On December 16,
1999, pursuant to a stock exchange agreement, voting rights were allocated to
the Class I and II shares due to the cancellation of the Company's Class A and
Class B warrants. In connection with the cancellation of these warrants the
Company issued an aggregate of 325,000 shares of common stock. The Class I share
of Series A Preferred Stock has 216,667 votes, the Class II share of Series A
Preferred Stock has 108,333 votes and the Class III share of Series A Preferred
Stock has 346,766 votes. None of the shares of Series A Preferred Stock are
entitled to any dividends. All voting rights for these preferred shares end on
June 7, 2004.
In connection with services rendered, the new consulting agreement and
guarantees issued by Matthew Schilowitz relating to collectability of certain
assets of Harmat, Mr. Schilowitz was awarded options to purchase the aggregate
of 190,615 shares at $1.90 per share, exercisable over a five (5) year period.
David W. Sass, a director of the Company, is the father of Jeffrey W.
Sass, a founder, shareholder, and director of BarPoint. McLaughlin & Stern, LLP,
general counsel to the Company, was a shareholder of BarPoint and received
shares in the Company as part of the transaction. David W. Sass is a member of
said firm and also a shareholder of the Company
NOTE G COMMITMENTS AND CONTINGENCIES
CONSULTING AGREEMENT. In February 1998, Harmat entered into a one year
consulting agreement with Spencer Trask to advise the Harmat on financial
matters in connection with the operation of the business including acquisitions,
mergers and other similar business combinations. The agreement was extended to
February 2000. The Harmat paid Spencer Trask an initial $10,000 retainer and an
additional $3,500 per month. In addition, Spencer Trask is to receive a
transaction fee for any transactions consummated by Harmat during the term of
the agreement or within two years after the end of the term. In connection with
this agreement Spencer Trask was granted five year warrants to purchase 200,000
shares of Harmat's common stock at $.35 per share. In connection with the
acquisition (see Note F), Spencer Trask was paid a fee of $189,000. On November
5, 1999 the Company and Spencer Trask terminated the consulting agreement,
however, the Company shall continue to make payments of the retainer fee through
January 2000 and the warrants remain in full force. As part of this agreement
the Holder of the warrants have agreed not to sell more than 28,500 shares per
month commencing January 1, 2000. On December 23, 1999, Spencer Trask purchased
195,372 common shares on a cashless exercise of the 200,000 warrants.
PROPERTIES. The Company currently rents over 10,000 square feet of
office space Ft. Lauderdale, Florida under a new five-year lease commencing in
January 2000. Annual future lease payments:
YEAR AMOUNT
---- ------
2001 $207,544
2002 $299,525
2003 $311,506
2004 $323,487
2005 $335,468
PRODUCT SUPPLY AND TECHNOLOGY LICENSE AGREEMENT. The Company issued
1,315,789 shares of common stock to Symbol Technologies, Inc. for (a) delivery
of $1,000,000 in cash, (b) a Product Supply and Technology License Agreement,
and (c) the agreement by the Company to sell up to 10,000 Symbol SPT 1500
machines at a discount.
EMPLOYMENT AGREEMENT. On June 3, 1999, the Company entered into an
Employment Agreement with Leigh Rothschild, a stockholder, director, and chief
executive officer, for 3 years with a base salary of $200,000 in the first year,
increasing in $50,000 increments each subsequent year.
On June 3, 1999, the Company entered into a three year employment
agreement with Jeffrey W. Sass and a three year consulting agreement with
Matthew Schilowitz, who are also company stockholders and directors, for an
annual base of $150,000 each, with increments of $25,000 and $50,000 each year
thereafter.
On March 24, 2000, the Company entered into a two-year employment
agreement with John C. Macatee, a director and chief executive officer, with a
base salary of $400,000 in the first year and increasing to $450,000 for the
second year.
On March 27, 2000 the Company entered into a new two-year employment
agreement, which supersedes his prior employment agreement, with Leigh M.
Rothschild, a stockholder, director and chairman of the board. The new
employment agreement provides that Mr. Rothschild shall serve as the Chairman of
the Board and not as the Chief Executive Officer, with a base salary of $300,000
in the first year increasing to $350,000 for the second year.
On March 27, 2000 the Company entered into a new two-year employment
agreement, which supersedes his prior employment agreement, with Jeffery W.
Sass, a stockholder, director and chief operating officer. The new employment
agreement provides for a base salary of $250,000 in the first year increasing to
$300,000 for the second year.
F-12
<PAGE>
NOTE H RELATED PARTY TRANSACTIONS
The Company paid a finders fee to Mr. Schilowitz, a stockholder of the
Company, in the amount of $246,455 in connection with the private placements.
The fee was offset against Mr. Schilowitz's loan balance of $218,655 as payment
in full plus Harmat's expenses of approximately $27,800. In addition the Company
repaid an advance to Leigh Rothschild in the amount of $110,000.
The law firm of McLaughlin & Stern, LLP of which Mr. Sass, a
stockholder of the Company is a principal, received legal fees of approximately
$69,000 for the year ended September 30, 1999 and $120,000 for the six months
ended March 31, 2000.
NOTE I YEAR 2000 ISSUES
We did not experience any significant effects of the Year 2000 issue on
January 1, 2000. We will continue to address this issue and the impact it might
have on operations and financial reporting. We believe that by modifying or
replacing systems, and by monitoring the Year 2000 readiness of key external
parties, we are mitigating the Year 2000 risks. However, we cannot assure our
stockholders that the uncertainties surrounding the Year 2000 issue will not
materially and adversely affect us in the future.
NOTE J STOCK OPTION PLANS AND WARRANTS
The Company has four stock-based compensation plans, which are
described below. The Company applies APB Opinion No. 25 and related
interpretations in accounting for its plans. Accordingly, no compensation cost
has been recognized.
a) The Plan for Incentive Compensation of Matthew Schilowitz (the
"Schilowitz Incentive Plan"), who is the principal stockholder, was adopted by
the Board of Directors and approved by Harmat's sole stockholder on March 1,
1996 and amended August 3, 1996. Pursuant to such plan, Mr. Schilowitz has been
granted an option to purchase up to an aggregate of 500,000 shares of common
stock at an exercise price of $.35, (as amended). The exercise price and number
of options have been amended to $.30 and 576,748 respectively due to the
dilutive effect of the acquisition. In conjunction with the acquisition all such
options have become fully vested resulting in the accrual of compensation
expense in the amount of $775,000, which has been reflected in the operations of
Harmat prior to June 3, 1999.
b) In February 1996, the Board of Directors adopted the 1996 Joint
Incentive and Non-Qualified Stock Option Plan (the "Plan") providing for the
granting of up to 400,000 shares of the Harmat's common stock. In January 1997,
the Harmat granted five year options under the Plan providing for 10,000 shares
at a price of $2.125 per share ($.35 as amended) to four directors and two key
employees of the Harmat. During 1998, 10,000 of these options were forfeited
with the termination of employment of a key employee. In March 1998, the
Harmat's chief executive officer and principal shareholder was granted 300,000
shares at an exercise price of $2.337 per share ($.35, as amended). The exercise
price and number of options have been amended to $.30 and 346,049 respectively
due to the dilutive effect of the acquisition. As of September 30, 1999 and
March 31, 2000, 50,000 options have been exercised.
c) As part of the acquisition the Company authorized five-year options
to purchase 800,000 shares of the Company's common stock at an exercise price of
$1.90 per share. Such options vest as follows: one-third after June 3, 2000;
one-third after June 3, 2001 in the event the Company achieves 50% of its
revenue projection of $49,000,000 in the second year and one third after June 3,
2002 in the event the Company achieves 50% of its revenue projection of
$179,000,000 in the third year. As of September 30, 1999, an aggregate of
560,000 options have been granted. As of March 31, 2000, an aggregate of 800,000
options have been granted.
d) The 1999 Equity Incentive Plan was adopted by the Board of Directors
on September 17, 1999 and was approved at the annual meeting of shareholders on
April 4, 2000, authorizing the Company to grant five-year options to purchase
1,500,000 shares of the Company's common stock at fair market value at date of
grant or 85% of fair market value. As of March 31, 2000, an aggregate of
1,405,200 options have been granted. The Company issued 180,000 stock options to
Mr. Schilowitz at a 15% discount to market resulting in a $220,000 compensation
expense.
In August 1999 the Company issued 60,000 warrants to a vendor at an
exercise price of $4.04, the warrants expire in three years. This resulted in a
marketing expense of $360,000 which has been reflected in financials for the six
months ended March 31, 2000.
F-13
<PAGE>
A summary of the status of the Company's stock options as of March 31,
2000, and the changes during the six months ended March 31, 2000 is presented
below:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGED
- ------------------------------------------------------------------------------------------------------------
FIXED OPTIONS SHARES EXERCISE PRICE
- -------------------------------------------------------------------------- ----------- --------------
<S> <C> <C>
October 1, 1998........................................................... 972,797 $ .30
Granted................................................................... 582,281 2.82
Exercised................................................................. (50,000) .35
Forfeited................................................................. 0 --
September 30, 1999........................................................ 1,505,078 $ 1.27
Granted................................................................... 284,700 6.44
Exercised................................................................. 0 --
Forfeited................................................................. (8,700) 7.42
December 31, 1999......................................................... 1,781,078 2.07
Granted................................................................... 995,500 7.89
Exercised................................................................. 586 1.90
Forfeited................................................................. 0 --
March 31, 2000............................................................ 2,776,579 4.16
Exercisable at March 31, 2000............................................. 2,776,579
Weighted-average fair value of options granted during the year............ $ 7.57
</TABLE>
On April 4, 2000 the Board of Directors amended the 1999 Equity Incentive Plan,
subject to stockholder approval, authorizing the Company to grant an additional
1,500,000 five-year options to purchase shares of the Company's common stock at
fair market value at date of grant or 85% of fair market value.
THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT FIXED STOCK OPTIONS OUTSTANDING
AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
OUTSTANDING WEIGHTED AVERAGE
EXERCISE PRICE NUMBER REMAINING AT WEIGHTED AVERAGE WEIGHTED AVERAGE
CONTRACTUAL OUTSTANDING PRICE 9/30/98 EXERCISE PRICE NUMBER EXERCISE EXERCISE PRICE
----------- ----------------- ------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
$ .30 922,797 2.5 to 7 years $ .30 922,797 $ .30
$1.90 377,281 5 years $1.90 377,281 $1.90
$4.50 205,000 5 years $4.50 205,000 $4.50
</TABLE>
The following information concerning the Company's stock option plans
is provided in accordance with SFAS No. 123 "Accounting for Stock Based
Compensation." The Company accounts for such plans in accordance with APB No.
25, "Accounting for Stock Issue to Employees."
The fair value of each option grant is estimated on the grant date
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1999: dividend yield of 0%, risk-free interest
rate of 5.0%, expected volatility of 115.04%, and expected lives of 5 years for
the options.
If the Company had used the fair value based method of accounting for
its employee stock option plan, as prescribed by Statement of Financial
Accounting No. 123, compensation cost included in the net loss for the year
ended September 30, 1999 would have increased by approximately $1,267,000,
resulting in a net loss of $(1,249,595), net of tax, and loss per share of
$(.15).
NOTE K INCOME TAXES
The income tax benefit for the year ended September 30, 1999 consists
of the following:
Loss before income tax benefit........................... ($846,595)
Federal income tax benefit at 36%........................ 305,000
Prior NOL allowable under IRC Section 382................ 103,000
Income tax benefit....................................... $ 408,000
The income tax expense for the six months ended March 31, 2000 consists
of the following:
Income................................................... $18,407,049
Federal income tax at 34%................................ 6,258,000
Prior NOL allowable under IRC Section 382................ (103,000)
-----------
Income tax provision..................................... $ 6,155,000
Current provision........................................ $ 5,934,000
Deferred provision....................................... $ 221,000
-----------
$ 6,155,000
===========
The Company has federal net operating loss carryforwards (NOL) of
approximately $1,680,000 and expects these NOL to be available in the future to
reduce the federal income tax liability of the Company. However, due to the
ownership change, the Company's ability to utilize the NOL's are restricted
under Section 382 of the Internal Revenue Code (IRC). Therefore, a tax benefit
has been reflected only to the extent allowable in the current year.
F-14
<PAGE>
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of the net
deferred income tax assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 MARCH 31, 2000
------------------ --------------
<S> <C> <C>
Deferred income tax assets:
NOL prior to acquisition................................. $604,800 $ 398,800
NOL generated in the current year........................ 305,000 --
Stock based compensation (prior to acquisition).......... 279,000 279,000
Stock based compensation and marketing expense........... -- 200,000
Valuation allowance...................................... (501,800) (398,800)
-------- ----------
$687,000 $ 479,000
Deferred income tax liabilities:
Unrealized gain on marketable securities................. $902,899 $2,725,894
-------- ----------
$215,899 $2,246,894
</TABLE>
NOTE L ACQUISITION
On November 4, 1999 the Company converted 750,000 of Socket
Communications, Inc. Preferred Series D holdings into 1,307,190 of Socket
Communications, Inc Common Shares.
On November 5, 1999 pursuant to an Agreement for Merger and
Reorganization of BarPoint.com, Inc. through a newly organized, wholly owned
subsidiary ("Sub") acquired all of the issued and outstanding shares of Synergy
Solutions, Inc. The purchase price for the acquisition consisting of the
following:
(A) 75,000 shares of common stock, par value $.001 per share, of
BarPoint (the "BarPoint Common Stock"); (B) cash totaling $100,000 ; and (C) in
the event Sub achieves at least Four Hundred Thousand Dollars ($400,000) in
earnings, before interest, taxes, depreciation and amortization ("EBITDA") no
later than twelve (12) months from the date of the closing, 75,000 shares of
BarPoint Common Stock, par value $.001 per share, which shares shall be held in
escrow pursuant to an escrow agreement.
BarPoint shall pay the Stockholders additional consideration in
proportion to their respective ownership of Synergy equal to (x) thirty percent
(30%) of Sub's EBITDA attributable to operations ending as of the first
anniversary of the closing; (y) twenty-five percent (25%) of Sub's EBITDA
attributable to operations between the first and second anniversaries of the
closing; and (z) twenty percent (20%) of Sub's EBITDA attributable to operations
between the second and third anniversaries of the closing, (collectively the
"Earn Out"). BarPoint shall deliver the Earn Out for each Earn Out period within
ninety (90) days of the first, second and third anniversary dates of the
Closing.
Any such Earn Out shall be paid in cash until the EBITDA equals eight
hundred thousand dollars ($800,000) and thereafter, in BarPoint common stock,
valued at the closing bid price three (3) business days prior to payment.
Synergy Solutions, Inc. provides computer-consulting services with
expertise in developing computer programs for the Palm OS devices and other
pentium based computer devices and developing web server applications with
various software, including, but not limited to, Oracle Unix/Linux Systems.
Employment Agreements were entered into with various executives of
Synergy Solutions, Inc. as well as the granting of options under BarPoint.com,
Inc., Equity Incentive Plan.
The business combination was accounted for as follows:
Current Assets................................... 78,651
Furniture and equipment-net...................... 13,668
--------
Total Assets............................. $ 92,319
Less: Total Current Liabilities........................ $ 82,322
--------
Net book value................................... 9,997
Goodwill......................................... 498,285
--------
Total consideration on acquisition..................... $508,282
========
Goodwill from the acquisition is being amortized over 15 years.
F-15
<PAGE>
NOTE M LAND HELD FOR SALE
On December 18, 1999 we closed on the sale of land held for sale for
$175,000. We recognized income of approximately $25,000, before commissions and
other selling expenses.
NOTE N SUBSEQUENT EVENTS
On April 4, 2000 the Board of Directors approved an employee benefits
program including a 401(k) Retirement Plan and an employee Stock Purchase Plan.
The 401(k) Plan provides for the Company to match 25% of the first six percent
of employee contributions and an additional 25% of the first six percent of
employee contributions if certain annual Company goals are achieved. The
employee Stock Purchase Plan provides for the Company to contribute up to 15% of
the common stock purchased by the employee.
On April 5, 2000 the Company completed a private offering of common
stock at a price of $12 per share by the Company and selling stockholders. The
Company received gross proceeds of approximately $17.7 million for the sale of
1,477,600 shares of BarPoint Common Stock.
F-16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by BarPoint in connection with
the sale of common stock being registered. All amounts are estimates except the
SEC registration fee.
Securities and Exchange Commission registration fee....... $ 11,959
Printing and engraving expenses........................... 2,500
Accounting fees and expenses.............................. 25,000
Legal fees and expenses................................... 50,000
Transfer Agent's fees and expenses........................ 2,000
Miscellaneous............................................. 8,541
--------
TOTAL.................................................. $100,000
========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court
to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). The Registrant's bylaws provides for
mandatory indemnification of its directors and officers and permissible
indemnification of employees and other agents to the maximum extent permitted by
the Delaware General Corporation Law. The Registrant's certificate of
incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty as
directors to BarPoint and its stockholders. This provision in the certificate of
incorporation does not eliminate the directors' fiduciary duty, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to BarPoint for acts or omissions not in good faith
or involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On April 5, 2000, BarPoint completed a private placement of 1,477,600
shares of common stock to eight of the selling stockholders for gross proceeds
of $17.7 million.
In June, 1999, we issued 6,634,042 shares of common stock in connection
with our acquisition of BarPoint.Com, Inc. The transaction was valued at $1.90
per share, but is subject to adjustment based on the value of certain assets
subsequent to the date of closing.
On August 4, 1999 and August 5, 1999, the company concluded private
placements of an aggregate of 3,958,550 shares of common stock to Symbol
Technologies, Inc. and 59 accredited investors and received gross proceeds of
approximately $6,166,500 in cash and a subscription note.
The sale of the above securities was deemed to be exempt from
registration under the Securities Act in reliance upon Section 4(2) of the
Securities Act or Rule 701 promulgated under Section 3(b) of the Securities Act
as transactions by an issuer not involving any public offering or transactions
pursuant to compensation benefit plans and contracts relating to compensation as
provided under such Rule 701. The recipients of securities in each such
II-1
<PAGE>
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Registrant, to information about the
Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. EXHIBITS
EXHIBIT EXHIBITS
------- ------------------------------------------------------------------
2.1 Stock Purchase Agreement dated May 20, 1999, incorporated herein
by Reference to Exhibit 1 to the Registrant's Report on Form 8-K
on June 3, 1999.
2.2 Addendum to Stock Purchase Agreement dated June 1, 1999,
incorporated by Reference to Exhibit 2 to the Registrant's Report
on Form 8-K on June 3, 1999.
3.1 Registrant's Articles of Incorporation as amended to date,
incorporated herein by Reference to Exhibit 3.1 to Registrant's
Registration Statement on Form SB-2, File No. 333-3501.
3.2 Registrant's Certificate of Amendment to the Certificate of
Incorporation of the Registrant authorizing the Series A Preferred
Stock, incorporated herein by Reference to Exhibit 6 to the
Registrant's Report on Form 8-K on June 3, 1999.
3.3 Registrant's Certificate of Amendment to the Certificate of
Incorporation of the Registrant changing the name of the
corporation, incorporated herein by Reference to Exhibit 1 to the
Registrant's Report on Form 8-K on June 15, 1999.
3.4 Registrant's By-Laws, as amended to date, incorporated herein by
Reference to Exhibit 3.2 to Registrant's Registration Statement on
Form SB-2, File No.333-3501.
4.1 Form of Common Stock Certificate, incorporated herein by Reference
to Exhibit 4.1 to Registrant's Registration Statement on Form
SB-2, File No. 333-3501.
4.2 Registrant's 1996 Stock Option Plan incorporated herein by
Reference and as amended June 19, 1997 (Exhibit 4.5 to
Registrant's Registration Statement on Form SB-2, File
No.333-3501).
5.1 Opinion of Greenberg Traurig, P.A.*
10.1 Employment Agreement between the Registrant and Leigh M.
Rothschild , incorporated herein by Reference to Exhibit 10.2 to
the Registrant's Report on Form 10-QSB for the quarter ended March
31, 2000.
10.2 Employment Agreement between the Registrant and John C. Macatee,
incorporated herein by reference to Exhibit 10.1 to the
Registrant's Report on Form 10-QSB for the quarter ended March 31,
2000.
10.3 Employment Agreement between the Registrant and Jeffrey W. Sass,
incorporated herein by Reference to Exhibit 10.3 to the
Registrant's Report on Form 10-QSB for the quarter ended March 31,
2000.
10.3 Consulting Agreement between the Registrant and Matthew C.
Schilowitz, incorporated herein by Reference to Exhibit 3 to the
Registrant's Report on Form 8-K on June 3, 1999.
10.4 Agreement for Merger and Reorganization among Registrant, Newco,
Synergy Solutions, Inc. and the Shareholders of Synergy Solutions,
Inc. incorporated herein by Reference to Exhibit 1 to the
Registrant's Report on Form 8-K on November 15, 1999
23.1 Consent of Greenberg Traurig, P.A. (included in Exhibit 5.1)
23.2 Consent of Marks Paneth & Shron LLP
24.1 Power of Attorney (included on the signature page)
27.1 Financial Data Schedules (SEC use only)
- ---------------------
* To be filed by amendment.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant 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, 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 hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pompano
Beach, State of Florida, on this 19th day of May, 2000.
BARPOINT.COM, INC.
By: /S/ JOHN C. MACATEE
-------------------------------------
John C. Macatee
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints John
C. Macatee and Jeffrey W. Sass or any one of them, as his or her true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution
for him or her in his or her name, place and stead in any and all capacities to
execute in the name of each such person who is then an officer or director of
the Registrant any and all amendments (including post-effective amendments) to
this Registration Statement, and any registration statement relating to the
offering hereunder pursuant to Rule 462 under the Securities Act of 1933, as
amended, and to file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents and each of them full power and authority to
do and perform each and every act and thing required or necessary to be done in
and about the premises as fully as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ LEIGH M. ROTHSCHILD Chairman of the Board May 19, 2000
- ------------------------------------
Leigh M. Rothschild
/S/ JOHN C. MACATEE President, Chief Executive Officer and Director May 19, 2000
- ------------------------------------ (Principal Executive Officer)
John C. Macatee
/S/ JEFFREY W. SASS Chief Operating Officer, Executive Vice President May 19, 2000
- ------------------------------------ and Director
Jeffrey W. Sass
/S/ GENE COCHRAN Treasurer and Controller May 19, 2000
- ------------------------------------ (Principal Accounting Officer)
Gene Cochran
/S/ SEYMOUR G. SIEGEL Director May 19, 2000
- ------------------------------------
Seymour G. Siegel
/S/ DAVID W. SASS Assistant Secretary and Director May 19, 2000
- ------------------------------------
David W. Sass
/S/ JAY HOWARD LINN Director May 19, 2000
- ------------------------------------
Jay Howard Linn
/S/ KENNETH JAEGGI Director May 19, 2000
- ------------------------------------
Kenneth Jaeggi
/S/ DAVID WACHTER Director May 19, 2000
- ------------------------------------
David Wachter
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT EXHIBITS
------- --------
23.2 Consent of Marks Paneth & Shron LLP
27.1 Financial Data Schedules
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
BarPoint.Com, Inc.
We hereby consent to the inclusion in this Registration Statement of
BarPoint.Com, Inc. on Form S-1 of our report dated December 16, 1999, for the
year ended September 30, 1999. We also consent to the reference to our Firm
under the caption "Experts" in such Registration Statement.
/s/ MARKS PANETH & SHRON
- --------------------------------------
Marks Paneth & Shron LLP
(Formerly Marks Shron & Company LLP)
Certified Public Accountants
Great Neck, New York
May 19, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 27,122,252
<SECURITIES> 7,181,221
<RECEIVABLES> 57,908
<ALLOWANCES> 0
<INVENTORY> 46,076
<CURRENT-ASSETS> 34,625,802
<PP&E> 227,297
<DEPRECIATION> (21,611)
<TOTAL-ASSETS> 35,743,839
<CURRENT-LIABILITIES> 6,993,029
<BONDS> 0
0
0
<COMMON> 15,430
<OTHER-SE> 14,662,012
<TOTAL-LIABILITY-AND-EQUITY> 26,503,916
<SALES> 220,290
<TOTAL-REVENUES> 220,290
<CGS> 15,925
<TOTAL-COSTS> 5,506,679
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,407,049
<INCOME-TAX> (6,155,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,252,049
<EPS-BASIC> .81
<EPS-DILUTED> .71
</TABLE>
