AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 2000
REGISTRATION STATEMENT NO. 333-44614
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HERTZ TECHNOLOGY GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3896069
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
ELI E. HERTZ
PRESIDENT
HERTZ TECHNOLOGY GROUP, INC.
75 Varick Street, 11th Floor, 75 Varick Street, 11th Floor,
New York, NY 10013 New York, NY 10013
(212) 634-4000 (212) 634-4000
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including area code, of registrant's telephone number, including area code, of
principal executive offices) agent for service)
</TABLE>
WITH COPIES TO:
DAVID C. THOMAS, ESQ.
RAICE PAYKIN KRIEG & SCHRADER LLP
185 Madison Avenue
10th Floor
New York, NY 10016
(212) 725-4423
(212) 684-9022 Fax
COUNSEL TO ISSUER
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
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, as amended ("the Securities Act") 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE (1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value 400,000 shares $2.53 $1,012,000 $267.17
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee, based
upon the average of the high and low sales prices of the common stock on the
Nasdaq Small Cap Market on August 21, 2000, pursuant to Rule 457(c) under the
Securities Act.
THIS 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.
================================================================================
<PAGE>
PROSPECTUS
400,000 SHARES
HERTZ TECHNOLOGY GROUP, INC.
COMMON STOCK
-----------------
The stockholders of Hertz Technology Group, Inc. listed in this prospectus are
offering an aggregate of 400,000 shares of our common stock. We and one of our
officers sold the common stock to the selling stockholders in transactions
exempt from registration under the Securities Act. Hertz Technology Group, Inc.
will not receive any of the proceeds from the sale of the common stock being
offered by this prospectus.
The shares of common stock being offered by the selling stockholders may be sold
from time to time in transactions on the Nasdaq SmallCap Market, in the
over-the-counter market or in negotiated transactions. The selling stockholders
directly, or through agents or dealers designated from time to time, may sell
the common stock offered by them at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices.
Hertz Technology Group, Inc.'s common stock is listed on the Nasdaq SmallCap
Market under the symbol "HERZ." On September 14, 2000, the last reported sale
price of the common stock on the Nasdaq SmallCap Market was $2.56 per share.
INFORMATION CONTAINED IN THIS PROSPECTUS IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
----------------
Investing in the common stock involves risks. See "Risk Factors" beginning on
page 7.
----------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
----------------
September 15, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
Special Note Regarding Forward-Looking Statements..............................3
Where You Can Find More Information About Us...................................4
Our Company....................................................................6
Recent Developments............................................................6
Risk Factors...................................................................7
Use of Proceeds...............................................................17
Selling Stockholders..........................................................17
Plan of Distribution..........................................................18
Indemnification...............................................................19
Legal Matters.................................................................20
Experts.......................................................................20
In this prospectus, "Herz," the "company," "we," "us," and "our" refer to Hertz
Technology Group, Inc.
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.
----------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Our Company,""Recent Developments" "Risk Factors"
and elsewhere in this prospectus are forward-looking statements. These
statements involve known and unknown risks, uncertainties, and other factors
that may cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by those
forward-looking statements.
<PAGE>
In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of those
terms or other comparable words.
We believe that the expectations reflected in the forward-looking statements are
reasonable, but we cannot guarantee future results, levels of activity,
performance, or achievements.
Neither we nor anyone else assumes responsibility for the accuracy and
completeness of the forward-looking statements. We do no promise to update or
revise any of the forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this prospectus may not
occur.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Commission at the Public Reference Room at the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. The Commission also makes these documents and other
information available on its web site at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3 under the
Securities Act of 1933, as amended, relating to the common stock offered by this
prospectus. This prospectus is a part of the registration statement but does not
contain all of the information in the registration statement and its exhibits.
For further information, we refer you to the registration statement and its
exhibits.
The Commission allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the following:
o The description of common stock description of securities contained
in the Registration Statement of the Registrant on Form SB-2, File
No. 333-9783 filed with the Commission on August 8, 1996, as
amended.
o Annual Report on Form 10-KSB for the fiscal year ended August 31,
1999 filed with the Commission on December 10, 1999;
o The Proxy Statement for the Annual Meeting of Stockholders held on
February 16, 2000 filed with the Commission on January 6, 2000;
o The Preliminary Proxy Statement for a Special Meeting of
Stockholders to be held on October 3, 2000 filed with the Commission
on August 28, 2000;
<PAGE>
o The Quarterly Report on Form 10-QSB for the quarter ended May 31,
2000 filed with the Commission on July 18, 2000;
o The Current Report on Form 8-K dated July 31, 2000 and filed with
the Commission on July 31, 2000;
o Any future filings we make with the Commission until the selling
stockholders sell all of the common stock offered by them by this
prospectus.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address or telephone number:
Hertz Technology Group, Inc.
75 Varick Street, 11th Floor,
New York, NY 10013
(212) 634-4000 Attention: Barry Goldsammler
<PAGE>
OUR COMPANY
----------------
Hertz Technology Group, Inc., headquartered in New York City, provides computer
based technical products and services. These include:
o an array of internet and network services and solutions, including
Web related services, networking services and computer systems
integration;
o ergonomically engineered modular technical computer furniture;
o PCs and related products; and
o computerized training facilities.
RECENT DEVELOPMENTS
On July 14, 2000, we signed an Agreement and Plan of Merger with Return
Assured Incorporated (then named A Sure eCommerce, Inc), a privately held Nevada
corporation. Under the agreement, Return Assured is to be merged into a
subsidiary we created for the purpose.
Return Assured intends to provide a service that will guarantee customers who
order products through the web sites of merchant members that they will get the
product and that the merchant will honor its stated return policies. It was
founded in 1999 and is in the early stages of implementing its business plan. It
has not conducted any business or received any revenue to date and has incurred
losses through May 31, 2000 of $621,598. We have received and reviewed a copy of
Return Assured's business plan, but statements in this prospectus as to the
intentions of Return Assured are based solely on information supplied to us by
that company.
Under the agreement, each of the 4,695,685 shares of common stock of Return
Assured outstanding will be converted into the right to receive one share of
Hertz Technology Group in a merger transaction. The combination will be
accounted for as a purchase of Hertz by Return Assured. After the merger, Return
Assured shareholders will own approximately two-thirds of the outstanding common
stock of the combined companies. Return Assured will be entitled to designate
the size and composition of the Registrant's board of directors following the
merger.
On the closing of the merger, GEM Global Yield Fund Limited, a private equity
fund, is to purchase $5,000,000 in convertible preferred stock and common stock
purchase warrants from the combined company.
The merger is conditioned upon a number of things including approval by our
stockholders.
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing our
company. Additional risks not presently, known to us or that we currently deem
immaterial may also impair our business operations.
Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. The trading price of our common stock
could decline due to any of these risks and you may lose all or part of your
investment.
This prospectus also contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
the risks faced by us described below and elsewhere in the prospectus.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Our future results and stockholder values
may differ materially from those expressed in these forward-looking statements.
Many of the factors that will determine these results and values are beyond our
ability to control or predict. Stockholders are cautioned not to put undue
reliance on any forward-looking statements. In addition, we do not have any
intention or obligation to update forward-looking statements, even if new
information, future events or other circumstances have made them incorrect or
misleading. For those statements, we are relying on the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You should understand that the following
important factors could affect our future results, and could cause results to
differ materially from those expressed in the forward-looking statements.
Risks Relating to the Proposed Merger
Shares of outstanding common stock of the combined companies may increase more
than expected because the conversion price of the preferred stock to be issued
in financing the merger is not fixed, but is determined based on the market
value of the common stock at the time of conversion.
The operations of the combined companies is being financed by the sale of $5
million in convertible preferred stock. Sale of that stock is a condition of the
merger. This convertible preferred stock has a maximum conversion price of $3.00
per share. However, if the market price of Hertz's stock at the time of
conversion is below $3.00 per share the conversion price is reduced to a price
based on the market price at that time. As a result, if Hertz's common stock
declines significantly in price, Hertz will have to issue far more shares of
common stock than it would if the conversion price were fixed. Nothing in the
agreement for sale of the preferred stock would prevent the holder of the
preferred stock from repeatedly selling the stock short and "covering" his short
sale at a lower price. He would not be subject to the usual risks of a short
seller, who might have to buy back the stock he has sold at an undetermined and
much higher price in order to cover his short position, because the conversion
can never go above $3.00 per share. In addition, a holder of the preferred stock
could continue converting and selling at ever lower prices without incurring an
economic loss. These sales could result in a
<PAGE>
major decline in the price of the Hertz common stock. They could also make Hertz
more vulnerable to a takeover by an outside party.
Hertz may be required to redeem the preferred stock for an amount that would
force it to go out of business.
The agreement for sale of the convertible preferred stock requires Hertz to
maintain an effective registration statement covering resale of the shares of
common stock that may be issued upon conversion. If Hertz is unable to maintain
the effectiveness of that registration statement or otherwise does not comply
with agreements it is making with holders of that preferred stock, it will have
to redeem all the outstanding preferred stock at the stated value of $1,000 per
share plus accrued dividends. There is no provision in the agreement for payment
of this obligation over time, and Hertz will not have any commitment for credit
to finance the payment of the redemption price. As a result, a redemption may
leave it with not enough liquid assets to continue paying its other debts and it
may be forced to go out of business.
The integration of our two companies may be difficult.
Merging our two companies involves technological, operational and
personnel-related risks. The integration process will be complex, time-consuming
and expensive, and will disrupt the business of the combined company after the
merger if not completed in a timely and efficient manner. If the merger is
approved, the combined company will use common information and communication
systems, facilities, operating procedures, financial controls and human
resources practices. We may lose key employees that we do not anticipate losing,
and the attention of our management team may be diverted from other ongoing
business concerns more than we anticipate.
Executive officers and directors of both companies have different interests from
yours.
The directors and executive officers of both Hertz and Return Assured have
interests in the merger that are different from yours and may represent a
conflict of interest. Because of these benefits, these persons may be influenced
to vote in favor of or to recommend the merger. These benefits include:
o Two of Hertz's controlling stockholders will sell $1,025,000 in
common stock to the combined company at the time of closing. One of
these stockholders will also enter into a five-year employment
agreement with the combined company's Hergo subsidiary under which
he will receive an annual salary of at least $250,000 (approximately
his present salary) plus incentive compensation of 25% of total
gross profit on sales of this subsidiary. He will also enter into a
two-year consulting agreement with the combined company under which
he will receive $125,000 per year and additional fringe benefits;
o Barry Goldsammler, Hertz's Executive Vice President, will enter into
a one-year employment agreement with the combined company under
which he will receive an annual salary of $125,000 (approximately
his present salary) and additional fringe benefits;
<PAGE>
o I. Marilyn Hertz, Hertz's Vice Chairperson will enter into a
five-year employment agreement with the combined company under which
she will receive an annual salary of $95,000 and additional fringe
benefits;
o At the effective time of the merger, each outstanding option to
purchase Return Assured common stock, including any stock option
held by any executive officer or director of Return Assured, will be
assumed by Hertz and will become an option to acquire common stock
of the combined company after the merger;
o Hertz's Board of Directors has authorized the vesting of presently
outstanding options held by some of Hertz's officers, directors and
key employees in the discretion of Mr. Hertz; and
o Hertz's directors and executive officers have customary rights to
indemnification against specified liabilities.
Our counsel in the transaction has a pre-existing relationships with the
attorneys for Return Assured.
Our regular corporate attorneys initially advised us in the transaction. But in
the last stages of negotiation it developed that there would be a conflict of
interest between their representation of us and their individual representation
of Eli E. Hertz, our President. At that time we retained the firm of Raice
Paykin Krieg & Schrader LLP, to represent us in completing the transaction.
David C. Thomas, a member of that firm giving us legal advice in the transaction
also acts in an of counsel capacity to Kaplan, Gottbetter & Levenson LLP, Return
Assured's counsel (consisting primarily of attending meetings of approximately 1
hour per week) and receives relatively small amounts in payment for those
services. In addition, Mr. Thomas was from May of 1999 until March of this year
performing services for that firm on a contract basis substantially full time.
Hertz management received assurances that this relationship would not affect Mr.
Thomas's ability to render unbiased legal advice in the transaction.
Nevertheless, this pre-existing relationship could conceivably have affected the
advice we received on legal matters.
Failure to complete the merger could harm our stock price and future business
and operations.
<PAGE>
Both Hertz and Return Assured face a number of special risks if the merger is
not completed, including the following:
o We may be required to pay Return Assured a termination fee of
$500,000 if the transaction does not close because we do not carry
out our obligations under the merger agreement, because we decide to
accept an alternate acquisition proposal or because our Board of
Directors withdraws its recommendation of the transaction. In
addition, if we decide to accept an alternate acquisition proposal
or if the Board of Directors withdraws its recommendation (without a
violation of the contract by Return Assured that would entitle us to
cancel the contract) or if we do something purposefully or in bad
faith to prevent the merger we will be required to pay Return
Assured an additional termination fee of $500,000.
o costs related to the merger, such as legal and accounting fees and
financial advisor fees, must be paid even if the merger is not
completed.
o current and prospective Hertz employees may experience uncertainty
about their future roles with the combined company, which may hurt
each company's ability to attract and retain key management,
marketing, technical and administrative personnel. This may impede
subsequent integration of the two companies, and if the merger is
not completed it may harm Hertz in particular.
o If the merger is terminated and Hertz's board of directors
determines to seek another business combination, Hertz cannot assure
you that it will be able to find a party willing to combine with it
on equivalent or more attractive terms.
Risks Related to the Business of the Combined Company After the Merger
The combined companies will incur significant charges to their earnings for a
long time into the future as a result of the goodwill created by accounting for
the merger as a purchase.
The merger must be accounted for as a purchase of Hertz by Return Assured. Under
purchase accounting, Hertz's tangible assets will be entered on the combined
company's books at their fair market value. The difference between the market
value of the shares Hertz is issuing to the Return Assured stockholders in the
merger and the fair market value of Hertz's tangible assets is entered initially
on the balance sheet as goodwill. We expect the transaction to result in
approximately $17.7 million of goodwill. That goodwill will be charged to
earnings over 15 years, which will result in an expense charge of $1.18 million
per year for the next 15 years. This continuing write-off may make it difficult
for Hertz to obtain financing in the future.
The combined companies will incur additional charges to their earnings for
compensation payable to Mr. Hertz under his proposed employment agreement with
Hergo and his consulting agreement with Hertz.
The proposed employment arrangements after the merger include a five-year
employment agreement between Eli E. Hertz and Hertz's Hergo subsidiary and a
two-year consulting agreement between Mr. Hertz and Hertz. Under the employment
agreement, Mr. Hertz is to
<PAGE>
receive not less than $250,000 per year (approximately his present salary) plus
a share of gross profit on sales of the subsidiary, and under the consulting
agreement he is to receive not less than $125,000 per year. These costs will be
in addition to whatever compensation the combined company decides to pay its
senior management. The share of gross profit will be payable whether or not
Hertz or the subsidiary earns a net profit. The added costs will be a continuing
drag on earnings over the terms of these agreements, and may make it difficult
to obtain financing in the future.
The cash payment required to redeem Mr. Hertz's common stock may reduce the
available working capital of the combined companies, which could make it more
difficult for Hertz to meet its obligations and limit future expansion.
Return Assured has agreed to purchase $1,025,000 in common Stock from Eli E.
Hertz when the merger is completed. This obligation will become an obligation of
the combined companies if Return Assured does not assign its right to buy the
shares to an outside third party. The only sources of funds that will be
available to purchase the shares are the cash and cash equivalents of the
combined companies on hand at the time the merger is completed and the proceeds
of sale of the Series A Preferred Stock. As a result, the combined companies may
not have sufficient working capital, making it difficult for them to meet their
obligations and limiting future expansion plans.
The demand for Return Assured's proposed service may be less than the parties
expect.
Return Assured believes there is a considerable demand from merchants to provide
their customers with the assurance that the goods they order will be delivered,
and that the merchants will honor their return policies. But Return Assured
management has not conducted any marketing studies to confirm that this demand
exists or the extent of the demand. We may find that as customers become more
comfortable with e-commerce they will not feel the need for outside assurance of
delivery and returns. If that happens, the number of merchants willing to pay
for Return Assured's proposed service may be too small to be profitable.
If Return Assured's business plan is successful other companies with more
resources and greater name recognition may make competition so intense that the
proposed business will not be profitable.
Return Assured's business plan is based on its being the first to market with
its proposed service. Its service is not protected by patents or other
intellectual property rights, and if it is successful a number of other
companies with far more money and greater name recognition may decide to compete
with it. This competition could both reduce the number of merchants who select
Return Assured to provide the service and create downward pressure on the amount
Return Assured could charge for the service so that Return Assured would not
have enough revenue to generate a profit.
Return Assured's cyber liability insurance policy does not cover substantial
portions of the cost Return Assured might incur if a merchant is unable or
unwilling to deliver its product or honor its return policy.
Return Assured is purchasing a "cyber liability" insurance policy from Lloyd's
of London covering its own negligence in selecting a merchant or failing to
carefully monitor the shipment and return of the merchant's products. However,
that policy has a deductible of $2 million for each merchant. Since most claims
are likely to be less in the aggregate than $2 million per merchant, it is
unlikely that Return Assured would ever be able to make a claim under the
policy. In addition, since the policy covers Return Assured's own negligence in
selecting a merchant or failing to carefully monitor the shipment and return of
the merchant's products, coverage may not be available if a merchant fails to
deliver or honor its return policies for reasons beyond its control or for a
reason that Return Assured should not have recognized in allowing the merchant
to use the Return Assured logo.
<PAGE>
State regulations governing insurance could apply to Return Assured's business,
making that business impractical.
Virtually every state tightly regulates companies who are in the business of
insurance. Return Assured does not believe that its proposed business is
insurance under the laws of any state, but this business will be entirely new
and one or more states might try to regulate Return Assured's operations as
insurance. This risk may be increased by the presence of the Lloyd's of London
logo on the Return Assured web site. If Return Assured's business were to be
regulated as insurance its business plan would most probably not be practicable
because the costs of complying with the insurance regulations would be so high
that Return Assured would have to raise its charges to a level most merchants
would not be willing to pay. In addition, the cost of defending against state
regulators' claims, if brought, could be prohibitive.
Return Assured will be almost entirely dependent on third parties to develop and
implement its proposed service.
Except for Mr. Sebal, Return Assured's President, Return Assured's senior
management has virtually no experience in the e-commerce field. Mr. Carter, its
Chairman, comes from the oil business. Mr. Mulberry, its Senior Vice President,
comes from the banking and financial services fields. Return Assured has entered
into an agreement with IBM to evaluate its business plan and assist in
developing and implementing its proposed web site, but we cannot give any
assurance that Return Assured, even with IBM's assistance, will be able to
implement its business plan and Return Assured's principal managers may lack the
experience to assess the effectiveness of IBM's efforts.
Hertz and Return Assured have limited operating histories as online commerce
companies, which will make the business of the combined company difficult to
evaluate.
The merger will combine two companies that have limited operating histories as
online commerce companies. Hertz has been in the business of providing internet
and web-based services for only a little over a year. Return Assured was formed
less than a year ago. The prospects of the combined company will therefore be
subject to the risks, expenses and uncertainties frequently encountered by young
companies that operate in the new and rapidly evolving markets for internet
products and services. These risks include:
o evolving and unpredictable business models;
o intense competition;
o our need and ability to manage growth; and
o the rapid evolution of technology in electronic commerce.
There is no assurance as to future plans for Hertz's present core businesses.
<PAGE>
Management believes that the business combination with Return Assured is a
logical extension of its internet-related services. The parties expect that some
of the web-based services of Hertz's RemoteIT Division will complement Return
Assured's web-based proposed business, and that the expertise of that division
will enhance Return Assured's ability to pursue its business plan. Hertz's other
operations are less closely linked to Return Assured's business plans and we do
not have any assurance as to Return Assured's intentions as to the future
operations of those businesses. Mr. Eli Hertz, Hertz's President, is to become
the president of the combined companies' Hergo subsidiary and expects to
continue operating that subsidiary on a more or less autonomous basis. Over the
longer-term, Return Assured's management, which will become the management of
the combined companies, might determine that one or more of Hertz's present core
businesses is not central to its business plans, and the combined company would
be free to dispose of those operations as it sees fit.
We will likely incur net losses for the foreseeable future.
Based on pro forma financial statements, we would have incurred net losses in
each of 1999 and 2000. As of May 31, 2000, Hertz had a net accumulated deficit
of approximately $1,754,000 and Return Assured had a net accumulated deficit of
approximately $622,000. Hertz and Return Assured expect the combined company to
experience substantial quarterly net losses for the foreseeable future, due
primarily to the following factors:
o Mr. Hertz will be drawing a substantial salary and consulting fee
for the next several years, and these costs will be in additon to
whatever compensation we pay to other senior management;
o Amortization of the goodwill arising from this transaction will be a
continuing drain on the earnings of the combined company as that
goodwill is charged to earnings over future quarters;
o Competitive pricing pressures in Hertz's present core businesses are
expected to continue to negatively affect gross margins; and
o We will likely spend significant amounts on operating expenses, in
particular marketing expenses to bring the attention of businesses
and consumers to Return Assured's services.
Our operating results may fluctuate significantly and may be difficult to
predict.
Hertz's and Return Assured's operating results have fluctuated in the past, and
the operating results of the combined company will likely fluctuate in the
future due to a number of factors, many of which will be outside our control.
These factors include:
o pricing competition;
o failure of a major merchant, requiring us to incur large costs in
paying for goods that were not delivered or returns that were not
honored;
<PAGE>
o seasonal fluctuations in buying patterns of merchandise sold by
merchants using our services;
o the announcement or introduction of new types of service offerings
or customer services by us or our competitors;
o the amount and timing of costs relating to expansion of our
operations;
o interruptions to or increases in the costs associated with the
normal flow of our business operations, including the occurrence of
technical or communications failures or stoppages by common
carriers;
o governmental regulation and taxation policies which may reduce the
volume of merchandise purchased online from our merchants.
Due to these factors, factors discussed elsewhere in this document, or
unforeseen factors, in some future quarter our operating results may not meet
the expectations of securities analysts and investors, and if this happens the
trading price of the common stock of the combined company may decline.
We will operate in an extremely competitive market and we could lose revenue and
customers to competitors.
It is perceived to be easy to enter the online commerce services market, and
current and new competitors can launch new online commerce web sites at
relatively low cost. Competition in services to online commerce will likely
increase as well-recognized web participants decide to enter this market
segment. Increased competition may result in price reductions, reduced gross
margins, increased marketing costs or loss of market share, or any combination
of these problems.
Major credit card companies already offer some protection against both failure
to deliver and the delivery of defective products, and they may decide to
compete with Return Assured's service by, for example, themselves undertaking to
resolve delivery disputes or guaranty delivery and returns for customers who use
their cards to purchase online.
We may not be successful in competing against those competitors. Many of these
competitors have greater financial, marketing, customer support, technical and
other resources than we will. As a result, they may be able to provide the same
services Return Assured provides on more favorable terms than us, and they may
be able to respond more quickly to changes in customer preference or to devote
greater resources to the development, promotion and sale of their services than
we can. If competition increases and our branding efforts are not successful, we
may not be able to command higher margins on our services, or we may lose
revenue and customers to our competitors.
Our business may be affected by government regulation.
<PAGE>
The need for Return Assured's services may be reduced by future state or federal
regulation providing for governmental enforcement of the obligations of online
merchants to deliver their products and honor returns policies. Even if this
does not happen, it is possible that one or more states may decide that Return
Assured's proposed business is close enough to the business of insurance that it
should be regulated like insurance. This could result in an interference with
our business that would create unacceptable costs to us.
The tax treatment of the internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by some foreign governments that could impose taxes on the sale of
goods and services and other internet activities. Our business may be harmed by
the passage of laws in the future imposing taxes or other burdensome regulations
on online commerce.
Due to the increasing popularity and use of the internet, it is possible that a
number of laws and regulations may be adopted with respect to the internet
generally, covering issues such as user privacy, pricing and characteristics and
quality of products and services. Similarly, the growth and development of the
market for internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies conducting
business over the internet. The adoption of any additional laws or regulations
may decrease the growth of commerce over the internet, increase our cost of
doing business or otherwise have a harmful effect on our business.
We may have to qualify to do business in other jurisdictions. Because the
combined company's service will be available over the internet in multiple
states and foreign countries, those jurisdictions may claim that it is required
to qualify to do business as a foreign corporation in each of these states and
foreign countries. If we fail to qualify as a foreign corporation in a
jurisdiction where we are required to do so, we could be subject to taxes and
penalties.
We cannot predict our future capital needs and we may not be able to secure
additional financing.
To fully implement Return Assured's current business plan, we will likely need
to raise additional funds within the next 12 months in order to fund continuing
operating losses or to acquire complementary businesses, technologies or
services. Additional financing may not be available on terms favorable to us, or
may not be available to us at all. If we raise additional funds by issuing
equity securities, you may experience significant dilution of your ownership
interest, and these securities may have rights senior to the rights of common
stock holders. If additional financing is not available when required or is not
available on acceptable terms, we may be unable to fund continuing operations,
promote our brand name, enhance or develop our services, take advantage of
business opportunities or respond to competitive pressures, any of which could
harm our business.
We have no direct control over shipping and quality of products (returns)
shipped by merchants.
We will rely on our merchants to ship merchandise directly to customers.
Consequently, we will have limited control over the goods shipped by these
vendors, and shipments of goods may be subject to delays. In addition, we may
accept returns from customers for which we will not
<PAGE>
receive reimbursements from manufacturers or vendors. If the quality of service
provided by these vendors falls below a satisfactory standard or if our level of
returns exceeds expectations, this could have a harmful effect on our business.
Our online commerce services will be vulnerable to interruption.
Merchant access to our web site will directly affect the volume of orders and
thus affect our revenues. System interruptions may make our web site unavailable
or prevent us from processing shipments and returns efficiently, reducing the
attractiveness of our services. We may need to add hardware and software and
further develop and upgrade our existing technology, transaction-processing
systems and network infrastructure to accommodate increased traffic on our web
site and increased sales volume. We will maintain substantially all of our
computer and communications hardware at one facility, in a colocation facility.
Our systems and operations could be damaged or interrupted by fire, flood, power
loss, telecommunications failure, network break-ins, earthquake and similar
events. Our backup systems and disaster recovery plan may not be adequate, and
we may not have sufficient business interruption insurance to compensate us for
losses from a major interruption. Computer viruses, physical or electronic
break-ins, deliberate attempts by third parties to exceed the capacity of our
systems and similar disruptions could cause system interruptions, delays and
loss of critical data, and could prevent us from providing services and
processing order tracking and return.
We expect our stock price to be volatile.
The market price of the shares of the common stock of Hertz has been, and the
market price of the shares of common stock of the combined company is likely to
be, subject to wide fluctuations in response to several factors, such as:
o actual or anticipated variations in our results of operations;
o announcements of technological innovations;
o new services or product introductions by us or our competitors;
o changes in financial estimates by securities analysts; and
o conditions and trends in the Internet and electronic commerce
industries.
The stock markets generally, and the Nasdaq Small Cap Market in particular, have
experienced extreme price and volume fluctuations that have particularly
affected the market prices of equity securities of many technology companies and
that often have been unrelated or disproportionate to the operating performance
of those companies. These market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of the
common stock of the combined company.
<PAGE>
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being offered
by the selling stockholders listed under "Selling Stockholders." We will not
receive any proceeds from sales of common stock by the selling stockholders.
SELLING STOCKHOLDERS
We or our president, Eli E. Hertz individually, sold the common stock to the
selling stockholders in several separate transactions exempt from registration
under the Securities Act, as follows:
On June 13, 2000, we sold 100,000 shares of common stock to KGL Investments,
Ltd., a New York corporation whose principals are the attorneys representing
Return Assured in the merger transaction, at $1.75 per share.
On July 14, 2000 Mr. Hertz sold 300,000 shares of our common stock which he
owned to the three other selling stockholders at $2.00 per share.
As part of the above transactions, we agreed to register the shares being
offered by this prospectus.
The following table sets forth information as of September 14 about the selling
stockholders and the number of shares of common stock beneficially owned by each
selling stockholder, all of which are offered by this prospectus. For purposes
of computing the number and percentage of shares beneficially owned by a selling
stockholder on September 14, 2000, any shares which such person has the right to
acquire within 60 days after such date are deemed to be outstanding, but those
shares are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other selling stockholder:
<TABLE>
<CAPTION>
Shares
Owned Upon Percent
Shares Being Percent Owned Completion Owned After
Name and Address Offered Before Offering (1) of Offering Offering
<S> <C> <C> <C> <C>
KGL Investments, Ltd.
630 Third Ave.
New York, NY 10017 60,000 0.8% 0 0%
Dunlap Industries, Ltd. 40,000 0.6% 0 0%
c/o Johnson Stokes & Masters
Hong Kong Bank Building
623 Nathan Road
Kowloon, Hong Kong
Tel-Er-Ka AG 100,000 1.4% 0 0%
Zurichstrasse 28
8306 Bruettiseller
Switzerland
Partner Marketing AG 100,000 1.4% 0 0%
Landweg 1
6053 Hergiswil
Switzerland
Turbo International Ltd. 100,000 1.4% 0 0%
Shirley House
50 Shirley Street
P.O. Box N-7755, Nassau, Bahamas
</TABLE>
(1) Based on 6,945,278 shares including 2,249,593 shares presently
outstanding and 4,695,685 share to be issued in the merger.
PLAN OF DISTRIBUTION
The selling stockholders may sell the common stock being offered by this
prospectus from time to time directly to other purchasers, or to or through
dealers or agents. To the extent required, a prospectus supplement with respect
to the common stock will set forth the terms of the offering of the common
stock, including the name(s) of any dealer or agents, the number of shares of
common stock to be sold, the price of the common stock, any underwriting
discount or other items constituting underwriters' compensation.
<PAGE>
The selling stockholders may sell their stock from time to time directly or,
alternatively, through broker-dealers or agents. The selling stockholders will
act independently of us in making decisions regarding the timing, manner and
size of each sale. They may sell their common stock in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sales may be
made in transactions (which may involve crosses or block transactions)
o on any national securities exchange for quotation services on which
the common stock may be listed or quoted at the time of sale
o in the over-the-counter market,
o in transactions other than on such exchanges or services or in the
over-the-counter market, or
o through the writing of options.
In connection with sales of the common stock, the selling stockholders may enter
into hedging transactions with broker-dealers, and those broker-dealers may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling stockholders may also sell short the common
stock offered by this prospectus and deliver that common stock to close out such
short positions, or lend or pledge such common stock to broker-dealers that in
turn may sell such securities. Some of the common stock offered by this
prospectus also may be sold under Rule 144 under the Securities Act.
The selling stockholders and any brokers, dealers or agents described above may
be deemed "underwriters" as that term is defined by the Securities Act.
Each selling stockholder and any other persons participating in a distribution
of securities will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M may limit the timing of purchases and sales of securities by selling
stockholders and others participating in a distribution of securities. In
addition, under Regulation M, those engaged in a distribution of securities may
not at the same time make a market in the securities or take other actions that
may affect the market price of the securities for a specified period of time
before the beginning of the distribution, subject to some exceptions or
exemptions. All of the restrictions described above may affect the marketability
of the securities offered by this prospectus.
If a dealer is used in the sale of any common stock where this prospectus is
delivered, the selling stockholders may sell the common stock to the public at
varying prices to be determined by the dealer at the time of resale. To the
extent required, the name of the dealer and the terms of the transaction will be
set forth in the related prospectus supplement.
In connection with the sale of common stock, dealers or agents may receive
discounts, concessions, or commissions from the selling stockholders or from
purchasers of the common stock for whom they may act as agents. Agents and
dealers participating in the distribution of the common stock may be deemed to
be underwriters, and any compensation received by them
<PAGE>
and any profit on the resale of common stock by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
Under the Registration Rights Agreements with some of the selling stockholders,
we have agreed to pay costs and expenses associated with the registration of the
shares of common stock to be sold by this prospectus. In addition, the selling
stockholders may be entitled to indemnification against certain liabilities
under the Registration Rights Agreements.
We will make copies of this prospectus available to the selling stockholders and
have informed the selling stockholders of the need to deliver a copy of this
prospectus to each purchaser before or at the time of such sale.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law grants corporations the
power to indemnify their directors, officers, employees and agents. Our Amended
and Restated Certificate of Incorporation and our By-laws provide for
indemnification of our directors, officers, agents and employees to the full
extent permissible under the General Corporation Law. The General Corporation
Law also allows a corporation to eliminate the liability of directors for breach
of fiduciary duty in some cases. Our certificate of incorporation eliminates
that liability to the full extent permitted by the that law.
We have signed indemnification agreements with each of our directors and
executive officers. Each of these agreements provides that we will indemnify
that person against expenses, including reasonable attorneys' fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any civil or criminal action or administrative
proceeding arising out of the performance of his duties as an officer, director,
employee or agent of our company. This indemnification will be available if the
acts of the person we are indemnifying were in good faith, if the he acted in a
manner he reasonably believes to be in or not opposed to our best interest and,
as to any criminal proceeding, he had no reasonable cause to believe his conduct
was unlawful.
The Registration Rights Agreements we have signed with some of the selling
stockholders, contain indemnification provisions.
We maintain directors' and officers' liability insurance coverage with an
aggregate policy limit of $2 million for each policy year.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons under
the above provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission that indemnification is against public
policy and is, therefore, unenforceable.
<PAGE>
LEGAL MATTERS
The validity of the issuance of shares of common stock offered by this
prospectus will be passed upon for us by Raice Paykin Krieg & Schrader LLP.
EXPERTS
Our financial statements as of August 31, 1999 and for the year then ended have
been incorporated by reference in this prospectus and in the registration
statement in reliance on the report of Goldstein Golub Kessler LLP, independent
auditors, given upon the authority of that firm as experts in accounting and
auditing. Our financial statements as of August 31, 1998 and for the year then
ended have been incorporated by reference in this prospectus and in the
registration statement in reliance on the report of Arthur Andersen LLP,
independent auditors, given upon the authority of that firm as experts in
accounting and auditing. The financial statements of Return Assured as of August
31, 1999 and for the year then ended have been incorporated by reference in this
prospectus and in the registration statement in reliance on the report of
Pannell Kerr Forster, chartered accountants, given upon the authority of that
firm as experts in accounting and auditing.
<PAGE>
400,000 SHARES
HERTZ TECHNOLOGY GROUP, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
September 15, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the distribution of the securities
being registered, all of which are to be paid by the Registrant, are as follows:
Securities and Exchange Commission Registration Fee $267
Printing and Engraving Expenses 7,000
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 34,000
Miscellaneous Fees and Expenses 5,000
-------
Total $56,267
-----------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("GCL") grants corporations
the power to indemnify their directors, officers, employees and agents in
accordance with the provisions thereof. Article Sixth of the Registrant's
Amended and Restated Certificate of Incorporation ("Certificate") and Article V
of the Registrant's By-laws provide for indemnification of Registrant's
directors, officers, agents and employees to the full extent permissible under
Section 145 of the GCL. Section 102(b)(7) of the GCL authorizes a corporation to
eliminate the liability of directors for breach of fiduciary duty in certain
cases. Article Eighth of the Certificate eliminates such liability to the full
extent permitted by the GCL.
Registrant has entered into indemnification agreements with each of its
directors and executive officers. Each such agreement provides that Registrant
will indemnify the indemnitee against expenses, including reasonable attorneys'
fees, judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any civil or criminal action or
administrative proceeding arising out of the performance of his duties as an
officer, director, employee or agent of Registrant. Such indemnification will be
available if the acts of the indemnitee were in good faith, if the indemnitee
acted in a manner he reasonably believes to
<PAGE>
be in or not opposed to the best interest of Registrant and, with respect to any
criminal proceeding, the indemnitee had no reasonable cause to believe his
conduct was unlawful.
The Registration Rights Agreements entered into between Registrant and certain
selling stockholders, contain indemnification provisions.
Registrant maintains directors' and officers' liability insurance coverage with
an aggregate policy limit of $2 million for each policy year.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
An Exhibit Index has been attached as part of this Registration Statement and is
incorporated herein by reference.
(b) Financial Statement Schedules
Schedules are omitted because they are either not required, are not applicable
or because equivalent information has been included in the financial statements,
the notes thereto or elsewhere herein.
ITEM 17. UNDERTAKINGS
a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section
<PAGE>
13 or Section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall by 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.
c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item 15, Indemnification
of Directors and Officers" above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment to the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, 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
of 1933, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on a Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 15th day of
September, 2000.
HERTZ TECHNOLOGY GROUP, INC.
By: /s/ Eli E. Hertz*
--------------------------------
Name: Eli E. Hertz
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Date Title
--------- ---- -----
/s/ Eli E. Hertz* 9/15/00 Chairman, President and Chief
------------------------ Executive Officer
Eli E. Hertz
/s/ I. Marilyn Hertz* 9/15/00 Vice Chairperson and Director
------------------------
I. Marilyn Hertz
/s/ Barry J. Goldsammler 9/15/00 Senior Vice President, Chief
------------------------ Financial and Accounting Officer and
Barry J. Goldsammler Director
/s/ Beryl Ackerman* 9/15/00 Director
------------------------
Beryl Ackerman
/s/ Bruce Borner* 9/15/00 Director
------------------------
Bruce Borner
*By /s/ Barry J. Goldsammler
------------------------
Barry J. Goldsammler
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger dated as of July 13, 2000
incorporated by reference to Form 8-K filed on July 31, 2000.
4.1 Specimen Stock Certificate incorporated by reference from the
Company's Registration Statement on Form SB-2 (SEC File Number
333-9783)
4.2 Form of Redeemable Warrant incorporated by reference from the
Company's Registration Statement on Form SB-2 (SEC File Number
333-9783)
4.4 Warrant Agreement incorporated incorporated by reference from the
Company's Registration Statement on Form SB-2 (SEC File Number
333-9783)
4.5 Certificate of Amendment of Certificate of Incorporation dated
October __, 2000 incorporated by reference from Annex B to
preliminary proxy statement filed August 28, 2000
4.6 *Certificate of Designations, Preferences and Rights of Series A
Preferred Stock
4.7 *Warrant issued to GEM Global Yield Fund Limited
5.1 Opinion of Raice Paykin Krieg & Schrader LLP
23.1 *Consent of Goldstein Golub Kessler LLP
23.2 Consent of Raice Paykin Krieg & Schrader LLP included in
Exhibit 5.1
23.3 *Consent of Pannell Kerr Forster
23.4 *Consent of Arthur Andersen
* Previously filed
