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As filed with the Securities and Exchange Commission on August 10, 2000
Registration No. 333-41474
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================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NHANCEMENT TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1360852
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(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
6663 Owens Drive, Pleasanton, California 94588
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(Address of Principal Executive Offices)(Zip Code)
Douglas S. Zorn
President
6663 Owens Drive,
Pleasanton, California 94588
(925) 251-3200
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(Name and address and telephone number of agent for service)
(Telephone number, including area code, of agent for service)
Copies to:
Leonard H. Bloom, P.A.
Broad and Cassel
201 South Biscayne Boulevard
Miami Center, Suite 3000
Miami, Florida 33131
(305) 373-9400
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, 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 of 1933, 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 of 1933 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
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES OF COMMON STOCK AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE (1) PRICE FEE
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Common Stock $.01 par value 4,395,604 shares $11.375 $50,000,000 $13,200
underlying the Common Stock
Purchase Agreement
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Common Stock $.01 par value 120,000 shares (2) $20.82 $2,498,400 $ 660
underlying warrants
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Common Stock $.01 par value 1,081,074 shares (2) $11.375 $12,297,217 $ 3,247
underlying Debentures
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Common Stock $.01 par value 1,628,628 shares (2) $11.375 $18,525,643 $ 4,891
underlying warrants
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Common Stock, $.01 par value 350,000 shares $11.375 $3,981,250 $ 1,051
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Total Registration Fee -- -- -- $23,049 (3)
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(1) The proposed maximum offering price per share has been estimated solely
for the purpose of calculating the registration fee pursuant to Rule
457 of the Securities Act of 1933, as amended.
(2) Together with such number of indeterminate number of securities to be
offered as a result of any adjustment from stock splits, stock
dividends, exercise price adjustments or similar events.
(3) The registrant is registering through this amendment No. 1 an
additional 250,000 shares of Common Stock. A filing fee in the amount
of $22,299 has already been paid.
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 SECURITIES AND COMMISSION, ACTING PURSUANT TO
SECTION 8(a), MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. 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 it is
not soliciting an offer to buy these securities in any state in which the offer
or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION, AUGUST 10, 2000
PROSPECTUS
7,575,306 SHARES OF COMMON STOCK
NHANCEMENT TECHNOLOGIES INC.
Of the shares of common stock being offered, 3,179,702 shares are being
offered by the selling stockholders identified on pages 24 through 27 and are
being registered for resale. These shares of common stock include 1,081,074
shares underlying convertible debentures and 1,628,628 shares underlying
warrants held by the selling stockholders. We will not receive any proceeds from
the sale of the shares by the selling stockholders. However, we will receive the
proceeds upon the exercise of the warrants held by the selling stockholders.
The remaining 4,395,604 shares may be issued through a common stock
purchase agreement by and between Kedrick Investments Limited and us as
further described in this prospectus. We will receive the sale price of any
common stock that we sell through the common stock purchase agreement and
Kedrick Investments Limited may resell those shares pursuant to this
prospectus.
The selling stockholders may sell their shares in one or more
transactions in the over-the-counter market, on The Nasdaq SmallCap Market or
on any other exchange on which our common stock may be listed. They may also
sell in privately negotiated transactions or otherwise, or a combination of
such methods of sale, at market prices prevailing at the time of sale or
prices related to such prevailing market prices or at negotiated prices. The
selling stockholders may sell their shares to or through broker-dealers, and
such broker-dealers may receive compensation from the selling stockholders
and/or purchasers of the shares for which they may act as agent (which
compensation may be in excess of customary commissions). Kedrick Investments
Limited is an "underwriter" within the meaning of the Securities Act of 1933
in connection with its sale and the selling stockholders and any
participating broker-dealers may be deemed to be "underwriters" as defined in
the Securities Act of 1933. We cannot estimate at the present time the amount
of commissions or discounts, if any, that will be paid by the selling
stockholders on account of their sales of the shares from time to time. We
will indemnify Kedrick Investments Limited and the selling stockholders
against certain liabilities, including certain liabilities under the
Securities Act of 1933.
Our common stock is quoted on The Nasdaq Small-Cap Market under the
symbol "NHAN". On July 11, 2000, the last reported sales price for our common
stock was $11.1094 per share.
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INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE "RISKS OF INVESTING IN OUR SHARES" SECTION BEGINNING ON
PAGE 3 OF THIS PROSPECTUS.
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YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS. NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE
ANY INFORMATION THAT IS NOT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT
AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SHARES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE
DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is August __, 2000.
<PAGE>
TABLE OF CONTENTS
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Prospectus Summary......................................................................................1
About NHancement Technologies Inc. .....................................................................1
Risks of Investing in Our Shares........................................................................3
Use of Proceeds........................................................................................10
Common Stock Purchase Agreement........................................................................11
Convertible Debenture Purchase Agreement...............................................................17
Selling Stockholders...................................................................................19
How the Shares May Be Distributed......................................................................24
Legal Opinion..........................................................................................25
Experts................................................................................................25
Where You Can Find More Information....................................................................26
Incorporation of Certain Information by Reference......................................................26
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As used in this Prospectus, the terms "we," "us," "our," and "the Company" mean
NHancement Technologies, Inc. (unless the context indicates a different meaning)
and the term "common stock" means NHancement Technologies, Inc.'s common stock,
$.01 par value per share.
<PAGE>
PROSPECTUS SUMMARY
BECAUSE THIS IS A SUMMARY, IT DOES NOT CONTAIN ALL OF THE INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS. YOU SHOULD
CONSIDER THE INFORMATION AS DESCRIBED IN THE SECTION "RISKS OF INVESTING IN OUR
SHARES."
BUSINESS
We are a software applications and services company that specializes in
unified communications, collaborative commerce and multimedia solutions to help
companies improve internal and external communications functions. This includes
facilitation of an enterprise's electronic business transactions and customer
service interactions. Our company telephony products and services work in both
Internet-enabled environments and over standard telephone lines. Our products
orchestrate client use of telephone, e-mail, faxing, paging and Internet based
communications to keep in touch with customers and with one another. We have
developed an end-to-end solutions suite to enable companies to do business in
the office and on the road. By simplifying business communications and improving
access to distributed corporate information (data) resources, our products are
designed to help clients build solid customer relationships and maximize revenue
opportunities.
Our primary objective is to become a leading provider of communications
and data software products, systems and services for enterprise customers. Our
management believes that increased competition, shorter time to market trends
and the reduced importance of geographical borders make it imperative that
corporations achieve and maintain state-of-the-art communication and information
systems that provide a unified view of an enterprise's business functions on a
worldwide basis. We provide corporations and other businesses with communication
systems, data products and technological innovations designed to enhance
efficiency.
In addition, we design, develop, market and service profile selling
software products and services to corporate enterprises. This software is
designed to ascertain one-to-one customer-selling opportunities based on
marketing characteristics that are unique to the individual customer.
RECENT DEVELOPMENTS
On June 6, 2000, we exercised our rights to repurchase from former
vendors of one of our subsidiaries 216,000 shares of our common stock at a price
of approximately $3.65 per share.
In May 23, 2000, we announced that we plan to introduce "Personal
Communications Hub", a new product offering that is intended to provide our
customers with unifying communications and unifying information solutions.
Personal Communications Hub will utilize CISCO Systems' unified communications
platform, Unified Open Network Exchange. Our management believes that the
Personal Communications Hub suite of products and applications on the Unified
Open Network Exchange platform will provide our customers with scaled, carrier
grade IP-based solutions seamlessly across multiple channels. We expect to incur
substantial
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expenditures for equipment, systems, research and development, consultants
and personnel to implement this new service. As a result, our short-term
operating results and cash flows and overall financial condition may be
adversely affected in the short term.
We were incorporated in Delaware. Our principal corporate office is
located at 6663 Owens Drive, Pleasanton, California 94588, and our telephone
number is 925-251-3200.
THE OFFERING
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Common Stock offered by the selling stockholders.......3,179,702 shares (1)
Common Stock offered by the Company....................4,395,604 shares (2)
Common Stock outstanding...............................10,818,594 shares
Use of Proceeds .......................................We will not receive any of the proceeds from the
sale of the shares of common stock by the
selling stockholders, but we will receive proceeds
from the exercise of warrants and issuance of
shares of common stock pursuant to the Common Stock
Purchase Agreement. Such funds will be used by us
for working capital and other corporate purposes.
See "Proceeds from the Sale of Shares" and "Selling
Stockholders."
Risk Factors ..........................................Investing in the common stock involves a high
degree of risk. See "Risks of Investing in our
Shares."
</TABLE>
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(1) Includes 1,081,074 shares underlying convertible debentures and 1,628,627
shares underlying warrants. See "Selling Stockholders".
(2) Represents the estimated maximum number of shares which may be issued
through a common stock purchase agreement between Kendrick Investments
Limited and us.
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RISKS OF INVESTING IN OUR SHARES
INVESTING IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. BEFORE INVESTING IN OUR COMMON STOCK, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS THE OTHER INFORMATION
CONTAINED ELSEWHERE IN THIS PROSPECTUS.
WE HAVE A HISTORY OF NET LOSSES AND WE CANNOT BE CERTAIN OF FUTURE
PROFITABILITY.
Although we recorded net income of approximately $502,700 on net
revenues of $9.0 million for our second quarter ended March 31, 2000, and net
income of $745,700 on $17.7 million of net revenues for the six months ended
March 31, 2000, we sustained significant losses for the nine-month period ended
September 30, 1998 and the fiscal year ended September 30, 1999.
While we have recently returned to profitability, our financial
condition will be adversely affected if we fail to continue to produce positive
operating results. This could also:
- Adversely affect the future value of our common stock
- Adversely affect our ability to obtain debt or equity financing on
acceptable terms
- Prevent us from engaging in acquisition activity
OUR EQUITY AND DEBT FUNDING SOURCES MAY BE INADEQUATE TO FINANCE FUTURE
ACQUISITIONS.
The acquisition of complementary businesses and products is an element
of our business strategy. Our ability to engage in acquisition activity depends
on our ability to obtain debt or equity financing, neither of which may be
available or, if available, may not be on terms acceptable to us. Our inability
to obtain such financing would have a material adverse effect on our acquisition
strategy.
Both debt and equity financing involve certain risks. Debt financing
may require us to pay significant amounts of interest and principal payments,
reducing the resources available to us to expand our existing businesses.
Certain types of equity financing may be dilutive to our stockholders' interest
in our assets and earnings.
OUR COMMON STOCK MAY BE DILUTED.
The issuance of further shares and the eligibility of issued shares for
resale will dilute our common stock and may lower the price of our common stock.
If you invest in our common stock, your interest will be diluted to the extent
of the differences between the price per share you pay for the common stock and
the pro forma as adjusted net tangible book value per share of our common stock
at the time of sale. We calculate net tangible book value per share by
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calculating the total assets less intangible assets and total liabilities, and
dividing it by the number of outstanding shares of common stock.
Furthermore, we may issue additional shares, options and warrants and
we may grant additional stock options to our employees, officers, directors and
consultants under our stock option plan, all of which may further dilute our net
tangible book value.
OUR SALE OF SHARES UPON CONVERSION OF DEBENTURES AT A PRICE BELOW THE MARKET
PRICE OF OUR COMMON STOCK WILL HAVE A DILUTIVE IMPACT ON OUR STOCKHOLDERS.
We have issued debentures to certain investors that may convert into
common stock at a discount to the then-prevailing market price of our common
stock. Accordingly, the issuance of shares upon conversion of the principal
and interest under the debentures may have a dilutive impact on our
stockholders. Discounted sales resulting from the conversion of the
debentures could have an immediate adverse effect on the market price of the
common stock. Also, to the extent that debenture and warrant holders convert
their securities and sell the underlying shares into the market, the price of
our shares may decrease due to the additional shares in the market.
OUR NEW PRODUCTS AND STRATEGIC PARTNERING RELATIONSHIPS MAY NOT BE SUCCESSFUL.
We have announced a new product offering referred to as "Personal
Communications Hub" that is intended to provide our customers with unifying
communications and unifying information solutions. Personal Communications Hub
will utilize CISCO Systems' unified communications platform, Unified Open
Network Exchange. While we believe that the Personal Communications Hub suite of
products and applications on the Unified Open Network Exchange platform will
provide our customers with scaled, carrier grade IP-based solutions seamlessly
across multiple channels, there can be no assurance of our customers' acceptance
or adoption of Personal Communications Hub products. Moreover, we will need to
conform our existing products and applications onto the CISCO's Unified Open
Network Exchange platform. Such efforts could prove unsuccessful, and could
result in delays and cost overruns.
Further, we expect to incur substantial expenditures for equipment,
systems, research and development, consultants and personnel to implement this
new service. As a result, our operating results and cash flows may be adversely
affected and we anticipate incurring net operating losses in our fiscal year
ended September 30, 2000. Although we believe that this new product offering
will ultimately result in profitable operations, there can be no assurance that
the implementation of our service model will be successful.
4
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WE RELY UPON LEGACY VOICEMAIL SYSTEMS REVENUES.
Legacy voicemail systems revenues (which includes customer premises
equipment revenues) made up approximately 64.1% of our total revenues for the
quarter ended March 31, 2000 and 80.7% of our North American revenues.
Management believes that future revenues from legacy voicemail systems will
steadily decline over the next two years, due to the introduction of new unified
messaging systems, which integrate several diverse messaging technologies, such
as voicemail, email and facsimile. Our ability to transition our product sales
to the new unified messaging platforms will be critical to our future growth.
WE RELY UPON OUR DISTRIBUTOR AND SUPPLIER RELATIONSHIPS.
Our North American operations are based upon the integration of
hardware, software, and communications and data processing equipment
manufactured by others into systems designed to meet the needs of our
customers. Although we have agreements with a number of equipment
manufacturers, a major portion of our revenues is based upon products
manufactured by three companies. In this regard, we rely to a significant
extent on products manufactured (and services provided) by Centigram
Communications Corporation, products manufactured by Baypoint Innovations, a
division of Mitel, Inc., that purchased the customer premises equipment
business of Centigram Communications Corporation, and on products
manufactured by Interactive Intelligence, Inc., principally its enterprise
information center product, a next-generation communications server that
merges voice and data functions into a single computer-based system. Any
disruption in our relationships with Centigram Communications Corporation,
Baypoint Innovations, or Interactive Intelligence, Inc. would have a
significant adverse effect on our business for an indeterminate period of
time until new supplier relationships could be established. On June 9, 2000,
Centigram Communications Corporation announced that it was being acquired by
ADC Telecommunications, Inc. We have not had a prior relationship with ADC
Telecommunications, Inc. and therefore our relationship with Centigram
Communications Corporation may be adversely affected. Any interruption in the
delivery of products by key suppliers would materially adversely affect our
results of operations and financial condition.
WE ARE DEPENDENT UPON SIGNIFICANT CUSTOMERS.
We currently service approximately 1,000 customers. However, the
revenues from our three largest customers accounted for approximately 48.9%,
11.0% and 6.7% respectively of total revenues during the second quarter ended
March 31, 2000. No other customer accounted for over 5% of total revenues during
this period. This concentration of revenue results in additional risk to our
operations, and us and any disruption of orders from our largest customers would
have an adverse effect on our results of operations and financial condition.
Our Singapore subsidiary offers a wide range of infrastructure
communications equipment products. It has an established business providing test
measuring instrumentation and testing environments, and is the regional
distributor and test and repair center for Rohde & Schwarz test instruments.
This subsidiary's profitability depends in part on a steady stream of revenues
relating to the services performed for Rohde & Schwarz test instruments. Since
the subsidiary's revenues comprised approximately 41% of our total revenues for
the fiscal year ended September 30, 1999, and approximately 30.7% of our total
revenues for the quarter ended
5
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March 31, 2000, any material change in our relationship with our
manufacturers, including Rohde & Schwarz, would materially adversely affect our
results of operations and financial condition.
IF WE DO NOT COMPETE EFFECTIVELY, WE MAY SUFFER PRICE REDUCTIONS, REDUCED GROSS
MARGINS AND LOSS OF MARKET SHARE.
The voice processing and customer premises equipment and related
software markets are highly competitive and competition in this industry is
expected to further intensify with the introduction of new product enhancements
and new competitors. We compete with a number of larger integrated companies
that provide voice-processing products and services as subsets of larger product
offerings. Our existing and potential competitors include many large domestic
and international companies that have better name and product recognition in the
market for our products and services and related software, a larger installed
base of customers, and substantially greater financial, marketing and technical
resources than ourselves.
Our Singapore subsidiary competes against several large companies in
Singapore that are better capitalized. Although it has in the past managed to
compete successfully against these larger companies on the basis of its
engineering and product management expertise, no assurances can be given that
this expertise will allow the subsidiary to compete effectively with these
larger companies in the future. Further, various large manufacturers
headquartered outside of Singapore have established their own branch offices in
Singapore and also compete with it.
OUR REVENUES WILL LIKELY DECLINE IF WE DO NOT DEVELOP AND INTEGRATE THE
COMPANIES WE ACQUIRE.
We have in the past pursued, and plan to continue to pursue,
acquisition opportunities. Acquisitions involve a number of special risks,
including among others:
- Adverse short-term effects on our operating results
- The disruption of our ongoing business
- The risk of reduced management attention to normal daily operations
- Our dependence on the retention, hiring and training of key personnel and
the potential risk of loss of such personnel
- Our potential inability to successfully integrate the personnel,
operations, technology and products of acquired companies
- Unanticipated problems or unknown legal liabilities
- Adverse tax or financial consequences
Two of our prior acquisitions, namely the acquisition of Voice Plus
(now known as NHancement Technologies North America, Inc.) and Advantis Network
& Systems Sdn Bhd, a Malaysian company, in the past yielded operating results
that were significantly lower than expected. In fact, the poor performance of
Advantis Network & Systems Sdn Bhd led to its
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divestiture less than one year after we acquired the company. Accordingly, no
assurances can be given that the future performance of our subsidiaries will
be commensurate with the consideration paid to acquire these companies. If we
fail to establish the needed controls and do not manage growth effectively,
our operating results, cash flows and overall financial condition will be
adversely affected.
OUR INTERNATIONAL OPERATIONS INVOLVE RISKS THAT MAY ADVERSELY AFFECT OUR
OPERATING RESULTS.
Our Singapore subsidiary accounted for approximately 41% of our
revenues for the fiscal year ended September 30, 1999 and approximately 30.7% of
our revenues for the quarter ended March 31, 2000. There are risks associated
with our international operations, including:
- Our dependence on members of management of the subsidiary and the risk of
loss of customers in the event of the departure of key personnel
- Unexpected changes in or impositions of legislative or regulatory
requirements
- Potentially adverse taxes and adverse tax consequences
- The burdens of complying with a variety of foreign laws
- Political, social and economic instability
- Changes in diplomatic and trade relationships
Any one or more of these factors could negatively affect the performance of
our subsidiary and result in a material adverse change in our results of
operations and financial condition.
OUR STOCK PRICE COULD EXPERIENCE PRICE AND VOLUME FLUCTUATIONS.
The markets for securities such as our common stock historically have
experienced extreme price and volume fluctuations during certain periods. Other
factors that also may adversely affect the market price of our common stock
include the following:
- New product developments
- Technological and other changes in the voice-messaging and communications
industries
- General economic conditions
- Quarterly variations in our results of operations
IT IS DIFFICULT TO REPLACE OUR KEY PERSONNEL.
Our business depends upon the services of its executives and certain
key personnel, including Douglas S. Zorn, our President and Chief Executive
Officer, John R. Zavoli, our Vice President of Finance and Chief Financial
Officer, and Ken Murray, our Executive Vice President, Global Sales. Management
changes often have a disruptive effect on businesses and can lead to the loss of
key employees because of the uncertainty inherent in change. In 1999 and
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<PAGE>
early 2000, we had significant changes in our key personnel. We cannot be
certain that we will be able to successfully attract and retain key personnel
since the job market in the greater San Francisco Bay Area is intensely
competitive. The loss of the services of any one or more of such key
personnel, if not replaced, or the inability to attract such key personnel,
could harm our business.
FAILURE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR
ABILITY TO COMPETE.
We do not have any patents or copyrights and while we intend to file
for copyright and patent protection, we currently rely on general common law and
confidentiality and non-disclosure agreements with our key employees to protect
our trade secrets. Our success depends on our ability to adequately protect our
intellectual property rights. Our efforts to protect our intellectual property
may not be sufficient against unauthorized third party copying or use or the
application of reverse engineering, and existing laws afford only limited
protection. In addition, existing laws may change in a manner that adversely
affects our proprietary rights. Furthermore, policing the unauthorized use of
our product is difficult, and expensive litigation may be necessary in the
future to enforce our intellectual property rights.
OUR PRODUCTS COULD INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS,
RESULTING IN COSTLY LITIGATION AND THE LOSS OF SIGNIFICANT RIGHTS.
We may be subject to legal proceedings and claims for alleged
infringement of proprietary rights of others, particularly as the number of
products and competitors in our industry grow and functionalities of products
overlap. This risk is higher in a new market in which a large number of
patent applications have been filed but are not yet publicly disclosed. We
have limited ability to determine which patents our products may infringe and
take measures to avoid infringement. Any litigation could result in
substantial costs and diversion of management's attention and resources.
Further, parties making infringement claims against us may be able to obtain
injunctive or other equitable relief, which could prevent us from selling our
products or require us to enter into royalty or license agreements which are
not advantageous to us.
IF WE FAIL TO ADEQUATELY RESPOND TO RAPID TECHNOLOGICAL CHANGES, OUR PRODUCTS
WILL BECOME OBSOLETE OR UNMARKETABLE.
Advances in technology could render our products obsolete and
unmarketable. We believe that to succeed we must enhance our software
products and underlying technology, develop new products and technologies on
a timely basis, and satisfy the increasingly sophisticated requirements of
our customers. We may not successfully respond to technological change,
evolving industry standards or customer requirements. If we are unable to
adequately respond to these changes, our revenues could decline. In
connection with the introduction of new products and enhancements, we have
experienced development delays and related cost overruns, which are not
unusual in the software industry. To date, these delays have not had a
material impact on our revenues. If new releases or products are delayed or
do not achieve broad market acceptance, we could experience a delay or loss
of revenues and customer dissatisfaction.
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IF OUR SOFTWARE CONTAINS DEFECTS, WE COULD LOSE CUSTOMERS AND REVENUES.
Software as complex as ours often contains unknown and undetected
errors or performance problems. Many defects are frequently found during the
period immediately following the introduction of new software or enhancements
to existing software. Although we attempt to resolve all errors that we
believe would be considered serious by our customers, our software may not be
error-free. Undetected errors or performance problems may be discovered in
the future. This could result in lost revenues or delays in customer
acceptance and would be detrimental to our reputation, which could harm our
business.
RISKS RELATING TO FORWARD LOOKING STATEMENTS.
Certain statements contained in this prospectus, including, without
limitation, statements containing the words "believes," anticipates," "may,"
"intends," "expects" and words of similar import, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements (or industry results, performance or achievements) expressed or
implied by these forward-looking statements to be substantially different from
those predicted. The factors that could affect our actual results include the
following:
- general economic and business conditions, both nationally and
internationally
- competition
- changes in business strategy or development plans
- technological, evolving industry standards, or other problems that
could delay the sale of our products
- our inability to obtain appropriate licenses from third parties,
protect our trade secrets, operate without infringing upon the
proprietary rights of others, or prevent others from infringing on
our proprietary rights
- our inability to obtain sufficient financing to continue to expand
operations
- changes in demand for products and services by our customers
Certain of these factors are discussed in more detail elsewhere in this
prospectus, including under the caption "Risks of Investing in Our Shares." You
should also consider carefully the risks described in this prospectus or
detailed from time to time in our filings with the Securities and Exchange
Commission.
9
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We do not undertake any obligation to publicly update or revise any
forward-looking statements contained in this prospectus or incorporated by
reference, whether as a result of new information, future events or otherwise.
Because of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus might not transpire.
PROCEEDS FROM THE SALE OF SHARES
We will not receive any proceeds from the sale of shares of our
common stock by the selling stockholders. However, we may receive up to
$8,211,812 from the exercise of warrants and up to $50,000,000 upon the
issuance of common stock pursuant to the terms of the common stock purchase
agreement between Kedrick Investments Limited and us. Such proceeds, if any,
will be used for working capital and other corporate purposes.
We expect to incur expenses of approximately $58,049 in connection with
the registration of the shares.
10
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
Overview
Kedrick Investments Limited, a British Virgin Islands corporation,
and we signed a common stock purchase agreement, dated May 24, 2000 and
amended as of June 30, 2000, for the future issuance and purchase of shares
of our common stock. The stock purchase agreement establishes what is
sometimes termed an equity line or an equity drawdown facility. In general,
the drawdown facility operates like this: the investor, Kedrick Investments
Limited, has committed up to $50 million to purchase shares of our common
stock over a 14 month period. Once every 18 trading days, we may request a
draw of up to $4,000,000 of that money, subject to a formula based on the
average common stock price and average trading volume. Each draw down must be
for at least $250,000. At the end of an 18 day trading period following the
draw down request, the actual draw down amount is determined based on the
volume-weighted average stock price during that 18 day period. We then use
the formulas in the common stock purchase agreement to calculate the amount
of money that Kedrick Investments Limited will provide to us and the number
of shares of our common stock we will issue to Kedrick Investments Limited in
return for that money. The formulas for determining the actual draw down
amounts, the number of shares we issue to Kedrick Investments Limited and the
price per share paid by Kedrick Investments Limited are described in detail
beginning on page 12.
Kedrick Investments Limited will receive an eight percent (8%) discount
to the average daily market price of our common stock for the 18-day period,
weighted by trading volume. We will receive the amount of the draw down less an
escrow agent fee of $1,500 and a 2% placement fee payable to the placement
agent, Grady, Hatch & Company, which introduced Kedrick Investments Limited to
us. Grady, Hatch & Company is not obligated to purchase any of our shares.
We are under no obligation to request a draw for any period. We may
make up to a maximum of twelve (12) draws; however, the aggregate total of all
draws cannot exceed $50 million and no single draw can exceed $4 million.
In lieu of providing Kedrick Investments Limited with a minimum
aggregate drawdown commitment, we have issued to Kedrick Investments Limited
stock purchase warrants to purchase 120,000 shares of our common stock with an
exercise price of $20.82. The warrants expire May 24, 2003. The common stock
issuable upon exercise of those warrants is included in the registration
statement of which this prospectus is a part.
Based on a review of our trading volume and stock price history and
the number of drawdowns we could make, we are registering 4,395,604 shares of
common stock for possible issuance under the common stock purchase agreement
and 120,000 shares of common stock underlying the warrants delivered to
Kedrick Investments Limited. The listing requirements of The Nasdaq SmallCap
Market prohibit us from issuing 20% or more of our issued and outstanding
shares of common stock in a single transaction if the shares of common stock
may be issued for less than the greater of market value or book value unless
we get stockholder approval. Based on shares of common stock issued and
outstanding on May 24, 2000, the date of the closing of the common stock
purchase agreement, we may not issue more than 2,089,820
11
<PAGE>
shares under the common stock purchase agreement and the Kedrick Investments
Limited warrant, without the approval of our stockholders. Because 120,000 of
these shares of common stock are committed to the Kedrick Investments Limited
warrant, if we wish to draw amounts under the common stock purchase agreement
which would cause an issuance of more than 1,969,820 shares of common stock
under the common stock purchase agreement, we must receive stockholder
approval prior to any such drawdown.
In addition, the common stock purchase agreement does not permit us to
drawdown funds if the issuance of shares of common stock to Kedrick Investments
Limited pursuant to the drawdown would result in Kedrick Investments Limited
owning more than 9.9% of our outstanding common stock on the date we exercise a
drawdown.
THE DRAW DOWN PROCEDURE AND THE STOCK PURCHASES
We may request a draw down by faxing a draw down notice to Kedrick
Investments Limited, stating the amount of the draw down we wish to exercise and
the minimum threshold price, if any, at which we are willing to sell the shares
of our common stock. The next 18 trading days immediately following the draw
down notice are used to determine the actual amount of money Kedrick Investments
Limited will provide and the number of shares of our common stock we will issue
in return. Either at the end of each week within each 18 trading day period or
the 18th trading day is the draw down settlement date when the amount of the
draw and the number of shares of our common stock to be issued is determined and
delivered based on the formulas below.
AMOUNT OF THE DRAW
The amount of the draw down is the amount we have requested, except
that the amount is capped based on the following formula:
- Average daily trading volume for the 45 trading days immediately
prior to the date we give notice of the draw down, multiplied by
18;
MULTIPLIED BY
- The average of the volume-weighted average daily prices* for the
18 trading days immediately prior to the date we give notice of
the draw down;
MULTIPLIED BY
- 20%
If the volume-weighted average daily price for any given trading day is
below the threshold price set by us in the draw down notice during the 18
trading days immediately following the date we give notice, then the draw down
amount that Kedrick Investments Limited is obligated to pay is correspondingly
reduced by 1/18th for each day that is below the threshold price. Thus, if the
daily price for a day is below the threshold price we will not issue any shares
--------
* As reported by Bloomberg Financial using the AQR Function.
12
<PAGE>
of our common stock and Kedrick Investments Limited will not purchase any shares
of our common stock for that day.
NUMBER OF SHARES OF OUR COMMON STOCK
To determine the number of shares of our common stock we must issue in
connection with a draw down, take 1/18 of the draw down amount and for each of
the 18 trading days immediately following the date we give notice of the draw
down, divide it by 92% of the volume-weighted average daily trading price of our
common stock on such date.* The 92% accounts for Kedrick Investments Limited's
8% discount. The sum of these 18 daily calculations produces the number of
shares of our common stock we will issue, unless the volume-weighted average
daily price for any given trading day is below the threshold amount, in which
case that day is not part of the sum. The price per share Kedrick Investments
Limited ultimately pays is determined by dividing the final draw down amount by
the number of shares we issue to Kedrick Investments Limited.
SAMPLE CALCULATION OF STOCK PURCHASE
The following is an example of the calculation of the draw down amount
and the number of shares of our common stock we would issue to Kedrick
Investments Limited in connection with the draw down based on hypothetical
assumptions.
SAMPLE DRAW DOWN AMOUNT CALCULATION.
We provide a draw down notice to Kedrick Investments Limited that we
wish to draw down $4,000,000,** which is the maximum amount for any
draw. The average daily trading volume for the 45 trading days prior to
the notice is 300,000. The average of the volume-weighted average daily
prices of our common stock for the 18 trading days prior to the notice
is $14.00. The maximum amount we can draw down under the formula is
capped at the $4,000,000 requested.***
Suppose that the notice specifies a threshold amount of $15.00, below
which we will not sell any shares of common stock to Kedrick
Investments Limited during this draw down period. If the
volume-weighted average daily price of our common stock for each of the
next 18 trading days following the draw down notice is at least $15.00,
we will be able to draw the maximum $4,000,000 amount. If on the other
hand the volume-weighted average daily price of our
------------
* The discount price which can be increased by 0.1% for every $4.00 increase in
the threshold price over $14.00 until it equals 94.5% except that the discount
price shall be increased to 94.5% if our market capitalization is equal to or
exceeds one billion dollars.
** Maximum draw down can be increased by $500,000 for every $2.00 increase in
the threshold price over $14.00.
*** Calculation is: 300,000 x 18 or 5,400,000 x $14.00 or $75,600,000 times .2
or $15,120,000, above the $4,000,000 maximum.
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<PAGE>
common stock is below $15.00 on two of those 18 days, for example, the
$4,000,000 would be reduced by 1/18 for each of those days and the draw
down amount would be 16/18 of $4,000,000 or $3,555,555.
SAMPLE CALCULATION OF NUMBER OF SHARES OF OUR COMMON STOCK
Assume that the draw down amount for the draw down period is $4,000,000
and assume that the volume-weighted average daily price for our common
stock is as set forth in the table below. Suppose that the notice
specifies a threshold amount of $15.00. The number of shares of our
common stock to be issued based on any trading day during the draw down
period is calculated from the formula: (1/18 of the draw down amount)
divided by (92% of the volume weighted average daily price).
For example, for the first trading day in the example in the table
below, the calculation is as follows: (1/18 of $4,000,000) divided by
(92% of $16.00 per share) or 15,096 shares of common stock. Perform
this calculation for each of the 18 measuring days, excluding any days
on which the volume-weighed average daily price is below the $15.00
threshold amount, and add the results to determine the number of shares
of common stock to be issued. In the table below, there are two days
which must be excluded: days 8 and 9.
After excluding the days that we are below the threshold price, the
amount of our drawdown in this example would be $3,555,552 and the
total number of shares of common stock we would issue to Kedrick
Investments Limited for this drawdown request would be 242,339, so long
as those shares of common stock would not cause Kedrick Investments
Limited to beneficially own more than 9.9% of our outstanding common
stock. Kedrick Investments Limited would pay $14.67 per share for these
shares of common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF OUR
VOLUME-WEIGHTED AVERAGE 1/18 OF REQUESTED DRAW COMMON STOCK TO BE ISSUED
TRADING DAY DAILY STOCK PRICE** DOWN AMOUNT** FOR THE TRADING DAY
----------- ------------------- ------------- -------------------
<S> <C> <C> <C>
1 $16.00 $222,222 15,096
2 16.25 222,222 14,864
3 16.00 222,222 15,096
4 15.75 222,222 15,336
5 15.50 222,222 15,583
6 15.75 222,222 15,336
7 15.50 222,222 15,583
8 14.75 *
9 14.50 *
10 15.50 222,222 15,583
11 15.75 222,222 15,336
12 16.00 222,222 15,096
13 16.00 222,222 15,096
14 16.25 222,222 14,864
15 16.50 222,222 14,639
16 16.50 222,222 14,639
17 16.00 222,222 15,096
18 16.00 222,222 15,096
</TABLE>
* Excluded because the volume-weighted average daily price is below the
threshold specified in this hypothetical draw down notice.
** The share prices are illustrative only and should not be interpreted as a
forecast of share prices.
14
<PAGE>
There will be a maximum of 12 Draw Down Periods and a
settlement in each Draw Down Period either on a weekly basis or on the
first trading day after each Draw Down Pricing Period, at the election
of Kedrick Investments Limited. Kedrick Investments Limited shall send
the applicable purchase price to the escrow agent and we shall deliver
the shares of common stock purchased to the Depository Trust Company to
be credited to the Kedrick Investments Limited account within three
trading days after each settlement upon confirmation by the escrow
agent of receipt of the purchase price.
In the above example, and assuming one settlement, we would
receive $3,555,552 less a 2% fee to Grady, Hatch & Company, the
placement agent, less a $1,500 escrow fee, or net proceeds $3,482,941
for the entire Draw Down Pricing Period. The delivery of the requisite
number of shares of common stock and payment of the draw will take
place through the escrow agent, Esptein, Becker & Green, P.C. of New
York.
NECESSARY CONDITIONS BEFORE KEDRICK INVESTMENTS LIMITED IS OBLIGED TO PURCHASE
OUR SHARES OF OUR COMMON STOCK
The following conditions must be satisfied before Kedrick Investments
Limited is obligated to purchase the shares of our common stock that we wish to
sell from time to time:
- A registration statement for the shares of common stock we
will be issuing must be declared effective by the Securities
and Exchange Commission and must remain effective and
available as of the draw down settlement date for making
resales of the shares of common stock purchased by Kedrick
Investments Limited;
- There can be no material adverse change in our business,
operations, properties, prospects or financial condition;
- We must not have merged or consolidated with or into another
company or transferred all or substantially all of our assets
to another company, unless the acquiring company has agreed to
honor the Common Stock Purchase Agreement;
15
<PAGE>
- No statute, rule, regulation, executive order, decree, ruling
or injunction may be in effect which prohibits consummation of
the transactions contemplated by the Common Stock Purchase
Agreement;
- No litigation or proceeding adverse to us, Kedrick Investments
Limited or their affiliates, can be pending, nor can any
investigation by any governmental authority be threatened
against us or them seeking to restrain, prevent or change the
transactions contemplated by the Common Stock Purchase
Agreement or seeking damages in connection with such
transactions; and
- Trading in our shares of common stock must not have been
suspended by the Securities and Exchange Commission or The
Nasdaq SmallCap Market, nor shall minimum prices have been
established on securities whose trades are reported by The
Nasdaq SmallCap Market.
A further condition is that Kedrick Investments Limited may not
purchase more than 19.9% of shares of our common stock issued and outstanding
on May 24, 2000 without obtaining approval from our stockholders for such
excess purchases. In addition, the Common Stock Purchase Agreement does not
permit us to draw down funds if the issuance of shares of common stock to
Kedrick Investments Limited pursuant to the drawdown would result in Kedrick
Investments Limited owning more than 9.9% of our outstanding common stock on
the drawdown exercise date.
RESTRICTIONS ON FUTURE FINANCINGS
The Common Stock Purchase Agreement limits our ability to raise money
by selling our securities for cash at a discount to the market price until the
earlier of July 23, 2001 or the date which is 60 days after Kedrick Investments
Limited has purchased the maximum of $50,000,000 worth of common stock from us
under the Common Stock Purchase Agreement.
There are exceptions to this limitation for securities sold in the
following situations:
- in a registered public offering which is underwritten by one
or more established investment banks;
- pursuant to any presently existing or future employee benefit
plan which plan has been or is approved by our stockholders;
- pursuant to any compensatory plan for a full-time employee or
key consultant;
- in connection with a strategic partnership or other business
transaction, the principal purpose of which is not simply to
raise money; and
- in a transaction to which Kedrick Investments Limited gives
its written approval.
16
<PAGE>
COSTS OF CLOSING THE TRANSACTION
At the closing of the transaction on May 24, 2000, we delivered the
requisite opinion of counsel to Kedrick Investments Limited and paid the escrow
agent, Esptein, Becker & Green, P.C. of New York, $40,000 for Kedrick
Investments Limited's legal, administrative and escrow costs.
TERMINATION OF THE COMMON STOCK PURCHASE AGREEMENT
Kedrick Investments Limited may terminate the equity draw down facility
under the Common Stock Purchase Agreement if any of the following events occur:
- We suffer a material adverse change in our business,
operations, properties, or financial condition;
- Our shares of common stock are delisted from The Nasdaq
SmallCap Market unless such delisting is in connection with
the listing of such shares of common stock on a comparable
stock exchange in the United States;
- We file for protection from creditors; or
- This registration statement is not effective by August 31,
2000.
INDEMNIFICATION OF KEDRICK INVESTMENTS LIMITED
Kedrick Investments Limited is entitled to customary indemnification
from us for any losses or liabilities suffered by it based upon material
misstatements or omissions from the registration statement and the prospectus,
except as they relate to information supplied by Kedrick Investments Limited to
us for inclusion in the registration statement and prospectus.
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
On May 19, 2000, we entered into a convertible debentures purchase
agreement with certain investors in the aggregate principal amount of
$5,800,000. On June 15, 2000, we amended certain terms of the convertible
debentures.
The convertible debentures are set to mature on May 30, 2001 with
interest to accrue at 8% per annum from the date such convertible debentures
were issued until the earlier of conversion into shares of our common stock or
May 30, 2001, payable quarterly in arrears, on July 1, October 1, January 1 and
May 1 of each year, commencing July 1, 2000.
The convertible debentures are convertible by the holder into shares
of our common stock at any time prior to the close of business on May 30,
2001. The conversion price, as amended, is equal to the lesser of $13.00 per
share or 91% of the average of the three lowest bid prices during the ten
trading days immediately preceding the date on which the holder of the
debenture gives us notice of the intent to convert the debenture, provided
that the conversion price shall not be less than $8.00 per share. We have the
right to redeem the convertible debentures for the sum of 105% of the unpaid
principal
17
<PAGE>
and any accrued or unpaid interest. We are obligated to reserve for issuance
upon conversion a sufficient number of shares of common stock and to register
such reserved shares of common stock and maintain an effective registration
statement for such shares of common stock. The beneficial conversion feature
associated with the issuance of the convertible debenture will result in a
charge of $ 1,088,075 to interest expense during the third quarter of our
current fiscal year.
We received proceeds from the sale of the debentures in the amount of
$5,800,000, less an escrow, administrative and legal fee of $15,000 to Epstein
Becker & Green, P.C., and a 3% transaction fee payable to the placement agent,
Grady, Hatch & Company, and a 3% transaction fee payable to AMRO International,
S.A.
18
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
ownership of our common stock by selling stockholders as of the date of this
prospectus.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OF COMMON OWNERSHIP OF COMMON
STOCK BEFORE OFFERING(1) NUMBER OF STOCK AFTER OFFERING(4)
SELLING STOCKHOLDERS ------------------------ SHARES BEING ---------------------------
NUMBER PERCENTAGE(2) OFFERED(3) NUMBER PERCENTAGE(2)
-------------------------------------------- ---------- -------------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Abergel, Joseph 4,000(5) * 4,000 0 *
Adams Jr., George J. 4,000(6) * 4,000 0 *
Adams, Leonard J. 3,750(6) * 3,750 0 *
Admiral Capital Corporation 55,000(6) * 55,000 0 *
Afro-Asia Pte. Ltd. 750(6) * 750 0 *
Anderson, Suzette 32,500(6) * 7,500 25,000 *
Barton, Kenneth A. 25,325(7) * 25,325 0 *
Baynes, Brian 1,218(6) * 1,218 0 *
Boyersmith, Joseph 100(6) * 100 0 *
Brassfield, Jerry 2,500(6) * 2,500 0 *
Brehm, William 1,500(6) * 1,500 0 *
Chai, Cheng Huan 1,250(6) * 1,250 0 *
8607 Colonial Group 25,000(8) * 25,000 0 *
Dallas, Barbara 938(6) * 938 0 *
Darling, Greg 400,000 (9) 3.7% 200,000 200,000 1.8%
Das, Santanu 26,875(6) * 26,875 0 *
Dunlae, Andrew 3,750(6) * 3,750 0 *
Eickman, Bradley 67,500(6) * 7,500 60,000 *
Elfland, Stuart 3,750(6) * 3,750 0 *
Gillespie, James(12) 744,565(13) 6.9% 227,500 517,065 4.8%
19
<PAGE>
Gilman, Robert 59,500(14) * 59,500 0 *
Glass, Gilbert L. 56,000(11) * 56,000 0 *
Glover, Richard 600,000(10) 5.5% 300,000 300,000 2.8%
Goei, Esmond T.(15) 52,394(16) * 52,394 0 *
Goh, Chang Chua 1,500(6) * 1,500 0 *
Goldberg, Mark 68,750(17) * 68,750 0 *
Grodko, Alan 3,750(6) * 3,750 0 *
Grodko, Jeffrey 3,750(6) * 3,750 0 *
Gruber, Jon 250(6) * 250 0 *
Gulechha, Saurabh 125,000 1.1% 50,000 75,000 *
Gulechha, Vaibhav 125,000 1.1% 50,000 75,000 *
Hart, David E. 701(6) * 701 0 *
Heilshorn, John, Jr. 3,750(6) * 3,750 0 *
Higgins, Brian 500(6) * 500 0 *
Hirschfield, Jack 938(6) * 938 0 *
Hsu, Ming 1,875(6) * 1,875 0 *
Husarsky, Morris 3,750(6) * 3,750 0 *
Iyengar, Ulma Dasika 1,875(6) * 1,875 0 *
Kubin, Michael & Nicole 2,813(6) * 2,813 0 *
Leonardi, Lorianne 158,000(5) 1.4 158,000 0 *
Leonaris Trust Ltd. 1,250(6) * 1,250 0 *
Lewis, Dr. Charles 938(6) * 938 0 *
Lim, Philip Seng Choong 609(6) * 609 0 *
Low Keng Tee 25,000(6) * 25,000 0 *
Martin, Stanley (Heleric) 1,875(6) * 1,875 0 *
20
<PAGE>
Marucci, Edward 25,000(6) * 25,000 0 *
McKee, Stan 640(6) * 640 0 *
Merz, Fred 2,500(5) * 2,500 0 *
Meyers, Michael 1,250(6) * 1,250 0 *
Milburn, Catherine Knoll 250(6) * 250 0 *
Milchman Family Partner, Inc. 3,750(6) * 3,750 0 *
Moh, Lawrence 5,000(6) * 5,000 0 *
Nowak, Diane 107,500(18) * 107,500 0 *
Paladino, Albert 750(6) * 750 0 *
Perrine, Gary & Rebecca 50,000(6) * 50,000 0 *
SAGAX FUND II Ltd. (Hardy) 3,750(6) * 3,750 0 *
Saker, Wayne 3,750(6) * 3,750 0 *
Saud, Juana Elsaca 5,625(6) * 5,625 0 *
Scheck, Dale 1,875(6) * 1,875 0 *
Schmier, Robert J.(19) 50,000(5) * 50,000 0 *
Schwartz, Bernard 3,550(20) * 3,550 0 *
Schwimer, Alfred & Cheryl 15,000(6) * 15,000 0 *
Soon, Kian Lee 714(6) * 714 0 *
Tan, Michael Kiah Teck 1,125(6) * 1,125 0 *
Twardosz, Wayne 1,875(6) * 1,875 0 *
Visconti, Allen 1,875(6) * 1,875 0 *
W.S. Ventures 1,250(6) * 1,250 0 *
Walko, N. Bruce(19) 50,000(5) * 50,000 0 *
Walnut Capital 1,250(6) * 1,250 0 *
21
<PAGE>
Watson, Terry 250(6) * 250 0 *
Williams, Richard 26,250(6) * 26,250 0 *
Windsor, George 500(6) * 500 0 *
Zorn, Douglas S.(21) 526,000(22) 4.9% 161,375 364,625 3.4%
Kedrick Investments Limited 120,000(23) 1.1% 120,000 0 *
Amro International, S.A. 186,393(24) 1.7% 372,786(25) 0 *
Baldwin, Lucian T. 46,598(24) * 93,196(25) 0 *
Celeste Trust Reg 46,598(24) * 93,196(25) 0 *
Deephaven Private Placement Trading Ltd. 186,393(24) 1.7% 372,786(25) 0 *
(26)
Esquire Trade & Finance Inc. 46,598(24) * 93,196(25) 0 *
Hackley, Bartlett 9,319(24) * 18,638(25) 0 *
Jacobson, Allen 9,319(24) * 18,638(25) 0 *
Saker, Wayne 9,319(24) * 18,638(25) 0 *
</TABLE>
*Represents less than 1%.
(1) Represents shares of common stock beneficially owned by the named
individual, including shares of common stock that the person has the
right to acquire within 60 days of the date of this prospectus. Unless
otherwise noted, all persons listed have sole voting and sole
investment power.
(2) Based on 10,818,594 shares of common stock issued and outstanding as of
the date of this prospectus.
(3) Does not constitute a commitment to sell any or all of the stated
number of shares of common stock. The number of shares of common stock
offered shall be determined from time to time by each selling
stockholder in his or her sole discretion.
22
<PAGE>
(4) Assumes all the shares of common stock are sold pursuant to this
prospectus and that no other shares of common stock are acquired or
disposed of by the selling stockholders prior to the termination of
this prospectus.
(5) Represents shares of common stock issuable upon the exercise of
warrants at an exercise price of $3.4275 per share.
(6) Represents shares of common stock issuable upon the exercise of certain
warrants at an exercise price of $4.80 per share.
(7) Includes 25,000 and 325 shares of common stock issuable upon the
exercise of warrants at an exercise price of $4.80 per share and
$3.4275 per share respectively.
(8) Represents shares of common stock issuable upon the exercise of
warrants at an exercise price of $2.3680 per share.
(9) Includes 100,000 shares of common stock issuable upon the exercise of
certain warrants at an exercise price of $1.525 per share.
(10) Includes 150,000 shares of common stock issuable upon the exercise
of certain warrants at an exercise price of $1.525 per share.
(11) Includes 50,000 and 6,000 shares of common stock issuable upon the
exercise of warrants at an exercise price of $4.80 per share and
$3.4275 per share respectively.
(12) Mr. Gillespie is a former director.
(13) Includes 27,500 shares of common stock issuable upon the exercise of
warrants at an exercise price of $4.80 per share and 200,000 shares of
common stock isssuable upon the exercise of warrants at an exercise
price of $3.4275 per share.
(14) Includes 57,500 and 2,000 shares of common stock issuable upon the
exercise of warrants at an exercise price of $4.80 per share and
$3.4275 per share respectively.
(15) Mr. Goei is a former Chairman of the Board, President and Chief
Executive Officer.
(16) Includes 51,519 and 875 shares of common stock issuable upon the
exercise of warrants at an exercise price of $4.80 per share and
$3.4275 per share respectively.
(17) Represents shares of common stock issuable upon the exercise of
warrants at an exercise price of $1.00 per share.
(18) Includes 7,500 shares of common stock issuable upon the exercise of
warrants at an exercise price of $4.80 per share, 50,000 shares of
common stock issuable upon the exercise of warrants at an exercise
price of $2.368 and 50,000 shares of common stock issuable upon the
exercise of warrants at an exercise price of $3.4275.
(19) Mssrs. Walko and Schmier are directors.
23
<PAGE>
(20) Includes 2,250 and 1,300 shares of common stock issuable upon the
exercise of warrants at an exercise price of $4.80 per share and
$3.4275 per share respectively.
(21) Mr. Zorn is our President and Chief Executive Officer.
(22) Includes 61,375 shares of common stock issuable upon the exercise of
warrants at an exercise price of $4.80 per share, 100,000 shares of
common stock issuable upon the exercise of warrants at an exercise
price of $3.4275 per share and 225,000 options to purchase shares of
common stock exercisable immediately.
(23) Represents 120,000 shares of common stock issuable upon the exercise of
warrants pursuant to the Common Stock Purchase Agreement with Kedrick
Investments Limited.
(24) Represents a portion of the shares of common stock issuable upon
conversion of certain convertible debentures under the Convertible
Debenture Purchase Agreement described in this registration statement
based on the number of shares of common stock that would be required to
be registered upon conversion of all the convertible debentures as of
July 11, 2000.
(25) Represents a portion of the shares of common stock issuable upon
conversion of certain convertible debentures under the Convertible
Debenture Purchase Agreement described in this registration statement.
The Convertible Debenture Purchase Agreement requires registration of
200% of the shares of common stock issued upon conversion of the
convertible debentures based on the number of shares of common stock
that would be required to be registered upon conversion of all the
convertible debentures as of July 11, 2000.
(26) Deephaven Private Placement Trading Ltd. is a private investment fund
that is owned by its investors and is managed by Deephaven Capital
Management LLC. Deephaven Capital Management LLC has voting and
investment control over the shares listed above owned by Deephaven
Private Placement Trading Ltd. Deephaven Capital Management LLC is an
indirect subsidiary of Knight/Trimark Group, Inc.
HOW THE SHARES MAY BE DISTRIBUTED
The selling stockholders have advised us that they may from time to
time sell all or a portion of the shares offered in one or more transactions in
the over-the-counter market, on The Nasdaq SmallCap Market, or on any other
exchange on which the common stock may then be listed, in privately negotiated
transactions or otherwise, or a combination of such methods of sale, at market
prices prevailing at the time of sale or prices related to such prevailing
market prices or at negotiated prices. The selling stockholders may effect such
transactions by selling the shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the selling shareholders and/or purchasers of
the shares for whom they may act as agent (which compensation may be in excess
of customary commissions). The selling stockholders and any participating
broker-dealers may be deemed to be "underwriters" within the meaning of Section
2(4) of the Securities Act of 1933.
24
<PAGE>
Neither the selling shareholders nor we can estimate at the present time the
amount of commissions or discounts, if any, that will be paid by the selling
shareholders on account of their sales of the shares from time to time.
Because Kedrick Investments Limited, is deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act of 1933, and the
remaining selling shareholders may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act of 1933, the selling shareholders
will be subject to prospectus delivery requirements under the Securities Act of
1933. Furthermore, in the event of a "distribution" of securities, the selling
shareholders, any selling broker-dealer, and any "affiliated purchasers" may be
subject to Regulation M under the Securities Exchange Act of 1934, as amended,
which prohibits certain activities for the purpose of pegging, fixing or
stabilizing the price of securities in connection with an offering.
Under the securities laws of certain states, the shares may be sold
only through registered or licensed broker-dealers or pursuant to available
exemptions from such requirements. In addition, in certain states the shares may
not be sold unless the shares have been registered or qualified for sale or an
exemption from such requirement is available and is complied with.
We will pay certain expenses in connection with this offering,
estimated to be approximately $57,299 but we will not pay for any underwriting
commissions and discounts, if any, or counsel fees or other expenses of the
selling stockholders. We have agreed to indemnify the selling shareholders,
their directors, officers, agents and representatives, and any underwriters,
against certain liabilities, including certain liabilities under the Securities
Act of 1933. The selling stockholders have also agreed to indemnify us, our
directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act of 1933.
LEGAL OPINION
Broad and Cassel, a partnership including professional associations,
201 South Biscayne Boulevard, Suite 3000, Miami, Florida 33131, is giving an
opinion regarding the validity of the offered shares of common stock.
EXPERTS
The financial statements incorporated by reference in this prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are incorporated herein in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting.
25
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission in connection with this offering. This prospectus does
not contain all of the information set forth in the registration statement, as
permitted by the Rules and Regulations of the Securities and Exchange
Commission. Whenever reference is made in this prospectus to any contract or
other document of ours, the reference may not be complete and you should refer
to the exhibits that are part of the registration statement for a copy of the
contract or document.
We also file annual, quarterly and current reports and other
information with the Securities and Exchange Commission. You may read and copy
any report or document we file, and the registration statement, including the
exhibits, may be inspected at the Securities and Exchange Commission's public
reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public from the SEC's website at:
http://www.sec.gov.
Quotations for the prices of our common stock appear on The NASDAQ
SmallCap Market, and reports, proxy statements and other information about us
can also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Securities and Exchange 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 those documents. The
information incorporated by reference is considered to be part of this
prospectus, and later information that we file with the Securities and Exchange
Commission will automatically update and supersede this information.
We incorporate by reference the following filings and any future
filings made with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
- The description of the common stock contained in our
registration statement on Form 8-A (File Number 000-21999),
filed on January 17, 1997;
- Our Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1999;
- Our Quarterly Reports on Form 10-QSB for the quarterly period
ended December 31, 1999 and March 31, 2000;
- Our Current Report on Form 8-K filed with the SEC on December
23, 1999; and
- Our Current Report on Form 8-K filed with the SEC on February
7, 2000.
26
<PAGE>
We have filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended,
with respect to the common stock covered by this prospectus. This prospectus,
which is a part of the Registration Statement, does not contain all the
information set forth in, or annexed as exhibits to, the Registration Statement,
as permitted by the Securities and Exchange Commission's rules and regulations.
For further information with respect to us and the common stock offered under
this prospectus, please refer to the Registration Statement, including the
exhibits, copies of which may be obtained from the locations described above.
Statements concerning any document filed as an exhibit are not necessarily
complete and, in each instance, we refer you to the copy of the document filed
as an exhibit to the Registration Statement.
You may request, at no cost, a copy of any or all of the information
incorporated by reference by writing or telephoning us at:
NHancement Technologies Inc.
6663 Owens Drive
Pleasanton, California 94588
Telephone Number (925) 251-3200
Attention: Corporate Secretary
You should only rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. Our common stock is not being
offered in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation and Bylaws include provisions that
(i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
General Corporation Law of the State of Delaware and (ii) indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, including circumstances in which indemnification is otherwise
discretionary.
We maintain a directors and officers' liability policy insuring any
person who is or was our director or officer against any liability incurred by
such person in any such capacity or arising out of such person's status as such.
The insurer's limit of liability under the policy is a $5.0 million coverage
limit per occurrence and $5.0 million in the aggregate per policy year. The
policy contains various reporting requirements and is subject to certain
exclusions and limitations.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers, and
controlling persons pursuant to the foregoing provisions, or otherwise, we
have 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.
27
<PAGE>
PART II
INFORMATION REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
NHancement Technologies Inc. (the "Company") estimates that its
expenses in connection with this registration statement will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $23,049
Legal fees and expenses 25,000
Accounting fees and expenses 5,000
Miscellaneous 5,000
------------------
TOTAL $58,049
==================
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and Bylaws include
provisions that (i) eliminate the personal liability of its directors for
monetary damages resulting from breaches of their fiduciary duty to the extent
permitted by the General Corporation Law of the State of Delaware and (ii)
indemnify its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law, including circumstances in which
indemnification is otherwise discretionary.
The Company maintains a directors and officers' liability policy
insuring any person who is or was our director or officer against any liability
incurred by such person in any such capacity or arising out of such person's
status as such. The insurer's limit of liability under the policy is a $5.0
million coverage limit per occurrence and $5.0 million in the aggregate per
policy year. The policy contains various reporting requirements and is subject
to certain exclusions and limitations.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to the Company's directors, officers,
and controlling persons pursuant to the foregoing provisions, or otherwise, the
Company 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.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.1 Form of Common Stock Certificate. (1)
28
<PAGE>
4.3 Registration Rights Agreement, dated September 1, 1996, between
BioFactors, Inc. ("BFI") and (i) a majority of the holders of
securities pursuant to the Secured Note and Warrant Purchase Agreement
dated December 1, 1994, as amended; (ii) a majority of the holders of
securities issued pursuant to the Secured Note and Stock Purchase
Agreement, dated December 1, 1995, as amended; (iii) a majority of the
holders of securities issued pursuant to the Unsecured Note and Stock
Purchase Agreement, dated February 1, 1996, as amended; (iv) a majority
of the holders of securities issued pursuant to the Unit Subscription
Agreement, dated May 17, 1996, as amended; (v) the purchasers of
securities issued pursuant to the Unit Subscription Agreement dated
October 3, 1996; and (vi) the former holders of BFI's Series A
Preferred Stock. (2)
4.4 Registration Rights Agreement, dated October 25, 1996, between the
Company and James S. Gillespie. (1)
4.8 Warrant Agreement dated February 2, 1999 between the Company and
Kenneth L. Greenberg. (3)
4.9 Warrant Agreement dated February 2, 1999 between the Company and Mark
Goldberg. (3)
4.10 Form of Warrant dated June 15, 1999 delivered to purchasers of Series A
Convertible Preferred Stock. (4)
4.11 Form of Warrant dated June 15, 1999 delivered to purchasers of Series A
Convertible Preferred Stock (exercise contingent on redemption of
Preferred Stock). (4)
4.12 Warrant Agreement dated June 7, 1999 between the Company and James S.
Gillespie. (4)
4.14 Warrant dated January 21, 2000, issued to Richard Glover. (5)
4.15 Warrant dated January 21, 2000, issued to Greg Darling. (5)
4.16 Warrant dated December 10, 1999, issued to Douglas S. Zorn. (6)
4.17 Warrant dated December 10, 1999, issued to James S. Gillespie. (6)
4.18 Warrant dated December 10, 1999, issued to John M. Black.(6)
4.19 Warrant dated December 10, 1999, issued to James S. Gillespie. (6)
4.20 Warrant dated December 10, 1999, issued to N. Bruce Walko.(6)
4.21 Warrant dated December 10, 1999, issued to Robert J. Schmier. (6)
29
<PAGE>
4.22 Warrant dated December 10, 1999, issued to Diane Nowak.(6)
4.24 Convertible Debenture Purchase Agreement by and between NHancement
Technologies Inc. and certain investors, dated May 19, 2000. (7)
4.25 Common Stock Purchase Agreement by and between NHancement Technologies
Inc. and Kedrick Investments Limited, dated May 24, 2000. (7)
4.26 Amendment to the Convertible Debenture Purchase Agreement by and
between NHancement Technologies Inc. and certain investors, dated June
15, 2000. (7)
4.27 Amendment to the Common Stock Purchase Agreement by and between
NHancement Technologies Inc. and Kedrick Investments Limited, dated
June 30, 2000. (7)
4.28 Form of Convertible Debenture. (7)
5.1 Opinion of Broad and Cassel (7)
23.1 Consent of Broad and Cassel (contained in its opinion filed as Exhibit
5.1 to this Registration Statement)
23.2 Consent of BDO Seidman, LLP (7)
24.1 Power of Attorney (included in the signature page of this Registration
Statement)
</TABLE>
-------------------------------
(1) Incorporated by reference to the document bearing the same
exhibit number as contained in Registrant's Registration
Statement on Form SB-2, File Number 333-15563, as filed with
the Securities and Exchange Commission on November 5, 1996.
(2) Incorporated by reference to the document bearing the same
exhibit number as contained in Amendment No. 1 to Registrant's
Registration Statement on Form SB-2, File Number 333-15563, as
filed with the Securities and Exchange Commission on December
20, 1996.
(3) Incorporated by reference to the document bearing the same
exhibit number as contained in Registrant's Quarterly Report
on Form 10-QSB, as filed with the Securities and Exchange
Commission on February 16, 1999.
(4) Incorporated by reference to the document bearing the same
exhibit number as contained in Registrant's Quarterly Report
on Form 10-QSB, as filed with the Securities and Exchange
Commission on July 28, 1999.
(5) Incorporated by reference to the document bearing the same
exhibit number as contained in Registrant's Current Report on
Form 8-K/A, as filed with the Securities and Exchange
Commission on February 15, 2000.
30
<PAGE>
(6) Incorporated by reference to the document bearing the same
exhibit number to Registrant's Quarterly Report on Form
10-QSB, as filed with the Securities and Exchange Commission
on February 14, 2000.
(7) Filed herewith.
ITEM 17. UNDERTAKINGS.
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 of 1933;
(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. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(c) To include any additional or changed material information
on the plan of distribution;
PROVIDED, HOWEVER, that paragraphs (1)(a) and (1)(b) shall not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, 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.
31
<PAGE>
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on 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 Pleasanton, State of California on this 10th
day of August, 2000.
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Douglas S. Zorn
--------------------------------------
Douglas S. Zorn
President and Chief Executive Officer
32
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Douglas S. Zorn and John R. Zavoli as his or her true and lawful
attorneys-in-fact and agent with full power of substitution and
resubstitution for him or her and 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.
SIGNATURE TITLE DATE
s/s Douglas S. Zorn
---------------------- Chairman of the Board, Chief Executive
Douglas S. Zorn Officer, President and Director
(Principal Executive Officer) August 10, 2000
s/s Ram V. Mani
---------------------- Director
Ram V. Mani August 10, 2000
s/s Robert J. Schmier
---------------------- Director
Robert J. Schmier August 10, 2000
s/s N. Bruce Walko
---------------------- Director
N. Bruce Walko August 10, 2000
s/s John R. Zavoli
---------------------- Vice President of Finance and Chief
John R. Zavoli Financial Officer (Principal Financial
and Accounting Officer) August 10, 2000
33
<PAGE>
EXHIBIT INDEX (1)
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
4.24 Convertible Debenture Purchase Agreement by
and between NHancement Technologies Inc.
and certain investors, dated May 19, 2000.
4.25 Common Stock Purchase Agreement by and
between NHancement Technologies Inc. and
Kedrick Investments Limited, dated May 24,
2000.
4.26 Amendment to the Convertible Debenture
Purchase Agreement by and between
NHancement Technologies Inc. and certain
investors, dated June 15, 2000.
4.27 Amendment to the Common Stock Purchase
Agreement by and between NHancement
Technologies Inc. and Kedrick Investments
Limited, dated June 30, 2000.
4.28 Form of Convertible Debenture.
5.1 Opinion of Broad and Cassel
23.1 Consent of Broad and Cassel (included in
Exhibit 5.1)
23.2 Consent of BDO Seidman, LLP
24.1 Power of Attorney (included in the
signature page of this Registration
Statement)
</TABLE>
--------------------------------------
(1) All other exhibits listed in Item 16 of Part II of this
Registration Statement have been incorporated by reference
herein, as indicated in Item 16.
34
