AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 1999
REGISTRATION No. 333-18439
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2/A7
Registration Statement Under the Securities Act of 1933
MOBILE AREA NETWORKS, INC.
(Name of small business issuer in its charter)
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Florida 4813 59-3482752
(State or other jurisdiction (Primary Standard Industrial Classification Code (I.R.S. Employer Identification No.)
of incorporation or organization) Number)
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George E. Wimbish, Chairman
1275 Lake Heathrow Lane, Suite 115
Heathrow, Florida 32746
407-333-2350 FAX 407-333-9903
(Address and telephone of principal
executive offices and principal place of business)
James R. Leone, P.A.
1275 Lake Heathrow Lane, Suite 115
Heathrow, Florida 32746
407-805-9200 FAX 407-805-9030
(Name, address and telephone of agent for service)
Approximate Date of Proposed Sales to the Public: As soon as practicable after
the Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, no par value. 5,000,000 $6.00 $30,000,000 $7,500.00
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Total
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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 the registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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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. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY 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 SUCH STATE.
Subject To Completion, Dated (February 8, 1999)
MOBILE AREA NETWORKS, INC.
5,000,000 Common Shares (maximum) at $6.00 for $30,000,000
Mobile Area Networks, Inc., a Florida corporation, (the "Company") offers the
users of laptop computers and handheld digital communication devices its very
low cost, very fast, encrypted (private) wireless communication service called
MOBILAN(R). This system uses a unique combination of second-generation megabit
transceiver PC card, encryption software, local relays, and fiber optics
transmission for clean, fast, LAN access to main computer groups, including the
Internet and the Intranet. Digital, audio, and video live interaction will be
available on a real-time basis, at a small fraction of the cost of telephone
modem usage. The Company is a development stage company with limited operating
history and minimal revenues.
To buy the stock, read the Prospectus and mail or wire your funds as described
in the enclosed Subscription Agreement and on the Internet at
HTTP://WWW.MOBILEAREA.NET.
CONTACT: GEORGE E. WIMBISH, CHAIRMAN
1275 LAKE HEATHROW LANE, SUITE 115
HEATHROW, FLORIDA 32746
Tel: 407-333-2350, Fax: 407-333-9903
e-mail: [email protected]
(HTTP: //WWW.MOBILEAREA.NET)
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PRICE SALES PROCEEDS TO
PRICING TABLE TO PUBLIC(1) COMMISSION (2) COMPANY(3)
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PER SHARE $ 6.00 $ .60 $ 5.40
MINIMUM PURCHASE 100 SHARES $ 600.00 $ 60.00 $ 540.00
TOTAL MAXIMUM $30,000,000 $3,000,000 $27,000,000
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1. The offering price was determined in the Company's discretion, and
represents no relationship to earnings or equity.
2. The Company's officers and directors are selling the shares without
compensation. However, this column reflects the fact that the Company
may engage one or more licensed broker dealers as selling agents for
agreed upon commissions not to exceed ten percent (10%), who may allot a
portion thereof to other licensed broker dealers assisting in the sales.
The Company and broker dealers will mutually indemnify and defend each
other for claims attributable to the indemnifying party. Persons selling
or assisting in sales may be deemed to be underwriters under securities
laws. No broker dealers or other terms of selling have been determined.
3. Before deducting offering expenses payable by the Company estimated to
total $300,000 in the case of the Maximum Offering (1% of gross
proceeds). (See "Use of Proceeds", herein.) The proceeds from the sale
of shares will be transmitted by noon of the business day following
receipt, to the Company's bank account.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY, NOR HAVE THEY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
These securities are being sold on a best efforts, no minimum amount basis. The
offering will expire nine months after the effective date of the registration
statement for the securities, if not updated by amendment or terminated sooner.
A current Prospectus will be available so long as the offering is continued. The
shares are offered subject to prior sale, and the Company reserves the right to
reject subscriptions in whole or in part, or to accept them in any order. The
Company will send by U.S. mail to subscribers within thirty (30) days, signed
copies of their Subscription Agreement and Common Stock certificates. The
Company intends to qualify the securities in every state of the U.S. in which
sales are solicited and made.
3
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IMPORTANT INFORMATION
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INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO
LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" HEREIN FOR CERTAIN SUBSTANTIAL
RISKS TO INVESTORS.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED.
THE COMPANY IS A DEVELOPMENT STAGE COMPANY.
THIS OFFERING IS INTENDED TO BE QUALIFIED (AS PROVIDED IN PUBLIC LAW
104-290) FOR OFFERING IN ALL STATES OF THE UNITED STATES IN WHICH SALES ARE
SOLICITED AND MADE.
4
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SUMMARY
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The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere herein. See
"Risk Factors" for a discussion of certain factors that should be considered in
connection with an investment in the stock. THE COMPANY IS A DEVELOPMENT STAGE
COMPANY WITH LIMITED OPERATING HISTORY AND MINIMAL REVENUES.
FAST, LOW COST WIRELESS SERVICE
Operations have begun in Heathrow, Florida with sites in the Central
Florida region as well as in the Boston area. The Company now has research and
development and demonstration sites for its proposed service in four hotels, one
office building, and one University. The Company proposes to concentrate its
marketing efforts initially in the Southeastern United States and then expand
nationwide within the next three years. With the proceeds from this offering,
the Company will promote its services for usage in a variety of properties:
convention centers, airline clubs, airports, office buildings and others. To
help offset costs of operations during its start up period the Company has also
marketed its services as a full service Internet provider which includes web
page hosting and design, dial in Internet service, and shared high speed (T-1)
Internet service into office buildings with multiple tenants. The Company has
produced a minimal amount of revenue from the sales and installation of wireless
LAN products, computer system services, and Internet access. The Company has
also developed Internet Kiosks which are publicly accessed with a credit card
and are computers placed in the lobby of hotels for retrieving e-mail and other
Internet functions. These Kiosks have produced minimal amounts of revenue.
Mobile Area Networks, Inc., (the "COMPANY"), intends to be providing
its MOBILAN(R) wireless communication service for laptop Personal Computers and
handheld communication devices through a secure, low cost, very fast wireless
connection to remote home-office network services and to the Internet, from
select hotels, convention centers, and office buildings. Unlike a telephone
modem connection, no cord or telephone line connection is necessary for this
service. The Company will charge a user fee for this communication service. The
user's hardware (PC Card) and software for the MOBILAN(R) service will be paid
for by such user or by the user's employer as a setup fee, or as negotiated with
the user's employer.
The telephone modem was created so that a telephone line could carry
computerized data. The millions of miles of telephone wiring and millions of
telephone jacks support the modem strategy. The laptop Personal Computer modem
market (PC Card modems that fit into laptop computers) totaled three billion
dollars ($3,000,000,000) in modem equipment sales in 19951, and the usage fees
paid to telephone companies for line access and long distance charges probably
were much greater than that amount.
A study published on the Internet in December of 1997 by Killen &
Associates of Palo Alto, California predicts that the market for equipment and
software for connecting wireless users to the Internet will grow to 19.2 billion
dollars ($19,200,000,000) in the year 2002. This amount would be in addition to,
and much larger than, the fees to Mobile Area Networks, Inc. for "access" to the
Internet through the MOBILAN(R) communications system. Then, there is a
potentially large market for the Company's services.
FIBER OPTIC TO LEC TO WIRELESS RELAY CONNECTION
There are now millions of miles of fiber optic cable for computer style
data transport installed in the U.S. These fiber network installations are
within miles of nearly every major corporation office, hotel, and airline club
in the U.S. Local Exchange Carriers (LECs) can provide a high-speed local data
connection from these fiber optic networks to almost any building site in the
U.S. The Company will use a high-speed, short-range wireless relay to reach the
LEC to make this high-speed fiber optic data connection from inside each relay
equipped building; and a faster-than-modem-speed, long-range wireless technology
from outside locations. The WLAN (Wireless Local Area Networks) relays are
low-cost, small, easily installed, and use a very small amount of electric
power. With these two technologies, laptop users can communicate from nearly any
location, and be securely connected to their home-office Local Area Network
(LAN), or to the Internet.
- -----------------------------
(1) AP Research Corporation, International Data Corporation.
5
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MASSIVE COST ADVANTAGES
The Company's exclusive MOBILAN(R) wireless communication service will
have a dramatic economic advantage over a telephone modem connection because it
is uniquely based on the unregulated computer style data network and not on the
highly regulated long distance telephone system. The underlying cost per bit of
data on the fiber optic data network is about 1/100th the cost of carrying a bit
of data on the telephone network. The Company has a unique method of connecting
the users of laptop PCs and handheld digital communication devices to the data
network.
There were seventeen million (17,000,000) business users of laptop
computers at the end of 19952. Nearly three million (3,000,000) of these laptop
users travel an average of three (3) times per month to interstate destinations.
BIS Strategic Decisions estimated that these mobile professionals are spending
over fifty million dollars ($50,000,000) per month, or six hundred million
dollars ($600,000,000) per year in long distance charges and surcharges to check
e-mail and send faxes from hotels.
HOW MOBILAN(R) WORKS
THE COMPANY HAS INTEGRATED A NUMBER OF KEY EXISTING TECHNOLOGIES TO
CREATE THIS MOBILE DATA COMMUNICATION SERVICE, AND HAS ADDED KEY PROPRIETARY
CONTENT NECESSARY TO MAKE THE NETWORK FULLY FUNCTIONAL AND MORE COST EFFECTIVE.
The Company is developing the MOBILAN(R) communications network by
joining wireless and wired public networks, which this offering will allow the
company to build, on a nationwide basis. Laptops are the lifeblood of the
business traveler "roadwarrior". With the PC Card expansion slots in laptops and
the Company's service called MOBILAN(R)3, travelers will be able to connect back
to corporate networks from almost anywhere, without plugging into a telephone
line.
One PC Card is a high-speed, short-range wireless card. The cards are
known as WLAN (Wireless Local Area Networks) cards. The MOBILAN(R) WLAN cards
can communicate data at up to 3 Mbps (Megabits per second) and are used inside
buildings. Initial target areas are hotels, convention centers, office
buildings, airports, resorts, and restaurants.
The Company obtains its PC Card transceiver and other hardware from
multiple vendors and is not dependent upon a singular source for its equipment.
The secondary, or wide area PC Card, is a wireless card that uses the
CDPD (Cellular Data Packet Delivery) network. CDPD is a computer style data
extension to the existing cellular telephone network.. CDPD can communicate
wirelessly at about 10 Kbps (10,000 bits per second), or at less than the speed
of a wired telephone modem, from most US locations. CDPD service is deployed in
over 100 metropolitan areas throughout the U.S. Therefore, almost anywhere in
these communities, outdoors or indoors, a laptop computer user can have full
access to the home office network LAN or to the Internet using the Company's
MOBILAN(R) connection. These metropolitan areas were selected by AT&T, GTE
MobilNet, Bell Atlantic NYNEX and others because they have the largest
concentrations of cellular telephones. The Company currently has CDPD cards
available from more than one manufacturer for this service that will be offered
for the user who can tolerate slow access when out of range of the high speed
MOBILAN(R) network.
If a hotel is equipped with the MOBILAN(R) service, a user simply opens
a properly equipped laptop computer anywhere in the hotel guest room, the hotel
convention area, the club or the bar, and is logged onto the Internet or the
home office network at megabit speeds. All network resources are available as if
the user were sitting at a desk in the home office with a direct Ethernet
connection. When in the home office, the WLAN card likewise will provide
performance comparable to a direct connection, but gives a user the freedom to
roam throughout the facilities without a telephone cord connection to the
laptop. This flexibility also allows for relocating offices within the facility
without rewiring computers.
- -----------------------------
(1) Ablonci, Wm. F., and Elliot, Thomas R.: MOBILE PROFESSIONAL MARKET
SEGMENTATION STUDY, March 1995, BIS Strategic Decisions, 1-617-982-9500
(2) Service Mark was registered with the U.S. Patent and Trademark Office on
10/21/96
6
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So, by means of a laptop computer equipped with PC Cards from the
Company and the MOBILAN(R) network, a user can connect to the home LAN or the
Internet, in home-office facilities, in hotels, in airline clubs, in a car, at
home, in a park, in the airport, and in the users' client location.
COMMUNICATION NETWORK VIA INTRANET (NOT INTERNET)
MOBILAN(R) will provide both high-speed and modem-speed data
communication connections between the wireless PC user and the home office LAN,
or other computer network through a high-speed private Intranet backbone of
fiber optic cables. It is a separate IP (Internet Protocol) network dedicated
primarily to corporate and business communication, not the public Internet.
SECURITY
MOBILAN(R) can achieve the industry's highest level of security, thanks
to some of the most comprehensive security software available. This encryption
software sets up impenetrable "tunnels" through which data can travel safely.
Authenticated, encrypted tunnels keep data from being accessed or modified as it
passes from a remote wireless client to the home LAN. MOBILAN(R)'s encryption
software products are commercially available from software vendors.
MOBILAN(R) ECONOMICS
The MOBILAN(R) WLAN service provides reliable, high-speed encrypted
communications at specific locations such as hotels and airline clubs. The
MOBILAN(R) service is priced very competitively with local dial-up Internet
connectivity on a monthly basis for an unlimited amount of data, but also may be
purchased by the hour or the day at selected hotels and convention centers.
There is no comparable service available at any price.
The MOBILAN(R) CDPD service is a wireless and encrypted (totally
private) form of the cellular modem's non-secure (non-private), reliable,
slow-speed communications across most major metropolitan areas. This CDPD
service is ideal for providing short, moderately rapid and timely data
exchanges. CDPD service is priced at approximately $50 per month for a total of
1 Mbyte of data communication. The CDPD service is merely intended to be a
backup to the MOBILAN(R) system for the user who is not in range of the high
speed system, but must be connected at any speed.
There is a third service that Mobile Area Networks, Inc. is developing.
This will provide a combination of long range, as well as medium-high-speed
wireless service with wide area coverage. This service is in the development
stage. This service has been demonstrated by the Company for city wide service,
but no contract for the Company to provide the service has been secured.
MOBILE COMPUTING COMMUNICATIONS
Mobile computing is booming(1):
/bullet/ In the U.S. alone, more than 4,600,000 (4.6-million) portable PCs
were sold in 1995, an increase of 23% over 1994. Figures for 1996
and 1997 should indicate a dramatic increase in this amount.
/bullet/ Research indicates that at the end of 1995, there were nearly
17,000,000 (17 million) portable computers in use in the U.S.
/bullet/ Airline and other research data show that 27,300,000 (27.3
million) professionals travel for business. At the end of 1994
approximately 20 percent or 5,500,000 (5.5 million) were using a
portable computer from a remote location.
However; in spite of the fact that 5,500,000 mobile professionals
travel with a laptop computer, these users in hotels are almost always limited
to a data connection of between 2400 and 28,800 baud (500 to 10,000 bits per
second) through a modem and telephone line connection, when and if they can find
access to a telephone jack connection. Even though many laptop computers now
have modems with advertised speeds much higher, the line connection for the
higher speed from most hotels is not often available.
- -----------------------------
(1) Computer Retailer News 12/8/95
7
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Because the modem uses the public telephone network, the lack of
security and the slow transmission rate both, prevent direct home office LAN
connection. Thus, the use of a remote modem connection is limited to low volume
data transactions, such as messaging or e-mail applications that are on servers
outside the normal in-house network (LAN or Mainframe CPU). The remote use and
benefit of a laptop is significantly less than the power of the same laptop when
connected directly to the business network, thus reducing productivity.
MOBILAN(R) allows approximately 30 to 100 times faster data transfer on an
encrypted (totally private) basis at far lower cost.
Mobile professionals are not the only remote-computer users. Other
users include telecommuters (some with portables, but most with desk bound PCs),
workers operating from remote sites, and the millions of workers in the other 70
percent of the work force who are not classified as professionals, but who use
computers or digital communication devices (meter readers, inventory clerks,
rental car return verifiers, parking enforcement personnel, etc.).
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THE COMPANY'S PEOPLE
GEORGE E. WIMBISH: Board Chairman, President and CEO, is a founder of
Mobile Area Networks, Inc. He is a successful private investor with over 20
years of experience in acquisitions/mergers and company startups. He has a
diversified background in wholesaling, manufacturing, and direct marketing. His
most recent prior position was CEO of a financial services company. In 1984 he
was a qualified candidate for the U.S. senate, and has personally lobbied the
U.S. Senate. He has experience with regulatory agencies including Underwriters
Laboratory and the Nuclear Regulatory Agency.
DR. ROBERT M. GOOD: Director and Treasurer, is a founder of Mobile Area
Networks, Inc. He has been a successful private investor and entrepreneur for
the past 15 years. He is a licensed stockbroker. He had a successful dental
practice in Long Island, New York, which he sold to achieve early retirement.
Dr. Good has served as an officer of numerous companies, and served as an Army
Officer. Dr. Good is responsible for investor relations and alliance building.
DR. RUSSELL M. GRAHAM, M.D. Director has been a medical physician with
his own practice in the Orlando, Florida area for more than ten years. He is
involved in other business interests, and is a licensed pilot.
EDWARD M. BELL: Business Development Advisor. Mr. Bell served 30 years
with AT&T. During his career with AT&T he held numerous leadership positions in
Marketing Management, Network Sales, Operations Planning, Access Management,
Strategic Marketing, and High Frequency Radio Relay Maintenance. His most recent
assignment was as Southern Regional Manager for AT&T's Consultant Liaison
Program where he was responsible for AT&T's industry consultants in 14
southeastern states.
JAMES R. LEONE: Director and Secretary, is a practicing attorney and
has had his own law firm since 1985, concentrating in the fields of securities
and corporate law. Previously, Mr. Leone was with Gray, Harris & Robinson in
Orlando, FL., and with Quinn, Jacobs, Barry and Miller in Chicago, IL. Until
1981, Mr. Leone was a financial attorney and financial analyst with the U.S.
Securities and Exchange Commission in Washington, DC.
MICHAEL A. TOMASSINI: Comptroller, has over 20 years experience in
Accounting and Finance, with expertise in financial and strategic planning. He
has developed accounting systems for several businesses and has specialized in
cost efficiency management for the last seven years.
DAVID J. PACKWOOD: Business Development Advisor, with over 25 years
experience in the computer industry both in the U.S. and Europe. Mr. Packwood
has been President of two computer software companies, and Vice President, and
Sales and Marketing Director of numerous other companies. Mr. Packwood most
recently served 10 years with Digital Equipment Corporation in the Advanced
Technology Group, where he was responsible for Media and Entertainment
marketing. Throughout his career he has held senior management positions with
Xerox Corporation, Systime Computers and Thorn EMI (UK).
MARK A. YINGLING: Internet Services Specialist, with more than 10 years
in Computer Technology related services including Network Management, Web Design
and Hosting, and 2 years Managing an Internet Service Provider Company.
The Company has radio frequency, communications network, and software
engineers on staff. All employees and consultants are under contract for
non-compete, non-circumvent, non-disclose, and trade secrets protection.
9
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NOTE: THIS PROSPECTUS IS PART 1 OF AND OMITS CERTAIN INFORMATION CONTAINED IN
PART 2 OF THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH OMITTED INFORMATION INCLUDES, BUT IS NOT LIMITED TO THE
FOLLOWING: Charter and By-laws and amendments thereto, certain material
contracts, consents of experts, opinion of legal counsel re: legality. Such
information is available on request, for which there may be reasonable charges
for copying.
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RISK FACTORS
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AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND
SHOULD BE REGARDED AS SPECULATIVE. AS A RESULT, THE PURCHASE OF SHARES SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN AFFORD A LOSS OF THEIR ENTIRE INVESTMENT. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE FOLLOWING:
A. LIMITED OPERATING HISTORY.
The Company is newly organized, and is dependent upon the proceeds of
this offering to implement its plan to deploy and operate its communications
network. Accordingly, an investment in the Company's shares is highly
speculative and is only a suitable investment for an investor who recognizes the
high risks involved, has no need for liquidity in the investment, and who can
afford a total loss of the investment. There cannot be any guarantee that the
Company will be profitable or that additional capital will not be required.
B. ILLIQUID INVESTMENT; RISK OF LOSS.
This investment is not recommended for investors who do not have
adequate additional liquid assets such that they can afford a long-term
non-liquid investment and the risk of complete loss of the investment.
C. DEPENDENCE ON MANAGEMENT.
The Company is dependent on the services of the Company's principal
Officers and Directors. In the Company's development stage, the loss of this
management could have a materially adverse impact on the Company. The Company
does not currently maintain any key-person life insurance policy. The Company is
investigating acquiring this type of insurance, but can make no assurances that
it will be available.
D. REGULATORY RISKS.
At the present time, no regulations are known to the Company which
would materially adversely affect the Company's contemplated operations. Future
government regulation with respect to applications permitted for certain radio
wave frequencies possibly could have an adverse impact on the Company.
E. CONTROL BY MANAGEMENT.
Upon completion of this offering, the officers and directors of the
Company will own, in the aggregate, between 72% and 79% of the outstanding
shares of the Company's common stock, assuming the maximum shares (5,000,000)
are sold. Accordingly, the Company's management will continue to be able to
elect a majority of the directors and thus control the management and affairs of
the Company.
F. COMPETITION.
The communications industry is a highly competitive business, and the
Company will be competing with numerous other companies, both privately and
publicly owned, which have substantially more resources and experience available
to them than the Company. This includes major telephone companies, regional
telephone companies, and existing wireless technology suppliers.
G. ARBITRARY OFFERING PRICE.
10
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The initial price at which the shares are offered hereby has been
arbitrarily set by the Company's management on a non-arm's length basis, and has
no relationship to the book value per share, current earnings of the Company,
(there having been only minimal amounts of revenue), or other generally accepted
measurement of value. Investors in this Offering will incur immediate and
substantial dilution in net tangible book value of their shares. See "Dilution".
H. LACK OF PUBLIC MARKET; NASDAQ APPLICATION WHEN ELIGIBLE.
Prior to this Offering, there has been no public market for the shares
offered, and none is anticipated to develop in the near future. In the event a
regular public trading market does not develop, or is not sustained, any
investment in the Company's Common Stock would be highly illiquid. Accordingly,
an investor in the shares may not be able to sell the shares readily, if at all.
Consequently, if as a result of some change in circumstances arising from an
event not now contemplated, an investor wishes to transfer the shares owned, the
investor may find he or she has only a limited or no ability to transfer or
market the shares. The Company intends to apply for inclusion of its shares in
the NASDAQ quotation system, assuming eligibility results from this Offering.
There can be no assurance that the Company will be successful in obtaining this
listing.
The Company plans to seek the support of NASD member firms which are
recognized market makers with the intention of obtaining their assistance in the
creation of a viable market in the Company's securities for the benefit of its
shareholders. There can be no assurance that market makers will be located to
deal in the Company's securities. The Company may employ one or more finders to
assist with introductions to appropriate market makers, for which such finders
would be paid finders fees commensurate with current market practices. No such
finders have been identified, nor have any proposed terms of their engagement
been determined.
Under Rule 15c2-11 under the Securities Exchange Act of 1934,
broker-dealers acting as market makers are required to have certain current
information about the Company before they can make a market and thereafter as
they continue making a market in its common stock. If needed in addition to
periodic reports filed with the Securities and Exchange Commission, the Company
will furnish periodically to broker-dealers the information specified in Rule
15c2-11 in order to enhance such firms' ability to make a market in the
Company's stock. There can be no assurance that market makers will be located to
deal in the Company's securities.
I. SUBSTANTIAL DILUTION.
Purchasers of the shares offered hereby will suffer an immediate and
substantial dilution of their investment. Specifically, in the case of the
maximum offering, dilution will be up to $5.29 per share, or up to 88%, (or more
if less than all shares are sold). (See "Dilution" herein, where the dilution is
illustrated by a table).
J. POSSIBLE NEED FOR ADDITIONAL FINANCING.
The Company cannot guarantee that sufficient funding will be available
from this offering to fund all its development and operational needs. In the
event the Company requires additional financing, the Company may seek such
financing through bank borrowing, debt, or other equity financing, or otherwise.
There can be no assurance that such financing will be available to the Company
on acceptable terms, if at all. The Company does not presently have a credit
line available with any lending institution. Any additional equity financing may
involve the sale of additional shares of the Company's Common Stock on terms
that have not yet been established. These terms may (or may not) be more
favorable than those contained herein. Any future sales of securities may (or
may not) result in dilution to the investors herein.
K. PENNY STOCK REGULATION.
Broker-dealer practices in connection with transactions in "penny
stocks" (also referred to as "designated securities") are regulated by certain
penny stock rules adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations
11
<PAGE>
for the penny stock, the compensation of the broker-dealer and its salesperson
in the transaction, and monthly account statements showing the market value of
each penny stock held in the customer's account. In addition, the broker-dealer
must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security that becomes
subject to the penny stock rules. If the Company's common stock becomes subject
to the penny stock rules, investors in this offering may find it more difficult
to sell their shares.
L. ADVERSE EFFECT ON MARKET PRICE OF FUTURE SALE OF SHARES.
The approximately 33,261,230 shares of Common Stock issued by the
Company prior to this Offering were sold in private transactions in reliance on
an exemption from registration under the Act. Accordingly, all of such
securities are "restricted securities" within the meaning of Rule 144 and cannot
be resold without registration, except in reliance on Rule 144 or another
applicable exemption from registration.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including any affiliate of the
Company, who beneficially owns "restricted shares" for a period of one to two
years is entitled to sell within any three-month period, shares equal in number
to the greater of (i)1% (382,612) of the then outstanding shares of Common Stock
after this offering if the maximum shares are sold under this offering or (ii)
the average weekly trading volume of the same class of shares during the four
calendar weeks preceding the filing of the required notice of sale with the
Securities and Exchange Commission. The seller also must comply with the Form
144 notice and manner of sale requirements of Rule 144, and there must be
current public information available about the Company. In addition, any person
(or persons whose shares are aggregated) who is not, at the time of the sale,
nor during the preceding three months, an affiliate of the Company, and who has
beneficially owned restricted shares for at least two years, can sell such
shares under Rule 144 without regard to notice, manner of sale, public
information or the volume limitations described above. A substantial number of
the shares now held by private shareholders were sold one or two years ago as of
September 1998.
Future sales of shares of Common Stock (or securities convertible into
Common Stock) by the Company or as stated above could adversely affect the
prevailing market price, if any, of the Company's Common Stock.
M. DIVIDENDS NOT LIKELY.
No dividends on this Company's Common Stock have been declared or paid
by the Company to date. The Company does not presently intend to pay dividends
for the foreseeable future, but intends to retain all earnings, if any, for use
in the Company's business. There can be no assurance that dividends will ever be
paid on the Common Stock. Investors who anticipate the need for dividends from
their investment in the Company should not purchase the shares offered hereby.
N. EFFECT OF PREFERRED STOCK AS ANTI-TAKEOVER PROVISIONS.
The Company currently has no authorized preferred stock, and the only
anti-takeover provision available is the ownership position of its management
group.
O. DEPENDENCE ON PROPRIETARY TECHNOLOGY.
The Company relies on a combination of trade secrets, copyright laws,
non-disclosure, non-circumvention and other contractual and technical measures
to protect its proprietary technology. There can be no assurance that these
provisions will be adequate to protect its proprietary rights. No single or
closely related group of items of proprietary technology is material to the
Company's business. Although the Company believes that its products and services
do not infringe upon the proprietary rights of third parties; there can be no
assurance that third parties will not assert infringement claims against the
Company, or the Company's clients. See "Description of Business-Intellectual
Property."
12
<PAGE>
- --------------------------------------------------------------------------------
DILUTION
- --------------------------------------------------------------------------------
Private investors have provided the Company with Approximately $968,000
in cash in order to finance the Company's working capital needs to develop the
working relationships and contractual agreements that contribute to the
MOBILAN(R) communication system. As of September 30, 1998, the aggregate net
tangible book value of the Company's Common Stock was $231,178 (See "Financial
Statements"). The net tangible book value per share as of September 30, 1998 was
$0.01 Net tangible book value per share is calculated by dividing the tangible
net worth of the Company (total tangible assets less total liabilities) by the
number of shares of Common Stock outstanding.
Giving effect to the sale by the Company of 5,000,000 shares of Common
stock offered hereby (at the offering price of $6.00 per share and after
deducting offering expenses), the pro forma net tangible book value of the
Company as of September 30, 1998, WOULD HAVE BEEN $27,231.178 or $.71 per share.
This represents an immediate increase in the net tangible book value of $.70 to
existing stockholders and an immediate dilution of $5.29 per share to the
persons purchasing the shares offered hereby at the initial public offering
price ("New Investors").
THE FOLLOWING TABLE ILLUSTRATES THE PER SHARE DILUTION TO THE NEW INVESTORS:
- --------------------------------------------------------------------------------
@MAXIMUM SUBSCRIPTIONS
Initial offering price per share. $6.00
Net tangible book value before offering. $231,178.00
Net tangible book value per share before the offering. $0.01
Increase in net tangible book value per share
attributableto the cash payment by new investors. $0.70
Pro forma net tangible book value per share after offering. $0.71
Dilution per share to New Investors. $5.29
The following tables summarize on a pro forma basias of September 30,
1998, the number of shares of Common Stock purchased from the Company and the
total consideration paid by existing stockholders and by new investors in the
offering being made hereby (based on, in the case of new investors, an offering
price of $6.00 per share), Less offering expenses.
OUTSTANDING SHARES OF TOTAL AUTHORIZED 50,000,000
AT MAXIMUM SUBSCRIPTIONS SHARES PURCHASED TOTAL NET CONSIDERATION
NUMBER PERCENT AMOUNT PERCENT
- -----------------------------------------------------------------------------
Officers, & Directors: 28,005,000. 73.1% $49,000. .2%
Other Private Investors: 5,256,230. 13.7% $919,217. 3.3%
New Investors: 5,000,000. 13.2% $27,000,000. 96.5%
- --------------------------------------------------------------------------------
TOTAL: 38,261,230. 100% $27,968,217 100%
13
<PAGE>
- -------------------------------------------------------------------------------
PLAN OF DISTRIBUTION
- -------------------------------------------------------------------------------
The shares are being offered at the offering price set forth on the
Cover Page of this Prospectus. An investor must purchase a minimum of 100
shares. The shares are being sold on a best efforts basis, subject to no minimum
offering proceeds, up to a maximum of 5,000,000 shares. The offering expires
nine months after the Registration Statement becomes effective, unless
terminated sooner or extended by the Company. A current Prospectus will be
available so long as the offering is continued, which shall be at the Company's
discretion.
The shares are being offered by the Company through its officers and
directors (i.e. Robert Good, Russell Graham, James Leone, and George Wimbish)
who will not receive compensation therefor.
The Company plans to seek the support of NASD member firms which are
recognized market makers with the intention of obtaining their assistance in the
creation of a viable market in the Company's securities for the benefit of its
shareholders. In this regard, the Company may employ one or more finders to
assist with introductions to appropriate market makers, for which such finders
would be paid finders fees commensurate with current market practices. No such
finders have been identified, nor have any proposed terms of their engagement
been determined.
Under Rule 15c2-11 under the Securities Exchange Act of 1934,
broker-dealers acting as market makers are required to have certain current
information about the Company before they can make a market and thereafter as
they continue making a market in its common stock. The Company will furnish
periodically to broker-dealers the information specified in Rule 15c2-11 if not
contained in reports filed with the Securities and Exchange Commission in order
to enhance such firms' ability to make a market in the Company's stock..
The price at which the shares are offered hereby has been arbitrarily
set by the Company's management, and has no relationship to the book value per
share, current earnings of the Company, or other generally accepted measurement
of value. No securities are to be offered for the account of any existing
shareholder.
The purchase price paid by investors must be wired or mailed directly
to the Company by check, or money order, payable only to: "MOBILE AREA NETWORKS,
INC." as stated in the enclosed Subscription Agreement.
The proceeds from the sale of the shares will be transmitted to the
Company bank account by noon of the business day following receipt. The shares
are offered subject to prior sale and the Company reserves the right to reject
any offer in whole or in part, or to accept subscriptions in any order, for any
or no reason. The Company will send by U.S. mail to subscribers within thirty
(30) days, signed copies of the Subscription Agreement and Common Stock
certificates.
14
<PAGE>
- --------------------------------------------------------------------------------
USE OF PROCEEDS
- --------------------------------------------------------------------------------
The Company will use the maximum proceeds primarily for
commercialization of its MOBILAN(R) service. This includes installing
demonstration systems for high profile accounts. The following table illustrates
the estimated use per category of maximum proceeds. This summary table is a
compilation of the financial projections illustrated near the end of this
Prospectus. The Company could use part of the proceeds for potential
acquisitions or development of additional product offerings.
------------------------------ ---------------- ------------- -----------
MAXIMUM
CATEGORY SUBSCRIPTIONS PERCENTAGE FOOTNOTE
------------------------------ ---------------- ------------- -----------
Gross Offering Proceeds $30,000,000 100.0% (1)
------------------------------ ---------------- ------------- -----------
Sales commission (Offering) 3,000,000 10.0% (2)
------------------------------ ---------------- ------------- -----------
Offering Expenses 300,000 1.0% (3)
------------------------------ ---------------- ------------- -----------
Network Operating Costs 1,450,000 5.0% (4)
------------------------------ ---------------- ------------- -----------
Data Line Recurring Charges 7,000,000 24.0% (5)
------------------------------ ---------------- ------------- -----------
Network Installation Costs 8,050,000 27.0% (6)
------------------------------ ---------------- ------------- -----------
Physical Build-Out In House 1,000,000 4.0% (7)
------------------------------ ---------------- ------------- -----------
System Sales Commission 3,000,000 10.0% (8)
------------------------------ ---------------- ------------- -----------
Management Salaries 1,560,000 6.0% (9)
------------------------------ ---------------- ------------- -----------
Sales and Promotion 1,350,000 5.0% (10)
------------------------------ ---------------- ------------- -----------
Engineering 750,000 3.0% (11)
------------------------------ ---------------- ------------- -----------
Administration 1,540,000 5.0% (12)
------------------------------ ---------------- ------------- -----------
Total $30,000,000 100.0% (13)
------------------------------ ---------------- ------------- -----------
Percentages rounded to nearest decimal.
FOOTNOTES
(1) Same as Prospectus Cover Page Pricing table footnote (1).
(2) Same as Prospectus Cover Page Pricing table footnote (2).
(3) Other offering expenses; totaling approximately $300,000. For filing,
accounting and legal fees, printing, travel, postage, delivery,
miscellaneous, lodging, phone, promotion, blue sky, Internet promotional
development, and edgarizing documents for SEC. See item #25 in part-II for
details.
(4) Network help desk activities to support the mobile users of the MOBILAN(R)
services and network operator personnel.
(5) Monthly charges for data system infrastructure to remote sites from network
center. Assuming 300 hotels on line. These services are available in the
market as needed.
(6) One time cost of MOBILAN(R) hardware and data line installations at hotels,
primarily data relay labor costs, plus approximately $500,000. For
management of sales efforts. Installers are available on short notice for
subcontracting work.
(7) Equipment capitalization to support communications from the home network.
(8) Commissions paid to independent sales agents for system marketing.
(9) Executive and senior management salary (three years).
(10) Advertising, sales promotions, trade shows, and related activities.
(11) System design, site surveys, and installation support, including help desk
support and new feature development.
(12) Middle management and clerical support, including finance, accounting and
employee benefits.
(13) To the extent revenues may cover certain of the expenses shown, then such
amounts will be utilized to increase marketing and order fulfillment to
more locations.
If less than the maximum proceeds were to be received, the Company
would expend the proceeds in approximately the same ratio as for the maximum
proceeds. In such event, the Company could seek more funding. However, the
Company's growth, market share, and profitability could be less than projected
herein, by an amount that cannot be determined but might be substantial.
Pending the actual use of proceeds for the stated purposes, the Company
intends to invest the funds in U.S. Government issued securities, such as U.S.
Treasury Bills.
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF BUSINESS
- --------------------------------------------------------------------------------
COMPANY HISTORY
The Company was incorporated in Florida on November 28, 1997 and became
the successor in interest to a Texas corporation of the same name, effective as
of January 1, 1998. The Texas corporation, formed May 22, 1996, transferred all
right, title and interests in and to its assets, over to the Company. Such
transfer was made in exchange for the Company's issuance of stock to the Texas
Company's shareholders on a five (5) for one (1) share basis. That is, each
share of the previously outstanding stock was in effect split up into five (5)
shares of the Company's stock.
GENERAL MARKET INFORMATION
FAST, LOW COST WIRELESS COMMUNICATIONS
Operations have begun in Heathrow, Florida with sites in the Central
Florida region as well as in the Boston area. The Company now has research and
development and demonstration sites for its proposed service in four hotels, one
office building, and one University. The Company proposes to concentrate its
marketing efforts initially in the Southeastern United States and then expand
nationwide within the next three years. With the proceeds from this offering,
the Company will promote its services for usage in a variety of properties;
convention centers, airline clubs, airports, office buildings and others. To
help offset costs of operations during its start up period the Company has also
marketed its services as a full service Internet provider which includes web
page hosting and design, dial in Internet service, and shared high speed (T-1)
Internet service into office buildings with multiple tenants. The Company has
produced a minimal amount of revenue from the sales and installation of wireless
LAN products, computer system services, and Internet access. The Company has
also developed Internet Kiosks which are publicly accessed with a credit card
and are computers placed in the lobby of hotels for retrieving e-mail and other
Internet functions. These Kiosks have produced minimal amounts of revenue.
The concentrated and the most costly marketing efforts have involved
securing and installing demonstration sites at hotels affiliated with major
hotel chains with the goal of securing these chains as alliances. Potential
customers are described in the following sections. These demonstration sites
have provided the basis for speculating both our customer profile and our cost
projections for installation and system support.
Mobile Area Networks, Inc. will provide traveling business people (road
warriors) who have laptop computers, with a very fast, very low cost, totally
private, wireless data communications service to remote home-office network
services, and to the Internet. Unlike a modem attachment, no telephone line
connection is necessary for this service.
A telephone modem does allow limited communication. However, slow speed
and vulnerability to interception and interference inhibit the mobile user from
having most of the productivity benefits enjoyed by in-house computer users.
Millions of miles of fiber optic cable for digital information
transport are installed in the U.S. The fiber network transceiver switch or
junction installations called Points of Presence (POPs), are within miles of
nearly every major corporate location, hotel, and airline club. Local Exchange
Carriers (LECs) can provide a high-speed local data connection from these POPs
to almost any building in the U.S. The Company will use a high-speed, wireless
technology PC Card to reach this high-speed data connection inside buildings.
The Company's MOBILAN(R) system will have a significant economic
advantage over a modem telephone cord connection because it utilizes the
unregulated data network and the Internet, not the highly regulated and tariffed
long distance public telephone system. The underlying cost per-bit on the fiber
data network is about 1/100th the cost of carrying a bit on the public voice
network.
LAPTOPS EXPLODING
16
<PAGE>
There were 17,000,000 (17 million) business users of laptop computers
at the end of 19955. Nearly 3,000,000 (3 million) of these laptop users travel
an average of three times per month to interstate destinations. BIS Strategic
Decisions estimated that these mobile professionals are spending over
$50,000,000 ($50 million) per month or $600,000,000 ($600 million) per year in
long distance charges and surcharges to check e-mail and send faxes from hotels.
The Company's MOBILAN(R) high-speed communications service will reduce this cost
substantially. Lower cost will encourage usage and new applications, giving
greater productivity from existing resources of people and equipment, which will
attract new users and expand the market rapidly because of the huge cost
reduction.
THE COMPANY HAS INTEGRATED A NUMBER OF KEY EXISTING TECHNOLOGIES TO
CREATE THIS MOBILE DATA COMMUNICATION SERVICE, AND HAS ADDED PROPRIETARY CONTENT
TO MAKE THE NETWORK FUNCTIONAL AND MORE COST EFFECTIVE.
Laptop computers are the lifeblood of the business traveling
roadwarrior. With the PC Card expansion slots in these laptops and the Company's
communications service called MOBILAN(R)6 travelers can connect to the corporate
computer network from nearly anywhere, for real-time interaction, without
plugging into a telephone line.
PC CARD APPLICATION
FAST WLAN PC CARD
One PC Card is a high-speed, short-range wireless card. These cards are
known as WLAN cards. The MOBILAN(R) cards can communicate at up to 3 million
bits per second (Mbps), and are most often used inside buildings. Initial target
areas are hotels, convention centers, airports, major office buildings, resorts,
and restaurants.
Wireless LANs (local area networks) consist of a transceiver that plugs
into the laptop PCMCIA card slot and transmits to an access point relay. Most
laptops can support two PC Cards at the same time. The access point transceiver
is about the size a smoke alarm or thermostat, and could mount on the ceiling or
the wall. However; in most installations the public does not see the transceiver
as it is hidden above the ceiling or is mounted in a utility area.
Under ideal conditions, good wireless communications from the laptops
to the access point can be established within a range of approximately 500 feet.
Two access points will cover about 785,000 square feet of space, depending upon
building construction and layout. For a hotel, two access points could cover two
or three floors, but the actual number of access points required depends upon
construction density. In an airline club, one Access Point could cover the
space, but more Access Points may be needed for problem free operation in this
multiple user environment. The Company's current installations have revealed
that the number of access points required will be substantially higher than some
manufacturers represent because of construction materials used in most hotels.
Retail price of the WLAN PC Cards is about $600 (about 1/2 the cost of some CDPD
modems and about 2 times the cost of a high-speed telephone line modem). The
retail price of the access point receiver is about $1,500, plus the cost of
special antennas in some locations. Each receiver can serve up to 256
simultaneous PC Cards users, so the per unit cost is much less than CDPD modems,
and the data capacity is much greater.
The Company has obtained suitable PC card transceiver products from
more than one source, and is therefore, not dependent upon any single
manufacturer for its supply of hardware.
SLOW CDPD CARD
The secondary service to be offered by the Company is a wireless
wide-area data networking system using the CDPD network. CDPD is a digital
portion of the existing cellular telephone network. CDPD can communicate
wirelessly at about 10,000 bits per second (10 Kbps), or about the actual speed
of a very slow wired modem,
- -----------------------------
(1) Ablonci, Wm. F., and Elliot, Thomas R.: MOBILE PROFESSIONAL MARKET
SEGMENTATION STUDY, March 1995, BIS Strategic Decisions, 1-617-982-9500
(2) Service Mark was registered with the Patent and Trademark office on
10/21/96
17
<PAGE>
from nearly anywhere. CDPD service is deployed in over 100 metropolitan areas
throughout the U.S. Therefore, anywhere in these communities, outdoors or
indoors, a laptop computer user can connect via MOBILAN(R) with total security
and full access to a home office network. Even though the CDPD data speed is
comparable to a very slow telephone line modem, it does allow MOBILAN(R) to
offer wireless mobility plus data access from almost anywhere. This slower speed
CDPD service is offered only as a backup for the user who needs connectivity at
any time even if for only small messages. Over 100 cities have CDPD service
across their metropolitan areas that MOBILAN(R) can utilize. This was expected
to grow to over 200 cities by year end 1997. The current price for CDPD PC Cards
is approximately $1,000. They are intended to be used as a backup to the WLAN
card if the MOBILAN(R) user is out of range of the fast system that the Company
is developing. The CDPD PC Cards are available from computer hardware suppliers.
INTRANET INFRASTRUCTURE
Mobile Area Networks, Inc. will use an Intranet TCP/IP WAN fiber optic
data line service for fast problem free transmission for both WLAN and WAN data.
Intranet uses the same Internet Protocol concepts as Internet but is a private
network so it does not have the slow response times and the lack of security of
the Internet. The key technical features of a "connectionless" network needed to
make Mobile Area Networks, Inc. successful require an excellent fit to an
Intranet service, which the Company is developing. The Company is currently
utilizing data lines supplied by more than one carrier, and has developed the
capability to operate with multiple carriers. Therefore, the Company is not
dependent upon a single carrier for its service. The Company has built out its
own Internet Service Providing center, or gateway, with fiber optics
installation and network servers in house through which all traffic is routed
for security and authentication. This provides the Company the potential to
develop its own advertising portal as users are added to the system.
Local high-speed lines will be utilized, and the data capacity is
virtually infinite, with the bit cost at approximately 1/100th the cost of a
telephone line and modem connection.
The short-range 802.11 wireless technology, the high-speed local loop
connections and the WAN data carriage comprise the data infrastructure of
MOBILAN(R). These network and the encryption software costs can be amortized
into monthly user fees, or possibly recovered by modest advance payment by the
user's employer.
The Company's connections with Local Exchange Carriers are provided for
the Company by data line service providers. The fiber optic Intranet service
providers selected by the Company can provide service to virtually any location.
Some of the wide area network (WAN) communications suppliers are AT&T, Sprint,
MCI, WorldCom, and MFS Datanet. This WAN data communications market was about
$2,000,000,000 ($2-billion) in 1995.
ENCRYPTION SOFTWARE
Security can be implemented using commercially available "tunnel"
software. Tunnel software encapsulates the initial information within a coded
mathematical formula for totally secured communications. The Company is using
commercially available encryption software, and is not dependent upon a single
supplier for this product.
COMPETITION
NO DIRECT COMPETITION
Mobile Area Networks, Inc.'s. proposed (dual-speed, low cost, wireless
data) communication service will be uniquely implemented. There currently exists
no announced direct competitors to totally duplicate this service, within the
knowledge of the Company. Implied competition exists in both the wired and
wireless market. Eventually, the vast cost savings and convenience of the
MOBILAN(R) services will create more customer demand and force competition to
emerge, but the Company expects to have a substantial, highly profitable market
share and will vigorously protect that market share against likely competition.
WIRED
The largest current competition is the telephone line modem connection.
The laptop PC card modem market (PC cards that fit into laptop computer PCMCIA
slots) totaled $3,000,000,000 ($3 billion) in sales in
18
<PAGE>
1995(1). However, the modem has now reached the maximum speed that the public
telephone network from a hotel can support (33.6 Kbps in most cases even though
faster modems are advertised)(2). Telephone modem speed has proved to be
acceptable for short message information, such as e-mail and is marginally
acceptable for small database applications such as Lotus Notes. The low security
and lack of privacy in phone connections has required most companies to use
"firewall" systems that block access to protect their LAN (Local Area Networks)
computer systems. Thus, remote users may get to e-mail or to Notes, but cannot
break through to the network. Modem companies are primarily manufacturing firms
and consequently are not expected to enter the high speed wireless
telecommunications service business.
Communication by traveling laptop PC users with regular modems can be
made through the public telephone network, the Internet, or leased lines. The
public phone long distance network is the most widely available service, but
often has high surcharges from public places, even for credit card calls. Public
Internet service (at local call rates plus a monthly and/or per minute charge)
is widely available but is the least secure and has serious performance
problems. Dedicated leased lines have the highest performance standards but are
prohibitively expensive. Leased lines are most often used for remote branch
offices with multiple users sharing the cost of these lines.
ISDN (Integrated Services Data Network) communication service is
available to some of the public. By the end of 1995, Datapro9 reports a total of
431,105 lines were installed. ISDN connections, like analog POTS (Plain Old
Telephone Service) links, can be either dial-up or dedicated. Pricing is highly
variable, availability is spotty, and installation and service have been poor.
Many applications of ISDN have been to replace leased lines for small satellite
offices and as dedicated connections for highly computer literate telecommuters
(engineers, network technicians, travel agents). ISDN is a dedicated line, or a
point-to-point connection, and it will be unlikely that ISDN to every room in a
hotel will be available before an even higher speed alternative, like Mobile
Area Networks, Inc.'s MOBILAN(R) will offer higher speeds at much lower cost.
WIRELESS
In the existing wireless network market, it is important to point out
that every potential competitive solution has a slower data rate, costs much
more, requires massive capital for infrastructure deployment, and requires the
use of an expensive, non-standard connection device. Many potential competitors
may be seeking to optimize their infrastructure investment, but in doing so,
they are forcing the end user to embrace unacceptably high levels of change in
user habits and unacceptably poor network performance.
Wireless to satellite may be reaching the masses in 1998 or 1999 with
bi-directional satellite service coming of age. At about $3 per minute and low
bandwidth (limited information) capacity, these services will be targeted at
emerging countries and very remote location users. They may, however, offer an
alternative to private radio networks in the U.S. when these services become
available. Satellite service will always be slow because it communicates to a
very broad audience so they will NOT be viable competition to Mobile Area
Networks, Inc.'s proposed service.
Ardis and RAM rely on radio frequencies to transmit packet data over
their proprietary nationwide networks. Ardis offers service in 410 Metropolitan
Service Areas; RAM offers it in 266. Like CDPD, a packet radio is best suited
for only small amounts of data. RAM's network operates at 8Kbps (8,000 bits per
second), with actual throughput (effective transmission rates) of 2.4 to
4.8Kbps. These services require proprietary modems for connection. These
companies have built proprietary infrastructures and will not be abandoning
their investments to develop competition to MOBILAN(R). CDPD and PCS are
expected to effectively compete with these companies, but are not expected to
rival Mobile Area Networks, Inc. data service speed.
- ---------------------------
(1) AP Research Corporation, International Data Corporation.
(2) Blankenhorn, Dana: ISDN TO THE NET - U.S. ROBOTICS SETS ITS MODEM STRATEGY,
Interactive Age, August 19, 1995
(3) DataPro is a Boston based research firm specializing on data communication
products and services.
19
<PAGE>
PCS is short for Personal Communication Services, and in its simplest
terms, is a combination of current devices: a cellular telephone, a pager, and a
small message screen with two-way communications in a small single device. The
frequency spectrum for narrow-band PCS was bid in 1995, with Sprint, AT&T and
AirTouch being the major winners. PCS is all digital, and requires about three
times the number of towers as cellular which has prompted some towns to limit
the number of new towers that can be built. The PCS data rate is 7.2Kbps so it
is targeted at the very short messaging and voice marketplace. Broadband
frequencies for PCS (intended to compete against cable) were auctioned by the
FCC (U.S. Federal Communications Commission) in 199610. The system requires a
transmitter/receiver ground station, a rooftop antenna, interface electronics,
and a set-top terminal. This very slow service will not be direct competition
to. MOBILAN(R).
The MOBILAN(R) Wireless communications network developed under the
International Electronic Equipment Compatibility standard (IEEE) 802.11. Basic
rates are 1 and 2 Mbps with actual throughputs from 350 Kbps to 1.2 Mbps. There
are some announced product offerings with up to 10 Mbps transmission rates.
20
<PAGE>
The following table compares the overall and the per data-bit costs of
current and announced telecommunication services. The massive cost savings
offered by the Company's MOBILAN(R) system are dramatic. By comparison. This
offers a great opportunity for the Company to gain market share before
competition can get into the market with comparable systems and services.
The "New Infrastructure cost" column is the infrastructure cost to
reach 5,000,000 (5 million) users as indicated in the footnoted source. For
MOBILAN(R) the cost estimate was developed by the Company.
<TABLE>
<CAPTION>
------------------------------ ------------------------ ---------------- -------------------- -------------------
WIRELESS CONNECTION NEW INFRASTRUCTURE DATA SPEED(2) APPLICATION(3) CONSUMER COST FOR
COST(1) MEGABYTE FILE(4)
------------------------------ ------------------------ ---------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Wireless to Space
[GRAPHIC OMITTED]
/bullet/ Motorola Iridium $3.4B 6.4 Kbps Voice N/A
/bullet/ Teledisic $40B 16 Kbps 5-10 Kbytes $120
------------------------------ ------------------------ ---------------- -------------------- -------------------
Wireless to a Tower
[GRAPHIC OMITTED]
/bullet/ Ardis $700M 4.8 Kbps 2-5 Kbytes $125
/bullet/ RAM $400M 4.8 Kbps 2-5 Kbytes $180
/bullet/ CDPD $440M 10 Kbps 2-5 Kbytes $60
/bullet/ PCS $20B 4.8 Kbps /less than/140 bytes $250
------------------------------ ------------------------ ---------------- -------------------- -------------------
[GRAPHIC OMITTED]
Wireless to a WAN
MOBILAN(R) $10M 1.5MBPS LAN extension $0.25
------------------------------ ------------------------ ---------------- -------------------- -------------------
<FN>
(1) Schneiderman, Ron: WIRELESS BROAD MARKET AWAITS FCC ACTION, Wireless System
Design July, 1996
(2) Fowler, Joe: The Race to Global Information Super-Skyway. Pacific Electric,
Wire and Cable Industry Report, January 6, 1996
(3) Gilder, George: ETHERSHERE, Forbes Magazine, October 10, 1994
(4) Gareiss, Robin: Special Report/Wireless Data Services, Data Communication
Magazine, March 21, 1995
(5) Mobile Area Networks, Inc.: Calculated as to competitors from published
pricing and published data rates, as described in the March 21, 1995 Data
Communication magazine article by Robin Gareiss, Special Report on Wireless
Data Services. Calculated for Mobile Area Networks, Inc. based on the
monthly $2,000 charge for a T-1 fiber optic line with 1.5 Mbps capacity.
</FN>
</TABLE>
21
<PAGE>
DATA CARRIAGE
Mobile Area Networks, Inc. has a major economic advantage because the
MOBILAN(R) system is being built on the unregulated structure of the fiber optic
data network (the private Intranet), not the regulated and tariffed public voice
long distance telephone network. The voice network has a multi-tiered regulated
market and pricing structure. The local voice call is generally a fixed cost but
varies by region, based mainly on competition. Legislation sets the rates at
each hand-off between the Local Exchange Carriers (LECs) and the Inter-Exchange
Carriers (IXE or long distance). The hand-off cost from LEC to IXE and from IXE
to LEC is about $0.05 on each call. The long distance (IXE) varies by distance,
time of day, and competition. Currently voice connection costs for long distance
calls range from $0.12 to $0.42 per minute. Surcharges are also added in public
places such as hotels to share revenue on public calls.
Much of the news media coverage in 1996 was about the growing market
for Competitive Access Providers (CAPs) that connect fiber optics directly to
large buildings or institutions, and directly connect that fiber into the
wide-area network. With this connection, CAPS are able to eliminate the $0.05
charge on one end of the call and can thereby price under the LECs in their
market. MFS Datanet is the largest CAP with local connection rights in Texas and
many mid-western states. MFS Datanet now has over 5,000 buildings on their
network.
Data communications networks that are the infrastructure backbone of
the Company's MOBILAN(R) service have a structure similar to the voice network.
LECs provide a local data circuit to a wide-area network Point-of-Presence (POP)
of the fiber based data network. The local hard-wired connection is offered in
discrete sizes: 64Kbps; 128Kbps; 256Kbps; 512Kbps; 896Kbps; 1024Kbps; 1.544Mbps;
45Mbps. The 1.544Mbps service is generally named T-1 or DS-1 and the 45Mbps
service is named DS-3. DS is a data service classification.
Comparing the Sprint DS-1 data service versus $0.20 per minute voice
service shows that the cost on a per-bit basis is about 1/250th that of data on
the voice service.
For example; if a user was spending $250 per month on data
communications over conventional voice grade telephone circuits, the DS-1 data
communication cost to the Company to provide that service would be about $1.00.
The Company may price that service to the user at $2.50 for a 99% savings to the
user, and the Company would realize a gross profit of $1.50 (60% gross margin).
In addition, the Company may realize a profit on the hardware (PC card) and
software sale or lease to the user/employer, or add to the data transmission fee
to amortize such costs, plus profits, and the Company would retain ownership of
the equipment and software.
MARKETING
There are two basics concepts developed for the early marketing plan
for MOBILAN(R). The first is a concept termed "Customer Specified Service
Locations". Second is the "Early Customers Focus" concept. Current efforts have
revolved around securing demonstration sites at hotels affiliated with major
hotel chains. Potential customers are described in the following sections. These
demonstration sites have provided the basis for determining both our customer
profile and our cost projections.
CUSTOMER SPECIFIED RELAY LOCATIONS
The Company intends to develop early customers with large mobile
workforces. These customers will define the locations for MOBILAN(R) data
service they require to support their workforce and to justify deployment. For
example, the first large customer may require coverage in six major cities at
one or more of its offices and at either of two hotels and Airline clubs in
those cities. The second customer may require three additional cities and a
different hotel chain. The third customer may require two additional cities and
stay at the same hotel as customer one or two.
The cost and risk of infrastructure deployment is in small incremental
steps, about $30,000 per hotel and $20,000 per airline club. Therefore, unlike
the potential competition, who will spend millions or billions of dollars to get
the first customer, the Company can grow incrementally in small steps. This is
expected to result in a shorter period of early operating losses and a lower
amount of losses, with a lower break even point. It is important to note that
the business traveler residence is well defined.
22
<PAGE>
By penetrating five major hotel chains, and two airline clubs, the
Company can supply 75% of business travelers' laptop computer communications
requirements. The estimated cost to accomplish this goal is thirty million
dollars ($30,000,000) which the Company anticipates spending in one to three
years after this funding is realized. The projections herein are based on the
more conservative three year schedule.
EARLY CUSTOMERS FOCUS
Early customers will be computer savvy technologists looking to jump
ahead of the competition, but also will include those who appreciate new
technology for its own sake. They are "self-referencing" and typically know
enough about technology to not depend on other reference points or outside
influence. If these technologists reference, they do so horizontally in their
industry segment rather than vertically in their own company. These technology
visionaries will typically begin with a pilot or beta test, which makes sense to
them as they venture into new ideas and products.
These visionary technologists generally are a "small pond" of
customers. The targeted early market customer profile for Mobile Area Networks,
Inc. (having these two criteria, a large mobile workforce and visionary
technologists), has focused attention on the large accounting and consulting
firms. Almost all of their workforce are mobile and they have pioneered many new
technologies. For example, Price Waterhouse pioneered Lotus Notes, Deloitte &
Touche pioneered Audit software, Coopers & Lybrand developed TeleSim for the
telecommunications industry, and KPMG teamed with Integral and Hyperion for
client server software.
MOBILAN(R) has a unique benefit for the Big Six type accounting firms.
Besides communicating from the laptop computer through an access point to a
distant home office LAN system, the MOBILAN(R) wireless technology allows
peer-to-peer interaction from laptop to laptop. Four tax auditors in a client
conference room or in different remote file rooms could network among themselves
wirelessly between laptops. This is very important to these firms because they
have travelers who want wireless communications at multiple offices of the
client, at the hotel, and at home. MOBILAN(R) allows them to be everywhere they
want to be, when they wish.
For roadwarriors who spend time at client sites for consulting work,
for vendor service, or installation of equipment or services, MOBILAN(R) allows
users with the wireless cards the opportunity to establish peer-to-peer local
area networks among small groups of people on site. This is a tremendous time
and money saver in passing information and in printing. A single printer can be
attached to the laptop of anyone in the group and everyone can print from
different locations instead of copying and delivering documents.
The Big Six firms combined have more than 400,000 mobile workers.
Penetrating just these six firms could produce substantial annual revenue for
Mobile Area Networks, Inc. while allowing those firms to realize substantial
savings.
Through the audit, tax accounting, and consulting services of these Big
Six firms, their clients will also become knowledgeable of the MOBILAN(R)
service. It is believed that through the Big Six firms many additional customers
foR MOBILAN(R) will be recruited.
To provide locations for users to have traveling telecommunications
access, the Company has focused its efforts on the hotel industry. The Company
is developing models that will generate revenue for the hotel instead of costing
the hotel to provide the availability of high speed Internet. Each hotel
property with the Company's system installed can immediately begin charging per
use access for this service. The Company has demonstration systems in place as
referred to under "Business Relationships".
BUSINESS RELATIONSHIPS
The Company has working demonstration systems installed in Marriott,
Radisson, Sheraton, and Westin hotels as well as at Florida A&M University and
one office building.
The Company has data lines installed by more than one carrier on a
non-exclusive basis. The Company obtains its wireless hardware from more than
one vendor. The success of the Company is not dependent upon any single provider
of data lines, hardware, or software, but the Company does intend to develop
long term relationships with suppliers when in the best interest of the Company.
23
<PAGE>
INTELLECTUAL PROPERTY
Mobile Area Networks, Inc. has integrated existing technologies of
wireless communication, wide-area data networks, Internet service, security, and
software products to develop a communications infrastructure. The Company owns
all intellectual property created for hire, and all business and technical
solutions developed are being treated as proprietary trade secrets.
REGULATORY AFFAIRS
After careful review and research into the regulatory issues involved,
the Company believes that its service offering will not be subjected to
regulatory review and FCC oversight.
There are two regulatory areas that relate to the MOBILAN(R) operation:
/bullet/ Use of the radio wave spectrum (broadcast frequencies)
/bullet/ Provision of telecommunications service
The FCC has proactively continued to affirm that the 2.4GHz spectrum
will not be site licensed, nor will the spectrum be auctioned. There are already
over 330,000 wireless LANs installed using the frequency (as well as millions of
microwaves ovens), so the industry (and the public) would very much oppose any
change in the regulation of this frequency.
Calls that start and end locally are regulated by the state public
utility commissions; calls that cross state lines are regulated by the Federal
Communications Commission by virtue of the Interstate Commerce Clause of the
Constitution. CompuServe is in a similar position as Mobile Area Networks, Inc.
in providing telecommunications services, and has not been subjected to
regulation. However, it does not provide communication services on a large scale
as a primary business, as the Company intends to do. The exploding Internet
growth is in a similar area of communications activities and is being promoted
by the Federal Government without regulation. The Company can therefore cite
strong precedence against regulation.
PRICING
Pricing of the Mobile Area Networks, Inc. service is expected to be a
dynamic issue. The initial rate is estimated to be approximately $50 to $60 per
month per user for the monthly subscriber, which compares very favorably with
the much slower speed service (telephone line modems) presently widely used in
the market.
Fixed rate billing was selected for two reasons. First, Internet
Service Providers (ISPs) did not experience explosive growth under variable rate
billing (i.e. $ per hour of use). Only after fixed rate pricing was introduced
did Internet service explode. Secondly, Intranet cannot yet provide detailed
billing information. Intranet pricing is simply based on the speed of the
connection port selected, so no time or data volume billing information is
available per user. Because the Intranet is so dramatically less costly than
regular telephone service, there presently is no significant incentive to meter
or bill by the minute for the service, and especially because the PC WLAN Card
allows the very fast transmission rate of up to 3Mbps.
If customer demand warrants, the Company can implement a billing system
so a customer can re-bill its own clients, or account for internal users for
cost control. For a casual user in a hotel who is not a subscriber, daily or
hourly charges can be added to the users room charge or can be charged to the
user's credit card by the Company.
EMPLOYEES
The Company has nine staff members, and has available additional
commissioned only sales persons. The working staff include a full time CEO, two
part time officers, and six full time staff members holding the positions of
comptroller, sales manager, sales persons, computer networking, wireless
product, and software and technical support personnel. The Company also has
available certain private shareholders who provide technical and
24
<PAGE>
business expertise on a volunteer basis. All Employees and consultants to the
Company are under non-compete, non-circumvent, and non-disclose of trade secrets
Agreements.
- --------------------------------------------------------------------------------
DESCRIPTION OF PROPERTY
- --------------------------------------------------------------------------------
The Company is conducting its operations through leased offices and
technical facilities located at 1275 Lake Heathrow Lane, Suite 115, in Heathrow,
Florida 32746. The Company's requirements for physical facilities are minimal
until tremendous numbers of network connections are in place. The Company
negotiated a facilities lease with terms which allowed for the build-out of the
facilities as the Company desired.
The Company has installed a fiber optic telecommunications system into
the building which should meet the needs of the Company for massive amounts of
data lines into the forseeable future. The system is a "Self Healing Sonet Ring"
which means the system will have back-ups built in which would reroute data
traffic if a portion of the system should fail or become damaged.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
BACKGROUND OF MANAGEMENT
(A) DIRECTORS:
At the present time, the Company's Board of Directors consists of four
members:
GEORGE E. WIMBISH, age 55, is a founder and has been a Director of the
predecessor (Texas) Company since November 3, 1996, and Chairman, President and
CEO since March 28, 1997. He was a successful private investor with over 20
years of experience in acquisitions/mergers and company startups. He has a
diversified background in wholesaling, manufacturing, and direct marketing. His
most recent prior position was CEO of a financial services company. In 1984 he
was a qualified candidate for the U.S. Senate, and has personally lobbied the
U.S. Senate. He has experience with regulatory agencies including Underwriters
Laboratory and the Nuclear Regulatory Agency. He resides in Heathrow, Florida.
DR. ROBERT M. GOOD, age 61, is a founder and has been a
Director/Treasurer of the predecessor (Texas) Company since November 3, 1996. He
has been a successful private investor and entrepreneur for the past 15 years.
He is a licensed stockbroker. He operated a successful dental practice in Long
Island, New York and sold the practice to achieve early retirement. Dr. Good has
served as an officer of numerous companies. He was an Army Officer. Dr. Good
resides in Heathrow, Florida.
DR. RUSSELL M. GRAHAM, M.D. age 40, has been a Director of the Company
since November 1998. Dr. Graham is a practicing Physician for more than the past
ten years. He is a Principal in a Clinical Research Company, a Principal in a
Helicopter flight school and a licensed pilot. He resides in Altamonte Springs,
Florida. Dr. Graham has introduced the Company to other business and Investment
community leaders.
JAMES R. LEONE, age 55, Director and Secretary, is a practicing
attorney and has had his own law firm since 1985, concentrating in the fields of
securities and corporate law. Previously, Mr. Leone was briefly with Gray,
Harris & Robinson in Orlando, FL (1984-1985) and with Quinn, Jacobs, Barry and
Miller in Chicago, IL. Until 1981 Mr. Leone was a financial attorney and
financial analyst with the U.S. Securities and Exchange Commission in
Washington, D.C. Mr. Leone resides in New Smyrna Beach, Florida.
(B) PERSONS NOMINATED OR CHOSEN TO BECOME DIRECTORS:
At the present time, no other person, other than those listed above,
has been chosen or nominated to become a Director of the Company.
(C) EXECUTIVE OFFICERS AND PERSONS CHOSEN TO BECOME EXECUTIVE OFFICERS:
At present, the Company's Executive Officers consist of its Directors,
mentioned above, Mr. George E. Wimbish as Chairman, President, and CEO, Dr.
Robert M. Good as Vice President and Treasurer, and
25
<PAGE>
James R. Leone as Secretary. It is anticipated that additional officers will be
added with the proceeds from this offering.
(D) CERTAIN LEGAL PROCEEDINGS:
The Company is not aware of any legal proceedings within the last five
years against any Director, Officer, Significant Employee, or candidate for any
such position involving a petition under the Bankruptcy Act or any State
insolvency law or of any receiver, fiscal agent or similar officer appointed by
a court for the business or property of such person or any partnership in which
he was general partner or within two (2) years before the time of such filing,
or any corporation or business association of which he was an executive officer
at or within two (2) years before the time of such filing; nor is the Company
aware of any of the above-mentioned persons being convicted in a criminal
proceeding; except as follows:
On August 14, 1995 James R. Leone & Assoc., P.A., a Florida
professional corporation, filed a reorganization petition in the Bankruptcy
Court in Orlando, Florida. Its Plan of Reorganization was scheduled for a
confirmation hearing on January 14, 1997 but a notice of proposed conversion to
liquidation was filed on that date and the conversion was made on or about March
12, 1997. A Director and the corporate Secretary of the Company, James R. Leone,
was the sole shareholder, officer and director of that corporation. On March 10,
1997 Mr. Leone filed a personal reorganization petition on the advice of counsel
because of liabilities caused by the corporate liquidation, and his plan of
Reorganization was confirmed.
REMUNERATION OF MANAGEMENT
The Company's current policy is that Directors serve without
compensation. However; in the future, it may be in the Company's best interests
to compensate Directors in a manner that will attract the most qualified people
to serve on the Company's Board. Through December 31, 1997 the officers of the
Company have served without compensation other than the allowance to acquire
founders stock at a discounted price. The Company's management will determine
when it is in the best interest of the Company to compensate officers. During
fiscal year 1997, there was accrued compensation expense of $120,000 owed to the
Company's President. During the second quarter of Fiscal 1998 the Company's
president was collecting a diminutive amount of his compensation in order to
reduce accrued compensation expense.
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
- --------------------------------------------------------------------------------
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1997 with respect to
each director and officer and any person who is known to the Company to be the
beneficial owner of five percent (5%) or more of the Company's outstanding
Common Stock. Also set forth in the table is the beneficial ownership of all
shares held by all directors and officers, individually and as a group.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
NAME AND ADDRESS SHARES OWNED PERCENT PERCENT AFTER
OF OWNER BEFORE OFFERING MAXIMUM OFFERING.
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
George E. Wimbish 25,500,000(a) 77.% 66.9%
Director, Chairman, President, & CEO
1275 Lake Heathrow Lane (Suite 115)
Heathrow, Fl 32746
Dr. Robert M. Good 2,500,000(a) 7.5% 6.5%
Director, Vice-President, Treasurer
1275 Lake Heathrow Lane (Suite 115)
Heathrow, Fl 32746
Dr. Russell M. Graham 10,000 ..03% .02%
109 Camphor Tree Lane
Altamonte Springs, Fl. 32714
26
<PAGE>
James R. Leone 5,000 .02% .02%
Director, Secretary
1275 Lake Heathrow Lane (Suite 115)
Heathrow, FL 32746
- --------------------------------------------------------------------------------------------------------
Subtotal 28,015,000 84.5% 73.4%
Other Private Shareholders 5,246,230(b) 15.5%(c) 13.4%(c)
New Shareholders 5,000,000 -------- 13.2%
From Offering
- ---------------------------------------------------------------------------------------------------------
TOTAL 38,261,230 100.0% 100.0%
<FN>
(a) Within the knowledge of the issuer, no other person holds or shares
the power to vote or direct the voting of securities described
pursuant to subsection (a) above. No other person holds shares or the
power to vote 5% or more of the issuer's voting securities.
(b) The Company may utilize private stock shares as incentive or
compensation for the product and service marketing efforts of the
Company's employees, when appropriate.
(c) Some of the restricted shares included in this total have been
conditionally assigned to certain employees or consultants with
performance and or tenure requirements. The possibility that all of
these private shares may or may not be rescinded would not
dramatically affect this percentage.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
All transactions during the previous two years and any presently
proposed transaction to which the issuer is a party in which any person having a
relationship with the issuer has a direct or indirect material interest are the
following transactions, and no others:
On October 2, 1997 the Company signed a Compromise Settlement and
Release Agreement with William J. Reid. Reid was formerly the predecessor
Company's CEO, a Director and 45% shareholder. He agreed that he no longer held
those positions (his stock being surrendered) and he dismissed a lawsuit against
the Company and returned certain assets to it in exchange for payment of $8,345
claimed by him as back salary, and release of him from a noncompetition clause
he had signed. His lawsuit, Reid vs Mobile Area, case No. 97-03622 was filed in
the 162nd Judicial District Court in Dallas County, Texas. He claimed that the
Company owed him monies and that the noncompete covenant was not valid, while
the Company counterclaimed for return of the assets, cancellation of the stock,
and damages for wrongful acts.
- --------------------------------------------------------------------------------
SECURITIES DESCRIPTION
- --------------------------------------------------------------------------------
The Company is offering only Common Stock in this Offering.
COMMON STOCK
The Company is authorized to issue up to Fifty Million (50,000,000)
shares of Common Stock with no par value. Approximately 33,261,230 shares have
been issued to 80 persons as of the date of this Prospectus. Each holder of
Common Stock is entitled to one vote for each share held of record on each
matter to be voted on by stockholders, except as otherwise may be provided by
law.
Subject to any preferences which may be granted to the holders of
Preferred Stock (if ever authorized by the shareholders) which the Company could
choose to issue in the future, each holder of Common Stock is entitled to
receive ratably such dividends as may be declared by the Board of Directors from
funds legally available. Upon liquidation or dissolution of the Company, the
holders of Common Stock are entitled to share ratability
in all the assets after payment of all creditors, subject to the rights of any
Preferred Stock then outstanding. The Common Stock does not have cumulative
voting rights or preemptive purchase rights.
The shares hereby offered, when paid for, will be fully paid and
non-assessable.
27
<PAGE>
PREFERRED STOCK
The Company is not currently authorized to issue Preferred Stock. The
Company currently has no plans to issue shares of Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The Company currently acts as its own Transfer Agent and Registrar for its
Common Stock
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
JAMES R. LEONE has provided a legal opinion as to certain matters
relating to the issuance of the shares pursuant to applicable securities laws.
This Prospectus has been prepared by the Company's management and its advisers
and has been reviewed by JAMES R. LEONE, who also is a Director and the
corporate Secretary of the Company. Neither he nor the Company's management
believes there is a significant conflict of interest in regard to his integrity
and lack of bias in issuing the opinion letter referred to above because he is a
Director and the corporate Secretary.
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
The Financial Statements included in this Prospectus and Registration
Statement, to the extent and for the period indicated in the accompanying
auditors report thereon, have been examined by Parks, Tschopp & Whitcomb, P.A.,
certified public accountants, and are included herein in reliance on their
authority as experts in accounting and auditing.
28
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
Independent Auditors' Report F-2
Financial Statements:
Balance Sheet, and Stockholders Equity F-3
Statement of Operations F-4
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
<PAGE>
PARKS, TSCHOPP & WHITCOMB, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
2600 MAITLAND CENTER PARKWAY, SUITE 330
MAITLAND, FLORIDA 32751
407-875-2760
1997 INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mobile Area Networks, Inc.:
We have audited the accompanying balance sheet of Mobile Area Networks, Inc. (a
development stage company) as of December 31, 1997, and the related statements
of operations, stockholders' equity, and cash flows for the year then ended and
for the period from May 23, 1996 (date of inception) through December 31, 1996
and the cumulative period from May 23, 1996 (date of inception) through December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mobile Area Networks, Inc. (a
development stage company) as of December 31, 1997, and the results of its
operations and its cash flows for the year then ended and for the period from
May 23, 1996 (date of inception) through December 31, 1996 and the cumulative
period from May 23, 1996 (date of inception) through December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ PARKS, TSCHOPP & WHITCOMB, P.A.
-------------------------------
Parks, Tschopp & Whitcomb, P.A.
January 30, 1998
THE FOLLOWING PAGES ARE INTERIM, AND UNAUDITED FINANCIAL REPORTS
F-2
<PAGE>
<TABLE>
<CAPTION>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, 1998 and 1997
(Unaudited)
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 57,085 368,584
Inventory 46,673 30,037
Other current assets 18,062 10,288
----------- -----------
Total current assets 121,820 408,909
----------- -----------
Office furniture and equipment, net 85,928 14,457
Intangible assets, net of $5,341 and $2,289 9,917 12,969
----------- -----------
$ 217,665 436,335
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,060 29,523
Accrued expenses 168,000 90,000
----------- -----------
Total current liabilities 185,060 119,523
=========== ===========
Stockholders' Equity:
Common stock, no par value, authorized 50,000,000 shares,
issued and outstanding 33,261,230 and 31,198,382 in 1998 and
1997, respectively 968,217 663,656
Deficit accumulated during the development stage (935,612) (346,844)
----------- -----------
Total stockholders equity 32,605 316,812
----------- -----------
$ 217,665 $ 436,335
----------- -----------
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1998 and 1997
and for the cumulative period from May 23, 1996 (date of inception)
through September 30, 1998
(Unaudited)
CUMULATIVE PERIOD
NINE MONTHS NINE MONTHS FROM MAY 23, 1996
ENDED ENDED THROUGH
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
------------------ ------------------ -------------------
<S> <C> <C> <C>
Revenues $ 16,850 - 16,850
Costs and expenses:
Product development and marketing (36,080) (21,235) (75,697)
General and administrative (453,594) (328,984) (895,301)
------------------ ------------------ -------------------
Total costs and expenses (489,674) (350,219) (970,998)
------------------ ------------------ -------------------
Interest income 4,632 9,950 18,536
------------------ ------------------ -------------------
Net loss $ (468,192) (340,269) (935,612)
------------------ ------------------ -------------------
</TABLE>
F-4
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998 and 1997 and for the cumulative
period from May 23, 1996 (date of inception) through September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE PERIOD
NINE MONTHS NINE MONTHS FROM MAY 23, 1996
ENDED ENDED THROUGH
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
------------------- ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(468,192) (340,269) (935,612)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 16,289 4,289 25,980
Change in operating assets and liabilities:
Accounts payable (13,296) 10,531 17,060
Accrued expenses 48,000 90,000 168,000
Inventory (10,881) (30,037) (46,673)
Other current assets (11,558) (10,288) (18,062)
--------- --------- ---------
Net cash used in operating activities (439,638) (275,774) (789,307)
--------- --------- ---------
Cash flows from investing activities:
Purchase of furniture and equipment (40,172) (16,457) (106,567)
Patent acquisition costs -- -- (15,258)
--------- --------- ---------
Net cash used in investing activities (40,172) (16,457) (121,825)
--------- --------- ---------
Cash flows from financial activities:
Proceeds from issuance of common stock 257,550 495,461 980,706
Stock issuance cost (137) (1,918) (12,489)
--------- --------- ---------
Net cash provided by financing activities 257,413 493,543 968,217
--------- --------- ---------
Net increase (decrease) in cash (222,397) 201,312 57,085
Cash at beginning of period 279,482 167,272 --
--------- --------- ---------
Cash at end of period $ 57,085 368,584 57,085
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes $ -- -- --
========= ========= =========
Interest $ -- -- --
========= ========= =========
</TABLE>
F-5
<PAGE>
MOBILE AREA NETWORKS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements have been prepared in accordance
with rules of the Securities and Exchange Commission and, therefore, do
not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash
flows, in conformity with generally accepted accounting principles. The
information furnished, in the opinion of management, reflects all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1998 and
1997, and results of operations and cash flows for nine month periods
ended September 30, 1998 and 1997 and for the cumulative period from
May 23, 1996 through September 30, 1998. The results of operations are
not necessarily indicative of results which may be expected for any
other interim period, or for the year as a whole.
(2) REVENUE RECOGNITION
The Company recognizes revenue upon shipment of product and upon
provision of related consulting and installation services.
(3) INVENTORIES
Inventories at September 30, 1998 and 1997 consist of finished products
and equipment.
F-6
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) NATURE OF DEVELOPMENT STAGE OPERATIONS
Mobile Area Networks (the Company) was incorporated on May 23, 1996 in
Texas and later transferred its assets to a Florida Corporation which
was formed for that purpose. The Company will be providing wireless
data communications connectivity service for remote home-office network
services and to the Internet from frequently traveled routes and places
such as hotels, convention centers, and airports. Unlike a modem
connection, no cord or telephone line connection is necessary for this
service.
Operations of the Company through the date of these financial
statements have been devoted primarily to product development and
marketing, raising capital, and administrative activities. The
Company's fiscal year end is December 31.
(b) CASH AND CASH EQUIVALENTS
Cash equivalents consist of liquid debt instruments purchased with
original maturities of three months or less.
(c) INVENTORY
Inventory is valued at the lower of cost or market. Cost is determined
on a first-in, first-out (FIFO) method.
(d) FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost. Depreciation is computed at
the straight line method of the estimated useful lives of the assets of
five years.
(e) INTANGIBLE ASSETS
Intangible assets consist of patents which will be amortized over their
estimated useful life, of five years, using the straight-line method.
(f) INCOME TAXES Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to temporary differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. Changes in tax rates are recognized in the period that
includes the enactment date.
Development stage operations for the period ended December 31,1997
resulted in a net operating loss. It is uncertain whether any tax
benefit of net operating loss will be realized in future periods.
Accordingly, no income tax provision has been recognized in the
accompanying financial statements.
(g) USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
F-7
<PAGE>
- --------------------------------------------------------------------------------
PROJECTIONS
- --------------------------------------------------------------------------------
THESE PROJECTIONS HAVE BEEN PREPARED BY THE COMPANY'S MANAGEMENT
WITHOUT REGARD TO PUBLISHED GUIDELINES OF THE AICPA AND ARE NOT INCLUDED IN THE
AUDITED FINANCIAL STATEMENTS OF THE COMPANY.
Mobile Area Networks, Inc. is a communications service provider for
traveling professionals and as such has some of the characteristics of
traditional communication service providers like AT&T, MCI and Sprint in that
certain investments in infrastructure development have to be made before the
service has enough coverage to be of value to users of the service. Mobile Area
Networks, Inc. utilizes the existing infrastructure of fiber optic networks and
copper wire networks, but has to establish the last approximate 500 feet of
connectivity. Mobile Area Networks, Inc. believes that this 500 feet of
infrastructure development can be matched to the specific requirements of large
customers as described in "Description of Business". See "MARKETING".
Some factors in this infrastructure development are the most
significant factors in the financial needs and results of the Company; as
follows:
1. The initial installation of hardware and software will
constitute the 500 feet of infrastructure to sell the large customers.
The financial forecast shown has the assumption that four hotel chains
would be installing systems. This assumption has not been tested.
2. The Company believes that the 500 feet of infrastructure
deployment can be matched to the requirements of the increasing
customer base. For example; the assumption is made that Mobile Area
Networks, Inc. can justify its value to 1,500 users with 28 sites
installed and can justify its value to 10,000 users with 265 sites
installed. This assumption has not been tested.
If these assumptions are accurate, modest infrastructure development
(less than $30 million) is required over a three (3) year period. If a much
larger infrastructure development is required, additional capital may be needed.
Some infrastructure development could be handled by debt financing or by
customers pre-payments against expected massive cost savings (i.e., repayment in
months, not years) but this is not assumed in these forwarding-looking
projections.
The Company also believes that hotel owners will be more willing to
participate in financing installations after travelers begin requesting the
MOBILAN(R) service.
The projected financial results are in line with customer development.
It may be desirable to develop infrastructure earlier to attract more customers.
Earlier infrastructure development will require substantially more capital than
illustrated in these projections.
To date the most significant revenue generated by hotels from the
Company's services has been in the convention areas where the typical client
will pay substantially more for convention room access to the Internet.
F-8
<PAGE>
SUMMARY OF FINANCIAL PROJECTIONS
THE FOLLOWING TABLE SUMMARIZES A SET OF FORWARD-LOOKING MARKET AND
FINANCIAL PROJECTIONS BASED ON THE ASSUMPTIONS DISCUSSED IN THIS SECTION. THESE
PROJECTIONS REPRESENT THE POTENTIAL REVENUE FROM THE HOTEL ONLY, AND DOES NOT
TAKE INTO CONSIDERATION THE MONTHLY USER FEES TO BE COLLECTED FROM THE CORPORATE
TRAVELER WHO WILL BE A REPEAT CLIENT.
1. Business Class hotel with 300 rooms, 20% of guests use service 20 days per
month @ $5 per user revenue to the Company.
60 USERS X 20 DAYS X $5. = $6,000
2. Each hotel has 4 meeting rooms with 3 group meetings per week with 20 of the
attendees per meeting requesting high-speed Internet access. Meeting room charge
for service at $30 per day is higher than for a sleeping room
60 USERS X 4 ROOMS X $30= $7,200.
3. Some hotel owners may choose to pay a negotiated monthly amount to Mobile
Area Networks Inc. for unlimited service that they can offer as they choose.
4. These projections do not assume service that will be offered for larger
convention users.
5. No significant user churn in the three year period.
6. Network monthly costs: $3,000.00 for a high speed data line and maintenance
The Company expects this cost to decline over a three year term based on
discussions with data carriers.
7. Network Installation labor and material is estimated to be $5,000.00 per
site. This covers the data line and routing hardware, but does not cover the
wireless equipment.
8. Wireless transceiver hardware installation per site is a minimum of
$10,000.00 per site, and runs much higher in a large hotel.
9. the Company anticipates spending approximately $30,000.00 per business class
hotel installation.
F-9
<PAGE>
<TABLE>
<CAPTION>
F Y 99 1ST. Q 99 2ND. Q 99 3RD. Q 99 4TH. Q 99.
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total hotels on line 8 16 48 100
*Assuming proceeds from this
Offering.
- --------------------------------------------------------------------------------------------------
Revenue per hotel 13,200 13,200 13,200 13,200
- --------------------------------------------------------------------------------------------------
Monthly gross Revenue 105,600 211,200 633,600 1,320,000
- --------------------------------------------------------------------------------------------------
Installation cost, amortized
Over 36 months 8,000 16,000 48,000 100,000
- --------------------------------------------------------------------------------------------------
Data network cost per
Month per site x 3,000 24,000 48,000 144,000 300,000
- --------------------------------------------------------------------------------------------------
Monthly service cost and
Overhead per site. x 3,000 24,000 48,000 144,000 300,000
- --------------------------------------------------------------------------------------------------
Gross profit per site 6,200 6,200 6,200 6,200
- --------------------------------------------------------------------------------------------------
Gross profit (Per Month),
Less general & administrative 49,600 99,200 297,600 620,000
- --------------------------------------------------------------------------------------------------
</TABLE>
F-10
<PAGE>
- --------------------------------------------------------------------------------
SUBSCRIPTION AGREEMENT
- --------------------------------------------------------------------------------
INVESTOR SUBSCRIPTION AGREEMENT FOR MOBILE AREA NETWORKS, INC.
Persons interested in purchasing shares of the Common Stock of Mobile AREA
NETWORKS, INC. must return this completed Subscription Agreement along with
their wire transfer, check or money order for their total payment, payable only
to: MOBILE AREA NETWORKS, INC., 1275 LAKE HEATHROW LANE, (SUITE 115) HEATHROW,
FLORIDA 32746. (HTTP://WWW.MOBILEAREA.NET).
If and when accepted by MOBILE AREA NETWORKS, INC., (the "Company"), this
Subscription Agreement shall constitute a subscription for shares of Common
Stock, no par value per share, of the Company. The minimum investment is $600.
(100 shares). An accepted copy of this Agreement will be returned to you as your
receipt, and a stock certificate will be issued to you shortly thereafter.
Method of Payment: (CIRCLE ONE ) Check, Money Order or Wire (fax or e-mail for
instructions) payable only to: "MOBILE AREA NETWORKS, INC.".
- --------------------------------------------------------------------------------
I hereby irrevocably tender this Subscription Agreement for the purchase of
_________ shares at six dollars ($6.00) per share. With this subscription
Agreement, I tender payment in the amount of $__________ ($6.00 per share) for
the shares subscribed.
In connection with this investment in the Company, I represent and warrant as
follows:
(a) Prior to tendering payment for the shares, I received the Company's
final Prospectus dated February 8, 1999.
(b) I am a bona fide resident of the state of ________________________.
Please issue the shares which I am purchasing as follows:
1. INDIVIDUAL(S) -- if more than one owner, please issue as follows:
[ ] Tenants-in-Common (all parties must sign -- each investor has an undivided
interest)
[ ] Joint Tenants with Right of Survivorship (all parties must sign joint
ownership)
[ ] Minor with adult custodian under the Uniform Gift to Minors Act in your
state
(the minor will have sole beneficial ownership)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------- ----------------------------------------------------
<S> <C>
INVESTOR NO. 1 (PRINT NAME ABOVE) INVESTOR NO. 2 (PRINT NAME ABOVE)
- --------------------------------------------- ----------------------------------------------------
Street (residence address) Street (residence address)
- --------------------------------------------- ----------------------------------------------------
City State Zip City State Zip
- --------------------------------------------- ----------------------------------------------------
Home Tele. Business Tele. Home Tele. Business Tele.
- --------------------------------------------- ----------------------------------------------------
FAX e-mail FAX e-mail
- --------------------------------------------- ----------------------------------------------------
Social Security Number Social Security Number
- --------------------------------------------- ----------------------------------------------------
Signature Date Signature Date
ACCEPTED BY: MOBILE AREA NETWORKS, INC.
- ---------------------------------------------
Name, Title Date.
</TABLE>
A-1
<PAGE>
SUBSCRIPTION FORM FOR OTHER THAN INDIVIDUAL
Purchasers of shares of the Common Stock of Mobile Area Networks, Inc. for other
than individuals must complete this form for the proper entity that will hold
title to the shares. Send this completed Subscription Agreement along with the
proper wire transfer, check or money order for the total payment, payable only
to: MOBILE AREA NETWORKS, INC., 1275 LAKE HEATHROW LANE, (SUITE 115) HEATHROW,
FLORIDA 32746 (HTTP://WWW.MOBILEAREA.NET).
If and when accepted by Mobile Area Networks, Inc., (the "Company"), this
Subscription Agreement shall constitute a subscription for shares of Common
Stock, no par value per share, of the Company. The minimum investment is six
hundred dollars (S600.) (100 shares). An accepted copy of this Agreement will be
returned to you as your receipt, and a stock certificate will be issued to you
shortly thereafter.
Method of payment: (CIRCLE ONE) Check, Money Order or Wire (fax or e-mail for
instructions) payable only to: "Mobile Area Networks, Inc".
ENTITY:
[ ] CORPORATION (authorized agent of corporation must sign)
[ ] EXISTING PARTNERSHIP (at least one partner must sign)
[ ] TRUST (all trustees must sign)
- ----------------------------------------------------------
Name of Entity
- ----------------------------------------------------------
Authorized Agent (print name above)
- ----------------------------------------------------------
Title of Authorized Agent
- ----------------------------------------------------------
Social Security or Federal Identification Number of Entity
- ----------------------------------------------------------
Street (business address) or address of Registered Agent
- ----------------------------------------------------------
City State Zip
- ----------------------------------------------------------
Business Tele. or Home Tele. of Registered Agent of Entity
- ----------------------------------------------------------
FAX e-mail
The undersigned acknowledges under the penalties of perjury
that the foregoing information is true, accurate, and
complete.
- ----------------------------------------------------------
Signature Date
- ----------------------------------------------------------
For a Trust, all Trustees must sign. Add a line for each to
the Right of form.
ACCEPTED BY: MOBILE AREA NETWORKS, INC.
- ----------------------------------------------------------
Name, Title Date.
A-2
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction or to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of the
Company since such date.
SUMMARY OF CONTENTS
SUMMARY............................................................... 2
RISK FACTORS.......................................................... 6
DILUTION.............................................................. 9
PLAN OF DISTRIBUTION.................................................. 10
USE OF PROCEEDS....................................................... 11
DESCRIPTION OF BUSINESS............................................... 14
DESCRIPTION OF PROPERTY............................................... 22
MANAGEMENT............................................................ 22
REMUNERATION OF MANAGEMENT............................................ 23
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITY HOLDERS.............................................. 23
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS............................................... 24
SECURITY DESCRIPTION.................................................. 24
LEGAL MATTERS......................................................... 25
FINANCIAL STATEMENTS.................................................. 26 (F-1)
PROJECTIONS........................................................... 34 (F-8)
SUBSCRIPTION AGREEMENT..................................................36 (A-1)
Date of Issuance: February 8, 1999
Mobile Area Networks, Inc.
"Boundary Free Wireless LAN Connectivity"
5,000,000 (MAXIMUM)
SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
MOBILE AREA NETWORKS, INC.
1275 LAKE HEATHROW LANE (SUITE 115)
HEATHROW, FL 32746
1-407-333-2350
FAX 1-407-333-9903
e.mail: [email protected]
--------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and Bylaws contain provisions
indemnifying its directors and officers to the extent permitted by the Act.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act"), as amended, may be permitted to directors, officers and
controlling persons of the Company 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 1933 Act and, therefore, is unenforceable. In the event that a
claim for indemnification against such liability (other than the payment by the
Company of the expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
will submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1993 Act and
will be governed by the final adjudication of such issue.
ITEM 25. OTHER ESTIMATED EXPENSES OF ISSUANCE AND DISTRIBUTION
Filing Fee - SEC $9,000.00
Listing Fee -- Stock Exchange, If Qualified $5,000.00
Transfer Agent & Registrar's Fees $5,000.00
Accounting Fees $20,000.00
Legal Fees $25,000.00
Printing Expense $30,000 00
Indemnification Insurance Premium $10,000.00
Miscellaneous $15,000 00
Travel $20,000.00
Postage & Delivery $10,000.00
Lodging $10,000.00
Telephone $10,000.00
Internet Development $28,000.00
Edgarizing (Converting Documents) $15,000.00
State Blue Sky Preparation and Filing Fees $30,000.00
Promotion and Advertising $58,000.00
Total $300,000.00
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The Company's predecessor in interest (a Texas corporation of the same name)
sold unregistered Common Stock. The following share figures have been adjusted
to reflect the ratio at which shares have been issued by the Company to the
shareholders of its predecessor. These private shares of restricted stock have
been sold primarily to friends and family with no advertising and no general
solicitation, with a limit of 35 non-accredited investors in any 12 month
period. Also, the sales total less than $1,000,000 per year and therefore meet
the requirements of rule 504.
In the past three (3) years the Company's sales of securities not registered
under the Securities Act of 1933 were as follows:
(a) AMOUNT SOLD, TITLE AND DATE. The amount of common stock sold is the
amount set forth below, since the May 22, 1996 date of
incorporation of the Texas predecessor.
(b) UNDERWRITER NON-PUBLIC TRANSFEREES. No underwriters. Three officers
and directors, 62 private investors.
(c) CASH OFFERING PRICE, COMMISSION.
$1.00 per share to private investors, no commission paid. $0.01 per
share to officers and directors, no commission paid, cash sales
(28,005,000 shares).
(d) Directors/Officers Purchases (3 persons, cash and/or services)
During the start up calendar year 1996 535,000 shares were sold to 15
individuals at between $.01 to $1.00 per share plus services in some cases for
total consideration of $107,700. Plus services rendered. These share sales were
in addition to the founders share sales which are listed separately under
"Dilution, and Security Ownership of Management".
During 1997 2,845,030 shares were sold to less than 30 individuals, plus some
additional sales to previous shareholders. These shares were sold for a total of
$579.456. plus services rendered by some shareholders. Most shares were sold at
$1.00 per share during 1997.
During 1998 to date of this accounting additional 1,866,200 shares have been
sold or used as incentive in return for $281,061. Plus services.
The Company is compelled to continue the sales of private in order to continue
operations until this proposed public offering is launched.
The Company has used stock shares as incentive and/or trade for services at an
approximate rate of $1.00 per share.
DATE SHARES $/SH TOTAL
- --------------------------------------------------------------------------------
11/2/96 25,500,000 $ .01 $23,000 +prior services
11/2/96 2,500,000 $ .05 $25,000 +prior services
12/2/96 5,000 $1.00 $ 1,000 of services
SUBTOTAL 28,005,000 $51,300
Private Investor Purchases (62 Persons, all cash) between .05 to $2./share),
pre-split. Some individuals have made more than one purchase.
DATE SHARES $TOTAL
- ------------------------------------------------------------
1996 total 535,000 107,700
1997 total 2,845,030 579,456
1998 total 1,866,200 281,061
- ------------------------------------------------------------
5,246,230 968,217
II-2
<PAGE>
ITEM 27 EXHIBITS
3i. Articles of Incorporation B/
3ii. Bylaws, as amended B/
4. Common Stock voting rights per Articles of Incorporation Page 1,
incorporated by reference from Exhibit 3i. B/
5. Opinion of JAMES R. LEONE as to the legality and non-accessibility of
the securities being distributed B/
6. Hotel Agreements B/
23a. Consent of PARKS, TSCHOPP & WHITCOMB, P.A. C/
23b. Consent of James R. Leone (filed as part of Exhibit 5) B/
27. Financial Data (SEC use only) B/
Footnotes:
B/ Previously filed
C/ Filed herein with Pre-Effective Amendment No.7 (File No. 333-18439)
Item 28. Undertakings
(A) To the extent the registrant is registering securities under Rule 415 under
the Securities Act of 1933, the registrant will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and Notwithstanding the forgoing, 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 a prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the 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.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(B) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "1933 Act"), as amended, may be permitted to Directors, Officers
and controlling persons of the Company 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 1933 Act and, therefore, is unen-
II-3
<PAGE>
forceable. In the event that claims for indemnification against such liability
(other than the payment by the Company of the expenses incurred or paid by a
Director, Officer or controlling person of the Company in the successful defense
of any such action, suit or proceeding) is asserted by such Director, Officer or
controlling person in connection with the securities being registered, the
Company, unless in the opinion of its counsel the matter has been settled by
controlling precedent, will submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1993 Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing on Form SB-2/A and authorized this Amended
Registration Statement to be signed on its behalf by the undersigned in the Town
of Heathrow, State of Florida on February 8, 1999.
MOBILE AREA NETWORKS, INC.
/s/ George Wimbish
----------------------------------
BY: George Wimbish
President & CEO
Pursuant to the Securities Act of 1933, this Amended Registration Statement was
signed by the following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Signature Title Date
- ---------------------------------------------------------------------------------------
/s/ GEORGE WIMBISH
- ------------------------------ Director, Chairman, President, February 8, 1999.
George Wimbish Chief Executive.
/s/ ROBERT M. GOOD
- ------------------------------ Director, Treasurer. February 8, 1999.
Robert M. Good
/s/ JAMES R. LEONE
- ------------------------------ Director, Secretary. February 8, 1999.
James R. Leone
/s/ RUSSELL M. GRAHAM
- ------------------------------ Director February 8, 1999
Russell M. Graham
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit Title of Exhibit Footnotes &
Number Page #
3i. Articles of Incorporation................................. B/
3ii. ByLaws, as amended........................................ B/
5 Opinion of James R. Leone as to the legality and
non-assessability of the securities being distributed..... B/
6. Hotel Agreements ......................................... B/
23a. Consent of Parks, Tschopp & Whitcomb, P.A................. A/
23b. Consent of James R. Leone.................................. B/
27. Financial Data (SEC Use Only)............................. B/
Footnotes:
A/ Filed herewith
B/ Previously filed
EXHIBIT 23.a
February 1, 1999
(PARKS, TSCHOPP & WHITCOMB, P.A. LETTERHEAD)
The Board of Directors
Mobile Area Networks, Inc.:
We consent to the use of our reports included in the Company's Registration
Statement (No. 333-18439) and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ Parks, Tschopp & Whitcomb, P.A.
Maitland, Florida
February 1, 1999
