As filed with the Securities and Exchange Commission
on January 6, 1998
Registration No.
===================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
H D N, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 52-2008972 7812
(State or other (I.R.S. Employer (Primary Standard
jurisdiction of Identification Number Standard Industrial
incorporation or Classification Code
Number)
organization
1813 Marsh Road, Suite H
Wilmington, Delaware 19810
302/529-5562
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Donald Mattei, President
H D N, Inc.
1813 Marsh Road, Suite H
Wilmington, Delaware 19810
302/529-5562
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. / X /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for
the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Amount Offering Aggregate Amount of
Class of Securities to be Price/ Offering Registration
to be Registered Registered Share Price Fee
<S> <C> <C> <C> <C>
Units consisting of 2,000,000 $5.00 $10,000,000 $3,030
1 share of common
stock and 1 warrant
Shares of Common 2,000,000 NA NA NA
Stock contained
in Units
Warrants contained 2,000,000 NA NA NA
in Units
Shares of Common 2,000,000 6.50 13,000,000 3,939
Stock underlying
Warrants
Shares of Common 3,246,524 1.25 3,500,000 1,000
Stock held by
Selling security-
holders(2)
Shares of Common 250,000 1.00 250,000 75
Stock underlying
Warrant
Total $26,750,000 $8,105(3)
</TABLE>
(1) Based on Rule 457(f)(2).
(2) Shares of Common Stock to be sold by Selling Securityholders.
(3) Paid by electronic transfer.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended,
or until the Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
[Legend for Red Herring Prospectuses]
The 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.
PROSPECTUS
Subject to Completion, Dated December ____, 1997
H D N, INC.
2,000,000 Units, 2,000,000 Shares of Common Stock and
2,000,000 Redeemable Warrants contained in the Units,
2,000,000 Shares of Common Stock underlying such Warrants
HDN, Inc., a development stage Delaware corporation (the
"Company"), is offering for sale 2,000,000 units (the "Units"), each
Unit consisting of one share of common stock of the Company, par value
$.001 per share (the "Common Stock") and one redeemable warrant (the
"Warrants"). The Units, the Common Stock, the Warrants and the
Common Stock issuable upon exercise thereof may be collectively
referred to hereinafter as the "Securities."
The Company offers a "high-tech" approach to dating interlinking
the use of the Internet and cable television infomercials. The Company
produces and broadcasts the Home Dating Network(sm) infomercial, a
professionally-produced 30-minute dating and entertainment infomercial
containing short video personal profiles of individual Home Dating
Network members to which interested viewers can respond using the
Company's "800" or "900" telephone numbers to leave a personal and
confidential mailbox message directed to a particular personal profile.
The Company also maintains a website on the Internet correlating
additional information regarding the dating and entertainment
suggestions aired on the infomercial and offering chat rooms, bulletin
boards and posted individual Home Dating Network(sm) member
personal profiles. In order to post a personal profile on the Company's
website or review those posted thereon, a person must join the Home
Dating Network(sm). Posted members' profiles contain e-mail addresses
for contact between members. Members are charged monthly
membership dues. See "THE COMPANY."
The Common Stock and the Warrants contained in the Units may be
separately transferred immediately upon the effective date (the "Effective
Date") of the registration statement of which this Prospectus is a part
(the "Registration Statement"). Each Warrant entitles the holder thereof
to purchase one share of Common Stock at an exercise price of $6.50
per share, subject to adjustment from time to time, for a period of five
years commencing on the Effective Date. The Warrants are subject to
redemption by the Company commencing one year from the date of this
Prospectus at a price of $.001 per Warrant on 30 days' written notice if
the closing bid price of the Common Stock for 30 consecutive trading
days ending within 15 days of the notice of redemption averages in
excess of $8.00 per share (subject to adjustment). The exercise price and
maturity date of the Warrants are subject to adjustment at the discretion
of the Company. See "DESCRIPTION OF SECURITIES." The
Company is attempting to locate an underwriter for the sale of the Units.
As of the date hereof, the Company has not located any such underwriter
and there can be no assurance that the Company will be able to do so.
In such event, the Units will be offered for sale by the officers and
directors of the Company who will not receive any remuneration for such
sales. The officers and directors are relying on the provisions of Rule
3a4-1 of the Securities Exchange Act of 1934 (the "Exchange Act") in
the sale by them of the sale of the Units. See "PLAN OF
DISTRIBUTION".
The Company is a recently formed, development stage corporation,
with limited operations and revenues and with limited capital. Prior to
the Company's offering of the Securities as described herein, there has
been no public market for the Units, the Common Stock or the
Warrants, and no assurances may be given that a public market will
develop following completion of this Offering or that, if any such market
does develop, it will be sustained. It is currently anticipated that the
offering price of the Units will be $5.00 per Unit. The offering price of
the Units and the exercise price of the Warrants were determined
arbitrarily by the Company and are not necessarily related to asset or
book value, net worth or any other established criteria of value. See
"PLAN OF DISTRIBUTION". The Company will receive the proceeds
(net of certain expenses) of the Offering of the Securities, including
exercise of the Warrants. See "USE OF PROCEEDS."
The Registration Statement of which this Prospectus is a part also
relates to the offer and sale of (i) 2,000,000 shares of Common Stock
held by a securityholder of the Company; (ii) 250,000 shares of Common
Stock underlying a common stock purchase warrant held by a
securityholder of the Company; and (iii) 1,246,524 shares of Common
Stock of the Company held or to be held by certain securityholders of the
Company upon conversion of the 155,815.5 shares of 11.25% cumulative
convertible Preferred Stock (the "Convertible Preferred Stock") held by
such securityholders (collectively referred throughout as the "Selling
Securityholders"). The securities being offered by the Selling
Securityholders are expected to become tradeable on or about the date of
this Prospectus. Sales of the securities being offered by Selling
Securityholders, or even the potential of such sales, may have an adverse
effect on the market price of tityholders will receive the proceeds from
the sale of the securities being offered by them. The Company will not
receive any of the proceeds from such sales. The Selling
Securityholders, directly or through agents, dealers or representatives to
be designated from time to time, may sell their securities on terms to be
determined at the time of sale. See "PLAN OF DISTRIBUTION." The
Selling Securityholders reserve the sole right to accept or reject, in whole
or in part, any proposed purchase of the securities being offered by them
pursuant hereto.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. See
"RISK FACTORS" CONTAINED IN THIS PROSPECTUS BEGINNING
ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Price Underwriting Discounts Proceeds to
to public and Commissions(2) Company(3)
<S> <C> <C>
Per Unit $ 5.00 N.A. $ 5.00
Total $ 5.00 N.A. $ 5.00
</TABLE>
(1) The officers and directors of the Company are offering the Units
for sale. If an underwriter is used, of which there can be no
assurance, discounts or commissions are not anticipated to exceed
10% of the offering price.
(2) Does not include an estimated $130,000 in expenses of issuance
and distribution of this Offering. See "BUSINESS-- Shareholder
Loan".
The date of this Prospectus is January ____, 1998.
CERTAIN SECURITIES DESCRIBED HEREIN ARE OFFERED
SUBJECT TO PRIOR SALE, WITHDRAWAL, CANCELLATION OR
MODIFICATION OF THE OFFERING, WITHOUT NOTICE. IN
ADDITION, THE RIGHT IS RESERVED TO CANCEL ANY
CONFIRMATION OF SALE EVEN IF THE PURCHASE PRICE HAS
BEEN PAID, IF IN THE OPINION OF THE COMPANY OR ANY
PARTICIPATING BROKER-DEALER, COMPLETION OF SUCH SALE
WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A
RULE OR POLICY OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.
FOLLOWING THE COMPLETION OF THIS OFFERING,
CERTAIN BROKER-DEALERS MAY BE THE PRINCIPAL
MARKETMAKERS FOR THE SECURITIES OFFERED HEREBY.
UNDER THESE CIRCUMSTANCES, THE MARKET BID AND ASKED
PRICES FOR THE SECURITIES MAY BE SIGNIFICANTLY
INFLUENCED BY DECISIONS OF THE MARKETMAKERS TO BUY
OR SELL THE SECURITIES FOR THEIR OWN ACCOUNT. NO
ASSURANCE CAN BE GIVEN THAT ANY MARKETMAKING
ACTIVITIES OF THE MARKET MAKERS, IF COMMENCED, WILL
BE CONTINUED.
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING
CLOSING OF THIS OFFERING, THE COMPANY WILL BE
REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO
FILE PERIODIC REPORTS AND OTHER INFORMATION WITH
THE SECURITIES AND EXCHANGE COMMISSION. SUCH
MATERIAL MAY BE INSPECTED AT THE COMMISSION'S
PRINCIPAL OFFICES AT JUDICIARY PLAZA, 450 FIFTH STREET,
N.W. WASHINGTON, D.C. 20459 AND COPIES MAY BE OBTAINED
ON PAYMENT OF CERTAIN FEES PRESCRIBED BY THE
COMMISSION. THE COMPANY WILL FURNISH TO HOLDERS OF
ITS COMMON STOCK ANNUAL REPORTS CONTAINING AUDITED
FINANCIAL STATEMENTS EXAMINED AND REPORTED UPON,
AND WITH AN OPINION EXPRESSED BY AN INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT. THE COMPANY MAY ISSUE
OTHER UNAUDITED INTERIM REPORTS TO ITS SHAREHOLDERS
AS IT DEEMS APPROPRIATE.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to and
should be read in conjunction with more detailed information and
financial data (including any financial statements and the notes thereto)
appearing elsewhere in this Prospectus. Each prospective investor is
urged to read this Prospectus in its entirety, including the financial data.
The Company. H D N, Inc. is a development stage corporation with
limited operations and revenues incorporated in Delaware in 1996. The
Company's principal place of business is located in Wilmington,
Delaware.
Business. The Company produces and markets for broadcast and cable
television 30- to 60-minute Home Dating Network(sm) entertainment
infomercials which contain approximately 20 or more short video
personal profiles of individual clients, travel, dining, entertainment and
other dating related segments. The Company uses the services of a
professional production company to create the infomercials. The
infomercials are shown on local cable television in selected geographic
markets. The Company maintains a series of 800 and 900 number
telephone lines from which each video participant is assigned a
confidential, safe and private voice mailbox number for responses from
infomercial viewers. After reviewing the mailbox responses, a
participant can choose whether to answer the interested responder.
The Company also maintains a website on the Internet which
correlates additional information about segments featured in the
infomercials and posts individual member personal profiles. The website
also offers chat rooms, bulletin boards and other dating tips. In order to
post a personal profile on the Company's website or review those posted
thereon, a person must join the Home Dating Network(sm). Posted
members' profiles contain e-mail addresses for contact between members.
Members are charged monthly membership dues.
The Company receives revenues from the responses on the 800
and 900 telephone numbers, from membership into the Home Dating
Network(sm), from advertising available in the infomercial and on the
website, and from advertising in a free magazine being developed for
distribution by the Company to members.
Selling Securityholders' Securities. The securities offered by the Selling
Securityholders included in the Registration Statement of which this
prospectus is a part consist of (i) 3,496,524 Shares, of which 2,000,000
are being offered for sale by a single holder thereof and 1,496,524 are
issuable upon exercise by the holders thereof of the conversion rights
contained in 155,815.5 shares of Convertible Preferred Stock and (ii)
250,000 Shares underlying a common stock purchase warrant held by a
securityholder of the Company. See "SELLING
SECURITYHOLDERS." The Selling Securityholders' Shares constitute
approximately 32.5% of the outstanding Common Stock of the Company
giving effect to the conversion rights contained in the Convertible
Preferred Stock.
Conversion of Convertible Preferred Stock. Certain of the Selling
Securityholders own in the aggregate 155,815.5 shares of the Company's
11.25% Cumulative Convertible Preferred Stock. Each share of
Convertible Preferred Stock is convertible into eight shares of Common
Stock for a period of 24 months after the Effective Date. Convertible
Preferred Shares not earlier converted will be automatically converted
into shares of Common Stock at the termination of the conversion term.
Transfer Agent. _________________ will serve as transfer agent for the
Company.
Trading Market. The Company intends to apply for admission to
quotation of the Shares on the NASD OTC Bulletin Board. The
Company intends to apply for listing on the Nasdaq SmallCap Market
when, and if, it qualifies for such admission. However, there can be no
assurance that the Shares will be listed onnts of the NASD OTC Bulletin
Board or the Nasdaq SmallCap Market. See "RISK FACTORS -- No
Current Trading Market for the Company's Securities" and
"DESCRIPTION OF SECURITIES - Admission to Quotation to Nasdaq
SmallCap Market and NASD OTC Bulletin Board".
Selected Financial Data
The following table sets forth selected financial information concerning
the Company as of June 30, 1997. This information is taken from the
audited financial statements included elsewhere herein.
Current Assets $ 517,455
Property and Equipment 54,639
Security Deposits 9,000
Total Assets 581,094
Total Current Liabilities $ 129,424
Shareholders Equity 451,670
Total Liabilities and Stockholders' Equity 581,670
The selected financial data above is a summary only and has been
derived from and is qualified in its entirety by reference to the
Company's financial statements and the report related thereto of
McBride, Shopa and Company, included elsewhere in this Prospectus.
See "EXPERTS" and "FINANCIAL STATEMENTS."
THE COMPANY
The Company was formed on December 9, 1996 in Delaware with an
authorized capitalization of 20,000,000 shares of common stock, par
value of $.001 per share (the "Common Stock") and 1,000,000 shares of
preferred stock designated as 11.25% Cumulative Convertible Preferred
Stock. Pursuant to a private offering of its securities, the Company
recently sold 155,815.5 shares of its Convertible Preferred Stock,
convertible into an aggregate of 1,246,524 shares of Common Stock
within 24 months of the Effective Date hereof. See "DESCRIPTION OF
SECURITIES".
The Company produces and broadcasts a Home Dating Network(sm)
infomercial integrating short video personals of individual Home Dating
Network(sm) members into an entertaining show with dining, vacation,
theater, movie and other dating related ideas. Interested viewers to the
infomercial can call the Company's 800-number or 900-number voice
mailbox system to leave a confidential response to the televised profile.
The voice mail instructions and questions are designed by the client and
the Home Dating Network(sm) to provide the client with a detailed
description of the responder. After reviewing the responses left on the
mailbox system, a client can choose whether to reply to a responding
viewer. This allows a Home Dating Network member to make use of
current technology while retaining anonymity and security.
The Company maintains a website on the Internet which correlates
additional information to the entertainment and dating segments featured
on the infomercial. The website also features personal profiles posted
about individual Home Dating Network(sm) members. In order to post a
personal profile on the Company's website or review those posted
thereon, a person must join the Home Dating Network(sm). The
personal profiles contain e-mail addresses for contact between members.
In addition, members can scroll the posted personal profiles by area code
or by relationship (e.g. "male seeking female", "female seeking male",
etc.). Members are charged monthly membership dues.
The Company has copyright and trademark rights for the service
marks "Home Dating Network" and "HDN" and for the Company's
logo. The Company had limited operations to date and has not received
revenues from operations. The Company has completed production of
one infomercial which has been broadcast on a local cable network in
the Philadelphia, Pennsylvania viewing market. The Company has
completed its website and as of December 1, 1997, had approximately
1,200 client profiles posted. The Company has begun receiving
responses to the televised infomercial and to the website profiles through
its 800- and 900-number telephone system. See "BUSINESS".
Employees
The Company presently has four full-time and one part-time
employee.
Offices
The offices of the Company are located at 1813 Marsh Road, Suite
H, Wilmington, Delaware 19810, and its telephone number is 302/529-
5562 its fax number is 302/529-5564. The Company's website address
on the Internet is http://www.hdn-date.com.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN
NATURE AND INVOLVE A HIGH DEGREE OF RISK. THE
SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY
BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY
THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE
OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS AND THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS, INCLUDING ALL NOTES THERETO.
The Company is a Development Stage Company with Limited Operating
History
The Company, organized in 1996, is a development stage company,
with limited operations since inception. Since inception, the Company
has been principally engaged in the development of its website and
production of its initial infomercial. Accordingly, there is only a limited
basis upon which to evaluate its operations or its prospects for achieving
its intended business objectives. The Company has not received any
revenues from operations. The Company's proposed operations are
subject to all of the risks inherent in the establishment of a new business
enterprise, including the absence of an operating history. The likelihood
of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with a new business and the competitive
environment in which the Company will operate. No assurance can be
given that the operations of the Company will result in any revenues or
that the Company will be profitable. See "BUSINESS."
Success of Plan of Operation Dependent on Advertisers and Popularity
with Viewers
The Company's proposed plan of operation and prospects will be
largely dependent upon the Company's ability to successfully attract
advertisers to the Company's infomercial, website and magazine and the
acceptance and success of the Home Dating Network(sm) infomercial
and Internet website. The Company has limited experience and
thnformation available concerning the potential performance or market
acceptance of the Company's operations. There can be no assurance
that the Company will be able to successfully implement its business plan
or that unanticipated expenses, problems, or difficulties will not occur
which would result in material delays in its implementation.
Success of Operations Dependent on Management's Decisions
The ability of the Company to successfully effect its business
objectives will be largely dependent upon the efforts of its Management
including Ms. Norma L. Veach, Chief Executive Officer, and Donald
Mattei, President of the Company. All decisions with respect to the
management of the Company will be made exclusively by Management.
The Company has entered into any employment agreement with its Chief
Operating Officer but no other employment agreements or other
understandings with any key executives have been entered into. The
Company has applied for "key man" life insurance for its President but
as of the date hereof has not obtained such insurance. The loss of the
services of such key executives could have a material adverse effect on
the Company's ability to successfully achieve its business objectives.
Continuing Control by Present Stockholders
Prior to the issuance of the Securities offered herein, the officers,
directors and affiliates owned 7,500,000 shares of the Company's
Common Stock, approximately 96% of the issued and outstanding
Common Stock of the Company. Accordingly, such officers and
directors are in a position to elect all of the Company's directors,
approve amendments to its Certificate of Incorporation, to authorize
issuance of additional shares of stock, to award performance bonuses
and other compensation arrangements and otherwise direct the affairs of
the Company. After issuance of the Common Stock pursuant to the sale
of the Units offered herein and sale of the Shares by the Selling
Securityholders, but assuming no conversion of the Convertible Preferred
Stock or exercise of the Warrants, management will own 56% of the
outstanding Common Stock of the Company. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT".
Possible Need for Additional Financing to Continue Operations
The Company anticipates that the net proceeds of this Offering,
together with proceeds from earlier stock subscription and anticipated
revenue from operations, will be sufficient to meet the Company's
contemplated operating and capital requirements for approximately the
12 months following the Effective Date. However, the Company's
revenue from operations depend on numerous factors, including the rate
of market acceptance of the Company's services, the ability to sell the
Company's available advertising space, the ability to obtain television
broadcast time at acceptable rates, the Company's ability to maintain and
expand its client base, the rate of expansion of the Company's services,
the level of resources required to expand the Company's marketing and
sales organization, and other factors. The timing and amount of such
capital requirements cannot accurately be predicted. If capital
requirements vary materially from those currently planned, the Company
may require financing sooner than anticipated. The Company has no
commitments for any financing, and there can be no assurance that any
such commitments can be obtained on terms acceptable to the Company,
if at all. Any equity financing may be dilutive to the Company's
stockholders, and debt financing, if available, may involve restrictive
covenants with respect to dividends, raising future capital and other
financial and operational matters. If the Company is unable to obtain
financing as needed, the Company may be required to reduce the scope
of its operations or its anticipated expansion, which could have a
material adverse effect on the Company, as well as the market price of
the Common Stock. See "BUSINESS."
Competition from Other More Established Entities
The Company faces competition from other forms of dating services,
including newspaper and magazine "In Search Of" ("ISO") sections,
other Internet services, and dating firms. Many of these competitors
have substantially greater financial and marketing resources than the
Company and may be better able to attract advertisers and clients. The
Company is aware of other television dating and "singles-matching"
television programs available in certain broadcast markets which may
compete with the Company for viewer audience and which may have
more funds available for advertisement and program development.
Dependence on Services of Providers
The Company has entered into an agreement with AIP Networks, an
experienced developer of broadcast programming and infomercials, for
development of the Company's infomercials at a price reduced from
competitive rates. The Company utilizes the services of American
Television Time, Inc. ("American Television") to secure television time
slots required by the Company to broadcast its infomercials. American
Television also provides factoring services against the revenue generated
by the 900 numbers and provides up-front financing of the purchase of
the television time slots. This financing provides a financial benefit to
the Company. Any reduction or loss of the services of either of these
relationships could have an adverse impact on the Company and its
financial ability to produce and televise the infomercials. See
"BUSINESS".
Issuance of Future Shares May Dilute Investors Share Value
The Certificate of Incorporation of the Company authorizes the
issuance of a maximum of 20,000,000 shares of Common Stock, $.001
par value and 1,000,000 shares of Preferred Stock. As of the date
hereof there are 7,807,000 shares of Common Stock outstanding and
155,815.5 shares of 11.25% Convertible Preferred Stock outstanding,
convertible into 1,246,524 shares of Common Stock. The future
issuance of all or part of the remaining authorized Common Stock
including that reserved for conversion of the Convertible Preferred Stock
may result in substantial dilution in the percentage of the Company's
Common Stock held by the Company's then existing shareholders,
including purchasers of the Shares offered herein. Moreover, any
Common Stock issued in the future may be valued on an arbitrary basis
by the Company. The issuance of the Company's shares for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the Shares held by investors, and might have an
adverse effect on any trading market, should a trading market develop
for the Company's Common Stock. See "BUSINESS".
Potential Adverse Effects of Authorization of Preferred Stock
The Company has designated 1,000,000 and issued 155,815.5 shares
of its authorized shares of preferred stock. The Company may, without
further action or vote by shareholders of the Company, designate and
issue the remaining shares of preferred stock. The terms of any series of
preferred stock, which may include priority claims to assets and
dividends and special voting rights, could adversely affect the rights of
holders of the Common Stock and thereby reduce the value of the
Common Stock. The designation and issuance of preferred stock
favorable to current management or shareholders could make the
possible takeover of the Company or the removal of management of the
Company more difficult and discourage hostile bids for control of the
Company which bids might have provided shareholders with premiums
for their shares.
Registration or Qualification of the Securities in a Limited Number of
States
The Company will register or qualify the offer and sale of the Units
in states to be selected. Purchasers of the Units who are residents of the
United States must be residents in one of the states selected by the
Company. The Company will not accept purchases from residents not
located in a state in which the Units have been qualified or registered.
Resales of the Shares under State Securities Laws--The National
Securities Market Improvement Act of 1996
Currently, the Company intends to register the Units only in
aforementioned listed states. The Company will not accept shareholders
who are not resident of these states or such other state in which
registration or qualification is not required.
The National Securities Market Improvement Act of 1996
("NMSIA") limits the authority of states to impose restrictions upon sales
of securities made pursuant to Sections 4(1) and 4(3) of the Securities
Act of companies which file reports under Sections 13 or 15(d) of the
Securities Exchange Act. Sales of the Shares in the secondary trading
market will be made pursuant to Section 4(1) (sales other than by an
issuer, underwriter or broker). It is anticipated that the Company Shares
will be immediately eligible for resale in the secondary market subject to
any lock-up agreements thereon.
Arbitrary Determination of Offering Price
The initial public offering price of the Units and the exercise price
and terms of the Warrants have been arbitrarily determined by the
Company and do not necessarily bear any relationship to the Company's
assets, net worth or other established criteria of value. The exercise and
redemption prices of the Warrants should not be construed to imply or
predict any increase in the market price of the Common Stock.
No Current Trading Market for the Company's Securities
There is currently no established public trading market for the
Shares. No assurance can be given that an active trading market in the
Company's securities will develop after completion of the Offering, or, if
developed, that it will be sustained. No assurance can be given that the
market price of the Company's securities will not fall below the initial
public offering price. The Company intends to apply for admission to
quotation of the Shares on the NASD OTC Bulletin Board and, if and
when qualified, it intends to apply for admission to quotation on the
Nasdaq SmallCap Market. See "DESCRIPTION OF SECURITIES".
The Company has limited business operations, investments and revenues,
and there can be no assurance that such a listing can now be obtained
or will be obtained once operations and revenues are established. There
can be no assurance that a regular trading market for the Common
Stock will develop or that, if developed, it will be sustained. Various
factors, such as the Company's operating results, changes in laws, rules
or regulations, general market fluctuations, changes in financial
estimates by securities analysts and other factors may have a significant
impact on the market price of the Securities. The market price for the
securities of public companies often experience wide fluctuations which
are not necessarily related to the operating performance of such public
companies such as high interest rates or impact of overseas markets.
Immediate and Substantial Dilution
Purchasers of the Units offered herein will incur immediate and
substantial dilution in the pro forma net tangible book value of the
Common Stock included in the Units, estimated to be approximately
$4.01 per share or approximately 80% of the public offering price per
share (allocating no value of the offering price to the Warrants).
Additional dilution to investors in the Units may result when, and if, any
warrants are exercised at a time when the net tangible book value per
share of the Common Stock
Factors Beyond the Company's Control
Numerous conditions beyond the Company's control may
substantially affect its ability to achieve financial success including such
items as rates of, and costs associated with, television broadcast time,
ease and access to Internet websites, capital expenditures and other costs
relating to the expansion of operations, changes in the pricing policies of
the Company's competitors, changes in operating expenses (including
"900" number costs or returns), increased competition in the Company's
markets and other general economic factors.
Limitation of Liability and Indemnification of Officers and Directors
The Certificate of Incorporation and By-Laws of the Company
provide that the Company shall indemnify its officers and directors
against losses sustained or liabilities incurred which arise from any
transaction in such officer's or director's respective managerial capacity
unless such officer or director violates a duty of loyalty, did not act in
good faith, engaged in intentional misconduct or knowingly violated the
law, approved an improper dividend, or derived an improper benefit from
the transaction. The Company's Certificate of Incorporation and By-
Laws also provide for the indemnification by it of its officers and
directors against any losses or liabilities incurred as a result of the
manner in which such officers and directors operate the Company's
business or conduct its internal affairs, provided that in connection with
these activities they act in good faith and in a manner which they
reasonably believe to be in, or not opposed to, the best interests of the
Company, and their conduct does not constitute gross negligence,
misconduct or breach of fiduciary obligations. See "MANAGEMENT--
Indemnification of Officers, Directors, Employees, and Agents".
Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national
securities exchanges or quoted on the Nasdaq Stock Market, provided
that current price and volume information with respect to transactions in
such securities is provided by the exchange or system. The Company's
securities may be subject to "penny stock" rules that impose additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and
have received the purchaser's written consent to the transaction prior to
the purchase. Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of
a disclosure schedule prescribed by the Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and
current quotations for the securities. Finally, monthly statements must
be sent disclosing recent price information on the limited market in
penny stocks. Consequently, the "penny stock" rules may restrict the
ability of broker-dealers to sell the Company's securities.
The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities maintain a market price of $5.00
or greater. There can be no assurance that the price of the Company's
securities will be maintained at such a level.
Additional Shares Entering Public Market without Additional Capital
Pursuant to Rule 144
All of the issued and outstanding shares of the Company, to the
extent not sold or transferred pursuant to this offering, are "restricted
securities" as such term is defined in Rule 144 ("Rule 144") of the
General Rules and Regulations of the Securities and Exchange
Commission (the "Rules") promulgated under the Securities Act of 1933
(the "1933 Act"). In general, under Rule 144, if adequate public
information is available with respect to a company, a person who has
satisfied a one year holding period as to his restricted securities or an
affiliate who holds unrestricted securities may sell, within any three
month period, a number of that company's shares that does not exceed
the greater of one percent of the then outstanding shares of the class of
securities being sold or the average weekly trading volume during the
four calendar weeks prior to such sale. Sales of restricted securities by a
person who is not an affiliate of the company (as defined in the 1933
Act) and who has satisfied a two year holding period may be made
without any volume limitation. Pursuant to such Rule 144, after the
expiration of the holding period certain shares of Common Stock now
restricted for trading will become eligible for trading in the public market
without any payment therefore or increase to the Company's
capitalization. Possible or actual sales of the Company's outstanding
Common Stock by all or some of the present stockholders may have an
adverse effect on the market price of the Company's Shares should a
public trading market develop. The additional availability of such shares
to be traded in the public market would increase the "public float" of the
Company without any corresponding increase in the Company's capital.
Selling Securityholders May Sell Shares at any Price or Time
Pursuant to Rule 415 of the Rules, a Selling Securityholder may
offer and sell the Selling Securityholder Shares at a price and time
determined by the particular Selling Securityholder. The timing of such
sales and the price at which the Selling Securityholder Shares are sold by
the individual Selling Securityholder could h the Shares, should one
develop.
Possible Payment of Dividends to Holders of Convertible Preferred Stock
Holders of the Convertible Preferred Stock will be entitled to receive,
when, as and if declared by the board of directors, out of the funds of
the Company legally available therefor, cash dividends at the rate of
11.25% per annum, payable semi-annually on June 30 and December 31
of each year. Dividends not paid to the holders of the Covertible
Preferred Stock will be accrued and will be paid to such holders, if not
paid earlier, at the time of conversion of such shares. Holders of
Common Stock are entitled to receive dividends when, as and if declared
by the Board of Directors out of funds legally available therefor. Any
cash dividends will depend on earnings, if any, and on the Company's
financial requirements and other factors. Dividends are paid at the
discretion of the board of directors. There can be no assurance that the
Company will be able to pay any dividends or, if able to so make such
dividends, that the board of directors will deem it in the best interest of
the Company to do so. Investors who anticipate the need of immediate
income from their investment should refrain from the purchase of the
Shares offered herein. The Company has not paid any cash dividends
on its Common Stock since inception. For the foreseeable future, it is
anticipated that any earnings which may be generated from the
Company's operations will be used to finance the growth of the
Company.
USE OF PROCEEDS
The proceeds from the sale of the Units, if all Units are sold, will
equal $10,000,000 and the net proceeds to the Company, after deduction
of estimated expenses of the Offering, will be approximately $9,870,000.
The Company expects the net proceeds to be utilized approximately in the
priority listed below:
Development and production of Home Dating
Network television infomercials including purchase of
airtime, filming of entertainment segments and personal
profiles; production and editing; and distribution;
Completion of mock-up of Home Dating Network magazine including
hiring additional writing staff, production, printing
and distribution;
Increase support staff for further development and production
of Internet website;
Development, filming and production of a one-time national
television show
The foregoing represents the Company's best estimate of its
allocation of the proceeds from the Offering based upon its current
business plan, operations and assumptions. The amounts actually
expended for each purpose set forth above may vary significantly.
Future events, including changes in economic or competitive conditions
or the Company's business and results of the Company's sales and
marketing activities, may make shifts in the allocation of such proceeds.
In light of such changing events, assumptions or operations,
Management of the Company may in its sole discretion to use the
proceeds of the Offering for other applications.
The Company anticipates that the net proceeds from the Offering, in
addition to the capital raised from earlier sale of its securities, plus
revenues from any exercise of the Warrants and from operating
revenues, should be sufficient to fund the Company's contemplated
operations for the 12 months following the Effective Date. In the event
that the Company does not receive the expected revenues from operations
or exercise of Warrants, then it may be required to seek additional
financing prior to the expiration of such 12-month period. The ability of
the Company to generate revenues from operations will be dependent
upon developing public interest in the Home Dating Network(sm)
infomercial and Internet website. There can be no assurance that the
Company will be successful in generating such interest.
DILUTION
Purchasers of the Units may experience immediate and substantial
dilution in the value of the Common Stock contained in such Unit.
Dilution represents the difference between the initial public offering price
per share paid by the purchasers in the Offering and the net tangible
book value per share immediately after completion of the Offering. Net
tangible book value per share represents the net tangible assets of the
Company (total assets less total liabilities), divided by the number of
shares of Common Stock outstanding upon closing of the Offering.
At June 30, 1997, the Company had a net tangible book value of
$451,670 or $.06 per share. Assuming conversion of the Convertible
Preferred Stock and sale of all the Units at $5.00 per Unit (and further
assuming no exercise of any Warrants), the net tangible book value of
the Company would be $10,321,670 or $.99 per share. This represents
an immediate dilution to investors in the Offering of $4.01 per share and
the aggregate increase in net tangible book value to present shareholders
of $.93 per share. The following table illustrates such effect:
Initial public price per Unit $5.00
Net tangible book value before Offering $.06
Increase per share attributable to
new investors $.93
Net tangible book value per share after Offering $.99
Dilution per share to new investors $4.01
BUSINESS
General
The Company produces and broadcasts Home Dating Network(sm)
infomercials integrating approximately 20 short video personal profiles
of individual Home Dating Network(sm) members into an entertaining
show with dining, vacation, theater, movie and other dating related
activities. Interested viewers to the infomercial can call the Company's
800-number or 900-number voice mailbox system to leave a confidential
response to a particular televised profile. The voice mail instructions are
designed by the member and Home Dating Network(sm) to provide the
member with a detailed description of the responder. After reviewing the
responses left on the mailbox system, a member can choose whether to
reply to a responding viewer. This allows a Home Dating Network(sm)
member to make use of current technology while retaining anonymity
and security.
The Company maintains a website (http:\\www.hdn-date.com) which
features personal profiles posted by Home Dating Network(sm) members
as well as chat rooms and bulletin boards. The website also correlates
dating and entertainment information to the entertainment and dating
segments featured on the infomercial and offers additional dating ideas
and tips. Members to the Home Dating Network(sm) can search the
website personal profile postings by area code, or by relationship
preference (man seeking woman, woman seeking man, man seeking
man, etc.) or can send an E-mail message available from the personal
postings. All members featured in the infomercials have posted profiles.
The Company has completed one infomercial which commenced
broadcast on WTGI TV-61 in Philadelphia on October 23, 1997. The
same infomercial airs five times per week. The Company estimates that
it has received over 3,000 telephone calls on its 800- and 900- telephone
lines in response to the infomercial.
The Company has completed its website and has received over
600,000 visits to the website in its first six months. The Company has
approximately 1,200 members with postings on its website. See "Current
Operations" herein.
The Infomercial
The Company's infomercials are developed by AIP Networks
("AIP"), Pennsauken, New Jersey. AIP is experienced and
knowledgeable in the industry and has agreed to produce the
infomercials for the Company with partial payment in stock of the
Company. AIP provides pre-production, production and post-production
services for the infomercials. The infomercials, once produced, are
placed into half-hour slots on television media for broadcast to the
general public. The Company intends to produce multiple infomercial
segments, utilizing formats which can be replicated in other markets as
the Company expands the Home Dating Network throughout the United
States.
The Company utilizes local professional studios in the city in which it
is filming to produce the personal profiles used in the infomercial.
These personal profiles are integrated into an infomercial production to
create a professional and entertaining television program. The
infomercial format utilizes two hosts (John DiDomenico and Hannah
Dalton) to lead viewers through different dating activities each week.
Each show will have two different activities interspersed around the
personal profiles of local singles. The Company intends to develop the
infomercial to use in numerous markets nationwide. The entertainment
portion of each infomercial will be the same but the personal profiles
will be from the local market. The infomercials are scripted to provide
light entertaining dialogue and to introduce dating activities such as
dining, movies, theater, spectator events, sporting participant events,
romantic "getaways", unusual adventures and other activities. The
infomercial is produced so that the entertainment segments can used in
all the markets in the which the infomercial is shown or repeated in the
same market with new personal member profile for each market or
rebroadcast in a market. Therefore, although the entertainment
segments remain the same, viewers in each market see profiles for local
singles. The Company offers for sale both national and local advertising
time during the infomercial.
Interested viewers to profiles aired on the infomercial can call the
Company's 800/900 telephone numbers to access a voice mailbox system
for any of the featured profiles and leave a message following the
prerecorded instructions and/or questions. The Company and the client
develop the mailbox instructions to garner certarom the caller so the
client can determine whether to respond to any such caller. In addition,
there is an optional service at an additional charge called "Direct Call"
that, during a specific time, a client will be available to take calls
directly from interested viewers. The calls are connected to a number
assigned to the client and the interested viewer only uses the Company's
800/900 telephone number.
Internet Website
The Company maintains a website on the Internet at http:\\www.hdn-
date.com. For a monthly fee members of the Home Dating Network(sm)
can post their personal profile, with an optional picture, on the website.
Members of Home Dating Network(sm) will be able to search the
database of single profiles by relationship preference ("male looking for
female", "female looking for male", male looking for male", etc.)
and/or by telephone area code to find singles within their local area. In
addition, the website offers chat rooms, bulletin boards, interesting tips
on dating as well as additional information to supplement the
entertainment segments featured on the infomercial.
The website provides an on-line membership application to allow
website visitors to immediately join the Home Dating Network(sm). Each
member who joins the Home Dating Network(sm) fills out a detailed
profile form describing his/her self and fills out a form describing their
criteria for a person they would like to meet. Through the Internet, the
Company returns to the member a list of the singles meeting such
criteria. The member can then leave an e-mail message for any of the
singles on the list. The member may include a picture if desired. All
participants in the Home Dating Network(sm) infomercial are also
profiled on the website and the website directs interested persons to the
"900 number" mailbox assigned to such participant.
The Company receives information on the number of visits (people
contacting the Company's website) its website receives each day, and
receives information on such individual visits so that additional
marketing and advertising material can be electronically communicated
to each Internet browser who visits the Company's website.
HDN--The Home Dating Network Magazine
The Company is in the process of developing a magazine to
supplement the infomercial and Internet website. The magazine is
designed for singles and will feature articles about dating and activities
related to dating, will contain both national and local advertising and
will list certain local "In Search Of" profiles of Home Dating
Network(sm) members. The magazine will be distributed to members of
the Home Dating Network(sm). The Company intends to eventually
distribute the magazine nationally but retaining local profiles and event
calendars.
Current Operations
The Company has finished one complete infomercial which has aired
5-times a week commencing October 23, 1997, on WTGI TV-61, a local
Philadelphia cable television station. The Company has also completed
the entertainment segments of four additional infomercials. The
Company advertises its filming schedule for individual personal profiles
on the Internet and is currently scheduled to film such personal profiles
in Boston, Miami, and New York. The Company anticipates scheduling
Baltimore/Washington and Atlanta in the near future. The Company
estimates that it has received over 3,000 calls on its 800- and 900-
telephone lines in response to the broadcast of the Company's
infomercial. The Company has completed its website and has received
over 300,000 visits in the first three weeks of operations. The Company
has approximately 1,200 members with postings on its website.
Computer Systems Redesigned for Year 2000
Many existing computer programs use only two digits to identify a
year in such program's date field. These programs were designed and
developed without consideration of the impact of the change in the
century for which four digits will be required to accurately report the
date. If not corrected, many computer applications could fail or create
erroneous results by or following the year 2000. Many of the computer
programs containing such date language problems have been corrected
by the companies or governments operating such programs. Although
none of the Company's systems are effected by this problem, the
Company could be impacted by the failure of other companies to timely
correct their computer systems. The Company's operations are
dependent on the Internet, the telephone system and the television
broadcast system. If any of these systems become inoperational the
Company will be directly and significantly effected.
Revenues
The Company has used the proceeds from the sale of the Convertible
Preferred Stock to fund its operations to date. The Company anticipates
that revenues will be generated from the following sources:
*The 800/900 telephone service charged at $2.95 per minute
from which the Company receives $1.85 per minute;
*Membership fees to the Home Dating Network(sm) website
at $9.95 per month; and
*Advertising revenues from the website, the magazine and
the infomercial.
The Company has contracted with BFD Productions, Inc., Las
Vegas, Nevada, to handle the 800 and 900 number telephone traffic.
This service bureau can handle approximately 6,000 calls per minute,
allowing the Company ample growth opportunity.
Revenue from the 800 service is credited to the Company's merchant
account as it is billed to the customer. Revenue from the 900 number is
received through the service bureau and is paid to the Company 90 days
after the charge is billed to the customer. The revenue generated from
the 900 numbers will have the service bureau's contracted fees deducted.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS".
The Internet Website. Revenue generated from memberships
through the Internet website is immediately credited to the Company's
merchant account. Members pay with their MasterCard or Visa credit
cards and continue to be billed on a monthly basis until notification to
the Company in writing to discontinue such membership. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS".
Advertising Revenues. The advertising available on the Company's
infomercial, website and magazine offers advertisers a multi-faceted
opportunity to reach a target market of singles ranging in age from 21 to
55. Advertising revenues from the magazine and the website are billed
to the customer at the time of publication. Banner advertising has been
allocated on the website. The Company anticipates that advertising on
the website will more than offset the development and monthly costs of
such website. The infomercial has six available slots for both local and
national advertising. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS".
Services of America Television Time, Inc.
The Company has entered into an agreement with America
Television Time, Inc. ("ATT"), Austin, Texas, a company which
specializes in the selection and purchasing of television segment slots for
resale to the Company. ATT will negotiate and purchase all broadcast,
satellite and cable television airtime for broadcast of the Company's
infomercial at a cost to the Company of 20% of the net invoice amount
due to and charged by media outlets. ATT will provide factoring services
against the revenue generated by the 900 numbers and up-front
financing of the purchase of the television time slots. ATT receives a
discounted rate on the purchase of television time which discount it
passes on to the Company. The Company would not be able to obtain
this discount on its own. Because the fees charged are discounted, the
percentage remuneration to be received by ATT is reduced. The
Company will pay ATT an amount approximately equal to the difference
between the remuneration ATT would receive from sale of the television
time at the going rate and the sale to the Company at the discounted
rate. ATT has experience in all major television markets throughout the
United States, and has the capability of assisting the Company's entrance
into national markets.
The Market In General
There is a substantial market of single Americans with an increasing
amount of disposable income. There are an estimated 80,000,000 singles
in the United States comprising approximately 40% of the adult
population. The number of single adults has increased by 35% between
1989 and 1993. The estimated disposable income for a single adult male
is $20,000 and $11,400 for females whereas the married adult male and
female each have estimated disposable incomes of $11,400.
The Company has analyzed three core areas in regard to marketing
the Home Dating Network(sm): (a) the growth of the dating service
industry; (b) the use of 900 numbers; and (c) the increased popularity of
"In Search Of" (ISO) advertising in newspapers and magazines.
Combining the statistical data from these three areas, and with the
common knowledge associated with the growth of television,
telecommunications and computer-based services, the Company believes
that the potential for a network dating approach is positive. Marketing
efforts will encompass the Internet, The Home Dating Network
Magazine, which the Company is developing, the infomercial as well as
all of the traditional advertising and marketing venues.
Target Markets
The Home Dating Network(sm) infomercial has been initially
broadcast in the Philadelphia market. The Philadelphia market is
located near the Company's headquarters which allows the Company to
advertise and film personal profiles with less cost and time. The
Philadelphia market is the fourth largest television viewing market in the
United States as stated the Broadcast and Cable Yearbook of 1996.
Approximately 75% of the households within the Philadelphia market are
connected to cable television service. The area is serviced by numerous
cable television networks as well as several local stations. The Home
Dating Network is currently presented on WTGI TV-61, a local cable
broadcast station and carried throughout the Philadelphia area. The
Philadelphia Market is estimated at over 7 million people representing
over 2.7 million households. The Philadelphia, Pennsylvania
metropolitan area is one of the most affluent and fast growing areas of
the country with an estimated 5,500,000 million adults of which
2,600,000 are not married.
The Company has targeted expansion into other major markets
commencing with Boston, New York, Miami, Baltimore/Washington,
D.C., and Atlanta. The Company has scheduled filming of personal
video profiles in the Boston, New York and Miami areas. The Company
anticipates a rapid expansion into the targeted television markets.
Attracting Participants and Viewers
The individual video personal profiles are filmed in each target
market at local area production studios. This provides potential member
participants with a sense of familiarity and confidence of the quality of
production. Initially, such participants will be attracted by local radio
and newspaper advertising, postings on the Internet and word of mouth.
Once an infomercial is broadcast in a local market, the Company
anticipates that the potential participant pool in that area will increase.
The Company intends to advertise the infomercial on television, radio
and newspaper and target area specific magazines. The Company
intends to promote each infomercial to viewers as a specific event
broadcast at a particular time on a particular station rather than an on-
going repeated series of shows.
Trademarks, Copyrights and Licenses
The Company has entered into an exclusive non-assignable and non-
transferable worldwide licensing agreement with The Home Dating
Network, L.L.C. (the "LLC"), a Delaware limited liability company, to
license the copyrighted "Home Dating Network" logo and servicemarks.
The Company acquired the rights and the overall concept for the Home
Dating Network from the LLC, together with existing video productions
and formats, pursuant to an agreement executed between the two
entities. The agreement continues in effect until the expiration date of
the last to expire of the licensed trademarks and copyrights at which time
no additional royalties will be due to the LLC for the use of such logo
and servicemarks. The agreement requires the payment by the Company
to the LLC of a licensing fee of $150,000 for the initial year of use and
an annual royalty fee equal to the greater of (i) 1% of the annualized net
earnings derived by the Company or (ii) $100,000. In the event that the
Company fails to pay the licensing or royalty fees, the LLC may
terminate the licensing agreement upon written notice to the Company.
The Company has a 30-day period in which to cure any such failure to
make payment on the fees. The Company paid $50,000 toward the
licensing payment to the LLC.
Related Transactions
The Company has licensed the trademarks and servicemarks,
including the name "Home Dating Network", from the Home Dating
Network, L.L.C., a Delaware L.L.C. owned by Ms. Norma Veach and
Mr. Donald Mattei, the Chief Executive Officer and President of the
Company, respectively. Although the license agreement is not an arm's-
length transaction, the Company deems the licensing fee and royalty fee
are deemed reasonable and customary in the industry.
Recent Transactions
Since January 31, 1997, the Company sold 155,815.5 shares of its
Convertible Preferred Stock at $10 per share for aggregate proceeds of
$1,558,155. Each share of Convertible Preferred Stock is convertible
into eight shares of Common Stock of the Company for a conversion
period of two years commencing with the Effective Date hereof. See
"DESCRIPTION OF SECURITIES". The Common Stock underlying
the conversion of the Convertible Preferred Stock is contained in the
Registration Statement of which this Prospectus is a part for sale by the
holders thereof.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company is a newly organized development stage company, the
objective of which is to offer a dating service infomercial supported by a
series of "900 number" telephone response lines and an Internet website
posting personal profiles of members.
The Company has issued 7,807,000 shares of Common Stock for an
aggregate purchase price of $7,800 and 155,815.5 shares of its
Convertible Preferred Stock for an aggregate purchase price of
$1.558,155. The Company has used the proceeds from such sales of its
securities and intends to use future revenues for production of television
infomercials for broadcast; for the purchase of television air-time; for
marketing and advertising, including roadside billboards, print and
broadcast media advertising; for payment of its website; for development
of the Company's Home Dating Network Magazine; and for capital
expenditures and working capital for its proposed operations, and certain
fees, costs and expenses associated with this Offering.
Results and Plan of Operations
The Company has paid $50,000 of the one-time licensing fee of
$150,000 to the Home Dating Network, L.L.C. for exclusive use of the
Company's copyrights and trademarks.
The Company has broadcast its initial infomercial on WTGI TV-61,
a local Philadelphia cable television station, commencing October 23,
1997 on a 5-night weekly schedule. The Company purchased the
broadcast time on WTGI TV-61 directly for a cost of $700 per 1/2 hour
time slot. The Company has prepared the entertainment segments of
four additional infomercials which need the insertion of the local
personal profiles before ready for broadcast. The Company has filmed
personal profiles in Philadelphia and has scheduled filming sessions in
New York, Miami and Boston. The Company has received over 3,000
calls on its 800/900 telephone numbers. infomercial.
Calls into the 800/900 telephone numbers are charged $2.95 per
minute (of which the Company receives $1.85). Revenue from the 800
service is credited to the Company's merchant account as it is billed to
the customer. Revenue from the 900 service bureaus is paid to the
Company by BFD Productions, Inc. ("BFD"), the 900 service bureau
with whom the Company has entered into a service bureau agreement,
90 days after the charge is billed to the customer. The revenue
generated from the 900 numbers will have the service bureau's
contracted fees deducted.
The Company pays BFD a monthly fee for the 800 service based on
$0.11 per billable minute for 0 to 25,000 minutes per month, $0.10 per
billable minute for 25,001 to 50,000 minutes per month and $0.09 per
billable minute for over 50,001 minutes per month. The Company has
guaranteed a minimum monthly payment of $500 to BFD.
The Company has entered into an agreement with ATT for the
purchase and resale of air time for broadcast of the infomercial. ATT
will negotiate and purchase all broadcast, satellite and cable television
airtime for broadcast of the Company's infomercial at a cost to the
Company of 20% of the gross invoice amount due to and charged by
media outlets. ATT will provide factoring services against the revenue
generated by the 900 numbers and up-front financing of the purchase of
the television time slots. ATT receives a discounted rate on the
purchase of television time which discount it passes on to the Company.
The Company would not be able to obtain this discount on its own.
Because the fees charged are discounted, the percentage remuneration to
be received by ATT is reduced. The Company will pay ATT an amount
approximately equal to the difference between the remuneration ATT
would receive from sale of the television time at the going rate and the
sale to the Company at the discounted rate.
The Company is continuing its broadcast in the Philadelphia market
but is scheduled to film personal video profiles in Boston, New York and
Miami. The Company has increased its efforts to obtain personal video
profiles for use in the infomercial by increasing its advertising of the
infomercial and scheduled personal profile filming dates. The Company
does not charge the participant for filming the personal profile or for its
placement in the infomercial. The Company anticipates that with the
increased advertising and commencement of broadcast of the
infomercial, the number of participants for the video profiles will
increase.
The Company has completed its website on the Internet. The
Company pays $1,365 per month for the T-1 line service for its website.
The Company has recorded over 600,000 visitors to its website in the six
months since it became operational. The Company offers memberships
into The Home Dating Network(sm) for $9.95 per month, on a month-to-
month basis. A member can quit the Home Dating Network(sm) at any
time with no penalty upon written notification to the Company.
Members are entitled to post a personal profile on the website and to
access the other personal member profiles. Profiles can be searched by
telephone area code or by relationship preference (e.g. "male seeking
female", "female seeking male", etc.) The website also offers members
chat rooms and bulletin boards, dating tips and interesting and
entertaining information often relating to ideas featured on the
infomercial. Although only members can access the personal profiles,
all visitors to the website can scroll into certain information about the
Company including its filming schedule. A website visitor can
immediately become a member of The Home Dating Network(sm)
utilizing the on-line application and a credit card.
Liquidity and Capital Resources
The Company has used the proceeds from the sale of its securities
for payment of operating costs to date. The Company has just begun
receiving revenues from its 800/900 telephone service and monthly
membership dues. The Company directly paid the costs for the broadcast
of its initial infomercial at a rate of $700 per 1/2 hour of air time.
The Company has begun offering advertising space on its website
and in its magazine, The Home Dating Network(sm) Magazine. The
Company has completed its first "mock-up" of the magazine and
anticipates that it will be ready for distribution in the second quarter of
1998. The magazine is a full-color multi-page professionally produced
magazine featuring articles related to dating and entertainment. The
magazine is intended for distribution to the Home Dating Network(sm)
members with each target market receiving an edition of the magazine
tailored for that market with advertising from that local market and with
personal profiles from that target market. For a one-time publication,
the Company charges national advertising rates between $1,500 for 1/6
of a page to $6,500 for a full page and up to $9,000 for a 4-color full
page back cover ad. Local advertising rates run from $400 for 1/6 page
and $1,500 for a full page. The Company has not yet received bookings
or revenues for advertising space in the magazine.
MANAGEMENT
Officers and Directors
The officers and directors of the Company are as follows:
Name Title
Norma L. Veach Chairman of the Board, Chief
Executive Officer
Donald Mattei President and Director
Edward Cole Chief Operating Officer
Jitendra R. Shah Director
Heatherlynn Colburn Director
Hector I. Hernandez, Sr., Esq. Secretary/Treasurer and Director
Robert Veach Director
All directors of the Company hold office until the next annual
meeting of shareholders or until their successors are elected and
qualified. At present, the Company's Bylaws provide for not less than
one nor more than nine directors. Currently, there are six directors in
the Company. The Bylaws permit the Board of Directors to fill any
vacancy and such director may serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Officers
serve at the discretion of the Board of Directors. Robert Veach is the
son of Norma L. Veach. There are no other family relationships among
any officers or directors of the Company.
The principal occupation and business experience for each officer
and director of the Company, for at least the last five years are as
follows:
Norma L. Veach, 70, has been Chairman of the Board, Chief
Executive Officer and a founder of the Company since its organization.
From 1992 to 1996 Ms. Veach served in numerous capacities with LMB
Amusements, Inc., Wilmington, Delaware, an arcade amusement
distributor and vendor. From 1989 to 1992, Ms. Veach was the owner
of Balls Sports Bar, a restaurant and sports bar located in Wilmington,
Delaware. Ms. Veach intends to devote approximately 40 hours per
week to the business of the Company.
Donald Mattei, 52, has been President, a director and a founder of
the Company since its organization. From 1981 to 1997, Mr. Mattei his
owned and managed Donmattco Enterprises, Inc., Woodlyn,
Pennsylvania, a retail food store. From 1967 to 1981, Mr. Mattei owned
and managed D & M Food Market, Woodlyn, Pennsylvania, a retail
food outlet.
Edward Cole, 45, serves as the Chief Operating Officer of the
Company. From 1995 to 1997, Mr. Cole was Vice President of Sales
and Marketing and General Manager of the Industrial Division of
Rainfair, Inc., Racine, Wisconsin, a manufacturer of industrial
protective garments. From 1992 to 1995, Mr. Cole was Vice President of
Sales and Marketing for Research & Trading Corporation, Wilmington,
Delaware, a manufacturer of industrial safety equipment. From 1988 to
1992, Mr. Cole served in various positions with Tokai Financial
Services, Inc., a third-party equipment leasing company located in
Berwyn, Pennsylvania, culminating as Vice President and Staff Assistant
to the Chief Executive Officer. Mr. Cole received his Bachelor of
Science degree in Business Administration from Western Connecticut
State University in 1976.
Jitendra R. Shah, 54, has founded and presided over a number of
business enterprises. Mr. Shah received a Masters Degree from
Villanova University in Pennsylvania, and presently operates an overseas
trading company, which specializes in the import and export of textile
and apparel. Mr. Shah also operates a travel firm that specializes in
group and business travel. Mr. Shah will be responsible for corporate
financial planning and will oversee the financial operation of the
business.
Heatherlynn Colburn, 28, is a Director of the Company since its
inception. She is the president of Hanover Mercantile Corporation, a
shareholder of the Company and a Selling Securityholder herein, a
boutique merchant banking firm headquartered in Baltimore, Maryland.
Ms. Colburn will be primarily responsible for investor relations.
Hector I. Hernandez, Sr. Esq., 37, serves as Secretary/Treasurer
and a director of the Company since its inception. Mr. Hernandez is a
practicing attorney, and received his Juris Doctor degree from the
Georgetown University Law Center in Washington, DC in 1986. From
1990 to 1993 Mr. Hernandez served as officer and director of Sibir,
Inc., U.S.A., a Virginia corporation which in 1994 was liquidated
pursuant to Chapter Seven of the U.S. Bankruptcy Code. From 1986 to
1990, Mr. Hernandez was an attorney with the U. S. Department of
State.
Robert Veach, 49, serves as a director of the Company. Mr. Veach
is the son of Norma Veach, the Chairman of the Board and Chief
Executive Officer of the Company. Mr. Veach currently serves as an
executive of Executone Corp., a corporation located in Harrisburg,
Pennsylvania. Mr. Veach has experience in marketing and sales.
Remuneration
The Company does not intend to pay any officer or director annual
compensation exceeding $100,000 during the 12 months following
incorporation of the Company. The Company has an employment
agreement with its Chief Operating Officer, but has not entered into any
employment agreements with its executive officers or directors. The
Company has applied for but not yet obtained any key-man life insurance
on its President.
The officers of the Company may receive remuneration as part of an
overall group insurance plan providing health, life and disability
insurance benefits for employees of the Company. The amount allocable
to each individual officer cannot be specifically ascertained, but, in any
event, will not exceed $3,500 as to each individual.
Each director is entitled to receive reasonable expenses incurred in
attending meetings of the Board of Directors of the Company. The
members of the Board of Directors intend to meet at least quarterly
during the Company's fiscal year, and at such other times duly called.
The Company presently has five directors.
The following table sets forth the total compensation paid or accrued
by the Company on behalf of the Chief Executive Officer and President
of the Company during 1997. No officer of the Company received a
salary and bonus in excess of $100,000 for services rendered during
1996 nor to date in 1997:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
principal position year salary
Norma Veach 1997 0
Chief Executive Officer
Donald Mattei (1) 1997 $47,666
President
(1) Mr. Mattei has been paid $47,666 to day with an annual
compensation of $52,000 for 1997 increasing to $60,000 in 1998.
Possible Conflicts of Interest
Management of the Company has other financial and business
interests to which a significant amount of time is devoted that may pose
certain inherent conflicts of interest. Ms. Norma Veach and Mr. Donald
Mattei, the Chief Executive Officer and President of the Company,
respectively, are owners of The Home Dating Network L.L.C., the
Delaware corporation from which the Company has licensed the rights to
use the Home Dating Network service mark and trademark. The
Company is required to pay a one-time licensing fee and annual royalty
fee pursuant to the licensing agreement.
Indemnification of Officers, Directors, Employees and Agents
The Articles and Bylaws of the Company provide that the Company
shall, to the fullest extent permitted by applicable law, as amended from
time to time, indemnify all directors of the Company, as well as any
officers or employees of the Company to whom the Company has agreed
to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL")
empowers a corporation to indemnify its directors and officers and to
purchase insurance with respect to liability arising out of their capacity
or status as directors and officers provided that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) arising under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under
the corporation's by-laws, any agreement, vote of shareholders or
otherwise.
The effect of the foregoing is to require the Company to indemnify
the officers and directors of the Company for any claim arising against
such persons in their official capacities if such person acted in good
faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the
Effective Date of this Prospectus regarding the beneficial ownership of
the Company's Common Stock by each officer and director of the
Company and by each person who owns in excess of five percent of the
Company's Common Stock.
<TABLE>
<CAPTION>
Shares of Percentage of Shares
Common Stock of Class Owned
Name, Position Beneficially Prior After
and Address Owned Offering Offering
<S> <C> <C> <C>
Norma L. Veach
Director 2,650,000 34% 27%
Chief Executive Officer
18 Augustine Cutoff
Wilmington, Delaware 19803
Donald Mattei
Director 2,650,000 34% 27%
President
1415 Bullens Lane
Woodlyn, Pennsylvania 19094
Jitendra R. Shah 100,000 1.3% 1.0%
Director
42 Marlon Pond Road
Hamilton Square, New Jersey 08690
Heatherlynn Colburn(3)
Director
Hanover Mercantile
Corporation (3) 2,000,000 25.6% 20.4%
8150 Leesburg Pike
Suite 1200
Vienna, Virginia 22182
Hector I.
Hernandez, Sr., Esq. 0 0% 0%
Secretary/Treasurer and Director
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
Robert Veach
Director 100,000 1.3% 1.0%
1056 Country Club Road
Camp Hill, Pennsylvania 17011
All Officers,
Directors 7,500,000 96.2% 76.5%
and Shareholders as a
Group (6 Persons)
</TABLE>
(1) Based on 7,807,000 shares of Common Stock outstanding prior to
the Offering.
(2) Based on 9,807,000 shares of Common Stock outstanding
assuming no conversion of shares of Convertible Preferred Stock
nor exercise of any Warrants.
(3) Heatherlynn Colburn, a director of the Company, is the President
of the name securityholder and is deemed to have voting control
of the listed securities.
(4) The number of shares held by officers or directors will be
5,500,000 following the Offering assuming sale of all the Shares
offered by Hanover Mercantile Corporation, one of the Selling
Securityholders.
SELLING SECURITYHOLDERS
The Company is registering for offer and sale by the holders thereof
(i) 2,000,000 shares of Common Stock held by a securityholder of the
Company; (ii) 250,000 shares of Common Stock underlying a common
stock purchase warrant held by a securityholder of the Company; and
(iii) 1,246,524 shares of Common Stock of the Company held or to be
held by certain securityholders of the Company upon conversion of the
155,815.5 shares of 11.25% Convertible Preferred Stock upon conversion
of such Convertible Preferred Stock at the ratio of eight shares of
Common Stock per share of Convertible Preferred Stock. The Selling
Securityholders will offer their securities for sale on a continuous or
delayed basis pursuant to Rule 415 under the 1933 Act. See "RISK
FACTORS--Additional Shares Entering Public Market without Additional
Capital Pursuant to Rule 144" and "Selling Securityholders May Sell
Shares at any Price or Time Shares."
The Company is applying for admission to the OTC Bulletin Board
for the Shares; however, there can be no assurance that the Shares will
be so listed. See "RISK FACTORS--No Current Trading Market for the
Company's Securities" and "DESCRIPTION OF SECURITIES--
Admission to Quotation to Nasdaq SmallCap Market and Bulletin Board"
All of the Selling Securityholders securities registered herein are
expected to become tradeable and/or exercisable on or about the date of
this Prospectus.
The freely tradeable Shares of the Common Stock (the "public
float") upon effectiveness of the Registration Statement of which this
Prospectus is a part and upon consummation of the transactions
contemplated herein (other than exercise of the Warrants) will be
5,246,524 shares of Common Stock of which 3,246,524 are to be sold or
distributed by the Selling Securityholders.
The following table sets forth the beneficial ownership of the
securities of the Company held by each person who is a Selling
Securityholder and by all Selling Securityholders as a group.
<TABLE>
<CAPTION>
Percent of Stock Owned
Name and Address Common Prior to After
of Beneficial Stock(1) Offering(2) Offering
Owner
<S> <C> <C> <C>
Marshall G. Long 4,000 * 0%
25614 Belle Alliance
Leesburg, Florida 34748
Ronald E. Yun 2,000 * 0%
1122 Crescent Hill Drive
San Antonio, Texas 78253
Donald A. Bratton 8,000 * 0%
8435 Upton
San Antonio, Texas 78250
Jerry L. Long 2,000 * 0%
2926 D. Lakeshore Drive
Indianapolis, Indiana 46205
Albert F. Anft III 8,000 * 0%
3242 Green Road
Whitehall, Maryland 21161
John DiLemme 32,000 * 0%
1727 Village Boulevard #112
West Palm Beach, Florida 33409
Ronald D. Maloney 50,000 * 0%
525 Fifth Avenue
Pelham, New York 10803
Robert J. Maloney 32,000 * 0%
1027 Washington Avenue
Pelham Manor, New York 10803
Pete C. Moncheck 30,000 * 0%
2241 Postmouth Way
San Mateo, California 94403
Marc D'Anna 320,000 4.1% 0%
509 Surrey Road
Timonium, Maryland 21093
Gary A. Owings 2,000 * 0%
18 Bardeen Court
Towson, Maryland 21204
C. John Thomson, IV 4,000 * 0%
8 Carriage Walk Court
Baltimore, Maryland 21234
Darrel Seahorn 4,000 * 0%
Route 10, Box 50
Gilmer, Texas 75644
Morgan H. Waldron 20,000 * 0%
4501 Green Cedar Lane
Richmond, Virginia 23237
Peggy E. Brady 4,000 * 0%
19 Seven Oaks Lane
Brewster, New York 110509
Chester E. Sajewski 2,800 * 0%
110 Beechwood Avenue
Mount Vernon, New York 10552
G. Steve Waldron 8,000 * 0%
15161 Straton Major Court
Centreville, Virginia 20122
Jesse L. Thomas 2,000 * 0%
9252 NW 9th Court
Plantation, Flroida 33324
Richard Z. Hricak 8,000 * 0%
10303 Lloyd Road
Potomac, Maryland 20854
Mary C. Cardisco 2,000 * 0%
429 Hutchinson Terrace
Holmes, Pennsylvania 19043
Michael Manzo 2,400 * 0%
15202 Glenmoor Drive
West Palm Beach, Florida 33409
Gary Meglino 4,000 * 0%
124 North Ridge Street
Rye Brook, New York 10573
Carlo Schiattraella 16,000 * 0%
9328 Waltham Wood Road
Baltimore, Maryland 21234
Ronald Schoff 2,000 * 0%
101 Concord Drive
Michigan City, Indiana 46369
Daniel P. Maloney 20,000 * 0%
1027 Washington Avenue
Pelham Manor, New York 10803
Donald S. Haltli 16,000 * 0%
52 Meadowbrook Drive
Stuart Draft, Virginia 24477
Michael Master 4,000 * 0%
44 Waters Edge
Rye, New York 10580
Christopher S. Duff 8,800 * 0%
255 4th Avenue, #2
Kirkland, Washington 98033
Carolyn W. Christy 400 * 0%
6 Glover Drive
Boothwyn, Pennsylvania 19061
Albert Cipolloni Jr. 1,000 * 0%
719 Highland Avenue
Morton, Pennsylvania 19070
George J. Cipolloni Jr. 1,000 * 0%
415 A Highland Avenue
Morton, Pennsylvania 19070
Joseph J. De Simone 8,800 * 0%
15 Gallant Fox Drive
Media, Pennsylvania 19063
Frederick W. Ryder 2,000 * 0%
101 Tyler Avenue
Woodlyn, Pennsylvania 19094
Brenda L. Evans 2,000 * 0%
2495 Wickersham Lane
Aston, Pennsylvania 19014
Joseph A. Cipolloni 2,000 * 0%
719 Highland Avenue
Morton, Pennsylvania 19070
Doug Mollo 2,000 * 0%
1401 Village Boulevard #937
West Palm Beach, Florida 33409
Rebecca Jones 800 * 0%
9 Dunlap Road
Elma, Washington 98541
P.R. Matthews 4,000 * 0%
3204 Ruby Drive
Wilmington, Delaware 19810
Patricia A. Yarusso 4,000 * 0%
1727 Village Boulevard #112
West Palm Beach, Florida 33409
William F. Nyce 2,000 * 0%
3803 Kattlelinn Avenue
Wilmington, Delaware 19808
Blanche A. Elbourne 2,400 * 0%
280 Bridgewater Road #C-6
Brookhaven, Pennsylvania 19015
Benny Chetcuti, Jr. 4,000 * 0%
1045 Crystal Court
Walnut Creek, California 94598
Mark S. Monchek 4,000 * 0%
3671 Hudson Manor Terrace
New York, New York
John Young 500 * 0%
14 Ruby Drive
Claymont, Delaware 19703
Keith F. Anderson 4,000 * 0%
457 South Ithan Avenue
Rosemont, Pennsylvania 19010-1226
Michael Gerace 12,000 * 0%
3 Barleycorn Drive
Broomall, Pennsylvania 19008
David L. Chua 8,000 * 0%
845 Babb Circle
Wayne, Pennsylvania 19087-2131
Edward L. Cole, Jr. 3,520 * 0%
2495 Wickersham Lane
Aston, Pennsylvania 19014
Anthony W. Carapella 16,000 * 0%
346 Deer Drive
Langhorne, Pennsylvania 19047
David O. Moore 4,000 * 0%
1603 Davidson Road
High Point, North Carolina 27262
Mary L. Catona 10,000 * 0%
216 Absey Lane
Swedesboro, New Jersey 08085
Susan V. Daywitt 10,000 * 0%
1551 Walton road
Blue Bell, Pennsylvania 19422
Judyann S. Gillespie 5,040 * 0%
296-6 Echelon Road
Voorhees, New Jersey 08043
Marie T. Carey 2,000 * 0%
417 Brighton Terrace
Holmes, Pennsylvania 19043
Elva M. Bernard 2,000 * 0%
1635 Ward Street
Linwood, Pennsylvania 19061-4240
Joseph Gillen 4,000 * 0%
Mildred Gillen
216 Meadowcroft Lane
Media, Pennsylvania 19063
Dale H. Wyeth 4,000 * 0%
Helen Wyeth
145 Wildwood Avenue
Landsdowne, Pennsylvania 19050
Norman A. Leopold 2,000 * 0%
233 Canterburg Drive
Wallingford, Pennsylvania 19086
John Geuting 8,000 * 0%
4005 Byron Road
Wilmington, Delaware 19802
Mary Green 4,000 * 0%
323 Fourth Avenue
Frankfort, New York 13340
Jack Kouzi 18,480 * 0%
221 Springhouse Lane
Merion, Pennsylvania 19066
Kevin McCullian 80,000 1% 0%
1028 Morgan Avenue
Drexel Hill, Pennsylvania 19026
Jon Stone 8,000 * 0%
701 Penn. Avenue
Ft. Washington, Pennsylvania 19034
Bruce Ostrow 400 * 0%
27 Upland Road
Parkside, Pennsylvania 19015
William F. Burrows 4,000 * 0%
553 Larkspur Street
Philadelphia, Pennsylvania 19116
Anthony Manginelli 8,000 * 0%
Gail Nicdermaier
356 North Mount Vernon Circle
Bensalen, Pennsylvania 19020
James Gillespie, Sr. 5,200 * 0%
108 Stone Road
Laurel Springs, New Jersey 08021
Thomas E. McCullian 4,000 * 0%
Margaret A. McCullian
1028 Morgan Avenue
Drexel Hill, Pennsylvania 19026
Susan Carey 8,000 * 0%
417 Brighton Terrace
Holmes, Pennsylvania 19043
Thomas W. McCullian 80,000 1% 0%
Maureen McCullian
33 High Street
Sharon Hill, Pennsylvania 19079
Charles J. Baldwin 14,400 * 0%
Kathy A. Baldwin
1179 Hilltop Lane
Coatesville, Pennsylvania 19320
Or Shachar 4,800 * 0%
205 Ehenezer Avenue
Bala Cynwyd, Pennsylvania 19004
Daniel O. Black 2,000 * 0%
419 Perron Boulevard
Maria, Quebec, Canada GOCIYO
James J. Gennello 40,000 * 0%
Barbara W. Gennello
201 Cleveland Avenue
Palmyra, New Jersey 08065
Eugene Geyer 24,000 * 0%
Linda Larkin Geyer
501 Walnut Ridge Est.
Saratoga, Pennsylvania 19564
Ted Fanelli 2,800 * 0%
545 Nicole Drive
Southampton, Pennsylvania 18966
Albert Cipolloni 2,000 * 0%
Jeanette Cipolloni
421 Hutchinson Terrace
Holmes, Pennsylvania 19043
Rosemary Gennello 2,000 * 0%
1410 Beverly Road
Burlington, New Jersey 08016
Michael Gerace 68,024 * 0%
Roseann Gerace
3 Barleycorn Drive
Broomall, Pennsylvania 18008
Susan McGovern 2,000 * 0%
11925 Alberta Drive
Philadelphia, Pennsylvania 19154
Joseph F. Trusi 2,000 * 0%
Donna L. Trusi
1423 Carrol Brown Way
West Chester, Pennsylvania 19382
Kevin P. Cooney 2,000 * 0%
2932 Passmore Street
Philadelphia, Pennsylvania 19149
Timothy E. Hammond 400 * 0%
128 Ronway Drive
Avondale, Pennsylvania 19311
James Gillespie, Jr. 4,600 * 0%
Michael Gillespie
Martins Gillespie
108 Stone Road
Laurel Springs, New Jersey 08021
Edward L. Cole III 80 * 0%
2008 S. Mebane Street, Apt. 733-F
Burlington, North Carolina 27215
Linda Evans 80 * 0%
915 Rose Avenue
Morton, Pennsylvania 19070
Manoj Khandelwal 4,000 * 0%
362 Sprague Road
Penn Valley, Pennsylvania 19072
Susan M. Natalie 2,000 * 0%
863 Mckendimen Road
Shamong, New Jersey 08088
Alexander J. Simkiw 4,000 * 0%
119 Flowers Avenue
Langhorne, Pennsylvania 19047
Patrick McCoy 4,000 * 0%
131 East Marshall Street
West Chester, Pennsylvania 19380
John Steven Cigler 4,000 * 0%
131 East Marshall Street
West Chester, Pennsylvania 19380
Basant K. Khandelwal 4,000 * 0%
300 Braeburn Glen court
Millersville, Maryland 21108
Robert Olsen 400 * 0%
1000 East O. Mg. Road, Apt. E-78
Prospect Park, Pennsylvania 15086
Corbin C. Mendenhall 2,000 * 0%
300 Ramsay Road
Coatesville, Pennsylvania 19320
Steven J. Vitalo 2,400 * 0%
111 Main Street
Blandon, Pennsylvania 19510
Frank L. D'Elia 4,000 * 0%
Deborah Love D'Elia
6 Spring Lane
Cludds Ford, Pennsylvania 14317
Joanne T. Burke 18,000 * 0%
3068 Mercer
Philadelphia, Pennsylvania 19134
Philip Bonner 3,000 * 0%
6701 Chester Avenue
Philadelphia, Pennsylvania 19142
Lachman Dass Gupta 2,000 * 0%
29 Emerson Drive
Dover, Delaware 19901
Jerome A. Wenger 8,000 * 0%
1604 Butter Lane
Reading, Pennsylvania 19606
Gerald and
Sandra J. Eichhorn 40,000 * 0%
1000 Garfield Avenue
Palmyra, New Jersey 08065
Hanover Mercantile
Corp. 2,000,000 * 0%
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
Pierce Mill
Associates, Inc.(4) 250,000 * 0%
1504 R Street, N.W.
Washington, D.C. 20009
All Selling Securityholders as a
Group
</TABLE>
_______________________
(1) With the exception of Hanover Mercantile Corp. and Pierce Mill
Associates, Inc., all the listed securityholders hold shares of
Convertible Preferred Stock convertible commencing at the
Effective Date hereof at a ratio of eight shares of Common Stock
for each share of Convertible Preferred Stock.
(2) 7,807,000 shares issued and outstanding prior to the Offering.
(3) 9,800,000 shares issued and outstanding after the Offering
assuming no conversion of any shares of the Convertible
Preferred Stock or exercise of any Warrants.
(4) Represents shares underlying the Common Stock Purchase
Warrant held by the named securityholder.
In the event the Selling Securityholders receive payment for the sale
of their securities, the Company will not receive any of the proceeds of
such sales. The Company is bearing all expenses in connection with the
registration of the securities of the Selling Securityholders offered
herein.
The Shares owned by the Selling Securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the
Securities and Exchange Commission, which Rule pertains to delayed
and continuous offerings and sales of securities. In regard to the Shares
offered under Rule 415, the Company has given certain undertakings in
Part II of the Registration Statement of which this Prospectus is a part
which, in general, commit the Company to keep this Prospectus current
during any period in which offers or sales are made pursuant to Rule
415.
DESCRIPTION OF SECURITIES
The Company has authorized capital of 20,000,000 shares of
Common Stock, $.001 par value, and 1,000,000 shares of preferred
stock. As of the date hereof, the Company has 7,807,000 shares of
Common Stock issued and outstanding and 155,815.5 shares of
Convertible Preferred Stock outstanding.
Units
The Company is offering an aggregate of 2,000,000 Units for sale at
$5.00 per Unit. Each Unit consists of one share of Common Stock and
one Warrant. Each Warrant entitles the holder thereof to purchase one
share of Common Stock. The Common Stock and Warrants including in
the Units are immediately transferable separately after the Effective Date
hereof.
11.25% Cumulative Convertible Preferred Stock
The Company has designated 1,000,000 shares and issued 155,815.5
shares of its preferred stock as 11.25% Cumulative Convertible Preferred
Stock.
The Convertible Preferred Stock is convertible, at the option of the
holder, for a period of 24 months beginning on the Effective Date hereof
into shares of Common Stock of the Company at a conversion ratio of
eight (8) shares of Common Stock for each share of Convertible
Preferred Stock. Upon the expiration of the 24 month conversion
period, the remaining Convertible Preferred Stock will be automatically
converted into shares of Common Stock under the foregoing terms. The
Convertible Preferred Stock is not redeemable by the Company. The
holders of the Convertible Preferred Stock have no voting rights.
Holders of the Convertible Preferred Stock will be entitled to receive,
when, as and if declared by the board of directors, out of the funds of
the Company legally available therefor, cash dividends at the rate of
11.25% per annum, payable semi-annually on June 30 and December 31
of each year, commencing on the first of such dates to occur after the
issue date, unless any such date is a Saturday, Sunday or federal legal
holiday. Cash dividends will be paid by the Company for the two year
life of the Convertible Preferred Stock. Dividends will be cumulative
from the date of first issuance of the Convertible Preferred Stock and
will be payable to holders of record as they appear on the stock books of
the Company on such record dates as are fixed by the Board of
Directors. Dividends not paid on the such dates hereof will accrue and
be payable, if not prior, at the time of conversion of such stock.
The Convertible Preferred Stock will be junior as to dividends to any
series or class of the Company's stock hereafter issued that ranks senior
as to dividends to the Convertible Preferred Stock ("senior dividend
stock"), and if at any time the Company has failed to pay or declare and
set apart for payment accrued and unpaid dividends on any senior
dividend stock, the Company may not pay any dividend on the
Convertible Preferred Stock. The Convertible Preferred Stock will have
priority as to dividends over the Common Stock and any other series or
class of the Company's stock hereafter issued that ranks junior as to
dividends to the Convertible Preferred Stock ("junior dividend stock"),
and no dividend (other than dividends payable solely in Common Stock
or any other series or class of the Company's stock hereafter issued
which ranks junior as to dividends and as to liquidation rights to the
Convertible Preferred Stock) may be paid on, and no purchase,
redemption or other acquisition may be made by the Company of, any
junior dividend stock unless all accrued and unpaid dividends on the
Convertible Preferred Stock have been paid or declared and set apart for
payment. The Company may not pay dividends on any class or series of
the Company's stock having parity with the Convertible Preferred Stock
as to dividends ("parity dividend stoc for payment or contemporaneously
pays or declares and sets apart for payment all accrued and unpaid
dividends for all prior periods on the Convertible Preferred Stock and
may not pay dividends on the Convertible Preferred Stock unless it has
paid or declared and set apart for payment or contemporaneously pays or
declares and sets apart for payment all accrued and unpaid dividends for
all prior periods on the parity dividend stock. Whenever all accrued
dividends are not paid in full on the Convertible Preferred Stock or any
parity dividend stock, all dividends declared on the Convertible Preferred
Stock and such parity dividend stock will be declared or made pro rata so
that the amount of dividends declared per share on the Convertible
Preferred Stock and such parity dividend stock will bear the same ratio
that accrued and unpaid dividends per share on the Convertible
Preferred Stock and such parity dividend bear to each other.
The amount of dividends payable per share of Convertible Preferred
Stock for each semi-annual dividend period will be computed by dividing
the dividend amount by two. The amount of dividends payable for the
initial dividend period and for any period shorter than a full semi-annual
dividend period will be computed on the basis of a 360-day year of twelve
30-day months. No interest will be payable in respect of any dividend
payment on the Convertible Preferred Stock which may be in arrears.
In the case of the voluntary or involuntary liquidation, dissolution or
winding up of the Company, holders of shares of Convertible Preferred
Stock are entitled to receive the liquidation preference of $ 10 per share,
plus an amount equal to any accrued and unpaid dividends to the
payment date, before any payment or distribution is made to the holders
of Common Stock or any other series or class of the Company's stock
hereafter issued that ranks Junior as to liquidation rights to the
Convertible Preferred Stock, but holders of the shares of the Convertible
Preferred Stock will not be entitled to receive the liquidation preference
of such shares until the liquidation preference of any other series or
class of the Company's stock hereafter issued that ranks senior as to
liquidation rights to the Convertible Preferred Stock ("senior liquidation
stock") has been paid in full. The holders of Convertible Preferred
Stock and all series or classes of the Company's stock hereafter issued
that rank on a parity as to liquidation rights with the Convertible
Preferred Stock are entitled to share ratable, in accordance with the
respective preferential amounts payable on such stock, in any distribution
(after payment of the liquidation preference of the senior liquidation
stock) which is not sufficient to pay in full the aggregate of the amounts
payable thereon. After payment in full of the liquidation preference of
the shares of the Convertible Preferred Stock, the holders of such shares
will not be entitled to any further participation in any distribution of
assets by the Company. Neither a consolidation or merger of the
Company with another corporation, nor a sale or transfer of all or part
of the Company's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Company.
No payment or adjustment shall be ible Preferred Stock on account
of any dividends on the shares surrendered for conversion or on account
of any dividends on the Common Stock issued upon conversion, and the
holder will lose any right to payment of dividends on the shares
surrendered for conversion. No fractional shares of common stock will
be issued upon conversion but, in lieu thereof, an appropriate amount
will be paid in cash by the Company based upon the reported last sales
price for the shares of Common Stock on the date of conversion.
The conversion rate will be subject to adjustment in certain events,
including: the issuance of stock as a dividend on the common stock;
subdivisions or combinations of the common stock; the issuance to all
holders of common stock of certain rights or warrants (expiring within
45 days after the record date for determining stockholders entitled to
receive them) to subscribe for or purchase common stock at a less than
current market price (as defined); or the distribution to all holders of
common stock of evidences of indebtedness of the Company, cash
(excluding ordinary cash dividends paid out of the Company's retained
earnings), other assets or rights or warrants to subscribe for or purchase
any securities (other than those referred to above). No adjustment of the
conversion rate will be required to be made until cumulative adjustments
amount to one percent or more of the conversion rate as last adjusted;
however, any adjustment not made is carried forward.
The Company from time to time may reduce the conversion rate by
any amount for any period of at least 20 days, in which case the
Company shall give at least 15 days notice of such change. The
Company may, at its option, make such increases in the conversion rate,
in addition to those set forth above, as the Board of Directors of the
Company deems advisable to avoid or diminish any income tax to holders
of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stoevent treated as tax purposes. of any reclassification
of the Common Stock, any consolidation of the Company with, or
merger of the Company into, any other person, any merger of any
person into the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of common stock), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or other
property, then provision shall be made such that the holder of each share
of Convertible Preferred Stock then outstanding shall have the right
thereafter; during the period such share of Convertible Preferred Stock
shall be convertible, to convert such share only into the kind and amount
of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, transfer or share exchange
by a holder of the number of shares of Common Stock into which such
share of Convertible Preferred Stock might have been converted
immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange.
Common Stock
The authorized capital stock of the Company consists of 20,000,000
shares of common stock, $.001 par value, of which, as of the date
hereof, 7,807,000 are issued and outstanding. Holders of the Common
Stock do not have preemptive rights to purchase additional shares of
Common Stock or other subscription rights. The Common Stock carries
no conversion rights and is not subject to redemption or to any sinking
fund provisions. All shares of Common Stock are entitled to share
equally in dividends from sources legally available therefor when, as and
if declared by the Board of Directors and, upon liquidation or dissolution
of the Company, whether voluntary or involuntary, to share equally in
the assets of the Company available for distribution to stockholders. All
outstanding shares are validly authorized and issued, fully paid and
nonassessable, and all shares to be sold and issued as contemplated
hereby will be validly authorized and issued, fully paid and
nonassessable.
The Board of Directors is authorized to issue additional shares of
Common Stock, not to exceed the amount authorized by the Company's
Certificate of Incorporation, and to issue options and warrants for the
purchase of such shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further
stockholder action.
Noncumulative Voting
Each holder of Common Stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Shares of
Common Stock do not have cumulative voting rights. The holders of
more than 50 percent of the shares voting for the election of directors
can elect all the directors if they choose to do so and, in such event, the
holders of the remaining shares will not be able to elect any person to
the Board of Directors.
Additional Information Describing Stock
The above descriptions concerning the stock of the Company do not
purport to be complete. Reference is made to the Company's Certificate
of Incorporation and By-Laws which are included as exhibits to the
Registration Statement of which this Prospectus is a part and which are
available for inspection at the Company's offices. Reference is also
made to the applicable statutes of the State of Delaware for a more
complete description concerning rights and liabilities of shareholders.
Warrants
The following is a summary of certain provisions of the Warrants,
but such summary does not purport to be complete and is qualified in all
respects by reference to the Warrant Agreement filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The
Company has issued 2,000,000 Warrants contained in the Units offered
hereby. The Warrants contained in the Units may be separately
transferred immediately upon the Effective Date hereof.
Each Warrant entitles the holder thereof to purchase one share of
Common Stock at an exercise price of $6.50 per share, subject to
adjustment from time to time, for a period of five years commencing on
the Effective Date provided that at such time a current prospectus
relating to the underlying Common Stock is in effect and the underlying
Common Stock is qualified for sale or exempt from qualification under
applicable state securities laws. The exercise price and maturity date of
the Warrants are subject to adjustment at the discretion of the Company.
The Warrants are subject to redemption by the Company
commencing one year from the date of this Prospectus at a price of
$.001 per Warrant on 30 days' written notice if the average closing bid
price of the Common Stock for 30 consecutive trading days ending within
15 days of the notice of redemption averages in excess of $8.00 per share
(subject to adjustment).
Admission to Quotation to Nasdaq SmallCap Market and NASD OTC
Bulletin Board
The Company is initially applying for listing of the Shares on the
NASD OTC Bulletin Board. The over-the-counter market differs from
national and regional stock exchanges in that it (1) is not cited in a
single location but operates through communication of bids, offers and
confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the
"specialist" common to stock exchanges. To qualify for listing on the
NASD OTC Bulletin Board, an equity security must have one registered
broker-dealer, known as the market maker, willing to list bid or sale
quotations and to sponsor such a Company listing. The Company
anticipates that it will trade its securities on the NASD OTC Bulletin
Board until such future time, if at all, that the Company applies and
qualifies for admission to quotation on the Nasdaq SmallCap Market.
There can be no assurance that the Company will qualify or if qualified
that it will be accepted for admission to quotation of its securities on the
NASD SmallCap Market.
To qualify for admission to quotation on the Nasdaq SmallCap
Market, an equity security must, in relevant summary, (1) be registered
under the Securities Exchange Act of 1934; (2) have at least three
registered and active market makers, one of which may be a market
maker entering a stabilizing bid; (3) for initial inclusion, be issued by a
company with $4,000,000 in net tangible assets, or $50,000,0000 in
market capitalization, or $750,000 in net income in two of the last three
years (if operating history is less than one year then market capitalization
must be at least $50,000,000); (4) have at a public float of at least
1,000,000 shares with a value of at least $5,000,000; (5) have minimum
a bid price of $4.00 per share; and (6) have at least 300 beneficial
shareholders.
Trading of Shares
There are no outstanding options, warrants to purchase, or securities
convertible into, the shares of the Company. The Company has not
agreed with any shareholders, to register their shares for sale, other than
for this registration. The Company does not have any other public
offerings in process or proposed.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the preferred stock, common
stock and warrants of the Company is ______________________.
Reports to Shareholders
The Company will furnish to holders of the Shares annual reports
containing audited financial statements examined and reported upon,
and with an opinion expressed by, an independent certified public
accountant. The Company may issue other unaudited interim reports to
its shareholders as it deems appropriate.
PLAN OF DISTRIBUTION
Arbitrary Determination of Offering Price
The offering price of the Units has been determined arbitrarily by the
Company. Among the factors considered were the Company's potential
operations, current financial conditions and financial requirements of
the Company, estimates of the business potential and prospects of the
Company, the perceived market demand for such services, the economics
of the industry in general, the general condition of the equities market,
and other factors.
Limited State Registration
The Company will qualify or register the sales of the Units in states
to be selected by the Company. The Company will not accept
subscriptions from investors resident in other states. See "RISK
FACTORS--Limited State Offering"
Sale of the Units
The Company is attempting to locate an underwriter for the sale of
the Units. As of the date hereof, the Company has not located any such
underwriter and there can be no assurance that the Company will be
able to locate an underwriter to do so. In such event, the Units will be
offered on a "best efforts" basis through the Company's officers and
directors. No sales commission will be paid to any officer or director of
the Company. The Company will reimburse its officers and directors for
expenses incurred in connection with the offer and sale of the Securities.
The officers and director of the Company are relying on Rule 3a4-1 of
the Exchange Act as a "safe harbor" from registration as a broker-
dealer in connection with the offer and sales of the Units. In order to
rely on such "safe harbor" provisions provided by Rule 3a4-1, an officer
or director must (1) not be subject to a statutory disqualification; (2) not
be compensated in connection with such selling participation by payment
of commissions or other remuneration based either directly or indirectly
on such transactions; and (3) not be an associated person with a broker
or dealer; and (4) (i) restrict participation to transactions involving offers
and sale of the securities, and (ii) perform substantial duties for the
issuer after the close of the offering not connected with transactions in
securities, and has not been associated with a broker or dealer for the
preceding 12 months, and does not participate in selling an offering of
securities for any issuer more than once every 12 months, and (iii)
restrict participation to written communications or responses to inquiries
of potential purchasers. The officers and directors of the Company
intend to comply with the guidelines enumerated in Rule 3a4-1.
Company Use of a Broker-Dealer
The Company may locate a broker-dealer who may offer and sell the
Units on terms acceptable to the Company. If the Company determines to
use a broker-dealer, such broker-dealer must be a member in good
standing of the National Association of Securities Dealers, Inc. and
registered, if required, to conduct sales in those states in which it would
sell the Units. The Company anticipates that it would not pay in excess
of 10% as a sales commission for any sales of the Units. If a broker-
dealer were to sell the Units, it is likely that such broker-dealer would be
deemed to be an underwriter of the securities as defined in Section 2(11)
of the Securities Act and the Company would be required to obtain a no-
objection position from the National Association of Securities Dealers,
Inc. regarding the underwriting and compensation terms entered into
between the Company and such potential broker-dealer. In addition, the
Company would be required to file a post-effective amendment to the
registration statement of which this Prospectus is a part to disclose the
name of such selling broker-dealer and the agreed underwriting and
compensation terms.
In order to comply with the applicable securities laws, if any, of
certain states, the Securities will be offered or sold in such states
through registered or licensed brokers or dealers in those states.
Sale of the Selling Securityholder Shares
The Company will not receive the proceeds of any sale of securities
by the Selling Securityholders pursuant to this Prospectus. The Selling
Securityholder Securities may be sold to purchasers from time to time
directly by and subject to the discretion of the Selling Securityholders.
The Selling Securityholders may from time to time offer their securities
for sale through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of
the securities for whom they may act as agents. Any underwriters,
dealers or agents who participate in the distribution of the securities may
be deemed to be "underwriters" under the 1933 Act and any discounts,
commissions or concessions received by any such underwriters, dealers
or agents may be deemed to be underwriting discounts and commissions
under the 1933 Act.
At the time a particular offer is made by or on the behalf of the
Selling Securityholders, a Prospectus, including any necessary
supplement thereto, will be distributed which will set forth the number of
shares of Common Stock and other securities being offered and the
terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for the
Securities purchased from the Selling Securityholders, any discounts,
commissions and other items constituting compensation from the Selling
Securityholders, any discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling price to the public.
The securities sold by the Selling Securityholders may be sold fring
price that is fixed or that may vary from transaction to transaction
depending upon the time of sale or (ii) at prices otherwise negotiated at
the time of sale. Such prices will be determined by the Selling
Securityholders or by agreement between the Selling Securityholders and
any underwriters.
In order to comply with the applicable securities laws, if any, of
certain states, the securities will be offered or sold in such states through
registered or licensed brokers or dealers in those states. In addition, in
certain states, the securities may not be offered or sold unless they have
been registered or qualified for sale in such states or an exemption from
such registration or qualification requirement is available and with which
the Company has complied.
Under applicable rules and regulations promulgated under the
Exchange Act, any person engaged in a distribution of securities may not
simultaneously bid for or purchase securities of the same class for a
period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder in connection with
transactions in the securities during the effectiveness of the Registration
Statement of which this Prospectus is a part.
The Company will pay all of the expenses incident to the registration
of the securities of the Selling Securityholders (including registration
pursuant to the securities laws of certain states) other than commissions,
expenses, reimbursements and discounts of underwriters, dealers or
agents, if any.
LEGAL MATTERS
Legal Proceedings
The Company is not a party to any litigation and management has
no knowledge of any threatened or pending litigation against the
Company.
EXPERTS
The financial statements in this Prospectus have been included in
reliance upon the report of McBride, Shopa and Company, independent
certified public accountants, given on the authority of that firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1
(the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information contained in the Registration Statement. For further
information regarding the Company and the securities offered hereby,
reference is made to the Registration Statement, including all exhibits
and schedules thereto, which may be inspected without charge at the
public reference facilities of the Commission's Washington, D.C. office,
450 Fifth Street, N.W., Washington, D.C. 20549. Each statement
contained in this Prospectus with respect to a document filed as an
exhibit to the Registration Statement is qualified by reference to the
exhibit for its complete terms and conditions.
The Company will be subject to the informational requirements of
the Securities Exchange Act of 1934 ("Exchange Act") and in
accordance therewith will file reports and other information with the
Commission. Reports, proxy statements and other information filed by
the Company can be inspected and copied on the Commission's home
page on the World Wide Web at http://www.sec.gov or at the public
reference facilities of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following Regional
Offices: 7 World Trade Center, Suite 1300, New York, N.Y. 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois.
60661-2511. Such material can also be inspected at the New York,
Boston, Midwest, Pacific and Philadelphia Stock Exchanges. Copies can
be obtained from the Commission by mail at prescribed rates. Request
should be directed to the Commission's Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
FINANCIAL STATEMENTS
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 1997
INDEX
Page
AUDITORS= REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2-3
Statement of Operations 4
Statement of Stockholders= Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7-17
<PAGE>
Independent Auditors Report
To the Members
HDN, Inc.
Greenville, Delaware
We have audited the accompanying balance sheet of HDN, Inc. (a
development stage company) as of June 30, 1997 and the related
statements of operations, stockholders= equity, and cash flows for the
period from inception (December 16, 1996) to June 30, 1997. These
financial statements are the responsibility of 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 HDN, Inc. (a development
stage company), as of June 30, 1997 and the results of its operations,
changes in stockholders= equity and cash flows for the period from
inception (December 16, 1996) to June 30, 1997.
Wilmington, Delaware
August 29, 1997<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 1997
ASSETS
CURRENT ASSETS
Cash $ 516,955
Due from stockholders 100
Employee loan 400
TOTAL CURRENT ASSETS $ 517,455
PROPERTY AND EQUIPMENT
Equipment $ 6,774
Furniture and fixtures 369
7,143
DEPOSITS ON EQUIPMENT AND FURNITURE 47,496
TOTAL PROPERTY AND EQUIPMENT 54,639
OTHER ASSETS
Security deposits 9,000
TOTAL ASSETS $581,094
LIABILITIES
CURRENT LIABILITIES
Accounts payable $71,053
Accrued expenses 58,386
TOTAL CURRENT LIABILITIES $129,424
COMMITMENTS -
STOCKHOLDERS EQUITY
COMMON STOCK, $.001 par value,
20,000,000 shares authorized,
7,800,000 shares issued
and outstanding 7,800
PREFERRED STOCK, 11.25% cumulative
convertible, $.001 par value,
1,000,000 shares authorized,
81,300 shares issued and
outstanding 81
ADDITIONAL PAID-IN CAPITAL 684,161
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (240,372)
TOTAL STOCKHOLDERS' EQUITY 451,670
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 581,094
See notes to financial statements.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (DECEMBER 16, 1996)
TO JUNE 30, 1997
REVENUE $ -
OPERATING EXPENSES
Bank charges 93
Consulting and fees 20,454
Licenses 75,050
Office expenses 776
Other expenses 12,135
Production costs 24,500
Professional fees 640
Rent 3,600
Repairs and maintenance 1,261
Salaries 58,371
Supplies 1,460
Telephone and pagers 7,602
Travel and entertainment 34,430
TOTAL OPERATING EXPENSES 240,372
NET LOSS $240,372
LOSS PER SHARE
Primary $ 0.03
Fully diluted $ 0.03
See notes to financial statements.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (DECEMBER 16, 1996)
TO JUNE 30, 1997
Deficit
Accumulated
Common Stock Preferred Additional During the
$.001 Par Value $.001 Par Paid-In Development
Value Capital Stage
Shares Amount Shares Amount
Common stock,
shares issued for
cash and services
rendered 7,800,000 $ 7,800
Preferred stock,
shares issued for
cash net of
issuance costs
of $128,758 81,300 $ 81 $684,161
Net loss, for the
period from
inception (December
16, 1996) to
June 30, 1997________ $(240,372)
7,800,000 $ 7,800 81,300 $ 81 $ 684,161 $(240,372)
See notes to financial statements.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (DECEMBER 16, 1996)
TO JUNE 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(240,372)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization -
Consulting and fees 2,500
(Increase) decrease in:
Employee loan (400)
Increase (decrease) in:
Accounts payable 71,053
Accrued expenses 58,371
NET CASH USED BY OPERATING ACTIVITIES (108,848)
CASH FLOWS FROM INVESTING ACTIVITIES
Equipment purchases and deposits (54,639)
Security deposits (9,000)
NET CASH USED BY INVESTING ACTIVITIES (63,639)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from stock issuance 689,442
NET CASH PROVIDED BY FINANCING ACTIVITIES 689,442
NET CHANGE IN CASH 516,955
CASH, Beginning of period -
CASH, End of period $ 516,955
SUPPLEMENTAL DISCLOSURES
Noncash financing activity:
Common stock issued for
professional services
rendered $ 2,500
See Notes to financial statements
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1 THE COMPANY
HDN, Inc. (the Company) was incorporated on December 16, 1996
in the state of Delaware. The Company has secured copyright and
trademark rights to develop, own and operate a new, unique and high-
technology approach to dating. By using the infomercial concept, which is
ordinarily 30 to 60 minutes of paid TV programming, the Company will
provide a forum where individuals can be interviewed and develop a short,
brief video about themselves and their interest in dating. That video will
then air on the Home Dating Network infomercial. Interested parties can
then call into a voice mailbox system, leaving his or her confidential
information in accordance with voice mail instructions. As the interested
party creates the voice message, he or she will be able to leave a detailed
description of themselves as prescribed by the Home Dating Network and
the video participant. This allows the entire process to be elevated to new
heights and into the next century.
The Company is in the development stage and its efforts through
June 30, 1997 have been principally devoted to organizational activities,
product development, and raising capital. As such, the accompanying
financial statements should not be regarded as typical for normal operating
periods. The Company anticipates that it will incur substantial additional
losses during its developmental stage which is expected to continue to the
end of 1997. The Company is a December 31 year end.
The Company has issued 81,300 shares of its 11.25% cumulative
convertible preferred stock in a private placement in exchange for
$684,242 in cash, which is net of $128,758 in issuance costs. Following
the closing of this private placement, the Company intends to file a Form
S-1 Registration Statement with The Securities and <PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
THE COMPANY (Cont=d.)
Exchange Commission for a proposed initial public offering of
2,000,000 shares of common stock at $5.00 per share. The Company
anticipates that its proposed initial public offering will be filed within
approximately 90 days following the closing of its private placement. The
expected gross total to be raised from these offerings is $10,000,000,
general market conditions and other factors permitting. The net proceeds
of the preferred stock are intended to develop and produce infomercials, to
develop a highly effective and motivational marketing campaign, to
acquire air time on targeted television and cable networks, and to cover its
operational and overhead expenses. The net proceeds of the common
stock are intended for significant capital expenditures and working capital.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
This summary of significant accounting policies is presented to
assist in understanding the Company=s financial statements. The financial
statements are representations of the Company=s management who are
responsible for their integrity and objectivity. The accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Business Activity and Credit Risk Concentration
Revenue will be generated primarily from broadcast revenue,
which is the Company=s share of earnings from the 900 number used by
the interested party to call into the voice mailbox system in response to a
specific <PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Cont=d.)
Business Activity and Credit Risk Concentration (Cont=d.)
video. The Company expects minimal credit risk from broadcast
revenunsored events and features.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with a
maturity of three months or less to be cash equivalents for the purposes of
determining cash flows.
The Company has cash balances at financial institutions amounting
to $516,955 with bank balances of $567,658 as of June 30, 1997. The
bank balances are covered by federal depository insurance up to $164,640.
Property and Equipment and Depreciation
Property and equipment are recorded at cost and depreciated over
their estimated useful lives using the straight line method. There was no
depreciation expense for the period because the assets had not yet been
placed in service.
Revenue Recognition
Broadcast revenue will be recognized in the period the 900 number
is used. Membership fees will be recognized over the membership period.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Cont=d.)
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires that management make
estimates and assumptions which affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Income Taxes
The Company incurred a net operating loss for the developmental
period ended June 30, 1997. The Company expects to have a net loss for
the year ended December 31, 1997. No tax prosses can be carried
forward to offset future taxable income until 2012.
Lossing of 7,812,444 shares. This calculation assumes the
conversion of the preferred stockon stock equivalent and is included in the
calculation of both loss per share amounts.<PAGE>
H
The Company is considered a development stage company because
as of June 30, 1997 it has not begun operations and it has primarily
devoted all of its efforts to establishing its new business.
NOTE 3 RELATED PARTY TRANSACTIONS
The Company has licensed the trademarks and servicemarks,
including the name AHome Dating Network@, from the Home Dating
Network, L.L.C., a Delaware L.L.C. owned by the Chief Executive
Officer and President of the Company. Although the license agreement is
not an arm=s-length transaction, the Company deems the licensing fee
and royalty fee are deemed reasonable and customary in the industry.
NOTE 4 TRADEMARKS, COPYRIGHTS AND LICENSES
The Company has entered into an exclusive non-assignable and
non-transferable worldwide licensing agreement with The Home Dating
Network, L.L.C. (the AL.L.C.@), a Delaware limited liability company,
to license the copyrighted AHome Dating Network@ logo and
servicemarks. The Company acquired the rights and the overall concept
for the Home Dating Network from the L.L.C., together with existing
video productions and formats, pursuant to an agreement executed between
the two entities. The agreement continues in effect until the expiration
date of the last to expire of the licenses trademarks and copyrights at
which time no additional royalties will be due to the L.L.C. for the
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
TRADEMARKS, COPYRIGHTS AND LICENSES (Cont=d.)
use of such logo and trademarks. The agreement requires the
payment by the Company to the L.L.C. of a licensing fee of $150,000 for
the initial year of use and an annual royalty fee to the greater of (i) 1% of
the annualized net earnings derived by the Company or (ii) $100,000. In
the event that the Company fails to pay the licensing or royalty fees, the
L.L.C. may terminate the licensing agreement upon written notice to the
Company. The Company has a 30-day period in which to cure any such
failure to make payment on the fees. The Company has paid $12,000
toward the licensing payment to the L.L.C.
NOTE 5 DUE FROM STOCKHOLDERS
Due from stockholders represents a temporary advance to a
stockholder. The Company expects to collect these funds within the
current fiscal year.
NOTE 6 COMMITMENTS
The Company has been assigned a contract from HDN, L.L.C., a
consulting agreement dated November 1, 1996. The consulting contract is
with Hanover Mercantile Corporation (the Consultant). The Consultant
will assist the Company in raising funds to implement its business plan and
for a possible Private and Initial Public Offering. The Consultant will
advise the Company on approaches, strategies, procedures, and structures
relating to participation by financing sources. The Consultant shall also
identify and qualify financing sources, and participate in related<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
COMMITMENTS (Cont=d.)
discussions and negotiations. The Consultant will be entitled to
compensation at a rate of five percent of the amount of funding
contributed to the Company by financing sources. In the event of a
funded offering, the Company will engage the Consultant for renewable
two year periods to provide public relations services at a rate of $5,000
per month plus expenses. The Consultant owns 2,000,000 shares of the
outstanding common stock.
NOTE 7 DESCRIPTION OF SECURITIES
Preferred Stock
The Company issued 81,300 shares of its Preferred Stock in a
private placement at $10 per share. The maximum number of shares
offered in their private placement was 1,000,000 shares. The Preferred
Stock is convertible, at the option of the holder, for a period of 24 months
beginning on the effective date of the proposed initial public offering into
common voting shares of the Company at a conversion ratio of eight (8)
shares ofitled to receive, when, as and if declared by the Board of
Directors, cash dividends at the rate of 11.25% per annum, payable semi-
annually on June 30 and December 31 of each year, commencing on the
first of such dates to occur after the issue date. <PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
DESCRIPTION OF SECURITIES (Cont=d.)
Preferred Stock (Cont=d.)
Dividends will be cumulative from the date of first issuance of the
Preferred Stock and will be payable to holders of record as they appear on
the stock books of the Company on such record dates as are fixed by the
Board of Directors.
The Preferred Stock will have priority as to dividends over the
common stock and any other series or class of the Company=s stock
hereafter issued that ranks junior as to dividends to the Preferred Stock
(Ajunior dividend stock@), and no dividend (other than dividends payable
solely in common stock or any other series or class of the Company's
stock hereafter issued which ranks junior as to dividends and as to
liquidation rights to the Preferred Stock) may be paid on, and no purchase,
redemption or other acquisition may be made by the Company of, any
junior dividend stock unless all accrued and unpaid dividends on the
Preferred Stock have been paid or declared and set apart for payment.
In the case of the voluntary or involuntary liquidation, dissolution
or winding up of the Company, holders of shares of Preferred Stock are
entitled to receive the liquidation preference of $10 per share, plus an
amount equal to any accrued and unpaid dividends to the payment date,
before any payment or distribution is made to the holders of Common
Stock or any other series or class of the Company=s stock hereafter
issued that ranks Junior as to liquidation rights to the Preferred Stock.
After payment in full of the liquidation preference of the shares of the
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
DESCRIPTION OF SECURITIES (Cont=d.)
Preferred Stock (Cont=d.)
Preferred Stock, the holders of suc stock carries no conversion
rights and is not subject to redemption or to any sinking fund provisions.
All shares of common stock are entitled to share equally in dividends from
sources legally available therefore when, as and if declared by the Board
of Directors and, upon liquidation or dissolution of the Company, whether
voluntary or involuntary, to share equally in the assets of the Company
available for distribution to stockholders.
Each holder of common stock is entitled to one vote per share on
all matters on which such stockholders are entitled to vote.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
DESCRIPTION OF SECURITIES (Cont=d.)
Common Stock (Cont=d.)
The Company currently has 7,800,000 shares of common stock
issued and outstanding. Of these shares, none are freely tradable without
restriction or registration under the Act. All of the shares (ARestricted
Shares@) were issued and sold by the Company pursuant to the Aprivate
placement@ exemptions under Regulation D and/or Section 4(6) of the
Act, as promulgated by the Securities and Exchange Commission,
Washington, D.C. 20549. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated) who has
beneficially owned his or her Restricted Shares for at least one year,
including persons who may be deemed Aaffiliates@ of the Company, as
that term is defined under the Act, would be entitled to sell in broker=s
transactions within any three month period a number of shares that does
not exceed the greater of one percent of the then outstanding shares of the
Company=s common stock or the average weekly trading volume in the
over-the-counter market in the Company=s common stock during the four
calendar weeks preceding such sale. A person who is not deemed to have
been an affiliate of the Company at any time during the 90 days preceding
a sale, and who has beneficially owned his or her Restricted Shares for at
least one year, would be entitled to sell such shares under Rule 144
without regard to the volume limitations described above, provided that
certain public information concerning the Company as required by the
Rule is available.
<PAGE>
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 8 LEASE COMMITMENT
The Company leases an office facility under a non-cancelable
operating lease which expires in June 2000. The lease requires monthly
rental payments of $3,000 for the first year with a provision for annual
increases of five percent or the increase in the consumer price index,
whichever is greater, but not to exceed twelve percent. The Company has
an option of renewing the lease for an additional three year term.
The approximate minimum future rental payments under this
operating lease, as of June 30, 1997 are as follows:
Year Ending June 30,
1998 $36,000
1999 $37,800
2000 $39,690
<PAGE>
No dealer, salesman or any other person has been authorized to
make any representations other than those contained in this
prospectus, and, if given or made, such information or
representations may not be relied on as having been authorized by the
Company or by any of the Underwriters. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the
affairs of the Company since the date hereof. This Prospectus does not
constitute an offer to sell, or solicitation of any offer to buy, by any
person in any jurisdiction in which it is unlawful for any such person to
make such offer or solicitation. Neither the delivery of this Prospectus
nor any offer, solicitation or sale made hereunder, shall under any
circumstances create any implication that the information herein is
correct as of any time subsequent to the date of the Prospectus.
------------------------
TABLE OF CONTENTS
Prospectus Summary
The Company
Risk Factors
Distribution
Business
Use of Proceeds
Dilution
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Management
Conflicts of Interest
Principal Stockholders
Description of Capital Stock
Legal Proceedings
Legal Matters
Experts
Index to Financial Statements
Until 90 days after the release of the registered securities from the
Escrow Account, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligations of
dealers to deliver a Prospectus when Acting as underwriters and with
respect to their unsold allotments or subscriptions.<PAGE>
H D N, INC.
2,000,000 Units, 2,000,000 Shares of
Common Stock and 2,000,000 Redeemable
Warrants contained in the Units
and 2,000,000 Shares of Common
Stock underlying such Warrants
----------
PROSPECTUS
----------
January ____, 1998
=======================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than
the filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 8,100
Fees and Expenses of Accountants 20,000
Fees and Expenses of Counsel 100,000
Blue Sky Fees and Expenses 1,000
Printing and Engraving Expenses 500
Miscellaneous Expenses 500
Total $130,000(2)
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated in Delaware. Under Section 145 of
the General Corporation Law of the State of Delaware, a Delaware
corporation has the power, under specified circumstances, to indemnify
its directors, officers, employees and agents in connection with actions,
suits or proceedings brought against them by a third party or in the right
of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred in any
action, suit or proceeding. The Certificate of Incorporation and the
By-laws of the Company provide for indemnification of directors and
officers to the fullest extent permitted by the General Corporation Law of
the State of Delaware.
The General Corporation Law of the State of Delaware provides that
a certificate of incorporation may contain a provision eliminating the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided
that such provision shall not eliminate or limit the liability of a director
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders, (ii) for actf the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit. The Company's Certificate of Incorporation contains such a
provision.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
As listed below, the Company issued shares of its Common Stock par
value $.001 per share to the following individuals or entities for the
consideration as listed in cash. The sales were made in reliance upon
the exemption from registration provided by Section 4(2) of the Securities
Act of 1933.
Date Name Shares Consideration
On January 1, 1997, the Company issued 7,800,000 shares of its
Common Stock to eight persons, including the officers and directors of
the Company, in a private placement transaction for aggregate
consideration of $7,800, its par value.
1/1/97 Norma Veach 2,650,000 $ 2,650
1/1/97 Donald Mattei 2,650,000 2,650
1/1/97 Hanover Mercantile
Corporation 2,000,000 2,000
1/1/97 Jitendra R. Shah 100,000 100
1/1/97 John Geuting 100,000 100
1/1/97 Dallas Winslow 100,000 100
1/1/97 Darleen Hansen 100,000 100
1/1/97 Robert Veach 100,000 100
12/10/97 Charles Esham & Bruce Sokoloff 2,000 2
12/10/97 Michael London 5,000 5
12/10/97 Kim Hall 1,000 1
Sales of Preferred Shares made pursuant to Rule 506 of Regulation D of
the Securities Act of 1933, as amended:
5/1/97 Marshall G. Long 500 $ 5,000
5/1/97 Ronald E. Yun 250 2,500
5/1/97 Donald A. Bratton 1,000 10,000
5/1/97 Jerry L. Long 250 2,500
5/1/97 Albert F. Anft III 1,000 10,000
5/1/97 John DiLemme 4,000 40,000
5/1/97 Ronald D. Maloney 6,250 62,500
5/1/97 Robert J. Maloney 4,000 40,000
5/1/97 Pete C. Moncheck 3,750 37,500
5/1/97 Marc D'Anna 40,000 400,000
5/1/97 Gary A. Owings 250 2,500
5/1/97 C. John Thomson 500 5,000
6/12/97 Darrel Seahorn 500 5,000
6/12/97 Morgan H. Waldron Jr. 2,500 25,000
6/12/97 Peggy E. Brady
Chester E. Sajewski Jr. 350 3,500
6/12/97 G. Steve Waldron 1,000 10,000
6/12/97 Jesse L. Thomas 250 2,500
6/12/97 Richard Z. Hricak 1,000 10,000
6/12/97 Mary C. Cardisco 250 2,500
6/25/97 Michael Manzo 300 3,000
6/25/97 Gary Meglino 500 5,000
6/25/97 Carlo Schiattraella 2,000 20,000
6/25/97 Ronald Schoff 250 2,500
6/25/97 Daniel P. Maloney 2,500 25,000
6/25/97 Donald S. Haltli 2,000 20,000
8/14/97 Michael Master 500 5,000
8/14/97 Christopher S. Duff 1,100 11,000
8/14/97 Carolyn W. Christy 50 500
8/14/97 Albert Cipolloni Jr. 125 1,250
8/14/97 George J. Cipolloni Jr. 125 1,250
8/14/97 Joseph J. De Simone 1,100 11,000
8/14/97 Frederick W. Ryder Jr. 250 2,500
8/14/97 Brenda L. Evans 250 2,500
8/12/97 Joseph A. Cipolloni 250 2,500
9/5/97 Doug Mollo 250 2,500
9/5/97 Rebecca Jones 100 1,000
9/5/97 P.R. Matthews 500 5,000
9/5/97 Patricia A. Yarusso 500 5,000
9/5/97 William F. Nyce 250 2,500
9/5/97 Blanche A. Elbourne 300 3,000
11/1/97 Benny Chetcuti, Jr. 500 5,000
11/1/97 Mark S. Monchek 500 5,000
11/1/97 John Young 62.5 625
11/10/97 Keith F. Anderson 500 5,000
11/10/97 Michael Gerace 1,500 15,000
11/10/97 David L. Chua 1,000 10,000
11/10/97 Edward L. Cole, Jr. 440 4,250
11/10/97 Anthony W. Carapella, Jr. 2,000 20,000
11/10/97 David O. Moore 500 5,000
11/20/97 Mary L. Catona 1,250 12,500
11/20/97 Susan V. Daywitt 1,250 12,500
11/20/97 Judyann S. Gillespie 630 6,300
11/20/97 Marie T. Carey 250 2,500
11/20/97 Elva M. Bernard 250 2,500
11/20/97 Joseph Gillen 500 5,000
11/20/97 Dale H. Wyeth 500 5,000
11/20/97 Norman A. Leopold 250 2,500
11/20/97 John Geuting 1,000 10,000
12/1/97 Mary Green 500 5,000
12/1/97 Jack Kouzi 2,310 23,100
12/1/97 Kevin McCullian 10,000 100,000
12/1/97 Jon Stone 1,000 10,000
12/1/97 Bruce Ostrow 50 500
12/1/97 William F. Burrows 500 5,000
12/1/97 Anthony Manginelli 1,000 10,000
12/1/97 James Gillespie, Sr. 650 6,500
12/1/97 Thomas E. McCullian 500 5,000
12/1/97 Susan Carey 1,000 10,000
12/1/97 Thomas W. McCullian 10,000 100,000
12/1/97 Charles J. Baldwin 1,800 18,000
12/1/97 Or Shachar 600 6,000
12/1/97 Daniel O. Black 250 2,500
12/1/97 James J. Gennello 5,000 50,000
12/1/97 Eugene Geyer 3,000 30,000
12/1/97 Ted Fanelli 350 3,500
12/1/97 Albert Cipolloni 250 2,500
12/1/97 Rosemary Gennello 250 2,500
12/1/97 Michael Gerace 8,503 85,030
12/1/97 Susan McGovern 250 2,500
12/1/97 Joseph F. Trusi 250 2,500
12/1/97 Kevin P. Cooney 250 2,500
12/1/97 Timothy E. Hammond 50 500
12/1/97 James Gillespie, Jr. 575 5,750
12/1/97 Edward L. Cole III 10 100
12/1/97 Linda Evans 10 100
12/1/97 Manoj Khandelwal 500 5,000
12/1/97 Susan M. Natalie 250 2,500
12/1/97 Alexander J. Simkiw 500 5,000
12/1/97 Patrick McCoy 500 5,000
12/1/97 John Steven Cigler 500 5,000
12/1/97 Basant K.Khandelwal 500 5,000
12/1/97 Robert Olsen 50 500
12/1/97 Corbin C. Mendenhall, Jr. 250 2,500
12/1/97 Steven J. Vitalo 300 3,000
12/1/97 Frank L. D'Elia 500 5,000
12/1/97 Joanne T. Burke 2,250 22,500
12/1/97 Philip Bonner 375 3,750
12/1/97 Lachman Dass Gupta 250 2,500
12/1/97 Jerome A. Wenger 1,000 10,000
12/1/97 Gerald Eichhorn 5,000 50,000
12/31/97 Pierce Mill Associates, Inc., 5-year warrant exercisable for
the purchase of 250,000 shares of common stock of the
Company at an exercise price of $1.00 per share.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Certificate of Incorporation
3.2 By-Laws of the Company
4.1* Form of Common Stock Certificate
4.2* Form of Warrant and Warrant Agreement
5.1* Opinion of Cassidy & Associates
10.1* Licensing Agreement
10.2* Agreement with American Television Time, Inc.
24.1 Consent of Accountant
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
- ---------------
* To be filed by Amendment.
(b) The following financial statement schedules are included
in this Registration Statement.
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission is that such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and wi issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, H D N, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly
caused this Registration Statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, Delaware on the 24th day of December, 1997.
H D N, INC.
By: /s/ Donald Mattei
Donald Mattei,
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Norma L. Veach Director, 12/24/97
Chief Executive Officer
/s/ Donald Mattei Director, President 12/24/97
/s/ Heatherlynn Colburn Director 12/23/97
/s/ Jitendra R. Shah Director 12/24/97
/s/ Hector I. Hernandez Director 12/23/97
/s/ Robert Veach Director 12/24/97
FIRST AMENDMENT TO THE
CERTIFICATION OF INCORPORATION
OF
HDN, INC.
First
The name of the Corporation is HDN, Inc. It's corporate office to be
located at 1813 Marsh Road, Suite H, Wilmington, DE 19810 or at
such convenient location as desired by the corporation.
Second
Its registered office in the State of Delaware is to be located at the
office of J. Dallas Winslow, Jr., Esq., 803 Shipley Street, Wilmington,
New Castle County and State of Delaware and its registered agent at that
location is J. Dallas Winslow, Jr., Esq.
Third
The purpose of the corporation is to engage in any lawful activity for
which corporations may be organized under the General Corporation
Law of Delaware.
Fourth
The total number of shares of stock which this corporation is
authorized to issue is TWENTY MILLION (20,000,000) shares of
Common Stock, all of which shares will be .001 par value, per share and
ONE MILLION (1,000,000) shares of Preferred Stock, all of which
shares will be .001 par value, per share.
Fifth
The name and mailing address of the incorporator is as follows:
J. Dallas Winslow, Jr., Esq.
803 Shipley Street
Wilmington, DE 19801
Sixth
In furtherance and not in limitation of the powers ordered by the
laws of the State of Delaware, and Board of Directors are expressly
authorized:
To make, alter, amend and repeal the by-laws;
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to alter or
abolish any such reserve; to authorize and cause to be executed
mortgages and liens upon the property and franchises of this
corporation;
To designate, by resolution passed by a majority of the whole board,
one or more committees, each to consist of two or more directors, which
committees, to be extent provided in such resolution or in the by-laws of
the corporation, shall have and may exercise any or all of the powers of
the Board of Directors in the management of the business and affairs of
this corporation and have power to authorize the seal of this corporation
and to be affixed to all papers which may require it;
From time to time to determine whether and to what extent and at
what times and places and under what conditions and regulations the
books and accounts of this corporation, or any of them other than the
stock ledger, shall be open to the inspection of the stockholders, and no
stockholders shall have any right to inspect any account or book or
document of the corporation, except as conferred by law or authorized by
resolution of the directors or of the stockholders;
To sell, lease or exchange all of its property and assets, including its
good will and its corporate franchised, upon such terms and conditions
and for such consideration, which may be in whole or in part shares of
stock in, and/or other securities of, any other corporation or
corporations, when and as authorized the affirmative vote of the holders
of a majority of the stock issued and outstanding having voting power
given at a stockholders, meeting duly called for that purpose, or when
authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding.
This corporation may in its by-laws confer powers additional to the
foregoing upon the directors, in addition to the powers and authorities
expressly conferred upon then by law.
Seventh
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this corporation or any creditor or
stockholder thereof, or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of
Title 8 of the Delaware Code, or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation
under the provisions of Section 279 of Title 8 of Delaware Code, order a
meeting of the creditors or class of creditors, and/or of the stockholders
of this corporation, as the case may be, to be summoned in such manner
as the court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders
or class of stockholders of this corporation, as WE, THE
UNDERSIGNED, being the incorporators, for the purpose of forming a
corporation, in pursuance of an Act of the Legislature of the State of
Delaware entitled "An Act Providing a General Corporation Law"
(approved March 10, 1989) as codified an reenacted as Title 8, Delaware
Code of 1953, and the acts amendatory thereof and supplemental thereto,
do make and file this Certificate of Incorporation, hereby declaring and
certifying that the facts herein stated are true and accordingly hereunder
have set my Hand and Seal the 1st day of October, 1997.
IN THE PRESENCE OF:
/s/Donald Mattei, President
/s/Hector Hernandez, Secretary
STATE OF VIRGINIA )
COUNTY OF FAIRFAX )
BE IF REMEMBERED that on this 1st day of October, A.D., 1997,
personally appeared before me the Subscriber, a Notary Public for the
State and County aforesaid, Donald Mattei and Hector Hernandez, the
party to the foregoing Certificate of Incorporation, known to me
personally to be such, and acknowledge the said Certificate to be his/her
act and deed that the facts therein stated were truly set fourth.
GIVEN under my Hand and Seal of the office the day and year
aforesaid.
Notary Public
BYLAWS
OF
HDN, INC.
___________________
Article I.
1.00 The principal office of the Corporation is
located at 18 Augustine Cutoff, Wilmington, Delaware 19803.
The corporation may have other offices, within or without the
State of Delaware as the board of directors may designate or
as the business of the corporation may require.
1.01 The registered office of the corporation, and
the address thereof, may be changed by the board of directors.
Article II.
2.00 Annual Meeting. The annual meeting of the
shareholders will be held on the 15th day of January in each
year, beginning with the year 1997, or at any other day within
that month which is fixed by the board of directors, for the
purpose of electing directors and for transaction of any other
business that may come before the meeting. If the day fixed
for the annual meeting is a legal holiday in the State of
Delaware, the meeting shall be held on the next succeeding
business day. If the election of directors is not held on the
day designated for any annual meeting of the shareholders or
at any adjournment of the meeting, the board of directors
shall call for the election to be held at a special meeting of
the shareholders as soon thereafter as possible.
2.01 Special Meetings. Special meetings of
shareholders, for any purpose, may be called by the president
or by the board of directors.
2.02 Meeting place. The board of directors may
designate any place within or without the State of Delaware,
as the meeting place for any annual meeting or for any special
meeting called by the board of directors. A waiver of notice
signed by all shareholders entitled to vote at a meeting may
designate any place, within or without the State of Delaware,
as the place for the meeting described in the waiver. If no
designation is made, or if a special meeting is called in a
different manner than that described in this Section, the
place of the meeting shall be the principal office of the
corporation in the State of Delaware.
2.03 Notice of Meeting. Written notice stating the
place, day and hour of the meeting and, in case of a special
meeting, the purpose for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before
the date of the meeting, either personally or by mail, to each
shareholder of record entitled to vote at the meeting. If
mailed, the notice shall be deemed to be delivered when
deposited in the United States mail, addrpears on the stock
transfer books of the corporation, with postage prepaid.
2.04 Quorum. At least fifty one (51%) percent of the
shareholders of record, represented in person or by proxy,
will constitute a quorum at a meeting of shareholders.
2.05 Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing
by the shareholder or by his or her authorized attorney-in-
fact. A proxy must be filed with the secretary of the
corporation before or at the time of the meeting. No proxy
will be valid after eleven months from the date of its
execution, unless the proxy provides otherwise.
2.06 Voting of Shares. Each outstanding share
entitled to vote shall be entitled to one vote upon each
matter submitted to shareholders.
2.07 Voting of Shares by Certain Holders. Shares in
the name of another corporation may be voted by the officer,
agent or proxy prescribed by that corporation's bylaws, or, in
the absence of a bylaw provision, as the board of directors of
that corporation determines.
2.08 Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action to be taken, is signed by
all of the shareholders entitled to vote on the action.
Article III.
3.00 General Powers. The business and affairs of the
corporation will be managed by the board of directors.
Amendments to the bylaws shall be only upon the unanimous
consent of the board of directors.
3.01 Number, Tenure and Qualifications. The number
of directors of the corporation shall be Nine (9). Each
director shall hold office until the next annual meeting of
shareholders and until his or her successor has been elected
and qualified. Directors need not be residents of the State
of Delaware or shareholders of the corporation.
3.02 Regular Meetings. A regular meeting of the
board of directors will be held without any notice other than
this bylaw immediately after, and at the same place as, the
annual meeting of shareholders. The board of directors may
fix, by resolution, the time and place, either within or
without the State of Delaware, of additional regular meetings
without any notice other than the resolution.
3.03 Special Meetings. Special meetings of the board
of directors may be called by or at the request of the
president or any two directors. The person(s) authorized to
call special meetings of the board of directors may fix the
time and place, either within or without the State of
Delaware, of any special meeting of the board of directors
called by them.
3.04 Notice. Notice of any special meeting shall be
given at least seven days in advance in writing, delivered
personally or mailed to each director at his business,
address, or by telegram. If mailed, the notice shall be
deemed to be delivered when deposited in the United States
mail, addressed with postage prepaid. If notice is given by
telegram, the notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director
may waive notice of any meeting.
3.05 The attendance of a director at a meeting shall
constitute a waiver of notice of that meeting, unless the
director attends for the express purpose of objecting to tng
is not lawfully called or convened.
3.06 Quorum. A majority of the number of directors
fixed by Section 3.01 of this Article III shall constitute a
quorum for the transaction of business at any meeting of the
board of directors. If less than a majority is present at a
meeting, a majority of the directors present may adjourn the
meeting without further notice.
3.07 Manner of Acting. The act of the majority of
directors present at a meeting at which a quorum is present
shall be the act of the board of directors.
3.08 Action Without a Meeting. Any action required
or permitted to be taken by the board of directors at a
meeting may be taken without a meeting if a consent in
writing, stating the action to be taken, is signed by all of
the directors.
3.09 Vacancies. Any vacancy in the board of
directors may be filled by the affirmative vote of a majority
of the remaining directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his or her
predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors may be filled
by election by the board of directors for a term of office
continuing the next election of directors by the shareholders.
3.10 Compensation. By resolution, the board of
directors may direct that each director be reimbursed for
expenses actually incurred in attending each meeting of the
board of directors. The board of directors, by resolution,
may also set an annual salary for each director, a stated sum
for attending a meeting of the board of directors, or both.
This payment shall not preclude any director from serving the
corporation in any other capacity and receiving compensation
for the service.
3.11 Presumption of Assent. A director of the
corporation who is present at a meeting of the board of
directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken,
unlappears in the meting, or unlessitten dissent to the action
with the person acting as the secretary of the meeting before
the adjournment, or forwards his dissent by registered mail to
the secretary of the corporation immediately after the
adjournment of the meeting. This right to dissent does not
apply to a director who voted in favor of the action.
Article IV.
4.00 Number. The officers of the corporation shall
be a president, one or more vice-presidents (the number to be
determined by the board of directors), a secretary, and a
treasurer, each of whom shall be elected by the board of
directors. Other officers and assistant officers may be
elected or appointed by the board of directors. Any two or
more offices may be held by the same person, except the
offices of president and secretary.
4.01 Election and Term of Office. The officers of
the corporation shall be elected annually by the board of
directors at the first meeting of the board of directors
following the annual meeting of the shareholders. If the
election of officers is not held at the meeting, the election
shall be held as soon as convenient. Each officer shall hold
office until his successor has been elected and has qualified
or until he dies, resigns or has been removed in the manner
provided in Section 4.02 of this Article IV.
4.02 Removal. Any officer or agent may be removed by
the board of directors whenever in its judgement the removal
will serve the best interests of the corporation.
4.03 Vacancies. A vacancy in any office for any
reason may be filled by the board of directors for the
unexpired portion of the term.
4.04 President. The president is the principal
executive officer of the corporation and, subject to the
control of the board of directors, will supervise and control
all of the business and affairs of the corporation. He will
preside at all the meetings of the shareholders. He may sign,
with the secretary or any other officer of the corporation
authorized by the board of directors, certificates for share
of the corporation as well as deeds, mortgages, bonds,
contracts, or other instruments which the board of directors
has authorized to be executed. The president may not sign
these documents where their signing and execution has been
expressly delegated by the board of directors or by these
bylaws to some other officer or agent of the corporation or
where the law of the State of Maryland requires the documents,
he will perform all duties incident to the office of president
and all other duties as may be prescribed by the board of
directors.
4.05 The Vice-President(s). In the president's
absence, death, or inability or refusal to act, the vice-
president (or in the event there is more than one vice-
president, the vice-president in the order designated at the
time of their election; or in the absence of any designation,
then in the order of their election) shall perform the duties
of the president. When the vice-president is acting as
president, he shall have all the powers of and be subject to
all the restrictions upon the president. Any vice-president
may sign, with the secretary, certificates for shares of the
corporation and perform any other duties that may be assigned
by the president or by the board of directors.
4.06 The Secretary. The secretary shall: (a) keep
the minutes of the proceedings of the shareholders and of the
board of directors in one or more books provided for that
purpose; (b) see that all notices are given in accordance with
the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the corporation's
seal and see that the corporation's seal is affixed to all
documents that must be executed under its seal; (d) keep a
register of the address of each shareholder which had been
given to the secretary by each shareholder; (e) sign with the
president, or a vice-president, certificates for shares of the
corporation; (f) have general charge of the stock transfer
books of the corporation; and (g) perform all duties incident
to the office of secretary and any other duties that may be
assigned by the president or by the board of directors.
4.07 The Treasurer. The treasurer shall: (a) have
charge and custody of all funds and securities of the
corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source and deposit all the
corporation's money in the name of the corporation in the
banks, trust companies or other depositories that are selected
in accordance with the provisions of these bylaws; and (c) in
general perform all of the duties incident to the office of
treasurer and any other duties that may be assigned by the
president or by the board of directors. If required by the
board of directors, the treasurer will give a bond for the
faithful discharge of his duties in a specified sum and with
the surety or sureties designated by the board of directors.
4.08 Assistant Secretaries and Assistant Treasurer.
The assistant secretaries, when authorized by the board of
directors, may sign with the president or a vice-president
certificates for share of the corporation whose issuance has
been authorized by a resolution of the board of directors.
The assistant treasurer shall, if required by the board of
directors, give bonds for the faithful discharge of their
duties in specified sums and with sureties designated by the
board of directors. In general, the assistant secretaries and
assistant treasurers will perform those duties that are
assigned to them by the secretary or the treasurer, or by the
president of the board of directors.
4.09 Salaries. The salaries of the officers will be
fixed by the board of directors. No officer shall be denied a
salary because he or she is also a director of the
corporation.
Article V.
5.00 Contracts. The board of directors may authorize
one or more officers or agents to enter into any contract or
execute and deliver any instrument on behalf of the
corporation. This authority may be general or confined to
specific instances.
5.01 Loans. No loans shall be contracted on behalf
of the corporation and no evidences of indebtedness shall be
issued in its name unless authorized by a resolution of the
board of directors.
5.02 Checks, Drafts, Etc. All checks, drafts or
other orders for the payment of money, notes or other
evidences of indebtedness issued in the corporation's name
shall be signed by the officer and/or agent of the corporation
in the manner authorized by resolution of the board of
directors.
5.03 Deposits. All funds of the corporation not
otherwise employed shall be deposited to the credit of the
corporation in banks, trust companies or other depositories
that the board of directors selects.
Article VI.
6.00 Certificates for Shares. Certificates
representing shares of the corporation shall be in the form
specified by the board of directors. The certificates shall
be signed by the president or a vice-president and by the
secretary or an assistant secretary and sealed with the
corporate seal or a facsimile. The officers' signatures upon
a certificate may be facsimiles if the certificate is manually
signed by the corporation's transfer agent or registrar. Each
certificate will be consecutively numbered or otherwise
identified. The name and address of each person to whom
certificates are issued, with the number of shares represented
by the certificate and date of issue, shall be entered on the
stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled
and no new certificate will be issued until the former
certificate for a like number of shares has been surrendered
and canceled. In case of a lost, destroyed or mutilated
certificate, a replacement may be issued upon the terms and
indemnity to the corporation as the board of directors may
prescribe.
6.01 Transfer of Shares. Transfer of the
corporation's shares will be entered in the corporation's
stock transfer books only when authorized by the holder of
record or the holder's legal representative, who shall provide
proper evidence of his authority filed with the corporation's
secretary. No transfer of shares will be entered in the stock
transfer book unless the certificate representing the shares
has been surrendered for cancellation. The person or entity
in whose name shares are entered in the stock transfer ledger
shall be deemed to be the owner of the shares for all
purposes.
Article VII.
7.00 The fiscal year of the corporation shall begin
on the first day of January and end on the thirty-first day of
December in each year.
Article VIII.
8.00 The board of directors may declare and the
corporation may pay dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and
the corporation's Articles of Incorporation.
Article IX.
9.00 Whenever any notice must be given to any
shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the
Article of Incorporation or under the law of the State of
Delaware, a waiver of notice signed by the person or persons
entitled to the notice, whether before or after the time set
out in the notice, is equivalent to the giving of notice.
Article X.
10.00 These bylaws may be altered, amended or repealed and
new bylaws may be adopted by the Board of Directors at any
regular or special meeting of the Board of Directors.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Registration Statement on
Form S-1 of our report dated June 30, 1997, relating to the
audited financial statements of HDN, Inc. and to the reference
to our Firm under the caption "Experts" in the Prospectus.
McBride, Shopa and Company
Certified Public Accountants
Wilmington, Delaware
December 30, 1997
