As filed with the Securities and Exchange Commission on August 11, 1998
Registration No. 333-43803
========================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT #1 to
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 jurisdiction of (I.R.S. Employer (Primary Standard
incorporation or organization) Identification Number) Industrial
Classification
Code Number)
------------------------
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
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<S> <C> <C> <C> <C>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES REGISTERED PRICE OFFERING REGISTRATION
TO BE PER SHARE(1) PRICE FEE
REGISTERED
Units consisting
of 1 share of 2,000,000 $ 2.00 $4,000,000 $1,320
common stock,
$.001 par value,
and 1 warrant
Shares of Common
Stock contained 2,000,000 NA -- --
in Units
Warrants contained
in Units 2,000,000 NA -- --
Shares of Common
Stock underlying 2,000,000 3.00 6,000,000 1,980
Warrants
Shares of Common
Stock, $.001 1,250,164 1.25 1,281,418 423
par value (2)
Shares of Common
Stock underlying 250,000 1.00 250,000 83
underlying Pierce
Mill Warrant
Total $11,531,418 $3,805(3)
</TABLE>
(1) Based on Rule 457(f)(2).
(2) Shares of Common Stock to be sold by Selling Securityholders.
(3) $8,105 previously 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 January ____, 1998
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;
250,000 shares of Common Stock underlying
a common stock purchase warrant and 1,250,164
shares of Common Stock held by Selling Securityholders
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") at an offering
price of $2.00 per Unit.. 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 Networktm 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 Networktm
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 Networktm. 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 $3.00 per share,
subject to adjustment from time to time, for a period of 24-months
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 $4.00 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." As of the date hereof, the Company has not employed an
underwriter for the sale of the Securities 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. 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. 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, if any. See "USE OF PROCEEDS."
The Registration Statement of which this Prospectus is a part also
relates to the offer and sale of (i) 250,000 shares of Common Stock
underlying a common stock purchase warrant held by a securityholder of the
Company; and (ii) 1,250,164 shares of Common Stock of the Company held or to
be held by certain securityholders of the Company upon conversion of
156,270.5 shares of 11.25% cumulative convertible Preferred Stock (the
"Convertible Preferred Stock") held by such securityholders (collectively
referred throughout as the "Selling Securityholders"). 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 the
securities of the Company. The Selling Securityholders 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.
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PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNTS AND COMPANY (2)
COMMISSIONS(1)
Per Unit $ 2.00 N.A. $ 2.00
Total $ 4,000,000 N.A. $ 4,000,000
</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 August ____, 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 MARKET MAKERS 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 MARKET MAKERS TO
BUY OR SELL THE SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE
CAN BE GIVEN THAT ANY MARKET MAKING ACTIVITIES OF THE MARKET
MAKERS, IF COMMENCED, WILL BE CONTINUED.
CERTAIN SECURITIES HEREIN ARE TRANSFERRABLE WARRANTS.
IT IS POSSIBLE THAT THE WARRANTS MAY BE ACQUIRED BY PERSONS
RESIDING IN STATES WHERE THE COMPANY IS UNABLE TO QUALIFY THE
SHARES OF COMMON STOCK UNDERLYING THE WARRANTS FOR SALE UPON
EXERCISE. WARRANTHOLDERS IN THOSE STATES WOULD HAVE NO CHOICE
BUT TO ATTEMPT TO SELL THEIR WARRANTS OR LET THEM EXPIRE
UNEXERCISED. IT IS ALSO POSSIBLE THAT THE COMPANY MAY BE
UNABLE, FOR UNFORESEEN REASONS, TO CAUSE A REGISTRATION
STATEMENT COVERING THE SHARES UNDERLYING THE WARRANTS TO BE IN
EFFECT WHEN THE WARRANTS ARE EXERCISABLE. IN THAT EVENT, THE
WARRANTS MAY EXPIRE UNLESS EXTENDED BY THE COMPANY AS PERMITTED
BY THE WARRANTS BECAUSE A REGISTRATION STATEMENT MUST BE IN
EFFECT, IN ORDER FOR WARRANTHOLDERS TO EXERCISE THEIR WARRANTS.
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.
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 Networktm entertainment
infomercials which contain approximately 20 or more short video
personal profiles of individual clients as well as 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 Networktm. 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 Networktm, 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) 1,250,164 Shares issuable upon
exercise by the holders thereof of the conversion rights
contained in 156,270.5 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 17% 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 156,270.5 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.
TRADING MARKET
There is no current trading market for the Company's
securities. The Company will be listed in the daily quotation
sheets of the National Quotation Services, Inc. until such time
as it qualifies 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 on any such exchange or
that the Company will meet the admission requirements 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 unaudited financial
information concerning the Company as of March 31, 1998.
Current Assets $ 95,741
Property and Equipment 142,637
Intangibles and Deferred Costs 220,264
Security Deposits 6,000
Total Assets $ 464,642
Total Current Liabilities $ 189,577
Shareholders Equity 275,065
Total Liabilities and Stockholders' Equity $ 464,642
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 unaudited financial statements.
Potential investors should also read the report and related
financial statements of December 31, 1997 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 156,270.5
shares of Common Stock convertible into an aggregate of
1,250,164 within 24 months of the Effective Date hereof. See
"DESCRIPTION OF SECURITIES".
The Company produces and broadcasts a Home Dating
Networktm infomercial integrating short video personals of
individual Home Dating Networktm 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 Networktm 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
Networktm 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 Networktm. 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
the date hereof has approximately 3,500 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 two 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 Networktm infomercial and Internet website. The Company
has limited experience and there is limited information
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 no 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 5,500,000 shares of
the Company's Common Stock, approximately 90.7% 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
68.2% 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 6,058,000 shares of Common Stock
outstanding and 156,270.5 shares of 11.25% Convertible Preferred
Stock outstanding, convertible into 1,250,164 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 156,270.5
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.
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 Company's Securities. 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's Securities will initially
be listed in the daily quotation sheets of the National
Quotation Bureau, Inc., commonly called the "Pink Sheets. The
Company's Securities will continue to be listed in the Pink
Sheets until such time as the Company qualifies and applies for
admission to quotation of the Securities on the NASD OTC
Bulletin Board. A company must have at least one market maker
in place to sponsor its securities for acceptance for listing on
the NASD OTC Bulletin Board. 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.
NO UNDERWRITER OR MARKET MAKER
There is no underwriter for the offering of the
Securities. The Securities 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
or expenses incurred in connection with the offer and sale of
the Securities. 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.
As of the date hereof, the Company has not located a
market maker or broker/dealer and there can be no assurance that
the Company will be able to locate a market maker for its
Securities. A company must have at least one market maker in
place to sponsor its securities for acceptance for listing on
the NASD OTC Bulletin Board. If the Company is unable to locate
a market maker, the Company may not be able to apply for listing
on the NASD OTC Bulletin Board and purchasers of its securities
may have increased difficulty in locating buyers should they
want to sell the Company's Securities.
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. See
"DILUTION". 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
exceeds the exercise price of such Warrants.
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 have an adverse effect upon the
public market for 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 Convertible 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 $4,000,000 and the net proceeds to the Company,
after deduction of estimated expenses of the Offering, will be
approximately $3,870,000. 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
Networktm 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 December 31, 1997 the Company had a net tangible book
value of $374,671 or$0.06 per share. Assuming conversion of
the Convertible Preferred Stock and sale of all the Units at
$2.00 per Unit (and further assuming no exercise of any
Warrants), the net tangible book value of the Company would be
$4,244,671or $0.46 per share. This represents an immediate
dilution to investors in the Offering of $1.54 per share and the
aggregate increase in net tangible book value to present
shareholders of $0.40 per share. The following table
illustrates such effect:
Initial public price per Unit $2.00
Net tangible book value before Offering $0.06
Increase per share attributable to
new investors $0.40
Net tangible book value per share after Offering $0.46
Dilution per share to new investors $1.54
BUSINESS
GENERAL
The Company produces and broadcasts Home Dating Networktm
infomercials integrating approximately 20 short video personal
profiles of individual Home Dating Networktm 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 Networktm 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 Networktm 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 Networktm
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 Networktm 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 two infomercials that have been
broadcast on WTGI TV-61 and WPHL TV-17 in Philadelphia,
Pennsylvania. Broadcasting began on October 23, 1997 on WTGI
TV-61 and was moved to WPHL TV-17 in March, 1998. The
infomercial airs one time per week. The Company estimates that
it has received over 14,000 telephone calls on its 800- and 900-
telephone lines in response to the infomercial.
The Company has completed its website and has received
over 800,000 visits to the website in its initial posting. The
Company has approximately 3,500 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 certain information from 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 Networktm can post their personal profile, with an
optional picture or video profile on the website. Members of
Home Dating Networktm 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 or by member name, if known. 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
Networktm. Each member who joins the Home Dating Networktm
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. A member may include a picture or video profile if
desired. All participants in the Home Dating Networktm
infomercial are profiled on the website and the website directs
interested persons to either send an e-mail message to the
profiled member or to utilize 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 Networktm members. The magazine will be
distributed to members of the Home Dating Networktm. The
Company intends to eventually distribute the magazine nationally
but retaining local profiles and event calendars.
CURRENT OPERATIONS
The Company has finished two complete infomercials that
have aired weekly commencing October 23, 1997, on WTGI TV-61, a
local Philadelphia cable television station and subsequently
moved to WPHL TV-17, the Warner Brothers cable channel in
Philadelphia, Pennsylvania. The Company has also completed the
entertainment segments of four additional infomercials. The
Company estimates that it has received over 14,000 calls on its
800- and 900- telephone lines in response to the broadcasts of
the Company's infomercial. The Company has completed its
website and has received over 800,000 "hits" on its site since
its launch. The Company has approximately 3,500 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 $.99 for
the first minute and $1.99 for each minute
thereafter for which the Company receives $.75 per
minute;
Membership fees to the Home Dating Networktm website
at $9.95 per month; and
Advertising revenues from the website, the magazine
and the infomercial.
The Company has contracted with American TelNet,
Plantation, Florida 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. 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 Networktm: (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 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 Home Dating Network was initially
presented on WTGI TV-61 and subsequently moved to be broadcast
throughout the Philadelphia area on WPHL TV-17, the Warner
Brothers Network. 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 156,270.5 shares
of its Convertible Preferred Stock at $10 per share for
aggregate proceeds of $1,562,275. 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 6,058,000 shares of Common Stock
and 156,270.5 shares of its Convertible Preferred Stock. 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 and beginning in March, 1998, moved to WPHL
TV-17, the Philadelphia Warner Brothers cable station. The
Company purchased the broadcast time on WTGI TV-61 directly for
a cost of $700 per 1/2 hour time slot. The Company purchased
the broadcast time on WPHL TV-17 directly paying $1,500 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 received over 14,000 calls on its
800/900 telephone numbers.
Calls into the 800/900 telephone numbers are charged $.99
for the first minutes and $1.99 each minute thereafter (of which
the Company receives $.75). 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 American TelNet ("ATN") 30 days after the charge
is billed to the customer.
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 800,000 visitors to
its website in since it became operational. The Company offers
memberships into The Home Dating Networktm for $9.95 per month,
on a month-to-month basis. A member can quit the Home Dating
Networktm 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 members' personal
profiles. Profiles can be searched by telephone area code,
member name or by relationship preference (e.g. "male seeking
female", "female seeking male", etc.) The website also offers
members chat rooms, bulletin boards, dating tips and interesting
information often relating to ideas featured on the infomercial.
Although only members can access the personal profiles, all
visitors to the website can click into certain information about
the Company and sample profiles. A website visitor can
immediately become a member of The Home Dating Networktm
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. 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 on WTGI and $1,500 per hour on WPHL.
The Company has begun offering advertising space on its
website and in its magazine, The Home Dating Networktm Magazine.
The Company has completed its first "mock-up" of the magazine
and anticipates that it will be ready for distribution in 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
Networktm 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
Jitendra R. Shah 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 three directors of 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.
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.
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 is
currently 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 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 four 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 1997:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
OTHER LONG-TERM ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS COMPENSATION
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.
Shares of
Common Stock Percentage of Class
Name, Position Beneficially Prior to After
and Address Owned Offering(1) Offering(2)
Norma L. Veach, Director 2,650,000 42% 32.8%
Chief Executive Officer
2355 Taggert Court
Wilmington, Delaware 19810
Donald Mattei, Director 2,650,000 42% 32.8%
President
1415 Bullens Lane
Woodlyn, Pennsylvania 19094
Jitendra R. Shah 100,000 1.6% 1.2%
Director
42 Marlon Pond Road
Hamilton Square, New Jersey 08690
Robert Veach, Director 100,000 1.6% 1.2%
Director
1056 Country Club Road
Camp Hill, Pennsylvania 17011
All Officers, Directors 5,500,000 90.7% 68.2%
and Shareholders as a Group
(4 Persons)
_____________
(1) Based on 6,058,000 shares of Common Stock outstanding
prior to the Offering.
(2) Based on 8,058,000 shares of Common Stock outstanding
assuming no conversion of shares of Convertible Preferred
Stock nor exercise of any Warrants.
SELLING SECURITYHOLDERS
The Company is registering for offer and sale by the
holders thereof (i) 250,000 shares of Common Stock underlying a
common stock purchase warrant held by a securityholder of the
Company; and (ii)1,250,164 shares of Common Stock of the Company
held or to be held by certain securityholders of the Company
upon conversion of the 156,270.5 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.
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) there will be 9,558,164 shares of Common Stock
outstanding of which 3,500,164 will be freely tradeable shares
of Common Stock (the "public float") of which 1,500,164 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.
PERCENT OF STOCK OWNED
NAME AND ADDRESS COMMON STOCK (1) PERCENT OF STOCK OWNED
OF BENEFICIAL PRIOR TO AFTER
OWNED OFFERING(2) OFFERING(3)
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 Jr. 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 Jr. 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 Jr. 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, Jr. 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. 6,800 * 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.
Sanatoga, 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, Jr. 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
William P. Dougherty 2,000 * 0%
26 North Linden Avenue
Aldan, Pennsylvania 19018
Pierce Mill Associates,
Inc.(4) 250,000 3% 0%
1504 R Street, N.W.
Washington, D.C. 20009
(1) With the exception of 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) 6,058,000 shares issued and outstanding prior to the
Offering.
(3) 8,308,000 shares issued and outstanding after the Offering
assuming no conversion of any shares of the Convertible
Preferred Stock or exercise of any Warrants except the
Warrant held by Pierce Mill Associates, and 9,558,164
shares outstanding upon conversion of the Convertible
Preferred stock.
(4) Represents shares underlying the Common Stock Purchase
Warrant held by the named securityholder. James M.
Cassidy, a principal of the law firm which prepared the
Registration Statement of which this Prospectus is a part,
is the director and sole shareholder of Pierce Mill
Associates, Inc.
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 6,058,000 shares
of Common Stock issued and outstanding and 156,270.5 shares of
Convertible Preferred Stock outstanding.
UNITS
The Company is offering an aggregate of 2,000,000 Units
for sale at $2.00 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
156,270.50 shares of its preferred stock as 11.25% Cumulative
Convertible Preferred Stock, convertible into 1,250,164 shares
of Common 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
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
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 made upon any conversion
of any share of Convertible 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
stock) or from any event treated as such for income tax
purposes.
In case 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, 6,058,000 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 $3.00 per share,
subject to adjustment from time to time, for a period of
24-months 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 $4.00 per share (subject to adjustment).
ADMISSION TO QUOTATION TO NASDAQ SMALLCAP MARKET AND NASD OTC
BULLETIN BOARD
There is currently no established public trading market
for the Securities and the Company does not have a market maker
for its securities. The Company anticipates that its securities
will be listed in the daily quotation sheets of the National
Quotation Bureau, Inc. (the "Pink Sheets") until, if ever, the
Company is able to locate a market maker and to meet the other
listing requirements. A market maker sponsoring a company's
securities is required for listing of securities on any of the
public trading markets. The Company does not currently have a
market maker to sponsor its securities for listing. If the
Company is able to obtain a market maker for its securities, the
Company intends to apply for admission to the NASD OTC Bulletin
Board for the listing of the Securities. It is possible that
the Company will not be able to locate a market maker that will
agree to sponsor the Company's securities and the Company's
securities will continue to be traded on the Pink Sheets. Even
if the Company does locate a market maker, there is no assurance
that its securities will be able to meet the requirements for
such quotation or that the securities will be accepted for
listing on the NASD OTC Bulletin Board.
When possible, the Company intends to apply for listing of
the Shares on the NASD OTC Bulletin Board, but there can be no
assurance that the Company will be able to obtain such listing.
The over-the-counter market ("OTC") 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.
At such time that it is qualified to do so, the Company
plans to apply for admission to quotation on the Nasdaq SmallCap
Market. To qualify for listing on the NASD 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 $50,000,000 in market capitalization, or
$750,000 in net income in two of the last three years (if
operating history is less than one year than market
capitalization must be at least $50,000,000); (4) have 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. There is no
assurance that the Company will ever meet the requirements of
the NASD SmallCap Market.
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 American Securities
Transfer, Inc., 1925 Lawrence Street, Suite 444, Denver,
Colorado 80202.
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 may qualify or register the sales of the Units in
a limited number of states. The Company will not accept
subscriptions from investors resident in other states.
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 SECURITIES
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 from time to time in one or more transactions: (i) at an
offering 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.
LEGAL OPINION
Cassidy & Associates, Washington, D.C. has given its opinion
as attorneys-at-law that the Securities, when sold pursuant to
the terms hereof and pursuant to a valid and current prospectus
in which those securities are registered, will be fully paid and
non-assessable. Pierce Mill Associates, Inc., a Delaware
company owned and controlled by James M. Cassidy, a principal of
Cassidy & Associates, is a shareholder and Selling
Securityholder of the Company. Pierce Mill Associates, Inc. is
not affiliated with the Company and has had no relationship with
the Company or any affiliate for the past three years other than
as disclosed herein. James Cassidy, a principal of Cassidy &
Associates, is the beneficial owner of the shares of Common
Stock and warrants to purchase Common Stock owned by Pierce Mill
Associates, Inc.
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.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1997
(AUDITED)
MARCH 31, 1998
(UNAUDITED)
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
INDEX
Page
AUDITORS' REPORT 1
FINANCIAL STATEMENTs
Balance Sheet 2-3
Statement of Operations 4
Statement of Stockholders' Equity 5
Statement of Cash Flows 6-7
Notes to Financial Statements 8-28
McBride Shopa & Company, P.A.
270 Presidential Drive
Wilmington, Delaware 19807
Independent Auditors' Report
To the Board of Directors and Stockholders
HDN, Inc.
Wilmington, Delaware
We have audited the accompanying balance sheet of HDN,
Inc. (a development stage company) as of December 31,
1997 and the related statements of operations,
stockholders' equity, and cash flows for the year ended
December 31, 1997 and for the period from inception
(December 16, 1996) to December 31, 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 December 31, 1997 and the results of its
operations and its cash flows for the year ended December
31, 1997 and the period from inception (December 16,
1996) to December 31, 1997.
Wilmington, Delaware
May 14, 1998, except for Note 10, as to which the date is
June 25, 1998
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
(Unaudited)
December 31, March 31,
1997 1998
CURRENT ASSETS
Cash $ 69,979 $ 29,453
Accounts receivable 5,790 5,790
Prepaid expenses 68,949 58,648
Employee advances 2,000 1,850
TOTAL CURRENT ASSETS 146,718 95,741
INVESTMENT (Note 9) - -
PROPERTY AND EQUIPMENT, at cost
Computer equipment 116,928 116,985
Furniture and fixtures 38,199 38,199
Leasehold improvements 7,986 7,986
163,113 163,170
Less: Accumulated depreciation
and amortization (11,733) (20,533)
151,380 142,637
INTANGIBLE ASSETS
Trademark and copyright license
agreement, less accumulated
amortization of $5,000 at
December 31, 1997 and $8,750
at March 31, 1998 145,000 141,250
DEFERRED OFFERING COSTS 87,199 79,014
OTHER ASSETS Security deposits 6,000 6,000
TOTAL ASSETS $ 536,297 $ 464,642
See accompanying notes to financial statements
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
LIABILITIES
(Unaudited)
December 31, March 31,
1997 1998
CURRENT LIABILITIES
Accounts payable, trade $ 61,187 $ 83,926
Accounts payable, related party 100,000 105,000
Accrued expenses 439 652
TOTAL CURRENT LIABILITIES 161,626 189,578
COMMITMENTS AND CONTINGENCIES (Note 9) - -
STOCKHOLDERS' EQUITY
COMMON STOCK, restricted $.001 par value,
20,000,000 shares authorized, 7,808,000
shares issued and outstanding 7,808 7,808
PREFERRED STOCK, 11.25% cumulative
convertible, $.001 par value,
1,000,000 shares authorized;
issued and outstanding, 139,145.5
shares at December 31, 1997 and
155,515.5 shares at March 31, 1998.
Liquidation preference of $10
per share plus accumulated dividends 139 155
ADDITIONAL PAID-IN CAPITAL 1,257,399 1,412,898
1,265,346 1,420,861
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (890,675) (1,145,797)
TOTAL STOCKHOLDERS' EQUITY 374,671 275,064
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 536,297 $ 464,642
See accompanying notes to financial statements.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
_______________________
December 16, December 16,
1996 1996
(inception) Three months (inception)
Year Ended to ended to
December 31, December 31, March 31, March 31,
1997 1997 1998 1998
REVENUES $ 8,799 $ 8,799 $ 522 $ 9,321
COSTS AND EXPENSES
Production costs 323,089 323,089 50,193 373,282
General and administrative 576,385 576,385 205,451 781,836
TOTAL COSTS AND EXPENSES 899,474 899,474 255,644 1,155,118
NET LOSS $ (890,675) $ (890,675) $(255,122) $(1,145,797)
LOSS PER SHARE
Basic $ (.10) $ (.03)
Diluted $ (.10) $ (.03)
See accompanying notes to financial statements.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accum-
ulated
Addi- during the
Common Stock Preferred tional Devel-
$.001 Par Value $.001 Par Value Paid-In opment
Shares Amount Shares Amount Capital Stage
Common stock,
sharesissued
for services
rendered 7,808,000 $ 7,808
Preferred stock,
shares issued for
cash and services
rendered net
of offering
costs of $133,917 139,145.5 $ 139 $1,257,399
Net loss _______ __ __ __ $(890,675)
Balance
December 31,
1997 7,808,000 7,808 139,145.5 139 1,257,399 (890,675)
Preferred stock,
shares issued
for cash, net
of offering costs
of $8,185 (unaudited) 16,370.0 16 155,499
Net loss (unaudited) (255,122)
Balance March 31,
1998
(unaudited) 7,808,000 $7,808 155,515.5 $155 $1,412,898 $(1,145,797)
See accompanying notes to financial statements
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
December 16, December 16,
1996 Three 1996
(inception) Months (inception)
Year ended to ended to
December 31, December 31, March 31, March 31,
1997 1997 1998 1998
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (890,675) $ (890,675) $ (255,122) $(1,145,797)
Adjustments
to reconcile net
loss to net cash
used by operating
activities:
Common stock
issued for
services
rendered 7,808 7,808 - 7,808
Preferred stock
issued for ser-
vices rendered 4,400 4,400 - 4,400
Depreciation and
amortization 16,733 16,733 12,550 29,283
(Increase) decrease in:
Accounts
receivable (5,790) (5,790) - (5,790)
Prepaid expenses (68,949) (68,949) 10,301 (58,648)
Increase (decrease) in:
Accounts payable
related party - - 25,000 25,000
Accounts payable 61,187 61,187 22,739 83,926
Accrued expenses 439 439 213 652
NET CASH USED BY
OPERATING ACTIVITIES (874,847) (874,847) (184,319) (1,059,166)
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment
acquisitions (163,113) (163,113) (57) (163,170)
Trademark and
copyright license
payments (50,000) (50,000) (20,000) (70,000)
Security deposits (6,000) (6,000) - (6,000)
Employee advances (2,000) (2,000) 150 (1,850)
Deferred offering
costs (87,199) (87,199) 8,185 (79,014)
NET CASH USED BY
INVESTING ACTIVITIES (308,312) (308,312) (11,722) (320,034)
See accompanying notes to financial statements.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
December 16, December 16,
1996 Three 1996
(inception) Months (inception)
Year ended to ended to
December 31, December 31, March 31, March 31,
1997 1997 1998 1998
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from
preferred stock issuance,
net of offering
costs 1,253,138 1,253,138 155,515 1,408,653
NET CASH PROVIDED BY
FINANCING
ACTIVITIES 1,253,138 1,253,138 155,515 1,408,653
NET CHANGE IN CASH 69,979 69,979 (40,526) 29,453
CASH, Beginning of
period - - 69,979 -
CASH, End of period $69,979 $ 69,979 $ 29,453 $ 29,453
SUPPLEMENTAL DISCLOSURES
Noncash investing and financing activities:
Preferred stock (3,545.5 shares) issued
as offering
costs $ 35,455 $ 35,455 $ - $ 35,455
Trademark and copyright
license financed
by a related
party $ 100,000 $ 100,000 $ - $ 100,000
See accompanying notes to financial statements.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
NOTE 1 THE COMPANY
Nature of the Business
HDN, Inc. (the
Company) was incorporated on December 16, 1996 in the state
of Delaware 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, which integrates short video
personal profiles of individual HDN members into an
entertaining show that features dining, vacation, theater,
movie and other dating related activities, the Company will
provide a forum where individuals can be interviewed and
develop a video about themselves and their interest in
dating. That video will then air on the Home Dating
Network infomercial. Interested viewers can then call into
the Company's 800 or 900 number voice mailbox system,
leaving his or her confidential information in accordance
with voice mail instructions. As the interested viewer
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. The Company
will also maintain a website which features personal
profiles posted by HDN members as well as chat rooms and
bulletin boards. The website will correlate dating and
entertainment information to the entertainment and dating
segments to be featured on the infomercial and will offer
additional dating ideas and tips. In addition, the Company
is in the process of developing a magazine, to be
distributed to its members, to supplement the infomercial
and Internet website. The magazine is designed for singles
and will feature articles about dating and activities
related to dating contain both national and local
advertising and list certain local "In Search Of" profiles
of HDN members.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
THE COMPANY (Cont'd.)
Nature of the Business (Cont'd.)
Revenue will be
earned primarily from broadcast revenue, which is the
Company's share of earnings from its 800 and 900 numbers.
In addition, revenue will be earned from membership fees to
its internet website and advertising revenue from its
magazine. The Company will initially target the
Philadelphia, PA television market, and will eventually
expand into other major markets throughout the United States.
The Company is in the development stage and its efforts to
date have been principally devoted to organizational
activities, product development, and raising capital.
Planned principal operations began in September 1997, but
there has been no significant revenue from them. The
Company completed one infomercial which began broadcasting
on a local Philadelphia, PA cable television station on
October 23, 1997, and as a result has generated some
broadcast revenue. Membership to the website was offered
free as a promotion during 1997. Advertising revenue from
the magazine is expected to be earned in 1998. 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 end sometime during 1998 as a result of its
initial public offering of common stock. The
Company's operations to date have been funded by the net
proceeds of the private placement of its 11.25% cumulative
convertible preferred stock.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
THE COMPANY (Cont'd.)
Proposed Initial Public Offering of Common Stock
The Board of Directors
has authorized management of the Company to file a
Registration Statement with the Securities and Exchange
Commission for an initial public offering of common stock.
This proposed initial public offering will be for 2,000,000
units at $2.00 per unit. Each unit will consist of one
share of common stock, par value $.001 per share, and one
redeemable warrant, which will entitle the holder to
purchase one share of common stock at $3.00 per share for a
period of two years. In addition, the registration will
include sufficient shares of common stock to be offered
upon conversion of all of the outstanding 11.25% cumulative
convertible preferred stock, (Note 7), and 250,000 shares
of common stock underlying a common stock purchase warrant
(Note 7).
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.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
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.
Concentration of Credit Risk
Cash balances
are maintained at financial institutions located in
Delaware, Virginia, and California. Accounts at each
institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. The Company has no uninsured
bank balances at December 31, 1997 and March 31, 1998.
Receivables are not expected to represent a significant
credit risk.
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.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Property and Equipment and Depreciation
Property and equipment is stated at cost. Depreciation is
provided over the estimated useful lives of property and
equipment using the straight line method. The annual
depreciation rates are based on the following range of
useful lives:
Computer equipment 3 to 5 years
Furniture and fixtures 5 to 7 years
Leasehold improvements are stated at cost and are being
amortized using the straight line method from the date the
improvement is placed in service to the lease expiration
date, June 2000 (Note 9).
Depreciation expense was $11,733 for 1997 and $8,800 for
the three months ended March 31, 1998. The assets were
placed in service in September 1997.
Intangible Assets and Amortization
Intangible assets are stated at cost and
are amortized over their estimated useful lives using the
straight line method. Intangible assets and their
estimated useful lives consisted of the following at
December 31, 1997:
Trademark and Copyright
License Agreement 10 years
Amortization expense
was $5,000 for 1997 and $3,750 for the three months ended
March 31, 1998.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Stock-Based Compensation
1.Transactions with other than employees.
Transactions in which equity instruments are issued in
exchange for goods or services are valued as of the
measurement date at the fair value of the consideration
received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
2. Transactions with employees.
Transactions in
which equity instruments are issued to employees in
exchange for services will be valued at the intrinsic
value of the equity instrument, in accordance with
Accounting Principles Board (APB) Opinion No. 25,
rather than the fair value of the equity instrument,
which is considered preferable by Statement of
Financial Accounting Standards (SFAS) No. 123.
Intrinsic value is the amount by which the market price
of an equity instrument exceeds its option price at the
measurement date. In accordance with SFAS 123 the
Company will disclose on a pro-forma basis what net
income and earnings per share would have been if the
fair value method under SFAS 123 had been used to value
the cost of stock-based compensation for employees.
The Company presently does not have any stock-based
compensation plans for employees.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Revenue
Broadcast revenue is
recognized in the period in which the telephone call is
made. Membership fees are recognized over the membership
period. Advertising revenue is recognized the first time
the advertisement occurs.
Advertising Costs
Production costs are
charged to operations as incurred. Communication costs are
charged to operations the first time the advertisement
occurs. Advertising costs charged to operations were
$9,323 for 1997 and $8,898 for the three months ended March
31, 1998.
Income Taxes
Income taxes are provided for the tax effects of
transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes.
Deferred taxes are recognized for differences between the
basis of assets and liabilities for financial statement and
income tax purposes. These differences relate primarily to
"start-up" costs, which are expensed as incurred for
financial statement purposes, but capitalized and amortized
for income tax purposes. Deferred tax assets and
liabilities represent the future tax return consequences of
those differences, which will either be deductible or
taxable when the assets and liabilities are recovered or
settled. Deferred taxes also are recognized for operating
losses and tax credits that are available to offset future
taxable income.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Loss Per Share
The Company has adopted SFAS No. 128, "Earnings per Share",
which is effective for periods ending after December 15, 1997.
Under SFAS No. 128, basic loss per share excludes dilution
and is computed by dividing loss applicable to common stock
(net loss after deducting preferred stock dividends) by the
weighted-average number of common shares outstanding for
the period.
Diluted loss per share reflects the potential dilution that
could occur if securities or other contracts to issue
common stock were exercised or converted into common stock
or otherwise resulted in the issuance of common stock, and
is computed similarly to "fully diluted" loss per share
that was reported under previous accounting standards.
Under the new rules, computations of dilutive effects are
based upon the average market price of the common stock
during the reported period, while under the old rules the
end of the period market price would be used if more dilutive.
Diluted loss per share reflects the dilutive effective of
the 11.25% cumulative convertible preferred stock, which is
considered to be "potential common stock". The dilutive
effect was calculated using the "if-converted" method.
These dilutive effects were calculated as of the beginning
of the period because the preferred stock has an issue or
exercise price substantially below the expected IPO price
(Note 1).
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Accounting Standards Not Yet Adopted
Statement of
Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income", is effective for fiscal
years beginning after December 15, 1997. SFAS-130
establishes standards for reporting and displaying
comprehensive income and its components in general-purpose
financial statements. Comprehensive income includes net
income and several other items that current accounting
standards require to be recognized outside of net income.
SFAS-130 requires companies to display comprehensive income
and its components in its financial statements, and
suggests several alternative formats for presentation; to
classify items of comprehensive income by their nature in
the financial statements; and to display the accumulated
balances of other comprehensive income in stockholders'
equity separately from retained earnings and additional
paid-in capital. The effect of this new standard is not
expected to have a material effect on the financial
position and results of operations of the Company.
NOTE 3 RELATED PARTY TRANSACTIONS
Trademarks and Copyright License Agreement
The Company has entered into an exclusive non-assignable
and non-transferable worldwide licensing agreement with The
Home Dating Network, L.L.C. ("the L.L.C."), which is wholly
owned by two of the Company's shareholder/director/officers
(who together own a majority of the Company's common
stock), to license the copyrighted "Home Dating Network"
logo and servicemarks. The Company acquired the rights and the
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
RELATED PARTY TRANSACTIONS (Cont'd.)
Trademarks and Copyright License Agreement (Cont'd.)
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 requires the payment by the
Company to the L.L.C. of a one-time licensing fee of
$150,000 during 1997 and an annual royalty fee of the
greater of (i) 1% of the annualized net earnings derived by
the Company or (ii) $100,000 starting January 1, 1998. 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 use of such logo and trademarks.
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.
As of December 31, 1997 and March 31, 1998, the Company has
paid $50,000 and $70,000 respectively of the one-time
licensing fee. There have been no payments made of the
annual royalty fee, which is being accrued during 1998.
The unpaid balance of the one-time licensing fee and the
accrued royalty fee for 1998 are included in accounts
payable related party.
Investment Banker
The Company agreed to an
assignment of a contract dated October 23, 1996, between the L.L.C.
and Hanover Mercantile Corporation ("the IB") whereby the IB was
engaged to assist the Company in identifying investors for the
private placements of its preferred shares and to provide public
relations services for renewable two year
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
RELATED PARTY TRANSACTIONS (Cont'd.)
Investment Banker (Cont'd.)
periods beginning January 1, 1997. A director and a director/officer
of the Company are also owner/principals of the IB.
As compensation
for services rendered, the IB received:
- an initial retainer fee of $5,000,
- a commission of 5% of the amount of the
preferred stock purchased by investors who were
identified by the IB,
- $5,000 per month for public relations
services, and
- reimbursement for all out-of-pocket expenses.
Total payments to the IB as of December 31, 1997 were $271,158 which
consisted of:
$ 5,000 - Initial retainer
37,700 - Commissions on the sale of
preferred stock
60,000 - Public relations fees
19,981 - Out-of-pocket expenses
incurred in the sale of
preferred stock
28,400 - Director's fees
120,077 - Disputed amounts
$271,158
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
RELATED PARTY TRANSACTIONS (Cont'd.)
Investment Banker (Cont'd.)
The disputed
amounts represent payments made by the IB to itself using
Company funds in excess of the amounts allowed by the
contract. The IB was able to pay itself because a
director/officer of the Company, who was also an
owner/principal of the IB, had single check signing
authority over the bank account used to deposit the
proceeds from the sale of preferred stock. See Note 10 for
a further discussion of this issue.These costs are included
in the financial statements as a deduction from the
proceeds of preferred stock of $57,681, and as general and
administrative expenses of $213,477.
The IB also owns
2,000,000 shares of the Company's restricted common stock,
which the IB received as a founder (Note 10).
Maintenance Agreement
The Company has
an agreement with a company controlled by a family member
of the Chief Executive Officer to provide maintenance
services to the Company. As of December 31, 1997 and March
31, 1998, this company was paid $9,300 and $2,100,
respectively for such services.
NOTE 4 PREPAID EXPENSES
Prepaid expenses consisted of the following at:
December 31, March31,
1997 1998
Advertising communication costs $58,550 $58,550
Rent, paid in advance 9,000 -
Other 1,399 98
$68,949 $58,648
NOTE 5 DEFERRED OFFERING COSTS
Deferred
offering costs consisted of the following at:
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
DEFERRED OFFERING COSTS (Cont'd.)
December 31, March31,
1997 1998
Preferred stock, sales
commissions paid in
advance for stock issued
in 1998 $ 8,185 $ -
Common stock, costs incurred for
the proposed initial public
offering 79,014 79,014
$ 87,199 $79,014
These costs will be
charged against the gross proceeds of the offerings. If
there is no offering, they will be charged against operations.
NOTE 6 INCOME TAXES
There is no current income tax provision because of the
current income tax loss of $505,000 as of December 31,
1997, and the expected loss for 1998. These losses can be
carried forward and used to offset future taxable income
until 2013.
The only temporary difference between accounting for
financial statement and income tax purposes is the
accounting for start-up costs of $412,250. These costs are
expensed when incurred for financial statement purposes,
but are capitalized when incurred and then amortized over
60 months for income tax purposes.
The deferred tax benefit of the start-up costs and the tax
operating loss carryforwards have not been recognized as
assets because of the uncertainty of future taxable income.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
INCOME TAXES (Cont'd.)
The components of the tax effects of temporary
differences are as follows:
December 31, March 31,
1997 1998
Deferred tax assets
Start-up costs $ 150,100 $ 142,100
Net operating loss
carryover 197,200 304,700
347,300 446,800
Valuation allowance (347,300) (446,800)
Net deferred tax asset $ - $ -
NOTE 7 DESCRIPTION OF SECURITIES
Common Stock - Restricted
The Company has
issued 7,808,000 shares of its common stock ("Restricted
Shares") as of December 31, 1997, of which 7,800,000 have
been issued to the founders of the Company. These shares
have been recorded at their par value of $.001 per share.
None are freely tradable without restriction or
registration under the Securities Act of 1933 ("the Act").
All of the shares were issued by the Company pursuant to
the "private 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, 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.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
DESCRIPTION OF SECURITIES (Cont'd.)
Common Stock Restricted (Cont'.d)
None of these
shares are included in the Registration Statement for the
initial public offering expected during 1998.
Existing common
stockholders 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
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.
Preferred Stock
The Company issued
its 11.25% cumulative, convertible preferred stock in two
private placements at $10 per share. The maximum number of
shares offered was 175,000 shares. The offering period was
one continuous period that began on January 14, 1997 and
ended on January 8, 1998. At December 31, 1997, the
Company had $163,700 (16,370 shares) in subscribed but
unissued shares. These shares were issued during the three
months ended March 31, 1998 as the sales proceeds were
collected. The preferred stock is convertible, at the
option of the holder, for a period of 24 months,
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
DESCRIPTION OF SECURITIES (Cont'd.)
Preferred Stock (Cont'd.)
beginning on the
effective date of the proposed initial public offering
(Note 1), into common voting shares at a conversion ratio
of eight (8) shares of common stock, or $1.25 per share,
for each share of preferred stock.
Upon the expiration
of the 24 month conversion period, the remaining preferred
stock will automatically be converted into common shares
under the aforementioned terms. The preferred stock is not
redeemable. Holders of the preferred stock will be
entitled 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.
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 a 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 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 preferred stock, the holders of such shares
will not be entitled to any further participation in any
distribution of assets by the Company.
The
holders of the preferred stock have no voting rights.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
DESCRIPTION OF SECURITIES (Cont'd.)
Common Stock Purchase Warrant
The
Company expects to issue on the date of the initial public
offering a 5 year transferable warrant to acquire up to
250,000 shares of the Company's common stock at a price of
$1.00 per share. It is also expected that this warrant
will be exercised in connection with the proposed initial
public offering. Since the issuance of this warrant is
contingent upon the initial public offering, it has not
been recorded as of December 31, 1997 or as of March 31, 1998.
NOTE 8 LOSS PER SHARE
The
following data shows the amounts used in computing loss per
share and the effect on loss and the weighted average
number of shares of dilutive potential common stock at:
December 31, March 31,
1997 1998
Net loss $ (890,675) $ (255,122)
Dividends on convertible preferred
stock (16) (20)
Loss applicable to common stock (890,691) (255,142
Dividends on convertible
preferred stock 16 20
Adjusted for diluted computation $ (890,675) $ (255,122)
Weighted average common shares
Outstanding 7,803,549 7,808,000
Dilutive effect of
convertible preferred stock 1,113,164 1,244,124
Adjusted for diluted computation 8,916,713 9,052,124
Basic loss per share $ (.10) $ (.03)
Diluted loss per share $ (.10) $ (.03)
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
LOSS PER SHARE (Cont'd.)
The dilutive effect of the weighted average common shares
outstanding was used in computing both basic and diluted
loss per share because the preferred stock has an issue or
exercise price substantially below the expected IPO price.
NOTE 9 COMMITMENTS AND CONTINGENCIES
Lease
Office facilities are leased 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 in subsequent
years 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 March 31, 1998 are as follows:
Year Ending December 31,
1998 $27,900
1999 $38,745
2000 $19,845
Rental expense incurred
under the terms of the lease was $18,600 during 1997, and
$9,000 for the three months ended March 31, 1998.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
COMMITMENTS AND CONTINGENCIES(Cont'd.)
Employment Contract
The Company has entered
into an employment contract with its Chief Operating
Officer ("COO") for the period from July 1, 1997 to June
30, 1999. Pursuant to the terms of the contract, the COO
will be compensated $92,500 for the first year, and
$125,000 for the second year plus expenses. The terms of a
bonus arrangement have not yet been finalized.
Trademark and Copyright License Agreement
The Company is
obligated for a royalty fee of the greater of (i) 1% of
the annualized net earnings of the Company, or (ii)
$100,000 until June 2007.
Law Firm Agreement
On
September 19, 1997, the Company engaged a law firm to
advise and assist it in connection with its proposed
initial public offering (Note 1). In return for services
rendered by the law firm, the Company agreed to:
1. purchase, for $100,000, 20,000 shares of common
stock of a privately-held company controlled by
the law firm, and
2. issue, on the effective date of the registration
statement, a 5-year transferable warrant to
acquire up to 250,000 shares of the Company's
common stock at $1.00 per share.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
COMMITMENTS AND CONTINGENCIES(Cont'd.)
Law Firm Agreement (Cont'd.)
As of December 31, 1997, 10,000 shares of the common stock of
the privately-held company controlled by the law firm have been
issued to the Company. These shares have not been recorded as an
asset because the Company believes they have no value. The law
firm has billed the Company $75,000 for services rendered through
December 31, 1997. This amount has been recorded as deferred
offering costs as of December 31, 1997 (Note 5).
The value of the common stock purchase warrant will be recorded
as offering costs when it is issued, which will be the effective
date of the initial public offering.
Contingency
An occurrence of noncompliance with the conditions in the
private placement memorandum occurred during 1997. A director of
HDN received compensation for the placement of securities. The
ultimate effect of the violation of this condition cannot be
determined at this time.
HDN, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(information relating to March 31, 1998 is unaudited)
NOTE 10 SUBSEQUENT EVENT
On May 5, 1998, the Company terminated its contract with the IB (Note 3)
for breach of contract. Concurrent with the termination, the IB was
notified that the 2,000,000 shares of common stock held by them would be
changed to restricted status effective as of the date of issuance (November
28, 1997).
At a subsequent meeting on June 25, 1998, the Company and the IB agreed
that the 2,000,000 shares of restricted common stock held by the IB would
be canceled and would be replaced by 250,000 shares of restricted common.
No dealer, salesman or any other person has =========================
been authorized to give any information or 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 H D N, INC.
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 2,000,000 Units, 2,000,000
sell, or solicitation of any offer to buy, by Shares of Common
any person in any jurisdiction in which it is Stock and 2,000,000
unlawful for any such person to make such Redeemable Warrants
offer or solicitation. Neither the delivery contained in the Units
of this Prospectus nor any offer, and 2,000,000 Shares of
solicitation or sale made hereunder, shall Common Stock underlying
under any circumstances create any such Warrants
implication that the information herein is
correct as of any time subsequent to the date
of the Prospectus.
- ------------------------
TABLE OF CONTENTS
Page
Prospectus Summary
The Company
Risk Factors
Distribution
Business ----------
Use of Proceeds PROSPECTUS
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 August ____, 1998
Experts
Index to Financial Statements
Until 90 days 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
subscription.
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 acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or
dividends on, capital stock) of the General Corporation Law of
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 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 $6,058, 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 (1) Hanover Mercantile
Corporation 250,000 250
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 500 5,000
6/12/97 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 4,400
11/10/97 Anthony W. Carapelli 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. Hammon 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 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 and Sandra
J. Eichhorn 5,000 50,000
12/23/97 Tim Hammond 50 500
4/24/98 William P. Dougherty 250 2,500
(1) 1,750,000 shares were returned and canceled.
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
24.1 Consent of Accountant
24.2* Consent of Cassidy & Associates (included in
Exhibit 5)
27* Financial Data Schedule
---------------
* To be filed by Amendment.
** Previously filed.
(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 will be governed by the final
adjudication of such 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.
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 7th day of August, 1998.
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, Chief 8/7/98
Executive Officer
/s/ Donald Mattei Director, President 8/7/98
/s/ Jitendra R. Shah Director 8/7/98
/s/ Robert Veach Director 8/7/98
McBride & Shopa & Company
270 Presidential Drive
Wilmington, Delaware 19807
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Registration Statement on Form
S-1 of our report dated May 14, 1998, except for Note 10, as to
which the date is June 25, 1998, relating to the audited financial
statements of HDN, Inc. (a development stage company) as of and for
the year ended December 31, 1997 and for the period from inception
(December 16, 1996) to December 31, 1997 and to the reference to our
Firm under the Caption "Experts" in the Prospectus.
/c/ McBride, Shopa & Company
Certified Public Accountants
Wilmington, Delaware
August 10, 1998
