As filed with the Securities and Exchange Commission on June 16, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SILVER KING RESOURCES, INC.
(Exact name of small business Issuer as specified in its charter)
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Delaware 65-0884085 6770
(State or other jurisdiction of (I.R.S. Employer Identification Number) (Primary Standard Industrial
incorporation or organization) Classification Code Number)
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20 Corporate Park
Suite 110
Irvine, California 92606
(949) 756-8181
(Address and telephone number of principal executive offices)
Mr. Larry Mayle
20 Corporate Park
Suite 110
Irvine, California 92606
(949) 756-8181
(Name, address and telephone number of agent for service)
Copies of all communications to:
Gregory Sichenzia, Esq.
Thomas A. Rose, Esq.
Sichenzia Ross & Friedman, LLP
135 West 50th Street
New York, New York 10022
Telephone No.: (212) 664-1200
Facsimile No.: (212) 664-7329
Approximate date of proposed sale to the public:
From time to time after the effective date of this Registration Statement
in light of market conditions and other factors.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 number of the earlier effective registration statement for the
same offering. []
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If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. []
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
<PAGE>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Securities Amount to be Price Per Offering Registration
to be Registered Registered Share (1) Price Fee
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Common Stock, $.0001 par value 5,170,449 $3.125 $16,157,653 $4,266
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1. Based upon bid price of the common stock on June 14, 2000.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
SILVER KING RESOURCES, INC.
Cross Reference Sheet
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Form SB-2 Item Number and Caption Captions In Prospectus
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1. Front of Registration Statement and Outside Front Cover of Prospectus Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus Cover Page, Inside Cover Page,
Outside Back Page
3. Summary Information and Risk Factors Prospectus Summary, Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page, Risk Factors
6. Dilution Not Applicable
7. Selling Securityholders Selling Securityholders, Plan of
Distribution
8. Plan of Distribution Prospectus Summary,
Selling Securityholders
9. Legal Proceedings Business
10. Directors, Executive Officers, Promoters and Control Persons Management, Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and Management Principal Stockholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters
14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities Management
15. Organization Within Last Five Years Not Applicable
16. Description of Business Prospectus Summary, Business
17. Management's Discussion and Analysis or Plan of Operation Management's Discussion and
Analysis of Financial Condition
and Results from Operations
18. Description of Property Business
19. Certain Relationships and Related Transactions Certain Transactions
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20. Market for Common Equity and Related Shareholder Matters Front Cover Page, Description of
Securities
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Accounts on Accounting and Financial
Disclosure Not Applicable
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<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 16, 2000
SILVER KING RESOURCES, INC.
5,170,449 shares of common stock
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Silver King Resources, Inc.: o Our principal executive offices are located at Silver King Resources,
Inc., 20 Corporate Park, Suite 110, Irvine, California 92606, and our
telephone number is (949) 756-8181.
o Over the Counter Electronic Bulletin Board Market Symbol: SVKG
The Offering: o All of the shares of common stock being sold are offered by selling
stockholders. We will not receive any proceeds from the sale of the
shares by the selling stockholders. However, we will receive the
sale price of any common stock that we sell pursuant to common stock
purchase warrants described in this prospectus.
o A total of 5,170,449 shares of our common stock are being offered.
o The selling stockholders may sell all or any portion of the shares
in this offering in one or more transactions by a variety of methods,
including through the Over The Counter Bulletin Board or in negotiated
transactions. The selling stockholders will determine the selling price of
the shares. The selling stockholders will also pay any broker or dealer
commission, fee or other compensation or underwriter discount.
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YOUR INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE
INVESTING IN OUR COMMON STOCK, YOU SHOULD CONSIDER CAREFULLY THE RISKS DESCRIBED
UNDER "RISK FACTORS" BEGINNING ON PAGE 6.
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Neither the Securities and Exchange Commission nor any state Securities
Commission has approved or disapproved of these securities or Determined IF this
prospectus is complete or accurate. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is June , 2000
<PAGE>
PROSPECTUS SUMMARY
Silver King Resources, Inc.
All information contained in this prospectus except in the financial
statements assumes the effect of a one-for-25 reverse stock split of our common
stock which will become effective in July, 2000.
Silver King Resources, Inc. is a holding company for our wholly-owned
subsidiary, eNexi Inc. We originally formed Silver King to identify private
business opportunities that would capitalize on our status as a public
corporation. From early 1999 until March 2000, we conducted initial stage
exploration of silver-producing properties in Mexico. On May 19, 2000, we
acquired eNexi, a company that provides internet-related services. As a result
of our change in business operations, we intend to change our name to eNexi
Holdings, Inc. to reflect our new business plan.
eNexi Inc. is an Internet service provider and intermediary for online
advertising and marketing. Through eNexi, we provide free email accounts through
a web-based email system, www.dollars4mail.com. In order to become a subscriber
to the system, each applicant must provide detailed information about his or her
demographics and interest. We expect to make these aggregated data available to
online advertisers in the future to enable them to target specific groups within
the dollars4mail subscriber base depending on demographics, interests or both.
The advertisers pay eNexi based on the number of times the advertisements appear
on the users' screens or the number of times users click on the advertisement to
view an advertiser's web site. In turn, eNexi shares its advertising revenue
with its dollars4mail subscribers, who receive cash compensation for referrals
to the dollars4mail system and for visits they and their referrals make to the
websites of advertisers on the system.
Through eNexi's VirtuallyFreeInternet.com division, we provide analog
Internet access to its subscribers for a monthly fee. Subscribers to
VirtuallyFreeInternet.com can earn cash compensation for referrals to the
Internet access service. VirtuallyFreeInternet.com and dollars4mail.com are
supported by eNexi's patent-pending proprietary software that permits fully
automated online sign-up, authentication of subscribers, automated credit card
billing and processing of multi-tiered referral compensation. The Company is
currently seeking a purchaser of its subscribers for this system.
The Offering
In connection with our purchase and merger with eNexi Inc., we
issued to the principal stockholders of eNexi 6,000,000 shares of our series A
convertible preferred stock. We agreed with the principal stockholders to
register such shares within 120 days of the merger. We agreed to pay all the
costs incurred in registering the shares while the stockholders agreed to pay
all the costs incurred in selling their shares. As a result, we will receive no
proceeds from the sale of these shares of common stock by the selling
stockholders.
The selling stockholders may sell all or any portion of the shares in
this offering in one or more transactions by a variety of methods, including
through the Over the Counter Electronic Bulletin Board or in negotiated private
transactions. The selling stockholders will determine the selling price of their
shares.
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Shares Outstanding................... We are authorized to issue 50,000,000 shares of common stock and 15,000,000
shares of preferred stock, which may be issued in one or more series. As of
June 1, 2000, there were 1,723,000 shares of common stock issued and
outstanding, 6,000,000 shares of series A convertible preferred stock issued
and outstanding, and 2,009,864 shares of series B convertible preferred stock
issued and outstanding. The 8,009,864 shares of preferred stock will convert
into 8,009,864 shares of common stock upon the effectiveness of the
one-for-25 reverse stock split.
Use of Proceeds....................... We will not receive any proceeds from the sale of the common stock offered by
the prospectus
Trading Symbol..................... Our common stock trades on the Nasdaq Over the Counter Electronic Bulletinunder
the symbol SVKG.
Forward-Looking This prospectus contains forward-looking statements that address, among other
Statements.......................... things, our expansion and acquisition strategy, business development, use of
proceeds, projected capital expenditures, liquidity, and our development of
additional revenue sources. The forward-looking statements are based on
our current expectations and are subject to risks, uncertainties and assumptions.
We base these forward-looking statements on information currently available to us,
and we assume no obligation to update them. Our actual results may differ
materially from the results anticipated in these forward-looking statements, due
to various factors.
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SUMMARY FINANCIAL INFORMATION
The following summary of financial information should be read in
conjunction with the Financial Statements and notes thereto appearing elsewhere
in this Prospectus.
SUMMARY OF FINANCIAL DATA
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From inception through Three months ended
December 31, 1999 March 31, 2000
--------------------------------------- ---------------------------------
Statement of Income and Expense
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Net revenues $ 27,192 $ 96,372
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Operating costs and expense:
Cost of recurring revenues 98,626 48,367
Sales and marketing 310,480 242,913
General and administrative 1,098,927 388,158
Depreciation 22,846 10,238
--------------------------------------- ---------------------------------
Total operating costs and expenses 1,530,879 689,676
--------------------------------------- ---------------------------------
Loss from operations (1,503,687) (593,304)
Other income (expense)
Interest expense (9,141) (6,073)
Interest income 17,285 12,982
Other expense - (1,678)
--------------------------------------- ---------------------------------
Loss before provision for income taxes (1,495,543) (588,073)
--------------------------------------- ---------------------------------
Provision for income taxes - -
--------------------------------------- ---------------------------------
Net loss $ (1,495,543) $ (588,073)
======================================= =================================
Net income (loss) per common share:
Basic (2.825) (0.561)
Weighted average common shares outstanding:
Basic 529,460 1,048,868
Supplemental Data:
Depreciation $ 22,846 $ 10,238
Capital expenditures (203,875) (3,394)
--------------------------------------- ---------------------------------
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March 31, 2000
--------------------------------------------------------------------------
Actual Pro Forma
As Adjusted (1)
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Balance Sheet Data
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Cash and cash equivalents $ 630,475 $ 5,369,926
Total assets 907,272 5,646,723
Total liabilities 565,368 711,667
Total stockholders' equity 341,904 4,935,056
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(1) Assumes the issuance of 6,000,000 shares of series A convertible preferred
stock and 2,009,864 shares of series B convertible preferred stock as if
the reverse merger and issuance of shares took place at March 31, 2000. No
effect was given for the registration and sale of stock since none of the
proceeds will be received by us.
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors,
in addition to the other information contained in this prospectus, in connection
with investments in the securities offered hereby. This prospectus contains
certain forward-looking statements which involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors, including those set
forth below and elsewhere in this prospectus. An investment in the securities
offered hereby involves a high degree of risk.
Limited Operating History. Due to the absence of an established
operating history, there is material uncertainty concerning our ability to
operate successfully. We are subject to all risks inherent in a developing
business enterprise. A limited operating history makes it difficult for
subscribers to evaluate the services provided and for businesses to assess the
targeted audience's response to the advertisements delivered to our subscribers.
The likelihood of our success must be considered in light of the problems,
expenses and difficulties frequently encountered by a new business in general
and those specific to the information technology sector, such as the competitive
and rapidly changing environment in which we will operate.
Recently Discontinued Operations. Prior to the recent merger, we were
engaged in the exploration of potential silver-producing properties. This
operation produced net losses of approximately $758,704 during the year ended
December 31, 1999. Furthermore, when additional results of exploration proved
disappointing our management elected to suspend those activities and through the
write-off of all mineral resource assets, accounted for its former business as a
discontinued operation. We can give no assurance that our newly acquired
business will be more successful.
Net Operating Losses. For its fiscal year ended December 31, 1999 and
quarter ended March 31, 2000, eNexi incurred net losses of $1,495,543 and
588,073, respectively. We expect to continue to incur operating losses since we
have not yet built a significant subscriber and advertiser revenue base. This
may continue until we reach a greater level of maturity. It is possible that our
revenues may never exceed expenses. If operating losses continue beyond the
short term, our operations will be in jeopardy.
Underdeveloped Subscriber and Advertiser Base. We expect to continue to
derive substantially all of our revenues from the sale of online advertisements.
(We also derive a modest amount of income from subscription fees for Internet
access with email accounts, although we anticipate selling this part of our
business.). Advertisers pay us for the number of advertisements displayed, for
the number of times subscribers click on advertisements or based on other
criteria, such as the amount of purchases made by subscribers. We do not have a
broad subscriber or advertiser base due to the early stages of our development.
If we cannot build a wide subscriber base, retailers will be less inclined to
advertise on our dollars4mail system, or will not be willing to pay higher
advertising rates. Furthermore, we may not be able to attract paying subscribers
to VirtuallyFreeInternet.com. In light of these factors, we may not generate
sufficient advertising or other revenues to reach profitability.
Inability to Successfully Integrate Potential Acquisitions May
Adversely Affect Our Operating Results. Our success will depend to a great
extent on our ability to integrate the operations and management of the
businesses that we have acquired and businesses that we may acquire in the
future. Consolidating acquired businesses and integrating regional operations
may take a significant period of time, will place a significant strain on our
resources and could prove to be more expensive than expected. We may increase
expenditures to accelerate the integration and consolidation of our acquired
operations, but we cannot guarantee this result nor can we assure investors that
our resources will be sufficient to successfully implement our expansion
program.
Lack of Long-Term Contractual Arrangements. We do not have contractual
arrangements with many of our customers. Our relationships with customers is
based upon course of dealing and can be terminated at any time. The agreements
which we do have with some of our customers may generally be terminated by the
customer on short notice. We cannot be sure that any of our customers will
continue to do business with us. The loss of significant customers would have a
material adverse effect on our business, financial condition and results of
operations.
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Limited Trading of the Our Common Stock; Possible Volatility of Stock
Prices. The public trading market for shares of our common stock recently
commenced on the OTC Bulletin Board; however trading has been extremely limited.
There can be no assurances that a regular trading market for the common stock
will develop, and if it develops, whether it can be sustained. By its very
nature, trading on the OTC Bulletin Board provides only limited market
liquidity. The trading market for the shares may be adversely effected by the
subsequent influx into the market of shares offered pursuant to this prospectus.
Although it is impossible to predict market influences and prospective values
for securities, it is possible that, in and of itself, the substantial increase
in the number of shares available for public sale could have a depressive effect
on the market. Until a trading market develops, if at all, the market price for
our common stock is likely to be volatile, and factors such as success or lack
thereof in accomplishing our business objectives may have a significant effect.
In addition, the stock markets generally have experienced, and continue to
experience, extreme price and volume fluctuations which have affected the market
price of many small capitalization companies and which have often been unrelated
to the operating performance of these companies. These broad market
fluctuations, as well as general economic and political conditions, may
adversely affect the market price of our common stock.
Possible Limitations upon Trading Activities; Restrictions Imposed upon
Broker-Dealers Effecting Transactions in Certain Securities. The Securities and
Exchange Commission has adopted regulations imposing limitations upon the manner
in which certain low priced securities (referred to as a "penny stock") are
publicly traded. Under these regulations, a penny stock is defined as any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on the
Nasdaq National Market System or SmallCap Market and any equity security issued
by an issuer that has (i) net tangible assets of at least $2,000,000, if such
issuer has been in continuous operation for three years, (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous operation
for less than three years, or (iii) average annual revenue of at least
$6,000,000 if such issuer has been in continuous operation for less than three
years. Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated therewith. Also,
under these regulations, certain broker/dealers who recommend such securities to
persons other than established customers and certain accredited investors must
make a special written suitability determination for the purchaser and receive
the purchaser's written agreement to a transaction prior to sale.
Our common stock presently constitutes a "penny stock," accordingly,
trading activities for our common stock will be made more difficult for
broker-dealers than in the case of securities not defined as "penny stocks."
This may have the result of depressing the market for our securities and an
investor may find it difficult to dispose of such securities.
Dependence on Key Personnel; Need for Additional Personnel. Our future
success depends on the continuing services of Larry Mayle, our Chief Executive
Officer, and Dr. Roger LeRoy Miller, our President. The loss of either of
Messrs. Mayle or Miller could have a material adverse effect on our business or
operations. Moreover, as we grow, additional personnel will be required. We
believe that the market for qualified personnel in its industry is highly
competitive. There is no assurance that we will be successful in attracting and
retaining key personnel with the skills and expertise necessary to manage our
business.
Competition. The markets in which we operate are highly competitive.
Many of our competitors have greater financial resources, longer operating
histories, greater technical capabilities, and greater name recognition than we
do. Our failure to compete effectively would have a material adverse effect on
our business, operating results, and financial condition.
No Assurance of Market Acceptance. Our future success and competitive
position depends upon the continued market acceptance of our current products
and market acceptance of our new products in development. There can be no
assurance that our products will continue to be accepted in the market.
<PAGE>
Absence of Dividends. We have not paid or declared any cash dividends
with respect to the common stock, and we do not intend to declare any cash
dividends to holders of the common stock in the foreseeable future. The payment
of future dividends, if any, to holders of the common stock is within the
discretion of the Board of Directors and will depend on our earnings, capital
requirements, financial condition, and other relevant factors. There can be no
assurance that any dividends will ever be paid to holders of common stock. There
are certain circumstances under which our credit facility may prohibit the
payment of dividends.
Spamming. We rely heavily on subscriber referrals to add to its
subscriber base. This referral program could motivate subscribers to send
unsolicited bulk e-mails, or spam, in order to encourage other computer users to
subscribe to our online communities. Since it is difficult for us to monitor the
use of e-mail by subscribers soliciting referrals, spamming may result and
damage our reputation or result in violation of legislation restricting
spamming. While we have instituted an anti-spam policy, there can be no
assurances that significant spamming will not occur, or that if it does, that it
may have an adverse effect on our business.
Indemnification of Directors and Officers. Our certificate of
incorporation and bylaws reflect the adoption of the provisions of Section
102(b)(7) of the Delaware General Corporation Law which eliminates or limits the
personal liability of a Director to us or our stockholders for monetary damages
for breach of fiduciary duty under certain circumstances. If the Delaware law is
amended to authorize corporate action further eliminating or limiting personal
liability of Directors, the certificate of incorporation provides that the
liability of our Directors shall be eliminated or limited to the fullest extent
permitted by the Delaware law. Our certificate of incorporation and bylaws also
provide that we shall indemnify any person, who was or is a party to a
proceeding by reason of the fact that he is or was a Director, officer, employee
or agent of ours, or is or was serving at our request as a Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with a proceeding if he acted in good
faith and in a manner he reasonably believed to be or not opposed to our best
interests, in accordance with, and to the full extent permitted by the Delaware
law. The determination of whether indemnification is proper under the
circumstances, unless made by the court, shall be determined by our Board of
Directors.
Acquisition Strategy Risks. We may consider acquisitions that would
complement or expand our business. In attempting to make any such acquisitions,
we may compete with other potential acquirers with greater financial and
operational resources than us. Also, the process of evaluating, negotiating,
financing and integrating acquisitions may divert management's time and
resources or cause us to incur disruptions or unexpected expenses. Although we
currently have no definite plans to do so, we may issue additional shares to
acquire the stock or assets of another business, which could substantially
dilute our stock and reduce its value. Finally, we cannot be sure that any
acquisition, when consummated, will not materially adversely affect our
business, results of operations or financial condition.
Need for Additional Financing. We may not have sufficient capital
resources to develop and implement our business plan. Therefore, our ultimate
success may depend upon our ability to raise additional capital. We have not
investigated the current availability, sources or terms of acquiring additional
capital, and the Board of Directors will not in all likelihood do so until it
has determined a need for such additional capital. If additional capital is
needed, there is no assurance that such capital will be available from any
source or, if available, made or proposed on terms which are acceptable to us.
If such capital is not available, it will be necessary for us to limit our
operations to those that can be financed with existing financial resources.
Risks Associated with Intellectual Property. Our future success and
competitive position depends in part upon our ability to obtain and maintain
certain proprietary technology used in our principal products, and we rely in
part on patent, trade secret, trademark and copyright law to protect that
technology. Some of the technology is not covered by any patent or patent
application, and there can be no assurance that our patent application we filed
will not be invalidated, circumvented, challenged or licensed to others, that
the rights granted thereunder will provide competitive advantages to us or that
any of our pending or future patent applications will be issued with the scope
of the claims sought by us, if at all. Furthermore, there can be no assurance
that others will not develop technologies that are similar or superior to our
technology, duplicate our technology or design around the patents owned or
licensed by us. In addition, effective patent, trademark, copyright and trade
secret protection may be unavailable, limited or not applied for in certain
foreign countries. There can be no assurance that steps taken by us to protect
our technology will prevent misappropriation of such technology.
<PAGE>
The internet service provider industry is characterized by vigorous
protection and pursuit of intellectual property rights or positions, which have
resulted in significant and often protracted and expensive litigation. There is
no intellectual property litigation currently pending against us; however, we
may from time to time be notified of claims that we may be infringing patents or
other intellectual property rights owned by other third parties. If it is
necessary or desirable, we may seek licenses under such patents or intellectual
property rights. However, there can be no assurance that licenses will be
offered or that the terms of any offered licenses will be acceptable to us. The
failure to obtain a license from a third party for technology used by us could
cause us to incur substantial liabilities and to suspend the manufacture or
shipment of products or the use by us of processes requiring the technology.
Litigation could result in significant expense to us, adversely affecting sales
of the challenged product or technology and diverting the efforts of our
technical and management personnel, whether or not such litigation is determined
in favor of us. In the event of an adverse result in any such litigation, we
could be required to pay substantial damages, cease the manufacture, use, sale
or importation of infringing products, expend significant resources to develop
or acquire non-infringing technology, discontinue the use of certain processes
or obtain licenses to the infringing technology. There can be no assurance that
we would be successful in such development or acquisition or that such licenses
would be available under reasonable terms and any such development, acquisition
or license could require expenditures by us of substantial time and other
resources.
Effects of Competition on Pricing; Unanticipated Competing Products.
The advertising-enabled portal business is highly competitive. There are
numerous competitors, some of which have substantially greater financial
resources than we do. New competitors may enter the business, some of which may
offer a more attractive deal for Web surfers, thereby taking away business from
us. Advertisers may no longer wish to deal with us if the subscriber base for
our dollars4mail.com system does not grow rapidly or if our subscribers do no
use our system. In addition,the internet service provider industry is highly
competitive. Competition is based on price, product performance, quality,
reliability and customer service. The gross profit margins realizable in our
markets can differ across regions, depending on the economic strength of
end-product markets in those regions. In addition, even in strong markets price
pressures may emerge as competitors attempt to increase market share by lowering
prices on those products. Competition in the various markets served by us comes
from companies of various sizes, many of which are larger and have greater
financial and other resources than we do and thus can better withstand adverse
economic or market conditions than we can. In addition, companies not currently
in direct competition with us may introduce competing products in the future.
Control by Existing Stockholders; Anti-Takeover Effects. Our executive
officers, directors and other principal shareholders, in the aggregate,
beneficially own approximately 61% of our outstanding shares of common stock.
The voting power of these stockholders, under certain circumstances, could have
the effect of delaying or preventing a change in control of us. Further, the
holders of our shares of common stock are not entitled to accumulate their
votes. Accordingly, the holders of a majority of the shares of common stock
present at a meeting of stockholders will be able to elect all of our Directors
and the minority stockholders will not be able to elect a representative to our
Board of Directors.
<PAGE>
USE OF PROCEEDS
Because this prospectus is solely for the purpose of permitting the
selling stockholders to offer and sell shares, we will not receive any proceeds
from the sale of the shares being offered. The selling stockholders will receive
all the proceeds. We have, however, previously received proceeds from the
original issuance of the shares covered by this prospectus.
DETERMINATION OF OFFERING PRICE
This offering is solely for the purpose of allowing selling
stockholders to sell shares. The selling stockholders may elect to sell some or
all of their shares when they choose, in the near future or at a later date, at
the price at which they choose to sell. As the market develops, the selling
stockholders will determine the price for their shares.
DIVIDENDS
To date, we have paid no dividends on any shares of common stock and
our Board of Directors has no present intention of paying any dividends on the
common stock in the foreseeable future. The payment by us of dividends on the
common stock in the future, if any, rests solely within the discretion of the
Board of Directors and will depend upon, among other things, our earnings,
capital requirements and financial condition, as well as other factors deemed
relevant by our Board of Directors. Although dividends are not limited currently
by any agreements, it is anticipated that future agreements, if any, with
institutional lenders or others may also limit our ability to pay dividends on
the common stock.
MARKET FOR SECURITIES
The high and low bid (price which a market maker is willing to pay for
a share of common stock) and offered (price at which a market maker will sell a
share of common stock) quotations for the common stock, as reported by brokerage
firms listed on the specified dates by the OTC Bulletin Board as making markets
in our securities are listed in the following chart. These quotations are
between dealers, do not include retail mark-ups, markdowns or other fees and
commissions, and may not represent actual transactions. (These quotations are
all given on a pre-reverse-split basis)
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Date Low Bid Price High Bid Price
<S> <C> <C>
1st Quarter - 1998 * *
2nd Quarter - 1998 * *
3rd Quarter - 1998 * *
4th Quarter - 1998 * *
1st Quarter - 1999 $0.1875 $2.75
2nd Quarter - 1999 $0.3125 $6.00
3rd Quarter - 1999 $2.00 $5.00
4th Quarter - 1999 $2.00 $4.00
1st Quarter - 2000 $0.01 $0.07
2nd Quarter - 2000 $0.04 $1.00
</TABLE>
* No bids or trades reported
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
We are an Internet company that provides advertisers with an online
audience of targeted consumers. Through our flagship vehicle, dollars4mail.com,
we offer our subscribers free web-based e-mail accounts, games, chat,
casino-type activities, cash rebates for e-commerce purchases, and rewards for
signing up for online programs. Our subscribers share revenue derived from the
use of these services as well as from the activities of their referrals. We plan
to add as many revenue-generating services as practical with the intention of
maximizing the value to our advertisers. Through dollars4mail.com, we have also
created a unique application hosting service for advertisers, advertising
agencies, medium- and large-company marketing departments, and media companies.
Our goal is to match advertisers' marketing messages with the widest audience of
targeted consumers. This will be accomplished through the mining of the opt-in
email list that is being created through this vehicle. Advertisers are able to
target an audience with great precision and to communicate directly with them
via email.
In addition to dollars4mail.com, we operate virtuallyfreeinternet.com,
a national Internet service that provides analog Internet service also utilizes
revenue sharing and referral-based marketing to increase its subscriber base.
We are the surviving entity of a merger that occurred on May 19, 2000
pursuant to which eNexi Inc. (formerly known as VirtuallyFreeInternet.com, Inc.)
merged with and into Silver King Resources, Inc. Pursuant to the terms of the
merger agreement, Silver King Resources, Inc. acquired 100% of the outstanding
capital stock of eNexi Inc. for a purchase price consisting of 6,000,000
newly-issued shares of Silver King Resources' series A convertible preferred
stock, which are convertible into 6,000,000 shares of Silver King Resources'
common stock, or approximately 61% of the outstanding shares of common stock. In
addition, as part of the merger, Silver King Resources, Inc. agreed to assume
the existing eNexi warrants which, permit the issuance of 1,000,000 shares of
common stock at an exercise price of $2.50 per warrant. In conjunction with the
merger closing, a private placement offering was completed for 2,009,864 newly
issued shares of Silver King Resources' series B convertible preferred stock,
and the shares are convertible into an aggregate 2,009,864 shares of common
stock. The series B shares were sold at a price of $2.50 per share to accredited
investors and raised gross proceeds of $5,024,660. The proceeds of the offering
will be used to fund our operations.
Results of Operations
From May 14, 1999 (Inception) to December 31, 1999
Net revenues; losses. We derived revenues from monthly access fees
charged to members of VirtuallyFreeInternet.com. We earned $27,192 in revenues
from VirtuallyFreeInternet.com following its launch in September 1999 and
incurred operating losses of $1,495,543 from May to December of 1999.
Cost of revenues. The cost of revenues consist of the cost of
connecting members to the Internet, providing email services, points of presence
or POP's (dial-up telephone access), commissions earned by our members, and
credit card processing fees. We incurred $179,073 in dial-up service expenses in
the period.
Sales and marketing. Sales and marketing costs consist of the cost of
Internet advertisements purchased to attract new members to our web sites, new
market penetration costs, and public relations costs. Advertising costs were
$310,480 in the period.
Administrative costs. During the period ended December 31, 1999,
administrative costs consisted mainly of legal fees, labor and consultant costs
required to develop our proprietary software. Labor and consultant costs
incurred in the period ended December 31, 1999 were $561,480 collectively.
<PAGE>
Interest expense. Interest expense incurred for the period ended
December 31, 1999 amounted to $9,141 and were derived from the notes due to
related parties.
For the Three Months Ended March 31, 2000
Net revenues; losses. We currently derive our revenues from two
sources: monthly access fees charged to members of VirtuallyFreeInternet.com and
from advertising companies that purchase advertising space on Dollars4mail.com.
During the three months ended March 31, 2000, we earned $60,285 in revenues from
members of VirtuallyFreeInternet.com and $36,087 in revenues from
Dollars4mail.com (the Dollars4mail.com revenues were earned from March 6, 2000,
the site launch date, through March 31, 2000). Also, during the three months
ended March 31, 2000, we incurred a loss in the amount of $588,073.
Cost of revenues. The cost of revenues consist of the cost of
connecting members to the Internet, providing email services, points of presence
or POP's (dial-up telephone access), commissions earned by our members, and
credit card processing fees. We paid $71,945 to dial-up service providers in the
quarter.
Sales and marketing. Sales and marketing costs consist of the cost of
Internet advertisements purchased to attract new members to our web sites, new
market penetration costs, and public relations costs. Advertising expenditures
for the quarter ended March 31, 2000 were $186,000.
Administrative costs. During the three months ended March 31, 2000,
administrative costs increased on average due to the increase in our labor
force. We expanded our number of employees by approximately 50% in the period
while other costs remained relatively consistent. Labor costs for the quarter
ended March 31, 2000 were $226,964.
Interest expense. Interest expense for the three months ended March 31,
2000 amounted to $6,073 and were derived from the notes due to related parties.
Liquidity and Capital Resources
As of March 31, 2000, we had cash and cash equivalents of $630,475 and
receivables of $36,913. The increase in accounts receivable is due to the
addition of sales from advertising companies whose payment terms range from 30
to 90 days.
On May 19, 2000, we received $5,024,660 in gross proceeds from a
private placement of its securities completed in conjunction with the closing of
the eNexi merger. In exchange for the proceeds, we sold 2,009,864 shares of
series B convertible preferred stock for a price of $2.50 per share. The Company
currently has a working capital deficit from operations and the proceeds from
the private placement will be used to fund its operations.
<PAGE>
BUSINESS
History
We originally incorporated under the laws of the State of Florida under
the name Arngre, Inc. On June 24, 1999, we merged with and into Silver King
Resources (Delaware), Inc., a newly-formed Delaware corporation. Silver King
(Delaware), Inc., the surviving corporation of the merger, was formed for the
purpose of the merger and had no prior operating history. Immediately after the
completion of the merger, we changed our name to Silver King Resources, Inc.
On May 19, 2000, Silver King Acquisitions, Inc., a Delaware corporation and
a wholly owned subsidiary of us, merged with and into eNexi Inc., a Delaware
corporation. eNexi Inc., as the surviving entity after the merger, is a wholly
owned subsidiary of us. We anticipate changing our name in the near future to
eNexi Holdings, Inc. to reflect the change in our business plan.
Overview
Recent Change of Business
Until recently, we were an exploration stage mineral resource holding
company. From inception through 1998, we were inactive, having been formed to
identify private business opportunities that would capitalize on our status as a
public corporation. Commencing in early 1999, we began operations as an
exploration-stage mineral resource holding company operating through its Mexican
subsidiary, International Capri Resources, S.A. de C.V., a joint venture in
which we owned a 60% interest. During 1999, the Mexican subsidiary conducted
initial stage exploration of silver-producing properties in Zacualpan, Mexico.
Because recent geologic results at the Zacualpan project indicated concentration
of potential mineral deposits less than the amounts expected by management, we
elected to temporarily suspend any further exploration activities and explore
other business opportunities. Toward that end, on March 21, 2000, we entered
into an Agreement and Plan of Merger with eNexi Inc., a company that provides
Internet-related services. Pursuant to the terms of the merger Agreement, Silver
King Acquisition, Inc., a newly formed Delaware corporation and wholly owned
subsidiary of us, merged with and into eNexi. As the surviving entity of the
merger, eNexi is a wholly owned subsidiary of us. Since the completion of the
merger on May 19, 2000, we discontinued all mining operations in full and are
attempting to divest our interest in the Zacualpan through a sale or liquidation
event.
Pursuant to the terms of the merger agreement, we acquired 100% of the
outstanding capital stock of eNexi for a purchase price consisting of 6,000,000
newly-issued shares of our series A convertible preferred stock, which will
automatically convert into 6,000,000 shares of our common stock upon the reverse
stock split, or approximately 61% of the outstanding shares of common stock. In
addition, as part of the merger, we agreed to assume existing eNexi warrants
which permit the issuance of 1,000,000 shares of common stock at an exercise
price of $2.50 per warrant. Concurrently with the closing of the merger, we
completed the private placement sale of 2,009,864 shares of series B convertible
preferred stock which will automatically convert into an aggregate 2,009,864
shares of common stock upon the reverse stock split. We received approximately
$5,024,660 of gross proceeds from the offering which will be used to fund our
operations.
eNexi
eNexi was incorporated in Delaware in May 1999. It is an Internet
service provider (ISP) and intermediary for online advertising and marketing.
Through eNexi, we provide free email accounts through a Web-based email system,
www.dollars4mail.com. In order to become a subscriber to the system, each
applicant must provide detailed information about his or her demographics and
interest. We expect to make these data available to online advertisers in the
future to enable them to target specific groups within the dollars4mail
subscriber base depending on demographics, interests or both. The advertisers
pay eNexi based on the number of times the advertisements appear on the users'
<PAGE>
screens or the number of times the users click on the advertisements to view an
advertiser's web site. In turn, we share our advertising revenue with the
dollars4mail subscribers, who receive cash compensation for referrals to the
dollars4mail system and for visits they and their referrals make to the websites
of advertisers on the system. Through our VirtuallyFreeInternet.com division, we
provide analog Internet access to our subscribers for a monthly fee. Subscribers
to VirtuallyFreeInternet.com can earn cash compensation for referrals to the
Internet access service. VirtuallyFreeInternet.com and dollars4mail.com are
supported by eNexi's patent-pending proprietary software that permits fully
automated online sign-up, authentication of subscribers, automated credit card
billing and processing of multi-tiered referral compensation.
Internet Service Provider Operations
Through eNexi, we provide analog Internet access through our
VirtuallyFreeInternet.com division, and act as an Internet-based intermediary
for businesses to reach target audiences by means of online advertising through
our dollars4mail.com email system. Through VirtuallyFreeInternet.com, we deliver
co-branded and private-branded Internet access in 49 states for a monthly fee,
which is currently $15. Although there are currently only 1,500 subscribers to
VirtuallyFreeInternet, we hope to increase our subscriber bases by paying cash
rewards for referrals to VirtuallyFreeInternet's Internet access services. We
also co-brand VirtuallyFreeInternet with existing online communities to increase
our subscriber base. Under a co-branding arrangement, eNexi and its partnering
online community link their websites together so that a visitor to one will be
more likely to visit the other. To accomplish this, the partnering online
community places a link on its portal to VirtuallyFreeInternet's site, uploads a
VirtuallyFreeInternet graphic to its website, or delivers email newsletters to
its members with links to VirtuallyFreeInternet. In exchange, we place a link on
our portal to the co-branding partner's site or pay our partner cash
compensation for subscribers to VirtuallyFreeInternet who reached the site
through the partner's link. To facilitate VirtuallyFreeInternet and other
applications, we have developed patent-pending software with the capability to
allow automated customer sign-up, authenticate the identification of
subscribers, referral compensation calculation and management and automated
periodic credit card billing. We are currently in the process of soliciting a
buyer for our subscribers in order to focus exclusively on our dollars4mail.com
program.
Advertiser Support
We also utilize our proprietary software system to operate
www.dollars4mail.com, an online community that offers its subscribers free email
accounts and cash payments for viewing online advertisements and purchasing
products and services from online advertisers. This system is used as a vehicle
to offer advertisers a method of presenting ads to potential customers in the
context of us sharing the resultant ad revenues with our dollars4mail.com
subscribers. We are paid on a per-click basis and sometimes on a
cost-per-thousand (CPM) basis for all such advertising viewed by our
subscribers. This system commenced operations in mid March 2000 and now has over
100,000 subscribers.
As our subscriber base grows, the dollars4mail program will become more
valuable to advertisers. When subscribing to the program, a user must
voluntarily complete a detailed information form about interests and
socio-economic status. This information allows our advertisers to target
specific audiences for better response rates. Our patent-pending proprietary
software is compatible with the program, including the multi-tiered compensation
aspect for each dollars4mail.com subscriber.
The dollars4mail.com program is marketed in a variety of way, all on
the Web. In some situations, we pay for banner ads on a cost per thousand
impression (CPM) basis, and sometimes on a cost per click (CPC) basis. In other
situations we pay a flat fee for an active subscriber sign-up, but always
through Web advertising only. In addition, our model pays referral payments to
members who bring in other members who earn cash from our system. No one is ever
paid anything just for bringing new subscribers, though. In effect, we use viral
marketing for a growing part of our subscriber acquisition to dollars4mail.com.
There are many competitors that offer some of our products on their sites.
Indeed, there are hundreds of advertising-enabled portals offering Web surfers
<PAGE>
the chance to make money on the Web. One of the biggest is AllAdvantage.com,
which offers members payments to view ads in an adbar that is active while they
surf the Web. We do not offer such a product, but the principle is the same:
sharing advertising revenues with users of the system. Spree.com is a company
that offers cash rebates to members. We do the same. Spedia.com offers, among
other things, an adbar similar to what AllAdvantage.com offers, and in addition
pays people for signing up with other programs. We offer a similar product on
our site. There are other sites that offer members payments to send out jokes,
to send out e-mails, etc. Many competitors have greater resources that we do and
may create methods to acquire subscribers at a faster rate than we can.
Properties
We currently rent approximately 2,000 square feet of office space for
our corporate headquarters in Irvine, California for $4,255 per month. We also
lease space from Exodus Communications, Inc. at its Internet Data Center in
Irvine, California for $9,615 per month. Our servers and hardware are located at
the Internet Data Center.
Employees
As of June 1, 2000, we had 20 full-time employees. None of our
employees are currently covered by collective bargaining agreements. We believe
that relations with our employees are good.
Legal Proceedings
We are not currently involved in any material litigation or legal
proceedings and is not aware of any potentially material litigation or
proceeding threatened against us.
<PAGE>
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Larry Mayle 57 Co-Chairman, Chief Executive Officer and
Dr. Roger LeRoy Miller 57 Co-Chairman, President and Director
Michael Ames 39 Chief Financial Officer and Director
</TABLE>
Set forth below is a brief background of our executive officers and
directors, based on information supplied by them.
Larry Mayle co-founded eNexi and has served as its Co-Chairman and Chief
Executive Officer since its formation in May 1999. During the five years prior
to co-founding eNexi, Mr. Mayle owned and managed Rally Chevrolet and other
General Motors' dealerships in Southern California, where he developed automated
management systems for the operation of his dealerships. Mr. Mayle holds a
Bachelor of Science degree from the University of Southern California.
Dr. Roger LeRoy Miller co-founded eNexi and has served as its Co-Chairman
and President since its formation in May 1999. During the five years prior to
founding eNexi, Dr. Miller owned and managed Unicor, Inc., a Florida corporation
that provides manuscripts and marketing materials for college textbooks in
economics, business law and political science. Through Unicor, Dr. Miller
developed interactive CD-ROM and Web-based educational systems for several
publishers, including HarperCollins, West and McGraw-Hill. Dr. Miller holds a
Ph.D. in economics and business from the University of Chicago and a Bachelor of
Arts degree in economics from the University of California at Berkeley.
Michael Ames has served as Chief Financial Officer and Director of eNexi
since June 1999. From 1998 to June 1999, Mr. Ames served as the Vice
President/Controller of Systems Management Specialists, Inc., a technology
outsourcing company based in Santa Ana, California. From 1990 to 1998, Mr. Ames
ran his own financial consulting business. Mr. Ames received a Bachelor of
Science in Accounting and Management Information Systems from California State
University, Fullerton, in 1985. He is a Certified Public Accountant in the State
of California.
Each of the foregoing officers and Directors were appointed as our
Directors on May 19, 2000.
Our Directors hold office until the next annual meeting of our stockholders
and until their successors have been elected and duly qualified. Executive
officers are elected by the Board of Directors annually and serve at the
discretion of the Board.
Compensation of Directors
Directors will receive no salary for their services and no fee for their
participation in meetings, although all Directors are reimbursed for reasonable
travel and other out-of-pocket expenses incurred in attending meetings of the
Board.
<PAGE>
Executive Compensation
Larry Mayle and Roger Miller received no compensation in the year 1999.
Employment Arrangements
We entered into one year employment agreements with Messrs. Mayle and
Miller providing annual salaries of $180,000 and $120,000 respectively, and
other customary benefits and provisions.
Employee Stock Option Plan
Our Board of Directors recently adopted the 2000 Employee Stock Option
Plan. Under the 2000 plan, 1,500,000 shares of common stock have been authorized
for issuance as Incentive Stock Options or Non-Incentive Stock Options. The 2000
plan anticipates qualifying under Section 423 of the Internal Revenue Code of
1986, as an "employee stock purchase plan." Under the 2000 plan, options may be
granted to our key employees, officers, directors or consultants.
The purchase price of the common stock subject to each Incentive Stock
Option shall not be less than the fair market value (as determined in the 2000
Plan), or in the case of the grant of an Incentive Stock Option to a principal
stockholder, not less that 110% of fair market value of such common stock at the
time such option is granted. The purchase price of the common stock subject to
each Non-Incentive Stock Option shall be determined at the time such option is
granted, but in no case less than 85% of the fair market value of such shares of
common stock at the time such option is granted.
The 2000 plan shall terminate 10 years from the earlier of the date of its
adoption by the Board of Directors or the date on which the 2000 plan is
approved by the affirmative vote of the holders of a majority of the outstanding
shares of our capital stock entitled to vote thereon, and no option shall be
granted after termination of the 2000 plan. Subject to certain restrictions, the
2000 plan may at any time be terminated and from time to time be modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of our capital stock present, or represented, and entitled to vote at a
meeting duly held in accordance with the applicable laws of the State of
Delaware.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of the June 1, 2000, as adjusted to reflect the
conversion of the series A and series B preferred stock, by (i) each person who,
to our knowledge, beneficially owns more than 5% of the our common stock; (ii)
each of our directors; and (iii) all of our executive officers and directors as
a group:
<PAGE>
<TABLE>
<CAPTION>
Amount of
Beneficial Percentage
Ownership(1)(2) of Beneficial
Ownership
Name and Address of
Beneficial Owner
<S> <C> <C>
Larry Mayle 2,757,707(3) 25.7%
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Dr. Roger LeRoy Miller 1,880,571 17.5%
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Michael Ames 12,036 *
c/o eNexi Inc.
20 Corporate Park, Suite 110
Irvine, CA 92606
Haywood Securities, Inc. 1,000,000(4) 9.3%
400 Burrad Street
Vancouver, BC
Canada V6C 3A6
Millworth Investments, Inc. 880,000 8.2%
4960 South Virginia Street
Suite 300
Reno, NV 89502
All Directors and Executive Officers as a 4,650,314 43.3%
Group (3 persons)
----------------------
o Less than 1%.
</TABLE>
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in
the rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended, and accordingly, may include securities owned by
and for, among others, the spouse and/or minor children of an
individual and any other relative who has the same home as such
individual, as well as other securities as to which the individual has
or shares voting or investment power or which such person has the right
to acquire within 60 days pursuant to the conversion of convertible
equity, exercise of options, or otherwise. Beneficial ownership may be
disclaimed as to certain of the securities.
(2) Based upon 10,732,864 shares of common stock outstanding as of June 1,
2000, assuming no other changes in the beneficial ownership of the our
securities except the conversion of series A and series B preferred
stock and the issuance of 1,000,000 shares of common stock pursuant to
the exercise of outstanding warrants.
<PAGE>
(3) Includes 24,072 shares owned by Mr. Mayle's wife. Mr. Mayle disclaims
beneficial ownership of such shares.
(4) Issuable upon exercise of presently exercisable options.
Restrictions Upon Resale
In addition to any prohibition on transfers or sales under applicable
federal or state securities laws, Larry Mayle and Roger Miller have agreed not
to sell, transfer, encumber or otherwise dispose of (i) 3,000,000 shares of
series A preferred stock; or (ii) the shares of common stock issuable upon the
conversion of such shares, during the period commencing on May 19, 2000, and
ending on the earlier to occur of (x) the date on which we have at least 500,000
subscribers in our online communities or (y) August 2002.
Voting Arrangements
In the event that we do not have 500,000 subscribers to our online
communities by August 2002, then Messrs. Mayle and Miller shall give a voting
proxy with respect to 3,000,000 shares of common stock to Haywood Securities
until the earlier to occur of (x) 90 days thereafter; or (y) the date on which
we attain 500,000 subscribers to our online communities.
CERTAIN TRANSACTIONS
There were no transactions between the Company and officers or directors of more
than $60,000.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 50,000,000 shares of Common Stock,
par value $0.001 per share, 15,000,000 shares of Preferred Stock, par value
$0.001 per share, which may be issued in one or more series at the discretion of
the Board of Directors. As of June 1, 2000, 9,732,864 shares of common stock
were issued and outstanding, assuming the conversion of 6,000,000 shares of
series A preferred stock and 2,009,864 shares of series B preferred stock.
Common Stock
Holders of shares of common stock are entitled to one vote per share on
each matter submitted to vote at any meeting of stockholders. Shares of common
stock do not carry cumulative voting rights and, therefore, holders of a
majority of the outstanding shares of shares of common stock will be able to
elect the entire Board of Directors, and, if they do so, minority stockholders
would not be able to elect any members to the Board of Directors. Our Board of
Directors has authority, without the action by the our shareholders, to issue
all or any portion of the authorized but unissued shares of common stock, which
would reduce the percentage ownership of our present stockholders and which may
dilute the book value of the shares of common stock.
Our stockholders have no pre-emptive rights to acquire additional
shares of common stock. The shares are not subject to redemption and carry no
subscription or conversion rights. In the event of liquidation, the shares of
common stock are entitled to share equally in corporate assets after
satisfaction of all liabilities. All of the shares of common stock currently
issued and outstanding are fully paid and non-assessable.
Holders of shares of common stock are entitled to receive such
dividends as the Board of Directors may from time to time declare out of funds
legally available for the payment of dividends. We have not paid dividends on
our shares of common stock and there can be no assurance that it will pay
dividends in the foreseeable future.
<PAGE>
Preferred Stock
Shares of preferred stock may be issued from time to time in one or
more series as may from time to time be determined by our Board of Directors.
Our Board of Directors has authority, without action by the stockholders, to
determine the voting rights, preferences as to dividends and liquidation,
conversion rights and any other rights of such series. Any shares of preferred
stock, if and when issued, may carry rights superior to those of the shares of
common stock. We previously issued authorized and issued 6,000,000 shares of
series A preferred stock and authorized 3,000,000 shares of series B preferred
stock, of which 2,009,864 were issued. Upon the effectiveness of the reverse
stock split, all of the outstanding shares of series A and series B preferred
stock will be converted into 8,009,864 shares of common stock. The shares of
preferred stock so converted shall no longer be available for issuance.
Series B Preferred Stock
The Board of Directors authorized the designation of a series of
preferred stock as series B convertible preferred stock, and authorized the
issuance of up to 3,000,000 shares of series B preferred stock with such rights
and preferences as are described in the following summary.
The series B preferred stock has no liquidation preferences.
Accordingly, if we liquidate or dissolve, after payment to all creditors,
holders of the series B preferred stock shall share ratably (on an as-converted
basis) with holders of the common stock in any distribution to be made. Except
as otherwise set forth below, the holders of the series B preferred stock have
rights equal to those of holders of common stock to receive dividends when, as
and if declared by the Board of Directors, out of funds legally available
therefor. Each share of series B preferred stock automatically converts into 25
shares of common stock following the reverse stock split. Each share of series B
preferred stock shall have the right to that number of votes equal to the number
of shares of common stock issuable upon conversion of such share.
Certain Anti-takeover Devices
We are subject to Section 203 of the Delaware General
Corporation Law, which restricts certain transactions and business combinations
between a corporation and an "Interested Stockholder" owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the date
the stockholder becomes an Interested Stockholder. Subject to certain
exceptions, unless the transaction is approved by the Board of Directors and the
holders of at least 66-2/3% of the outstanding voting stock of the corporation
(excluding shares held by the Interested Stockholder), Section 203 prohibits
significant business transactions such as a merger with, disposition of assets
to, or receipt of disproportionate financial benefits by the Interested
Stockholder, or any other transaction that would increase the Interested
Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain stock plans).
Transfer Agent and Registrar
Interwest Transfer Company has been appointed as the transfer
agent and registrar for our common stock. Its telephone number is (801)
272-9294.
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
As of June 1, 2000, we had 9,732,864 shares of common stock outstanding
(including shares issuable upon conversion of outstanding shares of series A and
series B preferred stock). All of the 5,170,449 shares of common stock sold in
this offering will be freely transferable by persons other than our "affiliates"
(as that term is defined under the Securities Act of 1933).
Less than 10% of the outstanding shares of common stock are
"restricted securities" within the meaning of Rule 144 under the Securities Act
of 1933 and may not be sold in the absence of a registration under the
Securities Act of 1933 unless an exemption from registration is available,
including the exemption contained in Rule 144. In general, under Rule 144 as
currently in effect, a person who has beneficially owned restricted securities
for a period of at least one year, including an "affiliate" as that term is
defined in Rule 144, is entitled to sell, within any three-month period a number
of "restricted" shares that does not exceed the greater of 1% of the then
outstanding shares of common stock or the average weekly trading volume during
the four calendar weeks preceding such sale. Sales under Rule 144 are also
subject to certain manner of sale limitations, notice requirements and the
availability of current public information about us. Rule 144(k) provides that a
person who is not deemed an "affiliate" and who has beneficially owned shares
for at least two years is entitled to sell such shares at any time under Rule
144 without regard to the limitation described above.
SELLING STOCKHOLDERS
The following table gives information on the selling stockholders based
on the number of outstanding shares of common stock as of June 1, 2000. The
number of shares to be beneficially owned following completion of the offering
is based on the assumption that the stockholder will sell all of the shares that
may be offered for the stockholder's account in this offering, and that the
stockholder will not purchase or sell any other shares. Stockholders are not
required to sell the shares that may be offered in this offering. Under
Securities and Exchange Commission rules, beneficial ownership includes all
shares of common stock issuable within 60 days after the date of this prospectus
upon exercise of outstanding options, warrants, convertible securities or other
rights.
<TABLE>
<CAPTION>
Name No. of Percent of No. of No. of
Shares Outstanding Shares Shares Owned
Beneficially Shares Offered After Sale
Owned Represented by
Total
<S> <C> <C> <C> <C>
Seawolf LTD 114,627 1.2% 114,627 0
Clyde Perlee 57,313 * 57,313 0
Woodside Financial Services 114,627 1.2% 114,627 0
John S. Morton 28,656 * 28,656 0
Larry Sisson 57,313 * 57,313 0
Stephen Clarke 28,656 * 28,656 0
David Lyall 57,313 * 57,313 0
JIBE Holdings, Inc. 28,656 * 28,656 0
ScouterHoldings,1nc. 57,313 * 75,313 0
Clarion Finanz AG 57,313 * 57,313 0
John Tognetti 57,313 * 57,313 0
FEI-Brent Investments LTD 28,656 * 28,656 0
Peripatetic Investments LTD 57,313 * 57,313 0
William Hunter 14,328 * 14,328 0
Steven Clayton 28,656 * 28,656 0
James Hattori 14,328 * 14,328 0
Don Simpson 28,656 * 28,656 0
<PAGE>
Glen Pountney 28,656 * 28,656 0
John Meisenbach 28,656 * 28,656 0
Richard Grafton 28,656 * 28,656 0
Greg Boland 57,313 * 57,313 0
Jeff Brotman 28,656 * 28,656 0
Laiy Limited 28,656 * 28,656 0
Michael Goldfarb 14,328 * 14,328 0
Mark Johnson 114,627 1.2% 114,627 0
Gary Corbett 26,732 * 26,732 0
Deans Knight Capital Management 200,000 2.0% 200,000 0
Greg Boland 40,000 * 40,000 0
Kaimar Investment Corp. 40,000 * 40,000 0
Ken Downie 40,000 * 40,000 0
Deano 2000 Holdings, Inc. 40,000 * 40,000 0
Glenarriff Investment 36,000 * 36,000 0
Val De Sol Inc. 40,000 * 40,000 0
Haywood Securities, Inc. 80,000 * 80,000 0
Bodejo Investments Ltd. 42,000 * 42,000 0
Banque Privee Edmond De Rothschild 40,000 * 40,000 0
Grafton Family Trust 80,000 * 80,000 0
C. Channing Buckland 40,000 * 40,000 0
Fei Brent Investments Ltd. 27,200 * 27,200 0
Robert Disbrow 40,000 * 40,000 0
Marna Disbrow 27,200 * 27,200 0
Patricia Poutney 60,000 * 60,000 0
Largo Flight Limited 60,000 * 60,000 0
California Bank & Trust Agent FBO 100,000 1.0% 100,000 0
Johnathon Andron Roth IRA
Jibe Holdings Ltd. 44,000 * 44,000 0
Trinity Pacific Investments 80,000 * 80,000 0
Can-oro Consulting 40,000 * 40,000 0
Winton Capital Holdings Ltd. 100,000 1.0% 100,000 0
Adolf H. Lundin 40,000 * 40,000 0
Holnik Capital Inc. 26,732 * 26,732 0
United Market Ltd. 300,000 3.0% 300,000 0
Unicor, Inc. 80,000 * 80,000 0
Larry A. Mayle 40,000 * 40,000 0
Edelman Value Partners, L.P. 90,000 * 90,000 0
The Wimbledon Edelman Select Opportunities 20,000 * 20,000 0
Edelman Value Partners, L.P. 90,000 * 90,000 0
Haywood Securities, Inc. 1,000,000 9.1% 1,000,000 0
KAB Investments, Inc. 60,000 * 60,000 0
Milworth Investments, Inc. 880,000 9.0% 880,000 0
SPH Investments, Inc. 60,000 * 60,000 0
</TABLE>
* Less than 1%.
<PAGE>
PLAN OF DISTRIBUTION
We are registering this offering of shares on behalf of the selling
stockholders. We will pay all costs, expenses and fees related to the
registration, including all registration and filing fees, printing expenses,
fees and disbursements of its counsel, blue sky fees and expenses. The selling
stockholders will pay any underwriting discounts and selling commissions in
connection with the sale of the shares.
The selling stockholders may sell the shares covered by this prospectus
from time to time in one or more transactions through the OTC Bulletin Board or
an interdealer quotation system, on one or more securities exchanges, in
alternative trading markets or otherwise, at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The selling stockholders will determine the prices at which they
sell their shares in these transactions. The selling stockholders may effect the
transactions by selling the shares to or through broker-dealers. In effecting
sales, broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales. The shares may be sold by one or
more, or a combination, of the following:
- a block trade in which the broker-dealer attempts to sell the
shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction,
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account,
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers, and
- privately negotiated transactions.
The selling stockholders may enter into hedging transactions with
broker-dealers. In these transactions, broker-dealers may engage in short sales
of the common stock in the course of hedging the positions they assume with the
selling stockholders. The selling stockholders also may sell the common stock
short pursuant to this prospectus and redeliver the shares to close out these
short positions. The selling stockholders may enter into option or other
transactions with broker-dealers that require the delivery to the broker-dealer
of the shares covered by this prospectus. The broker-dealer may then resell or
otherwise transfer the shares pursuant to this prospectus. The selling
stockholders also may loan or pledge the shares to a broker-dealer. The
broker-dealer may then sell the loaned shares or, upon a default by the selling
stockholder, the broker-dealer may sell the pledged shares pursuant to this
prospectus.
The selling stockholders may engage in other financing transactions
that may include forward contract transactions or borrowings from financial
institutions in which the shares are pledged as security. In connection with any
of these forward contract transactions, the selling stockholders would pledge
shares to secure their obligations and the counterparty to these transactions
would sell the common stock short to hedge its transaction with the selling
stockholder. Upon a default by the selling stockholder under any of these
financings, including a forward contract transaction, the pledgee or its
transferee may sell the pledged shares pursuant to this prospectus. Any such
pledgee or its transferee will be identified in this prospectus by
post-effective amendment to the registration statement of which it is a part.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholder.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation to a particular broker-dealer may be in excess of customary
commissions and will be in amounts to be negotiated with a selling stockholder
in connection with the sale. Broker-dealers or agents, any other participating
broker-dealers and the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933 in connection
with sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act of 1933. Because the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to the prospectus delivery requirements of the
Securities Act of 1933. Each selling stockholder has advised put in our transfer
agent that the stockholder has not yet entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of the shares.
<PAGE>
The selling stockholders have agreed to sell the shares only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states the shares may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from registration or qualification is available and is complied
with.
The selling stockholders will be subject to applicable provisions of
the Securities Exchange Act of 1934 and the associated rules and regulations,
including Regulation M. These provisions may limit the timing of purchases and
sales of shares of the common stock of Silver King by the selling stockholders.
Silver King will make copies of this prospectus available to the selling
stockholders and has informed them of the need for delivery of copies of this
prospectus to purchasers at or before the time of any sale of the shares.
Legal Matters
Certain legal matters in connection with this offering will be passed
upon for us by Sichenzia, Ross & Friedman LLP, New York, New York.
Experts
Our financial statements as of December 31, 1999, and for the
year then ended and our balance sheet as of December 31, 1999 have been included
herein and in the registration statement in reliance upon the reports of
Mendoza, Berger & Company, independent certified public accountants, appearing
elsewhere herein, and upon the authority of such firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith file reports, proxy or
information statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
as well as at the following regional offices: Seven World Trade Center, New
York, New York 10048, and Citicorp Center, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C.20549, at prescribed rates. In addition, the Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the Commission's web site is http://www.sec.gov.
We have filed with the Commission, a registration statement on Form
SB-2 under the Securities Act of 1933 with respect to the common stock being
offered hereby. As permitted by the rules and regulations of the Commission,
this prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to the Company and the common stock offered hereby,
reference is made to the registration statement, and such exhibits and
schedules. A copy of the registration statement, and the exhibits and schedules
thereto, may be inspected without charge at the public reference facilities
maintained by the Commission at the addresses set forth above, and copies of all
or any part of the registration statement may be obtained from such offices upon
payment of the fees prescribed by the Commission. In addition, the registration
statement may be accessed at the Commission's web site. Statements contained in
this prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report....................................................................................F-1
Balance Sheet...................................................................................................F-2
Statement of Income and Expense.................................................................................F-3
Statement of Stockholders' Equity...............................................................................F-4
Statement of Cash Flows.........................................................................................F-5
Notes to the Financial Statements...............................................................................F-7
</TABLE>
<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders
of Silver King Resources, Inc.(d.b.a. eNexi)
We have audited the accompanying balance sheet of Silver King Resources, Inc.
(d.b.a. eNexi Inc.) (formerly known as eNexi, Inc.) (a Delaware corporation) as
of December 31, 1999, and the related statements of income and expense,
stockholders' equity, and cash flows from inception (May 14, 1999) through
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Silver King Resources, Inc.
(d.b.a. eNexi, Inc.) as of December 31, 1999, and the results of its operations
and its cash flows for the period from inception through December 31, 1999 in
conformity with generally accepted accounting principles.
/s/MENDOZA BERGER & COMPANY, LLP
Mendoza Berger & Company, LLP
Laguna Hills, California
March 16, 2000, except for Notes 1, 10 and 11, as to which the date is June 13,
2000
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
BALANCE SHEET
DECEMBER 31, 1999 AND MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
ASSETS
March 31,2000
December 31, 1999 (unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,196,675 $ 630,475
Accounts receivable 1,336 36,913
Other current assets 10,267 28,570
--------------------- ------------------------
Total current assets 1,208,278 695,958
--------------------- ------------------------
Property and equipment - net (Notes 2 and 3) 181,029 174,185
--------------------- ------------------------
Other assets
Deposits 52,527 37,129
--------------------- ------------------------
Total assets $ 1,441,834 $ 907,272
===================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 88,994 $ 146,060
Accrued liabilities 7,979 14,052
Notes payable (Note 4) 394,884 394,884
Other current liabilities - 10,372
--------------------- ------------------------
Total Current Liabilities 491,857 565,368
--------------------- ------------------------
Commitments and contingency (Note 6) - -
Stockholders' equity: (Note 5)
Common stock, $.01 par value, 1,200,000
shares authorized, 1,048,868 and 1,046,868
(unaudited), shares issued and outstanding
at December 31, 1999 and March 31, 2000,
respectively 10,489 10,469
Additional paid-in capital 2,435,031 2,415,051
Accumulated deficit (1,495,543) (2,083,616)
--------------------- ------------------------
Total Stockhlders' equity 949,977 341,904
--------------------- ------------------------
Total liabilities and stockholders' equity $ 1,441,834 $ 907,272
===================== ========================
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
( FORMERLY KNOWN AS eNexi, Inc.)
STATEMENT OF INCOME AND EXPENSE
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
From inception Three months ended
through March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
Net revenues $ 27,192 $ 96,372
--------------------- ------------------------
Operating costs and expense:
Cost of recurring revenues 98,626 48,367
Sales and marketing 310,480 242,913
General and administrative 1,098,927 388,158
Depreciation 22,846 10,238
--------------------- ------------------------
Total operating costs and expenses 1,530,879 689,676
--------------------- ------------------------
Loss from operations (1,503,687) (593,304)
Other income (expense)
Interest expense (9,141) (6,073)
Interest income 17,285 12,982
Other expense - (1,678)
--------------------- ------------------------
Loss before provision for income taxes (1,495,543) (588,073)
--------------------- ------------------------
Provision for income taxes (Note 7) - -
--------------------- ------------------------
Net loss $ (1,495,543) $ (588,073)
====================== =========================
Weighted average shares outstanding 529,460 1,048,868
====================== =========================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
Additional Retained Total
Number of $0.01 Par Paid-in Earnings Stockholders'
Shares Value Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, May 14, 1999 - $ - $ - $ - $ -
Issuance of stock for cash 10,052 101 100,419 - 100,520
Stock dividend (Note 5) 834,316 8,343 (8,343) - -
Conversion of debt to equity
(Note 5) - - 300,000 - 300,000
Issuance of stock for cash 204,500 2,045 2,042,955 - 2,045,000
Net loss - - - (1,495,543) (1,495,543)
------------- -------------- ------------- ---------------- -----------------
Balance, December 31, 1999 1,048,868 10,489 2,435,031 (1,495,543) 949,977
Purchase of stock for cash
(Note 5) (unaudited) (2,000) (20) (19,980) - (20,000)
Net loss (unaudited) - - - (588,073) (588,073)
------------- -------------- ------------- ---------------- -----------------
Balance, March 31, 2000
(unaudited) 1,046,868 $ 10,469 $ 2,415,051 $ (2,083,616) $ 341,904
============= =============== ============== ================ ================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
STATEMENT OF CASH FLOWS
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
From inception Three months ended
through March 31,2000
December 31, 1999 (unaudited)
Cash flows provided by operating activities:
<S> <C> <C>
Net loss $ (1,495,543) $ (588,073)
--------------------- --------------------
Adjustment to reconcile net loss to net cash used by
operations:
Depreciation 22,846 10,238
Changes in assets and liabilities:
Accounts receivable (1,336) (35,577)
Other current assets (10,267) (18,303)
Other assets - 15,400
Deposits (52,527) -
Accounts payable 88,994 57,064
Accrued liabilities 7,979 6,073
Other current liabilities - 10,372
--------------------- --------------------
Total adjustments 55,689 45,267
--------------------- --------------------
Net cash used by operations (1,439,854) (542,806)
Cash flows used by investing activities:
Purchase of property and equipment (net) (203,875) (3,394)
--------------------- --------------------
Net cash used by investing activities (203,875) (3,394)
Cash flows provided by financing activities:
Proceeds from notes payable 394,884 -
Issuance (purchase) of common stock 2,445,520 (20,000)
--------------------- --------------------
Net cash provided (used) by financing
Activities 2,840,404 (20,000)
--------------------- --------------------
Net increase (decrease) in cash and cash
Equivalents 1,196,675 (566,200)
Cash and cash equivalents, beginning of period - 1,196,675
--------------------- --------------------
Cash and cash equivalents, end of period $ 1,196,675 $ 630,475
====================== ====================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
STATEMENT OF CASH FLOWS
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
Supplemental disclosures of cash flow information
<TABLE>
<CAPTION>
From Inception Three Months
through ended
December 31, 1999 March 31, 2000
(unaudited)
<S> <C>
Cash paid during the year for:
Interest expense $ 1,678 $ -
================== =================
Supplemental schedule of non cash financing activities:
Stock dividend $ 8,343 $ -
================== =================
Conversion of long-term debt to common stock $ 300,000 $ -
================== =================
</TABLE>
<PAGE>
F-18
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
1. NATURE OF BUSINESS AND ORGANIZATION
Silver King Resources, Inc. (d.b.a. eNexi, Inc.) (the Company)
(formerly known as eNexi, Inc.) was incorporated in Delaware in May
1999. It is an intermediary for online advertising and marketing and
provides free e-mail accounts through its Web-based e-mail system,
www.dollars4mail.com. The advertisers pay the Company which in turn,
shares its advertising revenue with its dollars4mail subscribers, who
receive cash compensation for referrals to the dollars4mail system and
for visits they and their referrals make to the websites of advertisers
on the system. In addition, through its VirtuallyFreeInternet.com
division, the Company provides analog Internet access to its
subscribers for a monthly fee. Subscribers to VirtuallyFreeInternet.com
can earn cash compensation for referrals to the Internet access
service.
As disclosed in Note 11, the Company consummated a merger on May 19,
2000, which was accounted for as a reverse acquisition, and a
recapitalization of the Company. The Company plans to initiate a
one-for-25 reverse common stock split after the merger. All references
to shares are at pre-split quantities. The Company will legally take on
the name, Silver King Resources, Inc. but will operate as eNexi.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenues consist of monthly fees charged to members for Internet access
and are recognized as services are provided. The Company offers a 30
day fee trial period to use its Internet services and recognizes the
monthly revenues once the 30-day period has expired. Additionally,
advertising revenues are received for advertising space purchased on
the Company's website and recognized as services are provided.
Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments which
are readily convertible into cash within ninety (90) days of purchase.
Accounts Receivable
The Company bills customers' credit cards for Internet service in
advance and funds not received are included in accounts receivable. No
material amounts of accounts receivable were outstanding at December
31, 1999.
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
Property and Equipment
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets,
which is generally five years. The Company has no equipment under
capital leases and has no leasehold improvements.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash deposits in
excess of $100,000. The Company places its cash deposits with
high-credit quality financial institutions. At times, balances in the
Company's cash accounts may exceed the Federal Deposit Insurance
Corporation's (FDIC) limit of $100,000. The Company's cash investment
policies limit investments to short-term, investment grade investments.
The Company is heavily dependent upon a number of other third parties
for credit card processing, dial-up connectivity, and for the hosting
of its system infrastructure and database servers. If the services of
any of these third parties is interrupted, it could have a material
adverse impact on the Company's operations.
Advertising
The cost of advertising is expensed as incurred. The Company incurred
advertising expense of $277,000 and $186,000 (unaudited) for the
periods ended December 31, 1999 and March 31, 2000, respectively.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to
be in effect when the differences are expected to be recovered. A
valuation allowance has been provided for deferred tax assets when it
is more likely than not that all or some portion of the deferred tax
asset will not be realized. The Company has established a full
valuation allowance on the aforementioned deferred tax assets due to
the uncertainty of realization.
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
Interim Financial Information
The unaudited financial information furnished herein reflects all
adjustments, consisting only of normal recurring adjustments, which in
the opinion of management, are necessary to fairly state the Company's
financial position, the results of their operations and cash flows for
the periods presented. The results of operations for the three months
ended March 31, 2000, are not necessarily indicative of results for the
entire fiscal year ending December 31, 2000.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities at
the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Accordingly, actual
results could differ from those estimates.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principals. For certain of the
Company's financial instruments, including cash, accounts payable, and
other accrued liabilities, the carrying amounts approximate fair value
due to their short maturities. The amounts shown for notes payable also
approximate fair value because current interest rates offered the
Company for debt of similar maturities are substantially the same.
Net Loss Per Share
Net loss per share is calculated based on the weighted average number
of common shares outstanding. Warrants outstanding have not been
included in the net loss per share calculation since their effect would
be antidilutive.
Reclassification
Certain reclassifications have been made to previously reported amounts
to conform to the current - period presentation.
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at:
<TABLE>
<CAPTION>
March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
Equipment $ 203,875 $ 206,521
Less: accumulated depreciation (22,846) (32,336)
-------------------- ------------------
$ 181,029 $ 174,185
==================== ==================
</TABLE>
Depreciation expense for the period ended December 31, 1999 and March
31, 2000 was $22,846 and $10,238 (unaudited), respectively.
4. NOTES PAYABLE
The following is a summary of notes payable at:
<TABLE>
<CAPTION>
March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
6% note payable, due upon demand to Rally
Automotive Group. Larry A Mayle, President of Rally
Automotive Group is also Co-chairman
and Chief Executive Officer of eNexi Inc. $ 220,431 $ 220,431
6% note payable, due upon demand to Unicor, Inc. Dr. Roger
L. Miller, President of Unicor, Inc. is
also Co-chairman and President of eNexi Inc. 128,000 128,000
6% note payable, due upon demand to Larry A. Mayle,
Co-chairman and Chief Executive
Officer of eNexi, Inc. 18,839 18,839
6% note payable due upon demand to Dr. Roger L. Miller,
Co-chairman and President of eNexi, Inc. 27,614 27,614
-------------------- ------------------
$ 394,884 $ 394,884
==================== ==================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
5. CAPITAL STOCK
Stock Dividend
On September 1, 1999, the Company distributed 834,316 shares of common
stock in connection with a 8400% stock dividend. As a result of the
stock dividend, common stock was increased and additional paid in
capital was decreased by $8,343, respectively. All references in the
accompanying financial statements to the number of common shares and
per-share amounts have been restated to reflect the stock dividend.
Conversion of Debt to Equity
On September 1, 1999, the Company converted a $180,000 and a $120,000
promissory note due to the Chairman/CEO and President, respectively,
into capital. This was done as part of the original capitalization of
the Company and no additional shares were issued in conjunction with
this transaction.
Warrants
In December, 1999, the Company agreed to issue 1,000.3 warrants, for
every 1,000 shares of any type of stock issued. The warrants enable the
holders to purchase one share of the Company's common stock and are
exercisable within five years at a strike price equal to the stock's
market value at the time any additional shares are issued. The warrants
were canceled as of the date of the merger (Note 11).
Retirement of Stock (unaudited)
On March 29, 2000, the Company purchased 2,000 shares of common stock
from two stockholders for the purchase price of $10 per share. The
shares were immediately retired.
6. COMMITMENTS AND CONTINGENCY
Operating Leases and Agreements
The Company leases office and storage space under non-cancelable
operating leases which expire June and August, 2000, respectively and
requires monthly lease payments totaling $13,868. The amount of rent
expense recorded for the periods ended December 31, 1999 and March 31,
2000, totaled $75,456 and $41,604 (unaudited), respectively.
The Company leases computer and office furniture under operating leases
which expire through August 2001 and require monthly lease payments
totaling $11,499. The amount of rent expense recorded for the periods
ended December 31, 1999 and March 31, 2000, totaled $63,612 and $36,596
(unaudited), respectively.
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
6. COMMITMENTS AND CONTINGENCY (Continued)
---------------------------
Operating Leases and Agreements (Continued)
--------------------------------
The Company has entered into an agreement with Apex Global Internet
Services (AGIS) to provide Internet ports. The term of the agreement is
12 months starting June 7, 1999 and requires a monthly payment of
$1,620, which will be increased as more ports are provided. The amount
of expense recorded for the periods ended December 31, 1999 and March
31, 2000, was $108,700 and $7,500 (unaudited), respectively. See
related contingency note below.
The Company has entered into two agreements to provide Internet ports
which expire March and August, 2002, respectively and require monthly
payments totaling $22,600, which will be increased as more ports are
provided. The amount of expense recorded for the periods ended December
31, 1999 and March 31, 2000, totaled $45,315 and $64,445 (unaudited),
respectively.
Future minimum lease and agreement payments are as follows as of
December 31, 1999:
<TABLE>
<CAPTION>
For the year ended Furniture and
December 31, Equipment
Office Services Total
<S> <C> <C> <C> <C> <C>
2000 $ 105,987 $ 121,902 $ 287,440 $ 515,329
2001 - 63,168 290,640 353,808
2002 - - 158,300 158,300
-------------- ------------------- --------------- ----------------
$ 105,987 $ 185,070 $ 736,380 $ 1,027,437
============== =================== =============== ================
</TABLE>
Employment and Consulting Agreements (unaudited)
The Company has entered into agreements dated December 1, 1999 with its
Co-Chairman and Chief Executive Officer and Co-Chairman and President.
The agreements call for monthly payments totaling $25,000 which began
once the Company received its second round of outside financing and
will continue for periods of one year, thereafter.
Contingency
AGIS, one of the vendors used by the Company to provide dial-up ports
to its customers, declared bankruptcy by filing for Chapter 11 in
February 2000. The Company has added an additional vendor that will
cover the potential loss of the ports provided by AGIS.
Additionally, the Company is in the process of clarifying the terms of
its agreement with AGIS
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
6. COMMITMENTS AND CONTINGENCY (Continued)
---------------------------
Contingency (Continued)
-----------
based upon what management believes is contradictory language in the
contract. The agreement entered into in June 1999, states that the
Company will pay a monthly charge of $81,000 for the deployment of
1,000 ports, totaling $567,000 for the period ended December 31, 1999.
The Company asserts that it should be billed only for ports used, which
amounts to $1,620 per month. See operating leases and agreements
disclosure above. AGIS has not disputed the Company's assertion,
however, it has calculated the monthly billing amount at $2,500. The
Company has initially made a payment of $108,700, which the Company
asserts will be applied against any future resolution. AGIS has been in
contact with Company management, attempting to resolve this issue. The
Company has not sought the services of outside counsel.
7. INCOME TAXES
The Company incurred taxable losses for federal and state purposes for
the periods ended December 31, 1999 and March 31, 2000 (unaudited).
Accordingly, the Company did not incur any federal income tax expense
for those periods other than the minimum required taxes for state
purposes.
Prior to September 7, 1999, the Company was taxed as an S Corporation.
All tax benefits arising from operating losses as an S Corporation were
passed to the individual shareholders.
The Company's effective tax benefit on pretax loss differs from the
U.S. Federal Statutory tax rate for the periods ended December 31, 1999
and March 31, 2000, (unaudited) as follows:
<TABLE>
<CAPTION>
March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
Federal statutory tax (benefit) (34.00%) (34.00%)
State tax (benefit) (8.84%) (8.84%)
----------------------- ----------------------
(42.84%) (42.84%)
======================= ======================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
7. INCOME TAXES (Continued)
------------
Significant components of the Company's deferred tax asset at December
31, 1999 and March 31, 2000, (unaudited) are as follows:
<TABLE>
<CAPTION>
March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
Net operating loss carryforwards $ 307,000 $ 542,000
----------------------- ----------------------
Gross deferred tax assets 307,000 542,000
Valuation allowance (307,000) (542,000)
----------------------- ----------------------
Net deferred tax assets $ - $ -
======================= ======================
</TABLE>
At December 31, 1999 and March 31, 2000, (unaudited) the Company had
net operating loss carryforwards of approximately $772,000 and
$1,240,000, respectively related to federal and state income taxes
which can be used to offset future federal and state taxable income
from operations. These carryforwards will begin to expire in 2007 and
substantially all will expire in 2019.
As a result of the merger on May 19, 2000, (Note 11), the Company will
have combined net operating loss carryforwards of approximately
$1,840,000 related to federal and state income taxes which can be used
to offset future federal and state taxable income from operations. The
carryforwards will begin to expire in 2007, and substantially all will
expire in 2019. Additionally, at March 31, 2000, the Company had net
loss carryforwards of approximately $120,000 for Mexican income tax
purposes, which if not used will expire in 2009.
Under the Tax Reform Act of 1986, the benefits from net operating
losses carried forward may be impaired or limited in certain
circumstances. Events which may cause limitations in the amount of net
operating losses that the Company may utilize in any one year include,
but are not limited to, a cumulative ownership change of more than 50%
over a three year period. The impact of any limitations that may be
imposed for future issuances of equity securities, including issuances
with respect to acquisitions, have not been determined.
8. PROFIT SHARING PLAN
The Company has a profit sharing plan that covers all non-shareholder
employees. Contributions to the plan are at the discretion of
management. Management did not make a contribution to the plan for the
period ended December 31, 1999. The plan was canceled as of the date of
the merger (Note 11).
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
9. EMPLOYEE STOCK OPTION PLAN (unaudited)
As of January 1, 2000, the Company adopted a stock option plan under
which 37,500,000 shares of common stock are available for issuance with
respect to awards granted to officers, management, consultants, and any
other key employees of the Company. The options may be exercised at not
less than 85% of the fair market value of the shares on the date of
grant. The options expire after 10 years from the date of grant and 5
years from the date of grant for a ten percent shareholder, as defined.
The options are exercisable immediately, when granted and are subject
to restrictions on transfer, repurchase and right of first refusal.
Information with respect to the stock options is summarized below:
<TABLE>
<CAPTION>
<S> <C>
Outstanding at January 1, 2000 ............................................. --
Granted .................................................................... --
Exercised .................................................................. --
Expired .................................................................... --
-----
Outstanding at March 31, 2000 .............................................. --
=====
</TABLE>
The Company applies APB Opinion 25 and related interpretation in
accounting for stock options. The Company did not record any
compensation expense for the three months ended March 31, 2000.
10. SEGMENT AND GEOGRAPHIC INFORMATION
The Company has adopted SFAS No. 131, "Disclosures About Segments Of An
Enterprise And Related Information", in the period ended December 31,
1999. SFAS No. 131 establishes standards for reporting information
regarding operating segments in annual financial statements and
requires selected information for stockholders. SFAS No. 131 also
establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial
information is available for evaluation by the chief operating decision
maker, or decision-making group, in deciding how to allocate resources
and assess performance.
The Company is an Internet service provider (ISP) and intermediary for
online advertising and marketing. Services are provided through free
e-mail accounts in a Web-based e-mail system, www.dollars4mail.com and
through the VirtuallyFreeInternet.com division, which provides analog
Internet access to subscribers for a monthly fee. In measuring
performance and allocating assets, the chief operating decision maker
reviews each segment by type of service provided.
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
10. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)
----------------------------------
<TABLE>
<CAPTION>
For the three months ended
March 31, 2000
(unaudited) VirtuallyFreeInternet Dollars4mail Total
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenues $ 60,285 $ 36,087 $ 96,372
Net loss $ (456,953) $ (122,120) $ (588,073)
For the year ended December
31, 1999
---------------------------------------------------------------------------------------------------------
Net revenues $ 27,192 $ - $ 27,192
Net loss $ (1,495,543) $ $ (1,495,543)
</TABLE>
11. SUBSEQUENT EVENTS
Merger and Private Placement (unaudited)
On May 19, 2000, the board of directors and stockholders of Silver King
Resources, Inc., a Delaware corporation ("Silver King"), approved and
adopted the Agreement and Plan of Merger, dated as of March 21, 2000,
(the "Agreement"), by and among Silver King and Silver King
Acquisition, Inc. ("Acquisition Corp"), a wholly-owned subsidiary
formed for the purpose of the merger. Pursuant to the Agreement, Silver
King issued 6,000,000 shares of its Series A Convertible Preferred
Stock, par value $.0001 per share, convertible into 150,000,000 shares
of Silver King's common stock, par value $.0001 per share to the
stockholders of eNexi, Inc., in exchange for 100% of the outstanding
capital stock of eNexi, Inc. Simultaneously, Silver King issued
2,009,864 shares at $2.50 per share of Series B Convertible Preferred
Stock, convertible to 50,246,600 shares of common stock.
In addition Silver King assumed existing common stock purchase warrants
from eNexi, Inc. which will be exchanged for 25,000,000 shares of
common stock of Silver King at an exercise price of $.10 per share.
Since the former shareholders of eNexi, Inc. acquired control of
the Silver King through Acquisition Corp. upon the merger closing, the
merger was accounted for as a reverse acquisition. Accordingly, for
financial statement purposes, eNexi, Inc. was considered the
accounting aquiror and the related business combination was considered
a recapitalization of eNexi, Inc., rather than an acquisition by
Silver King. Silver King plans to recapitalize its common stock
shortly
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
------------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
following the merger, which will take the form of a one-for-25 reverse
split. The historical financial statements prior to May 19, 2000, will
be those of eNexi, Inc. but the name of the corporation going forward
will be Silver King Resources, Inc.
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet
reflects adjustments to Silver King Resources, Inc.'s (d.b.a. eNexi,
Inc.) historical balance sheet at March 31, 2000, to give effect to
this merger.
Pro Forma Condensed Consolidated Statements of Income and Expense were
not presented for any of the periods required since there were no
material expenses associated with the merger that would be reflected in
the statement of income and expense.
The accompanying unaudited pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the
financial position or results of operations which would actually have
been reported had the acquisition been in effect during the periods
presented, or which may be reported in the future.
The accompanying Unaudited Pro Forma Condensed Consolidated Financial
Statements should be read in conjunction with the historical financial
statements and related notes thereto for Silver King Resources, Inc.
(d.b.a. eNexi).
(left intentionally blank)
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
<TABLE>
<CAPTION>
11. SUBSEQUENT EVENTS (Continued)
-----------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(MARCH 31, 2000)
Silver King
Resources,
Inc. and Pro Forma Pro Forma
eNexi subsidiary Adjustments Consolidated
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 630,475 $ 2,271 $ 4,737,180 b $ 5,369,926
Accounts receivable 36,913 - - 36,913
Other currents assets 28,570 - - 28,570
Deferred offering costs - 3,000 (3,000) b -
---------------- --------------- ----------------- ----------------
Total current assets 695,958 5,271 4,734,180 5,435,409
Fixed assets-net 174,175 - - 174,185
Deposits 37,129 - - 37,129
---------------- --------------- ----------------- ----------------
Total assets $ 907,272 $ 5,271 $ 4,734,180 $ 5,646,723
================ =============== ================= ================
Liabilities and Stockholders' Equity
Accounts payable $ 146,060 $ 39,299 $ - $ 185,359
Accrued liabilities 14,052 - - 14,052
Notes payable 394,884 107,000 - 501,884
Other current liabilities 10,372 - - 10,372
---------------- --------------- ----------------- ----------------
Total current liabilities 565,368 146,299 - 711,667
Preferred Stock - - - -
Series A preferred stock - - 600 a 600
Series B preferred stock - - 200 b 200
Common stock 10,469 4,307 (10,469) a 4,307
Additional paid-in capital 2,415,051 714,427 3,870,087 a,b 6,999,565
Warrants outstanding - 14,000 - 14,000
Accumulated deficit (2,083,616) (873,762) 873,762 a (2,083,616)
---------------- --------------- ----------------- ----------------
Total stockholders' equity 341,904 (141,028) 4,735,180 4,935,056
---------------- --------------- ----------------- ----------------
Total liabilities and equity $ 907,272 $ 5,271 $ 4,734,18 $ 5,646,723
================ =============== ================= ================
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
-----------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
Notes the Unaudited Pro Forma Condensed Consolidated Balance Sheet at
March 31, 2000.
<TABLE>
<CAPTION>
a) The eliminating entries to account for the reverse acquisition of Silver King
Resources, Inc. through the merger with its wholly owned subsidiary.
--------------------------------------------------------------------- -----------------------------
<S> <C>
Common stock $ 10,469
Additional paid-in capital 863,893
Accumulated deficit (873,762)
Series A preferred stock (600)
--------------------------------------------------------------------- -----------------------------
$ -
--------------------------------------------------------------------- =============================
b) To record the private offering of Series B preferred stock, the
proceeds will be used for operations and working capital.
--------------------------------------------------------------------- -----------------------------
Cash $ 4,737,180
Additional paid-in capital (4,733,980)
Series B preferred stock (200)
Deferred offering costs (3,000)
--------------------------------------------------------------------- -----------------------------
$ -
--------------------------------------------------------------------- =============================
c) After the merger, authorized and issued shares will be as follows:
Preferred Stock, authorized 6,000,000 shares , no shares issued
Series A Preferred Stock, authorized and issued 6,000,000 shares
Series B Preferred Stock, authorized 3,000,000 shares, issued 2,009,864 shares
Common stock, authorized 50,000,000 shares, issued 43,075,000 shares
</TABLE>
<PAGE>
SILVER KING RESOURCES, INC.
(d.b.a. eNexi, Inc.)
(FORMERLY KNOWN AS eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THREE MONTHS ENDED
MARCH 31, 2000 (The information with respect to the
three months ended March 31, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
-----------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
Pro Forma Earnings Per Share (unaudited)
Unaudited pro forma earnings per share are calculated by dividing net
income by the average number of shares outstanding during the period.
<TABLE>
<CAPTION>
For the three
months ended
For the year ended March 31,2000
December 31, 1999 (unaudited)
<S> <C> <C>
Pro Forma net loss $ (1,495,543) $ (588,073)
----------------------------------------------- ======================= ======================
Pro Forma net loss per share $ (.029) $ (.012)
----------------------------------------------- ======================= ======================
Pro Forma weighted average number of shares
outstanding 51,084,864 51,084,864
----------------------------------------------- ======================= ======================
</TABLE>
<PAGE>
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Company's Bylaws provided that the Company shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer employee
or agent of the corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred by him or her in connection
with such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities offered hereby.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee....................................................................... $ 4,266
Printing and engraving..................................................................... 1,000
Accountant's fees and expenses............................................................. 10,000
Legal fees................................................................................. 30,000
Blue sky fees and expenses................................................................. 5,000
Miscellaneous.............................................................................. 1,734
Total.............................................................. $52,000
</TABLE>
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
1. On January 27, 1999, Silver King issued and sold an aggregate of
14,500,000 shares of common stock to 43 purchasers to raise gross proceeds of
$14,500. This offering was undertaken by Silver King prior to any significant
operations. At that time Silver King was an inactive company with no assets or
liabilities. Investors in such offering were, therefore, subject to a number of
risks and uncertainties, including the material contingencies. These shares were
issued directly by Silver King without payment of any commissions to accredited
investors in a private placement transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and Rule 506
of Regulation D promulgated thereunder.
2. On January 27, 1999, Silver King issued and sold an aggregate of
2,000,000 units, each unit consisting of one share of common stock and five year
warrants to purchase four shares of common stock at an exercise price of $4.00
per share to raise gross proceeds of $16,000. This offering was undertaken by
Silver King prior to any significant operations. At that time Silver King was an
inactive company with no assets or liabilities. Investors in such offering were,
therefore, subject to a number of risks and uncertainties, including the
material contingencies associated with a new venture. These units were issued
directly by Silver King without payment of any commissions to two accredited
investors in a private placement transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and Rule 506
of Regulation D promulgated thereunder.
3. On April 14, 1999, Silver King issued and sold an aggregate of
525,000 shares of common stock to raise gross proceeds of $525,000. This
offering was undertaken by Silver King prior to any significant operations. At
that time there were no assurances that Silver King would become an operating
company. Investors in such offering were, therefore, subject to a number of
risks and uncertainties. These shares were issued directly by Silver King
without payment of any commissions seven accredited investors in a private
placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
4. On April 15, 1999, Silver King issued 50,000 shares of common stock
to Founders Equity Group, Inc., as consideration for a $100,000 loan made to
Silver King, which was repaid in full on May 25, 1999. These shares were issued
directly by Silver King without payment of any commissions to Founders Equity in
a private placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
5. On February 3, 2000, Silver King sold an aggregate 25,000,000 units,
each unit consisting of one share of common stock and three year warrants to
purchase two shares of common stock at an exercise price of $0.01 per share. The
purchase price of a unit was $.005 per unit. The units were sold to three
accredited investors in a private placement transaction exempt from registration
pursuant to Section 4(2) of the Act and Rule 506 of Regulation D. All of the
warrants granted in this unit placement were subsequently forfeited.
6. On May 19, 2000, Silver King completed the sale of an aggregate of
2,009,864 shares of series B convertible preferred stock to 29 accredited
investors for gross proceeds of $5,024,660. These shares were issued directly by
Silver King without payment of any commissions seven accredited investors in a
private placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
7. On May 19, 2000, the board of directors and stockholders of Silver
King, approved and adopted the Agreement and Plan of Merger, dated as of March
21, 2000 (the "Agreement"), by and among Silver King, Silver King Acquisition,
Inc. ("Acquisition Corp."), a wholly-owned subsidiary formed for the purpose of
the merger, eNexi Inc. ("eNexi") and the principal stockholders of eNexi Inc.
Pursuant to the Agreement, Silver King issued 6,000,000 shares of its series A
convertible preferred stock to the historic stockholders of eNexi in exchange
for 100% of the outstanding capital stock of eNexi, which was acquired by
Acquisition Corp. The transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
<TABLE>
<CAPTION>
<S> <C>
2.1 Agreement and Plan of Merger, dated as of June 23, 1999, between Silver King Resources (Delaware), Inc. and Silver
King Resources, Inc. (1)
2.2 Agreement and Plan of Merger dated as of March 21, 2000, between Silver King Resources, Inc. and eNexi, Inc. (2)
3.1 Certificate of Incorporation, as amended (1)
3.2 Bylaws (1)
3.3 Certificate of Merger between Silver King Resources (Delaware), Inc. and Silver King Resources, Inc. (1)
3.4 Certificate of Merger between Silver King Resources (Delaware), Inc. and eNexi, Inc. (2)
5.1 Opinion of Sichenzia, Ross & Friedman LLP
10.1 Employment Agreement between Silver King Resources, Inc. and Larry Mayle
10.2 Employment Consulting Agreement between Silver King Resources, Inc. and Unicor, Inc.
10.3 2000 Employee Stock Option Plan
10.18 Agreement and Plan of Merger dated March 21, 2000 by among Silver King Resources, Inc., Silver King Acquisition,
Inc. eNexi Inc. and the Principal Stockholders of eNexi Inc. (3)
21.1 Subsidiaries of the Registrant
23.1 Consent of Mendoza, Berger & Company
23.2 Consent of Sichenzia, Ross & Friedman LLP (included in Exhibit 5.1)
</TABLE>
-------------------------------------
<TABLE>
<CAPTION>
<S> <C>
1. Incorporated by reference from the Registrant's Form 10-SB, filed on July 8, 1999.
2. Incorporated by reference to the Registrant's Form 8-K filed on May 24, 2000.
3. Incorporated by reference to the Registrant's Form 10-KSB for the year ended December 31, 1999.
</TABLE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file a post-effective amendment to this Registration Statement
during any period in which offers or sales are being made:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act;
<PAGE>
(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. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
((S)230.424(b) of this Chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement of any material change to such information in the
Registration Statement.
(2) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(3) To provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(4) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and this offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising from the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Company certifies that it
has reasonable grounds to believe that it meets all of the requirement for
filing on Form SB-2 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the State of
California, on June 15, 2000.
SILVER KING RESOURCES, INC.
By:/s/ LARRY MAYLE
---------------
Larry Mayle,
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/s/ LARRY MAYLE Co-Chairman, Chief Executive June 15, 2000
Larry Mayle Officer and Director (principal
executive officer)
/s/ ROGER LEROY MILLER Co-Chairman, President and Director June 15, 2000
Roger LeRoy Miller
/s/ MICHAEL AMES Chief Financial Officer (principal June 15, 2000
Michael Ames accounting officer) and Director
</TABLE>
