AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 2000
Registration No. 333-87293
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
---------------------
SENSE HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Florida 334110 82-0326560
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Number) Identification No.)
</TABLE>
7300 West McNab Road, Suite 117
Tamarac, FL 33321
(954) 726 - 1422
(Address and Telephone Number of Principal Executive Offices)
-------------------------
Dore Scott Perler, President
7300 West McNab Road, Suite 117
Tamarac, FL 33321
(954) 726 - 1422
(Name, Address and Telephone Number of Agent For Service)
------------------------------
Copies of all communications to:
Steven I. Weinberger, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, FL 33301
Telephone: (954) 763-1200
Facsimile No. (954) 766-7800
Approximate Date of Proposed Sale to the Public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Maximum Maximum
Class of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Security Offering Price Registration Fee
---------------- ---------- ------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
Common Stock, par value
$.10 per share(1) 1,241,734 $1.00 $1,241,734 $345.20
-------
Total Registration Fee $345.20
</TABLE>
(1) Estimated solely for purposes of calculating the registration
fee pursuant to Rule 457. Based upon the average of the
closing bid and asked prices for the common stock on September
13, 1999.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said section
8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
ii
<PAGE>
Subject to Completion January 24, 2000
PROSPECTUS
SENSE HOLDINGS, INC.
1,241,734 Shares of Common Stock
This prospectus covers the 1,241,734 shares of common stock of Sense
Holdings, Inc. being offered by certain selling securityholders. We will not
receive any proceeds from the sale of the shares by the selling securityholders.
Our common stock is traded in the National Quotation Bureau's "Pink
Sheets" under the trading symbol "SEHO" (previously CTSMD). On June 30, 1999,
the last date on which a trade in our common stock was reported, the closing
price was $1.00. There is currently only a limited trading market in our common
stock and we do not know whether an active trading market will develop.
--------------------------------
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss of your investment. See "Risk
Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------------------
The date of this prospectus is ____________, 2000
<PAGE>
PROSPECTUS SUMMARY
This prospectus contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from the results
discussed in the forward-looking statements. You are urged to read this
prospectus carefully and in its entirety.
The Company
Sense Holdings, Inc. is a Florida corporation. We design, develop,
manufacture and sell products that use biometric technology to verify a person's
identity. Unique physical traits such as fingerprints, retina lines, voice waves
and palm prints are known as biometric traits, and their use to verify a
person's identity is known as biometric identification. Our current product,
CheckPoint T/ATM, uses fingerprints to authenticate a person's identity.
CheckPoint T/ATM is marketed to employers as a method of verifying each
employee's actual attendance at work, thereby substantially reducing incidents
of employee fraud inherent in the use of traditional attendance systems such as
punch clocks. CheckPoint T/ATM also gathers employee attendance data, performs
calculations and generates reports using the data, and electronically transports
the information to third-party payroll services, where payroll checks can be
prepared.
To date, we have only generated minimal revenues from operations. For
the year ended December 31, 1998, and the nine months ended September 30, 1999,
we incurred losses of $(174,629) and $(562,875), respectively. We recently
completed a private offering of our common stock, and received approximately
$700,000 from that offering.
Our executive offices are located at 7300 West McNab Road, Suite 117,
Tamarac, Florida 33321, and our telephone number there is (954) 726-1422.
References in this prospectus to "we", "us" and "our" are to Sense Holdings,
Inc. and its wholly-owned subsidiary, Sense Technologies, Inc.
The Offering
Common Stock Offered by
Selling Securityholders.............................. 1,241,734 shares
Common Stock Outstanding:
Prior to the Offering .......................... 6,071,736 shares
After the Offering ............................ 6,071,736 shares
Trading Symbol for Common Stock...................... SEHO (previously CTSMD)
2
<PAGE>
Selected Financial Data
The following summary of our financial information has been derived from
our financial statements that are included in this prospectus. The information
for the year ended December 31, 1998 is derived from our audited financial
statements. The information for the nine months ended September 30, 1999 is
derived from our unaudited financial statements.
<TABLE>
<CAPTION>
Year ended Nine Months Ended
December 31, 1998 September 30, 1999
----------------- ------------------
(unaudited)
<S> <C> <C> <C>
Revenues $ - 0 - $54,695
Gross Profit $ -0- $33,005
Operating Expenses $ 174,629 $595,880
Net (Loss) $(174,629) $(562,875)
Net (Loss) Per Share $(.04) $(.12)
December 31, 1998 September 30, 1999
----------------- -------------------
(unaudited)
Working Capital
(Deficit) $(124,643) $468,922
Total Assets $ 23,378 $532,546
Current Liabilities $ 139,424 $ 52,217
Long-Term Debt $ - 0 - $ - 0 -
Shareholder's Equity
(Deficit) $(116,046) $480,329
</TABLE>
3
<PAGE>
RISK FACTORS
An investment in the securities offered hereby is speculative in nature
and involves a high degree of risk. In addition to the other information
contained in this prospectus, the following factors should be considered
carefully in evaluating the Company and its business before purchasing the
securities offered hereby.
If our net losses continue, investors may have difficulty reselling their shares
For the fiscal year ended December 31, 1998, and the nine months ended
September 30, 1999, we experienced net losses of $(174,629) and $(562,875),
respectively. Our operating results for future periods will include significant
expenses, including product and service development expenses, sales and
marketing costs, programming and administrative expenses, and will be subject to
numerous uncertainties. As a result, we are unable to predict whether we will
achieve profitability in the future. If we are unable to achieve profitable
operations, investors may be unable to sell their shares at a profit, or at all.
Our business is capital intensive, particularly with respect to advertising and
marketing, and our lack of revenues and profits may make our obtaining
additional capital more difficult
Our operations are capital intensive and our growth will consume a
substantial portion of our available working capital. Therefore, depending upon
the timing and rate at which we are able to generate revenues from operations,
we may require additional capital in order to fund our operations. We anticipate
that funds currently available to us will satisfy working capital requirements
for approximately one year. Unless we are able to generate sufficient revenues
to sustain and grow operations, we will require additional funding in order to
remain viable. Our current lack of significant revenues or profitable operations
may cause us difficulty in raising additional financing if we require it. We
cannot predict whether additional financing will be available to us on
acceptable terms.
A contract necessary for CheckPoint T/A(TM) to function effectively could
terminate
We have an agreement with Integrated Design, Inc. to license software
to us, that enables the data gathered by CheckPoint T/A(TM) systems to be
formatted and transmitted to third party payroll services. That agreement may be
terminated by either party on ninety days' prior written notice.
If this agreement is terminated, our ability to continue to produce and
market CheckPoint T/A(TM), and, therefore, our financial results of operations,
will be adversely affected.
Our limited operating history makes an evaluation of us difficult
4
<PAGE>
We were recently formed and have only conducted limited operations. We
have no operating history that permits you to evaluate our business and our
prospects based on prior performance. You must consider your investment in light
of the risks, uncertainties, expenses and difficulties that are usually
encountered by companies in their early stages of development, particularly
those engaged in emerging technologies such as biometrics.
There are various biometric security devices being developed and marketed, and
we have performed no market studies to determine whether fingerprint biometric
security devices will be accepted in the marketplace
CheckPoint T/A(TM) uses fingerprints as the basis for authenticating a
person's identity. Other forms of biometric identification, including iris
scanning, voice patterns and signature verification, are being developed and
tested and may, in the future, be marketed by others. Our success will be
dependent on our ability to successfully market CheckPoint T/A(TM) and support
services to end-users, distributors and resellers. Successful marketing will
depend upon the acceptance of fingerprint biometrics to be accepted as a
preferred form of identification. We have not commissioned a formal market or
research study to determine whether fingerprint identification is preferred to
other forms of biometric identification, or whether sufficient demand for our
products and services exists to enable us to sustain operations, expand or
achieve profitability.
Our inability to manage growth could hurt our operating results
Further expansion of our operations will be required to address
potential growth of our customer base and market opportunities. Expansion will
place a significant strain on our management, operational and financial
resources. Currently, we have only a limited number of employees to do this, and
will need to improve existing and implement new transaction processing,
operational and financial systems, procedures and controls, and to expand, train
and manage our employee base. We also will be required to expand our finance,
administrative and operations staff. Furthermore, we intend to enter into
relationships with various strategic partners, including product manufacturers
and distributors and other third parties necessary to our business. Our failure
to prepare for and manage growth effectively will have a damaging effect on our
business, results of operations and financial condition.
Our lack of product diversification could heighten the effects of any setbacks
we suffer
We currently market only one product. As a result, in the event of
unforeseen adverse events in the development, enhancement, marketing or
acceptance of our product, we will be unable to temper its effects by relying
upon sales of other products. We do not currently know when products under
development will generate revenues, or whether they can be successfully
marketed.
Our inability to timely complete product and technology development may hurt us
5
<PAGE>
We have not yet completed development and testing of certain proposed
products and proposed enhancements to our CheckPoint T/ATM systems, some of
which are still in the planning stage or in relatively early stages of
development. Our success will depend in part upon our ability to complete
product development to permit their timely introduction into the marketplace. We
will be required to commit considerable time, effort and resources to complete
development of our proposed products and product enhancements, however, our
product development efforts are subject to all of the risks inherent in the
development of new products and technology, including unanticipated delays,
expenses and difficulties, as well as the possible insufficiency of funding to
complete development.
Our product development efforts may not be successfully completed. In
addition, our proposed products may not satisfactorily perform the functions for
which they are designed, they may not meet applicable price or performance
objectives and unanticipated technical or other problems may occur which result
in increased costs or material delays in development. Despite testing by us and
by current and potential end users, problems may be found in new products after
the commencement of commercial shipments, resulting in loss of, or delay in,
market acceptance.
Securities and Exchange Commission rules on "penny stocks" could hurt the market
for our stock
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Depending on
market fluctuations, our common stock could be considered to be a "penny stock".
A penny stock is subject to rules that impose additional sales practice
requirements on broker/dealers who sell these securities to persons other than
established customers and accredited investors. For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of these securities. In addition he must receive the purchaser's
written consent to the transaction prior to the purchase. He must also provide
certain written disclosures to the purchaser. Consequently, the "penny stock"
rules may restrict the ability of broker/dealers to sell our securities, and may
negatively affect the ability of holders of shares of our common stock to resell
them.
It is not possible to foresee all risks which may affect us. Moreover,
we cannot predict whether we will successfully effectuate our current business
plan. Each prospective purchaser is encouraged to carefully analyze the risks
and merits of an investment in the Shares and should take into consideration
when making such analysis, among others, the Risk Factors discussed above.
6
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of September 30,
1999. The table does not reflect the exercise of any options. The table should
be read in conjunction with the consolidated financial statements and related
notes included elsewhere in this prospectus.
September 30, 1999
------------------
Shareholder's equity:
Common Stock, $.10 par value,
10,000,000 shares authorized,
6,071,734 shares issued and
outstanding actual $607,173
Additional paid-in capital 610,660
Accumulated deficit (737,504)
Total shareholder's equity $480,329
========
Total capitalization $480,329
========
USE OF PROCEEDS
We will not receive any proceeds upon the sale of shares by the selling
securityholders.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our shares of common stock are listed in the National Quotation
Bureau's "Pink Sheets" under the symbol "SEHO" (previously CTSMD). There is
currently a limited trading market for our shares and we do not know whether an
active market will develop The reported high and low bid prices for the common
stock are shown below for the period from July 1, 1997 through September 30,
1999. An "*" indicates that no trades were reported during the quarter. The
quotations, which were provided by the research department of the Nasdaq Stock
Market, Inc., reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
Period High Low
- ------ ---- ---
<S> <C> <C>
Fourth Quarter ended 12/31/97 * *
First Quarter ended 3/31/98 $.09375 $.0625
Second Quarter ended 6/30/99 * *
7
<PAGE>
Third Quarter ended 9/30/98 * *
Fourth Quarter ended 12/31/98 * *
First Quarter ended 3/31/99 $3.50 $1.00
Second Quarter ended 6/30/99 $1.00 $.75
Third Quarter ended 9/30/99 * *
Fourth Quarter ended 12/31/99 $1.00 $1.00
</TABLE>
Our common stock is owned of record by approximately 800 holders. We
have never paid cash dividends on our common stock. We intend to keep future
earnings, if any, to finance the expansion of our business, and we do not
anticipate that any cash dividends will be paid in the foreseeable future. Our
future payment of dividends will depend on our earnings, capital requirements,
expansion plans, financial condition and other relevant factors.
There are currently 6,071,736 shares of our common stock outstanding.
Of these shares, 732,021 shares are freely tradeable and 1,241,734 shares are
available for sale under this prospectus. The balance of 4,097,981 shares are
restricted and may be sold only if a registration statement covering those
shares is in effect or if there is an available exemption from registration. In
January 2000, approximately 4,000,000 restricted shares issued in January 1999
will become available for sale under Rule 144 once we begin filing quarterly
reports with the Securities and Exchange Commission. If we do not have a
substantial market for our shares, a significant number of shares being sold
could greatly affect the market and cause a decline in the price of our common
stock.
Our common stock is traded in the "Pink Sheets" and there is currently
only a limited trading market for our shares. Prospective investors should not
view historic market prices as indicative of the prices at which our shares can
be bought or sold. Following the effective date of the registration statement,
we will file periodic reports with the Securities and Exchange Commission and at
that time, we intend to apply to have our shares listed on the Over-the Counter
Bulletin Board, an electronic trading system maintained by the National
Association of Securities Dealers. There is no assurance that our shares will be
listed on the Bulletin Board or even if they are, that more than a limited
trading market will develop.
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus discuss future expectations
or state other forward-looking information. Those statements are subject to
known and unknown risks, uncertainties and other factors that could cause our
actual results to differ materially from those contemplated by the statements.
Factors that might cause a difference include, but are not limited to, those
discussed in "Risk Factors" and elsewhere in this prospectus.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
During the twelve month period immediately following the date of this
prospectus, our goal is to design, produce and market our biometric security
devices. In order to accomplish our goal, we must create, with the assistance of
various consultants, a computer network which will allow our clients to receive
our services and purchase our products.
Results of Operations - July 13, 1998 (Inception) - December 31, 1998
We generated no revenues during the period from our inception through
December 31, 1998. Operating expenses were $174,629 for the period ended
December 31, 1998. These expenses consisted mainly of general and administrative
expenses of $99,611 primarily attributable to salaries, advertising costs of
approximately $14,000, professional fees of approximately $30,000, and research
and development expenses of $71,510, consisting of software purchased for use in
the production of security systems.
Results of Operations - January 1, 1999 - September 30, 1999 (Unaudited)
For the nine months ended September 30, 1999, we generated revenues of
$54,695. The cost of goods sold was $21,690, resulting in a gross profit of
$33,005 for the nine month period. Operating expenses were $595,880 for the nine
months ended September 30, 1999. These expenses consisted mainly of general and
administrative expenses of $220,017 primarily attributable to salaries and
professional fees, non-cash compensation expenses of $260,000, and research and
development expenses of $107,542 consisting of software purchased for use in the
production of security systems. The significant increase in our operating
expenses during 1999 reflect our full nine months' of operations, the
commencement of payments of officers' salaries and salary payments for a larger
technical staff, and legal and accounting fees relating to this registration
statement.
Liquidity, Capital Resources and Plan of Operations
We have financed our growth and cash requirements through capital
contributions from existing shareholders. We do not currently have any credit
facilities from financial institutions or private lenders. We do not currently
have any material commitments for capital expenditures.
Cash used in operations for the period from July 13, 1998 (inception)
to September 30, 1999 was approximately $537,000 attributable primarily to the
net loss of approximately $738,000 offset by non-cash compensation of $260,000,
increases in accounts receivable of $55,000, increases in inventory of $19,000
and increases in prepaid and other current assets of $40,000 offset by increases
in accounts payable and accrued expenses of $52,000. Cash used in investing
activities was approximately $14,000 which was for the purchase of property and
equipment. Cash provided by financing activities during the period was
approximately $946,000 from the sale of common stock of $830,000 and capital
contributions of $200,000 offset by loans to shareholders of approximately
$12,000. Total cash increased by approximately $395,000 during the period.
9
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Since our inception, we have been engaged in research and development
activities relating to our first generation of biometric security products. We
commenced delivery of these products in the third quarter of fiscal 1999 and
began generating revenues from those sales in the fourth quarter. We recently
completed development of a second generation product, and expect revenues from
those product sales during the first half of fiscal year 2000. We also expect
that enhancements to our second generation product will support a larger
database, and enable us to market CheckPoint T/ATM to larger companies,
resulting in a greater profit margin to us. We anticipate that enhanced versions
of our product will be available for shipment during the first half of fiscal
2000.
Based upon purchase orders we have received, anticipated future product
sales and cash on hand, we do not believe that we will be required to raise
additional capital in order to meet our cash flow needs over the next twelve
months. However, in order to remain competitive in the marketplace, we must
develop new products and enhance our existing products. Should revenues not
reach projected levels or should unforeseen events arise, we may be required to
secure additional funds to meet our operating needs sooner than anticipated.
Additional funding may not be available to us on acceptable terms.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two-digit entries to represent years in the date code
field. Computer systems and products that do not accept four-digit year entries
will need to be upgraded or replaced to accept four-digit year entries to
distinguish years beginning with 2000 from prior years.
We have completed the process of becoming compliant with the Year 2000
requirements at an approximate cost of $2,000. Compliance includes all phases of
our information technology and non-information technology. In order to address
Year 2000 concerns, we developed CheckPoint T/ATM to accept four digit year
coding. All computer systems that we use for product development, testing and
other purposes have been tested to assure Year 2000 compliance, and any failing
systems were updated or replaced, and retested. Included in this process are our
basic input output systems, also known as BIOS, which control the time and date
functions of our products' hardware systems. Our BIOS are supplemented by a
back-up, real time clock, which confirms that the BIOS function properly, and
makes adjustments as are necessary.
As discussed elsewhere in this prospectus, we have material
relationships with various third parties, including SAC Technologies, Inc., Test
Systems Engineering and Integrated Design, Inc. We have contacted each of these
third-parties and confirmed that their computer
10
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systems are Year 2000 compliant. We have been advised by Integrated Design that
the computer systems of the major third-party payroll service providers which
interfaces with the software developed for us by Integrated Design, are also
Year 2000 compliant.
Neither Sense Holdings nor any third parties with whom we have material
relationships, suffered any significant adverse consequences resulting from the
transition to Year 2000. However, it is possible that companies including us and
our third-party contractors, will suffer adverse Year 2000 consequences over the
near term. In order to minimize potential adverse effects, we have designated
experienced personnel and consultants to identify, correct, test and implement
solutions to Year 2000 problems, if and when they arise. In addition, we have
purchased excess inventory of products and components, in the event that future
Year 2000 consequences causes delays in our ability to obtain component
supplies. We have also identified alternate suppliers of non-proprietary
components that we may approach should our inventory of components outlast
third-party vendors' Year 2000 problems. We have not established any other
contingency plan to address Year 2000 issues should they arise, and we do not
intend to do so.
BUSINESS
Sense Holdings, Inc. is a recently-formed Florida corporation. We
design, develop, manufacture and sell products that use biometric technology to
verify a person's identity. Unique physical traits such as fingerprints, retina
lines, voice waves and palm prints are known as biometric traits, and their use
to verify a person's identity is known as biometric identification.
Corporate History
We were organized in Idaho, under the name Century Silver Mines, Inc.,
on February 5, 1968. Originally, we developed mining properties, but by 1998 we
had ceased those operations and sought an operating business that we might
acquire.
Sense Technologies, Inc. was organized under the laws of the State of
Florida on July 13, 1998. Sense Technologies was formed for the purpose of
engaging in developing and marketing biometric devices for use in employee
identification and security-related products.
In January 1999, we acquired all of the outstanding shares of Sense
Technologies for a purchase price consisting of 4,026,700 of our shares, issued
to the former shareholders of Sense Technologies. We now own and operate Sense
Technologies, Inc. as our wholly-owned subsidiary. At the time of the
acquisition, Century Silver Mines had no operations and Sense Technologies was
developing its proprietary biometric security systems. Immediately following the
acquisition, the former shareholders of Sense Technologies owned approximately
93% of our outstanding shares.
11
<PAGE>
At the time of the acquisition, the principal owners of Sense
Technologies were Dore Scott Perler and Andrew Goldrich. Dore Perler was its
president, Andrew Goldrich was its secretary and treasurer, and Messrs. Perler
and Goldrich were the members of its board of directors. At the time of the
acquisition, the officers and directors of Century Silver Mines were John Branz,
Kirk Scott and Barbara Scott, the mother of Kirk Scott. There were 288,300
outstanding shares of Century Silver Mines owned by approximately 750 holders,
none of whom, to our knowledge, owned in excess of 5% of the outstanding shares.
However, we understand that Kirk Scott, Barbara Scott and James Scott, her
borther-in-law, owned an aggregate of approximately 29% of the outstanding
shares of Century Silver Mines at the time of the acquisition.
In January 1999, we reduced the shares of our stock that were
outstanding by combining each 7.74 shares that were outstanding, into one share.
All numbers of shares in this prospectus reflect the January 1999 share
combination. In June 1999, we changed our corporate domicile from Idaho to
Florida and, in connection with the domicile change, we changed our name to
Sense Holdings, Inc.
Industry
The use of unique physical traits to verify a persons' identity, is
known as "biometric" identification. Biometric identification includes
fingerprinting, hand geometry, iris scanning, signature verification and voice
analysis. Biometric technology has been used for decades in government and law
enforcement applications. But, until recently, these systems were too expensive
to manufacture to make retail marketing realistic. With the introduction of more
powerful computers and the development of more advanced software applications,
biometric identification techniques can be adapted for commercial purposes on an
economically feasible basis.
We believe that fingerprint identification is far more effective in
authenticating employees' actual attendance at work than traditional time clock
verification. By authenticating a person's identity, biometric identification
can substantially reduce incidents of employee fraud inherent in the use of
other forms of employee identification and attendance verification, such as
punch clocks. We also believe that fingerprint verification is less intrusive,
more widely accepted and more cost effective than other available forms of
biometric identification systems.
Products
We currently have one biometric security identification system, which
we call "CheckPoint T/A(TM)". CheckPoint T/A(TM) has hardware and software
components that identify an employee by comparing his or her fingerprint to the
fingerprint on file with the employer, while gathering time and attendance data
each time the employee's fingerprint is read. The user's fingerprint is scanned
by means of an optical reader with sensors that scan and capture the image of
the fingerprint. The image is then converted into data that is stored in the
employer's computer
12
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database as a reference for comparison to the fingerprint of the employee
offered at the workplace. CheckPoint T/ATM's functions include:
o authenticating the identity of employees when they arrive at and leave
work;
o gathering data, including the time each employee attends work;
o performing calculations based on the data that is gathered, and
exporting this information electronically, to third-party payroll
software, such as that provided by ADP, so that automated payroll
checks can be produced;
o granting access to locked buildings, offices or other secured areas;
and
o producing logs and reports related to the foregoing.
We have completed the production of pilot versions of CheckPoint
T/A(TM), and have built and shipped 15 prototypes that are being field tested by
a limited group of select customers. We commenced delivery of these products in
the third quarter of fiscal 1999 and began generating revenues from those sales
in the fourth quarter. We also have firm orders for an additional 30 systems.
These systems are scheduled for shipment in the first quarter of 2000. We
recently completed development of a second generation product, and expect
revenues from those product sales during the first half of fiscal year 2000. We
also expect that enhancements to our second generation product will support a
larger database, and enable us to market CheckPoint T/ATM to larger companies,
resulting in a greater profit margin to us. We anticipate that enhanced versions
of our product will be available for shipment during the first half of fiscal
2000.
We are also developing a modified version of CheckPoint T/A(TM), to be
known as CheckPoint A/C(TM). CheckPoint A/C(TM) will incorporate "access
control" functions into our CheckPoint T/A(TM) system. These functions will
provide user access to buildings, offices and other secure areas, based upon
authentication of the user's fingerprint. The program can incorporate different
levels of security to permit access to places based upon the level of the user's
security clearance.
To date, we have developed a CheckPoint T/ATM system that incorporates
access control for single door access. We are currently developing software
application infrastructure that will enable a single CheckPoint T/ATM system to
to control access to multiple locations. We intend to market CheckPoint A/C(TM)
at a higher price than CheckPoint T/A(TM), to provide for the increased level of
technology and functionality provided by CheckPoint T/A(TM) .
Product Development, Manufacturing and Assembly
A CheckPoint T/A(TM) system consists of an optical fingerprint scanner
with sensors, a custom-built Pentium-based computer with VGA color display and
our proprietary software.
The software portion of CheckPoint T/A(TM) has been developed by our
in-house computer programmers and software engineers. The source code for the
software is our proprietary
13
<PAGE>
property. This software enables CheckPoint T/A(TM) to gather, filter and sort
data, generate reports from the data and compute payroll information for
transmission to third party payroll services.
We obtain most of the hardware components for CheckPoint T/A(TM)
off-the-shelf, from various vendors. However, certain hardware components are
designed to our specifications and manufactured exclusively for us by Test
Systems Engineering.
We have entered into a strategic alliance with Test Systems
Engineering. Test Systems Engineering will design, engineer, configure and
assemble the hardware components of CheckPoint T/A(TM), in consultation with us,
and to our specifications. All product testing and assembly will be performed at
Test Systems Engineering's facilities, in order to maintain quality control. Our
agreement with Test Systems Engineering terminates on December 31, 2005, but, as
long as we remain in compliance with our obligations under the agreement, it
will be automatically renewed for consecutive one year terms. For its services,
Test Systems Engineering receives a fee payable at the rate of $75 per hour. We
are dependent on Test Systems Engineering for its services in producing
CheckPoint T/A(TM).
We have entered into a license agreement with SAC Technologies, Inc.
Under this agreement, we have the exclusive right to include SAC's technology in
our identification systems. This technology consists of the optical fingerprint
scanner with sensors and related software that converts a fingerprint image into
data that is stored in CheckPoint T/A(TM)'s database. We have agreed to pay SAC
a one time license fee of $100,000 for the right to use its technology and
manufacture and market CheckPoint T/A(TM) under our name. We also agreed to pay
royalties to SAC of $50 per system sold, with annual minimum royalties of
$50,000. We have paid SAC $37,500 and must pay the balance to SAC in three
quarterly payments. Our agreement with SAC continues until December 21, 2002,
but as long as we are not in default of our obligations, the license agreement
will be renewed annually provided that we increase our purchases from SAC by at
least 20% over the preceding year.
We have entered into an agreement with Integrated Design, Inc. under
which Integrated Design has agreed to develop a software program to enable the
payroll data produced by CheckPoint T/A(TM) to be transferred to third party
payroll services such as ADP and Paychex. We have agreed to license the software
from Integrated Design and pay license fees aggregating at least $100,000 during
the first two years of the agreement. We have also agreed to pay Integrated
Design a $10,000 software development fee. The agreement is for a term of five
years, with five year renewal terms, but may be canceled by either party on 90
days written notice. The agreement also provides us access to the software and
allows us to continue to use Integrated Design's software in the event of their
dissolution, bankruptcy or similar events.
From our inception in July 1998 through September 30, 1999, we have
spent approximately $179,052 on research and development activities.
14
<PAGE>
Sales and Marketing
We intend to market CheckPoint T/A(TM) systems for base prices ranging
from $5,995 to $7,995, depending on the number of employees who will be tracked
on the system. Expansion modules can be added in one hundred employee
increments, for $495. We will also offer software updates and on-site service
contracts for additional fees.
Initially, we will market CheckPoint T/A(TM) to manufacturers and
retailers with at least 15 employees. We plan to sell CheckPoint T/A(TM) and
future products through an in-house sales force who will use telemarketing lead
generation, direct marketing programs, trade show participation, and local,
regional and national advertising campaigns to generate sales. We are also
evaluating whether our biometric technology can be used to conduct secure
commerce over the Internet.
We have also engaged independent sales representatives to market our
products in the Atlanta, New York, Miami and Los Angeles markets. We intend to
engage sales representatives to cover additional territories over the next 12
months. Initially, we intend to seek penetration of the retail merchandise, home
and business security, food processing facilities, textile manufacturing and
trucking and transport distribution markets through the services of these
representatives. Sales representatives are generally compensated by a commission
based upon the sales prices of systems sold by them.
Intellectual Property
We have developed our own software and we claim common law ownership of
our software. We may also seek copyright protection for our software with the
United States Patent and Trademark Office, and are investigating whether our
CheckPoint T/A(TM) system configuration of hardware and software may be the
subject of a successful patent application.
Whether or not we obtain formal protection for our software, hardware
or CheckPoint T/A(TM) system, we intend to vigorously protect our ownership
rights. However, protection of our rights will not prevent others from
developing similar technology on their own or developing other products that may
be used for purposes similar to ours. If these events occur, others may become
our competitors and our financial condition and the results of our operations
may be adversely affected.
Competition
We do not believe that intense competition currently exists for
biometric security systems for use in the private sector. However, the demand
for more reliable security systems is high and we expect that additional
competition will develop as others develop technologies for applications similar
to ours. Our ability to compete successfully will depend on many factors,
15
<PAGE>
including our ability to adapt to changing technologies and meet the needs of
the marketplace on a price competitive and timely basis.
Competition may come from companies using biometric fingerprint
technology, as well as from companies using other biometric identification
methods. Competitors also include companies marketing traditional forms of
employee verification and attendance products, including time clocks, ID badges,
passwords and PIN numbers. Competition is likely to include companies with
longer operating histories and greater financial and other resources than we
have.
We believe that we can effectively compete in our industry because:
o biometric identification is more reliable than traditional
employment verification methods;
o fingerprint identification is less costly and more recognized
than other currently available forms of biometric identification;
o CheckPoint T/ATM uses biometric technology, tracks employee
attendance and performs payroll functions not available through
the use of currently available competitive products;
o biometric identification does not use ID badges, passwords , PIN
numbers or other devices that have historically been misused by
employees to the detriment of employers; and
o CheckPoint T/ATM has other security-related applications, such as
limiting access to secure areas only to personnel who are
authorized and whose identity can be verified.
Our inability to compete successfully will have a material adverse effect on our
financial condition and results of our operations.
Employees
We currently employ nine people, six of whom are full-time employees,
in the following capacities: three executive officers, one administrative
employee, three sales and marketing personnel and two programmers. Our employees
are not represented by a collective bargaining unit. We believe that the
relations with our employees are good.
Legal Proceedings
We are not a party to any material legal proceeding, nor are any of our
officers, directors or affiliates a party adverse to us in any legal proceeding.
16
<PAGE>
Description of Property
We currently lease approximately 1,300 square feet of office space at
our Tamarac, Florida headquarters. The lease is with an unaffiliated party. Our
monthly lease payments range from approximately $1,166 to $1,285 over the lease
term. The lease expires in July 2002 and provides that we may not assign or
sublet the premises without the landlord's prior written consent. These
facilities are suitable and adequate for our current needs. We currently
maintain commercial general liability and property insurance coverage with
policy limits of $1,000,000 and $125,000, respectively. We may increase this
coverage to the extent business growth dictates.
MANAGEMENT
Directors and Executive Officers
The following table includes the names, positions held and ages of our
executive officers and directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Dore Scott Perler 39 Chief Executive Officer, President and
Director
Andrew Goldrich 38 Vice President and Director
Shawn Tartaglia 30 Chief Technical Officer and Director
Julie Slater 40 Director
</TABLE>
Dore Scott Perler has served as the Chief Executive Officer and
President of the Company, and a member of its Board of Directors, since July
1998. From May 1993 to July 1998, Mr. Perler was a founder, Director, and Vice
President of Sales covering the Southeast United States and Latin America, for
Latinrep, Inc., a manufacturer's representative organization. He assisted in the
formation of Latin Channels, a trade show for Latin American distributors.
Andrew Goldrich has served as the Vice President of the Company, and a
member of its Board of Directors, since July 1998. From January 1984 to July
1998, Mr. Goldrich was Vice President of Sales and Finance for Sassy Knitting
Mills, Inc., a privately-held garment manufacturer. He was a founder of Sassy
Knitting Mills, where he implemented a national salesforce and was responsible
for overall financial and marketing activities.
17
<PAGE>
Shawn Tartaglia has served as the Chief Technical Officer of the
Company, and a member of its Board of Directors, since July 1998. From November
1997 to July 1998, Mr. Tartaglia was Manager of Information Systems for
CompScript, Inc., a privately-held pharmaceutical provider. From February 1993
to November 1997, he was employed by Solopak Pharmaceuticals, a privately-held
pharmaceutical supplier, as its Systems and Telecommunications Manager.
Julie Slater has served on the Company's Board of Directors, since
January 1999. From 1984 and continuing until the present, Ms. Slater is Vice
President of All Eyes Optical, a privately-held optometry and retail eye wear
provider.
We have also engaged several consultants who we believe are significant
to our business. They are:
Doug Kilarski is our Operations Director, Business Operations. Mr.
Kilarski has served as a consultant to us, through Test Systems Engineering,
since July 1998. From 1994 to the present he is the Vice President, Analyst for
Aspen Business Development, a privately-held business development organization.
Alex Schlinkmann is our Operations Director, Hardware Engineering and
Manufacturing. Mr. Schlinkmann has been a consultant to us, through Test Systems
Engineering, since July 1998. From 1991 to the present he serves a President and
Design Engineer for Test Systems Engineering, a privately-held manufacturer of
automated assembly machines.
Jamie Schlinkmann is our Operations Director, Hardware Design. Mr.
Schlinkmann is the brother of Alex Schlinkmann, and has been a consultant to us
since July 1998. From 1991 to the present he serves as Vice President and Design
Engineer for Test Systems Engineering, a privately-held manufacturer of
automated assembly machines.
Board Committees: We do not as yet have an audit committee or a
compensation committee. However, as and when we elect independent directors, we
expect to organize these committees.
Employment Agreements. In March 1999, we entered into employment
agreements with each of Dore Scott Perler, Andrew Goldrich and Shawn Tartaglia.
Each agreement provides for employment at our discretion, and may be terminated
at any time, for any reason not prohibited by law. The agreements require each
employee to devote all of his work time and attention to our business, and
contain confidentiality provisions prohibiting the employee from divulging
information concerning our business to any third party. Each employee is
entitled to participate in our stock option plan, and in all other benefit
programs established by the board of directors for the benefit of our employees.
We pay Messrs. Perler and Goldrich annual salaries at the rate of $67,600 per
year, and Mr. Tartaglia at the rate of $65,000 per year.
18
<PAGE>
All directors serve for one year and until their successors are
elected and qualify. Directors do not receive compensation for serving as
directors. Officers are elected by the Board and their terms of office are,
except as otherwise stated in employment contracts, at the discretion of the
Board.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information relating to all compensation
awarded to, earned by or paid by us during the past three fiscal years to: (i)
our President and Chief Executive Officer; and (ii) each of our executive
officers who earned more than $100,000 during the fiscal year ended December 31,
1998:
<TABLE>
<CAPTION>
Fiscal Other Annual LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Options/ (#) Payouts Compensation
- --------------------------- ---- ------ ----- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dore Scott Perler, CEO 1998 - - - - - --
</TABLE>
19
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information concerning our grant of
options to purchase shares of our common stock during the fiscal year ended
December 31, 1998 to (i) our President and Chief Executive Officer; and (ii)
each of our executive officers who earned more than $100,000 during the fiscal
year ended December 31, 1998.
<TABLE>
<CAPTION>
Percent of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Options/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
---- ----------- ---- ------ ---------------
<S> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - --
</TABLE>
Incentive and Non-Qualified Stock Option Plan
On July 19, 1999, the board of directors adopted our 1999 stock option
plan. We have reserved 1,500,000 shares of common stock for issuance upon
exercise of options granted from time to time under the 1999 stock option plan.
The 1999 stock option plan is intended to assist us in securing and retaining
key employees, directors and consultants by allowing them to participate in our
ownership and growth through the grant of incentive and non-qualified options.
Under the stock option plan we may grant incentive stock options only
to key employees and employee directors, or we may grant non-qualified options
to our employees, officers, directors and consultants. The 1999 stock option
plan is currently administered by our board of directors.
Subject to the provisions of the stock option plan, the board will
determine who shall receive options, the number of shares of common stock that
may be purchased under the options, the time and manner of exercise of options
and exercise prices. The term of options granted under the stock option plan may
not exceed ten years or five years for an incentive stock option granted to an
optionee owning more than 10% of our voting stock. The exercise price for
incentive stock options will be equal to or greater than 100% of the fair market
value of the shares of the common stock at the time granted. However, the
incentive stock options granted to a 110% holder of our voting stock are
exercisable at a price equal to or greater than 10% of the fair market value of
the common stock on the date of the grant. The exercise price for non-qualified
options will be set by the board, in its discretion, but in no event shall the
exercise price be less than 75% of the fair market value of the shares of common
stock on the date of grant.
20
<PAGE>
The exercise price may be payable in cash or, with the approval of the board, by
delivery of shares or by a combination of cash and shares. Shares of common
stock received upon exercise of options will be subject to restrictions on sale
or transfer. As of the date of this prospectus, we have not granted any options
under the 1999 stock option plan.
Option Exercises and Holdings
The following table contains information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 1998 to (i) our President and Chief Executive Officer; and (ii)
each of our executive officers who earned more than $100,000 during the fiscal
year ended December 31, 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-The-Money
Acquired Options/SARs Options/SARs
On Value At FY-End (#) At FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --- --- ------------- -------------
<S> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - --
</TABLE>
Long-Term Incentive Plans Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Number Performance Estimated Future Payouts Under
of Shares or Other Non-Stock Price-Based Plans
Units or Period Until ------------------------------
Other Rights Maturation Threshold Target Maximum
Name (#) or Payout ($or #) ($or #) ($ or #)
---- --- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Dore Scott Perler, CEO - - - - --
</TABLE>
Limitation on Liability and Indemnification Matters
As authorized by the Florida Business Corporation Law, our Articles of
Incorporation provide that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except liability for:
o any breach of the director's duty of loyalty to our company or
its shareholders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
21
<PAGE>
o unlawful payments of dividends or unlawful stock redemptions or
repurchases; and
o any transaction from which the director derived an improper
personal benefit.
This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.
Our Articles of Incorporation further provide for the indemnification
of any and all persons who serve as our director, officer, employee or agent to
the fullest extent permitted under Florida law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC, this indemnification is against public policy as expressed
in the securities laws, and is, therefore unenforceable.
CERTAIN TRANSACTIONS
In July 1998, Dore Scott Perler, our President and a director, and
Andrew Goldrich, our Vice President and a director, founded Sense Technologies
and each of them were issued 1,370,518 shares valued at par, or $137,052 each.
Mr. Perler and Mr. Goldrich each subsequently contributed inventory and other
fixed assets to the capital of Sense Technologies, valued at $29,291.50 each.
Thereafter, Mr. Goldrich gifted 85,999 shares to a family member and Mr. Perler
gifted 25,793 shares to two friends.
In July 1998, Shawn Tartaglia, a founder of Sense Technologies, and our
Chief Technology Officer and a director, was issued 193,585 shares valued at
par, or $19,359.
In August 1998, Julie Slater, a director, purchased shares of Sense
Technologies for $10,000. These shares were converted into 38,703 shares of our
common stock at the time we acquired Sense Technologies.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of December 31, 1999, information
known to us relating to the beneficial ownership of shares of common stock by:
each person who is the
22
<PAGE>
beneficial owner of more than five percent of the outstanding shares of common
stock; each director; each executive officer; and all executive officers and
directors as a group.
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of Sense Holdings, Inc., 7300 West McNab Road,
Suite 117, Tamarac, Florida 33321.
We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them.
Under securities laws, a person is considered to be the beneficial
owner of securities he owns and that can be acquired by him within 60 days from
the date of this prospectus upon the exercise of options, warrants, convertible
securities or other understandings. We determine a beneficial owner's percentage
ownership by assuming that options, warrants or convertible securities that are
held by him, but not those held by any other person and which are exercisable
within 60 days of the date of this prospectus, have been exercise or converted.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
<S> <C> <C>
Dore S. Perler 1,344,725 22.1%
9400 S.W. 49th Place
Cooper City, FL 33328
Andrew Goldrich 1,284,519 21.1%
21653 Marigot Drive
Boca Raton, FL 33428
Shawn Tartaglia 193,585 3.2%
6888 Ashburn Road
Lake Worth, FL 33467
Julie Slater 38,703 1.0%
402 N.W. 118th Terrace
Coral Springs, FL 33071
Officers and Directors 2,861,532 47.1%
as a group (4 persons)
</TABLE>
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 10,000,000 shares of common
stock, $.10 par value per share. As of the date of this prospectus, there are
6,071,736 shares of common stock issued and outstanding, which are held of
record by approximately 800 holders.
23
<PAGE>
Common Stock
Holders of common stock are entitled to one vote for each share on all
matters submitted to a shareholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available
funds. In the event of our liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate in all assets that remain
after payment of liabilities and after providing for each class of stock, if
any, having preference over the common stock.
Holders of common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions for the common
stock. The rights of the holders of common stock are subject to any rights that
may be fixed for holders of preferred stock, when and if any preferred stock is
authorized and issued. All outstanding shares of common stock are, and the
shares underlying all option and warrants will be, duly authorized, validly
issued, fully paid an non-assessable upon our issuance of these shares.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American
Securities Transfer and Trust, 12039 West Alameda Parkway, Suite Z-2, Lakewood,
Colorado 80228, and its telephone number is (303) 986-5400.
Reports to Securityholders
We intend to furnish our stockholders with annual reports containing
audited financial statements. We may disseminate such other unaudited interim
reports to securityholders as we deem appropriate.
SELLING SECURITYHOLDERS
The following table sets forth (a) the name of each selling
securityholder, (b) the number or shares of common stock beneficially owned by
each selling securityholder as of the date of this prospectus, giving effect to
the exercise of the selling securityholders' warrants into shares of common
stock and (c) the number of shares being offered by each selling securityholder.
The shares of common stock being offered are being registered to permit public
sales and the selling securityholders may offer all or part of the shares for
resale from time to time. All expenses of the registration of the common stock
on behalf of the selling securityholder are being borne by us. We will receive
none of the proceeds of this offering.
24
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Shares Available Shares Percent of
Prior to this Pursuant to Owned after Class
Selling Securityholder Offering this Prospectus Offering after Offering
- ---------------------- -------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Austin Gleason 66,667 66,667 - -
Eugene Graves 66,667 66,667 - -
Leon Hertzon 10,000 10,000 - -
Bill Hickey 66,667 66,667 - -
Earl Hingson, Jr. 10,000 10.000 - -
Ivy Entertainment 15,000 15,000 - -
Michael Janis 33,333 33,333 - -
Joyce Westmoreland 33,333 33,333 - -
Alan Silverberg 10,000 10,000 - -
Andrew Astrove 10,000 10,000 - -
Lisa Battaglia 4,000 4,000 - -
David Baum 13,500 13,500 - -
545775 BC Ltd. 10,000 10,000 - -
Adam Childers 40,000 40,000 - -
James Corrado 24,000 24,000 - -
Richard David 133,333 133,333 - -
Gerard Kearns 57,333 57,333 - -
William Kearns 5,000 5,000 - -
Philip Kendall 50,000 50,000 - -
Herbert Meislich 66,667 66,667 - -
Robert Murray 5,000 5,000 - -
Schneider Fuel Pension 20,000 20,000 - -
Josette Pieroni 13,333 13,333 - -
Marty Powell 7,000 7,000 - -
Thomas Ralston 1,000 1,000 - -
Jeffrey Rappaport 15,000 15,000 - -
Dan Rosen 3,000 3,000 - -
Brian Ross 20,000 20,000 - -
Charlotte Sundquist 1,734 1,734 - -
Michael Schift 4,000 4,000 - -
Scott Schift 4,000 4,000 - -
Alvin Siegel 20,000 20,000 - -
Mitchell Thomas 5,000 5,000 - -
George Thompson 66,667 66,667 - -
Brian Wallach 6,667 6,667 - -
Warren Struhl Fam. Part. 33,333 33,333 - -
Jeff Weiss 6,667 6,667 - -
David Zakala 12,000 12,000 - -
John Zale 26,667 26,667 - -
William Zimmerman 10,000 10,000 - -
Mel Goldstein 1,000 1,000 - -
Jack Blanco 500 500 - -
Fred Banner 5,333 5,333 - -
Adam Rovner 3,333 3,333 - -
lst Level Capital 225,000 225,000 - -
------- ------- --- ---
TOTAL 1,241,734 1,241,734 - --
</TABLE>
25
<PAGE>
The information contained in the foregoing table is derived from our
books and records, as well as from our transfer agent.
We are advised that (a) the beneficial owner of 545775 BC Ltd. Corp. is
Sean Dickinson, (b) the beneficial owner of Schneider Fuel Pension is Edward T.
Schneider, (c) the beneficial owner of Struhl Family Partnership is Warren
Struhl, and (d) the beneficial owners of First Level Capital, Inc. are Marc
Siegel, Al Mirman, Richard Galtiero, Eric Rand and Vincent Labarbara.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be distributed from time to
time by the selling securityholders in one or more transactions that may take
place on the over-the-counter market. These include ordinary broker's
transactions, privately-negotiated transactions or through sales to one or more
broker-dealers for resale of these shares as principals, at market prices
existing at the time of sale, at prices related to existing market prices,
through Rule 144 transactions or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the selling
securityholders in connection with sales of securities.
The selling securityholders may sell the securities in one or more of
the following methods:
(a) a block trade in which a broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as principals
to facilitate the transaction;
(b) purchasers by a broker or dealer as principal and resale by the
broker or dealer for its account under this prospectus;
(c) ordinary brokerage transactions and transactions which the broker
solicits purchases, and
(d) face-to-face transactions between sellers and purchasers without a
broker-dealer.
In making sales, brokers or dealers used by the selling securityholders
may arrange for other brokers or dealers to participate. The selling
securityholders and others through whom such securities are sold may be
"underwriters" within the meaning of the Securities Act for the securities
offered, and any profits realized or commission received may be considered
underwriting compensation.
At the time a particular offer of the securities is made by or on
behalf of a selling securityholder, to the extent required, a prospectus is to
delivered. The prospectus will include the number of shares of common stock
being offered and the terms of the offering, including the
26
<PAGE>
name or names of any underwriters, dealers or agents, the purchase price paid by
any underwriter for the shares of common stock purchased from the selling
securityholder, and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
We have told the selling securityholders that the anti-manipulative
rules under the Securities Exchange Act of 1934, including Regulation M, may
apply to their sales in the market. We have provided each of the selling
securityholders with a copy of these rules. We have also told the selling
securityholders of the need for delivery of copies of this prospectus in
connection with any sale of securities that are registered by this prospectus.
Sales of securities by us and the selling securityholders or even the
potential of these sales may have a negative effect on the market price of the
shares of common stock offered hereby.
SHARES ELIGIBLE FOR FUTURE SALE
At the date of this prospectus, we have 6,071,736 shares of common
stock issued and outstanding of which 732,021 shares are freely tradeable
without restriction or further registration under the Securities Act, except for
any shares purchased by an affiliate of ours. This does not include 1,500,000
shares that may be issued upon exercise of options that may, in the future, be
granted under our stock option plan. They may be resold by their holders as long
as they are covered by a current registration statement or under an available
exemption from registration.
All of the remaining 5,339,715 shares of common stock currently
outstanding are restricted securities. Of these restricted shares, 1,241,734
shares are eligible for resale by this prospectus. The remaining restricted
shares will become eligible for sale under Rule 144 at various times provided
that they have been held for at least one year. In general, Rule 144 permits a
shareholder who has owned restricted shares for at least one year, to sell
without registration, within a three month period, up to one percent of our then
outstanding common stock. We must be current in our reporting obligations in
order for a shareholder to sell shares under Rule 144. In addition, shareholders
other than our officers, directors or 5% or greater shareholders who have owned
their shares for at least two years, may sell them without volume limitation or
the need for our reports to be current.
We cannot predict the effect, if any, that market sales of common stock
or the availability of these shares for sale will have on the market price of
the shares from time to time. Nevertheless, the possibility that substantial
amounts of common stock may be sold in the public market could adversely affect
market prices for the common stock and could damage our ability to raise capital
through the sale of our equity securities.
27
<PAGE>
LEGAL MATTERS
The validity of the securities offered by this prospectus will be
passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas
Boulevard, Suite 1900, Fort Lauderdale, FL 33301, Florida.
EXPERTS
The consolidated financial statements as of December 31, 1998, and for
the year then ended, appearing in this prospectus and registration statement
have been audited by Feldman Sherb Horowitz & Co., P.C., independent auditors,
as set forth in their report thereon appearing elsewhere in this prospectus, and
are included in reliance upon this report given on the authority of such firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the SEC the registration statement on Form SB-2
under the Securities Act for the common stock offered by this prospectus. This
prospectus, which is a part of the registration statement, does not contain all
of the information in the registration statement and the exhibits filed with it,
portions of which have been omitted as permitted by SEC rules and regulations.
For further information concerning us and the securities offered by this
prospectus, we refer to the registration statement and to the exhibits filed
with it. Statements contained in this prospectus as to the content of any
contract or other document referred to are not necessarily complete. In each
instance, we refer you to the copy of the contracts and/or other documents filed
as exhibits to the registration statement, and these statements are qualified in
their entirety by reference to the contract or document.
The registration statement, including all exhibits, may be inspected
without charge at the SEC's Public Reference Room at 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials
may also be obtained from the SEC's Public Reference at 450 Fifth Street, N.W.,
Room 1024, Washington D.C. 20549, upon the payment of prescribed fees. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. In addition, registration statements and other filings
made with the SEC through its Electronic Data Gathering, Analysis and Retrieval
Systems are publicly available through the SEC's site on the World Wide Web
located at http//www.sec.gov.
The registration statement, including all exhibits and schedules and
amendments, has been filed with the SEC through the Electronic Data Gathering,
Analysis and Retrieval system.
28
<PAGE>
Following the effective date of the registration statement relating to
this prospectus, we will become subject to the reporting requirements of the
Exchange Act and in accordance with these requirements, will file annual,
quarterly and special reports, and other information with the SEC. We also
intend to furnish our shareholders with annual reports containing audited
financial statements and other periodic reports as we think appropriate or as
may be required by law.
29
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
REPORT ON AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
FROM JULY 13, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Independent Auditors' Report....................................................................................F-2
Consolidated Balance Sheets.....................................................................................F-3
Consolidated Statements of Operations...........................................................................F-4
Consolidated Statements of Stockholders' (Deficit) Equity.......................................................F-5
Consolidated Statements of Cash Flows...........................................................................F-6
Notes to Consolidated Financial Statements...............................................................F-7 - F-12
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Sense Holdings, Inc. and Subsidiary
Sunrise, Florida
We have audited the accompanying consolidated balance sheet of Sense
Holdings, Inc. and Subsidiary (A Development Stage Enterprise) as of December
31, 1998, and the related consolidated statements of operations, stockholders'
(deficit) equity, and cash flows for the period July 13, 1998 (Inception)
through December 31, 1998. 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 amount 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sense
Holdings, Inc. and Subsidiary (A Development Stage Enterprise) as of December
31, 1998, and the results of its operations and its cash flows for the period
July 13, 1998 (Inception) through December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
July 2, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31, September 30,
1998 1999
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash $ 13,147 $ 395,170
Accounts receivable -- 55,029
Inventory -- 19,049
Prepaid expenses -- 37,500
Loans receivable - shareholders -- 11,500
Other current assets 1,634 2,891
---------- ----------
TOTAL CURRENT ASSETS 14,781 521,139
PROPERTY AND EQUIPMENT, net 8,597 11,407
---------- ----------
$ 23,378 $ 532,546
========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
----------------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 28,924 $ 52,217
Common stock to be issued 110,500 --
---------- ----------
TOTAL CURRENT LIABILITIES 139,424 52,217
---------- ----------
STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock, $.10 par value, 10,000,000 shares authorized;
288,300 and 6,071,734 shares issued and outstanding, respectively 28,830 607,173
Additional paid-in capital 29,753 610,660
Accumulated deficit (174,629) (737,504)
---------- ----------
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY (116,046) 480,329
---------- ----------
$ 23,378 $ 532,546
========== ==========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
From July 13, Nine Months From July 13,
1998 (Inception) Ended 1998 (Inception)
to December 31, September 30, to September 30,
1998 1999 1999
------------------- ------------------ ----------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Sales $ -- $ 54,695 $ 54,695
Cost of goods sold -- 21,690 21,690
--------------------- ----------------- ---------------------
Gross Profit -- 33,005 33,005
OPERATING EXPENSES:
Depreciation 858 1,530 2,388
Rent 2,650 6,791 9,441
Research and development 71,510 107,542 179,052
Non-cash compensation -- 260,000 260,000
General and administrative 99,611 220,017 319,628
--------------------- ----------------- ---------------------
174,629 595,880 770,509
--------------------- ----------------- ---------------------
NET LOSS $ 174,629 $ 562,875 $ 737,504
===================== ================= =====================
Net loss per common share $ 0.04 $ 0.12 $ 0.15
===================== ================= =====================
Weighted Average
Number of shares outstanding 4,315,000 4,759,048 4,945,594
===================== ================= =====================
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
---------------------------------------------------------
Common Stock
------------------------------ Additional Total
Number of Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit (Deficit) Equity
-------------- ------------ -------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Balance, July 13, 1998 (Inception) 288,300 $ 28,830 $ (28,830) $ -- $ --
Capital contribution -- -- 58,583 -- 58,583
Net loss -- -- -- (174,629) (174,629)
------------- ----------- ------------- ----------------- -----------------
Balance, December 31, 1998 288,300 28,830 29,753 (174,629) (116,046)
Issuance of common stock pursuant
to share exchange agreement (unaudited) 4,026,700 402,670 (402,670) -- --
Capital contribution (unaudited) -- -- 141,200 141,200
Cancellation of common stock (unaudited) (50,000) (5,000) 5,000 -- --
Issuance of Common Stock (unaudited) 1,266,734 126,673 631,377 -- 758,050
Issuance of Common Stock
for services rendered (unaudited) 540,000 54,000 206,000 -- 260,000
Net loss (unaudited) -- -- -- (562,875) (562,875)
------------- ----------- ------------- ----------------- -----------------
Balance, September 30, 1999 (unaudited) 6,071,734 $ 607,173 $ 610,660 $ (610,660) $ 480,329
============= =========== ============= ================= =================
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
From July 13, Nine Months From July 13,
1998 (Inception) Ended 1998 (Inception)
to December 31, September 30, to September 30,
1998 1999 1999
-------------------- --------------- --------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (174,629) $ (562,875) $ (737,504)
-------------------- --------------- --------------------
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation 858 1,530 2,388
Non-cash compensation -- 260,000 260,000
Changes in assets and liabilities:
Increase in accounts receivable -- (55,029) (55,029)
Increase in inventory -- (19,049) (19,049)
Increase in prepaid and other current assets (1,634) (38,757) (40,391)
Increase in accounts payable and accrued expenses 28,924 23,293 52,217
-------------------- --------------- --------------------
Total adjustments 28,148 171,988 200,136
-------------------- --------------- --------------------
CASH USED IN OPERATIONS (146,481) (390,887) (537,368)
-------------------- --------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,455) (4,340) (13,795)
-------------------- --------------- --------------------
CASH FLOWS USED IN INVESTING ACTIVITIES (9,455) (4,340) (13,795)
-------------------- --------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock to be issued 110,500 (110,500) --
Loans to shareholders -- (11,500) (11,500)
Proceeds from the sale of common stock -- 758,050 830,050
Capital contribution 58,583 141,200 199,783
-------------------- --------------- --------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 169,083 777,250 946,333
-------------------- --------------- --------------------
NET INCREASE IN CASH 13,147 382,023 395,170
CASH - beginning of period -- 13,147 --
-------------------- --------------- --------------------
CASH - end of period $ 13,147 $ 395,170 $ 395,170
==================== =============== ====================
</TABLE>
See notes to consolidated financial statements
F-6
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
(A Development Stage Enterprise)
--------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
FOR THE PERIOD JULY 13, 1998 (Inception) THROUGH DECEMBER 31, 1998
------------------------------------------------------------------
Sense Technologies, Inc. ("Sense")was formed on July 13, 1998 to design,
develop, manufacture and sell security identification systems.
On January 19, 1999, Sense was acquired by Century Silver Mines, Inc. ("CSM"),
an Idaho corporation, for 4,026,700 shares of CSM stock (the "Exchange"). The
Exchange was completed pursuant to the Agreement and Plan of Reorganization
between Sense and CSM. The Exchange has been accounted for as a reverse
acquisition under the purchase method for business combinations. Accordingly,
the combination of the two companies is recorded as a recapitalization of Sense,
pursuant to which Sense is treated as the continuing entity. In August 1999,
pursuant to the approval of the Board of Directors of CSM, the name of the
company changed to Sense Holdings, Inc. (the "Company").
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A. Principles of consolidation - The financial statements include
the accounts of the Company and its wholly-owned subsidiary.
All material intercompany transactions have been eliminated.
B. Equipment - Equipment is carried at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the various assets.
C. Inventories - Inventories are stated at the lower of average
cost or market.
D. Income Taxes - Income taxes are accounted for under Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which is an asset and liability approach that
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial
statements or tax returns.
E. Fair Value of Financial Instruments - The carrying amounts
reported in the balance sheet for cash, receivables, and
accounts payable approximate their fair market value based on
the short-term maturity of these instruments.
F. Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could
differ from those estimates.
F-7
<PAGE>
G. Impairment of long-lived assets - The Company reviews
long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the
carrying amounts may not be recovered. At December 31, 1998,
the Company believes that there has been no impairment of its
long-lived assets.
H. Comprehensive Income - The Company has adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130) "Reporting
Comprehensive Income". Comprehensive income is comprised of
net loss and all changes to the statements of stockholders'
equity, except those due to investments by stockholders,
changes in paid-in capital and distribution to stockholders.
For the period ended December 31, 1998, the Company had deemed
comprehensive income to be negligible.
I. Research and Development - Research and development costs are
expensed as incurred. These costs primarily consists of fees
paid for the development of the Company's software. Research
and development costs for the period ended December 31, 1998
were $71,510.
J. Stock Based Compensation - The Company accounts for stock
transactions in accordance with APB No. 25, "Accounting for
Stock Issued to Employees." In accordance with Statement of
Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation," the Company adopted
the pro forma disclosure requirements of SFAS 123.
K. New Accounting Pronouncements - The Company will adopt
Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131") for the period ended December
31, 1998. SFAS No. 131 requires the Company to report selected
information about operating segments in its financial
statements. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. The application of the new pronouncement is
not expected to have a material impact on the Company's
disclosures.
The Company will adopt Statement of Financial
Accounting Standards No. 132 ("SFAS No. 132"), "Employers'
Disclosures about Pensions and Other Postretirement Benefits"
for the period ended December 31, 1998. SFAS 132 revises
employers' disclosures about pension and other postretirement
benefit plans. The application of the new pronouncement is not
expected to have a material impact on the financial
statements.
L. Licensing Agreements - Licensing agreements are stated at
cost, less accumulated amortization. Amortization is computed
using the straight-line method over an estimated life of ten
years based upon management's expectations relating to the
life of the technology and current competitive market
conditions. The estimated life is reevaluated each year based
upon changes in these factors.
F-8
<PAGE>
M. Earnings Per Share - The Company has adopted the provisions of
Financial Accounting Standards No. 128, "Earnings Per Share".
Basic net loss per share is based on the weighted average
number of shares outstanding. Potential common shares included
in the computation are not presented in the financial
statements as their effect would be anti-dilutive.
2. EQUIPMENT
---------
Equipment is as follows:
Computer equipment 9,455
Less: Accumulated depreciation 858
--------------
$ 8,597
==============
3. COMMITMENTS
-----------
A. Rent - The Company leases office space under operating leases
commencing September 1998. The lease expires September 1999.
Minimum rental commitments are as follows:
1999 $ 8,268
===============
B. License Agreement -The Company entered into a licensing
agreement with a software development company. Under this
agreement, the Company has exclusive rights to include the
software company's technology in its identification systems.
The Company has agreed to pay $100,000 for the right to use
this technology. The Company has also agreed to pay royalties
of $50 per system sold, with annual minimum royalties of
$50,000. As of June 30, 1999, the Company has paid $37,500 and
must pay the balance in three quarterly installments. The
license can be renewed annually .
C. Employment Agreements - In March 1999 the Company entered into
one-year employment agreements with three officers. The total
commitment to the Company for these agreements will aggregate
$200,200.
4. INCOME TAXES
------------
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for
the expected
F-9
<PAGE>
future tax benefit to be derived from tax loss and tax credit
carryforwards. SFAS No. 109 additionally requires the establishment of
a valuation allowance to reflect the likelihood of realization of
deferred tax assets.
The provision (benefit) for income taxes differs from the amounts
computed by applying the statutory federal income tax rate to income
(loss) before provision for income taxes, the reconciliation is as
follows:
Taxes benefit computed at statutory rate $ (59,000)
Income tax benefit not utilized 59,000
---------------
Net income tax benefit $ --
===============
The Company has a net operating loss carryforward for tax purposes
totaling approximately $175,000 at December 31, 1998 expiring in the
year 2013.
Listed below are the tax effects of the items related to the Company's
net tax liability:
Tax benefit of net operating loss carryforward $ 59,000
Valuation Allowance (59,000)
---------------
Net deferred tax asset recorded $ --
===============
5. STOCKHOLDERS' EQUITY
--------------------
On January 15, 1999 the Company declared a 1 for 7.74 reverse
stock split. The financial statements for all periods
presented have been retroactively adjusted for the stock
split.
On January 19, 1999, the Company issued 4,026,700 shares of
common stock to former shareholders of Sense Technologies,
Inc., in connection with the Company's acquisition of all of
the issued and outstanding shares of Sense Technologies, Inc.
The Company also received cash of $141,200 relating to the
acquisition.
In January 1999, the Company issued an aggregate of 290,000
shares of common stock to various consultants, in
consideration of services rendered to the Company. Such shares
were valued at an aggregate of $72,500 or approximately $.25
per share. Such issuance was recorded as non-cash compensation
expense.
In March 1999, the Company issued an aggregate of 240,000
shares of common stock to various people, for an aggregate of
$60,000 or approximately $.25 per share.
In June 1999, the Company issued 25,000 shares of common stock
to various consultants, in consideration of services rendered
to the Company. Such shares were valued at an aggregate of
$18,750 or approximately $.75 per share. Such issuance
was recorded as non-cash compensation expense.
F-10
<PAGE>
6. SUBSEQUENT EVENTS (Unaudited)
-----------------------------
A. Issuance of Common Stock - In July 1999, the Company issued
225,000 shares of common stock to various consultants, in
consideration of services rendered to the Company. Such shares
were valued at an aggregate of $168,750 or approximately $.75
per share.
From April to August 1999, the Company issued an aggregate of
1,026,733 shares of common stock for an aggregate purchase
price of $770,050 or approximately $.75 per share.
B. Stock Option Plan - On July 19, 1999, the board of directors
adopted the Company's 1999 stock option plan. The company has
reserved 1,500,000 shares of common stock for issuance upon
exercise of options granted from time to time under the 1999
stock option plan. The 1999 stock option plan is intended to
assist us in securing and retaining key employees, directors
and consultants by allowing them to participate in the
ownership and growth through the grant of incentive and
non-qualified options.
Under the stock option plan we may grant incentive stock
options only to key employees and employee directors, or we
may grant non-qualified options to our employees, officers,
directors and consultants. The 1999 stock option plan is
currently administered by the Company's board of directors.
Subject to the provisions of the stock option plan, the board
will determine who shall receive options, the number of shares
of common stock that may be purchased under the options, the
time and manner of exercise of options and exercise prices.
The term of the options granted under the stock option plan
may not exceed ten years or five years for an incentive stock
option granted to an optionee owning more than 10% of our
voting stock. The exercise price for incentive stock options
will be equal to or greater than 100% of the fair market value
of the shares of the common stock at the time granted.
However, the incentive stock options granted to a 10% holder
of the Company's voting stock are exercisable at a price equal
to or greater than 110% of the fair market value of the common
stock at the date of the grant. The exercise price for
non-qualified options will be set by the board, in its
discretion, but in no event shall the exercise price be less
than 75% f the fair market value of the shares of common stock
on the date of grant. The exercise price may be payable in
cash or, with the approval of the board, by delivery of shares
or a combination of cash and shares. Shares of common stock
received upon exercise of options will be subject to
restrictions on sale or transfer. As June 30, 1999, the
Company has not granted any
F-11
<PAGE>
options under the 1999 stock option plan
C. Licensing Agreement - The Company intends to enter into an
agreement with another software development company. The
Company has agreed to license the software from the software
development company and pay license fees of at least $100,000
per year during the first two years of the agreement. The
Company has also agreed to pay the software development
company a $10,000 software development fee. The agreement is
for a term of five years, with five year renewal terms, but
may be canceled by either party on 90 days written notice. The
Company intends to enter into the agreement with the software
development company once the Company reaches an agreement on
obtaining the right to continue the software development
company's software in the event of their dissolution,
bankruptcy or similar events.
F-12
<PAGE>
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the company or any of the
underwriters. This prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
any offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
the information set forth herein is correct as of any time subsequent to the
date hereof.
TABLE OF CONTENTS
Page
----
Prospectus Summary.......................... 2
Risk Factors................................ 4 1,241,734 SHARES
Capitalization.............................. 7
Use of Proceeds............................. 7 SENSE HOLDINGS, INC.
Price Range of Common Stock
and Dividend Policy...................... 7
Forward-Looking Statements.................. 8
Management's Discussion and
Analysis or Plan of Operation............ 9
Business.................................... 11 PROSPECTUS
Management.................................. 17 ----------
Executive Compensation...................... 19
Certain Transactions........................ 22
Principal Shareholders...................... 22 ________________, 2000
Description of Securities................... 23
Selling Securityholders..................... 24
Plan of Distribution ....................... 26
Shares Eligible for Future Sale............. 27
Legal Matters............................... 28
Experts..................................... 28
Additional Information...................... 28
Financial Statements........................ F-1
<PAGE>
Until _________, 199___ (90 days after the date of this Prospectus),
all dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligations of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
<PAGE>
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act.
The provisions of the Corporation Act that authorize indemnification do
not eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution and (d) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the Federal securities laws.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the act and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
distribution of the securities being registered are as follows:
SEC Registration and Filing Fee............................... $ 345
Legal Fees and Expenses*...................................... 20,000
Accounting Fees and Expenses*................................. 15,000
II-1
<PAGE>
Financial Printing*........................................... 3,000
Transfer Agent Fees*.......................................... 1,500
Blue Sky Fees and Expenses*................................... 500
Miscellaneous*................................................ 4,655
TOTAL............................................... $45,000
* Estimated
None of the foregoing expenses are being paid by the selling securityholders.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On or about January 19, 1999, the Company issued 4,026,700 shares of
common stock to the 38 former shareholders of Sense Technologies, Inc., in
connection with the Company's acquisition of all of the issued and outstanding
shares of Sense Technologies, Inc. The former shareholders of Sense
Technologies, Inc. had access to financial statements and other relevant
information concerning the Company and this transaction was exempt from the
registration requirement of the Securities Act of 1933, as amended (the "Act")
by reason of Section 4(2) of the Act and the rules and regulations thereunder.
Subsequently, 50,000 shares issued in the acquisition to a former Sense
Technologies shareholder were canceled due to the former shareholder's failure
to perform services that had been agreed to.
In January 1999, the Company issued an aggregate of 290,000 shares of
common stock to four persons, in consideration of consulting services rendered
to the Company. Such shares were valued at an aggregate of $72,500 or
approximately $.25 per share. These shares were issued pursuant to Rule 504 of
Regulation D under the Act. No general solicitation or advertising was used in
connection with these issuances, and the certificates evidencing the shares did
not bear a legend restricting their transferability under the Act.
In March 1999, the Company issued an aggregate of 240,000 shares of
common stock to seven persons, for an aggregate purchase price of $60,000 or
approximately $.25 per share. These shares were issued pursuant to Rule 504 of
Regulation D under the Act. No general solicitation or advertising was used in
connection with these issuances, and the certificates evidencing the shares did
not bear a legend restricting their transferability under the Act.
On or about April 1, 1999, the Company issued 10,000 shares of common
stock to one investor for a purchase price of $7,500 or $.75 per share. These
shares were issued pursuant to Rule 504 of Regulation D under the Act. No
general solicitation or advertising was used in connection with this
transaction, and the certificates evidencing the shares did not bear a legend
restricting their transferability under the Act. The purchaser had access to
business and financial information concerning the Company. The Company had
reasonable grounds to believe that the purchaser was an accredited investor, as
defined by Rule 501 of Regulation D, and the purchaser
II-2
<PAGE>
represented that he was acquiring the shares for investment purposes only, and
not with a view towards distribution or resale except in compliance with
applicable securities laws.
From April 7, 1999 to August 1999, the Company issued an aggregate of
1,016,734 shares of common stock to 46 persons, for an aggregate purchase price
of $762,550 or approximately $.75 per share. These shares were issued pursuant
to Rule 504 of Regulation D under the Act. Each of the investors (a) had access
to business and financial information concerning the Company, (b) represented
that it was acquiring the shares for investment purposes only and not with a
view towards distribution or resale except in compliance with applicable
securities laws and (c) had such knowledge and experience in business and
financial matters that they were able to evaluate the risks and merits of an
investment in the Company, and were, therefore, sophisticated investors at the
time of purchase. In addition, the Company had reasonable grounds to believe
that 39 of the investors were accredited investors within the meaning of Rule
501 under Regulation D. No general solicitation or advertising was used in
connection with these issuances and the certificates evidencing the shares that
were issued contained a legend restricting their transferability absent
registration under the Act or the availability of an applicable exemption
therefrom.
In June 1999, the Company issued 25,000 shares of common stock to 9
employees, consultants and/or professional advisors to the Company. The
employees, consultants and advisors (a) had a preexisting business relationship
with the Company, (b) had access to financial statements and other relevant
information concerning the Company, (c) had such knowledge in business and
financial matters that it was able to understand the risks and merits of an
investment in the Company, and was, therefore, a sophisticated investor at the
time of acquisition and (d) the shares that were issued contained a legend
restricting their transferability absent registration under the Act or the
availability of an applicable exemption therefrom. Accordingly, this transaction
was exempt from the registration requirements of the Act by reason of Section
4(2) of the Act and the rules and regulations thereunder.
In July 1999, the Company issued 225,000 shares of common stock to a
consultant, in consideration for services rendered to the Company. The
consultant (a) had a preexisting business relationship with the Company, (b) had
access to financial statements and other relevant information concerning the
Company, (c) represented that it was acquiring the shares for investment
purposes only and not with a view towards distribution or resale except in
compliance with applicable securities laws and (d) had such knowledge in
business and financial matters that it was able to understand the risks and
merits of an investment in the Company, and was, therefore, a sophisticated
investor at the time of acquisition. In addition, the shares that were issued
contained a legend restricting their transferability absent registration under
the Act or the availability of an applicable exemption therefrom. Accordingly,
this transaction was exempt from the registration requirements of the Act by
reason of Section 4(2) of the Act and the rules and regulations thereunder.
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<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description of Document
2 Agreement and Plan of Merger between Century Silver Mines,
Inc. and Sense Holdings, Inc.(1)
3.1(a) Articles of Incorporation of Sense Holdings, Inc.(1)
3.1(b) Articles of Merger of Century Silver Mines, Inc. into Sense
Holdings, Inc. (FL)(1)
3.1(c) Articles of Merger of Century Silver Mines, Inc. into Sense
Holdings, Inc. (ID)(1)
3.2 Bylaws (1)
5 Opinion and Consent of Atlas, Pearlman, Trop & Borkson,
P.A.(1)
10.1 Stock Option Plan (1)
10.2 Employment Agreement between the Company and Dore Scott Perler
(1)
10.3 Employment Agreement between the Company and Andrew Goldrich
(1)
10.4 Employment Agreement between the Company and Shawn Tartaglia
(1)
10.5 Technology License Agreement, as amended, with SAC
Technologies, Inc.(1)
10.6 Lease for Tamarac Office(1)
10.11 Manufacturing and Non-Compete Agreement with Test Systems
Engineering (1)
10.12 Sales Agreement with Integrated Design, Inc.(1)
23(i) Consent of Atlas, Pearlman, Trop & Borkson, P.A. (see Exhibit
5)(1)
23(ii) Consent of Feldman Sherb Horowitz & Co. P.C.(2)
21 Subsidiaries of Registrant (1)
27 Financial Data Schedule (1)
- -------------------------
(1) Previously filed.
(2) Filed herewith.
ITEM 28. UNDERTAKINGS
The undersigned Registrant also undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
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<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (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 Securities
and Exchange Commission (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 preceding) 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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Tamarac, Florida on January 24, 2000.
SENSE HOLDINGS, INC.
By: /s/ Dore Scott Perler
-------------------------------------
Dore Scott Perler
Chairman, Chief Executive Officer
and Principal Financial and Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Form SB-2 registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Dore Scott Perler Chief Executive Officer, January 24, 2000
- ------------------------------------ President and Director
Dore Scott Perler (Principal Executive Officer
and Principal Accounting
Officer)
/s/ Andrew Goldrich Vice President and Director January 24, 2000
- ------------------------------------
Andrew Goldrich
/s/ Shawn Tartaglia Chief Technical Officer January 24, 2000
- ------------------------------------ and Director
Shawn Tartaglia
/s/ Julie Slater Director January 24, 2000
- ------------------------------------
Julie Slater
</TABLE>
EXHIBIT 23(ii)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement on Form SB-2 of
our report dated July 2, 1999, relating to the financial statements of Sense
Holdings, Inc. and Subsidiary for the period July 13, 1998 (Inception) through
December 31, 1998, and the reference to our firm under the caption "Experts" in
this Registration Statement.
/s/ Feldman Sherb Horowitz & Co., P.C.
--------------------------------------
FELDMAN SHERB HOROWITZ & CO., P.C.
Certified Public Accountants
New York, New York
January 24, 2000
