<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
Amendment No. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
CDKNET.COM, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 22-3586087
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
595 Stewart Avenue, Suite 710
Garden City, N.Y. 11530
(516) 222-2345
WWW.CDKNET.COM
(Address, including zip code,
telephone number, including area code, and
web address of the principal
executive offices of the registrant)
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.0001
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders CDKNET.COM, INC.
We have audited the accompanying consolidated balance sheet of CDKNET.COM, INC.
and Subsidiaries (the "Company") as of June 30, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year ended June 30, 1999 and the period October 1, 1997 (date of inception)
to June 30, 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 audits. As discussed in Note 11, the Company's
consolidated statements of operations, stockholders' equity and cash flows for
the period October 1, 1997 (date of inception) to June 30, 1998 were reaudited
and restated.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CDKNET.COM, INC.
and Subsidiaries as of June 30, 1999, and the consolidated results of their
operations and their consolidated cash flows for the year ended June 30, 1999
and the period October 1, 1997 (date of inception) to June 30, 1998, in
conformity with generally accepted accounting principles.
As shown in the consolidated financial statements, since inception the Company
has sustained significant losses and used substantial amounts of cash in
operations. The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The
uncertainty as to the Company's ability to raise additional financing and
sustain profitable operations, as discussed in Note 1 to the consolidated
financial statements, raises substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from this uncertainty.
/s/ GRANT THORNTON LLP
Melville, New York
September 21, 1999, except for Note 12(c) and (d), as to which the date is
October 5, 1999
2
<PAGE>
CDKNET.COM, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEET
June 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 231,347
Accounts receivable 19,000
Due from officer 11,600
Prepaid expenses and other current assets 9,907
-------------
Total current assets 271,854
FURNITURE AND EQUIPMENT - at cost,
less accumulated depreciation and amortization of $152,286 489,053
COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED,
less accumulated amortization of $1,472,753 5,668,504
INTANGIBLE ASSETS, less accumulated amortization of $452,467 919,736
OTHER ASSETS
Deferred financing costs, less accumulated amortization of $37,400 210,750
------------
$ 7,559,897
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 220,778
Accrued expenses and other current liabilities 415,334
Due to related party 125,000
Current portion of long-term debt and capitalized lease obligations 67,939
------------
Total current liabilities 829,051
LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS,
net of current portion 205,416
SUBORDINATED CONVERTIBLE DEBENTURES 1,671,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - par value $.0001 per share; authorized
5,000,000 shares; none issued -
Common stock - par value $.0001, per share; authorized,
40,000,000 shares; 14,046,906, shares issued and outstanding 1,405
Additional paid-in capital 12,185,100
Accumulated deficit (7,332,075)
------------
4,854,430
------------
$ 7,559,897
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
3
<PAGE>
CDKNET.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period
October 1, 1997
(date of
inception) to
Year ended June 30,
June 30, 1998,
1999 as restated
--------- --------------
<S> <C> <C>
Net revenues $ 474,344 $ 616,137
Cost of revenues 288,762 415,769
----------- ------------
Gross profit 185,582 200,368
Selling, general and administrative expenses 3,257,551 1,580,478
Depreciation and amortization 1,981,130 133,776
---------- -----------
Loss from operations (5,053,099) (1,513,886)
Other expense (income)
Interest expense (income), including interest relating to
beneficial conversion and debt discount of
$1,038,008 in 1999 1,094,501 (461)
Minority interest in loss of subsidiary (328,950)
---------- -----------
NET LOSS $(6,147,600) $(1,184,475)
---------- -----------
---------- -----------
Basic and diluted earnings (loss) per share $(.46)
-----
-----
Weighted-average shares outstanding -
basic and diluted 13,282,176
----------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
CDKNET.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period October 1, 1997 (date of inception) to June 30, 1998
and year ended June 30, 1999
<TABLE>
<CAPTION>
Additional Total
Common Stock Member paid-in Accumulated stockholders'
Shares Amount Capital Capital Deficit Equity
---------- ------ ----------- ----------- ----------- -----------
Balance, October 1, 1997
<S> <C> <C> <C> <C> <C> <C>
Issuance of membership interest in Creative
Technology, LLC $ 1,735,000 $ 1,735,000
Common stock issued for exchange of member
capital of Creative Technology, LLC 6,000,000 $ 600 (1,735,000) $ 1,734,400
Common stock issued in merger with
International Pizza Group, Inc. 3,999,985 400 222,788 223,188
Common stock issued for purchase of
minority interests 1,300,363 130 3,146,571 3,146,701
Compensation related to stock option plan 147,000 147,000
Net loss, as restated $(1,184,475) (1,184,475)
---------- ------ ----------- ----------- ----------- -----------
Balance, June 30, 1998 11,300,348 1,130 - 5,250,759 (1,184,475) 4,067,414
Common stock and stock warrants issued for
purchase of fixed assets 75,000 8 143,742 143,750
Common stock issued for purchase of minority
interests 1,883,635 188 4,505,934 4,506,122
Debt discount 1,142,008 1,142,008
Conversion of subordinated debentures 476,358 48 324,952 325,000
Common stock and stock warrants issued for
financing costs 16,667 2 50,898 50,900
Exercise of stock options 116,084 12 69,988 70,000
Compensation related to stock option plan 201,000 201,000
Common stock and stock warrants issued for
services 175,000 17 395,698 395,715
Common stock issued in lieu of cash interest 3,814 9,121 9,121
Stock warrants issued for termination agreement 91,000 91,000
Net loss (6,147,600) (6,147,600)
---------- ------ ----------- ----------- ----------- -----------
Balance, June 30, 1999 14,046,906 $1,405 $ - $12,185,100 $(7,332,075) $ 4,854,430
---------- ------ ----------- ----------- ----------- -----------
---------- ------ ----------- ----------- ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
5
<PAGE>
CDKNET.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period
October 1, 1997
(date of
Inception) to
Year Ended June 30,
June 30, 1998,
1999 As Restated
----------- -------------
<S> <C> <C>
Cash flows from operating activities $(6,147,600) $(1,184,475)
Net loss
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 1,981,130 133,776
Amortization of debt discount 1,038,008
Uncollectible advances 29,033 160,307
Compensation related to stock option plan 201,000 147,000
Common stock and stock warrants issued for services 395,715
Common stock issued in lieu of cash interest 9,121
Stock warrants issued for termination agreement 91,000
Minority interest in loss of consolidated subsidiary (328,950)
Changes in assets and liabilities
(Increase) decrease in accounts receivable 86,744 (105,744)
(Increase) decrease in inventory 3,883 (3,883)
(Increase) in due from officer (11,600)
(Increase) decrease in prepaid expenses and other
current assets 16,187 (26,094)
Increase in accounts payable 42,020 171,258
Increase in accrued expenses and other
current liabilities 76,328 344,696
----------- -----------
3,958,569 492,366
----------- -----------
Net cash used in operating activities (2,189,031) (692,109)
----------- -----------
Cash flows from investing activities
Purchase of furniture and equipment (212,407) (43,832)
Advances to related party (29,033) (848,541)
----------- -----------
Net cash used in investing activities (241,440) (892,373)
----------- -----------
Cash flows from financing activities
Proceeds from notes payable 791,938 93,750
Repayment of notes payable (491,465)
Proceeds from subordinated convertible debentures 2,100,000
Deferred financing costs (197,250)
Principal payments on capitalized lease obligations (10,672)
Proceeds from issuance of common stock 1,959,999
----------- -----------
Net cash provided by financing activities 2,192,551 2,053,749
----------- -----------
NET INCREASE (DECREASE) IN CASH (237,920) 469,267
----------- -----------
Cash at beginning of period 469,267 -
----------- -----------
Cash at end of period $ 231,347 $ 469,267
----------- -----------
----------- -----------
</TABLE>
6
<PAGE>
CDKNET.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
Period
October 1, 1997
(date of
inception) to
Year Ended June 30,
June 30, 1998,
1999 As Restated
----------- ---------------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 36,055 -
Income taxes - -
Noncash investing and financing transactions:
Fixed asset acquisitions financed through capitalized lease
obligations 113,553
Common stock and stock warrants issued for purchase
of fixed assets 143,750
Common stock issued for purchase of minority interest 4,506,122 $3,146,701
Debt discount 1,142,008
Issuance of stock upon conversion of subordinated debentures 325,000
Common stock and stock warrants issued for financing costs 50,900
Exercise of stock options for debt extinguishment 70,000
Purchase of business, net of cash acquired 1,500,000
Contribution of notes for ownership interest 805,516
Exchange of ownership interest for outstanding debt advances (800,000)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
7
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
CDKNET.COM, INC. and Subsidiaries, formerly named Technology Horizons, Inc.
(collectively the "Company"), is a New York-based Internet company that
provides products to its worldwide customers utilizing its internally
developed multimedia technology, CDK-TM-. The technology provides for the
enhanced integration of audio, video and Internet connectivity on a
standard compact disc ("CD").
The Company's consolidated financial statements include the accounts of
CDKNET.COM, INC. ("CDK") and its wholly-owned subsidiaries, Creative
Technology, LLC ("Creative"), a limited liability company, and CDKnet, LLC
("CDKnet"), a limited liability company. CDKnet became a wholly-owned
subsidiary after a series of acquisitions completed through July 1998.
Creative was formed October 1, 1997 with cash capital contributions of
$1,735,000. On November 11, 1997, Creative, Kelly Music & Entertainment,
Inc. ("KME"), and certain stockholders of KME formed CDKnet, which is the
operating entity. Creative acquired a 40% capital interest and voting
control in CDKnet for $1,500,000. On May 21, 1998, CDK, which was formed
to be the corporate owner of Creative, and the members of Creative
exchanged their ownership interest for 6 million shares of CDK's common
stock.
The Company has incurred net losses of $6,147,600 and $1,184,475 during the
year ended June 30, 1999 and the period October 1, 1997 (date of inception)
to June 30, 1998, respectively. Since June 30, 1999, the Company has had no
revenues. For the year ended June 30, 1999, and the period October 1, 1997
(date of inception) to June 30, 1998, net cash used in operating activities
was $2,189,031 and $692,109, respectively. The Company's cash requirements
were primarily financed though the sale of subordinated convertible
debentures and common stock aggregating approximately $4,060,000. The
Company does not maintain a credit facility with any financial institution.
The Company continues to incur expenses with respect to new product
development. As a result of the continued losses, the use of significant
cash in operations and the lack of sufficient funds to execute its business
plan, among other matters, there is substantial doubt about the Company's
ability to continue as a going concern. No adjustments have been made with
respect to the consolidated financial statements to record the results of
the ultimate outcome of this uncertainty.
8
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 1 (CONTINUED)
Management's plans to remain a going concern require additional financing
until such time as sufficient cash flows are generated from operations.
Financings are anticipated to be in the form of additional debt and equity;
however, there can be no assurances that the Company will be able to obtain
sufficient financing to execute its business model, which is still in an
evolving stage. However, management believes that it will be able to secure
sufficient funding for operations at least for the next twelve months.
Further, management believes that operating expenses could be reduced to
fundable levels, if necessary. Subsequent to June 30, 1999, the Company
focused primarily on new product development and implemented a marketing
plan, including the hiring of marketing and sales personnel. Further, the
Company will need to build its brand name, provide scalable, reliable and
cost-effective services, continue to grow its infrastructure to accommodate
customers and increased use of its products and services, expand its
channels of distribution, and retain and motivate qualified personnel.
Subsequent to June 30, 1999, the Company issued 332,000 shares of common
stock and received net proceeds of $300,000. Further, the Company's CEO
and other parties have committed to invest $200,000.
In addition to the above equity financing, the Company also anticipates the
need to raise additional funds through public or private debt or equity
financing in order to take advantage of unanticipated opportunities,
including more rapid expansion or acquisitions of complementary businesses
or technologies, or to develop new or enhanced services and related
products, or otherwise respond to unanticipated competitive pressures.
There can be no assurance that additional financing will be available on
terms favorable to the Company, or at all. If adequate funds are not
available or are not available on acceptable terms, the Company may not be
able to take advantage of unanticipated opportunities, develop new or
enhanced services and related products, or otherwise respond to
unanticipated competitive pressures and the Company's business, operating
results and financial condition could be materially adversely affected.
NOTE 2 - MERGERS AND ACQUISITIONS
a. On November 11, 1997, CDKnet acquired certain assets of KME in exchange
for issuing to KME a 40% ownership interest in CDKnet valued at
$1,500,000. The assets acquired, including fixed assets and
intellectual property, represented the principal business of KME. No
liabilities were assumed in
9
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 2 (CONTINUED)
connection with this acquisition. In addition, key employees of KME
became employees of CDKnet. CDKnet accounted for the acquisition as a
purchase. Creative, which controlled CDKnet under the terms of the
operating agreement, accounted for the results of operations from the
date of acquisition. The fair values of the intangible assets
acquired are being amortized on a straight-line basis over five years.
On the above date, certain principals of KME contributed certain
collateralized notes of KME aggregating $712,000 (see Note 2(d)) in
exchange for an equivalent dollar ownership interests in CDKnet. As
substantially all of the assets of KME consisted of membership
interests in CDKnet, the notes were recorded as a reduction of the
equity of CDKnet. Such notes were later used to redeem a portion of the
membership interest of these individuals.
b. On May 21, 1998, International Pizza Group, Inc. ("IPGI"), a
nonoperating public company with net assets (principally cash) of
approximately $225,000, acquired 100% of the outstanding common stock
of CDK (the "Acquisition") and changed its name to CDK. The Acquisition
resulted in the owners and management of CDK having effective control
of the combined entity. Under generally accepted accounting principles,
the Acquisition is considered to be a capital transaction in substance,
rather than a business combination. That is, the Acquisition is
equivalent to the issuance of stock by CDK for the net monetary assets
of IPGI, accompanied by a recapitalization, and accounted for as a
change in capital structure. Accordingly, the accounting for the
Acquisition is identical to that resulting from a reverse acquisition,
except that no goodwill is recorded. Under reverse acquisition
accounting, the post-reverse-acquisition comparative historical
financial statements of the "legal acquirer," IPGI, are those of the
"accounting acquiree," CDK. Accordingly, the financial statements of
CDK for the period from October 1, 1997 (date of inception) to June 30,
1998 are the historical financial statements of CDK for the same
period.
10
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 2 (CONTINUED)
c. On June 3, 1998, the Company acquired the minority interests of two
members of CDKnet for $3,146,701. The consideration was paid through
the issuance of 1,300,363 shares of common stock. As a result of the
acquisition, the sellers held a reduced percentage ownership interest
in the Company. The Company accounted for the acquisition as a
purchase. The excess of the consideration over the estimated fair value
of the net assets acquired in the amount of $2,670,135 has been
recorded as cost in excess of fair value of net assets acquired and is
being amortized on a straight-line basis over five years.
d. On July 8, 1998, the Company entered into an agreement, subsequently
amended (the "Agreement"), based on terms previously agreed upon with
KME, to acquire the remaining minority interest for $5,171,122. The
consideration was (1) the retirement of $600,000 of notes (2) issuance
of 1,883,635 shares of the Company's common stock and (3) a cash
payment of $65,000. The amendment provided for the waiver of previously
agreed upon registration rights on common stock in excess of 250,000
shares, terminated any and all demand registration rights with certain
stockholders of KME and released the Company from any and all claims,
liabilities, demands and causes of action known or unknown which KME
could assert in the future, as defined.
The Company accounted for the acquisition as a purchase. The excess
consideration over the estimated fair value of the net assets acquired
of $4,471,122 has been recorded as cost in excess of fair value of net
assets acquired and is being amortized on a straight-line basis over
five years.
The following (unaudited) pro forma information has been prepared
assuming that the acquisition of KME and the minority interests had
occurred as of October 1, 1997, after giving effect to certain
adjustments, including amortization of goodwill. The (unaudited) pro
forma information is presented for informational purposes only and is
not necessarily indicative of what would have occurred if the
transactions had been made as of October 1, 1997.
<TABLE>
<S> <C>
Net revenues $ 616,137
Net loss (3,117,078)
</TABLE>
11
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Company's significant accounting
policies:
REVENUE RECOGNITION
The Company recognizes revenue on the date the product is shipped to the
customer.
During the year ended June 30, 1999, two customers accounted for
approximately 51% and 16% of net revenues, respectively. For the period
October 1, 1997 (date of inception) to June 30, 1998, one customer
accounted for approximately 95% of the Company's net revenues.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs include expenses incurred by the Company to
develop new products and enhance the Company's existing products.
Research and development costs are expensed as incurred. During the year
ended June 30, 1999 and the period October 1, 1997 (date of inception) to
June 30, 1998, such costs aggregated approximately $211,000 and $132,000,
respectively.
INCOME TAXES
CDK files separate Federal, state and city corporate income tax returns.
Creative and CDKnet file separate Federal, state and city (where
applicable) partnership income tax returns. Earnings or losses from these
limited liability companies pass through directly to CDK.
The Company follows the asset and liability method of accounting for income
taxes by applying statutory tax rates in effect at the balance sheet date
to differences among the book and tax bases of asset and liabilities. The
resulting deferred tax liabilities or assets are adjusted to reflect
changes in tax laws or rates by means of charges or credits to income tax
expense. A valuation allowance is recognized to the extent a portion or all
of a deferred tax asset may not be realizable.
USE OF ESTIMATES
The Company uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that the Company uses.
12
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 3 (CONTINUED)
EARNINGS (LOSS) PER COMMON SHARE
Basic loss per share is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted loss per
share is computed using the weighted average number of shares of common
stock, adjusted for the dilutive effect of potential common shares
issued or issuable pursuant to stock options and stock warrants. Loss per
share has not been shown for the period October 1, 1997 (date of inception)
to June 30, 1998, as the Company operated as a limited liability
company/partnership for substantially the entire period. All potential
common shares have been excluded from the computation of diluted loss per
share as their effect would be antidilutive and, accordingly, there is no
reconciliation of basic and diluted loss per share for each of the periods
presented. Potential common shares that were excluded from the computation
of diluted loss per share consisted of stock options and stock warrants
outstanding, aggregating 2,824,914 and 1,200,000 as of June 30, 1999 and
June 30, 1998, respectively (see Note 8).
FAIR VALUE OF FINANCIAL INSTRUMENTS
Due to the substantial doubt as to the Company's ability to continue as a
going concern, it is not practicable to estimate the fair value of the
Company's financial liabilities. Information concerning their terms is
contained in Notes 5 and 6.
FURNITURE AND EQUIPMENT
Furniture and equipment are recorded at cost. Maintenance and repairs are
charged to expenses as incurred; major renewals and betterments are
capitalized. When items of furniture or equipment are sold or retired, the
related cost and accumulated depreciation are removed from the accounts and
any gain or loss is included in the results of operations. Furniture and
equipment are depreciated using the straight-line method over their
estimated useful lives, which range from three to seven years. Leasehold
improvements are amortized over the term of the related lease or the useful
life of the improvements, whichever is shorter.
COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED
The cost in excess of fair value of net assets acquired ("goodwill") is
being amortized on a straight-line basis over five years.
13
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 3 (CONTINUED)
INTANGIBLE ASSETS
Intangible assets, principally intellectual property acquired in connection
with an acquisition, are being amortized over the estimated useful life of
five years.
On an ongoing basis, management reviews the valuation and amortization of
goodwill and intangible assets to determine the possible impairment by
considering current operating results and comparing the carrying value to
the anticipated undiscounted cash flows of the related assets.
DEFERRED FINANCING COSTS
The costs associated with completed financings are being amortized ratably
over the term of the financing.
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment consist of the following at June 30, 1999:
<TABLE>
<S> <C>
Furniture $ 5,295
Equipment 629,751
Leasehold improvements 6,293
---------
641,339
Less accumulated depreciation and amortization 152,286
---------
$489,053
---------
---------
</TABLE>
Depreciation expense for the year ended June 30, 1999 and the period
October 1, 1997 (date of inception) to June 30, 1998 was $123,999 and
$28,287, respectively.
14
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 5 - LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
TERM LOAN
In June 1999, the Company entered into a term loan with a lender.
Borrowings aggregating $175,000 under the agreement, which are
collateralized by the equipment and $145,000 in cash collateral provided by
the Company's CEO, are repayable in monthly installments of approximately
$3,500 including interest at 7.86% through March 2004.
CAPITALIZED LEASE OBLIGATIONS
The Company leases certain equipment under leases accounted for as capital
leases. The obligations require the Company to make monthly payments of
approximately $3,000 through May 2002.
The following is a summary of aggregate annual maturities of long-term debt
and capitalized lease obligations as of June 30, 1999.
<TABLE>
<CAPTION>
Year ending June 30,
<S> <C>
2000 $ 83,418
2001 78,745
2002 75,719
2003 42,440
2004 31,826
--------
312,148
Less amounts representing interest 38,793
--------
273,355
Less current portion 67,939
--------
$205,416
--------
--------
</TABLE>
Interest paid for the year ended June 30, 1999 was approximately $2,500.
NOTE 6 - SUBORDINATED CONVERTIBLE DEBENTURES
6.00% SUBORDINATED CONVERTIBLE DEBENTURES
During the period September 4, 1998 through January 21, 1999, the Company
issued $600,000 in 6% Subordinated Convertible Debentures due September 1,
2003 with detachable five-year warrants (the "Notes") to purchase 60,000
shares of common stock of the Company at an exercise price of $3.00 per
share. The Notes are immediately convertible into common stock of the
Company at an effective
15
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 6 (CONTINUED)
conversion price of the lower of (i) 70% of the average current market
price of the Company's common stock during the five days preceding the date
of the original issuance, or (ii) 75% of the average current market price
during the five-day trading period ending one trading day preceding the
date the Notes are converted. The agreement contains antidilution
provisions whereby the conversion price is subject to (downward) adjustment
in certain circumstances. The Company may redeem the Notes at any time for
120% of the principal amount of the Notes plus accrued interest. The Notes
are subordinated to the claims and rights of all Senior Debt, as defined by
the underlying agreement. In addition, the agreement contains covenants
limiting the Company's ability to pay dividends, incur new debt, enter into
certain transactions and reacquire common or preferred stock of the
Company. If an event of default occurs beyond a stated cure period the
notes shall become payable at the option of the holder. An event of default
includes, among others, the Company having its common stock suspended from
an exchange or over-the-counter market (see Note 12(d)).
In connection with the agreement, the Company recorded a discount on the
Notes in the aggregate amount of $238,000 resulting from the allocation of
proceeds of $203,000 to a beneficial conversion feature and the fair value
of the underlying warrants of $35,000. Due to the immediate conversion
rights under the agreement, the discount attributed to the beneficial
conversion feature was expensed on the date of issuance. The carrying value
of the Notes is being accreted to the face value of $600,000 using the
interest method over the life of the Notes. The accretion in fiscal 1999
was $20,000.
During the period from issuance to June 30, 1999, $325,000 in debentures
plus accrued interest of $2,500 was converted into 480,172 shares of the
Company's common stock.
In connection with the sale of the Notes, the Company incurred fees of
$60,000 and issued five-year warrants to purchase 30,000 shares of the
Company's common stock at $3.00 per share. The Company computed the
approximate fair value of the warrants issued to be $19,650 using the
Black-Scholes method.
5.75% SUBORDINATED CONVERTIBLE DEBENTURE
On February 2, 1999, the Company issued a $1,500,000, 5.75% Subordinated
Convertible Debenture due February 1, 2009 with detachable four-year
warrants (the "Debenture") to purchase 100,000 shares of common stock of
the Company at an exercise price of $1.75 per share. The Debenture is
immediately convertible into common stock of the Company at an effective
conversion price of the lower of (i) $1.30, or, (ii) subsequent to November
1, 1999, 75% of the average current market price during the five-day
trading period ending one trading day preceding the date the Debenture is
converted (limited to a minimum conversion price of $.60 through July 1,
2000). The agreement contains
16
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 6 (CONTINUED)
antidilution provisions whereby the conversion price is subject to
(downward) adjustment in certain circumstances. The Company may redeem the
Debenture at any time for 150% of the principal amount of the Debenture
plus accrued interest. In addition, the Company, at its option, may convert
the Debenture into shares of 5.75% Convertible Preferred Stock having the
same rights as the Debenture. The Debenture is subordinated to the claims
and rights of all Senior Debt, as defined by the underlying agreement. In
addition, the agreement contains covenants limiting the Company's ability
to pay dividends, incur new debt, enter into certain transactions and
reacquire common or preferred stock of the Company. If an event of default
occurs beyond a stated cure period the notes shall become payable at the
option of the holder. An event of default includes, among others, the
Company having its common stock suspended from an exchange or
over-the-counter market (see Note 12(d)).
In connection with the agreement, the Company recorded a discount on the
Debenture in the aggregate amount of $756,000, resulting from the
allocation of proceeds of $663,000 to a beneficial conversion feature and
the fair value of the underlying warrants of $93,000. Due to the immediate
conversion rights under the agreement, the discount attributed to the
beneficial conversion feature was expensed on the date of issuance. The
carrying value of the Debenture is being accreted to the fair value of
$1,500,000 using the interest method over the life of the Debenture. The
accretion in fiscal 1999 was $4,000.
In connection with the sale of the Debenture, the Company incurred fees of
$135,000 and issued 16,667 shares of the Company's common stock having a
market value of $31,250.
Under terms of a registration rights agreement, the Company was required to
have an effective registration statement for the shares issuable upon
conversion of the Debentures by July 25, 1999 or incur daily penalties, as
stated. Effective July 26, 1999, the Company is incurring such penalties
payable monthly with the issuance of common stock.
17
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 7 - INCOME TAXES
Temporary differences which give rise to deferred taxes are summarized as
follows:
<TABLE>
<CAPTION>
1999 1998
--------- -------
<S> <C> <C>
Deferred tax assets
Net operating loss and other carryforwards $ 1,510,000 $ 377,000
---------- --------
Net deferred tax assets before valuation allowance 1,510,000 377,000
Less valuation allowance (1,510,000) (377,000)
---------- --------
Net deferred tax asset $ - $ -
---------- --------
---------- --------
</TABLE>
The Company has recorded a full valuation allowance to reflect the
estimated amount of deferred tax assets which may not be realized.
The Company's effective income tax rate differs from the statutory Federal
income tax rate as a result of the following:
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Tax benefit at statutory rate $(2,090,000) $(403,000)
Nondeductible expense/nontaxable (income) - net 1,203,000 73,000
State benefit, net of Federal tax effect (246,000) (47,000)
Valuation allowance on net operating loss 1,133,000 377,000
---------- --------
$ - $ -
---------- --------
---------- --------
</TABLE>
The provision for Federal income taxes has been determined on the basis of
a consolidated tax return. At June 30, 1999, the Company had a net
operating loss carryforward for Federal income tax reporting purposes
amounting to approximately $3,975,000, expiring from 2018 through 2019. The
Internal Revenue Code of 1986, as amended, limits the amount of taxable
income the Company may offset with net operating loss carryforwards in any
single year. No Federal taxes were paid in the year ended June 30, 1999 and
the period October 1, 1997 (date of inception) to June 30, 1998.
NOTE 8 - STOCKHOLDERS' EQUITY
On February 2, 1999, the Company's Board of Directors amended the
certificate of incorporation, increasing the number of authorized shares
from 20 million to 45 million, of which 5 million are preferred shares.
18
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 8 (CONTINUED)
WARRANTS
Warrant activity for the year ended June 30, 1999 is summarized as follows:
<TABLE>
<CAPTION>
Weighted-
average
exercise
Shares Price
------ ---------
<S> <C> <C>
Outstanding at the beginning of the year - -
Issued 1,328,498 $.96
Exercised (116,084) $.66
---------
Outstanding at the end of the year 1,212,414 $.99
---------
---------
Warrants exercisable at year-end 1,212,414 $.99
---------
---------
Weighted-average fair value of warrants
granted during the year $.59
</TABLE>
Information, at date of issuance, regarding stock warrant grants during the
year ended June 30, 1999 is summarized as follows:
<TABLE>
<CAPTION>
Weighted- Weighted-
average average
exercise fair
Shares Price Value
--------- ---------- ---------
<S> <C> <C> <C>
Exercise price exceeds market price 90,000 $3.00 $.66
Exercise price equals market price 418,498 $ .61 $.35
Exercise price is less than market price 820,000 $ .91 $.70
</TABLE>
19
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 8 (CONTINUED)
The following table summarizes information about warrants outstanding and
exercisable June 30, 1999:
<TABLE>
<CAPTION>
Outstanding
and exercisable
----------------------------------------------
Weighted-
average Weighted-
remaining average
Number life in exercise
outstanding years price
----------- ------- ------
<S> <C> <C> <C>
Range of exercise prices
$.60 to $.85 877,414 3.69 $ .69
$1.00 to $1.25 145,000 4.33 1.03
$1.75 100,000 4.58 1.75
$3.00 90,000 4.17 3.00
-----------
1,212,414
-----------
-----------
</TABLE>
Certain warrant agreements contain a cashless exercise provision, whereby
the warrants may be exercised solely by the surrender of the warrants, and
without the payment of the exercise price in cash, for that number of
warrant shares determined by dividing the difference of the market price of
the shares of common stock issuable upon exercise of the warrants and the
warrant exercise price by the market price of the common stock on the date
of exercise.
STOCK OPTION PLAN
In 1998, the Company adopted the 1998 Equity Incentive Plan (the "Plan")
for employees, officers, consultants and directors of the Company, pursuant
to which the Company may grant incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock or deferred stock. The
Plan provides for each director to be granted (a) director stock options to
acquire 20,000 shares of common stock upon the initial acceptance to serve
as a member of the Board and (b) director options to acquire additional
shares immediately following the date of each annual meeting of
shareholders ranging from 10,000 shares in year one to 50,000 shares in
year five and thereafter. The total number of shares of the Company's
common stock available for distribution under the Plan is 3,000,000. The
Plan is administered by the stock option committee of the board, whose
members are appointed by the board
20
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 8 (CONTINUED)
of directors, which has the authority to designate the number of shares to
be covered by each award, the vesting schedule of such award and cashless
exercise rights, among other terms. The option period during which an
option may be exercised shall not exceed ten years from the date of grant
and will be subject to such other terms and conditions of the Plan. In
addition, the Plan contains certain acceleration provisions in the event of
a "change in control," as defined by the underlying agreement. Unless the
stock option committee provides otherwise, option awards terminate when a
participant's employment or services end, except that a participant may
exercise an option to the extent that it was exercisable on the date of
termination for a period of time thereafter if the participant was
involuntarily terminated without cause. The Plan will terminate
automatically on June 30, 2008.
Incentive stock option awards are granted at prices equal to or above the
fair market value of the stock on the date of grant. Nonqualified stock
option awards and director options are granted at prices equal to 80% and
85%, respectively, of the fair market value of the stock on the date of
grant. As of June 30, 1999, 1,387,500 shares were available for granting of
options under the Plan.
The Company's stock option awards granted to employees, consultants and
directors for the year ended June 30, 1999 and the period October 1, 1997
(date of inception) to June 30, 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
Weighted- Weighted-
average average
exercise exercise
Shares price Shares price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding at beginning of year 1,200,000 $.60 - -
Awards granted 412,500 $.85 1,200,000 $.60
----------- ---------
Outstanding at end of year 1,612,500 $.67 1,200,000 $.60
-----------
Options exercisable at year-end 1,612,500 $.67 1,200,000 $.60
----------- ---------
----------- ---------
Weighted-average fair value
of options granted during
the year $.57 $.42
</TABLE>
21
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 8 (CONTINUED)
The following information applies to options outstanding and exercisable at
June 30, 1999:
<TABLE>
<CAPTION>
Outstanding
and exercisable
---------------------------------------------
Weighted-
average Weighted-
remaining average
Number life in exercise
outstanding years price
----------- ----------- --------
<S> <C> <C> <C>
$ .60 1,350,000 8.94 $ .60
$1.00 262,500 4.42 $1.00
---------
1,612,500
---------
---------
</TABLE>
At June 30, 1999, there were approximately 5,738,000 shares of common stock
reserved for issuance pursuant to outstanding stock warrants, the stock
option plan and subordinated convertible debentures.
The Company accounts for stock-based compensation under the guidelines of
APB Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to
Employees," as allowed by Statement of Financial Accounting Standards No.
123 ("SFAS No. 123"), "Accounting for Stock-Based Compensation."
Accordingly, no compensation expense was recognized concerning stock
options granted to key employees and to members of the board of directors,
as such stock options were granted to board members in their capacity as
directors. Compensation expense of $450,870 and $147,000 was recognized for
the year ended June 30, 1999 and the period October 1, 1997(date of
inception) to June 30, 1998, respectively, for stock warrants and stock
options granted to consultants.
During the year ended June 30, 1999, the Company issued 175,000 stock
warrants to CDKnet's former president in connection with a termination and
severance agreement. In addition to severance payments, the Company
recorded an expense of $91,000, representing the fair value of the stock
warrants with a credit to paid-in capital.
22
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 8 (CONTINUED)
If the Company had elected to recognize compensation expense based upon the
fair value at the grant date for options granted to key employees and to
members of the board of directors consistent with the "fair value"
methodology prescribed by SFAS No. 123, the Company's net loss and net loss
per share for the year ended June 30, 1999 and net loss for the period
October 1, 1997 (date of inception) to June 30, 1998 would be reduced to
the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Net loss
As reported $(6,147,600) $(1,184,475)
Pro forma (6,183,225) (1,541,475)
Net loss per common share - basic and diluted
As reported $(.46)
Pro forma (.46)
</TABLE>
The fair value of each stock warrant or option grant is estimated on the
date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions for: dividend yields of zero in 1999
and 1998; risk-free interest rates ranging from 4.30% to 5.40% in 1999 and
5.70% in 1998; expected terms of 1 to 5 years in 1999 and 5 years in 1998;
and expected stock price volatility of 85% in 1999 and 1998.
NOTE 9 - RELATED PARTY TRANSACTIONS
a. During the year ended June 30, 1999 and the period October 1, 1997
(date of inception) to June 30, 1998, legal services of $168,393 and
$201,039, respectively, were provided by a firm (the "Firm") in which
the Company's CEO and principal stockholder is the managing partner.
Further, the Firm provided office space and accounting services for
which no fees were paid.
In fiscal 1999, the Company entered into a $150,000 demand loan with
the Firm at an interest rate of 11% and issued 150,000 stock warrants
at $.66 exercisable through October 1, 2003. The detachable warrants
with a fair value of $42,000 were accounted for as additional interest
cost with a credit to paid-in capital. At June 30, 1999,the outstanding
loan balance is $60,000.
On May 15, 1998, the Company granted 150,000 stock options issued under
the Plan (see Note 8) with an exercise price of $.60 to a partner in
the aforementioned law firm for legal services rendered. The fair value
of such services was $63,000.
23
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 9 (CONTINUED)
b. During fiscal 1999, certain stockholders of the Company provided loans
to the Company aggregating $200,000. In connection with the loans, the
Company granted 200,000 stock warrants with an exercise price of $.66,
exercisable through October 1, 2003. The detachable warrants with fair
value of $42,057 was accounted for as additional interest cost with a
corresponding credit to paid-in capital. The loans were partially
repaid and the outstanding balances were satisfied through the exercise
of stock warrants.
c. During the year ended June 30, 1999 and the period October 1, 1997(date
of inception) to June 30, 1998, CDKnet provided noninterest-bearing
advances to KME of $29,033 and $848,541, respectively. Such advances
plus the notes from KME of $712,000 (see Note 2(a) and (d)) were
extinguished as follows: 1) $600,000 was deemed consideration in the
purchase of KME's interest in CDKnet, 2) $800,000 was accounted for as
repurchase by CDKnet of a portion of KME's ownership interest in CDKnet
and 3) the remaining amounts of $29,033 in 1999 and $160,307 in 1998
were deemed uncollectible and recorded as uncollectible advances.
d. In June 1999, the Company entered into a finder's agreement with a
consultant, who became CDKnet's president effective as of August 1,
1999, and a third party whereby the Company issued 100,000 stock
warrants at an exercise price of $1.00 to the third party upon
execution of the agreement and agreed to pay both parties future fees
upon consummation of financing, purchase or venture transactions with
entities introduced by them, as defined. During the year ended June 30,
1999, the Company recorded an expense of $100,000 representing the fair
value of the stock warrants issued.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
a. FACILITY AND EQUIPMENT
The Company occupies its New York City office space under a
month-to-month lease with KME. In addition, the Company is leasing
telephone equipment on a month-to-month lease with KME. Rent expenses
for the office space and equipment for the year ended June 30, 1999 and
the period October 1, 1997 (date of inception) to June 30, 1998 were
approximately $145,000 and $124,000, respectively.
b. LITIGATION MATTERS
The Company is involved in claims and disputes which arise in the
normal course of business. Management believes that the resolution of
these matters will not have a material adverse effect of the Company's
financial position or results of operations.
24
<PAGE>
CDKNET.COM, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
NOTE 11 - RESTATEMENT
The Company engaged Grant Thornton LLP to reaudit the consolidated
financial statements as of June 30, 1998 and for the period October 1, 1997
(date of inception) to June 30, 1998. In connection with the reaudit,
management restated such financial statements to record adjustments
relating to, among others, the accounting for: stock warrants and options
granted, merger and acquisition transactions, and minority interests. The
effect of the adjustments increased the net loss, as previously reported
from $707,527 to $1,184,475, as restated.
NOTE 12 - SUBSEQUENT EVENTS
a. Subsequent to June 30, 1999, the Company issued an aggregate of
1,030,000 stock options to the Company's CEO and an employee at an
exercise price of $1.00. The quoted market price of the Company's stock
at the date of grant was $1.60.
b. Subsequent to June 30, 1999, CDKnet entered into a two-year employment
agreement with its president. The agreement provides for a minimum
annual salary of $150,000 and the issuance of 750,000 stock options
with an exercise price of $1.00 vesting over the term of the agreement
or earlier if a change in control or CDKnet terminates the agreement
without cause. The quoted market value of the Company's stock on the
date of grant was $1.60. The agreement provides for six months of
severance pay. All payments under the agreement are guaranteed by CDK.
c. On October 1, 1999, the Company gave notice to the holders of the 5.75%
Subordinated Convertible Debentures (see Note 6) and exercised its
right to call the outstanding Debentures in exchange for 5.75%
Convertible Preferred Stock. Under the terms of the Debentures, the
Convertible Preferred Stock shall have: (1) liquidation preferences
equal to the principal amount of the Debenture, (2) a 5.75% cumulative
annual dividend payable quarterly, (3) rights to convert into shares of
Common Stock at the same conversion rate as the Debentures and (4) the
same redemption rights at the option of the Company.
d. On October 5, 1999, the Company obtained a sixty-day waiver from the
holders of the 6% and 5.75% Subordinated Convertible Debentures to
waive any event of default relating to the common stock of the Company
being suspended from an exchange or over-the-counter market.
25
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
- --------- ----
<S> <C> <C>
3.1* Articles of Incorporation of the Registrant.
3.2* Amendment to the Articles of Incorporation.
3.3* By-Laws of the Registrant.
3.4* Certificate of Merger of the Registrant.
3.5* Amendment to the Articles of Incorporation.
3.6* Designation of Series A Preferred Stock.
4.1* Specimen of common stock certificate.
4.2* Technology Horizons Corp. Stockholders Agreement dated May 7, 1998.
10.1* Technology Horizons Corp. 1998 Equity Incentive Plan.
10.2* Convertible Subordinated Debenture Due February 1, 2009.
10.3* Registration Rights Agreement between Technology Horizons Corp. and
Kelly Music & Entertainment Corp. dated September 4, 1998.
10.4* Assignment Agreement between Kelly Music & Entertainment Corp. and
Technology Horizons Corp. dated September 4, 1998.
10.5* Amendment to Registration Rights Agreement between Technology Horizons
Corp. and Alvin Pock dated October 15, 1998.
10.6* Amendment to Registration Rights Agreement between Technology Horizons
Corp. and Robert L. Kelly dated October 15, 1998.
10.7* Registration Rights Agreement between Technology Horizons Corp. and
Robert L. Kelly dated June 3, 1998.
10.8* Registration Rights Agreement between Technology Horizons Corp. and
Alvin Pock dated June 3, 1998.
26
<PAGE>
10.9* Assignment Agreement between Robert L. Kelly and Technology Horizons
Corp. dated June 3, 1998.
10.10* Assignment Agreement between Alvin Pock and Technology Horizons Corp.
dated June 3, 1998.
10.11* Assignment Agreement between Kelly Music & Entertainment Corp. and
CDKnet, LLC, dated June 3, 1998.
10.12* Employment Agreement, dated August 1, 1999, by and between CDKNET.COM,
INC. and Shai Bar-Lavi.
10.13* Finder's Agreement between the Registrant and Shai Bar-Lavi and
Frederick Smithline dated June 1, 1999.
21* Subsidiaries of the Registrant
</TABLE>
* Incorporated by reference from the Registrant's Registration Statement filed
on Form 10-SB on October 7, 1999.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 25th day of
October, 1999.
CDKNET.COM, INC.
A Delaware corporation
By: /s/ Steven Horowitz
-----------------------------------------
Name: Steven Horowitz
Chairman, Chief Executive Officer,
Chief Financial Officer and Secretary
