<PAGE>
As filed with the Securities and Exchange Commission on February 18, 2000.
Registration No. 333-90117
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Pre-Effective Amendment No. 1 to
FORM SB-2
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933
--------------------------
iGENISYS, INC,
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(Name of small business issuer in its Charter)
Colorado 8742 84-1485196
- ------------------- ------------------- --------------
(State or other (Primary Standard Industrial (IRS Employer
jurisdiction of Classification Code Number) Identification
incorporation Number
654 North Belt East, Suite 310
Houston, Texas 77060
(281) 820-0200
(281) 447-8291 (fax)
- ---------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Carylyn K. Bell
Registered Agent
3200 Cherry Creek Drive South, Suite 430
Denver, Colorado 80209
(303) 282-4800
(303) 282-5800 (fax)
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Name, address, including zip code, and telephone number of agent for
service of process)
Copies to:
Clifford L. Neuman, Esq.
Neuman & Drennen, LLC
1507 Pine Street
Boulder, Colorado 80302
(303) 449-2100
(303) 449-1045 (fax)
-------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ x ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier 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>
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Each Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price per Offering Registration
Registered Registered Share Price (1) Fee
- ------------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value
to be sold by
the Company 1,500,000 $1.50 $2,250,000 $594.00
Common Stock,
$.001 par value
to be sold by the
Selling
Shareholders 2,955,291 $1.50 $4,432,937 $1,170.30
TOTAL: 4,455,291 $1.50 $6,682,937 $1,764.30
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY NOTE
This Registration Statement contains two forms of Prospectuses; one to be
used in connection with the offering of up to 1,500,000 shares of the
Company's common stock, $.001 par value, (the "Shares") ("Offering
Prospectus"); and one to be used in connection with the sale of common stock
by certain selling shareholders (the "Selling Shareholders Prospectus"). The
Offering Prospectus and Selling Shareholders Prospectus will be identical in
all respects except for the alternate pages for the Selling Shareholders
Prospectus included herein and labeled "Alternate Page for Selling
Shareholders Prospectus."
<PAGE>
<PAGE>
iGENISYS, INC.
Cross-Reference Index
Item No. and Heading Location In Form SB-2
in Prospectus Registration ----------------------------
Statement
- --------------------------------
1. Forepart of the Registration Forepart of Registration
Statement and Outside Front Statement and and Outside
Cover Page of Prospectus Front Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds; Risk Factors
5. Determination of Offering Price Front Cover Page
6. Dilution Dilution; Risk Factors
7. Selling Securityholders Selling Shareholders and Plan
of Distribution
8. Plan of Distribution Terms of Offering
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Controlling Persons
11. Security Ownership of Certain Security Ownership of
Beneficial Owners and Management Management and Principal
Stockholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of SEC Position on Management - Indemnification
Indemnification for Securities and Limitation on Liability
Act Liability of Directors
15. Organization Within Last Five Years The Company; Business -
Overview
16. Description of Business Prospectus Summary; Risk
Factors; Business
17. Management's Discussion Management's Discussion and
and Analysis or Plan of Analysis of Financial
Operation Condition and Results of
Operations; Financial
Statements; Business
18. Description of Property Business
19. Certain Relationships and Certain Transactions
Related Transactions
20. Market for Common Equity Certain Market Information
and Related Stockholder
Matters
21. Executive Compensation Management - Executive
Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements *
with Accountants on Accounting
and Financial Disclosure
- --------------------------
* Omitted from Prospectus because Item is inapplicable or answer is in the
negative
<PAGE>
<PAGE>
We may not sell these securities until the Registration Statement filed with
the Securities and Exchange Commission is effective. This Prospectus is not
an offer to sell the securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted
SUBJECT TO COMPLETION, DATED _____________, 2000
PROSPECTUS
iGENISYS, INC.
1,500,000 Shares of Common Stock
iGeniSys, Inc. is offering up to 1,500,000 shares of its common stock. It is
currently estimated that the initial public offering price per share will be
$1.50.
Before this Offering, there has been no public market for our common stock.
At the same time that this offering will begin, an additional 2,955,291 shares
of common stock will be offered for sale by certain selling shareholders. The
Company will not receive any of the proceeds from the sale of shares sold by
the selling shareholders.
Investing in our common stock involves a high degree of
risk. You should read the "Risk Factors" beginning on
Page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the 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>
<PAGE>
PROSPECTUS SUMMARY
About Our Company
Please note that throughout this Prospectus the words "we", "our" or "us"
refers to iGeniSys, Inc. and not to any of the selling shareholders.
We are a business-to-business software development, integration and
consulting company specializing in providing business solutions for medium and
large corporations, and government agencies that manage, execute or finance
capital projects. Our software focuses on timely communication of information
about the status of a particular project or program. Our software combined
with existing client systems allows managers to review, consolidate, filter
and analyze their data on a near real-time basis over the Internet to permit
more effective decision making.
Key features of our proprietary software and processes include website
based reporting adaptable to changing corporate requirements, dynamic links to
the data, multiple level password security and three dimensional graphic
presentations of actual plans tied to business data, i.e., cost, schedule,
budget, from existing systems. Our software is modular and integrates with
other project management, cost or scheduling software products, including
Microsoft's Project.
Our software development program is ongoing. Our senior staff meets with
Microsoft in the advanced development of planning tools and strategy. Based
on this insight, as well as insight on other project management software, we
are able to focus our development efforts on developing new capabilities for
our existing tools. Many of the ideas that become our software products come
from our field consultants who are working with large companies and their
enterprise systems which provide us with feedback on where our products need
to focus to maximize value for our clients. Our consulting to date has lead
to formal relationships with Microsoft Corp., Arthur Andersen, LLP and others.
Currently, we are installing, or have just completed installations of, our
software at Kinko's Corporation, The City of San Antonio, Boeing, Charter
Communications and other large organizations. These clients have recognized
the need for a solutions provider with proprietary tools that integrate with
their installed existing enterprise systems more detailed, useful and timely
information than is currently available.
Our principal executive offices are currently located in Houston, Texas
at 654 North Belt East, Suite 310, Houston, Texas 77060. Our telephone number
at that address is (281) 820-0200; our facsimile number is (281) 447-8291.
Our Internet Website address is http://www.genisystems.com. In addition to
our corporate office, we maintain offices in Denver, Colorado, Torrance (Los
Angeles), California and Washington, D.C.
<PAGE>
About The Offering
We are offering for sale up to 1,500,000 shares of our common stock. We
currently estimate that the shares will be offered at a price of $1.50 per
share. We are offering the shares primarily through our officers and
directors will not be paying them any commissions on any sales of common
stock. We may use the services of broker-dealers to help us sell shares. If
broker-dealers act as selling agents for us, we will pay them a 10% commission
on sales made by them.
The Offering will begin on the date of this Prospectus and will end
ninety (90) days from the date of this Prospectus, unless all 1,500,000 shares
of common stock are sold sooner. There is no minimum investment requirement
and, as a result, we cannot predict how many shares will be sold or what our
net proceeds from the Offering will be. We have made no arrangement to place
funds received into a trust, escrow or other similar account. Subscribers
will be required to sign a subscription agreement at the time of their
investment. Investors will receive their certificates within thirty (30) days
following their investment. However, we will place all investment proceeds
immediately into our general operating account to be used for general working
capital purposes.
Our affiliates may purchase shares in this Offering, although no
affiliate has made any commitment to participate. We have not placed any
limitation on the number of shares an affiliate may purchase in the Offering.
<PAGE>
<PAGE>
Summary Financial Data
The following financial information summarizes the more complete
historical financial information enclosed in this prospectus. You should read
the information below along with all other financial information and analysis
in this prospectus. Please do not assume that the results below indicate
results we will achieve in the future.
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998 1999
----------- ---------------------------
<S> <C> <C>
Current assets $ 1,107,489 $ 1,016,316 $ 560,478
Current liabilities $(1,467,455) $(1,047,773) $(1,432,699)
Net working capital deficit $ (359,966) $ (31,457) $ (872,221)
Development costs, net $ 299,819 $ 46,521 $ 341,155
Equipment, net $ 147,359 $ 94,078 $ 147,693
Convertible note payable,
shareholder $ -0- $ (75,000) $ -0-
Shareholders' equity
(deficit) $ 154,056 $ 5,024 $ (267,280)
Total assets $ 1,644,821 $ 1,171,699 $ 1,165,419
</TABLE>
<TABLE>
<CAPTION>
For the Periods For the Nine
Months
Ended March 31, Ended December 31,
1999 1998 1999 1998
---------------------- -----------------------
<S> <C> <C> <C>
Revenues $3,049,128 $1,882,455 $2,032,767 $1,868,671
Operating (loss) income $ (466,934) $ 5,823 $ (813,185) $(512,527)
Net loss $ (549,243) $ (20,076) $ (893,136) $(558,702)
Weighted average number of
shares 6,165,017 4,610,090 10,295,938 4,602,510
Basic and diluted loss
per share $ (.089) $ (.004) $ (.087) $ (.121)
</TABLE>
<PAGE>
<PAGE>
RISK FACTORS
An investment in our common stock is speculative and involves a high degree of
risk. Please carefully consider the following risk factors, as well as the
possibility of the loss of your entire investment in our securities, before
deciding to invest in our common stock.
We have a history of operating losses and may continue to incur operating
losses
We have incurred operating losses since our inception amounting to a net
accumulated deficit of $1,462,455 as of December 31, 1999. Such losses are
attributed to initial costs of starting the business, expenditures made in
developing corporate relationships with Microsoft and Arthur Andersen, LLP,
and expenses incurred developing initial releases of our software. We
continue to incur expenses relating to software development, expansion of our
markets, and personnel training. We anticipate that future losses will occur,
and there can be no assurances that our products will be accepted in the
marketplace nor that we will generate profitable operations.
A major reason for our losses since inception, especially in the last
three months of 1999, was the amount of our unassigned labor. We have
historically been a management consulting firm and the cost of unassigned
employees, including salaries and other employee related expenses, represent
overhead to us. As we have expanded our business and attracted project
management consulting talent, such costs have increased. In addition, our
revenues were lower than expected in the last quarter of calendar 1999 as our
customers decided to defer expenditures until after the new year due to the
Year 2000 computer concerns. This reduced revenue caused our unassigned labor
costs to increase and this cost increase had a corresponding adverse impact on
our net operating loss for the nine months ended December 31, 1999.
We will need additional financing
We will require substantial funds to fulfill the initial stages of our
business plan. These funds will be used to recruit and train the additional
staff needed to complete development and introduction of our software
products, to develop a network of regional offices needed to provide
nationwide customer support and to enhance marketing and sales, to fund
further software development, and for our general working capital
requirements. Our specific capital requirements depend upon numerous factors,
including:
* The progress of our product development and commercialization
* Competing technological and market developments that are developing
rapidly
* The acceptance of our products by the marketplace
As there is no minimum funding in this Offering and no commitment from
any investor to purchase any of our common stock, we cannot be assured that we
will receive any proceeds from this Offering, let alone sufficient proceeds to
satisfy our immediate or near term working capital needs. We may seek
additional funding through public or private financings or collaborative or
other arrangements with third parties. There can be no assurance that
additional funds will be available on acceptable terms, if at all. If
additional funds are raised by issuing equity securities, our existing
stockholders, including those who invest in the offerings described in this
prospectus, may experience substantial dilution. If adequate funds are not
available, we may be required to delay, scale back or eliminate one or more of
our development programs or reduce our operations. We may also be forced to
obtain funds by entering into arrangements with collaborative partners or
others that may require us to relinquish rights to certain of our products or
technologies that we would not otherwise relinquish. In December 1999,
January 2000 and February 2000, our major stockholder and director loaned us
$237,500 to meet our obligations. We may need additional funding of this type
while this offering is being completed.
We believe that our future success will depend, in part, on new software
products that may not be successful
Historically we have been primarily a project management consulting firm,
with limited sales of software. Over 90% of our revenues since inception in
1997 have been derived from consulting with clients on a wide range of project
management issues. Through our consulting, we have determined that there is a
substantial market for a software product that will enable an enterprise to
control and manage projects by extracting information from existing project
management software and making that information available to persons via the
Internet. It is our desire to fully develop such a product and a significant
portion of the proceeds from this offering will be spent to develop such a
product. Initial design is complete and we are currently testing enhanced
versions of the initial prototype systems, but we need additional financial
resources to complete the software and make it ready for market. However,
there exist many risks in taking our software to market, including:
* significant competition;
* rapid technology changes;
* a shortage of project management professionals; and
* our ability to meet client expectations on a project.
The value of our software is uncertain
As of December 31, 1999, we had $341,155 of net capitalized software
costs and this represents 29% of our total assets. We have capitalized
software development costs incurred to date based upon the guidance of
generally accepted accounting principles and our belief that our software has
future value. These accounting principles also require us to evaluate the
carrying costs of our software in relation to the estimated revenues that
these software packages will generate in future periods. If the expected
revenues do not exceed the capitalized software costs, such costs should be
written-down to net recoverable value. Our software products are being
finalized and there exists competing software products, but our management
believes that such capitalized costs will be recovered from future software
sales. Nevertheless, if our products do not obtain market acceptance and/or
we are not able to expand our marketing efforts, it is possible that we would
not fully realize the capitalized value of our software.
There is no minimum offering and no commitment to buy our shares
Our management and directors are planning to sell the 1,500,000 shares
under the Company Offering without the assistance of an underwriter. This,
along with the other risks discussed in "Risk Factors," increases the
possibility that we may not be successful in selling the 1,500,000 shares. If
we are not successful in this offering, our planned software development,
market expansion, and opening of a regional office will have to be
substantially reduced. Further, if we are unsuccessful, we may be forced to
reduce our operations. Our first priority in the use of proceeds under this
offering will be to repay existing short-term obligations. Under two separate
credit card agreements, we have accumulated approximately $400,000 of debt
relating primarily to travel expenses incurred prior to June 1999. We have
committed to these credit card companies that they will be repaid from the
proceeds of our offering. However, if the Offering is unsuccessful, and we
have not obtained alternate financing, we will be forced to either rely on
additional loans from our principal shareholder or substantially curtail our
operations.
Our business must keep pace with rapid technological changes
We are a small, start-up entity with limited resources and technology
changes can be cost prohibitive for our company. In addition, we have a
limited number of staff assigned to ensure that we remain current and up-to-
date with a rapidly evolving technology world. If we are unable to stay
abreast of such technology changes, it could render our products obsolete,
thus reducing their value and our ability to generate sales.
We evaluate technologies on an ongoing basis and endeavor to utilize
those that are most effective in developing software and computer solutions
for our customers, however, there can be no assurance that the technologies we
use, and the expertise we have gained in those technologies, will continue to
be applicable in the future. There can be no assurance that new technologies
will be made available to us or that we can economically apply these
technologies. The inability to apply existing technologies and our expertise
to subsequent projects could have a material adverse effect on our business,
operating results and financial condition.
Project management and software development professionals are in short supply
While the software applications and programs that we have developed are
important to our success, our future success also depends in large part upon
our ability to attract, retain and motivate highly skilled employees,
particularly software development, senior project managers, and other senior
personnel with experience in a wide variety of businesses and industries.
Qualified senior project managers and development professionals are in
particularly great demand and are likely to remain a limited resource for the
foreseeable future. Several attributes of our work environment pose
challenges to our ability to attract and retain employees, including:
* extensive travel requirements
* our intense work environment and culture
* our standards for employee technical skills and job performance
* our practice of adjusting the number of technical personnel to
reflect active project levels
Although we expect to continue to attract sufficient numbers of highly
skilled employees and to retain our existing senior project managers and other
senior personnel for the foreseeable future, there can be no assurance that we
will be able to do so. Our failure to attract and retain key personnel could
have a material adverse effect upon our business, operating results and
financial condition.
We are dependent upon certain key employees
Although we do not believe that the loss of any particular individual
would have a material adverse impact on us, the loss of some or all of our
senior managers could have a material adverse impact on our operations in the
short-term, including our ability to secure and complete engagements. We have
committed to Craig Crawford and Jeff Spencer that we would enter into written
employment agreements with them as our executive officers, but to date have
not done so. These commitments are oral and, as a result, it is possible that
one or more of our employees may elect to terminate his employment with little
or no advance notice. The loss of certain key employees without sufficient
time to locate and train suitable replacement personnel could have a material
adverse effect on our business operations and financial condition.
We face significant competition
The software development, project and program consulting and strategic
business consulting industries are comprised of a large number of
participants, are subject to rapid changes and are highly competitive. We
compete with, and face potential competition from, a number of companies that
have significantly greater financial, technical and marketing resources and
greater name recognition than we have. We also compete with smaller service
providers whose specific, more narrowly focused service offerings may be more
attractive to potential clients than our multi-dimensional approach. Our
clients primarily consist of government entities and agencies, Fortune 500
companies, and other large corporations. There are an increasing number of
companies in the software development, project consulting markets targeting
this client base. We believe that our ability to compete in these markets
depends in part on a number of factors outside our control, including the
ability of our competitors to hire, retain and motivate a significant number
of skilled project managers, our competitors ownership of, or ability to
develop, software applications that are competitive with our products and
services, and the price at which others offer comparable services.
In addition, our competitors have and continue to develop or acquire in-
house expertise and/or software applications similar to those which we
provide. This could decrease demand for our software and our services. No
assurance can be given that we will be able to maintain our existing client
base, maintain or increase the level of revenue generated by our existing
clients or be able to attract new clients.
We may be unable to protect our intellectual property rights
Software
We are developing certain foundation and application software tools,
programs and products that we will own and license to our clients. We regard
this software as proprietary and protect our rights in it where appropriate
with copyrights, trademarks, trade secret laws and contractual restrictions on
disclosure and transferring title. We cannot assure you that any steps we
take in this regard will be adequate to protect our rights or that third party
companies could develop functionally equivalent products.
Trademarks
We have developed and rely on the trademarks that we use with our
products, including GeniSys Enterprise Manager(-TM-) or GEM(-TM-), Visual
Project Manager(-TM-) or VPM(-TM-) , Gatekeeper(-TM-) and Tracer(-TM-).
Wherever possible, we intend to apply for federal registrations with respect
to the use of our trademarks, and where registrations of particular marks have
not been issued, we continue to claim common law trademark rights to those
names. However, we cannot assure you that we will obtain registrations for
all of our trademarks or that we will not be subject to opposition,
cancellation or infringement proceedings based upon the use of a particular
trademark. Because these trademarks are not widely recognized, the loss of
the use of any one or more of our trademarks is not expected to have a
material adverse effect upon our ability to profitably market the associated
product or service.
Trade Secrets
In addition, our success is dependent upon our specialized expertise and
methodologies. To protect this proprietary information, we rely upon a
combination of trade secret and common laws, employee nondisclosure policies
and third party confidentiality agreements. However, there can be no
assurance that any of the steps we take will be adequate to deter
misappropriation of our specialized expertise and methodologies.
Specifically, there are others who have not independently developed
substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets, that our trade secrets will not be disclosed
or that we can effectively protect our rights to unpatented and/or
uncopyrighted trade secrets. Despite precautions we may take, unauthorized
parties may attempt to engineer, reverse engineer, copy or obtain and use our
products and other information we consider proprietary. In fact, we are aware
of some competing software that has recently been introduced in our markets.
We pursue a policy of having our employees and consultants execute non-
disclosure agreements upon commencement of employment or consulting
relationships with us. These agreements provide that all confidential
information developed or made known to the individual during the course of the
relationship with us shall be kept confidential except in specified
circumstances. There can be no assurance, however, that these agreements will
provide meaningful protection for our trade secrets or other proprietary
information in the event they are used or disclosed in an unauthorized manner.
Although we believe that our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that an
infringement claim will not be asserted against us in the future.
Selling price of shares greater than net tangible book value
Investors purchasing shares of our common stock in this offering will
incur immediate and substantial dilution of their investment of approximately
$1.38 per share, or 92% of the offering price, based upon our adjusted net
tangible book value as of December 31, 1999. To the extent that currently
outstanding options to purchase our common stock are exercised, there will be
further dilution to investors acquiring shares of common stock.
The selection of our Board of Directors is controlled by Mr. and Mrs. Bell
Our Articles of Incorporation authorize the issuance of 10,000 shares of
Class B Common Stock only to J. Daniel Bell, our Chairman. These shares of
Class B Common Stock give Mr. Bell the right to select a majority of the
members of our Board of Directors. In addition, Carylyn K. Bell, Mr. Bell's
wife, is the beneficial owner of 62% of our outstanding Class A Common Stock
before the offering, and even if the maximum offering is sold, will be the
beneficial owner of 53% of our Class A Common Stock after the offering.
Accordingly, Mr. and Mrs. Bell will have the ability to control the selection
of all of our directors.
We have been arbitrary in setting the offering price
The offering price of the shares of common stock we are offering was
arbitrarily determined by us and is not necessarily related to our assets,
book value or financial condition, and may not be indicative of our actual
value.
Future issuances of our stock could dilute current shareholders and adversely
affect the market, if one develops
We have the authority to issue up to 100,010,000 shares of common stock,
50,000,000 shares of preferred stock, and to issue options and warrants to
purchase shares of our common stock without stockholder approval. These
future issuances could be at values substantially below the price paid for our
common stock by our current shareholders. In addition, we could issue large
blocks of our common stock to fend off unwanted tender offers or hostile
takeovers without further stockholder approval.
The issuance of preferred stock by our Board of Directors could adversely
affect the rights of the holders of our common stock. An issuance of
preferred stock could result in a class of outstanding securities that would
have preferences with respect to voting rights and dividends and in
liquidation over the common stock and could, upon conversion or otherwise,
have all of the rights of our common stock. Our Board of Directors' authority
to issue preferred stock could discourage potential takeover attempts or could
delay or prevent a change in control through merger, tender offer, proxy
contest or otherwise by making these attempts more difficult or costly to
achieve.
Future sales of our common stock could adversely affect the market
Future sales of our common stock into the market may also depress the
market price of our common stock if one develops in the future. We have
issued common stock, as well as options and warrants to purchase our common
stock. Sales of these shares of our common stock or the market's perception
that these sales could occur may cause the market price of our common stock to
fall. These sales also might make it more difficult for us to sell equity or
equity related securities in the future at a time and price that we deem
appropriate or to use equity as consideration for future acquisitions.
There is no public trading market for our common stock
There currently exists no public trading market for our common stock, and
there can be no assurance that a public trading market will develop or be
sustained in the future. Without an active public trading market, you may not
be able to liquidate your investment without considerable delay, if at all.
If a market does develop, the price for our securities may be highly volatile
and may bear no relationship to our actual financial condition or results of
operations. Factors we discuss in this prospectus, including the many risks
associated with an investment in us, may have a significant impact on the
market price of our common stock.
No broker or dealer could maintain a market in our stock
We have no agreement with any broker or dealer to act as a marketmaker
for our securities and there is no assurance that we will be successful in
obtaining any marketmakers. Thus, no broker or dealer will have an incentive
to make a market for our stock. The lack of a marketmaker for our securities
could adversely influence the market for and price of our securities, as well
as your ability to dispose of, or to obtain accurate information about, and/or
quotations as to the price of, our securities.
Over-the-counter stocks are very risky
The over-the-counter markets for securities such as our common stock
historically have experienced extreme price and volume fluctuations during
certain periods. These broad market fluctuations and other factors, such as
new product developments and trends in our industry and the investment markets
generally, as well as economic conditions and quarterly variations in our
results of operations, may adversely affect the market price of the common
stock. See "Certain Market Information."
We have not applied to have our shares listed on Nasdaq, and do not plan
to do so in the foreseeable future. As a result, trading, if any, in our
securities will be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet Nasdaq listing
requirements, or in what are commonly referred to as the "pink sheets." As a
result, you will find it substantially more difficult to dispose of our
securities. You will also find it difficult to obtain accurate information
about, and/or quotations as to the price of, our common stock. Finally,
depending upon several factors, including the future market price of our
common stock, our securities are and may remain subject to the "penny stock"
rules. These "penny stock" rules place stringent requirements on brokers and
investors who want to buy or sell our shares and generally have a negative and
depressive effect on the trading price of public shares subject to the rules.
We cannot be sure that all risks associated with the Y2K problem have passed
While we believe that the greatest risk of experiencing problems with the
Y2K issue has passed, we cannot be sure that in the near term we will not
experience problems with our suppliers and vendors, although no such problems
have been discovered to date.
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
In General
This prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of the
software development, computer-based project management, consulting and
strategic business consulting industries, statements about our future business
plans and strategies, and most other statements that are not historical in
nature. In this prospectus, forward-looking statements are generally
identified by the words "anticipate," "plan," "believe," "expect," "estimate,"
and the like. Although we believe that any forward-looking statements we make
in this prospectus are reasonable, because forward-looking statements involve
future risks and uncertainties, there are factors that could cause actual
results to differ materially from those expressed or implied. For example, a
few of the uncertainties that could affect the accuracy of forward-looking
statements, besides the specific factors identified above in the Risk Factors
section of this prospectus, include:
* changes in general economic and business conditions affecting the
software development, computer-based project management consulting
and strategic business consulting industries;
* technical developments that make our products or services obsolete;
* changes in our business strategies;
* the level of demand for our products and services; and
* our ability to develop or maintain strategic relationships within
the software development, computer-based project management
consulting and/or strategic business consulting industries.
In light of the significant uncertainties inherent in the forward-looking
statements made in this prospectus, particularly in view of our early stage of
operations, the inclusion of this information should not be regarded as a
representation by us or any other person that our objectives and plans will be
achieved.
No "Safe Harbor"
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offerings.
<PAGE>
<PAGE>
USE OF PROCEEDS
As we are conducting this offering as a direct public offering through
our officers and directors without a minimum investment requirement, we cannot
accurately predict the amount, if any, of net proceeds that we may receive
from the sale of our shares. If the maximum of 1,500,000 shares is sold at
the anticipated initial public offering price of $1.50 per share, we will
receive gross proceeds of $2,250,000. If all of those sales are made through
participating selling agents to whom a 10% commission is paid and assuming our
estimated offering expenses to be $100,000, we would estimate our net proceeds
from the maximum offering to be approximately $1,925,000. Actual proceeds
realized by the Company from the offering could be substantially less than
that amount.
As we cannot accurately predict the amount of net proceeds that we will
receive from the offering, the following sets forth our anticipated uses of
the funds in a decreasing order of priority:
* Approximately 40% will be used to pay existing corporate debts, as
discussed below
* Approximately 35% will be used to complete development of software
products
* Approximately 10% will be used to expand our marketing efforts
* Approximately 5% will be used to add additional regional offices as
part of our growth strategy
* Approximately 5% will be used to recruit and train additional
personnel
* Approximately 5% will be used for general corporate purposes,
including working capital, funds for operation and overhead expenses
As there is no minimum funding requirement, all funds received from the
offering will be placed immediately into our general operating account and
used according to the priorities set forth above. However, our first priority
of using the proceeds, net of any sales commissions due, will be to fulfill
our commitment to repay almost $400,000 in credit card debt and then to pay
vendors and related companies that have provided products and services to us
in the past. This will require a minimum of $500,000. In addition, we will
need to repay Mrs. Bell, our principal stockholder and director, and another
director approximately $200,000 in short term loans. Our next priority is the
completion of our software development in order to make our products ready for
full market penetration. Any additional proceeds will be divided between the
expansion of our marketing efforts, including sales personnel, recruiting and
training of additional personnel, and computer equipment. Each of these needs
will be funded ratably if our total offering is not sold. The lowest priority
is the addition of regional offices and will receive the lowest priority in
funding.
<PAGE>
<PAGE>
DIVIDEND POLICY
We have not declared or paid cash dividends on our common stock in the
preceding two fiscal years. We currently intend to retain all future
earnings, if any, to fund the operation of our business, and, therefore, do
not anticipate paying dividends in the foreseeable future. Future cash
dividends, if any, will be determined by our Board of Directors.
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999
on an actual basis. This section should be read in conjunction with the
consolidated financial statements and related notes contained elsewhere in
this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1999(1)
-----------------------------
<S> <C>
Shareholders' Equity
Preferred Stock, $.01 par value,
50,000,000 shares authorized; no
shares outstanding $ -0-
Common Stock, $.001 par value;
authorized 100,010,000 shares:
Class A, issued and outstanding
10,915,027 shares (actual) 10,915
Class B, issued and outstanding
10,000 shares 10
Additional paid-in capital 1,184,250
Accumulated deficit (1,462,455)
---------------
Total shareholders' deficit and
capitalization $ (267,280)
================
</TABLE>
- -----------------------------------------
(1) Does not include 2,500,000 shares of Common Stock we may issue upon
exercise of options which may be granted under our Equity Incentive Plan.
Currently under the Plan we have issued 1,860,000 options which are
subject to outstanding and unexercised options having an exercise price.
Of the 1,860,000 options, 1,474,000 options are currently not exercisable
by the holder but will vest in the future, subject to the holder's
continuing employment.
<PAGE>
<PAGE>
DILUTION
At December 31, 1999, we had a pro forma negative net tangible book
value of ($608,435) or ($.056) per share based upon 10,925,027 shares of Class
A and Class B Common Stock outstanding. Net tangible book value per share is
determined by dividing the number of outstanding shares of common stock into
our net book value (total assets less total liabilities) and then subtracting
capitalized, intangible software developments costs. After giving effect to
the sale of the shares of common stock we are offering and, assuming the sale
of all the shares and receipt of the estimated net proceeds from these sales
(after deducting the estimated offering expenses), the adjusted pro forma net
tangible book value as of December 31, 1999 would have been $1,541,565 or $.12
per share of common stock. This represents an immediate increase in net
tangible book value of $.18 per share to current stockholders and an immediate
dilution of $2.69 per share, or 90%, to you as an investor in our offering.
The following table illustrates the per share dilution, assuming all 1,500,000
shares are sold in our offering:(1)
<TABLE>
<CAPTION>
<S> <C>
Assumed public offering price per share of common stock $1.50 (2)
Pro forma net book value per share of common stock
before offering ($.06)
Increase per share of common stock attributable to
new investors .18
--------
Adjusted pro forma net book value per share of
common stock after offering .12
--------
Dilution of net book value per share of common stock
to new investors $1.38
========
Dilution per share of common stock as a percentage of
offering price 92.0%
========
_________________________
(1) Does not include 2,500,000 shares of common stock we may issue upon
exercise of options which may be granted under our Equity Incentive Plan.
Currently under this Plan, we have issued 1,860,000 having an average
exercise price of $.40 per share, with 1,474,000 subject to future
vesting.
(2) Estimated.
The following table sets forth, as of the date of this offering, the
number of shares of common stock purchased, the percentage of total
consideration paid, and the average price per share paid by (i) our existing
stockholders and (ii) investors purchasing shares of Common Stock in this
offering, before deducting estimated offering expenses we are responsible for
paying.
</TABLE>
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
-------------------------------------- Price
Number Percent Amount Percent Per Share
------- ------- ------ ------- -----------
- -------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 10,925,027 87.9% $1,195,176 34.7% $ .11
New Investors 1,500,000(1) 12.1% 2,250,000 65.3% $1.50
------------------- ---------------- ---------
Total 12,425,027 100.0% $3,445,176100.0% $ .28
========== ===== ================ ========
</TABLE>
____________________
(1) Estimated.
<PAGE>
<PAGE>
CERTAIN MARKET INFORMATION
There currently exists no public trading market for our common stock, and
there can be no assurance that a public trading market will develop or be
sustained in the future. Without an active public trading market, there can
be no assurances that you will be able to liquidate your investment without
considerable delay, if at all. If a market does develop, the price for our
securities may be highly volatile and may bear no relationship to our actual
financial condition or results of operations. Factors we discuss in this
prospectus, including the many risks associated with an investment in us, may
have a significant impact on the market price of our common stock. Also,
because of the relatively low price of our common stock, many brokerage firms
may not effect transactions in the common stock.
In addition, it is likely that the Company's common stock will be subject
to rules adopted by the Commission regulating broker dealer practices in
connection with transactions in "penny stocks." Those disclosure rules
applicable to "penny stocks" require a broker dealer, prior to a transaction
in a "penny stock" not otherwise exempt from the rules, to deliver a
standardized list disclosure document prepared by the Commission. That
disclosure document advises an investor that investment in "penny stocks" can
be very risky and that the investor's salesperson or broker is not an
impartial advisor but rather paid to sell the shares. It contains an
explanation and disclosure of the bid and offer prices of the security, any
retail charges added by the dealer to those prices (called mark up and mark
downs) and the amount of compensation or profit to be paid or received by the
salesperson in connection with the transaction. The disclosure contains
further warnings for the investor to exercise caution in connection with an
investment in "penny stocks," to independently investigate the security, as
well as the salesperson with whom the investor is working and to understand
the risky nature of an investment in this security. Further, the disclosure
includes information regarding the market for "penny stocks," explanations
regarding the influence that market makers may have upon the market for "penny
stocks" and the risk that one or two dealers may exercise domination over the
market for such security and therefore control and set prices for the security
not based upon competitive forces. The broker dealer must also provide the
customer with certain other information and must make a special written
determination that the "penny stock" is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
Further, the rules require that, following the proposed transaction, the
broker provide the customer with monthly account statements containing market
information about the prices of the securities.
These disclosure requirements may have the effect of reducing the level
of trading activity in the secondary market for our common stock. Many
brokers may be unwilling to engage in transactions in our common stock because
of the added disclosure requirements, thereby making it more difficult for
stockholders to dispose of their shares.
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is our selected financial data as of and for our years
ended March 31, 1999 and 1998 and as of and for the nine month periods ended
December 31, 1999 and 1998 financial information is derived from our
consolidated financial statements and related notes included elsewhere in this
prospectus and is qualified by reference to these consolidated financial
statements and the related notes thereto.
<TABLE>
<CAPTION>
Periods Ended Nine Months Ended
March 31, December 31,
------------------- --------------------
1999 1998 1999 1998
-------- -------- ------- ----------
Statements of Operations Data
<S> <C> <C> <C> <C>
Revenues $3,049,128$1,882,445 $2,032,767 $1,868,671
Operating expenses $3,516,062$1,876,624 $2,845,952 $2,381,198
Operating (loss) income $ (466,934)$ 5,821 $ (813,185) $ (512,527)
Interest expense $ 82,309$ 25,897 $ 79,951 $ 46,175
Net loss $ (549,243)$ (20,076) $ (893,136) $ (558,702)
Basic and diluted loss
per share(1) $ (0.89)$ (.004) $ (0.87) $ (.121)
Weighted average number of
shares outstanding(1) 6,165,715 4,602,510 10,295,938 4,602,510
</TABLE>
<TABLE>
<CAPTION>
At March 31, At December 31,
------------------------
1999 1998 1999
--------- ------------ --------------
<S> <C> <C> <C>
Balance Sheet Data
Total assets $ 1,644,821 $ 1,171, 699 $1,165,419
Working capital deficit ($359,966) ($31,457) ($872,221)
Total liabilities $ 1,490,765 $ 1,166,675 $1,432,699
Accumulated deficit ($569,319) ($20,076) ($1,462,455)
Shareholders' equity (deficit) $ 154,056 $ 5,024
($267,280)
</TABLE>
________________________
(1) Based upon the weighted average number of shares outstanding for the
years ended March 31, 1998 and 1999 and the nine month periods ended
December 31, 1999 and 1998.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.
Overview
We operate with iGeniSys Inc. as the holding company of GeniSys
Information Systems, Inc. ("GeniSys"). Our operations to date have been
conducted through our subsidiary. It is our plan that after the GeniSys
products and services have gained more wide spread market acceptance, that we
will expand through internal growth and acquisition of other companies in the
software/internet related markets.
An independent group of investors formed Zion Enterprises, Inc. ("Zion")
in February 1996 as a Colorado corporation. Zion was formed for the sole
purpose of establishing a widely held company that would subsequently seek a
merger with another entity that desired to merge into a public entity. Zion
had no operations or business activity and had never been subject to the
reporting requirements of the Securities Exchange Act of 1934.
In March 1999, Zion acquired all of the outstanding shares of the common
stock of GeniSys in exchange for 75% of the total issued and outstanding
shares of Zion. Zion became the parent company of GeniSys through this
transaction. As a result of the transaction, the former officers and
directors of GeniSys assumed control of Zion and changed the name to iGeniSys,
Inc. (the "Company"). This transaction has been accounted for as an
acquisition of Zion by GeniSys and a recapitalization of GeniSys. The
historical financial statements prior to this transaction are those of GeniSys
as Zion had no activities and such financial statements are included in this
document.
Our subsidiary, GeniSys, is a Colorado corporation formed on May 1, 1997.
Our primary business is consulting in the project management arena and the
development of state-of-the-art project and program management software. We
also perform services relating to assisting our customers in implementing our
software and improving overall project control.
Historically we have been primarily a project management consulting firm
with limited sales of software. Over 90% of our revenues since inception in
1997 have been derived from consulting with clients on a wide range of project
management issues. Through our consulting we have determined that there is a
substantial market for a software product that enables a project to be
controlled and managed by extracting information from existing project
management software and making that information available to persons via the
Internet. It is our desire to fully develop such a product and a significant
portion of the proceeds from this offering will be spent to develop such a
product. Initial development has begun, but we need additional financial
resources to complete the software and make it ready for market.
Our operations are based in Houston where our development group is based,
but we perform consulting, implementation and training services throughout
the country. Our revenues are generated from consulting services and software
sales. We have a staff of over 20 full-time professionals and we utilize
contract personnel when the need arises. This method of staffing allows us to
control fixed costs while providing the human resources necessary for growth.
Results of operations - year ended March 31, 1999 versus the period from
inception (May 1, 1997) to March 31, 1998
Net loss for the year ended March 31, 1999 ("1999") versus the period
from inception (May 1, 1997) to March 31, 1998 ("1998") changed to a net loss
of $549,243 from a net loss of $20,076 in 1998. This increase in net loss was
due to increased operating costs as we expanded our business and product
development costs in their initial phases. Revenues for 1999 increased 61.9%
($1,166,683) to $3,049,128 from $1,882,445 in 1998. This increase was due to
the expanded marketing efforts by our officers and the expansion of our
alliance with Arthur Andersen. Our revenues also increased as we were able to
increase our consulting hourly rates as our customer base became more
established and we did not need to substantially discount our billing rates to
win work. However, in 1999 our costs of operations increased 87.4%
($1,639,438) to $3,516,062 from $1,876,624 in 1998. This increase is a result
of the our efforts to grow and reflects increases in marketing, development
costs of a research and development nature and general overhead expenses.
The revenues generated from work performed for Arthur Andersen, LLP
represented $915,630 (30.0%) in 1999 and $785,346 (41.7%) in 1998. Our
management does not believe this dollar level of revenue will decrease in the
future. In addition, another customer accounted for 10% of our revenues
during the year ended March 31, 1999. Our management is attempting to
diversify our customer base and believes the percent of our revenues derived
from these customers will decrease in the future.
Results of operations -- Nine months ended December 31, 1999 versus the nine
months ended December 31, 1998
Net loss for the nine-month period ended December 31, 1999 was $893,136
compared to a net loss for the nine-month period ended December 31, 1998 of
$558,702. This 59.9% ($334,434) increase in our net loss is due to making
selective investments in certain of our projects, thus increasing contract
costs coupled with the increased level of marketing and sales efforts.
However, in comparison to the prior nine-month period, revenues increased 8.8%
($164,096) from $1,868,271 to $2,032,767 for the period ended December 31,
1999. This increase reflects our efforts to expand corporate relationships
and our marketing efforts are being successful.
However, our operations and sales were adversely impacted in the last
three months of 1999, as customers postponed purchases of software and
consulting services due to concerns over the Year 2000 system issues. Year
2000 concerns caused many software companies to have reduced levels of income
in the last quarter of calendar 1999. Our management made the decision that
it was in our best long-term interest to retain our core group of
professionals as opposed to eliminating these positions. This decision
increased our overhead costs as unassigned personnel costs increased over the
same period in 1998, while our revenues decreased.
Although revenues increased by $164,096, our costs of operations
increased from $2,181,198 for the nine month period ended December 31, 1998 to
$2,845,952 (a 30% increase) for the similar period ended December 31, 1999.
In addition to increased unassigned labor costs, this increase in operating
costs was due to costs of performing work under our contracts as we made
investments in certain projects to be certain that our software functioned at
the highest level during this initial product roll-out phase. In addition and
as previously noted, our sales and marketing related expenses increased due to
product introduction related expenses.
Liquidity and capital resources
We have financed our operations to date primarily through the private
sale of equity securities and borrowings from our majority shareholder and
other related parties. During the year ended March 31, 1999, we sold
1,472,083 shares of our common stock for $580,000. Through December 31, 1999,
we sold an additional 960,004 of our common stock for $471,800.
Since we began operations, we have experienced a shortage of working
capital. We need additional working capital in order to support our growth.
We do not believe that the working capital available to us through our
financing agreement will be sufficient to support all of our current and
future growth. As a result, we are depending upon the proceeds of this
Offering to supply us with needed working capital. Unfortunately, since we
are conducting the Offering ourselves on a best-efforts basis, we are
uncertain that this Offering will be successful in providing us with the
needed funds. It is likely that additional financings will be necessary in
the future which may involve either the sale of additional equity or debt. In
either case, the terms of future financings could have an adverse effect on
the value of our securities. We currently have no commitments for capital
expenditures.
Our working capital needs continue. In December 1999, our majority
shareholder loaned $50,000 in order for us to meet our operating costs. Such
loan is due in June 2000 and requires monthly payments with interest at 15%.
Further, in January 2000, our majority shareholder loaned an additional
$87,500 to the Company, which carries the same rate of interest and is due in
90 days. In February 2000, a member of the Company's Board of Directors
loaned $100,000 to the Company. This loan was made to meet our operating cash
needs to purchase some past-due invoices from our financial institution. This
loan is secured by the purchased invoices and a second loan on our software
products. The loan carries an interest rate of 15% and is payable in May
2000.
On May 17, 1999, we entered into a credit agreement with a financial
entity. This new agreement provided the funds to fully repay a factoring line
of credit relationship with our majority shareholder of $394,409 and a $56,039
revolving line of credit. Under the terms of this new credit agreement, which
is similar to a factoring arrangement, we are able to obtain financing for 85%
of specific accounts receivables. Provided the accounts receivable are
available, we can borrow up to $2,000,000. For this arrangement, we pay a
processing fee for financing each receivable depending upon the number of days
from the funding of the advance until that invoice is paid by the customer.
In addition, we pay interest on the total amount advanced at a rate equal to
the prime rate plus 2%. The receivables are financed on a full recourse basis
and the agreement can be terminated with 30 days notice after certain events
are met.
In January 2000, our lender notified us that our factoring line of credit
was being reevaluated due to our operating losses and past-due nature of
certain of our customers and, accordingly, future advances under the line were
contingent upon meeting underwriting standards. Management met with the
lender and negotiated reinstatement of our line of credit. Under the terms of
this agreement, our principal stockholder (who is the guarantor of this credit
facility) and investors have committed to purchase invoices that reach 90 days
past due up to a maximum of $200,000. In addition, the agreement requires the
Company to report monthly results of operations to our lender, rather than
quarterly. Subsequent to execution of this agreement, the lender began
factoring our receivables.
As of March 31, 1999, we had a working capital deficit of $359,966
compared to a deficit of $31,457 as of March 31, 1998. We also had a bank
overdraft of $16,632 and $23,937 as of March 31, 1999 and 1998, respectively.
Our accounts receivable remain outstanding to major corporations and
consulting firms and stayed fairly consistent at $933,134 as of March 31, 1999
and $889,091 as of March 31, 1998. Our accounts payable were $508,954 and
$402,378 as of March 31, 1999 and 1998, respectively. Our operations used
cash for the periods ended March 31, 1999 and 1998 of $537,095 and $174,207,
respectively.
As of December 31, 1999 we had a working capital deficit of $872,221
versus a deficit of $359,966 as of March 31, 1999. This increase in the
working capital deficit is due to the cash required to fund the operating loss
for the nine-month period ended December 31, 1999 and to fund the selective
investments in our projects and increased marketing efforts, as previously
discussed. As of December 31, 1999, we had a bank overdraft of $59,360 versus
$16,632 as of March 31, 1999. Accounts receivables decreased to $465,260 as
of December 31, 1999 from $933,134 as of March 31, 1999 due to the reduced
revenues in the last quarter of calendar 1999, our collection efforts, and the
payment on government contracts under which we performed work as a
subcontractor. Our accounts payable remained consistent from March 31, 1999
($508,954) to December 31, 1999 ($551,231). Included in our accounts payable
is approximately $400,000 of accumulated travel and other expenses which have
been charged to credit cards and must be repaid from future sources of
capital. Also, we owe a related company $126,304 for prior advances that also
must be repaid. Those sources of capital could be derived either from
proceeds of this Offering, operating revenues or other financings. For the
nine months ended December 31, 1999 and 1998, our cash flow from operations
used $278,627 and $289,809, respectively.
Capitalized software costs
Our software development costs consist primarily of enhancements and
software production costs related to products for which technological and
market feasibility has been established. Capitalization ceases when the
product has been completed and the product is ready for release to our
customers. Prior to achieving technological feasibility, development costs
are expensed. In the years ended March 31, 1999 and 1998, we incurred
approximately $450,000 and $100,000, respectively, for research and
development costs related to software development. During the nine months
ended December 31, 1999 and 1998, we incurred approximately $220,000 and
$390,000, respectively, for software development costs. As of December 31,
1999, our capitalized costs for each of our products were approximately as
follows:
GeniSys Enterprise Management(-TM-) $182,619
Gatekeeper(-TM-) 100,000
Visual Project Manager(-TM-) 115,000
-------------
$397,619
We expect to realize the net capitalized value through the future sales of our
software products.
Recent Accounting Pronouncements
Comprehensive Income. In June 1997, the FASB issued SFAS No. 130,
Reporting Comprehensive Income. This statement is effective for financial
statement issued for periods beginning after December 15, 1997. We adopted
this statement during 1998 and it had no material impact on our financial
statement disclosures.
Segments of an Enterprise and Related Information. In June 1997, the
FASB issued SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information. This statement is effective for fiscal years beginning
after December 15, 1997. SFAS 131 requires the reporting of profit and loss,
specific revenue and expense items, and assets for reportable segments. It
also requires the reconciliation of total segment revenues, total segment
profit or loss, total segment assets, and other amounts disclosed for
segments, in each case to the amounts in the general purpose financial
statements. As we only operate in one segment, adopting this statement had no
material impact on our financial statement disclosures.
Pension and Other Postretirement Benefits. In February 1998, the FASB
issued FAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits. SFAS 132 standardizes the disclosure requirements for
pensions and other post-retirement benefits and requires additional
information on changes in the benefit obligations and fair values of plan
assets. The statement is effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Adoption of SFAS 132 is expected to have no
effect on us, as there are no pension plans.
Derivative and Hedging Activities. In June 1998, the FASB issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement is effective for fiscal years beginning after June 15, 1999.
Currently, we do not have any derivative financial instruments and does not
participate in hedging activities, therefore management believes SFAS No. 133
will not impact our financial position or results of operations.
<PAGE>
<PAGE>
BUSINESS
Overview
Internet-based Project/Program management and cost control is one of the
key business areas that we emphasize. Large commercial and governmental
entities have projects of all sizes and descriptions, and we offer solutions
to improve the management and control of such projects. Whether it is the
development of a new aircraft, the construction of a major office building, a
time-sensitive overhaul to a petrochemical plant, or a major software
development project, managers at all levels need to monitor the progress of
these projects, control their respective costs, and be alerted when problems
arise. The critical need to provide early warning to senior management of
variances in project schedules and potential cost overruns is the
justification for using our project management consulting and software
solutions.
Our services span a wide range of software development, project
management and consulting services. Our software development services have
been provided across a range of industries and have included everything from
the integration of commercial off-the-shelf software into existing platforms,
to the development of new, highly specialized software applications to better
meet our clients' needs. Our consulting services include completing detailed
needs assessments and independent risk assessments, construction oversite and
project management staffing and services.
We have performed project and program management work for a diverse
sampling of government entities and prominent companies, including: the United
States Department of Defense, United States Navy, United States Army, United
States Air Force, Kinko's, Lockheed Martin Corporation, AT&T Global
Information Systems, Motorola Satellite and Communications, Boeing
Corporation, Hughes Aircraft, Wal-Mart, Mobil Corporation and the City of San
Antonio.
History
We were originally formed in February 1996 under the name "Zion
Enterprises, Inc." for the limited purpose of making a distribution of our
shares of common stock in order to become a widely held company with a large
stockholder base which would then seek a merger opportunity with a private
company that wanted to become publicly traded through a merger. In March
1999, we acquired all of the outstanding shares of common stock of GeniSys
Information Systems, Inc. in exchange for issuance to the shareholders of
GeniSys Information Systems, Inc. 75% of the total issued and outstanding
shares of our common stock. As a result of the transaction, the former
shareholders, officers and directors of GeniSys Information Systems, Inc.
assumed control of us and changed our name to iGeniSys, Inc. GeniSys
Information Systems, Inc. was formed in March 1997 to pursue the development
of software and ancillary services relating to business systems generally and
project management and cost and risk analysis in particular.
Business strategy
We have experience in many facets of project and program management,
software design, and related customized software implementation. Our current
mission focuses on creating new software tools utilizing the "World Wide Web"
and integrating with three dimensional (3D) technologies. We employ project
and program management knowledge that we have acquired from evaluating the
project management industry and developing best practices. Our business
strategy is to anticipate market needs and apply leading-edge information
technologies in combination with project management consulting to deliver
business solutions.
The software we develop combined with our experience are designed to
facilitate the integration and management of project information interrelating
estimates, schedules, budgets, and project risk management. Our services and
software are designed to simplify data collection, integration and analysis,
thus allowing real-time comparison of actual performance data versus planned
schedules and budgets. Further, our software tools are expected to work in
conjunction with major project management software systems and are designed to
integrate with customers existing accounting systems to provide timely
management and cost information. We also provide software customization,
training, implementation, and project management personnel.
Business activities
We operate as one entity without divisions and the services we offer are
in three major business activities:
* Project management software design, development, integration
and implementation;
* Business process improvement consulting; and
* Providing specialized technical services to the process
industry.
Business project management software design, development, integration and
implementation
It is our belief that most enterprises are managed via "forensic
management," e.g. analyzing the past instead of managing the future. Our
products are designed to work with the major commercially available project
management software tools, to deliver to our customers the information
necessary to execute their tactical and strategic missions. Through our
experience, we have come to the conclusion that the most effective management
occurs through having current knowledge of the status of projects, as opposed
to guessing what is happening and then determining what went wrong after the
fact. Our software will enable customers to utilize information to make
informed and prompt decisions when managing for the future.
Jeff Spencer, our Executive Vice President, is a member of the Microsoft
Insiders Group, whose role is to consult with Microsoft Corporation in the
development of its project management software. Membership in this group is
by invitation based on Microsoft's evaluation of your knowledge of project
management software solutions and the ability to deliver effective solutions
to companies. We also maintain very close relations with other project
management software providers and work, from time to time, as advisors for
Welcom Software, Inc. and Primavera Systems, Inc.
We are currently working or have worked with major corporations a number
of the Fortune 500 companies providing project management software solutions,
and services related to improving the efficiency and communications abilities
of their existing project management applications. Through consulting with
and providing software customization and system integration for our customers,
we have developed an understanding of the underlying architecture of many
leading edge and highly specialized project management software applications.
In many cases, we have been engaged to enhance, integrate, and develop new
software applications to better serve our customers' requirements. By
enhancing the functionality of a customers project management software
applications and providing solutions to the many needs of our highly diverse
client base, we recognize voids in the currently available project management
software and we are developing and plan to develop specific software products
designed to fill these gaps.
Examples of project management assignments we have completed for major
companies and organizations are outlined below:
Development of web-based project management systems, including software
interfaces, implementation, and training were executed for the following
diverse sample of our clients:
* Air Products, Inc.
* Arthur Andersen LLP
* City of San Antonio, Texas
* Charter Communications, Inc.
* Enron Energy Services, Inc.
* Kinkos, Inc.
We have also provided a wide range of project management solutions,
including existing system enhancements, for the following sample of our
clients:
* AspenTech, Inc.
* Boeing, Inc.
* Computer Sciences Corporation
* Lockheed Martin, Inc.
* Mobil, Inc.
* Raytheon, Inc.
* United States Army, PMCD, Crusader Program, and DASA
Business process improvement consulting
We have consulted with the design teams of several major project
management software packages, including Microsoft Project 98(-Registered Mark-
), Primavera P3(-Registered Mark-) and Open Plan. Additionally, our staff is
active in project management in a number of specific industries including
defense, aerospace, construction, petrochemical and power.
By working directly with a client and completing detailed needs
assessments, our consulting teams are able to provide a wide range of value
added business process services. These include assisting clients in
understanding where their own management systems are not meeting user needs.
Additionally, these engagements often require on-site assistance, including
on-site management, and regulatory compliance assistance. To this end, we
have a history of assisting our clients in bringing their management systems
into compliance with the most stringent governmental or industry reporting
requirements.
Providing specialized technical services to the process industry
We also provide construction management and project management services
and staffing to a variety of industries. We perform these services primarily
to increase our contacts in the project management arena. Among the project
management services provided are construction management, project engineering,
planning and scheduling for new construction projects, turnarounds and
inspection related turnarounds, including overhauls, outsourcing and
engineering services. In 1999, we completed a project management assignment
for Coastal Aruba, N.V. on their $140 million expansion project. This project
involved setting up a system for tracking performance, and staffed with 25
project and construction management professionals.
Products and services
Nearly all of our products have been designed and are being developed
through the recognition of a broader need uncovered while developing a
solution for a specific client need. Our design and development teams
concentrate their efforts on providing easy to use, flexible, solutions that
provide key business information on a timely basis. All of our products are
integrated with Microsoft(-Registered Mark-) products. The following is a
brief description of our current software products we either have or are
developing:
* Visual Project Manager(-TM-) (VPM(-TM-)) iGeniSys is developing
VPM(-TM-) using existing software from Adaptive Media, Inc. to
create what we believe will be the only internet based system to
integrate 3-dimensional drawings with key business functions. VPM(-
TM-) will makes it possible to tie key business information to a
visual representation of their products or facilities, color coding
them based on the client's criteria and providing the information
delivered via Internet directly to the user's desk. It further will
provides a collaborative environment over the Internet leveraging
web strategies to maximize the effectiveness of the client's staff
and the technology they use. This software package is being
developed by our staff and is scheduled for general release in the
first quarter of 2000.
* GeniSys Enterprise Manager(-TM-) (GEM(-TM-)) GEM is a project
management tracking and reporting tool enabling an organization to
manage and monitor large projects more effectively that is currently
under development by our staff. This software is planned to enable
mission critical information to be available to all levels of
management through the Internet. This will gives the appropriate
users access to project information across the enterprise. This
software can be customized with additional programming to interface
with legacy systems such as SAP, Oracle, J.D. Edwards and others. A
prototype software is being implemented at the City of San Antonio.
When complete, it is expected that GEM will be able to provide
critical information to all of the senior management of the City,
tracking progress on active projects. This software package is
currently being developed and no release date has been established.
* Gatekeeper(-TM-) Integrates earned value cost data with scheduling
data providing essential information to management on accurate
earned value. The concept of Earned Value Management Systems (EVMS)
was developed in recent years to assist governmental agencies in
tracking contractor progress on large projects. Gatekeeper is
applicable to every company executing project work for governmental
agencies. This product is actively marketed and we are presently
installing or have installed this product for company-wide use at
Boeing, Allied Signal, Northrop Grumman and others.
* GEM Web Builder(-TM-) We designed GEM Web Builder in order for
customers to share vital project management information on the
Internet. Whether interfacing within large organizations and/or
remote locations, Web Builder collects and displays project
management information for each level of management over the
Internet or Intranet. GEM Web Builder will enable a user to
complete a web site in minutes and guide the user through the
process. Web Builder includes user-definable business rules that are
color-coded to project tracking information in order to identify
problem areas. GEM Web Builder also allows a user to obtain
detailed project information through the web site.
Consulting services
Our employees offer a range of project management software
implementation, business process, event management and software training
services. Our personnel are available for consultation or field assignment to
support our client projects and business needs, including serving as
construction managers, plant rehabilitation leaders or planning.
We provide a wide range of value added business process improvement
services. This includes assisting clients in understanding where their own
management systems are not meeting the needs of users by completing detailed
"needs assessments." Our consulting teams develop and implement solutions
based on the results of the needs assessment and detailed reviews with the
client. These assignments often require on-site assistance and can include
"hands on" management. The types of management systems include applications
in manufacturing, government contracting, defense, aerospace, petrochemicals
and other process industries. Many of our consultants have extensive hands-on
experience in governmental contracts for Aerospace, Department of Defense and
NASA.
Corporate relationships
We have developed several business relationships which are significant
contributors to the development of our business, both directly, via business
referrals, joint projects and, indirectly, through the value of association.
While we do not have any long-term agreements with any of these associates, we
believe that our relationships are an important asset whose continuation
depends upon our continued performance.
Microsoft Corporation
We are and have been since inception an authorized Microsoft Solution
Provider. Solution Providers are for one year terms based on
qualifications. In addition, we have been selected by the Project team
at Microsoft as members of the Microsoft Project Insider Group. The
Insider Group is composed of a select group of four companies whose role
is to consult with Microsoft, supporting design strategy for future
releases of Microsoft Project, and other related project management tools
that may be planned. Participation on the Insider Group is at the
invitation of Microsoft and may be terminated at any time. We have
participated on the Insider Group since its inception. Our participation
in this group provides us with insight into their project management
development strategy. Combining our software tools with Microsoft Project
and our knowledge of future development help us to develop and implement
complete project management solutions for our customers. Based on this
key relationship, Microsoft has begun to refer customers with challenging
project management issues to us. In addition, we conduct seminars and
training sessions on Microsoft Project and Project Management throughout
the United States.
Arthur Andersen, LLP
We have a formal Master Marketing Agreement, and several sub-contracts
for software and services, with Arthur Andersen LLP (AA). Currently we
are jointly assessing project management on the U. S. Army Chemical
Weapons Demilitarization Program. This program includes complex process
facilities planned for or constructed and operated at nine chemical
weapons stockpile sites in the United States. Currently, we are assisting
AA in the establishment and operations of project management solutions
for several of their Fortune 500 clients. These projects are very
confidential as they relate to large projects or mergers and
acquisitions. In addition to these services for clients of AA, we also
provide internal project management software, training and consulting to
AA in several of their regional and international offices.
Vuent, Inc.
We have a licensing agreement with Vuent, Inc. that allows us to use
their 3D-design software that streams 3-dimensional designs over the
Internet to our Visual Project Manager(-TM-) product. We integrated the
Vuent technology with our proprietary software creating Visual Project
Manager. This tool enables clients to customize the information relating
to schedule, budget, and cost performance to the actual 3-dimensional
plans of a project and to communicate this information over the internet
along with the plans. Under our agreement, Vuent may market our Visual
Project Manager software to their clients, although no orders have been
received to date. We have received numerous inquiries from major
international software developers regarding the technology and processes
used in our Visual Project Manager tool.
Business Engine (FKA Micro-Frame)
We have a non-exclusive marketing agreement with Business Engine for one
of our proprietary software tools (Gatekeeper(-TM-)) that allows them to
sell our software to their customers. Business Engine developed an
earned value cost analysis system, known as Micro-Frame Project Manager
(MPM) that works with government contracting in completing required
reports. Our developers have integrated Gatekeeper with MPM. We also
have a direct marketing effort that has been successful in selling the
Gatekeeper software to some of the larger government contractors.
Gatekeeper is currently installed at Boeing, Northrop Grumman, ITT, and
other significant contractors.
Markets
Over the past decade there has been a tremendous change in the
sophistication of project management software. This gives the modern manager
access to tools and reports that were formerly unavailable to even the largest
companies. With the dramatic pace of business change, fueled by the expansion
of the Internet, the project management software category has experienced
tremendous growth. Through direct marketing, the alliances already
established, and future collaborations and alliances, we believe our market
share in products and services can grow.
Our marketing efforts to date have been limited due to our lack of
working capital. We have relied on referrals from Arthur Andersen and
Microsoft Corporation for over 75% of our revenues since inception. Our
marketing to date has been targeted toward building these two relationships
and attendance at conventions and trade shows. To date, our lack of working
capital has prevented us from developing a more aggressive marketing plan. If
we can repay our debts, our second priority for proceeds from this offering
will be to develop a marketing plan and internal sales force. Being able to
expand our marketing efforts is important for us to gain a larger market share
within the project management software industry. We do not believe that we
will be successful in obtaining such market penetration without significant
marketing efforts through an internal sales force.
Business managers are beginning to focus on enterprise-wide project
management issues rather than on a project-by-project basis. Our software
products focus on this need and we believe demand is increasing for project
management software tools that communicate transparently over the Internet to
provide managers with access to timely cost, budget, and schedule reports.
Our marketplace includes the Federal government, state and local government
entities, and any organization that manages large and/or diverse projects.
This would include, but not be limited to, large municipalities, construction
companies, aircraft manufacturers, software development companies, engineering
firms, petrochemical producers, and oil and gas companies. Our growth
strategy is based upon the belief that aggressive marketing of our products
and services combined with continued recruitment of industry experts will help
us meet the demands of our customers and allow us to grow into a leading
position in the project management marketplace.
Competition
A number of other companies compete with GeniSys in providing the kinds
of services that we do in the project management arena. However, we believe
that we have competitive advantages based upon our software development
inasmuch as we are able to develop work templates and software for the
improvement of business processes in the areas of project management, project
control, risk assessment and integrated software solutions that we combine
with our expertise and services. In addition, we believe that we gain
competitive advantages through our strategic relationships with Microsoft,
Arthur Andersen and other leaders in the project management field.
Nevertheless, there can be no assurance that larger companies with greater
resources will compete with us in areas in which we have developed niches,
since there exist few monetary barriers to entry into our field.
Intellectual property
We have developed certain foundation and application software tools,
programs and products that we own and license to our clients on a non-
exclusive basis. We regard this software as proprietary and protect our
rights in it where appropriate with copyrights, trademarks, trade secret laws
and contractual restrictions on disclosure and transferring title. There can
be no assurance that any steps we take in this regard will be adequate to
deter misappropriation of our proprietary rights or independent third party
development of functionally equivalent products.
We have developed and rely on the trademarks that we use with our
products, including GeniSys Enterprise Manager(-TM-) or GEM(-TM-), Visual
Project Manager(-TM-) or VPM(-TM-) , Gatekeeper(-TM-) and Tracer(-TM-).
Wherever possible, we have either applied for, intend to apply for, or have
obtained federal registrations with respect to the use of our trademarks, and
where registrations of particular marks have not been issued, we continue to
claim common law trademark rights to those names. However, there can be no
assurance that we will obtain registrations for all of our trademarks or that
we will not be subject to opposition, cancellation or infringement proceedings
based upon the use of a particular trademark. The loss of the use of any one
or more of our trademarks could have a material adverse effect upon our
ability to profitably market the associated product or service.
In addition, our success is dependent upon our specialized expertise and
methodologies. To protect this proprietary information, we rely upon a
combination of trade secret and common laws, employee nondisclosure policies
and third party confidentiality agreements. However, there can be no
assurance that any of the steps we take will be adequate to deter
misappropriation of our specialized expertise and methodologies.
Specifically, there can be no assurance that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets, that our trade secrets will not be
disclosed or that we can effectively protect our rights to unpatented and/or
uncopyrighted trade secrets. Despite precautions we may take, unauthorized
parties may attempt to engineer, reverse engineer, copy or obtain and use our
products and other information we consider proprietary. We pursue a policy of
having our employees and consultants execute non-disclosure agreements at the
beginning of employment or consulting relationships with us. These agreements
provide that all confidential information developed or made known to the
individual during the course of the relationship with us shall be kept
confidential except in specified circumstances. There can be no assurance,
however, that these agreements will provide meaningful protection for our
trade secrets or other proprietary information in the event they are used or
disclosed in an unauthorized manner.
Although we believe that our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that an
infringement claim will not be asserted against us in the future.
Research and development
We have two full-time employees and one to two part-time consultants
devoted to research and development. These employees and consultants are
software programmers with the full-time employees being involved in product
architecture. The majority of our research and development is undertaken
under contract with customers and clients as a result of which we may develop
a unique software program or module for the client's use on a non-exclusive
use basis. We generally retain the rights to all products that we develop for
clients so that we can use them for other customers and adapt them to other or
new applications. In the years ended March 31, 1999 and 1998, we incurred
approximately $450,000 and $100,000, respectively, for research and
development costs related to software development. During the nine months
ended December 31, 1999 and 1998, we incurred approximately $220,000 and
$390,000, respectively, for software development costs.
Employees and consultants
We have 20 core full-time employees, of whom 14 are located in our main
office in Houston, Texas and 6 are based in our other locations. In addition
to these core employees, we also have an additional labor pool consisting of
contract professionals that are hired on a part-time basis.
Facilities and equipment
Our principal executive offices are located in Houston, Texas. In
addition, we have offices in Los Angeles, California, Denver, Colorado and
Washington, D.C. Our Houston office consists of approximately 6,643 square
feet which we hold on a four year sublease expiring 2002. Our monthly rent is
$5,536, with triple net adjustments.
Our Los Angeles area office consists of 2,644 square feet which we occupy
under a three year lease in Torrance, California expiring in March 2001. The
monthly rent at that location is $3,305, together with triple net adjustments.
We only have two employees in our Torrance location and do not have immediate
plans to expand that facility.
Our Denver office is shared with Corporate Stock Transfer, Inc., our
stock transfer agent and a company owned by our primary stockholder, Carylyn
K. Bell. We pay a market rate of $1,500 per month for use of this office for
approximately 750 square feet and this rate includes administrative support.
We reimburse this company for all other out-of-pocket expenses incurred on our
behalf.
Our Washington, D.C. office consists of space utilized in the office of
one of our consultants, American Defense International (see "Consultants").
As part of our agreement with these consultants, we utilize their office space
as needed. We do not have any current plans to change these arrangements for
Washington D.C. location. We believe that each of these facilities are
adequate for the foreseeable future and do not plan any substantial expansion
or alteration.
We own computer equipment and office furniture and fixtures.
Consultants
We have a consulting agreement with American Defense International
("ADI") which assists us in establishing, developing and maintaining contacts
within the federal government. Under the agreement, ADI is paid a monthly
consulting fee of $7,500 which we share with Andersen Consulting LLP. The
agreement can be terminated by either party at any time.
We also have a consulting arrangement with McCandish Partners, a company
controlled by Carylyn K. Bell, the Company's principal stockholder and wife of
J. Daniel Bell, pursuant to which it pays $3,000 per month for financial
advisory services.
Legal proceedings
On February 17, 1999, a former employee/independent contractor of a
company previously owned by one of our executive officers, filed suit in
Superior Court in San Diego California, against us, the executive officer,
Jeff Spencer, and our principal stockholders. This suit is captioned Patrick
Foley v. Program Management Solutions Inc.; GeniSys Information Systems, Inc.;
et al. On March 25, 1999, we were served with the complaint. The complaint
alleges breach of contract, constructive trust and conspiracy. Our management
and legal counsel believe the suit is without substantial merit, we have
asserted counterclaims and plan to vigorously defend the case. The pending
suit is not expected to have a material adverse effect on us, although it will
require a portion of our scarce working capital to defend.
<PAGE>
<PAGE>
MANAGEMENT
Directors, executive officers and key employees
The name, position with the Company, age of each Director, executive
officer and key employee of the Company is as follows:
<TABLE>
<CAPTION>
Name(1) Age Position
------- ----- -------------
<S> <C> <C>
J. Daniel Bell 54 Chairman of the Board,
President, Chief Executive
Officer
Carylyn K. Bell 41 Director, Secretary
Walter Strycker 70 Director
Henry Fong 61 Director
Craig Crawford 46 Vice President
Jeffery M. Spencer 40 Vice President
Ward P. Rivenburg 42 Chief Financial Officer
</TABLE>
- ---------------------------
(1) J. Daniel Bell and Carylyn K. Bell are husband and wife.
We conduct business through our wholly owned subsidiary, GeniSys
Information Systems, Inc. The name, position, and age of each Director and
executive officer of such subsidiary are as follows:
<TABLE>
<CAPTION>
Name(2) Age Position
<S> <C> <C>
J. Daniel Bell 54 Chairman of the Board,
Chief Executive Officer
Craig Crawford 46 Director, President
Jeffery M. Spencer 40 Director, Senior Vice
President
William M. Bell 34 Director
Ward P. Rivenburg 42 Director, Chief Financial
Officer, Secretary and
Treasurer
</TABLE>
- ---------------------------------
(2) J. Daniel Bell and Carylyn K. Bell are husband and wife. William M.
Bell is the son of J. Daniel Bell.
The following sets forth biographical information with respect to our
Directors and executive officers for the prior five years:
J. Daniel Bell has been Chairman of the Board and Chief Executive
Officer since March 1999and Chairman and Chief Executive Officer of GeniSys
Information Systems, Inc. since inception. Prior to his association with
iGeniSys, Mr. Bell served as Chairman of the Board and Chief Executive Officer
of Industrial Services Technologies, Inc. ("IST"), a Denver-based acquisition
platform company. This company was privately sold to Phillip Services, Inc., a
Canadian-based conglomerate serving the process industries. Over the past ten
years, Mr. Bell has managed or co-managed over twelve acquisitions of various
sizes, including a specialty welding and fabrication company. He is also a
director and officer of Dunn International, Inc. based in Houston, Texas.
Dunn International, Inc. is not involved in the project management area and is
currently in liquidation. Mr. Bell attended Texas A&M University and
graduated from Lamar University with degrees in Economics and Marketing.
Craig Crawford has been Director and President of the subsidiary and
Vice President of the Company since March 1999. Mr. Crawford is responsible
for the day-to-day operations of the Company with a principal focus on the
Company's sales and marketing efforts and customer relations. Prior to
iGeniSys, Mr. Crawford served as Vice President, Western Region, for a
specialty welding and mechanical contracting company. He was the Vice
President, West Region, for Serv-Tech, Inc., and has served in Senior
Management positions from Operations to Finance at Rice University, Brown and
Root, Inc. and Goodwin Dannenbaum Littman and Wingfield, Inc. He attended the
Colorado School of Mines, studying Chemical Engineering, and graduated from
North Carolina State University with a BBA, Business Management.
Jeffery M. Spencer has been Senior Vice President and Director of the
Subsidiary and Vice President of the Company since March 1999 and is
responsible for the development of software tools and delivery of services.
He has developed project management solutions on a wide range of complex
projects, for example: X-33 (Space Plane), JSF (Joint Strike Fighter), Space
Station, NAVAIR (E2-C), Supercollider, Army SDI, Air Force SDI, and Navy MIDS
(Superproject conversion). Prior to GeniSys Information Systems, Mr. Spencer
was the President of Program Management Solutions Incorporated, a consulting
firm specializing the design and customization of Decision Support Systems
utilizing Microsoft Windows-based products, and customized training programs
for related Microsoft Windows applications. Mr. Spencer received a Bachelors
of Science in Production and Operations Management from California State
University, Northridge.
Ward P. Rivenburg joined us as Chief Financial Officer and Director
of the Subsidiary and our Chief Financial Officer in June 1999. Previously
Mr. Rivenburg served as Vice President of Finance for Nationwide Graphics,
Inc., a company involved in the consolidation of the commercial printing
industry. Mr. Rivenburg was the Senior Manager with the accounting firm of
BDO Seidman, LLP in 1998. From 1994 to 1998, Mr. Rivenburg was Finance and
Corporate Accounting Manager for Westlake Chemical Corporation. Prior to
Westlake Chemical, he was with Price Waterhouse for 12 years and was promoted
to Senior Manager. Mr. Rivenburg was with KPMG Peat Marwick for three years
after graduating in 1979 from Augustana College with a BA in Accounting and
Business Administration. He became licensed in 1982 as a Certified Public
Accountant.
Carylyn K. Bell, Director, Secretary and Treasurer since March 1999,
is the wife of J. Daniel Bell, Chairman of the Board and Chief Executive
Officer. In 1985, she founded Corporate Stock Transfer, Inc., a service
company located in Denver, Colorado representing public and private companies
in all aspects of shareholder needs and continues to serve as its chief
executive. From 1988 until 1991, she held the offices of Secretary and
Treasurer of Industrial Services Technologies, Inc., a Denver based
acquisition platform company headed by her husband. She also served as
Secretary for E-Management Corp. from 1987 until 1997.
William M. Bell, Director since 1999, is Vice President of Huttner &
Company, a Houston, Texas based management consulting firm. Prior to working
with Huttner & Company, Mr. Bell worked in the corporate finance consulting
department at Coopers & Lybrand, LLP. Mr. Bell is the son of J. Daniel Bell,
our Chairman of the Board and Chief Executive Officer.
Walter Strycker, Director since 1999, joined the Board of Directors
of iGeniSys Inc. in June 1999. Mr. Strycker serves as the President of Marine
Coastal Corporation, a financial, merger and acquisition, and corporate
business consulting firm. Mr. Strycker served as Chief Executive officer of
Marie Callender Pie Shops, Inc. from March 1991 to 1995. Prior to 1991, Mr.
Strycker was employed in various executive positions including Senior Vice
President Wheelabrator Environmental Systems, Senior Vice President Signal
Energy Systems, President Air Pollution Control Division of Wheelabrator Frye,
and President of Associates Venture Capital Corporation. Also, Mr. Strycker
was a founder and Chief Financial Officer of Decimus Corporation, a joint
venture with the Bank of America involving financial leasing and computer
services. He also spent fifteen years with the IBM Corporation in various
marketing positions as well as product development. Mr. Strycker is a
graduate of the University of California at Berkeley with a degree in Finance.
Henry Fong, Director since 1999, has been the President, Treasurer
and a Director of Equitex, Inc. since its inception in January 1983. Equitex,
formerly an investment company, is now an operating company which has executed
a definitive agreement to merge with a single bank holding company. From 1987
to June 1997, Mr. Fong was Chairman of the Board and Chief Executive Officer
of RDM Sports Group, Inc. and was its President and Treasurer from 1987 to
1996. From July 1996 to October 1997, Mr. Fong was a Director of IntraNet
Solutions, Inc., a publicly held company which provides internet/intranet
solutions to Fortune 1000 companies and was the Chairman of the Board and
Treasurer of its predecessor company, MacGregor Sports and Fitness, Inc., from
February 1991 until the two companies merged in July 1996. From January 1993
to January 20, 1999, Mr. Fong was Chairman of the Board and Chief Executive
Officer of California Pro Sports, Inc., a publicly traded manufacturer and
distributor of in-line skates, hockey equipment and related accessories. From
1959 to 1982 Mr. Fong served in various accounting, finance and budgeting
positions with the Department of the Air Force. During the period from 1972
to 1981, he was assigned to senior supervisory positions at the Department of
the Air Force headquarters in the Pentagon. In 1978 he was selected to
participate in the Federal Executive Development Program, and in 1981 he was
appointed to the Senior Executive Service. In 1970 and 1971, he attended the
Woodrow Wilson School, Princeton University and was a Princeton Fellow in
Public Affairs. Mr. Fong received the Air Force Meritorious Civilian Service
Award in 1982. Mr. Fong is a certified public accountant.
Each director is elected to serve for a term of one year until a
successor is duly elected and qualified.
Our executive officers are elected annually at the first meeting of
our Board of Directors held after each annual meeting of stockholders. Each
executive officer will hold office until his successor is duly elected and
qualified, until his resignation or until he shall be removed in the manner
provided by our By-Laws.
Currently, we do not have standing Audit, Compensation or Nominating
Committees of the Board of Directors. During the first six months of 2000 we
do plan to form an Audit Committee. No member of the Audit Committee will
receive any additional compensation for his service as a member of that
Committee and members of this committee will be primarily comprised of non-
officer directors. The Audit Committee will be responsible for providing
assurance that financial disclosures made by management reasonably portray our
financial condition, results of operations, plan and long-term commitments.
To accomplish this, the Audit Committee will oversee the external audit
coverage, including the annual nomination of the independent public
accountants, review accounting policies and policy decisions, review the
financial statements, including interim financial statements and annual
financial statements, together with auditor's opinions, inquire about the
existence and substance of any significant accounting accruals, reserves or
estimates made by management, review with management the Management's
Discussion and Analysis section of the Annual Report, review the letter of
management representations given to the independent public accountants, meet
privately with the independent public accountants to discuss all pertinent
matters, and report regularly to the Board of Directors regarding its
activities.
We also plan to form a Compensation Committee during fiscal 2000. No
member of the Compensation Committee will receive any additional compensation
for his service as a member of that Committee. The Compensation Committee
will be responsible for reviewing pertinent data and making recommendations
with respect to compensation standards for our executive officers, including
the President and Chief Executive Officer, establishing guidelines and making
recommendations for the implementation of management incentive compensation
plans, reviewing the performance of the President and CEO, establishing
guidelines and standards for the grant of incentive stock options to key
employees under our Equity Incentive Plan, and reporting regularly to our
Board of Directors with respect to its recommendations.
Except for J. Daniel Bell's relationship to Carylyn K. Bell, his
wife, and William M. Bell, his son, there are no family relationships among
Directors, nor any arrangements or understandings between any Director and any
other person pursuant to which any Director was elected as such. Our Class B
Common Stock, which can only be issued to J. Daniel Bell, gives Mr. Bell the
right to elect a majority of the Board. The present term of office of each
Director will expire at the next annual meeting of stockholders.
Director compensation
During the fiscal year ended March 31, 1999, outside Directors
received no cash compensation or other remuneration for their service on our
Board of Directors, however they were reimbursed their expenses associated
with attendance at meetings or otherwise incurred in connection with the
discharge of their duties.
The Board of Directors has adopted a formula plan pursuant to which
outside Directors are entitled to receive, under our 1999 Equity Incentive
Plan, an initial grant of non-qualified stock options exercisable to purchase
30,000 shares of common stock and, for each additional year of service after
the first year, additional non-qualified stock options exercisable to purchase
10,000 shares of our common stock. All non-qualified stock options issuable
to outside Directors under the Plan have an exercise price equal to the fair
market value of our common stock on the date of grant, and are exercisable for
a period of five years from the date of grant.
Directors who are also our executive officers receive no additional
compensation for their services as Directors.
Executive compensation
The following table and discussion set forth information with respect
to all compensation earned by or paid to our Chief Executive Officer ("CEO"),
and our most highly compensated executive officers other than the CEO, for all
services rendered in all capacities to us and our subsidiaries for each of our
last two fiscal years ended March 31, 1999 and 1998 (since inception).
However, no disclosure has been made for any executive officer, other than the
CEO, whose total annual salary and bonus does not exceed $100,000.
<PAGE>
<TABLE>
TABLE 1
SUMMARY COMPENSATION TABLE
<CAPTION>
Long
Term Compensation ------
- ----------------------------
Annual Compensation(1) Awards
Payouts
-------------------------- -------------------
- -- -------
Other All
Annual RestrictedOther
Name and Compen- StockLTIP
Compen-
Principal Year Salary Bonus sation Award(s)
Options/ Payouts sation
Position Year ($) ($) ($)(2) ($)SARs($)($)
- --------------- ------- -------- ----- --------- ----------------
- -- ------- ------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Daniel J. Bell, 1999 33,500 -0- -0- -0- -0-
-0- -0-
Chairman 1998 32,400 -0- -0- -0- -0-
-0- -0-
Craig Crawford, Vice 1999 116,417 10,000 -0- -0- 470,000
-0- -0-
President 1998 92,436 3,000 -0- -0- -0-
-0- -0-
Jeff Spencer, Vice 1999 147,561 16,000 -0- 29,000 570,000
-0- -0-
President 1998 129,619 10,000 -0- -0- -0-
-0- -0-
Ward Rivenburg(1)
- ------------------------------
</TABLE>
(1) Mr. Rivenburg joined us in June 1999 at a base compensation level of
$110,000. He receives performance bonuses at the discretion of the Chief
Executive Officer and received 250,000 options to purchase our common
stock.
<PAGE>
<PAGE>
Employment agreements
In June 1999, we entered into oral employment contracts with our Chief
Executive Officer, President, Senior Vice President of Sales, and a written
agreement with our Chief Financial Officer. These arrangements require annual
executive compensation totalling $418,000, and payment of performance bonuses
and issuance of stock options at the sole discretion of the Board of
Directors. This compensation level is consistent with the amounts paid during
the year ended March 31, 1999. These agreements are for a one-year period and
automatically renew, unless terminated by either party with 60-day notice.
The annual compensation is as follows:
J. Daniel Bell $ 36,000
Craig Crawford $116,000
Jeffery M. Spencer $156,000
Ward P. Rivenburg $110,000
We have not obtained any key man life insurance on any of our executive
officers.
Equity Incentive Plan
On May 17, 1999 we adopted an Equity Incentive Plan. Pursuant to the
Plan, stock options granted to eligible participants may take the form of
incentive stock options or ISOs under Section 422 of the Internal Revenue Code
of 1986, as amended, or options which do not qualify as ISOs, known as non-
qualified stock options or NQSOs. As required by Section 422 of the Code, the
aggregate fair market value of our common stock with respect to our ISOs
granted to an employee exercisable for the first time in any calendar year may
not exceed $100,000. The foregoing limitation does not apply to NQSOs. The
exercise price of an ISO may not be less than 100% of the fair market value of
the shares of our common stock on the date of grant. The exercise price of an
NQSO may be set by the Plan administrator. An option is not transferable,
except by will or the laws of descent and distribution. If the employment of
an optionee terminates for any reason (other than for cause, or by reason of
death, disability, or retirement), the optionee may exercise his options
within a ninety day period following such termination to the extent he was
entitled to exercise such options at the date of termination. Either our
Board of Directors (provided that a majority of directors are "disinterested")
can administer the Plan, or our Board of Directors may designate a committee
comprised of directors meeting certain requirements to administer the Plan.
The Administrator will decide when and to whom to make grants, the number of
shares to be covered by the grants, the vesting schedule, the type of award
and the terms and provisions relating to the exercise of the awards. An
aggregate of 2,500,000 shares of our common stock is reserved for issuance
under the Plan.
At February 15, 2000, we had granted a total of 1,780,000 incentive stock
options under the Plan exercisable at $.40 per share, and 80,000 non-qualified
stock options which have been issued to certain members of our outside Board
of Directors and optionholders exercisable at $.40 per share. All options
have been issued with exercise prices at or above market value on the date of
issuance.
The following tables set forth certain information concerning the
granting and exercise of incentive stock options during the last completed
fiscal year by each of the named executive officers.
<PAGE>
<PAGE>
<TABLE>
TABLE 2
Option/SAR Grants for Last
Fiscal Year - Individual Grants
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---------------------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
J. Daniel Bell -0- -0- -0- -0-
Craig Crawford 470,000 26% $.40 2009
Jeff Spencer 570,000 32% $.40 2009
Ward Rivenburg(1) 250,000 14% $.40 2009
- ---------------------
</TABLE>
(1) Mr. Rivenburg joined us in June 1999 and at this time his options were
granted.
The options granted to these officers vest in these officers over the
next five years. None of the above options have been exercised by the
officers.
<PAGE>
<TABLE>
TABLE 3
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
----------------------------------------------------
<CAPTION>
Value of
Number of
Unexercised
UnexercisedIn-
the-Money
Options/SARs
Options/SARs
at FY-End (#)at
FY-End ($) (1)
Shares Acquired Value Realized Exercisable
Exercisable/
Name on Exercise (#) ($) (Unexercisable)
Unexercisable
- ---------------- --------------- -------------- ------------------
- --------------
<S> <C> <C> <C> <C>
J. Daniel Bell -0- -0- -0--0-
Craig Crawford -0- -0- 470,000-0-
Jeff Spencer -0- -0- 570,000-0-
- ------------------------------
</TABLE>
(1) Value Realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market
value of our common stock on the date the options are exercised.
(2) The value of unexercised options is determined by calculating the
difference between the fair market value of the securities underlying the
options at fiscal year end and the exercise price of the options. The
fair market value of the securities underlying the options are based upon
the determination of the Board of Directors in light of the arms-length
transactions in the same securities.
<PAGE>
Indemnification and Limitation on Liability of Directors
Our Articles of Incorporation provide that we shall indemnify, to the
fullest extent permitted by Colorado law, any director, officer, employee or
agent of the corporation made or threatened to be made a party to a
proceeding, by reason of the former or present official of the person, against
judgments, penalties, fines, settlements and reasonable expenses incurred by
the person in connection with the proceeding if certain standards are met. At
present, there is no pending litigation or proceeding involving any of our
directors, officers, employees or agents where indemnification will be
required or permitted. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 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 Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Our Articles of Incorporation limit the liability of our directors to the
fullest extent permitted by the Colorado Business Corporation Act.
Specifically, our directors will not be personally liable for monetary damages
for breach of fiduciary duty as directors, except for (i) any breach of the
duty of loyalty to us or our stockholders, (ii) acts or omissions not in good
faith or that involved intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions, (iv)
violations of certain laws, or (v) any transaction from which the director
derives an improper personal benefit. Liability under federal securities law
is not limited by the Articles.
<PAGE>
<PAGE>
CERTAIN TRANSACTIONS
Founders and promoters of Zion Enterprises, Inc.
When we first formed the Company, we issued 895,000 shares of Common
Stock to our original founders and promoters in exchange for their services.
The following sets forth the names of the company's promoters and the amount
of shares received by each for their services:
<TABLE>
<CAPTION>
Amount
Name of Shares
------------------------ ----------------
<S> <C>
Earnest Mathis, Jr.(1) 298,334
Gary J. McAdam(2) 298,333
Gary A. Agro 298,333
</TABLE>
- ---------------
(1) Shares were issued in the name of Mathis Family Partners, Ltd.
(2) Shares were issued in the name of GM/CM Family Partners, Ltd.
In April and May 1996, we distributed an additional 81,250 shares to
approximately 240 persons in order to create a large shareholder base. We
received no cash consideration from the persons who received these shares.
We have been informed by the Commission that it is their view that none
of the 976,250 shares of our common stock which were issued to the original
shareholders of Zion Enterprises, Inc. may be resold without their being
registered under the Securities Act. As a result, we have agreed to register
for resale all of these shares in the concurrent offering being undertaken by
the Selling Shareholders.
Founders and promoters of GeniSys Information Systems, Inc.
When GeniSys Information Systems, Inc. ("GISI") was formed and organized
in 1997, it issued shares of its common stock to the following persons for the
consideration set forth below:
<TABLE>
<CAPTION>
Number of
Name Class Shares Consideration
---- ----- ---------- ---------------
<S> <C> <C> <C>
Carolyn K. Bell Class A 1,660,000 $25,000; conversion
of $75,000 of debt
plus accrued
interest
J. Daniel Bell Class B 10,000 $100
</TABLE>
In March 1999 when we acquired GISI, we issued to Mrs. Bell a total of
6,682,571 shares of our common stock in exchange for her shares of Class A
Common Stock of GISI. In that exchange, Mr. Bell received 10,000 shares of
our Class B Common Stock in exchange for 10,000 shares of Class B Common Stock
of GISI.
Bridge loans and conversion
In anticipation of completing our acquisition of GeniSys Information
Systems, Inc., we arranged for a total of $580,000 of bridge loans in February
1999 which GeniSys Information Systems, Inc. used for working capital. The
persons who made the bridge loans then agreed to convert all of the loans into
1,472,083 shares of Common Stock at the same time that the acquisition of
GeniSys Information Systems, Inc. was completed. This represented conversion
of the bridge loans into Common Stock at a value of $.394 per share. The
bridge loans were held by 17 persons, including Mr. Fong, one of our
directors, who converted $200,000 in loans.
Acquisition of GeniSys Information Systems, Inc.
In March 1999, we completed the acquisition of 100% of the outstanding
shares of Common Stock of GeniSys Information Systems, Inc. in exchange for
7,516,740 shares of Common Stock. This resulted in the persons who control
GeniSys Information Systems, Inc., Mr. and Mrs. Bell, acquiring control of the
Company as well.
Transactions with principal shareholder
Carolyn K. Bell is one of our founders and promoters and our largest
principal shareholder. During the past two years, we have had a number of
transactions with Mrs. Bell which can be summarized as follows:
* Mrs. Bell provided working capital through a factoring line of
credit and revolving line of credit which reached a maximum
principal amount of $400,000, until repaid in May of 1999 when we
obtained a credit arrangement with a commercial financing source.
* Mrs. Bell has provided numerous loans to the Company which, as of
the date of this Prospectus, total $137,500.
* Mrs. Bell arranged for a $100,000 loan for us at a financial
institution. We owe Mrs. Bell $31,530 on this loan as of December
31, 1999 and the loan is secured by a $100,000 certificate of
deposit owned by Mrs. Bell.
* Mrs. Bell is the principal owner of our transfer agent, Corporate
Stock Transfer, Inc.
* We use office space provided by Corporate Stock Transfer, Inc. in
its Denver, Colorado offices.
* We pay $3,000 per month for financial advisory services to McCandish
Partners, a company owned by Mrs. Bell.
While we have not formally adopted any policy controlling transactions
with our affiliates and principal shareholders, in each instance we believe
that the terms of these arrangements are commercially reasonable. Mrs. Bell
has made working capital available to us under circumstances where we were
unable to obtain it from other sources.
Transactions by certain affiliates
In January 2000, Mr. Craig Crawford, President and Director of our
subsidiary, sold to three of our other employees 70,000 shares of Common Stock
which he owned, which sales were at a price of $.40 per share. These
transactions will result in a one-time, non-cash charge against our income in
January because they are viewed as being essentially compensatory in nature
and the shares were sold at less than fair market value.
In February 2000, a member of the our Board of Directors loaned to us
$100,000. This loan was made to meet our operating cash needs to purchase
some past-due invoices from our financial institution. This loan is secured
by the purchased invoices and a second lien on our software products. The
loan carries an interest rate of 15% and is payable in May 2000.
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the
stock ownership of each person known by us to be the beneficial owner of five
(5%) percent or more of our common stock, all of our executive officers and
directors individually and all of our directors and executive officers as a
group. Each person has sole voting and investment power with respect to the
shares shown, except as noted.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class(1)(2)
of Beneficial of Beneficial Ownership Before After
Owner Offering(2)Offering(2)(4)
- ----------------- ----------------------- ----------- --------------
<S> <C> <C> <C>
J. Daniel Bell(5)(6) 42,191 .4% .3%
2750 East Cedar Avenue
Denver, CO 80209
Carylyn K. Bell(5)(7) 6,682,571 61.2% 53.8%
2750 East Cedar Avenue
Denver, CO 80209
Jeffery Spencer(8) 1,176,695 10.8% 9.5%
Craig Crawford(9) 924,000 8.5% 8.9%
Ward Rivenburg(10) 250,000 2.3% 2.0%
Walter Strycker(11) 30,000 .3% .2%
Henry Fong(12)(14) 654,008 5.9% .7%
William Maury Bell(3)(14) 88,071 .8% .4%
Gulfstream Financial 558,375 5.1% .4%
Partners, LLC(13)(14)
All Officers and Directors 9,759,465 83.1% 74.6%
as a Group (8 persons)
- -----------------------
</TABLE>
(1) Under SEC Rules, we include in the number of shares owned by each person
the number of shares issuable under outstanding options if those options
are exercisable within 60 days of the date of this Prospectus. We
calculate the ownership of each person who owns exercisable options by
adding (i) the number of exercisable options for that person only to (ii)
the number of total shares outstanding and dividing that result into
(iii) the total number of shares and exercisable options owned by that
person.
(2) Does not reflect voting percent. Mr. Bell's 10,000 shares of Class B
Common Stock entitle him to elect a majority of our directors.
(3) Unless otherwise noted, the address of each person is 654 North Belt
East, Suite 310, Houston, Texas 77060.
(4) Does not give effect to the exercise of any outstanding options or
warrant. Assumes all 1,500,000 shares of common stock are sold in the
Offering.
(5) J. Daniel Bell is the husband of Carylyn K. Bell and the father of
William Maury Bell.
(6) Consists of 10,000 shares of Class B Common Stock and 32,191 shares of
Class A Common Stock. Mr. Bell's 10,000 shares of Class B Common Stock
entitle him to elect a majority of our directors. On matters other than
the election of directors, the shares of Class B Common Stock are counted
equally with shares of Class A Common Stock.
(7) Includes 500,000 shares of Common Stock held by Mrs. Bell as custodian of
Caitlyn Ann Bell, Christopher Ryan Bell, Henry Daniel Bell, Ian Gregory
Bell and Kathleen Ann Bell under the Colorado Uniform Gifts to Minors
Act. Also includes 3,032,221 shares held of record by McCandish, LLC, a
limited liability company of which Mrs. Bell is a manager and controlling
person. In November 1999, Mr. Crawford exercised options from Mrs. Bell
and purchased 350,000 shares at $.01 per share. In January 2000, Mr.
Crawford sold 171,000 of these shares in three separate, private sales
for total consideration of $78,000. Further in January 2000, Mr.
Crawford gifted 41,500 shares to persons involved with the formation of
GeniSys Information Systems, Inc.
(8) Includes incentive stock options granted under the Plan exercisable to
purchase, in the aggregate, 570,000 shares of common stock at an exercise
price of $.40 per share, subject to future vesting.
(9) Includes options granted by Mrs. Bell to Mr. Crawford exercisable to
purchase from shares of common stock beneficially owned by Mrs. Bell
350,000 shares of common stock at a price of $.001 per share and 250,000
shares of common stock at a price of $.10 per share. Also includes
incentive stock options granted under the Plan exercisable to purchase,
in the aggregate, 470,000 shares of common stock at an exercise price of
$.40 per share, subject to future vesting.
(10) Consists of incentive stock options granted under the Plan exercisable to
purchase, in the aggregate, 250,000 shares of common stock at an exercise
price of $.40 per share, subject to future vesting.
(11) Consists of non-qualified stock options granted under the Plan
exercisable to purchase, in the aggregate, 30,000 shares of common stock
at an exercise price of $.40 per share.
(12) Includes non-qualified stock options granted under the Plan exercisable
to purchase, in the aggregate, 30,000 shares of common stock at an
exercise price of $.40 per share and warrants to purchase 5,967 shares.
Includes the 558,375 shares of common stock held of record by Gulfstream
Financial Partners, LLC, of which Mr. Fong would be deemed a beneficial
owner by virtue of his power to vote and dispose of such shares.
(13) Gulfstream Financial Partners, LLC is a Colorado Limited Liability
Company whose members include Henry Fong, a member of the Board of
Directors. The members have the authority by majority vote to make
decisions with respect to the voting or disposition of those shares owned
by us.
(14) In the Concurrent Offering being undertaken by certain selling
shareholders, Henry Fong, William Maury Bell and Gulfstream Financial
Partners, LLC are each offering shares for sale on a delayed and
continuous basis. The following table sets forth information related to
their share ownership giving effect to the Selling Shareholder Offering:
<TABLE>
<CAPTION>
Shares Shares Beneficially
Name Offered Owned After Offering Percent
- ---------- ------- --------------------- -------
<S> <C> <C> <C>
Henry Fong 59,666 35,967 .3%
William Maury Bell 38,071 53,807 .4%
Gulfstream Financial
Partners, LLC 507,614 50,761 .4%
</TABLE>
<PAGE>
<PAGE>
THE COMPANY OFFERING
We are offering on a best efforts basis up to 1,500,000 shares of our
common stock at an offering price of $1.50 per share. The offering price of
the common stock being offered hereby was arbitrarily determined by us and is
not necessarily related to our assets, book value or financial condition. In
determining the offering price and the number of shares of common stock to be
offered, we considered such factors as our financial condition, our net
tangible book value, limited operating history and general condition of the
securities market. Accordingly, the offering price of the common stock may
not indicate the actual value of the Company.
We are offering the shares of Common Stock to the public through our
chief executive officers and will rely primarily on the efforts of J. Daniel
Bell, our President and CEO and Henry Fong, a director. No commissions, fees
or other compensation will be paid to officers or directors in connection with
the offering. We may retain the services of selling agents who are members of
the National Association of Securities Dealers to assist us. On any sales
made by the selling agents, a commission of up to ten percent (10%) may be
paid. To date there exists no arrangements or commitments to retain any
selling agent.
We will offer the shares to the public beginning on the date of this
Prospectus and ending 90 days from the date of this Prospectus, unless all of
the shares are sold sooner. Investors in the Offering will be asked to sign a
subscription agreement at the time they pay for their shares. We have no
arrangements to escrow or impound any of the proceeds from the sale of shares,
and all proceeds will be immediately deposited into our general operating
account and used for working capital. We intend to deliver to investors
certificates for their shares within 30 days of accepting their subscription
agreements.
There currently exists no public trading market for our Common Stock, and
we cannot assure you that such a market will develop in the future. In the
absence of an active public trading market, an investor may not be able to
liquidate his investment without considerable delay, if at all. If a market
does develop, the price for our securities may be highly volatile and may bear
no relationship to our actual financial condition or results of operation.
Our securities may be quoted on the OTC Electronic Bulletin Board or in
the "pink sheets" maintained by the National Quotations Bureau, Inc. which
reports quotations by brokers or dealers making a market in particular
securities. We have no agreement with any broker or dealer to act as a
marketmaker for our securities and there is no assurance that we will be
successful in obtaining any marketmakers. The lack of a marketmaker for our
securities could adversely influence the market for and price of our
securities, as well as your ability to dispose of, or to obtain accurate
quotations as to the price of, our securities.
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
We are authorized to issue up to 100,010,000 shares of $.001 par value
common stock and 50,000,000 shares of $.01 par value preferred stock. As of
February 14, 2000, 10,919,384 shares of Class A Common Stock, 10,000 shares of
Class B Common Stock and no shares of preferred stock were issued and
outstanding, and there were 281 stockholders of record.
Common Stock
Our authorized common stock consists of 100,000,000 shares of Class A
Common Stock and 10,000 shares of Class B Common Stock. The shares of Class A
Common Stock and Class B Common Stock are identical with respect to the
relative rights and preferences of holders of such shares with respect to
dividends, payment on liquidation, lack of cumulative voting and preemptive
rights. However, the Class B Common Stock may only be issued to J. Daniel
Bell, our Chairman and CEO, or an entity controlled by Mr. Bell. The holders
of Class B Common Stock voting as a separate class have the right to elect a
majority of the members of our Board of Directors. All issued and outstanding
shares of Class B Common Stock automatically convert into an equal number of
Class A Common Stock if and when transferred to any person other than J.
Daniel Bell.
Each holder of common stock is entitled to one vote for each share held
of record. There is no right to cumulative voting of shares for the election
of directors. The shares of Class A Common Stock are not entitled to pre-
emptive rights and are not subject to redemption or assessment. Each share of
Class A Common Stock is entitled to share ratably in distributions to
stockholders and to receive ratably such dividends as may be declared by our
Board of Directors out of funds legally available therefor. Upon our
liquidation, dissolution or winding up, the holders of Class A Common Stock
are entitled to receive, pro-rata, our assets which are legally available for
distribution to stockholders. The issued and outstanding shares of common
stock are validly issued, fully paid and non-assessable.
Preferred Stock
We are authorized to issue up to 50,000,000 shares of $.01 par value
preferred stock. Our preferred stock can be issued in one or more series as
may be determined from time-to-time by our Board of Directors. In
establishing a series our Board of Directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike
in every particular. Our Board of Directors has the authority, without
stockholder approval, to fix the rights, preferences, privileges and
restrictions of any series of preferred stock including, without limitation:
(1) the rate of distribution, (2) the price at and the terms and conditions on
which shares shall be redeemed, (3) the amount payable upon shares for
distributions of any kind, (4) sinking fund provisions for the redemption of
shares, and (5) the terms and conditions on which shares may be converted if
the shares of any series are issued with the privilege of conversion, and (6)
voting rights except as limited by law.
Although we currently do not have any plans to issue shares of preferred
stock or to designate any series of preferred stock, there can be no assurance
that we will not do so in the future. As a result, we could authorize the
issuance of a series of preferred stock which would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividend coupons
before dividends would be declared to common stockholders, and the right to
the redemption of such shares, together with a premium, prior to the
redemption to common stock. Our common stockholders have no redemption
rights. In addition, our Board could issue large blocks of voting stock to
fend off unwanted tender offers or hostile takeovers without further
stockholder approval.
Warrants
We have issued to certain investors a total of 147,205 Class A Warrants,
each exercisable for one year to purchase a share of our common stock at a
price of $1.00 per share. The Class A Warrants expire on October 31, 2000.
We have the ability to repurchase the warrants if we have registered the
exercise of the warrants with the Commission and our public trading price has
been more than $1.50 per share for at least ten consecutive trading days. In
such event, holders of the warrant will have a 30 day notice period in which
to exercise the warrants, and any warrants not exercised will be redeemed by
us at a redemption price of $.01 per share.
Transfer Agent, Warrant Agent and Registrar
The transfer agent and registrar for our common stock is Corporate Stock
Transfer, Inc., Denver, Colorado. Ms. Carylyn Bell, one of our directors,
executive officers and principal shareholders, is the controlling person of
the transfer agent.
Reports to Stockholders
We intend to furnish annual reports to stockholders which will include
audited financial statements reported on by our independent certified public
accountants. In addition, we will issue unaudited quarterly or other interim
reports to stockholders as it deems appropriate.
LEGAL MATTERS
The validity of the issuance of the shares we are offering will be passed
upon for us by Neuman, Drennen & Stone, LLC, Boulder, Colorado.
EXPERTS
The audited consolidated financial statements of iGeniSys, Inc. and
subsidiaries included herein and elsewhere in the Registration Statement have
been audited by Gelfond Hochstadt Pangburn, P.C., independent certified public
accountants, for the periods and to the extent set forth in their reports
appearing herein and elsewhere in the Registration Statement. Such financial
statements have been so included in reliance upon the reports of such firm
given upon their authority as experts in auditing and accounting.
AVAILABLE INFORMATION
You may read and copy any document we file at the Commission's Public
Reference Rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Rooms. You can also obtain copies of our
Commission filings by going to the Commission's website at http://www.sec.gov.
We have filed with the Commission a Registration Statement on Form SB-2
to register the shares of our common stock and common stock warrants to be
sold by the Selling Securityholders and issued pursuant to the exercise of the
warrants. This Prospectus is part of that Registration Statement and, as
permitted by the Commission's rules, does not contain all of the information
set forth in the Registration Statement. For further information about us or
our common stock, you may refer to the Registration Statement and to the
exhibits filed as part of the Registration Statement.
We are not currently subject to the informational filing requirements of
the Exchange Act. However, as a result of this Offering, we will become
subject to these requirements and will file periodic reports, including annual
reports containing audited financial statements, reports containing unaudited
interim financial statements, quarterly and special reports, proxy statements
and other information with the Commission. We will provide without charge to
each person who receives this Prospectus copies of our reports and other
information which we file with the Commission. Your request for this
information should be directed to our Chief Financial Officer, Ward Rivenburg,
at our corporate office in Houston, Texas. You can also review this
information at the public reference rooms of the Commission and on the
Commission's website as described above.
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
This index relates to the consolidated financial statements set forth in
this Prospectus of iGeniSys, Inc.
Independent Auditors' Report of Gelfond Hochstadt Pangburn, P.C. F-2
Consolidated Balance Sheets as of March 31, 1999 and 1998 and
as of December 31, 1999 (unaudited) F-3
Consolidated Statements of Operations for the year ended
March 31, 1999, for the period May 1, 19997 (inception)
to March 31, 1998, and for the nine months ended December
31, 1999 (unaudited) and 1998 F-5
Consolidated Statements of Shareholders' Equity for the year
ended March 31, 1999 and for the period from May 1, 1997
(inception) to March 31, 1998 and the nine month period
ending December 31, 1999 (unaudited) F-6
Consolidated Statements of Cash Flows for the year ended
March 31, 1999, for the period May 1, 1997 (inception)
to March 31, 1998, and for the nine months ended December
31, 1999 (unaudited) and 1998 F-7
Notes to Consolidated Financial Statements F-9
<PAGE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
iGeniSys, Inc.
We have audited the accompanying consolidated balance sheets of iGeniSys, Inc.
and subsidiary as of March 31, 1999 and 1998, and the related consolidated
statements of operations, shareholders' equity, and cash flows for the year
ended March 31, 1999 and the period from May 1, 1997 (inception) to March 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 iGeniSys,
Inc. and subsidiary as of March 31, 1999 and 1998, and the results of their
operations and their cash flows for the year ended March 31, 1999 and the
period from May 1, 1997 (inception) to March 31, 1998, in conformity with
generally accepted accounting principles.
As discussed in Note 9 to the financial statements, subsequent to the issuance
of the Company's March 31, 1999 financial statements, management of the
Company determined that a portion of previously capitalized software costs
should have been expensed. As a result, development costs as shown on the
Company's March 31, 1999 balance sheet have been reduced by $250,000, and
selling, general and administrative expenses have been increased by a similar
amount increasing the net loss for the year ended March 31, 1999 to $549,243.
GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
June 25, 1999,
February 16, 2000 as to Note 9
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
------------------------
1999 1998 1999
------------ ---------- ------------
(unaudited)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Accounts receivable, net of
allowance for doubtful
accounts of $79,500, $50,000,
and $104,000 as of March 31,
1999 and 1998 and December
31, 1999, respectively $ 933,134 $ 889,091 $465,260
Other receivables 12,055 33,649 23,192
Contracts in process 125,611 45,723 8,031
Prepaid expenses and other 36,689 47,853 63,995
------------ --------------- -------
Total current assets 1,107,489 1,016,316 560,478
EQUIPMENT, net (Note 3) 147,359 94,078 147,693
INTANGIBLES AND OTHER ASSETS:
Development costs, net of
accumulated amortization of
$10,366 at March 31, 1999 and
$56,464 at December 31, 1999
(Note 9) 299,819 46,521 341,155
Royalties (Note 2) 81,000 11,000 55,000
Deposits and other 9,154 3,784 61,093
------------- ---------- -----------
$ 1,644,821 $1,171,699 $1,165,419
============= =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES:
Bank overdraft $ 16,632 $ 23,937 $ 59,360
Accounts payable, trade 508,954 402,378 551,231
Revolving line of credit
(Notes 4 and 10) 56,039 - 324,190
Revolving line of credit and
notes payable to shareholder
(Note 2) 394,409 144,000 96,531
Current portion of obligations
under capital leases (Note 5) 30,790 23,903 31,653
Accrued payroll, taxes and
withholdings 257,396 84,159 129,430
Due to affiliate (Note 2) 161,235 363,396 126,304
Deferred contract revenue - - 45,000
Management fees payable,
affiliate (Note 2) 42,000 6,000 69,000
----------- ---------- -----------
Total current liabilities 1,467,455 1,047,773 1,432,699
LONG-TERM DEBT:
Convertible note payable,
shareholder (Note 2) - 75,000 -
Long-term portion of obligations
under capital leases (Note 5) 23,310 43,902 -
----------- ---------- -----------
Total liabilities 1,490,765 1,166,675 1,432,699
COMMITMENTS (Note 6 and 10)
SHAREHOLDERS' EQUITY (Notes 7 and 10):
Preferred stock, $.01 par;
authorized 50,000,000 shares;
no issued and outstanding shares
Common stock, $.001 par value;
authorized 100,010,000 shares:
Class A; issued and outstanding
9,955,023 and 4,634,351 shares
as of March 31, 1999 and 1998,
respectively, 10,915,027 at
December 31, 1999 9,954 4,634 10,915
Class B; issued and outstanding
10,000 shares (1999 and 1998) 10 10 10
Additional paid-in capital 713,411 20,456 1,184,250
Accumulated deficit (569,319) (20,076) (1,462,455)
---------- ---------- -----------
154,056 5,024 (267,280)
---------- ---------- -----------
$ 1,644,821 $1,171,699 $ 1,165,419
============ =========== ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period For the nine
For the year May 1, 1997 months ended
Ended (inception), to December 31
------------------------
March 31, 1999March 31, 1998 1999 1998
-------------- ------------- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 3,049,128 $1,882,445 $ 2,032,767 $1,868,671
------------- ----------- ----------- ------------
OPERATING EXPENSES:
Contract costs 1,478,633 1,036,945 1,297,519 975,912
Selling, general and
administrative:
Affiliates (Note 2) 36,000 6,000 27,000 27,000
Other 1,943,673 827,426 1,431,318 1,345,445
Depreciation and
amortization 57,756 6,253 90,115 32,841
----------- ----------- ------------ ------------
3,516,062 1,876,624 2,845,952 2,381,198
----------- ----------- ------------ ------------
OPERATING (LOSS) INCOME (466,934) 5,821 (813,185) (512,527)
INTEREST EXPENSE
Shareholder (Note 2) 29,823 17,218 10,204 33,458
Other 52,486 8,679 69,747 12,717
------------- ---------- ----------- -----------
82,309 25,897 79,951 46,175
------------- ---------- ----------- ------------
NET LOSS $ (549,243) $ (20,076) $ (893,136) $(558,702)
============ ========== ============ =============
BASIC AND DILUTED LOSS
PER SHARE $ (0.09) $ (0.00) $ (0.09) $ (0.12)
============= ========== ============ =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,165,715 4,602,510 10,295,938 4,602,510
============= ============ ============ =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 1999 AND FOR THE PERIOD
FROM MAY 1, 1997 (INCEPTION) TO MARCH 31, 1998
AND THE NINE MONTH PERIOD ENDING DECEMBER 31. 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Additional Retained Total
Class A Class B Paid-in Earnings Shareholders'
Common Stock Common Stock Capital (Deficit) Equity
---------------- --------------------- ----------- ----------- ------------
Shares Amount Shares Amount
------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
May 1, 1997 - - - - - - -
Common stock
issued for
cash 4,634,351 $4,634 10,000 $ 10 $ 20,456 $25,100
Net income - - - - - $(20,076) (20,076)
----------- ------- -------- ------ --------- ---------- -----------
BALANCES,
March 31,
1998 4,634,351 4,634 10,000 10 20,456 (20,076) 5,024
Conversion of
notes and
interest
payable 2,129,711 2,130 79,605 81,735
Common stock
issued for
services 742,678 742 34,758 35,500
Acquisition
of the
assets
of Zion
Enterprise,
Inc. (Note 1) 976,200 976 64 1,040
Common stock
issued for
cash 1,472,083 1,472 578,528 580,000
Net loss - - - - - (549,243) (549,243)
---------- ------- ------- ------- ------------ --------
BALANCES,
March 31,
1999 9,955,023 9,954 10,000 10 713,411 (569,319) 154,056
Common stock
issued for
cash,
unaudited 960,004 961 - - 470,839 - 471,800
Net loss,
unaudited - - - - - (893,136) (893,136)
----------- ------- -------- ------- ---------- ----------- -----------
BALANCES,
December 31,
1999,
unaudited 10,915,027 $10,915 10,000 $ 10 $1,184,250 $(1,462,455) $ 267,280
============ ========= ========= ======== ============ ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period For the nine
For the year May 1, 1997 months ended
Ended (inception), to December 31,
-------------------------
March 31, 1999 March 31, 1998 1999 1998
-------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
(unaudited)
Net loss $ (549,243) $ (20,076) $(893,136) $(558,702)
Adjustments to reconcile
net loss to net cash
used in operating
activities -
Provision for doubtful
accounts 79,500 50,000 24,500 -
Depreciation and
amortization 57,755 6,252 90,115 32,841
Provision for loss
on royalties - - 26,000 -
Issuance of common stock
as compensation 35,500 - - -
(Increase) decrease in -
Accounts and other
receivables (123,543) (939,091) 443,374 425,495
Contracts in process (79,888) (45,723) 117,580 (106,832)
Prepaid expenses and
other 32,758 (81,502) (38,443) (36,545)
Increase (decrease) in -
Accounts payable 113,311 402,378 42,280 66,336
Accrued payroll, taxes
and withholdings 173,237 84,159 (127,966) 294,994
Due to affiliate (312,482) 363,396 (35,049) (413,396)
Deferred revenue - - 45,000 -
Management fees payable,
affiliate 36,000 6,000 27,000 6,000
-------- ---------- -------- -------
Net cash used in
operating activities (537,095) (174,207) (278,745) (289,809)
------------- ------------ ----------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property
and equipment (88,013) (29,434) (45,334) (75,902)
Development costs (263,665) (46,521) (86,336) (57,625)
Purchase of royalties (70,000) (11,000) - (70,000)
Deposits and other assets (5,369) (3,784) (51,939) (5,370)
--------- --------------- ----------- --------
Net cash used in
operating activities (427,047) (90,739) (183,609) (208,897)
------------- ------------ ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of)
bank overdraft (7,305) 23,937 42,728 (23,937)
Proceeds from notes
payable to shareholder 558,355 225,000 50,000 -
(Repayments of) proceeds
from revolving line
of credit to
shareholder (307,946) (6,000) (347,878) (8,257)
Proceeds from line of
credit, net 166,360 - 268,151 589,882
Repayments of obligations
under capital leases (26,362) (3,091) (22,447) (13,645)
Proceeds from issuances
of common stock 581,040 25,100 471,800 -
------------- ----------- -------- ---------
Net cash provided by
financing activities 964,142 264,946 462,354 544,043
------------- ----------- ----------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS - - - 9,703
CASH AND CASH EQUIVALENTS,
BEGINNING - - - -
------------ ----------- -------- ---------
CASH AND CASH EQUIVALENTS,
ENDING $ - $ - $ - $ 9,703
============ =========== ======== =========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION:
Cash paid for interest $ 87,232 $ 20,974 $ 84,592 $ 54,321
Cash paid for taxes - - - -
=========== =========== ========= ========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the period from May 1, 1997 (inception) to March 31, 1998 and the year
ended March 31, 1999, the Company executed capital lease agreements for the
purchase of property and equipment totaling $12,657 and $70,896, respectively.
During August 1998 the Company's major stockholder converted $75,000 of
convertible notes payable plus accrued interest of $6,735 into 2,129,711
shares of the Company's common stock, in satisfaction of amounts due.
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1999 AND 1998 AND NINE MONTHS ENDED
DECEMBER 31, 1999 AND 1998, (UNAUDITED)
1. Organization and summary of significant accounting policies:
Corporate Background
GeniSys Information Systems Inc. ("GeniSys") is a Colorado corporation
formed on May 1, 1997 and it is the operating subsidiary of iGeniSys, Inc.
(the "Company"). The Company's primary business is management consulting in
the project management arena and the development of supporting project
management software. GeniSys also performs ancillary services relating to
assisting its customers in implementing its software and performing
independent cost and risk analyses. Through March 31, 1999 (and December 31,
1999, unaudited), substantially all of the Company's customers were located
throughout the United States.
An independent group of investors formed Zion Enterprises, Inc. ("Zion")
in February 1996 as a Colorado corporation. Zion was formed for the sole
purpose of establishing a widely held company that would subsequently seek a
merger with another entity that desired to merge. Through March 1999, Zion had
no operations or business activity.
In March 1999, Zion acquired all of the outstanding shares of the common
stock of GeniSys in exchange for newly issued shares of Zion, whereby GeniSys'
shareholders received 75% of the outstanding post-merger common stock. Zion
became the parent company of GeniSys through this transaction. As a result of
the transaction, the former officers and directors of GeniSys assumed control
of Zion and changed the name to iGeniSys, Inc. This transaction has been
accounted for as an acquisition of Zion by GeniSys and a recapitalization of
GeniSys. The historical financial statements prior to this transaction are
those of GeniSys as Zion had no significant activities. Also, the equity
accounts of GeniSys have been restated to reflect the exchange ratio of one
GeniSys share for 4.184 Zion shares. All significant intercompany
transactions have been eliminated in consolidation.
The consolidated balance sheet as of December 31, 1999, the consolidated
statements of operations and cash flows for the nine months ended December 31,
1999 and 1998, and the consolidated statements of shareholders' equity for the
nine months ended December 31, 1999 have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows for all such periods have been made. The
results of operations for the nine months ended December 31, 1999 are not
necessarily indicative of the operating results for the full year.
Significant Accounting Policies
Basis of Preparation of Financial Statements - The Company has incurred
operating losses since inception due to unassigned labor costs, development of
its software products, and efforts to gain market acceptance for such
products. These losses have caused the Company to operate with limited
liquidity and created a deficit working capital as of March 31, 1999.
Management has developed a plan to increase its working capital and subsequent
to March 31, 1999 has raised equity capital of $471,800 as discussed in Note 9
through private placement of securities. This plan includes the effort to
raise additional equity through public sale of securities during fiscal year
ended March 31, 2000. Management's plans also include reducing operating
costs while increasing sales and marketing efforts. However, the Company is
not certain as to whether it will be successful in raising additional equity
or increasing revenues. If management's plans are not successful, operations
could be significantly reduced.
Contracts in Process - Contracts in process represent the cost of work
performed on contracts that have not been billed to the customer.
Property and Equipment - Property and equipment is stated at cost.
Depreciation, including amortization of capital leases, is provided for on the
straight-line method over the shorter of the lease term or estimated useful
lives of the assets, primarily five years.
Development Costs - The Company's software development costs consists
primarily of enhancements and software production from costs related to
products for which technological and market feasibility has been established.
Accordingly, such costs have been capitalized as incurred. Capitalization
ceases when the product has been completed and the product is ready for
release to our customers. Prior to the technological feasibility, development
costs were expensed. In the years ended March 31, 1999 and 1998, the Company
incurred approximately $450,000 and $100,000, respectively, for research and
development costs related to software development. During the nine months
ended December 31, 1999 and 1998, the Company incurred approximately $220,000
and $390,000, respectively, for software development costs. Amortization of
the capitalized cost begins on a straight-line basis over the estimated lives
of the products, generally three years, when the product is complete.
Amortization expense of approximately $10,366 was recorded related to these
costs during the year ended March 31, 1999; no amortization was recorded in
the period ended March 31, 1998. During the nine month period ended December
31, 1999 (unaudited), $46,098 was recorded as amortization costs; no
amortization was recorded in the corresponding period in 1998.
Management assesses the carrying values of its development costs and
other long-lived assets for impairment when circumstances warrant such a
review. Based on its review, management does not believe that any impairment
has occurred as of March 31, 1999 and 1998, nor as of December 31, 1999
(unaudited).
Revenue Recognition - Sales of the Company's software products are
recognized when shipped. The Company's revenues from consulting and
implementation services are recognized when the services are performed.
Software maintenance revenues are deferred and recognized over the term of the
related contract.
Income Taxes - Deferred tax assets and liabilities are recorded for the
estimated future tax effects of: (a) temporary differences between the tax
basis of assets and liabilities and amounts reported in the balance sheets,
and (b) operating loss and tax credit carryforwards. The overall change in
deferred tax assets and liabilities for the period measures the deferred tax
expense for the period. Effects of changes in enacted tax laws on deferred
tax assets and liabilities are reflected as adjustments to tax expense in the
period of enactment. The measurement of deferred tax assets may be reduced by
a valuation allowance based on judgmental assessment of available evidence if
deemed more likely than not that some or all of the deferred tax assets will
not be realized.
Basic and Diluted Loss per Share - The Company determines basic and
diluted loss per share in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share, which is effective for the
years ended after December 31, 1997. The basic net earnings (loss) per common
share is computed by dividing the net loss by the weighted average number of
shares outstanding during a period. Diluted net earnings (loss) per common
share is computed by dividing the net loss, adjusted on an as if converted
basis, by the weighted average number of common shares outstanding plus
potential dilutive securities. Stock options are not considered in the
calculation, as the impact of the potential common shares would be to decrease
loss per share.
Cash and Cash Equivalents - Cash and Cash Equivalents include cash and
other highly liquid investments with maturities of three months or less at the
date of acquisition. Cash equivalents are stated at cost, which approximates
market value.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results will be determined based on the outcome of
future events and could differ from the estimates.
Credit and Other Risk Considerations - The Company's accounts receivable
and its costs and estimated earnings in excess of costs on uncompleted
contracts subject the Company to credit risk, as collateral is generally not
required. The Company performs credit evaluations of its customers' financial
condition and maintains allowances for potential credit losses. In the
opinion of management, actual losses and allowances have been within its
expectations. The carrying amount of the Company's receivables and its costs
and estimated earnings in excess of costs on uncompleted contracts
approximates their fair value.
For the periods ended March 31, 1999 and 1998, approximately 29% and 42%
of the Company's revenues were billed to one customer, respectively
(approximately 42.3% and 11.6% for the nine month periods ended December 31,
1999 and 1998, respectively, unaudited). At March 31, 1999 and 1998,
approximately 56% and 47%, respectively, of total receivables were due from
this customer (17.1% at December 31, 1999). Also for the year ended March 31,
1999, another customer accounted for 10% of the Company's sales (approximately
18.3% and 14.1% for the nine month periods ended December 31, 1999 and 1998,
respectively, unaudited). Additionally, two other customers accounted for 10%
and 12% of total accounts receivables at March 31, 1999. At March 31, 1998,
another two customers accounted for 13% and 17% of total accounts receivable.
As of December 31, 1999, another two customers accounted for 19.6% and 12.4%
of our total accounts receivable.
The Company is subject to risks and uncertainties common to growing
technology-based companies, including rapid technological change, growth and
commercial acceptance of its products, dependence on principal products and
third party technology, new product development, new product introductions and
other activities of competitors, dependence on key personnel, and limited
operating history.
Stock- based Compensation - SFAS No. 123, Accounting for Stock-Based
Compensation, allows companies to choose whether to account for employee
stock-based compensation on a fair value method, or to continue accounting for
such compensation under the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25). The Company has chosen to account for employee stock-based compensation
using APB 25. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at the
date of the grant over the options' exercise price.
Recent Accounting Pronouncements
COMPREHENSIVE INCOME - In June 1997, the Financial Accounting Standards
("FASB") issued SFAS No. 130, Reporting Comprehensive Income. This statement
is effective for financial statement issued for periods beginning after
December 15, 1997. The Company adopted this statement during 1998 and it had
no material impact on the Company's financial statement disclosures.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION - In June 1997, the
FASB issued SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information. This statement is effective for fiscal years beginning
after December 15, 1997. SFAS 131 requires the reporting of profit and loss,
specific revenue and expense items, and assets for reportable segments. It
also requires the reconciliation of total segment revenues, total segment
profit or loss, total segment assets, and other amounts disclosed for
segments, in each case to the amounts in the general purpose financial
statements. As the Company only operates in one segment, adopting this
statement had no material impact on the Company's financial statement
disclosures.
PENSION AND OTHER POSTRETIREMENT BENEFITS - In February 1998, the FASB
issued FAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits. SFAS 132 standardizes the disclosure requirements for
pensions and other post-retirement benefits and requires additional
information on changes in the benefit obligations and fair values of plan
assets. The statement is effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Adoption of SFAS 132 is expected to have no
effect on the Company, since there are no pension plans.
DERIVATIVE AND HEDGING ACTIVITIES - In June 1998, the FASB issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement is effective for fiscal years beginning after June 15, 2000.
Currently, the Company does not have any derivative financial instruments and
does not participate in hedging activities, therefore management believes SFAS
No. 133 will not impact the Company's financial position or results of
operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, Disclosures about
Fair Value of Financial Instruments, requires the Company to disclose
estimated fair values for its financial instruments, for which it is
practicable to estimate. The fair value of the Company's payables to the
shareholder, affiliate and related party and the royalty receivable are not
practicable to estimate due to the related party nature of the underlying
transactions. Management believes that the carrying amounts of the Company's
other financial instruments approximates their fair values primarily because
of the short-term maturity of these instruments.
Estimates are not necessarily indicative of the amounts which could be
realized or would be paid in a current market exchange. The effect of using
different market assumptions and/or estimation methodologies may be material
to the estimated fair value amount.
2. Related party transactions:
Through a series of transactions, the Company acquired the rights to
receive royalty payments from software in which one of Company's officers has
an interest. These rights were obtained in exchange for total consideration
of $81,000. Management expected, through December 1999, this amount would be
recovered from the future royalty payments. However, in December 1999, it was
determined that this amount would not be realized and, accordingly, the asset
was written down to its estimated net realizable value of $55,000 (unaudited).
The Company has entered into a management contract for professional
services with an entity, which is controlled by the Company's majority
shareholder ("major shareholder"). The contract provides for management fees
of $3,000 per month. During the year ended March 31, 1999 and the period
ended March 31, 1998, the Company charged $36,000 and $6,000, respectively, to
expenses in fees pursuant to this agreement. As of March 31, 1999 and 1998,
$42,000 and $6,000, respectively, are payable under this contract. As of
December 31, 1999, the Company owes $69,000 under this contract and charged
$27,000 to expense for fees under this agreement during each of the nine month
periods ended September 30, 1999 and 1998 (unaudited).
The Company had a revolving line of credit with the major shareholder
totaling $321,409 at March 31, 1999 collateralized by specific customer
invoices. This financing arrangement was a factoring arrangement for the
Company. Payments received on these accounts were forwarded to the
stockholder as they were paid and the appropriate amount of the note retired.
Interest charged on these notes is equal to the rate which the stockholder
borrows funds to advance on these notes (7.75% at March 31, 1999). This note
was repaid subsequent to March 31, 1999 as discussed in Note 8.
In addition, the Company had notes payable with the major shareholder for
$58,000 and $15,000 as of March 31, 1999 and for $94,000 and $50,000 as of
March 31, 1998. The notes accrued interest at an annual prime rate, which was
7.75% and 8.5% as of March 31, 1999 and 1998, respectively. The $94,000 note
payable is represented by a borrowing at a financial institution that is
collateralized with a $100,000 certificate of deposit owned by our major
shareholder. Accordingly, this loan is recorded on the accompanying financial
statements as a liability. These notes are payable on demand, and accordingly
are classified as current liabilities. As of December 31, 1999, the balances
of these notes were $31,530 and $15,000, respectively. (See Note 10 for other
related party loans).
During the year ended March 31, 1998, the Company borrowed $75,000 under
a convertible debt agreement with the major stockholder. Interest accrued
monthly on the outstanding principal at the rate of 6%. Under the terms of
the agreement, the unpaid principal amount and accrued interest was
convertible into common stock at a current market price at the option of the
major stockholder. As of August 31, 1998, the major shareholder converted
$75,000 of unpaid principal and related accrued interest of $6,735 into
2,129,711 shares of the Company's common stock.
The Company and an entity controlled by the Company's major shareholder
shared employees, common lease space, third-party vendor accounts, and a line
of credit as discussed in Note 4. Further, the Company and this related
entity borrowed funds on an unsecured non-interest bearing basis from each
other from time to time as a cash flow vehicle, not a primary funding source.
During the periods ended March 31, 1999 and 1998, the maximum net amount
payable to the related entity approximated $370,000 and $415,000,
respectively. As of March 31, 1999 and 1998, the Company owed $186,235 and
$363,395, respectively, to this related entity for the net amount of inter-
company transactions. As of December 31, 1999 (unaudited), this due to
affiliate had been reduced to $126,304. The Company ceased the inter-company
borrowings in June 1999 once the credit agreement discussed in Note 10 was
obtained. The Company intends to pay off the balance remaining within the
next six-months and, accordingly, the balance is classified as a current
liability.
3. Equipment:
Equipment is summarized by major classification as follows as:
<TABLE>
<CAPTION>
March 31, March 31,December 31,
1999 1998 1999
-------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
Computer equipment $ 148,247 $ 93,447 $ 156,786
Computer software 10,915 5,260 37,124
Furniture and fixtures 41,839 1,624 48,331
----------- ---------- ----------
Total depreciable assets 201,001 100,331 242,241
Less accumulated
depreciation (53,642) (6,253) (94,548)
----------- ---------- ----------
$ 147,359 $ 94,078 $ 147,693
=========== ========== ==========
</TABLE>
Included in these assets are certain assets under a capital lease
obligation (Note 5). As of March 31, 1999 and 1998, the net amount of leased
equipment was approximately $57,000 and $68,500, respectively. As of December
31, 1999 (unaudited), the net balance approximated $45,000.
4. Revolving lines of credit:
During the year ended March 31, 1999 the Company and a related entity
were party to a joint loan and security agreement with a financial institution
which allowed the companies to borrow up to $750,000 under a revolving line of
credit. As of March 31, 1999, the Company's share of this line of credit was
$56,039. At March 31, 1998, there were no balances outstanding under this
line of credit. A general of assignment accounts receivable, property and
equipment, and software costs secures borrowings under the line of credit.
Under the terms of the agreement, the Company and the related entity are co-
borrowers, and each has joint and several liability on the outstanding
balance. The borrowings bear interest at variable rates equal to the Central
Bank of Houston's Index Rate plus 3.0% (approximately 9% at March 31, 1999).
The credit facility was repaid in April 1999 as discussed in Note 10.
5. Capital lease obligations:
The Company has certain assets under capital lease obligations. The
leases require total monthly payments of $2,731 and have been recorded using
the Company's marginal cost of borrowing at the time the leases were entered
into of 12%.
The minimum lease payments required under the capital leases together
with the present value of the minimum lease payments at March 31, 1999 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 30,790
2001 15,556
2002 8,376
2003 8,376
-----------
Total 63,098
Less amount representing interest (8,998)
------------
Present value of future
minimum lease payments 54,100
Less current portion 30,790
------------
Long-term portion $ 23,310
============
</TABLE>
Total interest expense related to these capital leases was $8,223 and
$891 in 1999 and 1998, respectively.
6. Commitments:
The Company leases office space in Houston and Los Angeles under
operating leases that expire through 2002. The leases generally require the
Company to pay for utilities, insurance, property taxes and maintenance.
Rental expense was approximately $110,000 and $70,000 for the periods ended
March 31, 1999 and 1998, respectively. For the nine months ended December 31,
1999 (unaudited), rental expense was $89,200 and $45,300, respectively.
Future minimum lease payments are approximately $120,000 annually through
2002.
7. Capital stock:
The Company has 50,000,000 shares of $.01 par value preferred stock
authorized, with no shares issued. These shares, when issued, will have
preferences and restrictions as determined by the Company's Board of
Directors.
The common stock of the Company is divided into Class A and Class B
shares. There are a total of 100,010,000 shares of $.001 par value common
stock authorized with 10,000 being designated as Class B shares. The rights
of Class A and B shares are identical, except that Class B shares may only be
issued to the Company's Chairman of the Board and Chief Executive Officer.
Further, Class B shares have the right to elect a majority of the Board of
Directors and such shares can be converted to Class A shares on a one-for-one
basis at the sole discretion of the holder.
In March 1999 and as part of the transaction discussed in Note 1, new
investors in Zion loaned GeniSys $580,000, at 10% interest annually, on a
temporary basis while the documentation of the stock purchase was being
completed. Prior to March 31, 1999, loan holders converted the temporary
loans of $580,000 into 1,472,083 shares of stock in the Company. Due to the
intent of the Company and investors, this transaction has been accounted for
as a sale of stock for cash in the accompanying financial statements.
During the year ended March 31, 1999, the Company issued 742,678 shares
of Class A common stock to two senior officers of the Company. The Company
recorded compensation expense of $35,500, based on management's estimate of
the fair value of the common stock.
8. Income taxes:
The Company has net operating loss carryforwards in excess of $250,000 as
of March 31, 1999 to offset future taxable income. Such net operating losses
begin to expire after 2019. As of March 31, 1999, the Company has provided a
100% valuation allowance for the deferred tax asset relating to such net
operating losses because it could not be determined that it was more likely
than not that the deferred tax asset would be realized through future
earnings. The Company has no other material deferred tax items since the
accounting methods used for financial reporting and income tax purposes are
substantially comparable.
9. Restatement of Software Development costs:
Subsequent to the original issuance of the Company's March 31, 1999
financial statements, management determined that a portion of the previously
capitalized software costs should have been expensed. Based upon further
evaluation of the working model of the Company's software, it was determined
that the software had not fully achieved technological feasibility at the date
the costs were incurred. Accordingly, such costs have been expensed as
research and development costs in the accompanying financial statements and
these statements have been restated to reflect this accounting change. The
effect of this correction is as follows:
<TABLE>
<CAPTION>
As Reported As Restated
----------- -----------
<S> <C> <C>
Software costs $ 549,819 $ 299,819
Shareholders' equity $ 404,056 $ 154,056
Net loss $(299,243) $(549,243)
Net loss per share $ ( .05) $ ( .09)
</TABLE>
In addition, in the quarter ending December 31, 1999, the Company
determined that software costs, which had been capitalized relating to the
completion of a major installation of its software, were in fact costs of the
project. These costs were initially capitalized, as it was believed these
costs would enable the software to be utilized by a wide variety of customers
and were incurred after the software prototype was functioning. After a
thorough analysis of such costs, management determined that such costs should
be expensed as a cost of the project. Accordingly, $200,000 of costs that had
been capitalized in the first two quarters of our 2000 fiscal year, were
expensed in the quarter ending December 31, 1999.
10. Subsequent events (unaudited):
On May 17, 1999, the Company entered into a credit agreement with a
financial entity. This new agreement provided the funds to fully repay the
note payable to the majority shareholder (Note 2) and the revolving line of
credit (Note 4). As of December 31, 1999 (unaudited), the Company had an
outstanding balance of $324,190 on this credit agreement. Under the terms of
this agreement, which is similar to a factoring arrangement, the Company is
able to obtain financing for 85% of specific accounts receivable. The Company
pays a processing fee for financing each receivable depending upon the number
of days from the funding of the advance until that invoice is paid by the
customer. In addition, the Company pays interest on the total amount advanced
at a rate equal to the prime rate plus 2%. The receivables are financed on a
full recourse basis and, accordingly, this financial arrangement is accounted
for as a borrowing. The agreement can be terminated with 30 days notice after
certain events are met.
In January 2000, our lender notified us that our factoring line of credit
was being reevaluated due to our operating losses and past-due nature of
certain of our customers and, accordingly, future advances under the line were
contingent upon meeting underwriting standards. Management met with the
lender and negotiated reinstatement of our line of credit. Under the terms of
this agreement, our principal stockholder (who is the guarantor of this credit
facility) and investors have committed to purchase invoices that reach 90 days
past due up to a maximum of $200,000. In addition, the agreement requires the
Company to report monthly results of operations to our lender, rather than
quarterly. Subsequent to execution of this agreement, the lender began
factoring our receivables.
Subsequent to March 31, 1999 and through October 19, 1999, the Company
raised $471,800 from the sale of its common stock through two private
placements. The Company has issued an additional 964,361 shares of common
stock in connection with these sales (unaudited).
In May 1999, the Company adopted the 1999 Equity Incentive Plan (the
"Plan"), which provides for awards in the form of options, including incentive
stock options (ISOs), nonstatutory options (NSOs), stock bonuses, rights to
purchase restricted stock, and stock appreciation rights (SARs). Employees,
directors, consultants and advisors of the Company will be eligible for the
grant of NSOs, stock bonuses, and rights to purchase restricted stock. Only
employees will be eligible for the grant of ISOs and SARs. Options issued are
to have exercise prices not less than the fair value of the Company's common
stock on the date of grant. The Company has reserved 2,500,000 shares of
common stock for issuance pursuant to the exercise of common stock under the
plan. In June 1999, the Company granted options to purchase 1,860,000 shares
of common stock an exercise price of $.40 per share, and of which 1,474,000
options are subject to future vesting. Options generally vest over a five year
period and options expire in July 2009. Management believes that the exercise
price of the options granted to employees was equal to the market value of the
Company's common stock at the date of grant (based on the Company's private
placements of common stock) and, accordingly, no compensation expense has been
recorded.
In May and June of 1999, the Company was named as a defendant in two
separate lawsuits in the state of California. One suit was filed by a
competing software company and the second by an individual. The suit with a
competing software company was settled through mediation in December 1999 with
no adverse financial impact on the Company. The suit, brought by the
corporation contains many allegations regarding the activities of the Company
and two senior officers of the Company, and it seeks damages of an unspecified
amount. The individual claims monies owed for past services to an entity
previously controlled by an officer of the Company. Management and legal
counsel believe that the remaining lawsuit is without merit, have filed
counterclaims, and plan to vigorously contest the case. The resolution of this
suit is not expected to have a material effect on the Company.
In June 1999, the Company entered into oral employment contracts, with
its Chief Executive Officer, President, Senior Vice President of Sales, and
the Chief Financial Officer. These arrangements require annual compensation of
approximately $418,000 in the aggregate, payment of performance bonuses, and
issuance of stock options at the sole discretion of the Board of Directors.
This compensation level is consistent with the amounts paid to senior
executives during the year ended March 31, 1999. These agreements are
generally for a one-year period and automatically renew, unless terminated by
either party with 60-day notice.
In October 1999, the Company issued to certain investors a total of
147,205 Class A Warrants, each exercisable for one year to purchase a share of
our common stock at a price of $1.00 per share. The Class A Warrants expire
on October 31, 2000. The Company has the ability to repurchase the warrants
if we have registered the exercise of the warrants with the Commission and our
public trading price has been more than $2.00 per share for at least ten
consecutive trading days. In such event, holders of the warrant will have a
30 day notice period in which to exercise these warrants, and any warrants not
exercised will be redeemed at a redemption price of $.01 per share.
In December 1999, our principal stockholder loaned the company $50,000 in
order to meet our obligations. This loan was secured by certain of our
software products and carries an interest rate of 15%. The loan is payable in
six months with no early repayment penalty. Further, in January 2000, our
principal shareholder and related parties loaned the company an additional
$87,500 and these loans are secured by a second lien on certain accounts
receivable and our software. These loans are payable within 90 days and carry
an interest rate of 15%.
In February 2000, a member of the Company's Board of Directors loaned
$100,000 to the Company. This loan was made to meet our operating cash needs
to purchase some past-due invoices from our financial institution. This loan
is secured by the purchased invoices and a second lien on our software
products. The loan carries an interest rate of 15% and is payable in May
2000.
<PAGE>
<PAGE>
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This Prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where
the offer or sale is not permitted.
iGeniSys, Inc.
1,500,000 Shares of Common Stock
_________________, 2000
===========================================================================
Until ___________, 2000 (25 days after the
date of this prospectus), all dealers effecting
transactions in the shares offered by this pro-
spectus -- whether or not participating in the
offering -- may be required to deliver a copy
of this prospectus. Dealers ;may also be
required to deliver a copy of this prospectus
when acting as underwriters and for their
unsold allotments or subscriptions.
TABLE OF CONTENTS
------------------
Page
----
Prospectus Summary 2
Risk Factors 5
Forward-Looking Statements 13
Use of Proceeds 14 ____________________________
Dividend Policy 15
Capitalization 16 Prospectus
Dilution 17
Certain Market Information 19 ____________________________
Management Discussion 21
Business 26
Management 36
Certain Transactions 44 ___________, 2000
Principal Stockholders 47
The Company Offering 50
Description of Securities 51
Legal Matters 52
Experts 52
Available Information 53
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
We may not sell these securities until the Registration Statement filed with
the Securities and Exchange Commission is effective. This Prospectus is not
an offer to sell the securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED _____________, 2000
PROSPECTUS
iGeniSys, INC.
2,955,291 Shares of Common Stock
This is an offering of shares of the common stock of iGeniSys, Inc. by persons
who were issued shares of our common stock in prior transactions. These
persons are referred to in this Prospectus as "Selling Shareholders."
Selling Shareholders may sell shares covered by this Prospectus at prices
related to prevailing market or at negotiated prices. There currently does
not exist a public trading market for our common stock. However, we intend to
develop a public trading market in the future.
We will not receive any proceeds from the sale of the common stock by the
Selling Shareholders. For information regarding fees and expenses we may pay
in connection with the registration of the common stock covered by this
Prospectus, see the section entitled "Selling Shareholders and Plan of
Distribution."
At the same time that this offering will begin, we are offering an additional
1,500,000 shares of our common stock to the public. Our offering may be
referred to as the "Concurrent Offering" or the "Company Offering."
Investing in our common stock involves a high
degree of risk. You should read the "Risk
Factors" beginning on Page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the 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>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
About The Offering
This is an offering of shares of our common stock by persons who were
issued shares of our common stock. We refer to these persons as "Selling
Shareholders" in this Prospectus. We are registering the common stock covered
by this Prospectus in order to fulfill obligations we have under agreements
with the Selling Shareholders.
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
Summary Financial Data
The following financial information summarizes the more complete
historical financial information enclosed in this prospectus. You should read
the information below along with all other financial information and analysis
in this prospectus. Please do not assume that the results below indicate
results we will achieve in the future.
<TABLE>
<CAPTION>
March 31, December 31,
-------------------- ------------
1999 1998 1999
------ ------ -----------
<S> <C> <C> <C>
Current assets $ 1,107,489$ 1,016,316 $ 560,478
Current liabilities $(1,467,455)$(1,047,773) $(1,432,699)
Net working capital deficit $ (359,966)$ (31,457) $ (872,221)
Development costs, net $ 299,819 $ 46,521 $ 341,155
Equipment, net $ 147,359 $ 94,078 $ 147,693
Convertible note payable,
shareholder $ -0- $ (75,000) $ -0-
Shareholders' equity
(deficit) $ 154,056 $ 5,024 $ (267,280)
Total assets $ 1,894,821 $ 1,171,699 $ 1,165,419
</TABLE>
<TABLE>
<CAPTION>
For the Periods For the Nine Months
Ended March 31, Ended December 31,
-------------------- ----------------------
1999 1998 1999 1998
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues $3,049,128 $1,882,445 $2,032,767 $1,868,671
Operating (loss)
income (466,934) $ 5,821 $(813,185) $(312,527)
Net loss $(549,243) $ (20,076) $(893,136) $(358,702)
Weighted average number
of shares 6,165,715 4,602,510 10,295,938 4,602,510
Basic and diluted
loss per share $ (.089) $ (.004) $ (.087) $ (.078)
</TABLE>
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
DILUTION
[Deleted]
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION
This Prospectus also relates to the resale to the public of shares of
common stock by the Selling Shareholders set forth below. None of the Selling
Shareholders have had any material relationship within the past three years
with us, or any of our predecessors or affiliates, except as specifically
noted.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Beneficially
Owned Shares Owned
As of Offering Date Offered After Offering
------------------- ------- --------------
Name and Address
of Beneficial Percent Percent
Owner Number (1) Number Number (1)(2)
------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gulfstream Financial 558,375 5.1% 507,614 50,761 .4%
Partners, LLC(2)(11)
7315 E. Peakview Ave.
Englewood, CO 80111
Gregory Pusey (12) 96,850 .9% 88,405 8,445 .1%
1722 Buffehr Creek Rd.
Vail, CO 81657
Cambridge Holdings,
Ltd. (13) 167,612 1.5% 146,552 21,054 .1%
1722 Buffehr Creek Rd.
Vail, CO 81657
Jill Pusey C/F (14) 21,256 .2% 21,256 0 0%
Christopher Pusey, UGTMA
1722 Buffehr Creek Rd.
Vail, CO 81657
Jill Pusey C/F (15) 30,590 .3% 30,590 0 0%
Jacqueline Pusey, UGTMA
1722 Buffehr Creek Rd.
Vail, CO 81657
Sally Rogers(3) (16) 69,797 .6% 63,452 6,345 .1%
4311 Witter Gulch
Evergreen, CO 80439
Mark M. King(4) (17) 69,797 .6% 63,452 6,345 .1%
370 17th St., Suite 2350
Denver, CO 80202
Bruce Rogers and
Sally Rogers, 41,878 .4% 38,071 3,807 0%
JTWROS(3) (18)
4311 Witter Gulch
Evergreen, CO 80439
William M. Bell(5)(19) 91,878 .8% 38,071 53,807 .4%
1244 Dexter Street
Denver, CO 80220
Alfred O. Brehmer(20) 69,797 .6% 63,452 6,345 .1%
730 17th St., Suite 712
Denver, CO 80202-3516
Milton Herson (21) 13,959 .1% 12,690 1,269 0%
17076 Royal Core Way
Boca Raton, FL 33486
Michael Herson (22) 27,919 .3% 25,381 2,538 0%
1200 North Veitch St., #1322
Arlington, VA 22201
Henry Fong (23) 654,008 5.9% 59,666 86,728 .7%
3155 Miro Drive North
Palm Beach Gardens, FL 33410
Norman Brownstein 35,381 .2% 25,381 10,000 0%
410 - 17th Street
Denver, CO 80202
L.F.S. No. 1 LLC 35,381 .2% 25,381 10,000 0%
417 - 17th Street
Denver, CO 80202
Jennings D. Bell, Jr. 50,761 .5% 50,761 0 0%
2750 East Cedar Avenue
Denver, CO 80209
Michael Smith 150,761 1.4% 50,761 100,000 .8%
370 17th Street,
Suite 3400
Denver, CO 80202
Iris Smith 50,761 .5% 50,761 0 0%
370 17th Street,
Suite 3400
Denver, CO 80202
Wayne Mills 200,000 1.8% 200,000 0 0%
5020 Blake Road South
Edina, MN 55436
DFG Capital Corp. 48,20 .2% 19,035 29,167 .2%
136 Monmouth Road
Monroe TWP, NJ 08831
Kleopatra Georgiades 29,357 .3% 12,690 16,667 .1%
44 Andromahis
Nicosia, Cyprus
Helene Abrahams 350 nil 350 0 0%
6365 East Tufts Avenue
Englewood, CO 80111
Marshall Abrahams 350 nil 350 0 0%
6365 East Tufts Avenue
Englewood, CO 80111
Gary Agron 257,313 .4% 257,313 0 0%
5445 DTC Parkway,
Suite 520
Englewood, CO 80111
Janice Puder Agron 41,020 0.4% 41,020 0 0%
59 Glenemoor Circle
Englewood, CO 80110
Elaine Asarch 350 nil 350 0 0%
1000 E. Tufts Avenue
Englewood, CO 80110
Richard Asarch 350 nil 350 0 0%
1000 E. Tufts Avenue
Englewood, CO 80110
Asian Pacific
Industries Ltd. 350 nil 350 0 0%
301 Ann Street, Level 4
Brisbane Queensland 400
Australia
Brenda S. Bagg 350 nil 350 0 0%
P.O. Box 491105
Los Angeles, CA 90049
Gerald A. Bagg 350 nil 350 0 0%
P.O. Box 491105
Los Angeles, CA 90049
Douglas C. Ball 350 nil 350 0 0%
131 Rochester Avenue
Toronto Ontario M4N LN9
Canada
Milton H. Barbarosh 350 nil 350 0 0%
18101 Daybreak Drive
Boca Raton, FL 33496
Ricki Barbarosh 350 nil 350 0 0%
18101 Daybreak Drive
Boca Raton, FL 33496
James D. Beatty 350 nil 350 0 0%
46 Teddington Park
Toronto Ont M4N 2C6
Canada
Susan Elliot Beatty 350 nil 350 0 0%
46 Teddington Park
Toronto M4N 2C6
Canada
Gerald M. Berenstein 350 nil 350 0 0%
4032 S Olive Street
Denver, CO 80237
Kathy Berenstein 350 nil 350 0 0%
4032 S Olive Street
Denver, CO 80237
Andrew N. Bernstein 350 nil 350 0 0%
5340 S Boston Street
Greenwood Village, CO 80111
Barbara V. Bernstein 350 nil 350 0 0%
3921 Huntington Street NW
Washington, D.C. 20015
Mitchell H. Bernstein 350 nil 350 0 0%
3921 Huntington Street NW
Washington, D.C. 20015
Angela Bortoluzzi 350 nil 350 0 0%
70 English Daisy Court
Kleinburg Ontario L0J 1C0
Eugene Bortoluzzi 350 nil 350 0 0%
70 English Daisy Court
Kleinburg Ontario L0J 1C0
Bruce W Breitweiser 350 nil 350 0 0%
1504 E Washington Street
Bloomington, IL 61701
Jeannie W. Breitweiser350 nil 350 0 0%
1504 E. Washington Street
Bloomington, IL 61701
Arna K. Campbell 350 nil 350 0 0%
8770 Pinewood Court
Castle Rock, CO 80104
Roger R. Campbell 350 nil 350 0 0%
8770 Pinewood Court
Castle Rock, CO 80104
Capital General Corporation
Limited 350 nil 350 0 0%
Robert Carrier 350 nil 350 0 0%
Canarc
# 800-850 West Hastings
Vancouver, BC V6C 1E1
Canada
Ben Casale 350 nil 350 0 0%
1736 Richmond Avenue
Staten Island, NY 10314
Christina Casale 350 nil 350 0 0%
583 Route 524
Allentown, NJ 08501
John E. Cathcart 350 nil 350 0 0%
774 Mays Blvd. #10-450
Incline Village, NV 89451
Ki Wai Chan 350 nil 350 0 0%
Blk. D 17/F., Prince Bldg.
97 Mongkok Rd. KLN
Hong Kong
China
Ting Sun Chang 350 nil 350 0 0%
5/F Flt.B, Chiap Thong Bldg.,
321 Tokwawan Rd.
Hong Hom. KLN
Hong Kong
China
Barbara F. Chapman 350 nil 350 0 0%
6004 East Princeton Avenue
Englewood, CO 80111
Jay H. Chapman 350 nil 350 0 0%
6004 East Princeton Avenue
Englewood, CO 80111
Jiansi Chen 350 nil 350 0 0%
Blk., D 17/F., Prince Bldg.
97 Mongkok Rd., KLN
Hong Kong
China
Andrew Chu 350 nil 350 0 0%
587 East El Paso #107
Fresno, CA 93720
Kwok Fu Chu 350 nil 350 0 0%
37c Block 3, Jubilee Garden
2-18 Lok King St.
Shantin, N.T
Hong Kong
China
Yin Kam Chu 350 nil 350 0 0%
Blk. D 17/F., Prince Bldg.
97 Mongkok Rd., KLN
Hong Kong
China
Naomi R. Cohn 350 nil 350 0 0%
501 Williams
Denver, CO 80218
Rennei K. Coleman 350 nil 350 0 0%
2209 East Green Oaks Lane
Greenwood Village, CO 80121
Robert J. Coleman 350 nil 350 0 0%
2209 East Green Oaks Lane
Greenwood Village, CO 80121
David L. Cove 350 nil 350 0 0%
P.O. Box 5555
Vail, CO 81658
Jack R. Daugherty 350 nil 350 0 0%
1600 West 7th Street, Suite 900
Ft. Worth, TX 76102
Shelley F. Daugherty 350 nil 350 0 0%
1600 West 7th Street, Suite 900
Ft. Worth, TX 76102
Joseph F. Demeo 350 nil 350 0 0%
151 Wentworth Drive
Henderson, NV 89014
Mary Jean Demeo 350 nil 350 0 0%
151 Wentworth Drive
Henderson, NV 89014
Ernest DuFresne 350 nil 350 0 0%
330 North Rocky Cliff Drive
Franktown, CO 80116
James Eller 18,000 0.2% 18,000 0 0%
Joanne Ernsten 350 nil 350 0 0%
1955 Cherryville Road
Littleton, CO 80121
Heather Evans 350 nil 350 0 0%
12906 North 4th
Parker, CO 80134
H. Thomas Fehn 350 nil 350 0 0%
11755 Wilshire Blvd.
Los Angeles, CA 90025
Monica R. Fehn 350 nil 350 0 0%
501 South Westgate Avenue
Los Angeles, CA 90049
John E. Fitzpatrick 350 nil 350 0 0%
4711 South Dahlia
Littleton, CO 80121
Suzanne Fitzpatrick 350 nil 350 0 0%
4711 South Dahlia
Littleton, CO 80121
Five Oaks Investment
Corp. 350 nil 350 0 0%
c/o 392 Dundas Street East
Toronto Ontario M5A 2A5
Canada
Wayne Fletcher 350 nil 350 0 0%
#2505-867 Hamilton Street
Vancouver, BC. V6B 6B7
Canada
Carolyn Fong 350 nil 350 0 0%
3155 Miro Drive North
Palm Beach Gardens, FL 33410
Chris Freeman 350 nil 350 0 0%
392 Dundas Street East
Toronto, Ontario M5A 2A5
Canada
Maria Freeman 350 nil 350 0 0%
2029 Oak Grove Place
Burlington, Ontario L7L 6M8
Canada
Jeffrey Frieldand 350 nil 350 0 0%
3801 East Florida #400
Denver, CO 80210
Penelope S. Gallagher 350 nil 350 0 0%
410 East Arsenal Street
San Antonio, TX 78204
William J. Gallagher 350 nil 350 0 0%
1250 NE Loop 410, Suite 335
San Antonio, TX 78209
Anthony P. Gargiulo 350 nil 350 0 0%
960 Cape Mar Co Dr #1003
Marco Island, FL 34145
Marcia A. Gargiulo 350 nil 350 0 0%
960 Cape Marco Dr #1003
Marco Island, FL 34145
Gary E. Keogh 700 nil 700 0 0%
8 Columbine Lane
Littleton, CO 80123
Judith H. Geller 350 nil 350 0 0%
445 Westwood Drive
Denver, CO 80206
Richard A. Geller 350 nil 350 0 0%
445 Westwood Drive
Denver, CO 80206
GM/CM Family Partners
Ltd 280,002 2.6% 280,002 0 0%
14 Red Tail Drive
Highlands Ranch, CO 80126
Kimberly K. Gollehon 350 nil 350 0 0%
6508 S Louthan Street
Littleton, CO 80120-3125
Ronald D. Gollehon 350 nil 350 0 0%
280-B West Long Drive
Littleton, CO 80120
Wendy Avra Gordon 350 nil 350 0 0%
2911 NW Cornell Road
Portland, OR 97210
Zachary T. Gordon 350 nil 350 0 0%
2911 New Cornell Road
Portland, OR 97210
Caryljo M. Greenblatt 350 nil 350 0 0%
2 Cantitoe Lane
Englewood, CO 80110
Phill D. Greenblatt 350 nil 350 0 0%
2 Cantitoe Lane
Englewood, CO 80110
Gregory Pusey
Investments 3,366 nil 3,366 0 0%
1722 Buffehr Creek Road
Vail, CO 81657
Ian Gunn 350 nil 350 0 0%
35 Westbrook Drive RR 3
Komoka, Ontario N01 1R0
Canada
Michele Gunn 350 nil 350 0 0%
35 Westbrook Drive RR 3
Komoka, Ontario N01 1R0
Canada
Gary Gutterman 350 nil 350 0 0%
899 Anaconda Court
Castle Rock, CO 80104
Sheila M. Gutterman 350 nil 350 0 0%
899 Anaconda Court
Castle Rock, CO 80104
Harris Trust
Dtd 8/22/94 350 nil 350 0 0%
Robert Allen Strahl Trustee
380 Foam Street, #210
Monterey, CA 93940
Kathy Hartzler 500 nil 500 0 0%
c/o 26 West Dry Creek Cr, Ste 600
Littleton, CO 80120
Deborah Hattoy-
Londelius 350 nil 350 0 0%
6017 East Cholla Lane
Paradise Valley, AZ 85253
John Hickey 350 nil 350 0 0%
Ambra Resources
610-800 West Pender Street
Vancouver BC V6C 2V6
Canada
Marsha Hillhouse 350 nil 350 0 0%
55 Harbour Square Unit 1317
Toronto, Ontario M5J 2L1
Canada
Matthew Hillhouse 350 nil 350 0 0%
55 Harbour Square Unit 1317
Toronto Ontario M5J 2L1
Canada
Anne Marie Janssens
-Lens 350 nil 350 0 0%
930 Cape Marco Drive PH 4
Marco Island, FL 33937
Paul F Janssens-Lens 350 nil 350 0 0%
930 Cape Marco Dr PH 4
Marco Island, FL 33937
John Epert Family
Trust 350 nil 350 0 0%
215 West Northview
Phoenix, AZ 85258
Leys Johnston-Koyle 350 nil 350 0 0%
RR 1Orangeview
Ontario L9W 2Y8
Canada
Jeffrey E. Kahler 350 nil 350 0 0%
438 S. Emerson Street
Denver, CO 80209
Joshua S. Kanter 350 nil 350 0 0%
333 West Wacker Drive,
Suite 2700
Chicago, IL 60606
Linda B. Kaufmann 350 nil 350 0 0%
3465 S. Columbine Circle
Englewood, CO 80110
Thomas A. Kaufmann 350 nil 350 0 0%
3465 S. Columbine Circle
Englewood, CO 80110
Brian Kelley 350 nil 350 0 0%
3145 N. Lewis Avenue
Phoenix, AZ 85009
Jack D. Kelley 350 nil 350 0 0%
18014 N. 78th Drive
Glendale, AZ 85308
Jane A. Kelley 350 nil 350 0 0%
18014 N. 78th Drive
Glendale, AZ 85308
Teresa M. Kelley 350 nil 350 0 0%
14018 North 63rd Avenue
Glendale, AZ 85306
Mary Kilgore 350 nil 350 0 0%
2523 Nature Bend
Carrollton, TX 75006
Raymond Kilgore 350 nil 350 0 0%
2523 Nature Bend
Carrollton, TX 75006
Cynthia Kirby 350 nil 350 0 0%
6588 South Cook Way
Littleton, CO 80121
Gerald Kirby 350 nil 350 0 0%
12906 North 4th
Parker, CO 80134
Lisa A. Kirby 350 nil 350 0 0%
7332 South Ivanhoe Court
Englewood, CO 80112-1505
Michael Kirby 350 nil 350 0 0%
6765 East Dorado Place
Greenwood Village, CO 80120
Michael Kleinman 350 nil 350 0 0%
13826 East Chenago Drive
Aurora, CO 80015
W. Koyle 350 nil 350 0 0%
RR 1
Orangeville, Ontario L9W 2Y8
Canada
Janet A. Kritzer 350 nil 350 0 0%
34 Sedgwick Drive
Englewood, CO 80110
Stuart A. Kritzer 350 nil 350 0 0%
34 Sedgwick Drive
Englewood, CO 80110
Dave Lageschulte 350 nil 350 0 0%
2644 Shriver Drive
Ft. Myers, FL 33901
Noel Langdon 350 nil 350 0 0%
Mrs. Noel Langdon 350 nil 350 0 0%
Bernard Laurent 350 nil 350 0 0%
141 Sloane Street
London SW1X 9AY
United Kingdom
Corinne Laurent 350 nil 350 0 0%
141 Sloane Street
London SW1X 9AY
United Kingdom
Jill A. Lee 350 nil 350 0 0%
5300 East Sanford Circle
Englewood, CO 80110
Herbert I. Lee 350 nil 350 0 0%
5300 East Stanford Circle
Englewood, CO 80110
Alan J. Levin DDS 350 nil 350 0 0%
10182 Stoneridge Terrace
Parker, CO 80134
Cynthia L. Levin 350 nil 350 0 0%
10182 Stoneridge Terrace
Parker, CO 80134
John T. Lisenby 350 nil 350 0 0%
7555 Lighthouse Lane
Reno, NV 89511
Mary Jane Lisenby 350 nil 350 0 0%
7555 Lighthouse Lane
Reno, NV 89511
John Londelius 350 nil 350 0 0%
6017 East Cholla Lane
Paradise Valley, AZ 85253
Patricia Lorenz 350 nil 350 0 0%
131 Rochester Avenue
Toronto, Ontario M4N 1N9
Canada
Chi Ting Lui 350 nil 350 0 0%
823 Po Ning Hse.
Po Lam Est Junk Bay Sk., KLN
Hong Kong
China
Luen Hing Lui 350 nil 350 0 0%
823 Po Ning Hse.,
Po Lam Est Junk Bay Sk., KLN
Hong Kong
China
Michael Lupynec 350 nil 350 0 0%
74 Indian Grove
Toronto, Ontario M6R 2Y4
Canada
Stephanie Lupynec 350 nil 350 0 0%
74 Indian Grove
Toronto, Ontario M6R 2Y4
Canada
Neil G. Macey 350 nil 350 0 0%
4643 South Ulster Street,
Suite 950
Denver, CO 80237-2866
Sharon Marks 350 nil 350 0 0%
4335 South High Street
Englewood, CO 80110
Stanley Marks 350 nil 350 0 0%
4335 South High Street
Englewood, CO 80110
David K. Marshall 350 nil 350 0 0%
P.O. Box 24629
Denver, CO 80224
Janet M. Marshall 350 nil 350 0 0%
P.O. Box 24629
Denver, CO 80224
Earnest Mathis 350 nil 350 0 0%
2584 River Road NE
Dalton, GA 30721
Mathis Family
Partners, Ltd.,
a Partnership 269,451 2.5% 269,451 0 0%
26 W. Drycreek Cir,
Ste 600
Littleton, CO 80120
Jessie Mathis 350 nil 350 0 0%
2584 River Road NE
Dalton, GA 30721
Don E. Montague 350 nil 350 0 0%
925 West Kenyon, Suite 15
Englewood, CO 80110
Betty J. Morey 22,843 0.2% 22,843 0 0%
Richard S Morey 22,843 0.2% 22,843 0 0%
20010 Coyote Ridge Lane
Katy, TX 77449
Gary A. Mosko 63,802 0.6% 63,802 0 0%
234 Garfield
Denver, CO 80206
Paula L. Mosko 350 nil 350 0 0%
234 Garfield
Denver, CO 80206
Leslie L. Neadeau 350 nil 350 0 0%
872 Laverstock Way
Sacramento, CA 95864
Jeane Hays Nerlino 350 nil 350 0 0%
18 I Heritage Drive
Chathamn, NJ 07928
Vincent Nerlino 350 nil 350 0 0%
18 I Heritage Drive
Chatham, NJ 07928
Paul Newland 350 nil 350 0 0%
6 Niblick Lane
Littleton, CO 80123
Po Ming Ng 350 nil 350 0 0%
Flt. H, 9/F. On Tai Bldg.
68 Mei King St., KLN
Hong Kong
China
Gertrude R. Nittler 350 nil 350 0 0%
3300 South Albion Street
Denver, CO 80222
Roger J. Nittler 350 nil 350 0 0%
3300 South Albion Street
Denver, CO 80222
Noraminter Holdings
Limited 350 nil 350 0 0%
c/o 141 Sloane Street
London SW1X 9AY
United Kingdom
Kurt Ohlson 350 nil 350 0 0%
32779 N. 70th Street
Scottsdale, AZ 85262
Tam Ohlson 350 nil 350 0 0%
32779 N. 70th Street
Scottsdale, AZ 85262
868982 Ontario Inc. 350 nil 350 0 0%
392 Dundas Street East
Toronto, Ontario M5A 2A5
Canada
932027 Ontario Inc. 350 nil 350 0 0%
392 Dundas Street East
Toronto Ontario M5A 2A5
Canada
Carol R. Paderski 350 nil 350 0 0%
400 South Steele Street, #23
Denver, CO 80206
David R. Paderski 350 nil 350 0 0%
400 South Steele Street, #23
Denver, CO 80206
Fong Nei Pak 350 nil 350 0 0%
Blk. D 17/f Prince Bldg.
97 Mongkok Rd., KLN
Hong Kong
China
C.K.C. Partners 350 nil 350 0 0%
7050 East Crestline Avenue
Englewood, CO 80111
Stuart W. Pattison 350 nil 350 0 0%
8945 Apache Plume Drive
Parker, CO 80134
Gary B. Peterson 350 nil 350 0 0%
10 West 100 South,
Suite 450
Salt Lake City, UT 84101
Gordon E. Peterson 350 nil 350 0 0%
59 Byron Avenue East
London, Ontario N6C 1C6
Canada
Dana L. Phillips 350 nil 350 0 0%
5534 Preston Fairway
Dallas, TX
Ramon D. Phillips 350 nil 350 0 0%
5534 Preston Fairway
Dallas, TX
C.R. Plaxton 350 nil 350 0 0%
1666 Lincolnshire Blvd.
Mississanuga, Ontario L5E 2S7
Canada
Gail E. Ploen 350 nil 350 0 0%
6590 East Lake Pl.
Englewood, CO 80111
Jeff P. Ploen 350 nil 350 0 0%
6590 East Lake Pl.
Englewood, CO 80111
Annette Pluss 350 nil 350 0 0%
5367 S. Boston Street
Engelwood, CO 80111
Richard G. Pluss 350 nil 350 0 0%
5367 S. Boston Street
Englewood, CO 80111
Jeffrey B. Preitauer 350 nil 350 0 0%
2015 Hidden Valley Crescent
Kitchener Ontario N2G 3WS
Canada
Michelle Preitauer 350 nil 350 0 0%
2015 Hidden Valley Crescent
Kitchener, Ontario N2G 3W5
Canada
Christopher Pusey 350 nil 350 0 0%
c/o Greg Pusey
1722 Buffehr Creek Road
Vail, CO 81657
Gregory Pusey 350 nil 350 0 0%
1722 Buffehr Creek Road
Vail, CO 81657
Jill Pusey 350 nil 350 0 0%
1722 Buffehr Creek Road
Vail, CO 81657
Adam Radley 350 nil 350 0 0%
Level 44 Rialto South Tower
525 Collins Street
Melbourne Victoria
Australia
Pamela S. Randall 350 nil 350 0 0%
365 Rangeview Dr
Littleton, CO 80120
Richard Randall 350 nil 350 0 0%
365 Rangeview Dr
Littleton, CO 80120
Gisela Ratcliff 350 nil 350 0 0%
7690 Old Paint Trail
Scottsdale, AZ 85262
Richard Ratcliff 350 nil 350 0 0%
7690 Old Paint Trail
Scottsdale, AZ 85262
Debra S Rhoads 350 nil 350 0 0%
4 West Dry Creek Circle 201
Littleton, CO 80120
Mitchell E. Rhoads 350 nil 350 0 0%
4 West Dry Creek Circle 201
Littleton, CO 80120
A. J. Robbins 350 nil 350 0 0%
4560 Montview Blvd
Denver, CO 80207
Barbara J. Robbins 350 nil 350 0 0%
4560 Montview Blvd
Denver, CO 80207
John Robertson 350 nil 350 0 0%
#185-10751 Shellbridgeway
Richmond
British Columbia
Shane XG Rodgers 350 nil 350 0 0%
11th Floor
230 Collins Street
Melbourne Victoria
Australia
Danielle L.
Rosendahl 350 nil 350 0 0%
1725 SW Spring Street
Portland, OR 97201
Steven F. Rosendahl 350 nil 350 0 0%
1725 SW Spring Street
Portland, OR 97201
Len Rothstein 350 nil 350 0 0%
134 Privateer Mall
Marina Del Rey, CA 90292
Dan Rudden 350 nil 350 0 0%
4900 South Ulster Street,
#3-115
Denver, CO 80237
Peg Rudden 350 nil 350 0 0%
1 Sedgwick Drive
Englewood, CO 80110
Martha H. Rudman 350 nil 350 0 0%
5337 East Mineral Circle
Littleton, CO 80122
Ronald L Rudman 350 nil 350 0 0%
5337 East Mineral Circle
Littleton, CO 80122
Salomon Smith
Barney Inc 350 nil 350 0 0%
333 West 34th Street, 3rd Floor
New York, NY 10001
Barry Schechter 350 nil 350 0 0%
8512 Cliffridge Avenue
La Jolla, CA 92037
Suzanne Schechter 350 nil 350 0 0%
8512 Cliffridge Avenue
La Jolla, CA 92037
John W. Scherer 350 nil 350 0 0%
1310 Wadsworth Blvd
Lakewood, CO 80215
Edward Schlauch 350 nil 350 0 0%
3206-9#206-980 Broadview Avenue
Toronto, Ontario
Canada
Janice Schneider 350 nil 350 0 0%
16835 Livorno Drive
Pacific Palisades, CA 90272
Richard Schneider 350 nil 350 0 0%
16835 Livorno Drive
Pacific Palisades, CA 90272
Chester P. Schwartz 350 nil 350 0 0%
1700 Lincoln Street, Ste. 3725
Denver, CO 80202
Louise S. Schwartz 350 nil 350 0 0%
12 Canon Place
Greenwood Village, CO 80111
Adele A. Seger 350 nil 350 0 0%
33 Cliffwood
Aliso Viejo, CA 92656
Chad Seger 350 nil 350 0 0%
33 Cliffwood
Aliso Viejo, CA 92656
Shaneko Investment
Corporation 350 nil 350 0 0%
2015 Hidden Valley Crescent
Kitchener, Ontario
Canada
Jeanette I. Shaw 350 nil 350 0 0%
6742 South Clayton Way
Littleton, CO 80122
Jerry L. Shaw 350 nil 350 0 0%
59 Toppler Drive
Castle Rock, CO 80104
Douglas Shields 350 nil 350 0 0%
#2309-980 Broadview Ave.
Toronto, Ontario M4K 3Y
Canada
Mary D. Silleck 350 nil 350 0 0%
7157 West Belmont Drive
Littleton, CO 80123
R. Hayden Silleck 350 nil 350 0 0%
7157 West Belmont Drive
Littleton, CO 80123
Dalia Silverman 29,356 nil 12,690 16,666 .1%
70 Bull Path
East Hampton, NY 11937
Beverle A. Skufca 350 nil 350 0 0%
620 Front Range Road
Littleton, CO 80120
William Skufca 350 nil 350 0 0%
620 Front Range Road
Littleton, CO 80120
Martha Sue Sloven 350 nil 350 0 0%
25 Crestmoor Drive
Denver, CO 80220
Sam S. Sloven 350 nil 350 0 0%
25 Crestmoor Drive
Denver, CO 80220
Snoflake Limited 350 nil 350 0 0%
c/o 392 Dundas Street E
Toronto Ontario M5A 2A5
Canada
Stewart Somers 350 nil 350 0 0%
60 Brookshire Circle
Thornhill Ontario L3T 7B3
Canada
Izzy Sonenreich 350 nil 350 0 0%
6795 East Tennessee Avenue, #205
Denver, CO 80224
Peri G. Sonenreich 350 nil 350 0 0%
7152 East Walsh Place
Denver, CO 80224
Terry J. Spencer 12,690 0.1% 12,690 0 0%
1814 Pitts Road
Richmond, TX 77469
Tak Wing Tang 350 nil 350 0 0%
Flt. A 15/F, 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Wai Tang 350 nil 350 0 0%
Flt. A, 15/F, 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Tak Wing Tang 350 nil 350 0 0%
Flt. A 15/F, 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Wai Tang 350 nil 350 0 0%
Flt. A, 15/F, 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Yui Tang 350 nil 350 0 0%
Flt. A, 15/F, 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Yuk Heung Tang 350 nil 350 0 0%
Flt. H, 9/F On Tai Bldg
68 Mei King St.
Hong Kong, China
Yuk Sun Tang 350 nil 350 0 0%
37C Block 3, Jubilee Garden
2-18 Lok King St., Shantin
Hong Kong, China
Allan Taylor 350 nil 350 0 0%
301 Ann Street, Level 4
Brisbane Queensland 400
Australia
Mrs Allan Taylor 350 nil 350 0 0%
Sany Then 350 nil 350 0 0%
5/F FltB Chiap Thong Bldg
321 Tokwawan Rd.
Hong Kong, China
Dirk Tinley 350 nil 350 0 0%
8240 South Locus Way
Englewood, CO 80112
Sian Piek Tjoe 350 nil 350 0 0%
Flt. D, 18/F, Star Crt
4 Man Wan Rd., Hong Kong
China
U S Bank National
Assoc C/FBO 16,904 0.2% 16,904 0 0%
Earnest Mathis IRA
Rollover UA DTD
Income Collections
P O Box CM-9551
St Paul, MN 551270
Vilacon Corporation
Pty, Ltd. 350 nil 350 0 0%
Wayne F. Vuolo 350 nil 350 0 0%
10515 West Belleview Avenue
Littleton, CO 80127
Suk Fan Wai 350 nil 350 0 0%
Flat D, 2/F, Fung Yue Mansion
47-53 Kowloon City Road
Kowloon, Hong Kong
China
Donald Wasko 350 nil 350 0 0%
305 Cook Street
Denver, CO 80206
Joanne Wasko 350 nil 350 0 0%
305 Cook Street
Denver, CO 80206
Melvin Wedgle 350 nil 350 0 0%
10910 West Florida 405
Lakewood, CO 80232
Mark Weiss 350 nil 350 0 0%
501 Williams Street
Denver, CO 80218
Ingrid E. Whitney 350 nil 350 0 0%
232 Bayshore Drive
Cape Coral, FLO 33904
Mary J Wilk 350 nil 350 0 0%
59 Byron Avenue
London Ontario N6C 1C6
Canada
Brenda C. Winter 350 nil 350 0 0%
491 East 134th Avenue
Thornton, CO 80241
Richard L Winter 350 nil 350 0 0%
491 East 134th Avenue
Thornton, CO 80241
Kenneth J. Wolf 350 nil 350 0 0%
545 Circle Drive
Denver, CO 80206
Chi Shing Wong 350 nil 350 0 0%
Flt. D, 18/F, Star Crt
4 Man Wan Rd.
Hong Kong, China
Kin Wong 350 nil 350 0 0%
Flt. A, 15/F., 6 Glee Path
Mei Foo Sun Chuen
Hong Kong, China
Suet Ying Yau 350 nil 350 0 0%
823 Po Ning House
Po Lam East Junk Bay
Hong Kong, China
Man Suet Yuen 350 nil 350 0 0%
FlaA, 23rd Floor
Tsui Lai Mansion
Westland's Court,
5 Westland's Road
Hong Kong, China
David E. Zimmerman 350 nil 350 0 0%
55 Glenmoor Way
Englewood, CO 80110
Twila K. Zimmerman 350 nil 350 0 0%
55 Glenmoor Way
Englewood, CO 80110
Gail R. Zucker 350 nil 350 0 0%
545 Circle Drive
Denver, CO 80206
Evan M. Zuckerman 350 nil 350 0 0%
5340 South Boston Street
Greenwood Village, CO 80111
</TABLE>
_____________________
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of the date of this Prospectus, or
within 60 days of such date, are treated as outstanding when determining
the percent of the class owned by such individual and when determining
the percent owned by the group.
(2) Assumes the sale of the 1,500,000 share maximum in this Offering.
(3) Henry Fong, a Director of the Company, would be deemed a beneficial owner
of shares held of record by Gulfstream Financial Partners, LLC by virtue
of his ability to exercise shared power to vote and dispose of such
shares.
(4) Sally K. Rogers is Carylyn K. Bell's sister and J. Daniel Bell's sister-
in-law.
(5) Mark M. King is Carylyn K. Bell's brother and J. Daniel Bell's brother-
in-law.
(6) William M. Bell is J. Daniel Bell's son.
(7) Includes warrants exercisable for one year to purchase 12,690 additional
shares of common stock at an exercise price of $1.00 per share.
(8) Includes warrants exercisable for one year to purchase 2,538 additional
shares of common stock at an exercise price of $1.00 per share.
(9) Includes warrants exercisable for one year to purchase 2,590 additional
shares of common stock at an exercise price of $1.00 per share.
(10) Includes warrants exercisable for one year to purchase 1,690 additional
shares of common stock at an exercise price of $1.00 per share.
(11) Includes warrants exercisable for one year to purchase 50,761 additional
shares of common stock at an exercise price of $1.00 per share.
(12) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(13) Includes warrants exercisable for one year to purchase 14,655 additional
shares of common stock at an exercise price of $1.00 per share.
(14) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(15) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(16) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(17) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(18) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(19) Includes warrants exercisable for one year to purchase 1,269 additional
shares of common stock at an exercise price of $1.00 per share.
(20) Includes warrants exercisable for one year to purchase 2,538 additional
shares of common stock at an exercise price of $1.00 per share.
(21) Henry Fong is a director of the Company and also an affiliate to a
broker-dealer. Shares include options to purchase 30,000 and warrants to
purchase 5,967 shares of additional common stock at an exercise price of
$1.00 per share. Also includes 507,614 shares owned of record by
Gulfstream Financial Partners, LLC.
The Selling Shareholders are offering shares of our common stock which
were issued to them in prior transactions. Of the shares being offered,
1,472,083 shares were issued to the Selling Shareholders upon conversion of a
total of $580,000 in bridge loans which the Selling Shareholders had made to
our subsidiary. In our agreement to acquire the subsidiary, we agreed to
register the common stock in order to induce the Selling Shareholders to
convert their outstanding debt. 976,250 of the shares were issued to our
original shareholders when we were first organized. The remaining shares
being offered by the Selling Shareholders were purchased by them in a private
offering which we made in September and October 1999. Investors in those
offerings were given registration rights as part of their agreement to invest.
We are not registering the resale of any warrants held by any Selling
Shareholders.
We have agreed to indemnify the Selling Shareholders against specified
liabilities including liabilities under the Securities Act in connection with
their offering. The Selling Shareholders have agreed to indemnify us and our
directors and officers, as well as any persons controlling our company,
against certain liabilities, including liabilities under the Securities Act.
We will pay all expenses to register the shares, except that the Selling
Shareholders will pay any underwriting and brokerage discounts, fees and
commissions, specified attorneys' fees and other expenses to the extent
applicable to them.
Selling Shareholders may sell their shares of common stock either
directly or through a broker-dealer or other agent at prices related to
prevailing market prices or an negotiated prices, in one or more of the
following kinds of transactions:
* Transactions in the over-the-counter market;
* Transactions on a stock exchange that lists our common stock, or
transactions negotiated between Selling Shareholders and purchasers,
or otherwise.
Broker-dealers or agents may purchase shares directly from a Selling
Shareholder or sell shares and warrants to someone else on behalf of a Selling
Shareholder. Broker-dealers may charge commissions to both Selling
Shareholders selling common stock, and purchasers buying shares and warrants
sold by a Selling Shareholder. If a broker buys shares directly from a
Selling Shareholder, the broker may resell the shares through another broker,
and the other broker may receive compensation from the Selling Shareholder for
the resale.
To the extent required by laws, regulations or agreements we have made,
we will use our best efforts to file a Prospectus supplement during the time
the Selling Shareholders are offering or selling shares covered by this
Prospectus in order to add or correct important information about the plan of
distribution for the shares.
In addition to any other applicable laws or regulations, Selling
Shareholders must comply with regulations relating to distributions by Selling
Shareholders, including Regulation M under the Securities Exchange Act of
1934, as amended.
Some states may require that registration, exemption from registration or
notification requirements be met before Selling Shareholders may sell their
common stock and warrants. Some states may also require Selling Shareholders
to sell their Common Stock only through broker-dealers.
<PAGE>
<PAGE>
==========================================================================
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This Prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where
the offer or sale is not permitted.
===========================================================================
iGeniSys, Inc.
2,955,291 Shares of Common Stock
_________________, 2000
===========================================================================
Until ___________, 2000 (25 days after the
date of this prospectus), all dealers effecting
transactions in the shares offered by this pro-
spectus -- whether or not participating in the
offering -- may be required to deliver a copy
of this prospectus. Dealers ;may also be
required to deliver a copy of this prospectus
when acting as underwriters and for their
unsold allotments or subscriptions.
TABLE OF CONTENTS
-----------------
Page
----
Prospectus Summary 2
Risk Factors 5
Forward-Looking Statements 13
Use of Proceeds 14
Dividend Policy 15
Capitalization 16
Certain Market Information 19 ---------------------------
Management Discussion 21
Business 26
Management 36 Prospectus
Certain Transactions 44
Principal Stockholders 47 -------------------------
Selling Shareholders and
Plan of Distribution 59
Description of Securities 89
Legal Matters 91 ___________, 2000
Experts 91
Available Information 92
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, director or officers of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, is as follows:
Sections 7-109-101 through 7-109-110 of the Colorado Corporation Code
provide as follows:
7-109-101. Definitions. As used in this article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other transaction
in which the predecessor's existence ceased upon consummation of the
transaction.
(2) "Director" means an individual who is or was a director of a corporation
or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, officer, partner,
trustee, employee, fiduciary, or agent of another domestic or foreign
corporation or other person or of an employee benefit plan. A director
is considered to be serving an employee benefit plan at the corporation's
request if his or her duties to the corporation also impose duties on, or
otherwise involve services by, the director to the plan or to
participants in or beneficiaries of the plan. "Director" includes,
unless the context requires otherwise, the estate or personal
representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a proceeding to
pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable
expenses.
(5 "Official capacity" means, when used with respect to a director, the
office of director in a corporation and, when used with respect to a
person other than a director as contemplated in section 7-109-107, the
office in a corporation held by the officer or the employment, fiduciary,
or agency relationship undertaken by the employee, fiduciary, or agent on
behalf of the corporation. "Official capacity" does not include service
for any other domestic or foreign corporation or other person or employee
benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a corporation may
indemnify a person made a party to a proceeding because the person is or
was a director against liability incurred in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's
best interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies
the requirement of subparagraph (II) of paragraph (b) of subsection (1)
of this section. A director's conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably believe
to be in the interests of the participants in or beneficiaries of the
plan shall be deemed not to satisfy the requirements of paragraph (a) of
subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not,
of itself, determinative that the director did not meet the standard of
conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the director was
adjudged liable on the basis that he or she derived an improper
personal benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors. Unless limited by its
articles of incorporation, a corporation shall indemnify a person who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection
with the proceeding.
7-109-104. Advance of expenses to directors.
(1) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(a) The director furnishes to the corporation a written affirmation of
the director's good faith belief that he or she has met the standard
of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written undertaking,
executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that he or she did not meet
the standard of conduct; and
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this
article.
(2) The undertaking required by paragraph (b) of subsection (1) of this
section shall be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability
to make repayment.
(3) Determinations and authorizations of payments under this section shall be
made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
(1) Unless otherwise provided in the articles of incorporation, a director
who is or was a party to a proceeding may apply for indemnification to
the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice the court considers necessary, may order indemnification in the
following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonable entitled
to indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth in
section 7-109-102 (1) or was adjudged liable in the circumstances
described in section 7-109-102 (4), the court may order such
indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability
shall have been adjudged in the circumstances described in section
7-109-102 (4) is limited to reasonable expenses incurred in
connection with the proceeding and reasonable expenses incurred to
obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of directors.
(1) A corporation may not indemnify a director under section 7-109-102 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in section
7-109-102. A corporation shall not advance expenses to a director under
section 7-109-104 unless authorized in the specific case after the
written affirmation and undertaking required by section 7-109-104 (1) (a)
and (1) (b) are received and the determination required by section 7-109-
104 (1) (-C-) has been made.
(2) The determinations required by subsection (1) of this section shall be
made:
(a) By the board of directors by a majority vote of those present at a
meeting at which a quorum is present, and only those directors not
parties to the proceeding shall be counted in satisfying the quorum;
or
(b) If a quorum cannot be obtained, by a majority vote of a committee of
the board of directors designated by the board of directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding
may participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of
subsection (2) of this section, and a committee cannot be established
under paragraph (b) of subsection (2) of this section, or, even if a
quorum is obtained or a committee is designated, if a majority of the
directors constituting such quorum or such committee so directs, the
determination required to be made by subsection (1) of this section shall
be made:
(a) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in paragraph (a)
or (b) of subsection (2) of this section or, if a quorum of the full
board cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full
board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall be made in
the same manner as the determination that indemnification or advance of
expenses is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made by
independent legal counsel, authorization of indemnification and advance
of expenses shall be made by the body that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section 7-
109-103, and is entitled to apply for court-ordered indemnification
under section 7-109-105, in each case to the same extent as a
director;
(b) A corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent
as to a director; and
(c) A corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for
by its bylaws, general or specific action of its board of directors
or shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain insurance on
behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation, or who, while a director, officer, employee,
fiduciary, or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee, fiduciary,
or agent of another domestic or foreign corporation or other person or of an
employee benefit plan, against liability asserted against or incurred by the
person in that capacity or arising from his or her status as a director,
officer, employee, fiduciary, or agent, whether or not the corporation would
have power to indemnify the person against the same liability under section 7-
109-102, 7-109-103, or 7-109-107. Any such insurance may be procured from any
insurance company designated by the board of directors, whether such insurance
company is formed under the laws of this state or any other jurisdiction of
the United States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock ownership or
otherwise.
7-109-109. Limitation of indemnification of directors.
(1) A provision treating a corporation's indemnification of, or advance of
expenses to, directors that is contained in its articles of incorporation
or bylaws, in a resolution of its shareholders or board of directors, or
in a contract, except an insurance policy, or otherwise, is valid only to
the extent the provision is not inconsistent with sections 7-109-101 to
7-109-108. If the article of incorporation limit indemnification or
advance of expenses, indemnification and advance of expenses are valid
only to the extent not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power to pay
or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he or she has not
been made a named defendant or respondent in the proceeding.
7-109-110. Notice to shareholder of indemnification of director. If a
corporation indemnifies or advances expenses to a director under this article
in connection with a proceeding by or in the right of the corporation, the
corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of
the board of directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to such
action.
* * *
b. Article XII of Registrant's Articles of Incorporation provide that
the corporation may indemnify each director, officer, and any employee or
agent of the corporation, his heirs, executors and administrators, against
expenses reasonably incurred or any amounts paid by him in connection with any
action, suit or proceeding to which he may be made a party by reason of his
being or having been a director, officer, employee or agent of the corporation
to the extent permitted by the law as recited above in subparagraph (a).
c. Article XII of Registrant's Articles of Incorporation provides, in
part:
"e. To the maximum extent permitted by law or by public
policy, directors of this Corporation are to have no personal
liability for monetary damages for breach of fiduciary duty as
a director."
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering are to be borne by us, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Filing Fee $ 3,000
Printing Expenses 5,000
Accounting Fees and Expenses 15,000
Legal Fees and Expenses 25,000
Blue Sky Fees and Expenses 5,000
Registrar and Transfer Agent Fee 2,000
Offering Expenses 30,000
Miscellaneous 15,000
----------
Total $ 100,000
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
1. In March, 1999, we issued to a total of 17 persons, all of whom
qualified as "accredited investors" and aggregate of 1,472,083
shares of common stock in conversion of an aggregate of
$580,000 in convertible debt. In addition, in September 1999,
we issued to these persons pro rata warrants exercisable to
purchase a total of 147,209 shares of common stock at a price
of $1.00 per share The shares and warrants were restricted
securities, which were taken for investment and were subject to
appropriate transfer restrictions, were issued without
registration under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act.
2. In March, 1999, we issued an aggregate of 7,516,740 shares of
common stock in exchange for all of the issued and outstanding
shares of capital stock of GeniSys Information Systems, Inc.
The shares were issued exclusively to persons, four who
qualified as "accredited investors" within the meaning of Rule
501(a) of Regulation D under the Securities Act. The
securities, which were taken for investment and were subject to
appropriate transfer restrictions, were issued without
registration under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act.
3. Between April and October 1999, we issued an aggregate of
505,838 shares of common stock in consideration of $199,300, or
$.394 per share. The shares were issued exclusively to nine
investors who qualified as "accredited investors" within the
meaning of Rule 501(a) of Regulation D under the Securities
Act. The securities, which were taken for investment and
subject to appropriate transfer restrictions, were issued
without registration under the Securities Act pursuant to
exemption set forth in Section 4(2) of the Securities Act and
Rule 506 of Regulation D thereunder.
4. Between September and October 1999, we issued an aggregate of
454,167 shares of common stock in consideration of $272,500, or
$.60 per share. The shares were issued exclusively to six
investors who qualified as "accredited investors" within the
meaning of Rule 501(a) of Regulation D under the Securities
Act. The securities, which were taken for investment and
subject to appropriate transfer restrictions, were issued
without registration under the Securities Act pursuant to
exemption set forth in Section 4(2) of the Securities Act and
Rule 506 of Regulation D thereunder.
Item 27. Exhibits
a. The following Exhibits are filed as part of this Registration
Statement pursuant to Item 601 of Regulation S-B:
Exhibit No. Title
- ---------- -----
* 2.0 Agreement Concerning the Exchange of Common Stock between Zion
Enterprises, Inc. and GeniSys Information Systems, Inc.
* 3.1 Amended and Restated Articles of Incorporation
* 3.2 Bylaws
* 4.1 Specimen Common Stock Certificate
* 4.2 Specimen Warrant Certificate
4.3 Form of Subscription Agreement
5.0 Opinion of Neuman, Drennen & Stone, LLC
* 10.1 1999 Equity Incentive Plan
* 10.2 Arthur Andersen, LLP Master Marketing Agreement
* 21.0 List of Subsidiaries
23.1 Consent of Neuman & Drennen, LLC
23.2 Consent of Gelfond Hochstadt Pangburn, P.C.
______________________
* Incorporated by reference from the Company's Registration Statement on
Form SB-2, SEC File No. 333-90117, as filed with the Commission on
November 1, 1999.
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement;
c. Include any additional or changed material information on the
plan of distribution.
2. That, for determining liability under the Securities Act, to treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be 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 such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
5. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred and
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, 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.
<PAGE>
<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 the Pre-Effective Amendment No. 1
to Form SB-2 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized, in the City of
Denver, State of Colorado on the 18th day of February, 2000.
iGENISYS, INC.
By: /s/ J. Daniel Bell
-----------------------------------------
J. Daniel Bell, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities with iGeniSys, Inc. and on the dates indicated.
Signature Position Date
--------- -------- ----
/s/ Daniel J. Bell Chairman of the Board 2/18/00
- -------------------------- President, Chief
Daniel J. Bell Executive Officer
/s/ Carylyn K. Bell Director, Secretary 2/18/00
- --------------------------
Carylyn K. Bell
/s/ Walter Strycker Director 2/18/00
- --------------------------
Walter Strycker
/s/ Henry Fong Director 2/18/00
- --------------------------
Henry Fong
/s/ Craig Crawford Vice President 2/18/00
- --------------------------
Craig Crawford
/s/ Jeffery M. Spencer Vice President 2/18/00
- --------------------------
Jeffery M. Spencer
/s/ Ward P. Rivenburg Chief Financial Officer 2/18/00
- ---------------------------
Ward P. Rivenburg
<PAGE>
SUBSCRIPTION AGREEMENT
iGeniSys, Inc
654 North Belt East, Suite 310
Houston, TX 77060
Gentlemen:
By signing below, the undersigned hereby subscribes to purchase _____
shares of the Common Stock, $.001 par value, of iGeniSys, Inc., a Colorado
corporation (the "Company"). In payment of the purchase price for the shares
of Common Stock, I hereby deliver to the Company payment in the amount of
$_______________, representing the price per share of $1.50 multiplied by the
number of shares being purchased.
I acknowledge receipt of the Company's Prospectus dated _____________,
2000 and represent that I have made my investment decision solely on the basis
of information contained in the prospectus.
This will further confirm that no broker/dealer or member of the National
Association of Securities Dealers, Inc. has been involved in any manner
whatsoever in my investment of the Company except as follows:
Broker-Dealer Name:
----------------------------------
Address:
----------------------------------------
----------------------------------------
Representative:
------------------------------------
SIGNATURE
Date:
--------------------------------------
Name:
--------------------------------------
Address:
-----------------------------------
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
Social Security Number:
--------------------
<PAGE>
NEUMAN & DRENNEN, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
February 17, 2000
iGeniSys, Inc.
654 North Belt East, Suite 310
Houston, Texas 77060
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to iGeniSys, Inc. (the "Company") in connection
with Registration Statement on Form SB-2 (the "Registration Statement") to be
filed with the United Stated Securities and Exchange Commission, Washington,
D.C., pursuant to the Securities Act of 1933, as amended, covering the
registration of an aggregate of 4,455,291 shares of Common Stock, $.001 par
value ("Common Stock"). In connection with such representation of the
Company, we have examined such corporate records, and have made such inquiry
of government officials and Company officials and have made such examination
of the law as we deemed appropriate in connection with delivering this
opinion.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws
of the State of Colorado and is validly existing as a corporation in good
standing under the laws of that state.
2. The Company's authorized capital consists of one hundred million ten
thousand (100,010,000) shares of Common Stock having a par value of $0.001
each and fifty million (50,000,000) shares of Preferred Stock having a par
value of $.01 each.
3. The 1,500,000 shares of the Company's Common Stock being registered
for sale and offered to the public by the Company as more fully described in
the Registration Statement are lawfully and validly issued, fully paid and
non-assessable securities of the Company.
4. The 2,955,291 shares of the Company's Common Stock being registered
for sale and offered to the public by the Selling Securityholders as more
fully described in the Registration Statement, are duly and validly
authorized, legally issued, fully paid and non-assessable.
Sincerely,
Clifford L. Neuman
CLN:nn
<PAGE>
NEUMAN & DRENNEN, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
February 17, 2000
iGeniSys, Inc.
654 North Belt East, Suite 310
Houston, Texas 77060
Re: S.E.C. Registration Statement on Form SB-2
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Registration Statement to be filed
with the United Stated Securities and Exchange Commission, Washington, D.C.,
pursuant to the Securities Act of 1933, as amended, by iGeniSys, Inc., a
Colorado corporation, (the "Company") in connection with the offering of up to
4,455,291 shares of its Common Stock, $.001 par value, as proposed and more
fully described in such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:nn
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form SB-2 of our
report dated June 25, 1999, February 16, 2000 as to Note 9, relating to the
March 31, 1999 and period May 1, 1999 (inception) to March 31, 1998
consolidated financial statements of iGeniSys, Inc., and to the reference to
our Firm under the caption "Experts" in the Prospectus.
GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
February 18, 2000
