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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section (12) or (g) of
The Securities Exchange Act of 1934
ENTERPRISES SOLUTIONS, INC.
(Name of small business issuer in its Charter)
Nevada 88-0232148
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
15 Raven Road, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 617-510-3898
781-821-0131
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Copies to:
Gerald A. Adler
Bondy & Schloss LLP
6 East 43rd St., 25th Fl.
New York, NY 10017
Securities to be registered pursuant to Section 12(b) of the Act:
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Name of each exchange
Title of each class to be so registered on which each class is to be Registered
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Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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ENTERPRISES SOLUTIONS, INC.
(General Form for Registration of Securities
of Small Business Issuers on Form 10-SB)
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PART I
Description of Business ................................................................ 3
Property ............................................................................... 8
Management's Discussion and Analysis of Financial Condition ............................ 9
Security Ownership of Certain Beneficial Owners and Management ......................... 16
Management ............................................................................. 16
Executive Compensation ................................................................. 17
Transactions with Management and Others ................................................ 17
Description of Securities .............................................................. 18
PART II
Legal Proceedings ...................................................................... 18
Market for Common Equity and Related Stockholder Matters ............................... 19
Recent Sales of Unregistered Securities ................................................ 20
Indemnification of Directors and Officers .............................................. 22
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ... 22
PART F/S
Financial Schedules and Exhibits ....................................................... 22
PART III
Index to Exhibits ...................................................................... 23
Description of Exhibits ................................................................ 24
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DESCRIPTION OF BUSINESS
General Development of Business
Enterprises Solutions, Inc., a Nevada corporation (the "Company"), was
incorporated on September 16, 1987 under the name of Sedgewicke Business
Alliance, Inc. On December 21, 1994, the Company changed its name to American
Casinos International, Inc. ("ACII") and from that time focused its operations
on the gaming industry. In particular, ACII operated a casino in Venezuela. In
mid-1997, the Venezuelan government effectively shut down all casinos pending
relicensing under a much changed and restrictive law. Although the new law had
not yet been interpreted or clearly defined as to how it would ultimately be
implemented, ACII's casino could not reopen as it had previously operated.
In 1998, the Company made a cognitive change in its corporate philosophy
in response to the growing global problem of Internet security. On September 1,
1999, the Company changed its name to Enterprises Solutions, Inc. and began to
focus its endeavors on developing a suite of products and solutions for
Internet security.
In June 1998, the Company capitalized $779,897 in shareholder loans and
accrued payroll expenses. The shareholders to whom the loan and payroll were
owed sold their shares to new investors and were allowed to keep the gaming
equipment in Venezuela as compensation for any and all liabilities associated
with the discontinued gaming operations. The Company also terminated a certain
licensing agreement and the rights to offer Internet bingo and casino games,
which the Company no longer part of its corporate business focus.
Description of Business
The Company's objective is to address what it perceives to be a lack of
security in Internet applications by developing and providing a fully secure
computer network and related products and services. Based upon its research,
the Company believes that none of the computer systems and software currently
being used for Internet transactions is fully secure or "trusted." The
Company's management believes that the demand for totally secure trusted
network systems and products has grown significantly in recent years due to the
dramatic increase in the transmission of sensitive information over the
Internet in e-commerce transactions.
The Company sees three potential market segments which it expects will be
interested in purchasing its trusted network products and related services:
infrastructure providers, corporate consumers and governments. The three main
product areas which the Company plans to offer to these segments are: (1)
bondable hardware products that provide the platforms for a secure network
infrastructure; (2) layered software application products built on these
platforms; and (3) consulting and hosted services offered to customers or
provided through the Company's prospective business partners
The Company believes that the technology which it intends to acquire is
the only fully trusted network technology developed to date. This, the Company
believes, will give it an advantage over any potential competitors. The
technology which the Company intends to acquire for development and marketing
of its products and services has been objectively evaluated by an independent
third party and rated according to the U.S. Government's Trusted Computer
System Evaluations Criteria ("TCSEC"). The TCSEC is a rating schedule for
computer security programs based upon the level of security or "assurance"
which each system provides. The technology which the Company intends to acquire
and develop for its network server has received a rating of A1 rating under the
TCSEC, which is the highest possible rating and indicates that products made
with the technology are fully secure or trusted. Management believes that this
is the only technology to have achieved such a rating. In addition, the
technology which the Company intends to acquire for use in its workstation
products has received a rating of C2. Although this indicates a lower level of
assurance, the Company believes that when used in conjunction with its A1
rated, trusted network server, its workstation product will be trusted as well.
Because of this independent evaluation and government rating, the Company
anticipates that its products will be secure enough to be bonded by business
insurance carriers and to provide the fundamental assurance necessary for
growth in e-commerce, particularly in business to business Internet exchanges.
The Company is in the process of acquiring and developing its trademarked
network security architecture, known as the Bondable Network Architecture(TM).
As planned, this will transparently integrate fully secure workstations,
servers and other network products into the existing Internet environment
without modifying either the
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basic user applications or the prevailing workstation environment. In addition,
the Company believes that the demand for its products will give rise to a
demand for security related consulting, support and training services. The
Company believes that its products and services will be unique in that they
will provide the only A1-rated, "trusted" network systems available.
Principal Platform Products
The Company plans for its initial group of products to include its own
fully secure computer platforms, some of which are designed as "plug-ins" to
make existing Internet systems secure and others of which are fully secure
products, which can be pre-loaded with the Company's specially designed trusted
software.
Novell(R) Proprietary Network Interface Card
The Company's planned initial product offering is a card consisting of a
computer board and embedded software which can be plugged into an existing
computer workstation to retrofit it into a secure workstation. The retrofitted
workstations will be able to operate within the practical boundaries of a Local
Area Network (LAN) and have been certified for a TCSEC assurance level C2 for
use with the Novell Trusted Network Architecture(R). The Proprietary Network
Interface Card, as part of Novell's trusted NetWare(TM), is intended to
identify users who access the network and support the enforcement of a
discretionary access control policy over data in the network. Although TCSEC
level C2 is not considered trusted or fully secure, the Company believes that
when used with its A1-rated Bondable Network Server(TM), the Proprietary
Network Interface Card will be fully secure.
Bondable Network Server(TM)
This general-purpose server, as planned, will include a Trusted Computing
Base that enforces a worldwide and persistent security policy for data privacy
and integrity. The technology which the Company plans to develop into its
Bondable Network Server has been independently evaluated and given a TCSEC
rating of A1, the highest level of security assurance possible. The Company
believes that the Bondable Network Server(TM) will be capable of supporting a
variety of trusted network functions required for e-commerce.
Bondable Internet Workstation(TM)
The Company intends to develop and market its own fully secure, trusted
workstation, known as the Bondable Internet Workstation(TM), which will be
marketed together with the Company's trusted applications software. The
technology which the Company plans to use for its Bondable Internet Workstation
has also been objectively evaluated by an independent third party and given a
TCSEC rating of A1 (the highest possible rating). The Company also expects the
Bondable Internet Workstation to perform the security functions when used with
standard workstation software.
As a secure network workstation, when used with the Bondable Network
Server(TM), the Bondable Internet Workstation(TM) should provide workstation
users with fully secure access to sensitive company data. The Bondable Network
Architecture(TM) only allows access in a manner consistent with specific
corporate security policies.
The PKI enabled security services within the Bondable Internet
Workstation(TM) and the explicit security properties supported by the Secure
Certificate Authority(TM) on the Bondable Network Server(TM) are expected to
form an insurable network capable of supporting E-Commerce in an environment
protected from subversion and unauthorized modification.
Principal Software Applications Products
Once it develops the platforms described above, the Company believes that
it can develop and market the following trusted software applications for use
in its platform products. These are not based on unique or new technology of
the Company. Rather, the Company plans to customize these commonly used
applications for use with its hardware platforms to provide the highest
possible level of security in e-commerce transactions.
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"Un-hackable" Web Server
The first planned network application for use on the Bondable Network
Server(TM) is a Web server. The Company believes that this Web server will be
unlike any previously marketed Web server, in that it should provide Web pages
that are protected from unauthorized modification. This is a first in Web page
protection, because it is the only independently evaluated and tested product
with high assurance access control mechanisms. These access control mechanisms
are a common thread throughout the Bondable Network Architecture(TM) and are
expected to protect the data as well as the programs which constitute the Web
Page.
The "Un-hackable" Web Server(TM) is a Bondable Network Server(TM) with
untrusted applications software. The underlying access control mechanism
protects the data, and therefore has no dependency on the security properties
of the Web server applications. The Web server does not depend on encryption
services, nor does it require a secure workstation. However, using the full
Bondable Network Architecture(TM) will enhance security.
Secure Certificate Authority(TM)
The Company also plans to develop a certificate authority software
application. A certificate authority is a mechanism for assigning
identification "certificates", or sets of data, to users who access secure,
password-protected sites on the world wide web. The Secure Certificate
Authority can be designed to extend e-business and e-commerce activities for
all types of organizations via the certificate and digital signature
technologies. Activities, such as secure e-mail and business-to-business
exchanges, and purchasing and funds commitments, will (for the first time)
actually be supported by the underlying and fundamental requirements for
internal security promulgated by generally accepted accounting practices
applied to E-Commerce activities.
The Company expects that the Secure Certificate Authority(TM) server will
correctly tie the user of a digital certificate to its use. This will support
high assurances in the attribution of digital signatures to the companies who
issue them because it is protected from modification and subversion when run on
the Bondable Network Server(TM). It thereby provides a trusted foundation for
the PKI-enabled security services of integrity, confidentiality and
non-repudiation.
Trusted Virtual Private Networks
The Bondable Internet Workstation(TM)- can be used to create a private
network over a public channel like the Internet. Such a network is referred to
as a "virtual private network" or "VPN." A VPN may be used, for example, by
multinational users to exchange value-laden data and perform transactions
across international borders. Cryptography is often limited by international
regulations and the varying laws and regulations imposed by different
countries. Encryption techniques on Bondable Internet Workstation(TM) can be
used to create VPNs which conform to the international laws and regulations in
the countries where they are used. Unlike other commercial products, which are
restricted by national regulatory boundaries, this offers customers true
privacy and the ability to operate on an international network. Integrated,
common security services on the Bondable Network Server(TM) and Bondable
Internet Client(TM) are intended to implement trusted and secure communication
paths involving transactions over the Internet within the Bondable Network
Architecture(TM).
Bondable Directory Service(TM)
The Company intends to establish another e-commerce-enabling network
service, called the Bondable Directory Service(TM), to satisfy a growing need
for a trusted utility to authenticate and validate the identity of parties on
the Internet. Business-to-business users need to know whom they are dealing
with electronically. Also, the Company believes that the pervasive nature of
the Bondable Directory Service(TM) will greatly simplify distribution and
revocation of identity certificates. This can support the PKI-enabled security
services infrastructure in the Bondable Network Architecture(TM). The Company
believes that the Bondable Directory Service(TM) can offer for the first time
the ease and facility to respond to these customer needs in a secure manner. As
planned, the Bondable Directory Service(TM) application will also be protected
from modification and subversion by the Bondable Network Server(TM) within the
Bondable Network Architecture(TM).
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Principal Consulting & Hosted Services
The Company believes that the development and marketing of its products
will create opportunities to provide related services. The Company believes
that a market will develop for both consulting and hosted services.
Consulting Services
The Company plans to provide consulting services initially in two areas:
(1) application developer consulting and (2) corporate architecture development
consulting.
Application Developer Consulting
Application developer consulting would involve assisting businesses and
others to establish a secure, trusted network, complete with the Company's
hardware and software products which is tailored to the needs of the
customer. The Company believes that demand for product development
consulting will be stimulated by the new and unique Bondable Network
Architecture(TM). The Company also believes that this type of consulting
can actually precede delivery to a customer of the Bondable Network
Server(TM) since many customers will need consultation on both their
current network applications delivery as well as the prospect of future
Bondable Network(TM) products.
Corporate Architecture Development Consulting
This area of consulting would involve working with companies' in-house
programming personnel to develop a secure, trusted network infrastructure
which is also tailored to the needs of the individual company. The Company
believes that the strength of its bondable technology can creates an
immediate need to provide high quality network computing consulting
services to potential customers and partners. Building Bondable
Networks(TM) requires individuals conversant with and ready to help
customers deploy the technology.
Hosted Services
The Company believes that its security products will enable it to support
service providers with what it believes are a uniquely attractive class of
hosted services. A "hosted service" is a service provided over the Internet to
facilitate Internet commerce. An example of such a hosted service which the
Company may offer is a truly trusted Internet Service Provider (ISP). The
Company believes that a trusted ISP could enable new electronic commerce
capabilities that are currently blocked by concerns about the lack of security
in today's ISPs, such as secure storage of personal identification numbers and
passwords.
Toward that end, the Company also plans to provide a global registry
service where a closed group of subscribers worldwide can access, on a bonded
basis, a highly reliable registry of various information. This could be useful,
for example, in providing information services departments with a means of
controlling the use of unapproved or deficient software by employees of large
organizations. The Company believes that, among other benefits, this will meet
the growing demand for trusted software distribution and control. That is, the
ability to verify the source and authenticity of software which is used by
businesses and is capable of being transported from external sources.
Underlying Technology
Based upon its research, the Company believes that there currently are
only two types of networking technology in the world which are fully secure or
"trusted". The Company's management is in the process of obtaining the rights
to develop each of these technologies and plans to combine them into its family
of products.
The Company is negotiating with Gemini Computers Incorporated ("Gemini"),
located in Carmel, California, to purchase the exclusive rights to the
technology needed to develop its Bondable Network Server and its Un-hackable
Web Server(TM). The Company is also considering purchasing an equity interest
in Gemini.
The Company has entered into a Teaming Agreement, dated as of July 26,
1999, with Gemini, which provides for Gemini to act as a subcontractor on
contracts for information technology equipment, supplies and services which are
to be developed by the Company. Pursuant to the agreement, the Company and
Gemini share
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responsibilities on technical proposals and on the actual contract work. The
Company is to manage all proposals under the agreement and provide facilities
for the production of proposals as well as administrative support. Gemini is to
provide technical and non-technical information and data to support development
of the proposals. The division of responsibilities for contracts is to be
agreed upon by the parties on a project-by-project basis.
The Company is also negotiating with certain creditors of Systex Inc. for
the exclusive rights to purchase "Assure" technology, which was created by
Systex Inc. in conjunction with Novell's Trusted Network Architecture(R). The
Company plans to use this technology to develop its level C2 certified plug-in
card for its workstation.
Because the Company is still negotiating for the rights to license and
develop these two technologies, it is possible that it will be unable to do so.
If it were unable to acquire these technologies, management would have to
consider the feasibility of developing the Company's planned products
independently of these technologies. The Company estimates that such
development would take as much as two years. The Company may be unable to
obtain adequate funding to continue its operations during those two years or to
support its research and development of the products. This would have a
material adverse effect on the Company and its business plan.
The Company has spent 1,600,000 during the past year on research and
development.
Planned European Operations
The Company plans to establish a subsidiary in Germany, under the name of
Enterprise GmbH. The Company believes that the establishment of this subsidiary
will strengthen its presence in the international secure networking market
place. Additionally, the Company is strategically looking at other European
manufacturers of complimentary products which can be used to augment the
company's family of products.
Government Regulation
The Company plans to acquire technology for use in developing its products
which has been independently evaluated and rated according to the TCSEC and
ITSEC government standards. In order to maintain these government ratings, the
Company will have to continuously update its products and have them evaluated
independently. In particular, in order to provide digital certificates in
Germany, the Company will be required to maintain an ITSEC evaluation level of
E4 or above.
In addition, the Company will have to establish an adequate technical
basis for providing digital signatures per statutes in several states in the
U.S.
In order to export any of its high assurance products or any equipment
containing encryption technology, the Company will have to comply with the
relevant regulations then in effect which are promulgated by the Departments of
State and/or Commerce.
Industry and Market for the Company's Products and Services
The Need for Business Level Assurances of Protection
The Company's management believes that as more and more businesses come to
rely on the Internet as a means of communicating and conducting transactions
with suppliers, customers and business partners, the need for secure, trusted
network products will become critical. The market analysis in the 1998 Ernst
and Young Special Report on Technology in Banking and Financial Services
presents technology spending trends on a global basis. The report focuses on
e-commerce, and the survey findings indicate that global commerce has, in
general, recognized the importance of the direct e-commerce channel and exposes
the need for critical infrastructure - the, as yet, unsolved problems posed by
today's technologies. Of the 100 institutions surveyed in 26 countries the
majority plan to allocate significant resources to develop the information
infrastructure required to exploit e-commerce. Management believes that this
indicates that the Internet has come of age as a viable means of communicating
and conducting transactions with suppliers, customers and business partners.
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According to the Gartner Group, ". . . through the year 2008, enterprises
will continue to evolve into extended enterprises, where business processes
encompass their partners, alliances and suppliers as well as their customers."
In these so-called "value networks" (Ernst & Young), enterprises will use
Internet-derived technology to extend their business processes.
The Company believes that businesses will continue to extend their
internal business processes to their external business partners, essentially
redefining process boundaries to include the Internet, web server and browsers.
This extranet technology will encompass all major businesses. But as stated by
Forrester, ". . . the explosive growth of the Internet raises new dimensions of
risk, in the form of [attacks] . . . that exploit a system's communication
capabilities." The Company believes that this is equally true of extranets.
Management believes that an "open" Internet means an "exposed" Internet,
where the user is not protected. The Gartner Group has also stated that "As
businesses expose their internal process to customers and suppliers, today's
security is being rendered ineffective. Firewalls have reached their limit --
taxed by the growing onslaught of invasive applications and aggressively
outbound users." Forrester has suggested, "What do you do when there are no
perimeters? If you succeed in making your Web site easier to use, then
everybody is an insider."
Gartner further states "A new model is needed to save companies from
security's crippling complexity and to enable increased openness." To do this,
Gartner suggests that enterprises ". . . must adopt tools that add identity and
policy to the extranet while delegating control across the business." The
business community must establish liability, accountability and
interoperability uniformly across the entire e-commerce networking environment
which is just as reliable as in the pen-and-paper based business world.
Market Analysis
The market trends in the Ernst and Young 1998 Special Report on Technology
indicate significant changes from previous years, with the area of greatest
change being Information Technology (IT) project spending. Projections
contained in the report indicate that such spending will be more than twice its
historical levels over the coming two to three years. This increase is to be
largely driven by mandatory initiatives, such as the Year 2000 computer problem
and European Union Mandates. In 2001, these mandatory requirements are
anticipated to decline dramatically. The Company believes, however, that these
budgets will not be cut but rather reallocated to other areas even over
budgetary constraints. Management further believes that, due to competitive
demands, there will be a surge of new e-commerce budget monies after 2001
resulting from these reallocations.
The Ernst & Young survey also indicated that stated growth in e- commerce
spending is far out-stripping that of spending for new technologies as a whole.
Respondents indicated that in 1998 they allocated twice as much of their
technology budgets for e-commerce as they allocated in 1997. New technology
budgets are projected to double from 1992 to 2001. Respondents also indicated
that by 2001, they plan to expend 14% of their new technology budgets on
e-commerce, alone. From this survey, it appears that during the next five
years, there will be allocations of the new technology budgets for developing
the information infrastructure for supporting e-commerce which will take
precedence over technology upgrades.
Respondents expect to see discretionary funding return to historical
levels (around 31%) by the Year 2000. Additionally, revenue growth through
e-commerce activities, viz., more content provider services, network service
providers, and direct sales channels, continues to be the primary focus of IT
discretionary spending and is projected to remain so for the next three to five
years.
In view of the survey findings, there are three aspects to the Company's
products and marketing potential to be considered.
First, according to the survey, sharp increases in IT funding, primarily
attributable to mandatory projects such as Y2K compliance, with no
corresponding reductions after the Year 2000, coupled with increases in
discretionary funding projected for the Year 2000 and after, suggest that key
project activities, such as security ("the number one concern" according to
Gartner Group) and building of the information infrastructure are projected to
receive a major share of the IT budget.
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Secondly, based on the survey predictions of the IT budgets dedicated for
e-commerce and the expressed interests in public key cryptography and digital
certificate systems, the Company believes that a trusted PKI security service
would be positioned to compete for a significant share of this funding.
Finally, increases in discretionary funding and in discretionary project
budgets will likely address security apart from e-commerce, focusing strictly
on corporate security requirements.
The Company believes that Ernst & Young's identification of security as a
top concern creates a greater potential to capture the niche security market
share more rapidly while competing with less comprehensive add-on security
products. For example, it would not be necessary for a customer to purchase a
firewall virus protection and a certificate management system separately when
using a comprehensive high assurance network product such as the Bonded Network
Architecture(TM). The Company believes that high assurance network products
should compete aggressively in the area over the next three to five years.
Marketing the Company's Products
The Company believes that the demand for secure network products is now
ready for significant expansion. Management believes that the biggest challenge
facing the Company in marketing its products is to educate a few very big
e-commerce customers about the risks caused by the substantial lack of security
in today's Internet products, and then to follow through with an introduction
to the Company's own solutions. The Company believes it has an advantage over
any potential competitors in technical capabilities.
The Company has developed potential customers and customers'
representatives over a 4-year period with on going contact, meetings,
associations and repeated presentations. The Company is a member of the Black
Forest Group, a trade group which management believes positions the Company for
introduction to major potential customers.
Additionally, in response to a specific request from the U.S. Government,
the Company has joined a security research project in the Naval Postgraduate
School in Monterey, California in submitting a formal proposal for a 3-4 year
research and development project with substantial demonstrations of the
Company's technology. Management anticipates that participation in this arena
will open up significant new markets within the government.
The Company has identified key trade publications in which it will seek to
advertise its products and services. The Company plans to target publications
with a tailored appropriate message for each specific audience, i.e., CEO, CIO,
CFO, Corporate Information Security Officers, Auditors, Department Management,
Consultants, LAN Administrators, and end users. Publications in which the
Company may seek to advertise include Info Security News, EDPAA Journal,
Computer Security Institute (CSI) Newsletter, International Security
Association (ISSA), Information Week, LAN Times, Computer World, Communications
Week, LAN Technology, PC Week and Auerbach Publications.
Business Strategy
The Company focuses on incorporating "predecessor" technologies (Gemini
and Assure) and leveraging existing standards to significantly shorten product
development, enhancement and time to market. Exploiting the specific
technologies requires a highly knowledgeable world-recognized staff and
experienced team of technical and management individuals with a common vision.
The Company plans to grow its technical and managerial team to 50 by the end of
the first year. Over three years, the team is expected to reach approximately
100 engineers and technical and support staff, as required to produce the
comprehensive product line.
In its first full year of operation, the Company's goal is to seek a
market share of 5% of the market for gross sales of e-commerce products and a
majority of the market share of trusted, insurable e-commerce products. The
Company cannot be certain that it will be able to sell its products or, if it
does, that it will achieve this revenue potential.
Competition
The market in which the Company plans to compete is that of bondable,
business-to-business e-commerce platforms and services. The fundamental factor
distinguishing the Company from the competition is the high
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level of security assurance afforded by the Company's products. The
technologies which the Company plans to utilize in developing its products have
been certified for their high level of security assurance by independent
evaluation. The Company believes that this distinguishes the Company to
potential customers.
Only high assurance products offer protection against attacks by malicious
software. The platforms and applications currently on the market, as well as
add-on products, are vulnerable to malicious software attacks.
The Company believes, however, that the development of its products and
related markets could accelerate the industry for high assurance products. This
would increase competition with the Company's products and services and
encourage other companies to enter the market. Some of these other companies
may be far larger and have greater resources than the Company and may thus gain
a competitive advantage over the Company in product development and marketing.
Competitor Differentiation
The Company believes that the market for Internet security products is
divided among (i) other high assurance Internet products, (ii) low assurance
Internet products and (iii) products of ambiguous assurance.
Other high assurance Internet products
A competitor could develop or acquire high assurance computer technology
and develop clients and/or servers that would be part of an insurable network
architecture. In particular, a competitor's ability to buy rights to GEMSOS,
and then proceed with a U.S. or European evaluation, represents the single
greatest competitive threat. The acquisition of Gemini technology and our
subsequent exclusive agreement with Gemini (and an agreement that they will not
themselves pursue an evaluation) is the only way to significantly reduce this
threat.
Low assurance Internet products
These are existing platforms and add-on security products such as those
being used today to conduct E-business. These would not compete in the bonded
products market; rather they represent the rabble above which we must raise the
bar.
Products of ambiguous assurance
These include products that were designed to meet high assurance
requirements but never completed any evaluation (e.g., the Lock system or
trusted MACH). Also in this group are modified and extended versions of what
were once evaluated products, but that no longer have any independent basis for
claims of high assurance (e.g., they were not modified under a RAMP program).
Competitors could obtain evaluations for these products, making them high
assurance competitors. The ambiguous assurance competition is our biggest
challenge in terms of educating potential customers. By neither accepting or
condoning such development and marketing shortcuts by competitors through our
own aggressive program of truthful and accurate responses; we plan to
differentiate ourselves from such products.
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High Assurance Competitors
Today there are three high assurance platforms that could potentially be
used as foundations for insurable networks:
HIGH ASSURANCE COMPETITORS
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High Assurance
Base Strengths Weaknesses
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Gemini and other licensees Most scalable & extensible The Company plans sell the
of GEMSOS of all. Best performance. only evaluated instance.
An exclusive licensing
agreement would lock out
competitors.
Wang Multiprocessor. Potential Would require significant
server, or if modified, a modification for use as a
workstation workstation. Class B3; does
not address malicious code
in the TCB.
Boeing Designed for VPN type Not suitable for a server.
applications.
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Low Assurance Competitors
As previously noted, the Company does not expect that these low assurance
competitors will compete in the bonded network marketplace. This category
includes all Microsoft products (workstations and servers). Of the clients, IBM
is most noteworthy as an initial competitor. IBM's strength is based upon its
hardware production. However, its weakness is in the insecure operating systems
which manage applications and user interfaces.
Ambiguous Assurance Competitors
Products such as Lock and Trusted Mach have been developed to meet high
assurance requirements. Therefore, technical resources exist that could be
applied to completing an evaluation of such a product. This would move such a
product to the group of high assurance competitors.
Staying Competitive
The Company believes that the use of high assurance products is its
primary competitive advantage. However, at some point, other high assurance
competitors will enter the market and possibly outperform the Company. In order
to compete on this level, the Company plans to establish and maintain a
reputation for providing the only third-party evaluated products and services
of high performance, quality, utility, convenience, versatility, safety and
serviceability.
Performance
The Company believes it has a strong engineering organization capable of
producing high performance products. The multi-processor capabilities of the
server platforms allow the company to offer expandable systems with scalable
performance.
Quality
The Company plans to institute quality assurance programs from the very
beginning of its operations. As planned, hardware products will be produced
from the highest quality commercial components and where necessary be ISO 9000
certified.
9
<PAGE>
Utility
The Company believes that the technical expertise of its staff will ensure
that its products continue to meet the needs of secure E- commerce as business
models continue to evolve.
Convenience
The underlying secure infrastructure is designed to operate transparently
with existing end-user client applications. Administrative and trusted path
interfaces will be designed using well-established standards and conventions
for ease of use.
Versatility
A small, powerful security kernel API provides the same underlying base to
each of the products. The kernel can essentially be viewed as "smart hardware"
that can be readily used as the base to many applications and services.
Significant engineering resources will be used to investigate product
enhancements to expand the application of the products to new areas of network
computing.
Safety
The Company plans to design its products for safety with a goal of
obtaining UL certification.
Serviceability
The Company believes that its extensive use of commodity hardware
components will aid serviceability of the products. Automated diagnostics and
built in tests are planned to perform fault isolation functions. The Company
plans to develop and expand these capabilities over the early life of the
product. The Company plans to offer both hardware and software maintenance
products with a range of service levels.
Employees
The Company currently has seven employees, consisting of five engineers, a
chief executive officer and an office administrator. The Company plans to hire
additional employees, particularly engineers, to assist in the development of
its products.
Headquarters
The Company's executive headquarters is located Southeast of Boston at 15
Raven Road, Canton, Massachusetts 02021. The Company's Security Systems
Solutions (S3) engineering and product development division and is located at
50 Ragsdale Drive, Suite 150, Monterey, California 93940. The main operations
center is located at 5061 North Dixie Highway Boca Raton, Florida 33431.
PROPERTY
The Company's Security Systems Solutions ("SSS") engineering and product
development division is located at 50 Ragsdale Drive, Suite 150, Monterey,
California 93940. The Company has entered into a lease for this facility which
has a three year term commencing on September 15, 1999 and expiring on
September 14, 2002. The lease provides for a base rent of $5,919 per month.
Pursuant to the lease, the Company is also responsible for 21.37% of (1) the
operating expenses (estimated at $2,320 per month for the first year and
including real property and any public authority taxes), (2) the services and
utilities and (3) the Landlord's performance of Tenant Company's Covenants (if
applicable). The building is a two-story office building in which the Company
leases approximately 4,735 square feet. The Company believes that the premises
are adequately insured.
The Company's SSS division also has leased a corporate condominium located
at 24525 Outlook Drive, #26, Carmel, California, 93923. The lease is for a
period of one year commencing on September 8, 1999 and expiring on August 31,
1999 at a monthly rent of $2,250.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Results of Operations
Comparison of the Nine Months Ended September 30, 1999 and 1998
Revenues decreased $328 from $328 in the nine months ended September 30,
1999 to zero for the nine months ended August 31, 1998. The decrease resulted
from the fact that the Company discontinued its prior operations and has not
yet generated any revenues from its planned Internet security business.
In July 1998, the Company terminated its pending acquisition of the
company it had advanced approximately $634,000 for working capital purposes.
The Company terminated is pending acquisition due to its inability to obtain
satisfactory audited financial statements because of missing financial
information, questionable contracts, lack of internal controls, and substantial
liabilities. As a result, the Company suffered a bad debt loss of $634,023
during the eight months ended August 31, 1999, which was the result of its
termination.
Selling, general and administrative expenses increased $41,960 or 37.5% to
$153,934 in the nine months ended September 30, 1999 from $111,960 in the prior
period. The increase is attributable primarily to the increase in professional
and consulting fees incurred as it began its new business plan and the auditing
of its terminated acqusition. In addition, the Company began incurring selling
expenses for travel and promotion as it began implementing its new Internet
security business plan.
As a result of the above factors, the Company's net loss increased
$676,325 from $111,632 for the nine months ended September 30, 1998 to $787,957
for the nine months ended September 30, 1999.
Comparison of the Year Ended December 31, 1998 and 1997
Revenues decreased $16,038 (98%) to $328 in fiscal 1998 as compared to
$16,366 in fiscal 1997. The decrease resulted from the fact that the Company
discontinued its prior operations and has not yet generated any revenues from
its planned Internet security business.
Selling, general and administrative expenses increased $64,670 to $125,567
in fiscal 1998 from $61,500 in fiscal 1997.
The net loss for fiscal 1998 increased $107,105 to $125,239 from a net
loss in 1997 of $45,134 due to the foregoing.
Liquidity and Capital Resources
The Company's working capital at August 31, 1999 was $48,504. The
Company's primary sources of working capital have been from the issuance of
Company securities and loans from shareholders.
Currently, the Company's primary cash requirements include the ongoing
cost of the development of its new business plan and the costs of maintaining
its administrative expenses.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the name and address of each officer and
director of the Company and each person who owns beneficially more than ten
percent of the Common Stock of the Company, and the number of shares owned by
each such person and by all officers and directors as a group:
Approx.
Name and Address of Amount and Nature % of
Beneficial Owner of Ownership Class
------------------- ----------------- -------
Dr. John A. Solomon(1) 225,000(2) 4.8%
Wayne B. Kight(3) 45,000 *
Roger Schell(4) 150,000 3.2%
Gary S Baker(4) 100,000(5) 2.1%
Richard A Lee II(4) 100,000 2.1%
Jeffrey M Moritz(3) 45,000(6) *
Nina L. Cannon(3) 10,000 *
Humphrey Limited 275,001 5.9%
Eurolife Bldg.
1 Corral Road, Ste. 2A
Gibraltar
Rowan House Limited 244,168 5.2%
Eurolife Bldg.
1 Corral Road, Ste. 2A
Gibraltar
All directors and officers 230,000 4.9%
as a group
*Less than 1%
(1) The address for Dr. Solomon is c/o the Company at 15 Raven Road, Canton,
Massachusetts 02021.
(2) 75,000 shares to be issued on December 31, 1999, 2000 and 2001,
respectively.
(3) The address for Mr. Kight and Ms. Cannon is c/o the Company at 5061 North
Dixie Highway Boca Raton, Florida.
(4) The address for Messrs. Schell, Baker and Lee is c/o the Company at 50
Ragsdale Drive, Suite 150, Monterey, California 93940.
(5) Subject to pledge.
(6) 15,000 of such shares are held by The Saugus Group, in which Mr. Moritz is
a partner. 30,000 of such shares underlie options which are presently
exercisable.
12
<PAGE>
MANAGEMENT
The Officers and Directors of the Company are as follows:
Name Age Title
---- --- -----
Dr. John A. Solomon 50 President and C.E.O*
Wayne B. Kight 48 Executive Vice President/Operations*
Dr. Roger Raymond Schell 59 Executive Vice President/ Engineering
Gary S. Baker 52 Vice President/ Engineering
Richard A. Lee II 50 Vice President/Business Development
Jeffrey M. Moritz 54 Treasurer*
Nina C. Anthony 41 Secretary*
- ------------
* Indicates Directors
Dr. John A. Solomon has been President, Chief Executive Officer and
Director of the Company from October, 1999 to present. Dr. Solomon was
President and Chief Executive Officer of CEA, Inc., a systems integration and
security technology company, from 1979 to 1995. He was Chief Executive Officer
of ACG, Inc., a telecommunications provider, from 1996 to 1997 and has been
Managing Principal of Madison Consulting LLC, a high tech consultancy firm
since 1997.
Dr. Solomon has over 28 years of global technical and management
experience in the field of electronic systems integration, software development
and distributed networks. Dr. Solomon has to his credit many successful
corporations/ventures for the US and foreign governments and multinational
corporations.
Wayne B. Kight has been Executive Vice President and Director of the
Company from June 1998 to present. He was Vice President of Homeowners
Financial Corp., a mortgage banking company, from May 1994 to June 1998 (this
corporation filed for Chapter 11 Bankruptcy in 1997 and for Chapter 7
Bankruptcy in 1998). Mr Kight had his own consultancy practice from 1998 to
1999. He is also on the Board of Directors of American ATM, Corp.
Dr. Roger Raymond Schell has been Executive Vice President and President
of the Company's SSS Division since August 1999. From 1994 to August 1999 he
was a Senior Manager for Novell, Inc., a software security company.
Dr. Roger R. Schell, shall administer to the division in accordance with
the established policy and guidelines of the corporation. Additionally, Dr.
Schell will perform mentoring and technical direction to the engineering staff.
Dr. Schell has over 35 years of accomplishment in the managing development of
high quality software and software engineering techniques. He has delivered
major Internet security enhancements in the world's leading network operating
systems.
Gary S. Baker has been Vice President and Director of Engineering of the
Company since August 1999. He was a Senior Engineer at Stratus Computer from
1993 to 1996, a Senior Engineer and Manager at Novell Computer from 1996 to
1998 and Director of Engineering at Sistrex from 1998 to 1999. He also serves
as a director of the Company's Secure Systems Solutions Division.
Richard A. Lee II has been Vice President of Business Strategy of the
Company since August 1999. He was the Senior Technical Research Engineer at
Novell, Inc. from 1990 to 1998.
Jeffrey M. Moritz has been Treasurer and Director of the Company since
June 1998. Mr. Moritz ran his own accounting firm until January 1998 and was
also a Partner at the Saugus Group, a Management Consulting firm until January
1999. Mr. Moritz filed for bankruptcy in 1993 and was discharged in 1994. His
CPA license was revoked by the Commonwealth of Massachusetts for three years as
of February 1, 1997 as a result
13
<PAGE>
of a Consent Agreement regarding the alleged sale of securities without a
license, under which he consented to jurisdiction, paid a $500 minimum fine and
agreed to cease activities. This agreement does not however impact on his
ability to apply for and be granted a license to sell securities.
Nina Cannon has been Secretary of the Company since September 18, 1999 and
a director since September 1, 1999. She was Director of Account and Contract
Management of Nortel Networks Telecommunications from December 1988 until
November 1997 and from December 1997 to September 1999 she was Vice President
of Operations, Sales and Planning at Lucent Technologies Telecommunications.
Ms. Cannon is currently an independent consultant.
Employment Agreements
The Company has entered into employment agreements with Dr. John A.
Solomon, Dr. Roger R. Schell, Gary S. Baker and Richard A. Lee II. Each
agreement has a term of three years commencing on August 1, 1999 for Messrs.
Schell, Baker and Lee and commencing September 15, 1999 for Dr. John A.
Solomon. The agreements provide for a base salary of $200,000 for Dr. Solomon,
$150,000 for Dr. Schell and $120,000 for Messrs. Baker and Lee. The agreements
also provide for stock to be issued to each of the employees and held in escrow
until such issuance.
Executive Compensation
During the fiscal year ended December 31, 1998, no compensation was paid
to officers. No salaries in excess of $100,000 have been paid to any executive
officer or director of the Company since the Company's change in business
focus.
Transactions with Management and Others
Dr. Roger Raymond Schell is a shareholder in Gemini Computers, Inc. with
which the Company has a Teaming Agreement. The Company intends to acquire from
Gemini the license to certain technology which is necessary for the development
of the Company's products. In addition, Dr. Schell claims he has a position of
about 20% of Gemini which he claims has been fraudulently diluted to less than
5%.
Sistemas de Comercio Internet has been advanced the sum of $105,000 by the
Company at an interest rate of 6%, which loan was approved by the Company's
Board of Directors and subject to an equity conversion of 10% of the Company.
LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and
has no knowledge that any such proceedings are threatened.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's securities trade on the OTC Bulletin Board and in the
over-the-counter market "pink sheets". The Company's trading symbol is "EPSO".
Over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions.
The following sets forth the range of high and low bid information for the
quarterly periods indicated as reported by the National Quotation Bureau:
<TABLE>
<CAPTION>
High Low High Low
------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
1997: 1st Quarter .21875 .0625 1998: 1st Quarter .50 .25
2nd Quarter .21875 .03 2nd Quarter 2.25 .125
3rd Quarter .05 .03 3rd Quarter 5 2
4th Quarter .5625 .04 4th Quarter 6.50 4.50
1999: 1st Quarter 11.25 6
2nd Quarter 15.125 11
3rd Quarter 14 13.50
</TABLE>
14
<PAGE>
The foregoing bid information has not been adjusted for the stock dividend
which occurred in June 1999.
Holders
As of November 15, 1999, the number of holders of record of shares of
common stock, excluding the number of beneficial owners whose securities are
held in street name was approximately 80.
Dividend Policy
The Company does not anticipate paying any cash dividends on its common
stock in the foreseeable future because it intends to retain its earnings to
finance the expansion of its business. Thereafter, declaration of dividends
will be determined by the Board of Directors in light of conditions then
existing, including without limitation the Company's financial condition,
capital requirements and business condition.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 25,000,000 shares of common stock,
$.001 par value of which 3,827,443 shares are issued and outstanding. The
holders of shares of common stock have one vote per share. None of the shares
have preemptive or cumulative voting rights, have any rights of redemption or
are liable for assessments or further calls. None of the shares will have any
conversion rights. The holders of common stock are entitled to dividends, when
and as declared by the Board of Directors from funds legally available therefor
and upon liquidations of the Company to share pro rata in any distribution to
shareholders.
The Company is authorized to issue 5,000,000 shares of preferred stock,
$.001 par value of which 148,500 shares are issued and outstanding. The
preferred shares are 8% cumulative and redeemable at the Company's option at
110% .
American Stock Transfer & Trust Company, 40 Wall Street, New York, New
York is the transfer agent and registrar for the Company's common stock.
Shares Eligible for Future Sale
The Company has 3,827,443 shares of Common Stock outstanding but of these
shares, only 3,182,443 shares are freely tradable. All of the remaining shares
of Common Stock are "restricted securities" and in the future, may be sold only
in compliance with Rule 144 or in an exempt transaction under the Securities
Act of 1933 (the "Act"), unless registered under the Act (the "restricted
shares").
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain conditions, a person, including an affiliate of the
Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least one year is entitled to sell
within any three month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same class or,
if the common stock is quoted on a national quotation system, the average
weekly trading volume during the four calendar weeks preceding the sale. A
person who has not been an affiliate of the Company for at least the three
months immediately preceding the sale and who has beneficially owned shares of
Common Stock for at least two years is entitled to sell such shares under Rule
144 without regard to any of the limitations described above.
Options and Warrants
On July 30, 1998, the Board of Directors has authorized the issuance of
annual options to members of the Board of Directors for their services to the
Company. On July 1 of each year, each then member of the Board of Directors is
to receive 15,000 options at 100% of the market bid price of common shares at
the close of business on June 30. As of August 31, 1999 options to purchase
60,000 shares have been issued.
In connection with its offerings during 1998 and through August 31, 1999,
the Company issued 2,150,000 warrants to purchase common shares at a price of
$1.667 per common share (1,800,000 warrants) and at $2.50 per common share
(350,000 warrants). The warrants expire on September 6, 2000. These warrants
have been adjusted for the June 1999 stock split.
15
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
The following paragraphs set forth information with respect to all
securities of the Company sold within the past three years without registering
the securities under the Act. The information includes the names of purchasers,
date of issue, number of shares issued and the consideration received by the
Company for the issuance of these shares.
From July 1998 through March 1999, the Company issued 300,000 shares of
its common stock at a price of $2.50 per share in a private offering pursuant
to Rule 504 of Regulation D under the Securities Act of 1933, as amended. The
shares were purchased in the following amounts and by the following
individuals:
Name Number of Shares Purchased
- -------------------------------------- ---------------------------
Mona Morris 4,000
Stanley & Phyllis Basist 6,000
Babbette Levy 10,000
Ivan Jay Steinhardt 4,000
National Resource Center Inc. 30,000
George Rosati 10,000
Audra Cerruto 5,000
Monteville Ltd. 64,000
Sal Cerruto 4,000
William Metnick 4,000
Anne & Seymour Goldberg 4,000
Martin Axetrod 10,000
Lee Engel 4,000
Barry Haberman 4,000
Joe Lapatin 4,000
Wayne & Vera Kaplan 4,000
Brent Anderson 50,000
Brent Anderson 401K 30,000
Kenneth Weitz 4,000
Hi-Tel Group Inc. 25,000
Trans Global Trade Linc Inc. 8,000
Antoinette J. Schwetzer 4,000
Sally Staltare 8,000
On June 16, 1998, the Company issued 10,000 shares of common stock to
Gerald A. Adler and Bondy & Schloss LLP at $.05 per share and for services
rendered and pursuant to Section 4(2) of the Securities Act and Rule 506
thereunder.
On June 18 and 19, 1998, the Company issued 6,667 shares of common stock
to Mr. John Falco, Jr., 6,667 shares of common stock to Mr. Jeffrey Geez and
6,666 shares of common stock to Mr. Enice Lorenzo, each at $.05 per share and
for services rendered and pursuant to Section 4(2) and Rule 506 thereunder.
On June 17, 1998, the Company issued 1,960,000 shares of common stock and
1,200,000 common stock purchase warrants to a group of European investors
pursuant to Regulation S.
In June 1998, the Company issued 10,000 shares of common stock each to Mr.
Wayne Kight, Omega Funding Corp. and The Saugus Group at $.05 per share and for
services rendered pursuant to Section 4(2) and Rule 506 thereunder.
16
<PAGE>
In September 1999, the Company issued Units consisting of shares of common
stock and common stock purchase warrants at $20,000 per Unit to the following
investors in the amounts indicated pursuant to Section 4(2) and Rule 506
thereunder:
ENTERPRISE SOLUTIONS -- unit offering $20,000 per unit
<TABLE>
<CAPTION>
Shares on
Warrant
# of Units Name and Address # of Shares # of Warrants Exercise
- ------------ ------------------------------------------ ------------- --------------- ----------
<S> <C> <C> <C> <C>
1/2 Martin Axelrod 5,000 50,000 33,334
1 Stanley Basist & Phylis Basist 10,000 100,000 66,667
1 Coltmill Ltd. 10,000 100,000 66,667
1/4 Girls Town 2,500 25,000 16,667
3/20 Bruce A. Gloteer, DEP IRA 1,500 15,000 10,000
1/4 Anne Goldberg and Seymour Goldberg 2,500 25,000 16,667
1/4 William Hanley 2,500 25,000 16,667
1/4 Joseph Lapatin 2,500 25,000 16,667
1/4 Henry B. Leshman 2,500 25,000 16,667
1/4 Lima Pech Limited Partnership 2,500 25,000 16,667
1/10 Michael A. Marks 1,000 10,000 6,667
1/2 National Resource Center 5,000 50,000 33,334
1/2 Ronibar Company, L.P. 5,000 50,000 33,334
3/4 Rowan House Limited 32,500 325,000 211,668
1/2 Sue Simon 5,000 50,000 33,334
1/2 Stephen M. Savage Family Ltd Partnership 5,000 50,000 33,334
1/4 SEG Investments Limited Partnership 2,500 25,000 16,667
1/4 SSE Investments Limited Partnership 2,500 25,000 16,667
3/4 Aubrey Strul 7,500 75,000 50,001
1/5 Amy Weidenbaum (Allen) 2,000 20,000 13,334
1/5 Pam Weidenbaum (Rottenberg) 2,000 20,000 13,334
1/10 Sharl Weidenbaum 1,000 10,000 6,667
3/10 Walter Weidenbaum 3,000 30,000 20,001
1/5 Wayne Weidenbaum 2,000 20,000 13,334
1/4 Eugene Winick 2,500 25,000 16,667
1/4 Raquel Wolf, as Trustee 2,500 25,000 16,667
</TABLE>
Shares issuable on warrant exercise have been adjusted for the common stock
split which occurred in June, 1999.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws include certain provisions permitted pursuant to the
General Corporation Law of the State of Nevada (the "NGCL") whereby officers,
directors and employees of the Company are to be indemnified against certain
liabilities. The Articles of Incorporation also limit to the fullest extent
permitted by the NGCL a director's personal liability for obligations, suits of
any kind including but not limited to malpractice suits, class action suits,
discrimination suits, personal injury suits, anti-trust suits, liens, acts or
judgments of the Company or any other liability which may be construed within
the scope of the laws and statutes of the State of Nevada. The Company believes
that these provisions will facilitate the Company's ability to continue to
attract and retain qualified individuals to serve as directors and officers of
the Company.
CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
17
<PAGE>
FINANCIAL SCHEDULES AND EXHIBITS
(a) There are filed as part of this Form 10-SB the following:
Financial Statements. The financial statements filed as part of this Form
10-SB are indexed below and are included at page F-1.
<TABLE>
<S> <C>
Independent Auditors' Report ............................................................. F-1
Balance Sheet as at August 31, 1999 (unaudited) December 31, 1998 and December 31, 1997
(audited) ............................................................................... F-2
Statement of Operations for the eight months ended August 31, 1999 and 1998 (unaudited)
and for the years ended December 31, 1998 and 1997 (audited) ............................ F-3
Statement of Stockholders' Equity for the eight months ended August 31, 1999 (unaudited)
and for the years ended December 31, 1998 and 1997 (audited) ............................ F-4
Statements of Cash Flow for the eight months ended August 31, 1999 and 1998 (unaudited)
and for the years ended December 31, 1998 and 1997 (audited) ............................ F-5
Notes to Financial Statements ............................................................ F-6 - F-20
</TABLE>
18
<PAGE>
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf the
undersigned thereto duly authorized.
Dated: January 3, 2000
Enterprises Solutions, Inc.
/s/ Dr. John A. Solomon
---------------------------
John A. Solomon, Ph.D., MBA
President & CEO
20
<PAGE>
ENTERPRISES SOLUTIONS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (AUDITED)
AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
<PAGE>
ENTERPRISES SOLUTIONS, INC.
TABLE OF CONTENTS
Page No.
---------
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT ........... 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets .......................................... 2
Statements of Operations ................................ 3
Statements of Shareholders' Equity ...................... 4
Statements of Cash Flows ................................ 5
Notes to the Consolidated Financial Statements .......... 6-9
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT
To the Shareholders of
Enterprises Solutions, Inc.
We have audited the accompanying consolidated balance sheets of Enterprises
Solutions, Inc. as of December 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
two years in the period ended December 31, 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial position of
Enterprises Solutions, Inc. as of December 31, 1998 and 1997, and the
consolidated results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principals.
/s/ Van Buren & Hauke, LLC
--------------------------
Van Buren & Hauke, LLC
October 12, 1999
F-1
<PAGE>
ENTERPRISES SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997 (AUDITED) AND
September 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
December 31, September 30,
--------------------------------- --------------
1998 1997 1999
--------------- --------------- --------------
(unaudited)
<S> <C> <C> <C>
Assets
------
Current assets
Cash ...................................................... $ 38,974 $ 1,478 $ 28,795
------------ ------------ ------------
Total current assets ..................................... 38,974 1,478 28,795
Loans and advances ......................................... 125,000 -- 130,220
Other ...................................................... -- -- 1,072
------------ ------------ ------------
Total assets ............................................... $ 163,974 $ 1,478 $ 160,087
============ ============ ============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Shareholders loans ........................................ -- 774,897 42,000
Commitments and contingencies
Shareholders' equity
Preferred stock; $0.001 par value; 5,000,000 shares
authorized; 110,000 and 148,500 (unaudited) shares
issued and outstanding at December 31, 1998 and
September 30, 1999, respectively ........................ 100 -- 148
Common stock; $0.001 par value; 25,000,000 shares
authorized; 3,443,340, 317,340, and 4,076,614
(unaudited) shares issued and outstanding at December 31,
1998, 1997 and September 30, 1999, respectively ......... 3,444 318 4,077
Additional paid-in capital ................................ 1,969,178 859,772 2,795,984
(Less) subscription receivable ............................ (50,000) -- --
Retained (deficit) ........................................ (1,758,748) (1,633,509) (2,682,122)
------------ ------------ ------------
Total shareholders' (deficit) equity ....................... 163,974 (773,419) 118,087
------------ ------------ ------------
Total liabilities and shareholders' equity ................. $ 163,974 $ 1,478 $ 160,087
============ ============ ============
</TABLE>
See accompanying notes.
F-2
<PAGE>
ENTERPRISES SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (AUDITED)
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
----------------------------- -----------------------------
1998 1997 1999 1998
------------- ------------- ------------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues ...................................... $ 328 $ 16,366 $ -- $ --
Costs and expenses ............................
Bad debt expense ........................... -- -- 634,023 --
Salaries and wages ......................... -- 11,407 24,892 --
Professional/consultants fees .............. 16,821 37,415 176,118 8,455
Office expenses ............................ 5,024 5,092 11,168 135
Telephone .................................. -- -- 3,170 1,030
Rent ....................................... -- -- 17,577 --
Computer services .......................... -- 385 -- --
Stock transfer expenses .................... 3,722 500 8,580 1,200
Abandonment of licensing agreement ......... 100,000 -- -- 100,000
Travel and promotion ....................... -- 6,701 37,985 --
Other ...................................... -- -- 9,861 832
---------- --------- ---------- ----------
Total costs and expenses ...................... 125,567 61,500 923,374 111,652
---------- --------- ---------- ----------
Net (loss) from continuing operations ......... (125,239) (45,134) (923,374) (111,652)
Adjustment of loss on abandonment of
discontinued operation ....................... -- 14,966 -- --
---------- --------- ---------- ----------
Net (loss) .................................... $ (125,239) $ (30,168) $ (923,374) $ (111,652)
========== ========= ========== ==========
Net (loss) per common share ................... $ (0.10) $ (0.09) $ (0.25) $ (0.16)
========== ========= ========== ==========
Weighted average common shares ................ 1,278,071 317,340 3,644,516 698,298
========== ========= ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
ENTERPRISES SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------------ --------------------
Shares Amount Shares Amount
------------ ---------- ---------- --------
<S> <C> <C> <C> <C>
Balance, January 1, 1997 ................ 211,560 $ 212 -- $ --
1997 Activity:
Net (loss) ............................. -- -- -- --
Common shares issued in stock
split ................................ 105,780 106 -- --
------- ------- ------- -----
Balance, December 31, 1997 .............. 317,340 318 -- --
1998 Activity:
Preferred shares issued ................ -- -- 100,000 100
Common shares issued ................... 2,084,000 2,084 -- --
Common shares issued in stock
split ................................ 1,042,000 1,042 -- --
Capitalize shareholder loans and
accrued payables ..................... -- -- -- --
(Less) underwriting expenses ........... -- -- -- --
(Less) subscription receivable ......... -- -- -- --
Net (Loss) ............................. -- -- -- --
--------- ------- ------- -----
Balance, December 31, 1998 .............. 3,443,340 3,444 100,000 100
1999 Activity (unaudited):
Preferred shares issued ................ -- -- 48,500 48
Common shares issued ................... 542,671 543 -- --
Common shares issued in stock
split ................................ 90,603 90 -- --
Subscription receivable-paid ........... -- -- -- --
(Less) underwriting expenses ........... -- -- -- --
(Net) loss -- nine months ended
September 30, 1999 ................... -- -- -- --
--------- ------- ------- -----
Balance, September 30, 1999 ............. 4,076,614 $ 4,077 148,500 $ 148
========= ======= ======= =====
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Additional Total
Paid-In Retained Shareholders'
Capital Earnings Equity
--------------- ---------------- --------------
<S> <C> <C> <C>
Balance, January 1, 1997 ................ $ 859,878 $ (1,603,341) $ (743,251)
1997 Activity:
Net (loss) ............................. -- (30,168) (30,168)
Common shares issued in stock
split ................................ (106) -- --
----------- ------------ -----------
Balance, December 31, 1997 .............. 859,772 (1,633,509) (773,419)
1998 Activity:
Preferred shares issued ................ 99,900 -- 100,000
Common shares issued ................... 243,916 -- 246,000
Common shares issued in stock
split ................................ (1,042) -- --
Capitalize shareholder loans and
accrued payables ..................... 786,397 -- 786,397
(Less) underwriting expenses ........... (19,765) -- (19,765)
(Less) subscription receivable ......... (50,000) -- (50,000)
Net (Loss) ............................. -- (125,239) (125,239)
----------- ------------ -----------
Balance, December 31, 1998 .............. 1,919,178 (1,758,748) 163,974
1999 Activity (unaudited):
Preferred shares issued ................ 48,452 -- 48,500
Common shares issued ................... 801,957 -- 802,500
Common shares issued in stock
split ................................ (90) -- --
Subscription receivable-paid ........... 50,000 -- 50,000
(Less) underwriting expenses ........... (23,513) -- (23,513)
(Net) loss -- nine months ended
September 30, 1999 ................... -- (923,374) (923,374)
----------- ------------ -----------
Balance, September 30, 1999 ............. $ 2,795,984 $ (2,682,122) $ 118,087
=========== ============ ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
ENTERPRISES SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (AUDITED)
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
-------------------------------- ---------------------------------
1998 1997 1999 1998
--------------- -------------- --------------- ---------------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net (loss) ....................................... $ (125,239) $ (30,168) $ (923,374) $ (111,652)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities
Write-off loan ................................... -- -- 25,000 --
Other ............................................ -- -- (1,072) --
----------- ---------- ----------- -----------
Net cash (used) by operating activities ........... (125,239) (30,168) (899,446) (111,652)
----------- ---------- ----------- -----------
Cash flows from investing activities
Loans and advances ............................... (125,000) -- (5,220) --
----------- ---------- ----------- -----------
Net cash (used) by investing activities ........... (125,000) -- (5,220) --
----------- ---------- ----------- -----------
Cash flows from financing activities
Loan repayments .................................. -- -- (65,000) --
Proceeds from issuance of shares of common
stock .......................................... 246,000 -- 802,500 163,500
Proceeds from issuance of shares of
preferred stock ................................ 100,000 -- 48,500 --
Proceeds from shareholders loans ................. 11,500 30,510 82,000 11,500
Subscription receivable .......................... (50,000) -- 50,000 --
Underwriting expenses ............................ (19,765) -- (23,513) (6,189)
----------- ---------- ----------- -----------
Net cash provided by financing activities ......... 287,735 30,510 894,487 168,811
----------- ---------- ----------- -----------
Net increase (decrease) in cash ................... 37,496 342 (10,179) 57,159
Cash at beginning of period ....................... 1,478 1,136 38,974 1,478
----------- ---------- ----------- -----------
Cash at end of period ............................. $ 38,974 $ 1,478 $ 28,795 $ 58,637
=========== ========== =========== ===========
Schedule of Non-Cash Financing Transactions:
Additional paid-in capital upon conversion
of debt ........................................ $ 786,397 $ -- $ -- $ 786,397
=========== ========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
ENTERPRISES SOLUTIONS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. GENERAL
Enterprise Solutions, Inc. (ESI) (Company), a Nevada Corporation, together
with its wholly-owned subsidiary, provides both government and commercial
enterprises with high assurance security technology. Although the Company
currently has no substantial revenues of a continuing nature, it is
management's intention to offer its total security solutions nationally and
internationally.
The accompanying financial statements include the consolidated accounts of
ESI and its wholly-owned subsidiary. All material intercompany balances and
transactions have been eliminated.
Prior to 1998, the Company's focus was in the gaming business,
particularly with a casino in South America. In mid 1997, the Venezuelan
government effectively shut down all casinos pending relicensing under a much
changed and restrictive law. Although the new law had not yet been interpreted
or clearly defined as to how it would ultimately be implemented nevertheless,
the casino could not reopen as it was previously operating. Management decided
to abandon the operation and write-off its investment. That adjustment was
given effect in the 1996 consolidated financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
Assets, liabilities, revenues and expenses are recognized on the accrual
method of accounting for financial statement presentation and for federal
income tax purposes.
Unaudited Interim Consolidated Financial Statements
The unaudited interim consolidated financial statements as of September
30, 1999 and for the nine months ended September 30, 1999 and 1998 have been
prepared on the same basis as the audited consolidated financial statements
included herein. In the opinion of management, such unaudited interim
consolidated financial statements include all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the results for such
periods. The consolidated operating results for the nine months ended September
30, 1999 are not necessarily indicative of the operating results to be expected
for the full fiscal year or for any future period.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes
At December 31, 1998, the Company has net operating loss carry forwards of
approximately $1,760,000 available to offset future taxable income which if
unused, expire through 2019. Therefore, a provision for income taxes has not
been provided.
Net Loss Per Common Share
Net loss per common share has been computed by dividing the net loss by
the weighted average number of common shares outstanding during the period.
F-6
<PAGE>
ENTERPRISES SOLUTIONS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998 AND 1997
3. GOING CONCERN
Currently, the Company has neither substantial revenues of a continuing
nature nor sufficient working capital to sustain its limited operations.
Management is planning to raise equity to pursue its intended plan of
operations. No assurance can be had that the Company will be successful in
raising additional funds or that any funding will be sufficient. The Company
has limited resources and has depended on outside financings. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
4. LOANS AND ADVANCES
The Company advanced $100,000 at December 31, 1998 and an additional
$5,000 through September 30, 1999 (unaudited) to a company to develop an
Internet credit and clearing operation. The loan is for one year payable
November 4, 1999 with interest at 6%. The Company has the right to convert its
loan including interest up to 10% equity interest in the borrower.
As of September 30, 1999 (unaudited), the Company advanced $25,000 to a
company for working capital purposes. The loan is for one year payable June
2000 with interest at 6%.
5. SHAREHOLDERS LOANS
In 1999 (unaudited), the Company borrowed $42,000 from a shareholder for
one year at 10%, payable with interest in April 2000.
6. SHAREHOLDERS' EQUITY
In 1998 and through September 30, 1999 (unaudited) the Company issued
2,084,000 and 542,671 common shares, respectively, in private placements,
raising $1,048,500 in total. In connection with certain of these offerings, the
Company also issued through September 30, 1999 2,150,000 warrants to purchase
common stock at a price of $1.667 per common share (1,800,000 warrants) and
$2.50 per common share (350,000 warrants). The warrants expire on September 6,
2000. The number of warrants and their exercise price have been adjusted for
the June 1999 stock split.
The Company also issued to certain common shareholders 100,000 and 48,500
shares of preferred stock at $1.00 per share in 1998 and through September 30,
1999, respectively.
In June 1998, the Company capitalized $779,897 of shareholders loans and
accrued payrolls as part of a transaction in which the shareholders to whom
these amounts were owed sold their entire interest in the company to new
shareholders. The Company's involvement in the exchange was to capitalize the
shareholders loans and accrued payrolls, and permit the old shareholders to
keep the gaming equipment in South America as compensation for any and all
liabilities associated with the discontinued operations.
In March 1999, the Company amended its certificate of incorporation to
change its name from American Casinos International, Inc. (ACII), to alter the
authorized number of common shares to 25,000,000 shares, par value $.001, and
to authorize 5,000,000 preferred shares, par value $.001, with the board of
directors authorized to determine, among others, the series, etc. These changes
were made retroactively in these consolidated financial statements.
In June 1999, the Company declared a 50% common stock split which totaled
1,238,383 shares. This adjustment was reported in these consolidated financial
statements as if it had occurred in December 1997.
The Company's preferred stock is 8% cumulative and redeemable at the
Company's option at 110%. In 1998 and 1999 (unaudited), the Company issued
100,000 shares and 38,500 shares, respectively, at $1.00 per share.
F-7
<PAGE>
ENTERPRISES SOLUTIONS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998 AND 1997
7. ABANDONED LICENSING AGREEMENT
In 1998, the Company abandoned a licensing agreement wherein the rights to
offer certain Internet bingo and Internet casino games was determined to be of
no value.
8. BAD DEBT EXPENSE
In July 1999, the Company terminated its pending acquisition of the
company it had advanced approximately $634,000 for working capital purposes
(unaudited). The Company had advanced the target $25,000 in 1998 and an
additional $609,000 in 1999. The Company terminated its pending acquisition due
to the Company's inability to obtain satisfactory audited financial statements
because of missing financial information, questionable contracts, lack of
internal controls, and substantial liabilities.
9. OFFICE
The Company's office is maintained through a month to month arrangement at
$150 per month, including utilities.
F-8
<PAGE>
Exhibits and Financial Schedules.
(a) Exhibits
<TABLE>
<S> <C>
3.1 Articles of Incorporation as filed with the Nevada Secretary of State on *
3.2 By-laws*
3.3 Amended and Restated By-laws
4.1 Specimen Stock Certificate
10.1 Lease for SSS Division's corporate condominium*
10.2 Lease for SSS Division's office space*
10.3 Employment Agreement by and between the Company and Dr. John A. Solomon*
10.4 Employment Agreement by and between the Company and Richard A. Lee, II*
10.5 Employment Agreement by and between the Company and Roger Schell*
10.6 Employment Agreement by and between the Company and Gary L. Baker. Teaming Agreement by and
between the Company and Gemini Computers, Inc.*
21.1 Subsidiaries of the Company*
27.1 Financial data schedule
</TABLE>
- ------------
* Previously filed.
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
LEADING EDGE PACKAGING, INC.
ARTICLE I - STOCKHOLDERS
Section 1.1. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held for the purpose of electing Directors, at such
date, time and place, either within or without the State of Delaware, as may be
designated by resolution of the Board of Directors from time to time. Any other
proper business may be transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called at any time by the Board of Directors or
by a committee of the Board of Directors that has been duly designated by the
Board of Directors and whose powers and authority, as provided in a resolution
of the Board of Directors, include the power to call such meetings or as
otherwise required under the provisions of the General Corporation Law.
Section 1.3. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other places as
shall be designated in the notices or waivers of notice of such meetings.
Section 1.4. Notice of Meetings.
(a) Except as otherwise provided by law or the rules of any
stock exchange or the Nasdaq Stock Exchange, Inc. ("Nasdaq"), whenever
stockholders are required or permitted to take any action at a meeting,
a written notice of the meeting shall be given that shall state the
place, date and hour of the meeting, and the purpose or purposes for
which it is called, shall be served either personally or by mail, not
less than ten or more than sixty days before the meeting, upon each
stockholder of record entitled to vote at such meeting, and to any
other to whom the giving of notice may be required by law. Notice of a
special meeting shall indicate that it is being issued by, or at the
direction of, the person or persons calling the meeting. If, at any
meeting, action is proposed to be taken that would, if taken, entitle
stockholders to receive payment for their shares pursuant to law, the
notice of such meeting shall include a statement of that purpose and to
that effect. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, and directed to
each such stockholder at his address, as it appears on the records of
the stockholders of the Corporation, unless he shall have previously
filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to the address designated in such
request.
1
<PAGE>
(b) Notice of any meeting need not be given to any person who
may become a stockholder of record after the record date, as determined
under Section 1.10 of these Bylaws and prior to the meeting, or to any
stockholder who attends such meeting, in person or by proxy, or to any
stockholder who, in person or by proxy, submits a signed waiver of
notice either before or after such meeting.
Section 1.5. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting in accordance with
Section 1.4.
Section 1.6. Quorum. Except as otherwise provided herein, or by law or
the rules of any stock exchange or Nasdaq, or in the Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), at all meetings
of stockholders of the Corporation, the presence at such meetings in person or
by proxy of stockholders holding of record a majority of the total number of
shares of the Corporation then issued and outstanding and entitled to vote,
shall be necessary and sufficient to constitute a quorum for the transaction of
any business. In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided in
Section 1.5 of these By-laws until a quorum shall attend. At any such adjourned
meeting at which a quorum is present, any business may be transacted at the
adjournment thereof which could have been transacted at the meeting as
originally called if a quorum had been present. Shares of its own stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of Directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted for quorum purposes; provided, however, that the
foregoing shall not limit the right of the Corporation to vote stock, including
but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.7. Organization. Meetings of stockholders shall be presided
over by the Chairman, if any, or in his absence, by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons, by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting by a majority of stockholders
present. The Secretary shall act as secretary of the meeting, but in his
absence, the chairman of the meeting may appoint any person to act as secretary
of the meeting. The chairman of the meeting shall announce at the meeting of
stockholders the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote.
2
<PAGE>
Section 1.8. Voting; Proxies.
(a) Except as otherwise provided by law or by the Certificate
of Incorporation, any corporate action, other than the election of
Directors to be taken by vote of the stockholders, shall be authorized
by a majority of votes cast at a meeting of stockholders by the holders
of shares entitled to vote thereon.
(b) Except as otherwise provided by law or by the Certificate
of Incorporation, each stockholder of record entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of
stock held by him which has voting power upon the matter in question.
(c) Each stockholder entitled to vote at a meeting of
stockholders, or to express consent or dissent to a corporate action in
writing without a meeting, may authorize another person or persons to
act for such stockholder by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in
writing by the stockholder himself, or by his attorney-in-fact
thereunto duly authorized in writing. No such proxy shall be voted or
acted upon after three years from its date, unless the person(s)
executing it shall have specified therein the length of time it is to
continue in force. Such proxy shall be exhibited to the Secretary at
the meeting and shall be filed with the records of the Corporation. A
proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law
to support an irrevocable power. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person
or by filing an instrument in writing revoking the proxy or by
delivering a proxy in accordance with applicable law bearing a later
date to the Secretary of the Corporation.
(d) At all meetings of stockholders for the election of
Directors, a plurality of the votes cast shall be sufficient to elect.
Unless otherwise provided by law, the Certificate of Incorporation or
these By-laws, all other elections and questions shall, be decided by
the vote of the holders of shares of stock having a majority of the
votes which could be cast by the holders of all shares of stock
outstanding and entitled to vote thereon.
Section 1.9. Fixing of Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record is adopted by the Board of Directors and which
record date: (i) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, the rules of any stock exchange or Nasdaq, not be more than
sixty nor less than ten days before the date of such meeting; (ii) in the case
of determination of stockholders entitled to express
3
<PAGE>
consent to corporate action in writing without a meeting, shall not be more than
ten days from the date upon which the resolution fixing the record date is
adopted by the Board of Directors; and (iii) in the case of any other action,
shall not be more than sixty days prior to such other action. If no record date
is fixed: (i) the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day preceding the day on which the meeting is held;
(ii) the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting when no prior action of the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (iii) the record date for determining stockholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjournment.
Section 1.10. List of Stockholders Entitled to Vote. The Secretary,
after consultation with the transfer agent, shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at the place where the
meeting is to be held, or at another place within the city where the meeting is
to be held, which other place shall be specified in the notice of the meeting.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present. The stock ledger maintained by the transfer agent shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list of stockholders or the books of the Corporation, or to vote in person
or by proxy at any meeting of stockholders.
Section 1.11. Action by Consent of Stockholders. Any resolution in
writing signed by all of the stockholders entitled to vote thereon shall be and
constitute action by such stockholders to the effect therein expressed, with the
same force and effect as if the same had been duly passed by unanimous vote at a
duly called meeting of stockholders and such resolution so signed shall be
inserted in the Minute Book of the Corporation under its proper date. Unless
otherwise restricted by the Certificate of Incorporation or the rules of any
stock exchange or Nasdaq, any action required or permitted to be taken at any
annual or special meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered (by hand, by
certified mail, return receipt requested, or by overnight courier
4
<PAGE>
from which evidence of receipt may be obtained) to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the Minute
Book in which proceedings of minutes of stockholders are recorded. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE II - BOARD OF DIRECTORS
-------------------------------
Section 2.1. Number, Election and Term of Office.
(a) The number of the Directors of the Corporation shall be
five (5), unless and until otherwise determined by vote of a majority
of the entire Board of Directors. The number of Directors shall not be
less than three, unless all of the outstanding shares are owned
beneficially and of record by fewer than three stockholders, in which
event the number of Directors shall not be less than the number of
stockholders permitted by law.
Directors need not be stockholders.
(b) Except as may otherwise be provided herein or in the
Certificate of Incorporation, at each annual meeting of stockholders,
each member of the Board of Directors of the Corporation shall be
elected by a plurality of the votes cast at such meeting.
(c) Each Director shall hold office until the annual meeting
of the stockholders next succeeding his election, and until his
successor is duly elected and qualified, or until his prior death,
resignation or removal.
Section 2.2. Duties and Powers. The Board of Directors shall be
responsible for the control and management of the affairs, property and
interests of the Corporation, and may exercise all powers of the Corporation,
except as are in the Certificate of Incorporation or by law expressly conferred
upon or reserved to the stockholders.
Section 2.3. Annual and Regular Meetings; Notice.
(a) A regular annual meeting of the Board of Directors shall
be held immediately following the annual meeting of the stockholders,
at the place of such annual meeting of stockholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of
Directors and may fix the time and place thereof.
5
<PAGE>
(c) Notice of any regular meeting of the Board of Directors
shall not be required to be given and, if given, need not specify the
purpose of the meeting; provided, however, that in case the Board of
Directors shall fix or change the time or place of any regular meeting,
notice of such action shall be given to each Director who shall not
have been present at the meeting at which such action was taken within
the time limit, and in the manner set forth, in paragraph (b) of
Section 2.4 of this Article II, with respect to special meetings,
unless such notice shall be waived in the manner set forth in paragraph
(c) of such Section 2.4.
Section 2.4. Special Meetings; Notice.
(a) Special meetings of the Board of Directors shall be held
whenever called by the President or by one of the Directors (including
the Chairman), at such time and place as may be specified in the
respective notices or waivers of notice thereof.
(b) Except as otherwise required by law, notice of a special
meeting shall be mailed directly to each Director, addressed to him at
his residence or usual place of business, at least two (2) days before
the day on which the meeting is to be held, or shall be sent to him at
such place by telegram, radio or cable, or shall be delivered to him
personally or given to him orally, not later than the day before the
day on which the meeting is to be held. A notice, or waiver of notice,
except as required by Section 2.8 of this Article II, need not specify
the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be
given to any Director who shall attend such meeting without protesting
prior thereto or at its commencement, the lack of notice to him, or who
submits a signed waiver of notice, whether before or after the meeting.
Notice of any adjournment of a meeting shall not be required to be
given.
Section 2.5. Organization. At all meetings of the Board of Directors
the Chairman of the Board, if any and if present, shall preside. If there shall
be no Chairman, or he shall be absent, then the President shall preside, and in
his absence, a chairman chosen by the Directors shall preside. The Secretary
shall act as secretary of the meeting, but in his absence, the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 2.6. Quorum and Adjournments.
(a) At all meetings of the Board of Directors, the presence of
a majority of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business, except as
otherwise provided by law, the rules of any stock exchange or Nasdaq,
by the Certificate of Incorporation, or by these By-laws.
(b) A majority of the Directors present at the time and place
of any regular or special meeting, although less than a quorum, may
adjourn the same from time to time without notice, until a quorum shall
be present.
6
<PAGE>
Section 2.7. Manner of Acting; Telephonic Meetings; Unanimous Consent
Permitted.
(a) At all meetings of the Board of Directors, each Director
present shall have one vote, irrespective of the number of shares of
stock, if any, which he may hold.
(b) Members of the Board of Directors, or any committee
designated by the Board of Directors, may participate in a meeting
thereof by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this
Section 2.7(b) shall constitute presence in person at such meeting.
(c) Except as otherwise provided by law or the rules of any
stock exchange or Nasdaq, by the Certificate of Incorporation, or these
By-laws, the action of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the Board of
Directors. Any action authorized in writing, by all of the Directors
entitled to vote thereon and filed with the minutes of the Corporation,
shall be the act of the Board of Directors with the same force and
effect as if the same had been passed by unanimous vote at a duly
called meeting of the Board of Directors.
Section 2.8. Vacancies. Any vacancy in the Board of Directors occurring
by reason of an increase in the number of Directors, or by reason of the death,
resignation, disqualification, removal (unless a vacancy created by the removal
of a Director by the stockholders shall be filled by the stockholders at the
meeting at which the removal was effected) or inability to act of any Director,
or otherwise, shall be filled for the unexpired portion of the term by a
majority vote of the remaining Directors, though less than a quorum, at any
regular meeting or special meeting of the Board of Directors called for that
purpose.
Section 2.9. Resignation. Any Director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 2.10. Removal. Any Director may be removed with or without
cause at any time by the affirmative vote of stockholders holding of record in
the aggregate at least a majority of the outstanding shares of the Corporation
at a special meeting of the stockholders called for that purpose, and may be
removed for cause by action of the Board of Directors.
Section 2.11. Salary. An annual fee in an amount to be determined by
resolution by the Board of Directors shall be paid to each Director, for his or
her services as such, and by resolution of the Board of Directors, a fixed sum
plus expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board; provided, however, that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
7
<PAGE>
Section 2.12. Contracts.
(a) No contract or other transaction between the Corporation
and any other Corporation shall be impaired, affected or invalidated,
nor shall any Director be liable in any way by reason of the fact that
any one or more of the Directors of this Corporation is or are
interested in, or is a Director or officer, or are Directors or
officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors and the stockholders.
(b) Any Director, personally and individually, may be a party
to or may be interested in any contract or transaction of the
Corporation, and no Director shall be liable in any way by reason of
such interest, provided at the fact of such interest be disclosed or
made known to the Board of Directors and the stockholders, and provided
that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such
Director) of a majority of a quorum, notwithstanding the presence of
any such Director at the meeting at which such action is taken. Such
Director or Directors may be counted in determining the presence of a
quorum at such meeting. This Section 2.12 shall not be construed to
impair or invalidate or in any way affect any contract or other
transaction which would otherwise he valid under the law (common,
statutory or otherwise) applicable thereto.
Section 2.13. Committees. The Board of Directors, by resolution adopted
by a majority of the entire Board, may from time to time designate from among
its members an Executive Committee, an Audit Committee, a Compensation Committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of one or more Directors, with such powers and
authority (to the extent permitted by law and the rules of any stock exchange or
Nasdaq) as may be provided in such resolution.
ARTICLE III - OFFICERS
Section 3.1. Number, Election and Term of Office.
(a) The officers of the Corporation shall consist of a
President and Chief Operating Officer, a Secretary, a Chief Financial
Officer, and such other officers, including a Chairman and Chief
Executive Officer, and one or more Vice Presidents, as the Board of
Directors may from time to time deem advisable. The Chairman of the
Board of Directors shall, and any other officer may, be a Director of
the Corporation. Any two or more offices may be held by the same
person.
8
<PAGE>
(b) The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board following
the annual meeting of stockholders.
(c) Each officer shall hold office until the annual meeting of
the Board of Directors next succeeding his election, and until his
successor shall have been duly elected and qualified, or until his
death, resignation or removal.
Section 3.2. Resignation. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, or to the
President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board of Directors or by the President or Secretary, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 3.3. Removal. Any officer may be removed, either with or
without cause, and a successor elected by a majority of the Board of Directors
at any time.
Section 3.4. Vacancies. A vacancy in any office by reason of death,
resignation, inability to act, disqualification, or any other cause, may at any
time be filled for the unexpired portion of the term by the Board of Directors.
Section 3.5. Duties of Officers. Officers of the Corporation shall,
unless otherwise provided by the Board of Directors, each have such powers and
duties as generally pertain to their respective offices as well as such powers
and duties as may be set forth in these By-laws, or may from time to time be
specifically conferred or imposed by the Board of Directors.
Section 3.6. Sureties and Bonds. In case the Board of Directors shall
so require, any officer, employee or agent of the Corporation shall execute to
the Corporation a bond in such sum, and with such surety or sureties as the
Board of Directors may direct, conditioned upon the faithful performance of his
duties to the Corporation, including responsibility for negligence and for the
accounting for all property, funds or securities of the Corporation which may
come into his hands.
Section 3.7. Shares of Other Corporations. Whenever the Corporation is
the holder of shares of any other Corporation, any right or power of the
Corporation as such (including the attendance, acting and voting at
stockholders' meetings and execution of waivers, consents, proxies or other
instruments) may be exercised on behalf of the Corporation by the Chairman, the
President, any Vice President, the Chief Financial Officer, or such other person
as the Board of Directors may authorize.
ARTICLE IV - SHARES OF STOCK
Section 4.1. Certificate of Stock.
9
<PAGE>
(a) The certificates representing shares of the Corporation
shall be in such form as shall be adopted by the Board of Directors,
and shall be numbered and registered in the order issued. They shall
bear the holder's name and the number of shares, and shall be signed by
(i) the Chairman or the President or a Vice President, and (ii) the
Secretary or
Chief Financial Officer, and shall bear the corporate seal, if any.
Such signatures and corporate seal may be imprinted or facsimiles.
(b) No certificate representing shares shall be issued until
the full amount of consideration therefor has been paid, except as
otherwise permitted by law.
(c) To the extent permitted by law or the rules of any stock
exchange or Nasdaq, the Board of Directors may authorize the issuance
of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in
liquidating distributions, in proportion to the fractional holdings; or
it may authorize the payment in cash of the fair value of fractions of
a share as of the time when those entitled to receive such fractions
are determined; or it may authorize the issuance, subject to such
conditions as may be permitted by law, of scrip in registered or bearer
form over the signature of an officer or agent of the Corporation,
exchangeable as therein provided for full shares, but such scrip shall
not entitle the holder to any rights of a stockholder, except as
therein provided.
Section 4.2. Lost or Destroyed Certificates. The holder of any
certificate representing shares of the Corporation shall notify the Corporation
of any loss or destruction of the certificate representing the same. The
Corporation through its transfer agent may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper so to do. The Board of Directors, by
resolution or resolutions duly adopted, may delegate to the Transfer Agent of
the Corporation, the authority to issue replacement stock certificates in such
manner and on such terms as are deemed appropriate by the Board of Directors and
specified in such resolution or resolutions.
Section 4.3. Transfers of Shares.
(a) Transfers of shares of the Corporation shall be made on
the share records of the Corporation only by the holder of record
thereof, in person or by his duly authorized attorney, upon surrender
for cancellation of the certificate or certificates representing such
<PAGE>
shares, with an assignment or power of transfer endorsed thereon or
delivered therewith, duly executed, with such proof of the authenticity
of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all
purposes and, accordingly, shall not be bound to recognize any legal,
equitable or other claim to, or interest in, such share or shares on
the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by law.
ARTICLE V - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amounts, and at such time or
times as the Board of Directors may determine.
ARTICLE VI - FISCAL YEAR
The fiscal year of the Corporation shall commence on the 1st day of
April of each year and end on the 31st day of March of the following year,
unless and until amended by the Board of Directors and subject to applicable
law.
ARTICLE VII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved
from time to time by the Board of Directors.
ARTICLE VIII - AMENDMENTS
Section 8.1. By-laws. All By-laws of the Corporation shall be subject
to alteration or repeal, and new By-laws may be made, by the affirmative vote of
stockholders holding of record in the aggregate at least a majority of the
outstanding shares entitled to vote in the election of Directors at any annual
or special meeting of stockholders, provided that the notice or waiver of notice
of such meeting shall have summarized or set forth in full therein, the proposed
amendment.
Section 8.2. By Directors. The Board of Directors shall have power to
make, adopt, alter, amend and repeal, from time to time, By-laws of the
Corporation; provided, however, that the stockholders entitled to vote with
respect thereto as in this Article VIII above-provided may alter, amend or
repeal By-laws made by the Board of Directors, except that the Board of
Directors shall have no power to change the quorum for meetings of stockholders
or of the Board of Directors, or to change any provisions of the By-laws with
respect to the removal of Directors or the filling of vacancies in the Board
resulting from the removal by the stockholders. If any By-law regulating an
impending election of Directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
stockholders for the election of Directors the By-law so adopted, amended or
repealed, together with a concise statement of the changes made.
11
<PAGE>
ARTICLE IX - INDEMNIFICATION
The Corporation shall, to the full extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.
A Director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as amended from timer to time.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of the director of the Corporation existing at the time of such
repeal or modification.
12
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
COMMON STOCK
ENTERPRISES SOLUTIONS, INC.
NUMBER SHARES
-------------------- --------------------------
CUSIP 29381G 1 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
- --------------------------------------------------------------------------------
THIS CERTIFIES that
is the owner of
- --------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES, OF THE PAR VALUE OF $.001 PER SHARE, OF
THE COMMON STOCK OF
ENTERPRISES SOLUTIONS, INC.
CERTIFICATE OF STOCK
transferable on the books of the Corporation by the holder thereof, in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are issued under
and shall be held subject to all the provisions of the Articles of Incorporation
of the Corporation and the By-laws now or hereafter amended.
This Certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
Witness the seal of the Corporation and the facsimile signatures of its
duly authorized officers.
Dated
[seal]
/s/ /s/
------------------- -----------------
Secretary/Treasuer President
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.) TRANSFER AGENT
BY AND REGISTRAR
AUTHORIZED SIGNATURE
<PAGE>
ENTERPRISES SOLUTIONS, INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _______________ Custodian______________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with rights of
survivorship and not as tenants in under Uniform Gifts to Minors Act
common
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value received ______________________________________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
|---------------------------------------|
| |
|---------------------------------------|-------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Please print or typewrite name, address and relationship of Assignee and number of shares
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------- shares
represented by the within Certificate and, if said number of shares shall not be all the shares represented by the within
Certificate, that a new Common Stock Certificate for the shares not transferred be registered in the name of the undersigned, and
- ------------------------------------------------------------------------------------------------------------------------------------
is hereby irrevocably constituted and appointed as Attorney to transfer such shares as aforesaid on the books of the Corporation,
with full power of substitution in the premises.
DATED
-------------------------------------------------------------------------------------------------------------------------------
------------------------------------------
NOTICE The signature to this assignment
must correspond with the name as written
upon the face of the Certificate, in every
particular, without alteration or
enlargement, or any change whatever.
Signature(s) Guaranteed:
- --------------------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad.15.
</TABLE>
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of Enterprises Solutions, Inc. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 28,795
<SECURITIES> 0
<RECEIVABLES> 130,220
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,795
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 160,087
<CURRENT-LIABILITIES> 42,000
<BONDS> 0
0
148
<COMMON> 4,077
<OTHER-SE> 113,862
<TOTAL-LIABILITY-AND-EQUITY> 160,087
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 923,374
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (923,374)
<INCOME-TAX> 0
<INCOME-CONTINUING> (923,374)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (923,374)
<EPS-BASIC> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
