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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 3
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.)
140 Wood Road, Suite 200, Braintree Massachusetts 02184
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 781-356-4387
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Copies to:
John A. Solomon
Enterprises Solutions, Inc.
140 Wood Road, Suite 200
Braintree, Massachusetts 02184
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
Management ....................................................... 2
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AS DETAILED IN THE COMPANY'S FORM 8-K, FILED APRIL 8, 2000, IN ITS FORM 10-KSB,
AMENDMENT NO. 3 TO WHICH WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") ON OCTOBER 4, 2000, AND IN ITS FORM 8-K FILED OCTOBER 16,
2000, THE COMPANY HAD BEEN IN LITIGATION WITH THE COMMISSION CONCERNING, INTER
ALIA, THE ACCURACY AND COMPLETENESS OF CERTAIN OF ITS FILINGS WITH THE
COMMISSION. AS A PART OF THE SETTLEMENT NEGOTIATIONS WITH THE COMMISSION ON
THESE ISSUES, THE COMPANY AGREED TO FILE AMENDMENT NO. 2 TO ITS FORM 10-SB.
AMENDMENT NO. 2, WHICH WAS FILED ON OCTOBER 4, 2000, PURSUANT TO THE COMPANY'S
NEGOTIATIONS WITH THE COMMISSION, AMENDED ONLY THE INFORMATION SET FORTH UNDER
THE CAPTION "MANAGEMENT" IN PART I OF AMENDMENT NO. 1 TO THE COMPANY'S FORM
10-SB. IN ORDER TO PRESERVE THE NATURE AND CHARACTER OF THE DISCLOSURES SET
FORTH IN THE COMPANY'S FORM 10-SB AS OF JANUARY 4, 2000, THE DATE ON WHICH
AMENDMENT NO. I TO THE FORM 10-SB WAS FILED, NO ATTEMPT WAS MADE IN AMENDMENT
NO. 2 TO THE FORM 10-SB TO MODIFY OR UPDATE DISCLOSURES EXCEPT AS DESCRIBED
ABOVE.
THIS AMENDMENT NO. 3 TO THE COMPANY'S FORM 10-SB FURTHER SO AMENDS AND
SUPPLEMENTS CERTAIN INFORMATION DISCLOSED IN AMENDMENT NO. 2 TO THE FORM 10-SB.
FOR CURRENT INFORMATION CONCERNING THE COMPANY, REFERENCE IS MADE TO THE
COMPANY'S AMENDMENT NO. 3 TO ITS FORM 10-KSB, FILED WITH THE COMMISSION ON
OCTOBER 4, 2000, ITS FORM 8-K, FILED OCTOBER 16, 2000, AND ITS FORM 10-QSB,
FILED NOVEMBER 14, 2000.
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MANAGEMENT
The Officers and Directors of the Company are as follows:
Name Age Title
---- --- -----
John A. Solomon 50 President and C.E.O*
Wayne B. Kight 48 Executive Vice President/Operations*
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 Cannon 41 Secretary*
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* Indicates Directors
John A. Solomon has served as the Company's President and Chief Executive
Officer since September, 1999. Mr. Solomon also is a member of the Company's
Board of Directors. Prior to his appointment to his positions with the Company,
from 1979 to 1995, Mr. Solomon was the President and Chief Executive Officer of
Computer Engineering Associates, Inc. ("CEA"), a systems integration and
security technology company. In November, 1995 CEA filed a petition for
voluntary bankruptcy which resulted from cash flow problems CEA encountered
related to several bonded construction projects CEA performed. Because Mr.
Solomon personally indemnified the bonding companies who insured CEA's
construction projects, Mr. Solomon was forced to file for personal bankruptcy in
February, 1997. Mr. Solomon was discharged from his personal bankruptcy in May,
1999.
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 also is
a Partner at the Saugus Group, a Management Consulting firm. 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 of a Consent Agreement regarding the alleged
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sale of securities without a license, under which he consented to jurisdiction,
paid minimum court fees of $500 and agreed to cease activities, without an
admission of guilt. This agreement does not impact on his ability to
apply for and be granted a license to sell securities.
Mr. Moritz is not the Jeffrey M. Moritz that was named as a defendant in
the proceeding initiated by the Securities and Exchange Commission in 1995
against The Trust Group, Ltd. in the U.S. District Court for the Eastern
District of Kentucky. The Company's Amendment No. 2 to its Form 10-SB, filed
October 4, 2000, incorrectly stated that Mr. Moritz was a defendant in that
proceeding.
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.
The Company has entered into an employment agreement with John A.
Solomon, the term of which is for three years from September 15, 1999. The
agreement provides for Mr. Solomon's employment as the President and Chief
Executive Officer of the Company at an annual salary of $200,000, which would be
increased to $500,000 once the Company receives funding in the amount of
$10,000,000 (the "Funding Event"). The agreement provides for bonuses as
determined by the Board of Directors at the sole discretion of the Board, but
not less than 7% of the Net Before Tax corporate profits in each year of
employment. Under the agreement, Mr. Solomon is entitled to borrow up to
$750,000 from the Company on a secured basis, all loans being repayable within
10 years of the first loan being taken out, and with the Company's stock as
collateral in value at least equal to 125% of the loan amount, the amount of
stock to be held as collateral to be adjusted monthly based on the price for the
stock in the market. On June 2, 2000, Mr. Solomon borrowed $650,000 under this
provision. This loan bears interest at the rate of 7% per annum, is due ten
years from the drawdown date, with interest only payable monthly until maturity.
The loan is secured by the pledge of all shares of common stock of the Company
and options to purchase common stock held by Mr. Solomon. The agreement provides
for the issuance of 225,000 shares of common stock of the Company to Mr. Solomon
in three installments of 75,000 shares each at the end of each year of
employment completion; the right to the first installment vested as of execution
of the employment agreement and is to have been issued by December 31, 1999. As
of September 19, 2000, no shares had been issued under these provisions. Shares
issued thereunder are to be issued at no cost to Mr. Solomon and could be issued
as restricted stock or pursuant to the Company's 2000 Restricted Stock Plan. If
the Funding Event condition is satisfied, Mr. Solomon is entitled under the
agreement to be issued an additional 275,000 shares of common stock at the time
of the resulting increase in his salary.
Executive Compensation
During the fiscal year ended December 31, 1999, Mr. John A. Solomon was
paid, through ACG Inc., a company wholly owned by him, consulting fees of
$49,999.98, and expense reimbursements of $9,575.45; no salaries in excess of
$100,000 per year have been paid to any other executive officer or director of
the Company.
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Transactions with Management and Others
Omega Funding, Inc., a corporation that the Company is advised is 100%
owned by Nina L. Cannon, a former director of the Company and the daughter of
Herbert S. Cannon, made loans to the Company aggregating $94,500 in 1999, and an
additional loan of $23,000 on February 24, 2000. In December, 1999, Nina L.
Cannon also made a personal loan to the Company in the amount of $22,000, which
was repaid in January, 2000. In 1999, Omega Funding was also assigned an
additional loan made to the Company by ATM Site Locators Inc. in the amount of
$10,000. In connection with Ms. Cannon's resignation as a director, all of the
loans held by Omega Funding, Inc., aggregating $127,500, were repaid on June 29,
2000, with interest in the amount of $5,243, and the Company agreed to indemnify
Ms. Cannon in accordance with Nevada law against liabilities arising from her
having served as a director and officer of the Company.
Dr. Roger Raymond Schell, a former officer of the Company, is a
shareholder in Gemini Computers, Inc. with which the Company had a teaming
agreement.
On June 2, 2000, John A. Solomon, Chairman and Chief Executive
Officer, borrowed $650,000 from the Company pursuant to his employment
agreement. The loan bears interest at the rate of 7% per annum, is due ten years
from the drawdown date, with interest only payable monthly to maturity, and is
secured by all stock and options to purchase stock of the Company held by Mr.
Solomon.
Promoter and Former Control Person
In recent years, Herbert S. Cannon acted as a general business consultant
to management pursuant to consulting agreements dated July 1, 1998, and January
7, 2000. As a consultant, Mr. Cannon performed a significant management role for
the Company primarily with respect to raising capital for the Company and in
interviewing and selecting management candidates, including Wayne B. Kight, the
former CEO and President, and John A. Solomon, the current CEO and President.
Mr. Cannon's consulting agreement entitled him to the payment of $3,000 per
month and under both agreements provision is made for a total award of 300,000
shares of common stock in exchange for his services. The Company is evaluating
its obligation to issue these shares to Mr. Cannon. Through World Net
Communications, of which Mr. Cannon is, to the knowledge of the Company, the
sole owner, Mr.Cannon owns 75,000 shares of common stock and in 1998 purchased
warrants to purchase 150,000 shares of common stock. See "Security Ownership of
Certain Beneficial Owners and Management" in Amendment No. 3 to the Company's
Form 10-KSB filed October 4, 2000. In addition, Mr. Cannon owns 150,000 shares
of common stock through Romsley Limited, of which Mr. Cannon is the sole owner.
Since January 1, 1999, the Company has paid Mr. Cannon approximately $111,257 in
consulting fees, expense reimbursements and other compensation (including a
$16,000 reimbursement for a loan made by Mr. Cannon on behalf of the Company to
Infotex Holdings, Ltd. and including certain expenses incurred by the Company's
Monterey, California, office that Mr. Cannon paid for with his personal credit
card). The Company may have made other payments to entities controlled by
Herbert S. Cannon. Mr. Cannon may be deemed a "promoter" and/or a "controlling
person" of the Company, as those terms are defined under the Securities Act of
1933 and the Securities Exchange Act of 1934. John A. Solomon, the Company's
Chief Executive Officer, upon authorization of the Board of Directors,
terminated Mr. Cannon's consulting arrangement effective March 20, 2000.
Mr. Cannon also acted as a general business consultant to Infotex Holdings,
Ltd., which the Company agreed to acquire in March 1999. In July 1999, the
Company cancelled its agreement to acquire Infotex. In August 1999, certain
investors in Infotex were afforded the opportunity to participate in a private
placement of the Company's common stock at a low per share price. The Company is
evaluating the terms and conditions of that private placement in relation to
other private sales of common stock in that period. In the months preceding
October, 1999, certain unauthorized press releases concerning the Company were
issued. Mr. Cannon appears to have played a role in the drafting and
dissemination of these press releases. These press releases contained, among
other things, revenue projections and statements about contracts purportedly
awarded to the Company. The Company did not authorize the press releases, and
did not realize the projections nor was it awarded the contracts referred to
therein.
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In addition, in a lawsuit described elsewhere (see "Legal Proceedings" in
said Amendment No. 3), the Securities and Exchange Commission has alleged, among
other things, that Mr. Cannon, through several offshore entities, including one
listed under the heading "Security Ownership of Certain Beneficial Owners and
Management" in said Amendment to the Company's Form 10-KSB, is a beneficial
owner of more than 5% of the Company's outstanding common stock. That issue is
being litigated in court between the Commission and Mr. Cannon. Mr. Cannon has
denied these allegations. In August, 1987, the Securities and Exchange
Commission issued an order barring Mr. Cannon from the securities industry. In
1988 and again in 1993, in separate civil cases brought by the Commission,
federal courts entered final judgments enjoining Mr. Cannon from violating
certain provisions of the federal securities laws. In addition, in 1985, Mr.
Cannon pleaded guilty to a charge of conspiracy to defraud the United States in
the collection of income taxes. In 1987, a New York state court found Mr. Cannon
guilty under that state's larcency statute while handling funds from a chartered
bank. He also pleaded guilty in that proceeding to two misdemeanor counts of
failure to file state tax returns. In 1988, Mr. Cannon pleaded guilty to one
count of conspiracy to defraud the federal government. In 1994, he was sentenced
by the U.S. District Court, Newark, New Jersey, to five years probation, and was
ordered to pay $10,000 in court costs and engage in 500 hours of community
service, for participation in a transaction which involved the sale of
fraudulent coal mine tax shelters to investors where the West Virginia coal
mines at issue did not engage in actual mining operations.
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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: November 17, 2000
Enterprises Solutions, Inc.
/s/ John A. Solomon
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John A. Solomon
President & CEO
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