<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C., 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 21, 2000
COMMISSION FILE NUMBER 000-29165
HIGH SPEED NET SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
FLORIDA 65-0185306
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
TWO HANNOVER SQUARE, SUITE 2120
434 FAYETTEVILLE STREET MALL
RALEIGH, NC 27601
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(919) 645-2610
(REGISTRANT'S EXECUTIVE OFFICE TELEPHONE NUMBER)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) On April 17, 2000. Anthony N. DeMint purchased all of the 672,000 shares
of J.S.J. Capital Corp's issued and outstanding Common Stock from 3 of
the Company's stockholders for total consideration of $200,000.
On April 18, 2000 J.S.J. Capital Corp. accepted the resignations of Jeff P.
Ploen, James W. Toot and Lawrence Deitler as Officers and Directors and Anthony
N. DeMint became Sole Director, President, Secretary, Treasurer
and the only stockholder of record.
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated as of
April 18, 2000 between High Speed Net Solutions, Inc., ("HSNS"), a Florida
corporation, and J.S.J Capital Corp. ("JSJ"), a Nevada corporation, HSNS has
acquired all the outstanding shares of common stock of JSJ from the sole
stockholder thereof in an exchange for 50,000 shares of 144 restricted common
stock of HSNS in a transaction in which HSNS was the successor corporation.
The Merger was approved by the unanimous consent of the Board of Directors of
HSNS on April 18, 2000.
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission, HSNS is the successor issuer to JSJ for reporting
purposes under the Securities Exchange Act of 1934, as amended (the "Act").
A copy of the Merger Agreement and Certificate of Merger are filed as exhibits
to this Current Report and is incorporated in its entirety herein.
(b) The following table sets forth the only stockholders known by HSNS to be the
beneficial owners, of more than five percent (5%) of the outstanding shares of
Common Stock of HSNS.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY SHARES
NAME AND ADDRESS OWNED OUTSTANDING
---------------- ------------ -----------
<S> <C> <C>
Summus Ltd. 10,151,527 (1)(2) 48.2%
Two Hannover Square, Suite 2120
434 Fayetteville St. Mall
Raleigh, NC 27601
Dr. Bjorn Jawerth 10,151,527 (1)(2) 48.2%
Two Hannover Square, Suite 2120
434 Fayetteville St. Mall
Raleigh, NC 27601
</TABLE>
The persons and entities named in the above table have sole voting and
investment power with respect to all shares shown as beneficially owned by them,
except as noted below.
(1) Includes 8,574,360 shares beneficially owned by Summus Ltd. Dr. Jawerth
owns 53.6% of the outstanding shares of Summus Ltd., and is the President and
Chairman of the Board of Directors of Summus Ltd. Dr. Jawerth exercises shared
voting and investment power with respect to all HSNS shares owned by Summus Ltd.
<PAGE> 3
(2) Includes 1,577,167 shares for which Summus has voting power through
voting agreements with and/or proxies from 14 persons.
(c) The table below gives the number of shares of HSNS Common Stock
beneficially owned as of April 13, 2000 by persons who were members of the Board
of Directors and executive officers of HSNS during 1999 or who are currently
members of our Board of Directors or are executive officers.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY SHARES
NAME OWNED OUTSTANDING
-------------------- ------------- ---------------
<S> <C> <C>
Andrew L. Fox
Director, Acting President and
Chief Executive
Officer, and Executive Vice President 80,000 (1)(2) *
Dr. Bjorn Jawerth
Chairman of the Board of Directors 10,151,527 (3) 48.2%
Richard F Seifert
Director 250,000 (4)(5) 1.2%
Herman Rush
Director 0 *
Alan Kleinmaier
Executive Vice President, Acting Chief
Financial Officer, Secretary, and Treasurer 90,000 (6) *
Michael M. Cimino
Former Director, President, Secretary
and Treasurer 500,000 (7) 2.4%
Michael Kim
Former President and Chief Executive Officer 265,000 (8) 1.3%
Peter Rogina
Former President and Chief Executive Officer 200,000 (9) *
All current directors and executive
officers as a group (6 Persons) 10,571,527 (10) 50.2% (11)
</TABLE>
* Represents beneficial ownership of less than one percent (1%) of Common
Stock.
The persons and entities named in the table have sole voting and investment
power with respect to all shares shown as beneficially owned by them, except as
noted below. Share ownership also includes shares of Common Stock issuable
within 60 days upon exercise of outstanding options.
(1) These shares do not include 240,000 shares that Mr. Fox may acquire
pursuant to stock options exercisable over three years in equal installments
from the anniversary date of August 25, 1999.
<PAGE> 4
(2) These shares represent 80,000 shares that Mr. Fox may acquire pursuant
to an agreement with Summus that Summus will transfer 80,000 HSNS shares in
exchange for 10,000 Summus shares owned by Mr. Fox.
(3) These shares include 8,574,360 shares owned by Summus Ltd. Dr. Jawerth
owns 53.6% of the outstanding shares of Summus Ltd. and is the President and
Chairman of the Board of Directors of Summus Ltd. Dr. Jawerth exercises shared
voting and investment power with respect to all HSNS shares owned by Summus Ltd.
These shares also include 1,577,167 shares for which Summus has voting power
through voting agreements with and/or proxies from 14 persons.
(4) These shares include 50,000 shares that Mr. Seifert may immediately
acquire pursuant to stock options.
(5) These shares include 200,000 shares that are beneficially owned with
his wife, Karen Seifert.
(6) These shares include 20,000 shares that Mr. Kleinmaier owns with
Pamela B. Kleinmaier, the wife of Mr. Kleinmaier. These shares include 50,000
shares that Mr. Kleinmaier may acquire pursuant to stock options immediately
exercisable.
(7) These shares include shares that Mr. Cimino beneficially owns with his
wife, Gina M. Cimino.
(8) These shares include 65,000 shares that Mr. Kim may immediately
acquire pursuant to stock options.
(9) These shares include 200,000 shares that Mr. Rogina may immediately
acquire pursuant to stock options, but does not include stock options
exercisable for 40,000 shares of Common Stock after July 1, 2000.
(10) This total counts the percentage of ownership attributable to the
Summus shares only once.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Merger Agreement was
negotiated between HSNS and JSJ. In evaluating the Merger, JSJ used criteria
such as the value of assets of HSNS, HSNS's ability to compete in the
marketplace, HSNS's current and anticipated business operations, and HSNS
management's experience and business plan. In evaluating JSJ, HSNS placed a
primary emphasis on JSJ status as a reporting company under Section 12(g) of the
Securities Exchange Act of 1934, as amended, and JSJ's facilitation of HSNS's
becoming a reporting company under the Securities Exchange Act.
BUSINESS
GENERAL
In this filing references to "HSNS", "we", "us", and "our", refer to High
Speed Net Solutions, Inc., post merger.
<PAGE> 5
We are launching a new business of providing clients with a service of
delivering audio, video, and graphics content and advertising over the Internet.
This business will utilize technology licensed from Summus Ltd. See "New
Agreements with Summus."
As of April 13, 2000, Summus held 8,574,360 shares (40.7% of our
outstanding Common Stock, and 38.5% on a fully diluted basis). Summus also has
the power to vote an additional 1,577,167 shares of our Common Stock through
voting agreements with and/or proxies from 14 persons. Summus' total voting
power is 48.2% of our outstanding Common Stock.
HISTORY OF HSNS
We were incorporated as a Florida corporation in 1984 under the original
name of EMN Enterprises, Inc. HSNS is a development stage company and our
auditors have raised substantial doubt about our ability to continue operations
as a going concern. From our inception in 1984 until mid-1998 HSNS was inactive
and had no significant operations.
In September of 1998, we changed our name from EMN Enterprises to ZZAP.NET,
Inc., in association with a transaction in which we acquired all of the assets
and liabilities of Marketers World, Inc., in exchange for issuing 9,275,000
shares of our Common Stock, a transaction which was accounted for as a reverse
acquisition. While under the name of ZZAP.NET, our Common Stock began trading on
the NASD's Over the Counter Bulletin Board (OTCBB). On January 25, 1999, we
changed our trading symbol from ZZNT to HSNS to reflect our new name, High Speed
Net Solutions, Inc.
During 1998, we operated our business based on the assets of Marketers
World. Marketers World's principal operations were to lease computer systems to
businesses and to distribute Internet oriented products and perform related
services. During 1998, we were not able to execute these planned activities,
other than the sale of pilot products and services. By the end of 1998, all
business operations based on Marketer's World assets had ceased. During 1999,
our operations were limited to obtaining financing and changing our business
plan. In 1998 we had a net loss of $1,709,696 and in 1999 we had a net loss of
$10,171,546.
In February 1999, Summus Ltd., and HSNS entered into the Marketing
License Agreement, in which we obtained the right to distribute certain Summus
products and technology. The term of the Marketing License Agreement was three
years. In exchange for these rights, we agreed to make an upfront payment of
$3,000,000 dollars in several installments during the first year of the
Marketing License Agreement. We made payments of $2,250,00 in cash toward
payment of the $3,000,000. We satisfied the final $750,000 due under the
Marketing License Agreement by issuing 1,500,000 shares of our Common Stock to
Summus. We terminated the Marketing License Agreement on February 18, 2000 and
on that same date entered into new agreements with Summus to support the
requirements of our new business plan. The new agreements are for a six year
term and give us rights to use certain Summus products and rights to maintenance
and support for these products. For a description of the new agreements, see
"Business - New Agreements with Summus."
In August 1999, Summus acquired 9,542,360 shares of our Common Stock (at
that time, approximately 51% of our outstanding shares, and approximately 49% on
a fully diluted basis) from the shareholders who obtained our stock in our
<PAGE> 6
acquisition of Marketers World. As of April 13, 2000, Summus held 8,574,360
shares (40.7% of our outstanding Common Stock, and 38.5% on a fully diluted
basis). Summus also has the power to vote an additional 1,577,167 shares of our
Common Stock through voting agreements with and/or proxies from 14 persons.
Summus' total voting power is 48.2.0% of our outstanding Common Stock.
Andrew L. Fox became our acting president and chief executive officer in
August of 1999 to develop and start our business operations. In September of
1999, we moved our operations from Florida to Raleigh, North Carolina into
office space at 434 Fayetteville St. Mall, Suite 2120.
HSNS AND SUMMUS RELATIONSHIP
Our business is to deliver audio, video, and graphics content and
advertising over the Internet for our clients. We plan to offer this service
under the brand name of Rich Media Direct. Summus is currently developing some
of the software products we will use to accomplish this delivery for our
customers. We have licensed from Summus the suite of software products labeled
MaxxSystem. The MaxxSystem products enable us to incorporate audio, video, and
graphics content and advertising into emails for delivery over the Internet. To
license MaxxSystem from Summus under the new agreements, we pay Summus ten
percent (10%) of the revenue we generate from the use of MaxxSystem for revenue
amounts above $10 million dollars. We have the right to all future versions of
MaxxSystem as part of the maintenance and support fee of $180,000 that we pay to
Summus in years two through six of the term of the license.
We launched our service to deliver content and advertising over the
Internet on January 14, 2000. In order to ramp up our business operations and
satisfy anticipated future customer demand, we will borrow resources from Summus
to satisfy basic business needs such as operations, communications, website
development and product management. This borrowing of resources is meant to
temporarily support our operations until qualified individuals can be hired to
operate these functions. HSNS is borrowing these resources from Summus under an
oral agreement and we will pay to Summus, without interest, the value of the
resources we have borrowed. HSNS is currently in the process of recruiting these
individuals.
RICH MEDIA DIRECTSM SERVICE.
We announced our Rich Media Direct service in January of 2000. Rich Media
Direct is an Internet direct marketing service that delivers advertising and
content over the Internet to targeted demographic groups through applications
such as opt-in email. This service allows customers to distribute content and
advertisements for purposes such as creating or increasing (1) product or brand
awareness, (2) customer traffic to web properties, and (3) revenue for Internet
web sites. Our Rich Media Direct service will provide customers with dedicated
bandwidth and a distributed infrastructure to efficiently distribute content and
advertisements to targeted audiences. Our service will allow our customers to
provide to us the list of email recipients. We will then deliver content or
advertising to the recipients on the list. Alternatively, we can identify a
targeted group and purchase distribution lists from third-parties, provided that
these lists contain individuals who have requested that content and advertising
be sent to them.
<PAGE> 7
INTELLECTUAL PROPERTY
We do not hold any patents nor do we hold any trademark or servicemark
registrations. We do not have any U.S. patent applications pending. We recently
filed a US servicemark application for Rich Media DirectSM and we intend to file
applications for the same mark in some foreign countries. There is no assurance,
however, that our servicemark application will result in our service mark being
approved.
Our success and ability to compete are substantially dependent upon
technology and intellectual property. While we will rely on copyright, trade
secret and trademark law to protect our technology and intellectual property, we
believe that factors such as the technological and creative skills of our
personnel, new service developments and frequent service enhancements are more
essential than establishing and maintaining an intellectual property leadership
position.
NEW AGREEMENTS WITH SUMMUS
To facilitate the implementation of our business plan, in February of 2000,
we entered into a Master Agreement with Summus Ltd. ("Summus"). The Master
Agreement includes a Software License Agreement ("SLA"), a Software Maintenance
Agreement ("SMA") and a Revenue Sharing Agreement ("RSA") (collectively with the
Master Agreement and a letter agreement between High Speed and Summus, dated
March 13, 2000, the "New Agreements"). The New Agreements entirely replace the
Marketing License Agreement and the related agreements incorporated by it or
referenced by it, and replace the various letter agreements between Summus and
us concerning one potential customer, Samsung Electronics of America, Inc.
(collectively, the "Terminated Agreements"). Under the terminated Marketing
License Agreement, we made payments of $2,250,000 in cash toward payment of the
$3,000,000. We satisfied the final $750,000 due under the Marketing License
Agreement by issuing 1,500,000 shares of our Common Stock to Summus.
The New Agreements give us a nonexclusive license to a suite of products
Summus has labeled MaxxSystem. MaxxSystem allows us to perform various services
for our customers. We can create audio, video, animation, and graphical content.
With MaxxSystem, we can manage, categorize, and track this content to organize
it for delivery to recipient lists. We will deliver this content for our
customers over the Internet or over private networks using MaxxSystem. To
perform this delivery, MaxxSystem uses a compression technique developed by
Summus and marketed under the brand name of Dynamic Wavelets.
PROPERTIES
Our headquarters is in 1,900 square feet of office space located at 434
Fayetteville Street Mall, Suite 2120, in Raleigh, North Carolina. Our lease
expires September 30, 2004. We pay $31,054 on an annualized basis. We believe
the terms are consistent with local market conditions. We plan to lease an
additional 2,100 square feet in the same building in the second quarter of 2000.
The space that we currently occupy, combined with the planned additional
space, is adequate for our projected growth needs over the next 12 months.
<PAGE> 8
CURRENT DIRECTORS
The following table sets forth information regarding the members of our
Board of Directors:
<TABLE>
<CAPTION>
First Year Elected as Term
Name Director Expires Age
--------------------------- --------- --------- -----
<S> <C> <C> <C>
Dr. Bjorn Jawerth 2000 2001 47
William Bradford Silvernail 2000 2001 41
Andrew L. Fox 2000 2001 36
Richard F. Seifert 1999 2001 49
Herman Rush 2000 2001 70
</TABLE>
EXECUTIVE OFFICERS
Executive Officers are elected annually and serve at the pleasure of the
Board of Directors. Our current executive officers are as follows:
<TABLE>
<CAPTION>
Name Office Officer Since Age
------------- ------------------------------------------ ------------- ----
<S> <C> <C> <C>
Andrew L. Fox Acting President and Chief Executive Officer 1999 36
Executive Vice President
Alan Kleinmaier Executive Vice President, Acting Chief
Financial Officer, Secretary, and Treasure 2000 52
</TABLE>
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS
Andrew L. Fox is our acting President and Chief Executive Officer and our
Executive Vice President. Before coming to HSNS, Mr. Fox spent over 2 1/2 years
at RealNetworks as a Senior Marketing Manager where he managed marketing and
sales operations for the corporate enterprise division of RealNetworks. Before
RealNetworks, Mr. Fox spent 10 years at IBM in a variety of sales, marketing and
product management roles. He was responsible for marketing and sales for IBM's
Wireless Data Division and was a product manager at IBM's Networking Hardware
Division. Summus Ltd. also employed Mr. Fox from August 1999 until January 2000
as its Executive Vice President of Sales and Marketing during which time Mr. Fox
also served as a member on the board of directors of Summus. Mr. Fox has an MBA
degree from Duke University's Fuqua School of Business and an undergraduate
degree in Computer Science and Electrical Engineering from Duke's School of
Engineering
Dr. Bjorn Jawerth, Chairman, President and Founder of Summus Ltd.,
received an M.Sc. In Mathematics and Statistics, as well as an M.Sc. In
Technical Physics and Electrical Engineering in 1974 from Lund Institute of
Technology, Lund, Sweden. He also received his Ph.D. in Mathematics from Lund
Institute in 1977. Dr. Jawerth is the David W. Robinson Palmetto Professor,
Professor of Mathematics and Adjunct Professor of Computer Science at the
University of South Carolina. Dr. Jawerth founded Summus Ltd. in 1991 and has
been employed with Summus since that time. He directs a group of approximately
50 researchers in Mathematics, Computer Science, Mechanical Engineering and
Chemistry at the University of South Carolina and Chalmers University of
Technology in Gothenburg, Sweden. Dr. Jawerth has more than 25 years of
experience as a consultant in the areas of image processing and finite element
analysis. Dr. Jawerth has over 90 publications to his credit in books and
referred journals. He has won and administered numerous grant awards from both
industry and government agencies such as the Office of Naval Research, the Air
Force Office of Scientific Research, the Army's NVESD, the NSF and DARPA. His
research interests include computational harmonic analysis and partial
differential equations, image processing and pattern recognition.
<PAGE> 9
Alan Kleinmaier is our Executive Vice President, Acting Chief Financial
Officer, Secretary, and Treasurer. Mr. Kleinmaier has more than 20 years of
management experience. From 1976 to 1992, he served as President and CEO of
Specialty Retail Concepts, Inc., a retail chain of more than 400 confectioneries
and coffee stores which he founded in 1976. From 1993 to 1998, Mr. Kleinmaier
was a principal and consultant for EK Retail Group, Inc., a privately held
management and consulting firm. Mr. Kleinmaier is currently the Acting Chief
Financial Officer of Summus Ltd. He joined Summus in May 24, 1999. Mr.
Kleinmaier is a graduate of the University of North Carolina, Chapel Hill, where
he was a Morehead Scholar. Mr. Kleinmaier is also a graduate of University of
North Carolina School of Business Executive Program and holds his North Carolina
Real Estate Broker's license.
W. Bradford Silvernail is the Chief Executive Officer of Summus Ltd. Mr.
Silvernail joined Summus in May 1999 and brings a strong background in general
management, technology and product management and marketing and sales. Mr.
Silvernail's most recent position before joining Summus Ltd. was General
Manager, Metering Systems, ABB Power T&D Company that developed energy
information solutions for the deregulating electric utility industry. Mr.
Silvernail was employed at ABB from 1997 to 1999. In a little over two years,
Mr. Silvernail put in place a management team and a functional business with
software development, product management and marketing and sales with a staff of
over 50. Prior to joining ABB, Mr. Silvernail spent more than fifteen years with
IBM Corporation in a variety of business unit management, product management and
sales positions associated with wireless, mobile computing and networking
products. Mr. Silvernail received a B.A. in Communications from Auburn
University in 1980 and an M.S. in Telecommunications from Syracuse University in
1981.
Richard Seifert is a Director at HSNS, having joined us in March of 1999 as
the Vice President of Operations. In late 1999 Mr. Seifert discontinued his
operational role but continued to serve us as a member of our board of
directors. Under and advisory and consulting agreement with us, Mr. Seifert has
been involved in formulating strategic partnerships and raising capital for us.
Mr. Seifert has over 20 years experience in the areas of business development,
finance, strategic planning and marketing. Mr. Seifert began his career in the
aviation industry where he flew and ran operations for several private and
commercial airlines, including Summit Airlines, Air Indiana, Nevada Airlines,
and the Royal Family of Saudi Arabia. Mr. Seifert holds a degree in Business
Administration from Montgomery County College and Penn State University.
Herman Rush is a Director at HSNS, having joined us in March of 2000. Mr.
Rush is recognized as a leader in the entertainment industry with over 30 years
experience in executive, production and sales position. He was the CEO and
President of Columbia Pictures Television Group from 1966 to 1976. Mr. Rush was
responsible for creating and producing such shows as The Montel Williams Show,
and remains an executive producer to the series. He also previously served as
Chairman and CEO of Coca-Cola Telecommunications, senior vice president of the
Entertainment Business Sector of The Coca-Cola Company, and as a member of the
Board of Directors of Columbia Pictures Industries. Mr. Rush is currently the
Chairman of New Tech Entertainment, and Internet Production company, that, in
association with American Interactive Media, is currently producing nine
Internet program sites.
Executive officers are appointed by the board of directors on an annual
basis and serve until their successors have been duly elected and qualified.
There are no family relationships among any of our directors or executive
officers.
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table and the narrative text disclose the compensation paid
during 1999, 1998, and 1997 to the various individuals who served as our
President and Chief Executive Officer 1999. The table also shows the three (3)
other highest paid executive officers whose annual salary and bonuses exceeded
$100,000 during 1999, including individuals who were not serving as an executive
officer at the end of 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ------------------------
Awards
Annual Other Restricted Options/ All Other
Name and Salary Bonus Compensation Stock SARS Compensation
Principal Position Year ($) ($) (1) ($) Awards (#) ($)
------------------ ---- --- ------- --- ------ --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Andrew L. Fox 1999 66,100 55,000 30,891 (2) 240,000 (2)
Director, Acting President 1998 -- -- -- -- -- --
And Chief Executive Officer, 1997 -- -- -- -- -- --
Executive Vice President
Alan Kleinmaier 1999 (2) (2) 13,300 (2) 50,000 (2)
Executive Vice President, 1998 -- -- -- -- -- --
Acting Chief Financial 1997 -- -- -- -- -- --
Officer, Secretary, and
Treasurer
Michael Cimino 1999 (2) (2) 50,879 425,000 (2) (2)
Former President and Chief 1998 (2) (2) 11,000 705,000 (2) (2)
Executive Officer, 1997 -- -- -- -- -- --
Secretary, and Treasurer
Michael Kim 1999 66,346 (2) 12,153 (2) 265,000 100,000
Former President and Chief 1998 -- -- -- -- -- --
Executive Officer 1997 -- -- -- -- -- --
Peter Rogina 1999 17,308 (2) 8,895 (2) 240,000 110,000
Former President and Chief 1998 -- -- -- -- -- --
Executive Officer 1997 -- -- -- -- -- --
Richard Seifert 1999 24,000 (2) 112,646 (2) 250,000 (2)
Former Vice President of 1998 -- -- -- -- -- --
Operations 1997 -- -- -- -- -- --
</TABLE>
(1) Amounts in this column include amounts earned during the year specified
but deferred for payment either the following year or thereafter.
(2) No compensation of this type received.
<PAGE> 11
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
Our Common Stock, $.001 par value, is traded in the over-the-counter market
and is quoted on the NASD Over The Counter Bulletin Board ("OTCBB") under the
symbol "HSNS." Prior to January 25, 1999, we were quoted on the OTCBB under the
symbol "ZZNT."
The following tables set forth the high and low daily bid prices for each
quarter during the entire trading history of our Common Stock as reported by the
OTCBB. Such quotations reflect inter-dealer prices without markup, markdown or
commissions and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
2000 LOW HIGH
--------- ------- --------
<S> <C> <C>
First Quarter $11.750 $32.375
Second Quarter through $ 6.880 $13.25
April 13, 2000
<CAPTION>
1999 LOW HIGH
-------- -------- --------
<S> <C> <C>
First Quarter $ 1.125 $ 2.250
Second Quarter $ 1.250 $ 4.750
Third Quarter $ 1.440 $ 6.590
Fourth Quarter $ 4.062 $18.125
<CAPTION>
1998 LOW HIGH
------- ---------- --------
<S> <C> <C>
First Quarter Not Traded Not Traded
Second Quarter Not Traded Not Traded
Third Quarter $ 2.125 $ 7.250
Fourth Quarter $ 2.125 $ 5.875
</TABLE>
The OTCBB is a regulated quotation service that displays real-time quotes
and volume information in over-the-counter (OTC) equity securities. The OTCBB
does not impose listing standards or requirements, does not provide automatic
trade executions and does not maintain relationships with quoted issuers. Stocks
traded on the OTCBB may face a loss of market makers, lack of readily available
bid and ask prices for its stock, experience a greater spread between the bids
and ask price of its stock and a general loss of liquidity with its stock. In
addition, certain investors have policies against purchasing or holding OTC
securities. Both trading volume and the market value of our securities have
been, and will continue to be, materially affected by the trading on the OTCBB.
DESCRIPTION OF REGISTRANT'S SECURITIES
In accordance with our amended and restated certificate of incorporation,
we are authorized to issue up to 50,000,000 shares of Common Stock, par value
$0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per
share. As of April 13, 2000, there were 21,062,149 shares of Common Stock
outstanding. As of April 13, 2000, there were 2000 shares issued and outstanding
of our Series A Convertible Preferred Stock. We have no other class or series of
preferred stock.
<PAGE> 12
COMMON STOCK
As of April 13, 2000, there were 21,062,149 shares of Common Stock
outstanding. In addition, as of April 13, 2000, there were outstanding stock
options to purchase 1,070,000 shares of Common Stock. If the 2,000 shares of
Series A Convertible Preferred Stock issued and outstanding were to convert to
Common Stock, then an additional 140,449 shares of our Common Stock would be
issued and outstanding. Based upon the number of shares outstanding as of April
13, 2000, and giving effect to the issuance of Common Stock upon the exercise of
all outstanding stock options, assuming that these options fully vest, and the
conversion of all of the Series A Convertible Preferred Stock into Common Stock,
there would be 22,272,598 shares of Common Stock outstanding.
Each share of Common Stock entitles the holder to one vote on all matters
submitted to a vote of stockholders, including the election of directors.
Holders of Common Stock are entitled to receive ratably the dividends, if any,
declared from time to time by the board of directors out of legally available
funds. Holders of Common Stock have no conversion, redemption or preemptive
rights to subscribe to any of our securities. In the event of any liquidation,
dissolution or winding-up of our affairs, holders of Common Stock will be
entitled to share ratably in our assets remaining after provision for payment of
liabilities to creditors. The rights, preferences and privileges of holders of
Common Stock may be subject to the rights of the holders of any shares of
preferred stock, which we may issue in the future.
PREFERRED STOCK
As of April 13, 2000, there were 2000 shares issued and outstanding of our
Series A Convertible Preferred Stock. We have no other class or series of
preferred stock. Before February 28, 2000, we had never issued any shares of
preferred stock.
We have recently amended and restated our articles of incorporation to
eliminate the specific rights and privileges originally associated with our
preferred stock. We have replaced these specific rights and privileges with
language in our articles of incorporation granting the board of directors the
power to determine by resolution at a future date the designations, rights and
privileges of the preferred stock.
The board of directors, without further action by shareholders, may from
time to time authorize the issuance of shares of preferred stock in one or more
series and with certain limitations, rights, preferences, qualifications, or
restrictions thereon and the number of shares constituting such series and the
designation of such series. Satisfaction of any dividend preferences on
outstanding preferred stock would reduce the amount of funds available for the
payment of dividends on our Common Stock. Holders of preferred stock would
normally be entitled to receive a preference payment in the event of any
liquidation, dissolution, or winding up of HSNS before any payment is made to
the holders of Common Stock. In addition, under certain circumstances, the
issuance of such preferred stock may render more difficult or tend to discourage
a change in control of HSNS. The board of directors of HSNS, without shareholder
approval, may issue preferred stock with voting and conversion rights, which
could adversely affect the rights of holders of Common Stock.
On February 28, 2000, we designated a series of Preferred Stock called
Series A Convertible Preferred Stock consisting of 10,000 shares. The rights of
the Series A Convertible Preferred Stock include the following rights: (i) a
cumulative dividend of $80 each year per share of Series A Convertible Preferred
Stock, and we have the right to pay this dividend by issuing additional shares
of Series A Convertible Preferred Stock; (ii) no voting rights except for the
right to approve by a majority vote of the holders of the Series A Convertible
Preferred Stock our issuance of any shares of a series or class of preferred
stock that ranks senior to the Series A Convertible Preferred Stock and any
voting rights required under Florida law; (iii) the right to convert the Series
A Convertible Preferred Stock into shares of our Common Stock at a conversion
price of $14.24 divided into the liquidation preference, subject to anti
dilution adjustment in the case of Common Stock dividends, splits and
reorganizations; and (iv) a liquidation preference of $1,000 per share of Series
A Convertible Preferred Stock, plus accrued unpaid dividends, payable in the
event of any liquidation, dissolution, or winding up of High Speed. After March
1, 2002, we have the right to redeem any outstanding shares of the Series A
Convertible Preferred Stock at a redemption price of $1,000 per share of Series
A Convertible Preferred Stock plus accrued dividends that have not been paid.
On February 28, 2000 we issued 2,000 shares of our Series A Convertible
Preferred Stock for consideration of $2,000,000. If the 2,000 shares of Series A
Convertible Preferred Stock issued and outstanding were to convert to Common
Stock, then an additional 140,449 shares of our Common Stock would be issued and
outstanding. If we sold the total authorized 10,000 shares of Series A
Convertible Preferred Stock, and if all 10,000 shares were to convert to Common
Stock, then an additional 702,247 shares of our Common Stock would be issued and
outstanding.
<PAGE> 13
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(A) PREVIOUS INDEPENDENT ACCOUTANT
(i) In November 1999, we engaged Ernst & Young LLP as our independent
auditors. Ernst & Young has audited our financial statements for the
years ended December 31, 1998 and 1999. Barry L. Friedman, P.C.
("Friedman"), which had served as our independent auditors in prior
years, was dismissed by High Speed on the date Ernst & Young was
engaged.
(ii) The report of Friedman on the financial statements of our company
for the period January 1, 1998 to July 22, 1998 and for the two
years in the period ended December 31, 1997 included an explanatory
paragraph regarding the company's ability to continue as a going
concern.
(iii) The change in our independent auditors was approved by our Board of
Directors.
(iv) In connection with the audits performed by Friedman, there were no
disagreements with Friedman on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or
procedure which disagreements, if not resolved to the satisfaction
of Friedman, would have caused it to make reference to the subject
matter of the disagreement in connection with its report on the
financial statements of the company for such periods.
(v) During the time period Friedman performed his audits and through the
date of dismissal, there were no "reportable events", as that term
is defined in Item 304(a) (1) (v) of Regulation S-K, with respect to
the services provided by Friedman.
High Speed requested that Friedman furnish it with a letter addressed
to the Commission stating whether it agrees with the above statements and, if
not, stating the respects in which it does not agree. A copy of such letter is
filed as Exhibit 16 to this document.
(B) NEW INDEPENDENT AUDITORS
During our two most recent fiscal years and through the date of the
engagement of such firm, High Speed did not consult with Ernst & Young LLP on
matters (i) regarding the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on High Speed's
financial statements, or (ii) which concerned the subject matter of a
disagreement or reportable event with the former auditor (as described in
Regulation S-K, Item 304).
ITEM 5. OTHER EVENTS
Successor Issuer.
<PAGE> 14
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the
Securities and Exchange Commission, the Company is the successor issuer to JSJ
for reporting purposes under the Securities Exchange Act of 1934,
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
On April 18, 2000 JSJ accepted the resignations of Jeff P. Ploen, James W.
Toot and Lawrence Deitler, as Officers and Directors and Anthony N. DeMint
became Sole Director, President, Secretary, Treasurer and the only stockholder
of record.
Pursuant to the merger the Officers and Directors of HSNS, the successor
corporation, will remain the same. (see Item 2 - "Current Directors" and
"Executive Officers.")
ITEM 7. FINANCIAL STATEMENTS
Audited financial statements of HSNS are filed herewith along with
Proforma financial statements.
ITEM 8. CHANGE IN FISCAL YEAR
JSJ has a fiscal year that ends on October 31. HSNS, as the surviving
corporation, has a fiscal year that ends on December 31. Therefore, as of the
date of the merger, April 24, 2000, the fiscal year end is December 31 and any
report covering any transition period required to be covered will be filed on
HSNS' next filing on Form 10-Q.
EXHIBITS
1.1* Agreement and Plan of Merger between High Speed Net Solutions, Inc. and
J.S.J. Capital Corp.
1.2* Certificate of Merger between High Speed Net Solutions, Inc. and J.S.J.
Capital Corp.
1.3* Unanimous consent of Stockholder
1.4** Audited Financial Statements of High Speed Net Solutions, Inc.
1.5** Proforma Financial Statements after Merger
1.6** Audited Financial Statements of Summus, Ltd.
16.02** Letter from Barry L. Friedman, P.C. regarding change in Certifying
Accountant dated September 21, 2000
-----------
* Included as an Exhibit to Form 8-K filed with the Securities and Exchange
Commission on May 8, 2000
** Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K/A to be signed on its
behalf by the undersigned hereunto duly authorized.
HIGH SPEED NET SOLUTIONS, INC.
Date: October 17, 2000
By /s/ Robert S. Lowrey
Robert S. Lowrey
Chief Financial Officer
