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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of report: May 19, 2000
(Date of earliest event reported)
LEARNCOM, INC.
(Exact name of Registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-29379 87-0622927
(Commission File No.) (I.R.S. Employer
Identification No.)
720 Industrial Drive
Bensenville, Illinois 60106
(Address of principal executive offices; zip code)
(630) 227-1080
(Registrant's telephone number, including area code)
525 South 300 East
Salt Lake City, Utah 84111
(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
(a) On May 19, 2000, LearnCom, Inc. a Nevada corporation, (the
"Registrant"), LeanCom, Inc., an Illinois corporation ("LC Illinois"), and the
stockholders of LC Illinois (the "LC Illinois Stockholders") executed an
Agreement and Plan of Reorganization (the "Plan"), whereby the Registrant
acquired 100% of the LC Stockholders in exchange for 500,000,000 shares of
common stock of the Registrant, which shares represented approximately 66% of
the outstanding shares of common stock of the Registrant after giving effect to
the transaction.
The source of the consideration used by the LC Illinois Stockholders to
acquire their respective interests in the Registrant was the exchange of all of
the issued and outstanding equity securities of LC Illinois in accordance with
the Plan.
The Plan provided for:
1. The acquisition of 100% of the outstanding equity securities of LC
Illinois;
2. The issuance and exchange of 500,000,000 shares of the Registrant's
common stock for the outstanding common stock of LC Illinois, which
shares of common stock of the Registrant were "restricted
securities" under the Securities Act of 1933, as amended;
3. The resignation of Ariika Mason and Brett Mayer as the sole
directors and executive officers of the Registrant;
4. The election of Denis Armand Mola, Lloyd W. Singer, Dr. Paul Selden
and Robert R. Redwitz to the Board of Directors of the Registrant;
Prior to the completion of the Plan, there were 257,500,000 outstanding
shares of common stock of the Registrant. Giving effect to the issuance of the
shares of common stock pursuant to the Plan, at June 1, 2000 there were
757,500,000 issued and outstanding shares of common stock of the Registrant.
(b) The following table contains information as of June 1, 2000 regarding
share holdings of the Registrant's directors and executive officers and those
persons or entities who beneficially own more than five percent (5%) of the
Registrant's common stock, taking into account the issuance of all shares under
the Plan:
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Shares of Common Stock
Owned Prior to Offering(1)
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Name and Address Amount %
----------------------------- -------------- --------
David Doerge........................ 257,404,850(2) 34.0%
Doerge Capital Management
30 S. Wacker Drive
Chicago, Illinois 60606
99,393,952(3)
Denis Armand Mola................... 13.1
980 N. Michigan Avenue
Chicago, Illinois 06011
75,469,620(4)
Lloyd W. Singer..................... 9.7
3 Bristol Court
Lincolnshire, Illinois 60069
Dr. Paul Selden..................... 35,715,802(5) 4.7
1235 Maple Avenue
Evanston, Illinois 60602
Robert R. Redwitz................... 17,330,227(6) 2.3
220 Technology Drive
Irvine, California 92618
Directors and executive officers as 29.0
a group (four persons)............ 227,909,601(7)
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(1) For purposes of this table, information as to the beneficial ownership of
shares of Common Stock is determined in accordance with the rules of the
Securities and Exchange Commission and includes general voting power and/or
investment power with respect to securities. Except as otherwise indicated,
all shares of the Registrant's Common Stock are beneficially owned, and sole
investment and voting power is held, by the person named. For purposes of
this table, a person or group of persons is deemed to have "beneficial
ownership" of any shares of Common Stock which such person has the right to
acquire within 60 days after the date of this Report. For purposes of
computing the percentage of outstanding shares of Common Stock held by each
person or group of persons named above, any shares which such person or
persons has the right to acquire within 60 days after the date of this
Report is deemed to be outstanding but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. The
inclusion herein of such shares listed beneficially owned does not
constitute an admission of beneficial ownership.
(2) Includes 112,136,766 shares owned of record by Doerge LearnCom LP, of which
Mr. Doerge is a General Partner, and 61,165,509 shares owned of record by
Doerge WingsNet LP, of which Mr. Doerge is a General Partner.
(3) Includes 21,025,644 shares owned of record by Armand Group, Inc., of which
Mr. Mola is a General Partner, and 15,291,377 shares owned of record by
Armand Video Investors LP, of which Mr. Mola is a General Partner.
(4) Includes 19,174,415 shares issuable upon the exercise of currently
exercisable stock options.
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(5) Includes 7,426,754 shares issuable upon the exercise of currently
exercisable stock options.
(6) Includes 2,038,850 shares issuable upon the exercise of currently
exercisable stock options.
(7) Includes 28,640,019 shares issuable upon the exercise of currently
exercisable stock options.
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1.
The consideration exchanged under the Plan was negotiated at "arms length"
and the Board of Directors of the Registrant used criteria used in similar
proposals involving the Registrant in the past, including the relative value of
the assets of the Registrant; its present and past business operations; the
future potential of LC Illinois; the management of LC Illinois; and the
potential benefit to the stockholders of the Registrant. The Board of Directors
determined that the consideration for the exchange was reasonable under these
circumstances.
No director, executive officer or controlling person of the Registrant had
any direct or indirect interest in LC Illinois prior to the completion of the
Plan.
(b) The Registrant intends to continue the business operations conducted
and intended to be conducted by LC Illinois, and which are described under Item
5 below under the caption "Business."
Item 5. Other Events.
The following sets forth certain information regarding the business and
management of the Registrant following the consummation of the transactions
contemplated by the Plan.
BUSINESS
The Registrant is a leading provider of human resource, management and
safety training courseware and consulting services to large and small businesses
and organizations. The Registrant offers over 500 courses that encompass a wide
array of management skills and business topics typically characterized as "soft
skills." The Registrant's courseware and consulting services have traditionally
been delivered over a variety of channels, including film, videotape, compact
disk, textbooks and workbooks, and internal customer workshops. However, the
Registrant's strategy is focused on delivering its existing and all
newly-produced or acquired training content via a variety of electronic media,
including the Internet, organizational intranets, satellites, digital video disk
(DVD) and CD-ROM. In April 2000, the Registrant announced the launch of its
"e-learning" sales unit and its first e-learning product, a four-course series
titled "Jack Cade's Compliance Toolbox," the first course of which is scheduled
for release in September 2000.
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The Registrant currently provides its courseware and consulting services
through the following operating divisions:
Human Resources Consulting and Training. The Human Resources
Division, which is the Registrant's largest operating division, consists
of the sexual harassment, diversity and employment law courseware and
consulting business of BNA Communications, Inc. ("BNAC"), a former
subsidiary of The Bureau of National Affairs ("BNA") that was acquired by
the Registrant from BNA on August 30, 1999. BNAC has been the leading
provider of modularized, video-supported workshops in the areas of sexual
harassment prevention, diversity management and employment law for over 50
years. BNAC also operates a growing consulting business to provide custom,
enterprise-wide solutions for major corporations and organizations in
these areas. The Human Resources Division provides courseware and
consulting for over 90% of the Fortune 1000 organizations.
Safe Expectations International. The Safe Expectations International
Division, which was an operating division of BNAC that was acquired by the
Registrant in August 1999, provides courseware and consulting in the area
of business and government safety and environmental health, primarily
regulatory compliance under the Federal Occupational Safety and Health Act
("OSHA"). The safety training market is growing rapidly to meet the needs
of large and small businesses that continue to have compliance issues in
meeting an expanding health and safety regulatory environment. The Safe
Expectations International Division offers over 100 titles to a broad
spectrum of customers.
Management Development Resources. The Management Development
Resources Division was established as the Registrant's initial business
unit in January 1999 in connection with the purchase by the Registrant of
substantially all of the assets of WingsNet, Inc. (a successor to Video
Publishing House, Inc.), a major producer/distributor of video-based
training programs since 1986. This Division distributes a line of
video-based training and development content for executive and management
development that includes well-known business authors, consultants and
educators, including Tom Peters, Ken Blanchard, Stephen Covey, Jim
Belasco, Warren Bennis, John Kotter and Morris Massey.
The Registrant believes it is in a unique position to become a significant
participant in the e-learning revolution that is currently taking place in the
$62.5 billion training industry. The Registrant believes its extensive content
library, large customer base and trained sales force, and the value of its
50-year-old BNAC brand name in the marketplace, will provide the Registrant with
significant strategic advantages as it seeks to compete in the emerging
e-learning market. In addition, unlike most of its competitors that have adopted
a strategy of initially building extensive e-commerce and e-learning platforms
but have little and, in many cases, only the most basic content to offer their
customers, the Registrant has followed a strategy of acquiring a large
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and valuable library of human resource and management compliance training
solutions that it believes can quickly be converted to an interactive,
feature-rich e-learning format on a cost-effective basis. As the Registrant's
more than 30,000 customers develop the technical and broadband capability
necessary to utilize e-learning courseware, the Registrant expects to be in a
position to meet the e-learning needs of its customers.
Industry Background
Businesses and other large organizations are facing significant changes in
their environments due to increased competition, an increasingly global
marketplace and economy, and rapid technological change. To remain competitive
in this dynamic business environment, many companies and other large
organizations are seeking to increase their competitiveness by implementing
educational programs to increase the depth, breadth and timeliness of the skills
and knowledge of their managers, employees and customers. As a result,
businesses are investing increasing amounts in corporate training and learning
programs. In 1997, the Department of Education estimated that businesses in the
United States spent almost $55 billion on learning programs. According to
Training Magazine, U.S. businesses and governmental organizations spent
approximately $62.5 billion on learning and skill training in 1999, of which
approximately $15.1 billion was spent on third-party vendors of employee
training goods and services. In addition, the American Society for Training and
Development estimates that companies with more than 100 employees spent on
average approximately 1.8% of their payroll on training in 1999, with technology
companies spending at approximately twice that rate. According to Veronis,
Suhler & Associates Communications Industry Forecast, outsourced training
expenditures have grown at the rate of 8.2% since 1993, and are expected to
reach $19.3 billion annually by 2003.
Businesses and other large organizations are also operating in an
increasingly more detailed and complex regulatory environment and are facing
more frequent and larger penalties and damage claims for failing to comply with
applicable regulatory requirements and governmental mandates. In addition, the
diversity movement has grown dramatically over the past decade as both
businesses and their customers are populated by employees of all races, color,
gender, nationality and sexual preferences. As a result of this movement, senior
executives and management level employees now realize that training is one of
the keys to the prevention of internal and third-party discrimination and
harassment claims, damages and penalties.
Historically, organizations have addressed their learning and training
needs through investments in instructor-led training from external vendors or
internal training departments. While most organizations continue to deliver
through traditional media (88% provide classroom instruction, 73% employ
notebooks and manuals, and 70% use videotape), new interactive electronic media
delivered over the Internet are rapidly gaining market share and are expected to
be in use by over 50% of organizations providing learning or training courses
during the year 2000. The training functions of large organizations are
undergoing significant changes, which has resulted in the following trends and
results:
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o There has been a shift away from stand-up, teacher-centered classroom
training to self-paced, PC-based training;
o Corporations have moved the responsibility for training away from
centralized HR/training departments to line managers and content
experts;
o Demand for lower cost, accountability and flexibility is being met with
e-learning solutions;
o The internet is emerging as the dominant delivery channel of the
corporate learning market;
o Learning outcomes are being better matched to the needs of the
organization;
o Learning results are being measured to provide more accurate estimates
of return on investment;
o Corporate universities, emulating the university structure, are now in
place in over 1,600 corporations;
o "Learning organizations" are emerging with lifelong learning goals for
all employees and with employees taking greater responsibility for
their own development;
o The Chief Learning Officer is emerging as a top management position in
many organizations, replacing the traditional training department
within the HR function; and
o Companies have discovered that employee retention is directly related
to employee development, resulting in greater emphasis being placed on
training.
Accordingly, recent studies have demonstrated that the most vigorous
growth segment of the learning industry is e-learning. IDC, a
Massachusetts-based research firm, recently predicted that the corporate
e-learning market will grow to $11.4 billion by 2003, representing a five-year
compound annual growth rate of 83%. The principal reasons for this growth
include the following:
o e-learning is less costly than other methods of delivery, and reduces
travel, meeting and seminar costs. The Internet also provides
inexpensive transmission compared to other delivery alternatives.
o e-learning reduces the employee downtime and inflexibility of classroom
training.
o Most e-learning courses are segmented into smaller chunks of
information, facilitating flexibility and increased productivity.
Training can be worked in around regular assignments or at times when
employees are less busy.
o e-learning is more convenient. It can be delivered to the desktop on
demand by the learner either on the job or at home.
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o e-learning provides more consistency than can be delivered by a team of
facilitators of varying skills and motivation.
o e-learning programs, properly produced and developed, are as effective
as facilitated instruction, and in some cases are more effective.
o e-learning is less intimidating, an important consideration when
dealing with sensitive subjects like diversity, sexual harassment and
conflict resolution.
o Studies show that e-learning increases retention over time.
o e-learning expands access to training.
o e-learning fits the key concept of the learning organizations -
employees taking responsibility for their own learning.
o Organizations can deploy e-learning more quickly to more employees in
more places than traditional learning modalities.
Strategy
The Registrant's goal is to be the leading global provider of human
resource, management and safety training courseware and consulting services to
large and small businesses, government agencies and educational institutions.
Key elements of the Registrant's strategy include the following:
Initiate and Expand e-Learning Product Offerings. The Registrant
intends to offer its first e-learning courseware in September 2000, when
it introduces a four-course series titled "Jack Cade's Compliance
Toolbox." The Registrant intends to continue to expand its e-learning
courseware, initially by e-purposing its existing successful programs and
also by developing new programs. In order to minimize risk and maximize
revenues, production of all new courses will be completed for as many
delivery platforms as possible. Because of the complexity of e-learning,
new courses will be scripted and produced for delivery over the Internet
first, and then reformatted for DVD, CD-ROM and videotape. The Registrant
also intends to continue to work with McLeodUSA and other third-party
e-learning solutions providers to expand its e-learning platform in order
to provide a more comprehensive solution to its customers.
Continue to Broaden Product and Service Offerings. The Registrant
offers a wide range of courseware offerings and consulting services in the
areas of human resources, management and safety training. The Registrant
expects to continue to expand the number and types of course offerings in
order to provide the most comprehensive, educationally-rich solutions
available to its existing customers, as well as to attract new customers.
The Registrant intends to identify new product category markets by working
with its existing customers and prospective customers to determine
additional courses and course materials that
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would be appropriate and by hiring personnel with expertise in a variety
of subject or product categories. The Registrant is currently considering
additional courseware offerings in the areas of harassment prevention,
equal employment opportunity (EEO) and negotiation skills as possible
areas for expansion.
Acquire Complementary Businesses. The Registrant entered the
training industry by acquiring the assets of WingsNet, Inc. in January
1999 and acquiring BNAC from BNA in August 1999, and has successfully
integrated the operations of these businesses. To enable the Registrant to
better serve its customers, the Registrant plans to continue to acquire
complementary businesses that will provide the Registrant additional
training content, consolidation benefits, cross-selling opportunities and
management talent. The Registrant believes the training industry is highly
fragmented and that there are many smaller courseware and e-learning
providers with successful product offerings that are seeking merger or
acquisition partners. The Registrant believes its acquisition strategy
will allow it to broaden its product offerings to existing customers, gain
new customers, add experienced management, sales and technology personnel
and gain access to new technologies for its expansion into e-learning
delivery media. The Registrant currently has no commitments or agreements
with respect to any acquisition, and intends to analyze potential
acquisitions and pursue those opportunities that complement or supplement
its business strategy.
Increase Marketing and Direct Sales Efforts. The Registrant's direct
sales organization is primarily organized by operating division. The
Registrant intends to leverage its previous customer successes in one of
its operating divisions by devoting significant marketing and direct sales
resources to cross-market products or consulting services offered by the
Registrant's other operating divisions. The Registrant intends to increase
the number of its field sales representatives over the next 12 months and
to implement cross-marketing initiatives among its operating divisions to
increase the likelihood of introducing existing customers to the
Registrant's other products and consulting services.
Foster a Culture of Excellence and Customer Service. The Registrant
intends to continue to employ rigorous recruiting, training and evaluation
practices to help it attract and retain employees who dedicate themselves
to delivering outstanding products and consulting services to its
customers. The Registrant has emphasized the creation of an environment of
excellence and customer service, and believes its commitment to excellence
has led and will continue to lead to new customer referrals from satisfied
customers that have used the Registrant's courses, products and consulting
services.
Content and Courses
The Registrant currently provides its courseware and consulting services
through the following operating divisions:
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Human Resources Consulting and Training. The Human Resources Division,
which is the Registrant's largest division, is responsible for the product
development, marketing and sales of BNAC's sexual harassment prevention,
diversity and employment law courseware and consulting services. Approximately
60 titles, many of which are major award winners, provide the product backbone
of this division. Of these proprietary sources, seven have achieved sales of
more than $1 million and four have achieved sales of more than $4 million.
In contrast to most of the human resources and management video market,
the Registrant's human resources, diversity and employment law titles are
licensed to customers on a per head basis. The Registrant believes this pricing
model has increased orders from customers and revenues per title. In addition,
the Registrant believes this pricing model is largely responsible for increasing
the revenues per salesperson in this division, which over the past four years
have averaged $408,000 per year as compared to an industry average of
approximately $275,000 per year.
Virtually all of the courseware titles offered by this division are
exclusive to the Registrant and are not available to agents or sub-distributors
in the U.S. market. Since 1994, BNAC has released 20 human resource programs (46
modules). The Registrant believes the courses offered by this division are
superior to most offered by its competitors, and many of these courses have won
major industry awards, including the following:
o Diverse Communications: Investing in Relationships, Top 10 Training
Products of 1999, Human Resource Executive Magazine; CINE Golden Eagle
Award, 1999
o Jack Cade's Nightmare III: Caught in the Crossfire (Introductory Guide
to Performance Management), CINDY Silver Award, 1999
o Respect vs. Harassment, Top 10 Training Products of 1998, Human
Resource Executive Magazine
o Sexual Harassment Plain and Simple, INTERCOM International Film and
Video Festival Gold Plaque Award, 1995
o Brainwaves, Chicago International Film Festival, Intercom, 1995
o The Cost of Intolerance, Chicago International Film Festival, Intercom,
1994
o A Winning Balance, Telly Award, 1994; CINE, Golden Eagle Award, 1993
Under the leadership of Julie Pierce Williams, a noted author, speaker and
consultant on human resource matters, the Human Resources Division provides
comprehensive consulting services for larger organizations that are seeking
turnkey solutions, including the following:
o Executive Consulting: Meeting with top-level managers, consultants
discuss organizational challenges and clearly define needs based on the
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business case. This lays the groundwork for enterprise-wide solutions
in all EEOC subject areas with the commitment of top management.
o Training Audits: Consultants develops and conduct surveys and focus
groups to determine the types of training experiences that will
maximize organizational benefits.
o Strategy Planning/Needs Analysis: Consultants provide thorough
assessments regarding organization focus, issues and culture and
develop unique plans that address specific strategic, operational and
budgetary concerns. The Registrant's assessment tools help
organizations differentiate training needs from organizational issues.
o Custom Program Development: The Registrant provides customization
services that increase the relevance of training and help insure
training success. Custom programs can range from materials and
exercises developed to address customer's workplace specifics to videos
shot on location using an organization's own employees.
o On-Site Implementation/Pilot Sessions: The Registrant conducts
high-impact, respectful and organizationally-challenging seminars at
customer locations. Each facilitator conducts participative
programs/workshops in an atmosphere that is sensitive to individual
differences. Pilot sessions allow customers to test program content,
focus and credibility.
o Award-winning Training Programs/Resources: A key part of most
consulting engagements is the Registrant's proprietary, award-winning
courseware resources that are licensed by customers for enterprise-wide
utilization. The availability of this courseware is one of the
Registrant's principal competitive advantages in the marketplace.
o Train-the-Trainer Workshops: Consultants coach corporate trainers,
assist in developing techniques for delivering the programs and offer
advice on methods to overcome resistance to sensitive topics.
Train-the-trainer services include instructor certifications.
o Evaluation and Analysis: The Registrant creates and builds evaluation
and analysis measurements into its training programs. Measurements are
based on feedback from training participants and longer-term
attitudinal surveys.
The Registrant is in the process of expanding the scope of its consulting
services to include other categories of consulting and training, including
leadership, management and communications skills and the skills of negotiation.
Safe Expectations International. The Safe Expectations International
Division, which was purchased by the Registrant as part of the BNAC acquisition,
has over 100 high quality courses targeted at the needs of both large and
smaller organizations. Driven largely by the large and complex regulatory
environment underlying the Federal Occupational Safety and Health Act
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(OSHA), the safety training market is relatively large and very competitive. The
Registrant is seeking to aggressively grow this division through third-party
partnerships or strategic alliances and through acquisitions. As a result, many
of the courses offered by this division have been produced by third parties and
are offered by the Registrant on a non-exclusive basis under royalty
arrangements.
Since 1994, BNAC has released 27 safety programs (66 modules), of which 24
are available on CD-ROM and will be re-released as part of the Registrant's
e-learning initiative. The Registrant's most recent release, Safety Lotto, uses
a humorous game show format to point out the hazards created by mental lapses on
and off the job. This title had sales in excess of $10,000 in its first month of
release.
The Registrant is working to develop a custom production capability and
consulting program for this division similar to that of the Human Resources
Division in an effort to increase revenues, improve operating margins and offer
a more complete service to the customers of this Division. The Safe Expectations
International Division is currently in negotiations with a large governmental
agency to produce a customer safety program. This consulting program is expected
to commence during the fourth quarter of fiscal 2000.
Management Development Resources. The Management Development Resources
Division, which commenced operations in January 1999 in connection with the
purchase of the operating assets of WingsNet, has over 300 titles that provide
high quality proprietary and distributed video-based training and development
content for executive and management development. Many of the titles offered by
this division feature well-known business authors, consultants, educators and
thought leaders, including Tom Peters, Ken Blanchard, Stephen Covey, Jim
Belasco, Warren Bennis, John Kotter and Morris Massey. A typical video sells for
approximately $600.
The Management Development Resources Division sells its products primarily
through its own direct telemarketing sales force, as well as through a
distributor network of over 100 additional telemarketers. More recent
distribution initiatives include the development of trainersgold.com, an
Internet catalog that offers a preview of selected videos offered by the
Registrant.
In March 2000, the Management Development Resources Division released a
new videotape based on One Minute Manager, the best-selling book by Ken
Blanchard that has sold over 10 million copies since its release 18 years ago.
Revenues from the videotape, The Story of a New One Minute Manager, exceeded
$40,000 for the first two months of its release, and the Registrant expects this
title to be a training industry best seller.
e-Learning Initiative
The Registrant has examined dozens of programs designed for e-learning.
Most to date are what are derisively called "page turners"... uninteresting
programs with heavy reading requirements, little interactivity and poor use of
the Internet's graphical interface. In general,
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they are text-based workbooks that have been ported to the Internet. The result
is low cost delivery, but virtually ineffective learning methodology. Students
rarely finish the courses, finding the materials boring and the presentation
tiring.
The Registrant's e-learning strategy is video-centric. Studies have shown
that compelling content is critical in capturing and holding the attention of
the computer learner. The Registrant's objective is not just to sign up learners
- but to provide an interesting and engaging video based learning experience
that encourages successful completion of course materials with a high level of
retention. This will be particularly true as the workforce fills up with a
younger generation reared on television, VCRs, DVDs, videos and computer games.
e-Learning Resources. The Registrant's e-learning courseware will come
from three sources:
Sources Process Cost Advantages Disadvantages
--------------------------------------------------------------------------------
E-Purposing Partnering Out of Speed to market, Double
with existing pocket lowest risk, royalties,
producers to costs plus dealing with possible market
convert override best sellers. saturation with
existing royalties. some companies
best-sellers already using
for e-learning the video
delivery. Full version.
conversions
with
assessments,
pre-test,
post-test,
learning
management
system, etc.
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New Production Independent Out of Product will be Time
producers pocket plus uniquely created Consuming.
retained by single for the market. High front end
the Registrant royalties. New titles costs. Riskier.
will create usually sell
new well. More
multi-platform creative freedom.
courses (see
below).
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Acquisition of Aggregate Lowest Speed to market. Usually
Existing Titles content from cost. Often Fill in gaps in non-exclusive
producers royalties product line. deals. Dilutes
willing to use only the idea of
distributors. (variable single source
cost). for proprietary
products.
The Registrant's first e-learning product will be a four-course series
titled "Jack Cade's Compliance Toolbox," the first course of which is scheduled
to be released in September 2000. The main content of the course will be
dramatized video showing Jack Cade's propensity for making potentially costly
employment law errors on the job. It deals with a family of critical issues that
apply to virtually all management personnel, including possible violations of
various federal laws, such as Title VII, the Fair Employment Act, the Americans
with Disabilities Act, OSHA and the National Labor Relations Act. The three
initial courses will cover an introduction to employment law issues, sexual
harassment and a general performance management course that addresses hiring,
promotion and termination practices, as well as performance appraisals. All
courses will be closely based on the existing video courses, although new video
materials will be added to balance Jack's inept supervisory skills with modeling
of appropriate behavior and answers to online test questions.
The Jack Cade series was chosen as the Registrant's initial e-learning
product because of its superior quality and outstanding success to date. Total
sales of Jack Cade branded courseware
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(series of three courses) since inception exceed $10 million. The Registrant
believes the Jack Cade brand has high recognition in training circles, and that
customers will feel comfortable that they are receiving high quality over this
new delivery medium.
Production Methodology. Although the Registrant will start with
e-purposing existing successful programs, it also intends to develop new
programs. In order to minimize risk and maximize revenues, production of all new
courses will be completed for as many delivery platforms as possible. Because of
the complexity of e-learning, new courses will be scripted and produced for the
Internet first, and then reformatted for DVD, CD-ROM and videotape. All new
programming will be completed with the following modalities in mind:
o Individual, self-paced learning: This is the basic learning mode for
which the Registrant will design its e-learning courseware. It is
assumed the personal computer will be the instrument of choice for most
e-learning customers. As a result, all images initially will be based
on 14" PC screen size. Likewise, DVD and CD-ROM versions will focus on
this mode.
o Group instruction: Derivative videotapes will be designed for use in
classroom settings, usually with a facilitator in charge.
o EPSS (Electronic Performance Support Systems). These are job aids or
problem solvers as compared to traditional full-length training
productions. With over 500 videotapes and its new production
capabilities, the Registrant believes it is well positioned to develop
a family of digital problem solvers utilizing footage and/or scripts
from existing courseware.
The delivery of e-learning courses can be handled via three major
alternatives - all using standard web-browsers:
--------------------------------------------------------------------------------
System Alternatives Server Location Advantages Disadvantages
--------------------------------------------------------------------------------
Internet Generic service Customer up and Customers have
hosted by running quickly. firewall/security
McLeodUSA. No administrative concerns.
overhead. No need
to integrate into
existing
infrastructure.
The Registrant
updates and
maintains.
--------------------------------------------------------------------------------
Intranet On customer Easiest for Slow
premises. customers to implementation.
customize and add Requires full
their own cooperation of
courses. customer IT
department.
Upgrades are more
complex.
--------------------------------------------------------------------------------
Extranet Customized system Customer branded. Firewall issue.
hosted by Ease of adding
McLeodUSA. their own courses.
--------------------------------------------------------------------------------
The Registrant has entered into an agreement with McLeodUSA, a prominent
technology/services provider, for the following key support functions:
o Providing template - for web-based content development for both
Registrant -owned courses as well as self-publishing of customer's own
programs.
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<PAGE>
o Installation support - assisting customers with the installation and
optimization of products and services.
o Technical Support Hotline - telephone support to customers from 7:30
a.m. to 6:30 p.m., five days per week, with emergency service 24 hours
per day, seven days per week.
o Implementation consulting - assisting customers in planning and
implementing their training programs; establishing timetables and
success criteria; developing internal marketing programs to maximize
use; and developing communications strategies.
o LMS - Learning management system for registering users, assessing
knowledge levels, tracking and reporting on usage of e-learning
courseware, controlling security and integrating collaboration tools -
chat, threaded discussion, push slides, e-mail, recording test results,
live events polling, program control whiteboard and providing tools for
updating and changing site.
o Live Event Capability - McLeodUSA is a prominent provider of live event
services using satellite, video streaming and video-conferencing
protocols.
The Registrant expects that courseware selection, design and the executive
producer role for the Registrant's initial e-learning products will be the
responsibility of Dr. Paul Selden, the Registrant's Chief Technology Officer.
The Registrant believes Dr. Selden's experience as an educator, course designer
and web developer will provide a firm foundation for the Registrant's
development efforts.
The Registrant will own the copyright or exclusive distribution rights to
all new e-learning productions. The Registrant plans to develop six courses in
2000, 12 in 2001 and 24 in 2002. These estimates will be adjusted based on
customer response and demand for new titles and opportunities as they develop.
Customers
The Registrant sells or licenses its corporate learning courseware to
Fortune 1000 companies and other major U.S. and international organizations in a
wide variety of industries, including manufacturing, technology,
telecommunications, retail, utilities and financial services, as well as to
governmental agencies. The Registrant's courseware and consulting services are
also marketed through the Registrant's direct sales force to over 30,000
corporate customers worldwide. No customer accounted for more than 10% of the
Registrant's revenues in fiscal 1999 or the first fiscal quarter of 2000.
The Registrant's customers include the following companies or
organizations or their affiliates:
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<PAGE>
AT&T Hertz Corporation Philip Morris
Bayer Corporation Hughes Aircraft Prudential Insurance Co.
Brooklyn Union Gas Ingram Micro Square D Corporation
Dean Witter Reynolds ITT US Postal Service
Department of Defense Merrill Lynch Virginia Power
Georgia Power Mobil Oil Westchester Co. Medical
General Dynamics Pathmark Stores Center
Sales and Marketing
The Registrant sells its products and consulting services through its
direct sales force. As of June 1, 2000, the Registrant's direct sales force
consisted of 14 professionals, all of whom were organized by operating division.
The Registrant's sales professionals typically target their sales efforts
at senior purchasing executives or other senior executives within the education
and/or compliance department of its potential customer. When a prospective
customer is interested in purchasing one or more titles within the Registrant's
extensive course offerings, the Registrant will generally provide previews of
such titles for the customer's consideration, submit a comprehensive proposal
for both training resources and consulting services and, in certain cases
involving potentially larger customers, visit the customer for high-level
presentations. The Registrant's consultants often participate in the selling
process. While the Registrant's consultants are typically independent
contractors, their consulting services are generally exclusive to the
Registrant. The sales professionals of the Registrant's three operating
divisions operate independently. However, the Registrant recently implemented a
referral system for its salespeople that rewards a salesperson from one division
for a sale made by another division on the basis of such salesperson's referral.
To support its direct sales organization, the Registrant has devoted
significant resources to building strong marketing support. The Registrant's
principal marketing objectives are to generate sales leads and increase the
market's awareness and accurate perception of the Registrant and its products
and consulting services. These efforts are focused on industry advertising,
public relations, trade shows, direct mailings and participation in major
industry seminars.
An important part of the Registrant's marketing strategy will also be
Internet. The Registrant has initially developed the following corporate
websites:
o lrncom.com (being changed to learncom.net) - a general corporate site
currently under development that will offer press releases, officer
biographies and hot links to division sites listed below.
o bnacommunications.net - covers products, services and news from the
Registrant's Human Resource Division and the Safe Expectations
International Division.
15
<PAGE>
o trainersgold.com - multifaceted site offering community of interest
information for trainers, as well as an online catalog with previews of
certain of the Registrant's video products.
A new site is being developed for e-learning information and
cross-promotion of the Registrant's other sites.
The trainersgold.com website is designed to use technology to simplify the
selection, previewing and purchasing process for the Registrant's full line of
over 500 training videotapes. When this site is fully operational, full, free
previews of each video title will be available online at 56k. Previews can be
viewed by prospective customers in the office or at home without the typical
two-way shipping of VHS cassettes. Secure online ordering will complete the
process in minutes rather than hours. For users wanting the human touch, the
Registrant's toll-free 800 number will be provided on all screens. Online chats
and threaded discussions are also planned for the site to create a sense of
community among professionals utilizing corporate videos for training. Live
webcasts (fee-based or free) featuring prominent thought leaders are an option
also being developed with McLeodUSA.
As bandwidth increases, the Registrant plans to migrate trainersgold.com
into an e-learning site featuring proprietary titles from each of the
Registrant's operating divisions, as well as third party content of exceptional
value.
Competition
The market for business education and training solutions is highly
competitive , constantly evolving and subject to rapidly emerging technologies.
The market is highly fragmented with no single competitor accounting for a
dominant market share. The Registrant competes with providers of traditional
classroom instruction, publishing companies and other vendors of textbooks,
videotapes, application software and other traditional courseware, training
consultants and internal educational and technological personnel of its
potential customers. Most recently, the Registrant began experiencing
significant increased competition from new companies entering the e-learning
market and education platform providers. The Registrant expects the e-learning
market to become increasingly competitive due to the low barriers to entry.
Increased competition may also develop as a result of consolidation within the
industry.
The Registrant believes the principal competitive factors affecting its
marketplace are the depth, breath and variety of content, the ability to offer
complete learning solutions, an installed customer base, the size and experience
of the sales force offering the courseware, training or consulting, product
quality, adaptability and flexibility of the training products offered, price
and corporate reputation. Although the Registrant believes that it currently
competes favorably with respect to these factors, there can be no assurance that
it will be able to maintain its competitive position against current and
potential competitors, particularly those with greater financial, technical,
sales, marketing, support and other resources or greater name recognition than
the Registrant. The Registrant believes its long-term success will depend on its
ability to implement and expand its e-learning offerings and to produce and
distribute the most extensive and
16
<PAGE>
educationally-rich e-learning products in the marketplace. However, the markets
for the Registrant's products are still rapidly evolving, and there can be no
assurance that the Registrant will be able to compete successfully against
current or potential competitors.
A number of public and private companies currently offer competitive
products in the Registrant's target markets. The Registrant believes the primary
competitors of its proposed e-learning "soft skill" products will be SmartForce,
PLC, SkillSoft Corporation and Ninth House Network. Competition for the large
consulting contracts sought by the Registrant's Human Resources Division is
vigorous, although the Registrant believes the quality of its consulting
services and of its related proprietary library of customizable video-supported
courseware provides a significant strategic advantage. The most significant
additional competitors for the Registrant's Human Resources Division include J.
Howard & Associates, a subsidiary of Provant, Patricia Pope & Associates and
Prism Corp. The Registrant believes its Safe Expectations International Division
generally competes with a number of larger companies, including Coastal
Communications, Summit Training Services, Inc., Comprehensive Loss Management,
Inc. and Marcom, Inc. The Registrant's Management Development Resources Division
operates in the most competitive end of the softskills training market. This
division competes with a large number of distributors that generally sell the
same management training titles to a shrinking customer base of corporations and
organizations that seek videos as a management training aid. While the
Registrant does not expect to eliminate the sale of management training videos,
it anticipates that the sales staff for this division will be redeployed over
the next three to six months to the Registrant's more profitable human
resources, safety training and e-learning units.
Intellectual Property
The Registrant relies on a combination of copyright, trademark and trade
secret laws, confidentiality and nondisclosure agreements and other contractual
provisions to establish, maintain and protect its proprietary rights. The
Registrant has copyright rights for its proprietary courseware and licenses
certain courseware for which the copyrights are owned by others. All courseware
is licensed by the Registrant, rather than sold, and the Registrant requires its
customers to enter into license agreements, which impose restrictions on their
ability to utilize the courseware. The Registrant attempts to protect its trade
secrets and other proprietary information through a number of means, including
agreements with suppliers, nondisclosure agreements with employees and
consultants and other security measures.
The Registrant intends to rely on outside licensers, primarily McLeodUSA,
for technology that will be incorporated into its e-learning courseware
products. The Registrant believes, however, that it can obtain replacement or
complementary technology from other vendors and may, in the future, develop
replacement technology itself.
Despite the Registrant's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of its products or to obtain
and use information that the Registrant regards as proprietary. Policing
unauthorized use of the Registrant's products is difficult, and while the
Registrant is unable to determine the extent to which piracy or the Registrant's
17
<PAGE>
courseware products exists, courseware piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries to not protect the
Registrant's proprietary rights to as great an extent as do the laws of the
United States. The Registrant's means of protecting its proprietary rights may
not be adequate and its competitors may independently develop similar courseware
or e-learning technology, duplicate its products or design around its
proprietary intellectual property.
Employees
As of June 1, 2000, the Registrant had 25 full-time employees and three
part-time employees, of whom 18 were engaged in marketing and sales, six in
management, administration and finance, two in consulting services, and two in
warehousing and shipping. None of these employees is covered by any collective
bargaining agreements, and to date, the Registrant has not experienced a work
stoppage. The Registrant believes its relationship with its employees is good.
Properties
The Registrant's principal administrative, sales, marketing and warehouse
facilities occupy approximately 11,000 square feet of office and warehouse space
in Bensenville, Illinois, a suburb of Chicago. The lease for these facilities
expires in January 2001. The Registrant also leases sales offices for its Human
Resources Division in Silver Spring, Maryland under a lease that expires in
December 2004 and for its Safe Expectations International Division in
Gaithersburg, Maryland under a lease that expires in October 2002. The
Registrant believes its facilities are adequate for its current needs and that
suitable additional or substitute space will be available as needed to
accommodate expansion of the Registrant's operations.
MANAGEMENT
Officers and Directors
The following table sets forth certain information with respect to each
officer or director of the Registrant.
Name Age Position
---- --- --------
Denis Armand Mola... 53 Chairman of the Board
Lloyd W. Singer..... 69 Chief Executive Officer, President and
Director
Dr. Paul Selden..... 51 Chief Operating and Technology Officer
and Director
Robert R. Redwitz... 54 Acting Chief Financial Officer and
Director
Dennis Kerrigan..... 53 Vice President and General Manager -
e-Learning
18
<PAGE>
Name Age Position
---- --- --------
Charles J. DeFilippo 39 Vice President and General Manager -
Human Resources and Management Solutions Unit
Julie Pierce
Williams............ 35 Vice President and General Manager -
Consulting and Training Services
Judy Forrester...... 54 Vice President and General Manager -
Safety and Environmental Health
Denis Armand Mola. Mr. Mola was a co-founder and Chairman of the Board of
LearnCom, and became Chairman of the Board of the Registrant upon consummation
of the Plan. Since 1976, Mr. Mola has been a Managing Director of The Armand
Group, an investment banking firm with offices in Chicago, Brussels, Belgium and
New York City, of which Mr. Mola was the founder. Mr. Mola has a B.A. in
Economics from St. John's University and an MBA in Finance from Fordham
University.
Lloyd W. Singer. Mr. Singer was a co-founder and the Chief Executive
Officer and President of LearnCom, and became Chief Executive Officer and
President of the Registrant upon consummation of the Plan. Prior to founding
LearnCom in September 1998, Mr. Singer was from January 1997 to December 1998,
Chief Operating Officer of WingsNet, Inc., a producer/distributor of video-based
training programs that filed an assignment for the benefit of creditors under
the laws of the State of Illinois in November 1998. From 1994 to December 1996,
Mr. Singer was the founder and Chief Executive Officer of Media Alliance, Ltd.,
a designer and distributor of CD-ROM database and learning products that was
sold to WingsNet, Inc. in January 1997. Mr. Singer has over 40 years of
experience in the electronics, training and publishing industries. Mr. Singer
has a B.A. and a B.S. in Industrial Engineering from Columbia College and
Columbia Engineering School, respectively. Mr. Singer is the father-in-law of
Dr. Selden.
Dr. Paul Selden. Dr. Selden was Chief Operating and Technology Officer of
LearnCom, and became Chief Operating and Technology Officer of the Registrant
upon consummation of the Plan. Prior to founding LearnCom in September 1998, Dr.
Selden was from January 1997 to December 1998, Chief Technology Officer of
WingsNet, Inc., a producer/distributor of video-based training programs that
filed an assignment for the benefit of creditors under the laws of the State of
Illinois in November 1998. From 1994 to December 1996, Dr. Selden was the Chief
Technology Officer of Media Alliance, Ltd., a designer and distributor of CD-ROM
database and learning products that was sold to WingsNet, Inc. in January 1997.
Dr. Selden has a B.A. from Yale University and a Ph.D. in Social Ethics from The
University of Southern California. Dr. Selden is the son-in-law of Mr. Singer.
Robert R. Redwitz. Mr. Redwitz was the acting Chief Financial Officer and
a director of LearnCom, and became the acting Chief Financial Officer and a
director of the Registrant upon consummation of the Plan. Since 1995, Mr.
Redwitz has been the founding and managing partner of Robert R. Redwitz & Co.,
certified public accountants and consultants, and since 1997, Mr. Redwitz has
also been the founding member of The GDR Group, LLC, a company that
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<PAGE>
specializes in computer systems design, software and hardware sourcing, and web
page development. Mr. Redwitz was a founder and financial advisor to WingsNet,
Inc., the assets of which were acquired by LearnCom in January 1999. Mr. Redwitz
is a graduate of St. John's Seminary College with a B.A. in Philosophy and has a
B.S. in Accounting from the University of Southern California in Los Angeles.
Dennis Kerrigan. Mr. Kerrigan joined LearnCom as Vice President and
General Manager - Management Development Resources Unit in January 1999 and
became Vice President and General Manager - e-Learning of the Registrant in May
2000. Prior to joining LearnCom, Mr. Kerrigan was from August 1997 to January
1999, Vice President of Sales of WingsNet, Inc. From 1992 to 1996, Mr. Kerrigan
was the Vice President of Sales for Distance Learning Associates. Mr. Kerrigan
has a B.B.A. from Notre Dame University.
Charles J. DeFilippo. Mr. DeFilippo joined LearnCom as Vice President and
General Manager - Human Resources and Management Solutions Unit in September
1999, and retained that position with the Registrant upon consummation of the
Plan. Prior to joining LearnCom, Mr. DeFilippo served for over ten years in
various positions with BNAC prior to its acquisition by LearnCom, most recently
as Vice President - Sales. Mr. DeFilippo has a B.S. from Indiana University of
Pennsylvania and is currently enrolled in the M.B.A. program at Johns Hopkins
University.
Julie Pierce Williams. Ms. Williams joined LearnCom as Vice President and
General Manager - Consulting and Training Services in September 1999, and
retained that position with the Registrant upon consummation of the Plan. Prior
to joining LearnCom, Ms. Williams was, since 1996, Manager of Training and
Consulting of BNAC. Ms. Williams has a B.A. from Clark University and an M.A. in
Psychological Counseling from Columbia University.
Judy Forrester. Ms. Forrester joined LearnCom as Vice President and
General Manager - Safety and Environmental Health in September 1999, and
retained that position with the Registrant in connection with the
Reorganization. Prior to joining LearnCom, Ms. Forrester was, since 1994,
Manager of Business Development for the Environmental, Safety and Health
Division of BNAC.
Executive Compensation
The table below sets forth the compensation earned for services rendered
to the Registrant in all capacities for the fiscal year ended December 31, 1999
by the Registrant's executive officers.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------
Annual Compensation Securities
---------------------- Underlying All Other
Name and Principal Position Salary Bonus Options (#) Compensation
--------------------------- ------ ----- ----------- ------------
<S> <C> <C> <C> <C>
Lloyd W. Singer.............................. $78,000 $ -- 28,761,624 $ --
President and Chief Executive
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------
Annual Compensation Securities
---------------------- Underlying All Other
Name and Principal Position Salary Bonus Options (#) Compensation
--------------------------- ------ ----- ----------- ------------
<S> <C> <C> <C> <C>
Dr. Paul Selden.............................. $59,000 $ -- 11,140,132 --
Chief Operating and Technology Officer
</TABLE>
Option Grants During Last Fiscal Year. In fiscal 1999, the Registrant
granted options to purchase up to an aggregate of 65,482,045 shares to
employees, directors and consultants. All options were granted at exercise
prices that the Board of Directors believed to be equal to the fair market value
of the Common Stock on the date of grant. All options have a term of ten years
(five years in the case of Mr. Singer). Optionees may pay the exercise price by
cash or certified check. Option shares generally vest over three years, with
one-third of the option shares vesting on each of the first three anniversaries
of the date of the option grant. The options granted to Mr. Singer and Dr.
Selden vest in three equal installments, with one-third vesting on the date of
grant, one-third vesting on January 1, 2000 and the balance vesting on January
1, 2001.
The following table sets forth certain information with respect to stock
options granted to each of the Registrant's executive officers in fiscal 1999.
<TABLE>
<CAPTION>
Percent of
Total
Number of Options
Securities Granted to
Underlying Employees
Options In Last Exercise Expiration
Granted Fiscal Year Price Date
------- ----------- ----- ----
Name
----
<S> <C> <C> <C> <C>
Lloyd W. Singer........................... 28,761,624 43.92% $0.007553 8/16/04
Dr. Paul Selden........................... 11,140,132 17.01% $0.006867 8/16/09
</TABLE>
Directors' Compensation
The Registrant's directors are reimbursed for expenses incurred in
attending meetings of the Board of Directors. Directors generally are not paid
any separate fees for serving as directors.
Employment Agreements
In June 2000, the Registrant entered into three-year employment agreements
with Lloyd W. Singer and Paul Selden in an effort to ensure the Registrant of
the continued employment of each officer in his current executive position with
the Registrant. Under the terms of these agreements, Mr. Singer and Dr. Selden
receive base salaries of $125,000 and $100,000, respectively. In their
employment agreements, each of Mr. Singer and Dr. Selden has agreed that during
the term of his employment agreement and for a period of one year thereafter
21
<PAGE>
(in the event of termination of employment for other than "cause" or "good
reason") or two years thereafter (in the event of termination of employment for
"cause"), each of them will not, without the prior written consent of the
Registrant, compete with the Registrant by engaging in any capacity in any
business which is competitive with the business of the Registrant.
Stock Option Plan
In May 2000, the Registrant adopted the LearnCom, Inc. 2000 Employee Stock
Option Plan (the "Option Plan") for the purpose of attracting, retaining and
maximizing the performance of executive officers and key employees and
consultants, and to enable the Registrant to exchange outstanding employee
options of LearnCom for substantially identical options of the Registrant. The
Registrant has reserved 102,000,000 shares of Common Stock for issuance under
the Option Plan. The Option Plan has a term of ten years. The Option Plan
provides for the grant of "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory
stock options, stock appreciation rights and restricted stock awards. It is
contemplated that the Option Plan will eventually be administered by a
Compensation Committee of the Board of Directors (the "Compensation Committee"),
which Committee has not yet been created. The exercise price for non-statutory
stock options may be equal to or more or less than 100 percent of the fair
market value of shares of Common Stock on the date of grant. The exercise price
for incentive stock options may not be less than 100 percent of the fair market
value of shares of Common Stock on the date of grant (110 percent of fair market
value in the case of incentive stock options granted to employees who hold more
than ten percent of the voting power of the Registrant's issued and outstanding
shares of Common Stock).
Options granted under the Option Plan may not have a term of more than a
ten-year period (five years in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Registrant's
Common Stock) and generally vest over a three-year period. Options generally
terminate three months after the optionee's termination of employment by the
Registrant for any reason other than death, disability or retirement, and are
not transferable by the optionee other than by will or the laws of descent and
distribution.
The Option Plan also provides for grants of stock appreciation rights
("SARs"), which entitle a participant to receive a cash payment, equal to the
difference between the fair market value of a share of Common Stock on the
exercise date and the exercise price of SAR. The exercise price of any SAR
granted under the Option Plan will be determined by the Board of Directors in
its discretion at the time of the grant. SARs granted under the Option Plan may
not be exercisable for more than a ten year period. SARs generally terminate one
month after the grantee's termination of employment by the Registrant for any
reason other than death, disability or retirement. Although the Board of
Directors has the authority to grant SARs, it does not have any present plans to
do so.
Restricted stock awards, which are grants of shares of Common Stock that
are subject to a restricted period during which such shares may not be sold,
assigned, transferred, made subject to a gift, or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered, may also be
22
<PAGE>
made under the Option Plan. The Board of Directors has not granted, and does not
have any plans to grant, restricted shares of Common Stock.
As of the date of this Report, ten-year options to purchase an aggregate
of 36,720,421 shares of Common Stock at an exercise price of $.006867 per share
have been granted under the Option Plan to 19 employees of the Registrant,
five-year options to purchase an aggregate of 28,761,624 shares of Common Stock
at an exercise price of $.007553 per share have been granted to one employee of
the Registrant and ten-year options to purchase 11,213,678 shares of Common
Stock at an exercise price of $.011771 per share have been granted to eight
employees of the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
Financial statements, if any, required by this item will be filed by
amendment not later than August 2, 2000.
(b) Pro Forma Financial Information.
Pro form financial information, if any, required by this item will
be filed by amendment not later than August 2, 2000.
(c) Exhibits.
The Registrant hereby furnishes the following exhibit:
2.1 Agreement and Plan of Reorganization dated as of May 19, 2000
among the Registrant, LearnCom, Inc., an Illinois corporation,
and the stockholders of LearnCom, Inc.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEARNCOM, INC.
Date: June 2, 2000 By:/s/ Lloyd W. Singer
---------------------------------
Lloyd W. Singer
Chief Executive Officer
24
