<PAGE> 1
As filed with the Securities and Exchange Commission on August 4, 2000
Registration No. 333-34612
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ENVIRONMAX.COM, INC.
(Name of issuer in its charter)
---------------
UTAH 5045 87-064520
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
4190 S. HIGHLAND DRIVE, SUITE 210
SALT LAKE CITY, UTAH 84124
(801) 424-0200
(Address and telephone number of registrant's principal executive offices
and principal place of business)
---------------
ROBERT F. CRAIG
CHIEF EXECUTIVE OFFICER
4190 S. HIGHLAND DRIVE, SUITE 210
SALT LAKE CITY, UTAH 84124
(801) 424-0200
(Name, Address and telephone number of agent for service)
---------------
COPIES TO:
J. GORDON HANSEN, ESQ.
RICHARD D. CLAYTON, ESQ.
SCOTT R. CARPENTER, ESQ.
PARSONS BEHLE & LATIMER
201 SOUTH MAIN STREET, SUITE 1800
SALT LAKE CITY, UTAH 84111
(801) 532-1234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================
PROPOSED PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
TITLE OF EACH CLASS MAXIMUM AMOUNT OFFERING PRICE AGGREGATE OF
OF SECURITIES TO BE TO BE PER SHARE (1) OFFERING PRICE REGISTRATION
REGISTERED REGISTERED FEE
=================================================================================================
<S> <C> <C> <C> <C>
Common Shares, with par 7,000,000 $ 21 $147,000,000 $38,808
value of $.001 per share. shares
=================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH A DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
[INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.]
SUBJECT TO COMPLETION, DATED AUGUST 4, 2000
PROSPECTUS
ENVIRONMAX.COM, INC.
A MINIMUM OF 3,000,000 SHARES AND A MAXIMUM OF 7,000,000 SHARES
ISSUABLE TO THE GENERAL PUBLIC
This is the initial registered public offering of EnvironMax.com, Inc.,
and we are offering a minimum of 3,000,000 shares and a maximum of 7,000,000
shares to the general public. The Company expects that the public offering price
will be between $17.00 and $25.00 per share. This price may not reflect the
price of the Company's shares after this offering. All of the common shares
offered hereby are being sold by EnvironMax.com, Inc. Prior to this offering
there has been no public market for our securities. We will apply to list the
common shares for quotation on the American Stock Exchange under the symbol
"ENVX."
THE COMMON SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," BEGINNING ON PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
<TABLE>
<CAPTION>
===============================================================================================
Minimum Offering Maximum Offering
-----------------------------------------------------------------------------------------------
Per Share Total Per Share Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Public Offering Price $17.00 $51,000,000 $17.00 $119,000,000
-----------------------------------------------------------------------------------------------
Offering Expenses $ .23 $700,000 $.10 $700,000
===============================================================================================
Net Proceeds $16.77 $50,300,000 $16.90 $118,300,000
===============================================================================================
</TABLE>
The date of this prospectus is , 2000.
<PAGE> 3
[INSIDE FRONT COVER]
[Graphics depicting the Company's products.]
WE INTEND TO DISTRIBUTE TO SHAREHOLDERS ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS EXAMINED BY AN INDEPENDENT PUBLIC ACCOUNTING FIRM
AND QUARTERLY REPORTS FOR THE FIRST THREE QUARTERS OF EACH CALENDAR YEAR
CONTAINING UNAUDITED FINANCIAL INFORMATION.
<PAGE> 4
As used in this prospectus, the terms "we," "our," "us,"
"EnvironMax.com," and "the Company" refer to EnvironMax.com, Inc. We have filed
trademark and servicemark applications for the "EnvironMax.com," and
"EnvironMax" names and logo. All other trademarks or tradenames referred to in
this prospectus are the property of their respective owners.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY................................................................. 1
RISK FACTORS....................................................................... 6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.................................. 17
USE OF PROCEEDS.................................................................... 18
DIVIDEND POLICY.................................................................... 18
CAPITALIZATION..................................................................... 18
DILUTION........................................................................... 19
SELECTED FINANCIAL DATA............................................................ 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................................................. 22
RESULTS OF OPERATIONS.............................................................. 24
BUSINESS........................................................................... 27
LEGAL PROCEEDINGS.................................................................. 35
MANAGEMENT EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES......................... 35
CERTAIN TRANSACTIONS............................................................... 40
PRINCIPAL SHAREHOLDERS............................................................. 40
COMPANY'S PLAN OF DISTRIBUTION..................................................... 42
DESCRIPTION OF SECURITIES.......................................................... 46
SHARES ELIGIBLE FOR FUTURE SALE.................................................... 47
STOCK TRANSFER AND LISTING......................................................... 48
LEGAL MATTERS...................................................................... 48
EXPERTS............................................................................ 48
WHERE YOU CAN FIND ADDITIONAL INFORMATION.......................................... 49
INDEX TO FINANCIAL STATEMENTS...................................................... F-1
</TABLE>
(i)
<PAGE> 5
(This page intentionally left blank.)
<PAGE> 6
PROSPECTUS SUMMARY
You should read this summary information with the entire prospectus and
the more detailed information in this prospectus, including the risk factors
regarding our company and the common stock being sold in this offering, the
financial statements and notes to those statements appearing elsewhere in this
prospectus.
OUR BUSINESS
We provide commercial and governmental enterprises with environmental
monitoring and management solutions. Through our parent corporation, Enmax, we
have pioneered hazardous material management by supporting, maintaining and
upgrading the Hazardous Material Management System, or HMMS, a
client-server based system used by governmental agencies, such as the Department
of Defense, to monitor and track hazardous material and waste. We are using this
knowledge and expertise to design, develop, and market the EnvironMax system.
Designed to replace HMMS and meet commercial requirements as well, the
EnvironMax system uses a combination of computer software, hardware, label
printers, bar code scanning devices, and business processes to manage and
monitor the procurement, use and disposal of hazardous material and waste.
The EnvironMax system manages hazardous materials in a manner similar to
that used by pharmacies in their management of prescription drugs. The
EnvironMax system monitors hazardous materials from their purchase through all
stages of dispersal, use and handling by employing serialized bar coded labels
and scanning devices. Information is then input and maintained in our database
via web-based software which can function both as a stand alone solution, or as
an integrated part of an enterprise resource planning system, or ERP. It is from
this database that compliance and accounting reports can be generated.
In addition to our EnvironMax system, we intend to develop other systems
to assist in environmental compliance management. These plans include systems
that will manage, track, and monitor air emissions and water discharges.
Together with our parent Enmax, we currently provide environmental
management solutions to numerous Department of Defense Depots including
Warner-Robins Air Logistics Center, Tobyhanna Army Depot, and the Marine Corps
Logistics Base, Albany. We plan to convert these enterprises from HMMS or the
client-server based EnvironMax to the web-enabled EnvironMax system within the
next six months. We also plan to market and sell to other enterprises throughout
the United States and the world.
1
<PAGE> 7
MARKET OPPORTUNITY
There are thousands of commercial entities and governmental sites within
the United States that are subjected to Environmental Protection Agency
reporting criteria. This necessitates an effective solution for tracking the
acquisition, production, handling, storage and disposal of environmentally
hazardous materials and waste. In 1994, U.S. governmental agencies spent
approximately $35 billion on environmental compliance efforts and commercial
enterprises spent approximately $ 65 billion as reported by the Congressional
Research Service Report of 1997. Although these services are primarily provided
internally, there are a few large and medium sized corporations offering such
services.
The Internet has accelerated the introduction of processes for managing
information and providing services. It also has changed the way software
applications are developed and deployed. In addition, the Internet has
accelerated the trend towards distributed software applications. We intend to
take advantage of this opportunity by enabling our EnvironMax software to be
web-based, Linux and Windows NT operable, and distributed via the Internet.
Our EnvironMax software can operate separately or as an integrated part
of an enterprise wide software solution. With the recent proliferation of
companies adopting company-wide enterprise software systems, we plan to
participate in this movement by providing a comprehensive suite of totally
interoperable tools and solutions for the management of hazardous materials and
waste, air emissions and water discharges.
OUR STRATEGY
Our goal is to become the leading provider of environmental management,
tracking and monitoring solutions for commercial and governmental enterprises
throughout the world. Key elements of our strategy to achieve this goal include:
- educating current and potential governmental users of HMMS about the
advantages of the EnvironMax system and securing contracts with those users;
- increasing awareness of our EnvironMax system among domestic and
international commercial enterprises and securing contracts with those entities;
- continuing our research and development efforts and developing
applications in the areas of air and water pollution prevention;
- forming alliances with business to business internet portals,
application service providers, or ASP's, and environmental waste management
consultants;
- integrating our products with major company-wide enterprise resource
planning, or ERP, systems currently in use and being developed.
2
<PAGE> 8
CORPORATE INFORMATION
Our corporate parent began maintaining the HMMS system on September 1,
1998. Enmax Corporation maintained and managed the HMMS system hazardous
materials and waste management tracking system. Enmax used its experience and
knowledge to begin development of the new EnvironMax system, which was designed
to take advantage of the Internet as a means for the deployment of a complete
hazardous material and waste tracking system. In order to take advantage of the
increased opportunities presented by the Internet, EnvironMax.com, Inc. was
incorporated in February 2000 to operate as a separate legal entity. We are
engaged in the development and marketing of the EnvironMax system, as well as
other related products. Our principal executive offices are located at 4190 S.
Highland Drive, Suite 210, Salt Lake City, Utah 84124 and our telephone number
is (801) 424-0200. Our Internet address is www.environmax.com. Information
contained in our web-sites is not part of this prospectus.
THE OFFERING
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C>
Common Shares offered by EnvironMax.com, Inc............ 3,000,000 shares 7,000,000 shares
Common Shares to be outstanding after this offering..... 16,910,710 shares 20,910,710 shares
Use of proceeds ........................................ To provide for product development,
marketing/sales, infrastructure,
operations and hiring of personnel.
American Exchange Market Symbol......................... ENV
</TABLE>
The outstanding share information is based on our shares outstanding as
of June 30, 2000. This information excludes 1,016,650 common shares issuable
upon the exercise of stock options outstanding as of June 30, 2000 with an
exercise price of $10 per share.
3
<PAGE> 9
SUMMARY FINANCIAL DATA
The following table summarizes financial data for our business. The
summary of selected financial data set forth below should be read in conjunction
with our financial statements and the related notes included elsewhere in this
prospectus and in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
prospectus.
For purposes of presenting our financial statements, we have segregated
or "carved-out" the operations related to the EnvironMax.com, Inc. product from
the historical financial statements of Enmax Corporation for the period
September 1, 1998 (date operations commenced) to December 31, 1998, for the year
ended December 31, 1999, for the six months ended June 30, 1999, and for the
one month ended January 31, 2000 (included in the successor information for the
six months ended June 30, 2000). Accordingly, our financial statements in this
prospectus and the selected financial data present our financial condition and
results of operations as if EnvironMax.com, Inc. had existed as a separate legal
entity for all periods presented. The carved-out historical results presented
are not necessarily indicative of what would have actually occurred had
EnvironMax.com, Inc. existed as a separate legal entity and any historical
results are not necessarily indicative of results that may be expected for any
future period.
The selected statements of operations data for the period September 1,
1998 (date operations commenced) to December 31, 1998 and for the year ended
December 31, 1999 and the selected balance sheet data as of December 31, 1999
are derived from, and are qualified by reference to, the audited financial
statements and related notes appearing elsewhere in this prospectus. The
statements of operations data for the six months ended June 30, 1999 and 2000
and the balance sheet data as of June 30, 2000 are derived from unaudited
financial information.
4
<PAGE> 10
SUMMARY FINANCIAL DATA
ENVIRONMAX.COM, INC.
<TABLE>
<CAPTION> Predecessor Predecessor Successor
-------------------------------------------------- ------------ ----------
PERIOD SEPTEMBER 1, 1998 SIX MONTHS ENDED JUNE 30
(DATE OPERATIONS COMMENCED) YEAR ENDED ---------------------------
TO DECEMBER 31, 1998 (1) DECEMBER 31, 1999 1999 2000(2)
------------------------- ----------------- ---------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues ........................ $ 745,980 $2,432,192 $1,288,748 $ 1,007,726
Cost of revenues ...................... 452,195 1,525,630 808,387 608,856
---------- ---------- ---------- -----------
Gross profit .......................... 293,785 906,562 480,361 398,870
Operating costs and expenses:
Selling, general and administrative 259,650 808,002 387,797 612,589
Compensation expense-founders
stock............................ - - - 506,873
Research and development .......... - 75,417 - 666,852
Interest expense, net.................. 856 4,671 2,336 59
---------- ---------- ---------- -----------
Income (loss) before income taxes...... 33,279 18,472 90,228 $(1,387,503)
Income taxes........................... - - - -
---------- ---------- ---------- -----------
Net income (loss)...................... 33,279 18,472 90,228 (1,387,503)
Pro forma income tax expense
(benefit) (3)........................ 13,312 7,389 36,091 (9,286)
---------- ---------- ---------- -----------
Pro forma net income (loss)............ $ 19,967 $ 11,083 $ 54,137 $(1,378,217)
========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 2000
--------------------------------
BALANCE SHEET DATA: ACTUAL PRO FORMA(4)
----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash and cash equivalents ......................... $ 14,680 $50,314,680
Total assets ...................................... 568,386 50,868,386
Long-term obligations, including current portion .. 171,388 171,388
Stockholders' equity (deficit) .................... (747,962) 49,552,038
</TABLE>
(1) Represents the carved-out portion of the predecessor operations related to
the EnvironMax product included within Enmax. Financial information prior to
September 1, 1998 is not presented as there were no EnvironMax operations prior
to this date. All other operations of Enmax were not related to the
EnvironMax.com, Inc. operations and were excluded from the carved-out financial
information.
(2) The six months ended June 30, 2000 information reflects the combined results
of the predecessor operations for the one month ended January 31, 2000 and the
successor operations for the five months ended June 30, 2000.
(3) Pro forma income tax expense (benefit) represents the estimated tax expense
(benefit) based on a 40% effective tax rate that we believe would have been
incurred had Enmax not been an S corporation for income tax purposes. There are
no S corporation distributions as neither the EnvironMax operations nor Enmax
were converted to a C corporation.
(4) Pro forma amounts reflect the sale of the 3,000,000 common shares in this
offering at an assumed initial public offering price of $17 per share, after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us.
5
<PAGE> 11
RISK FACTORS
An investment in our shares involves a high degree of risk. You should
consider carefully the following information about these risks, together with
our financial statements and related notes and the other information contained
in this prospectus, before you decide to invest in our shares. If any of the
following risks actually occur, our business, financial condition or results of
operations would likely suffer. In this case, the market price of our common
shares could decline, and you may lose all or part of the money you paid to buy
our common shares.
OUR OPERATING HISTORY IS LIMITED, SO IT WILL BE DIFFICULT FOR YOU TO EVALUATE AN
INVESTMENT IN OUR COMPANY.
We have only a limited relevant operating history for you to evaluate an
investment in our company. Our parent corporation, Enmax Corporation, formed
EnvironMax.com, Inc. in early 2000 with a substantially revised business plan
from that used by Enmax that will focus on our EnvironMax system. As a new
company in a competitive and rapidly evolving industry, we face risks and
uncertainties relating to our ability to successfully implement our strategy.
You must consider the risks, expenses and uncertainties that a company like
ours, operating with an unproven business model, faces in a new and rapidly
evolving market such as the market for environmental management, tracking, and
monitoring technology. If we cannot address these risks and uncertainties or are
unable to execute our strategy, we may not be successful, which would
significantly reduce the value of your investment.
WE ARE DEPENDENT UPON ANTICIPATED REVENUE FROM YET TO BE ACQUIRED CONTRACTS WITH
GOVERNMENT AND COMMERCIAL CLIENTS.
Our anticipated revenue includes revenues from yet to be acquired
contracts. If we are unable to secure these contracts, our revenues would be
lower than anticipated. Because a high percentage of our expenses will be
relatively fixed in the short term, if revenue levels fall below expectations,
the Company's operating results are likely to be materially adversely affected.
THE FAILURE OF OUR OPERATING RESULTS TO MEET THE EXPECTATIONS OF PUBLIC MARKET
ANALYSTS AND INVESTORS MAY NEGATIVELY IMPACT THE VALUE OF OUR SHARES.
It is possible that in some future periods our results of operations may
be below the expectations of public market analysts and investors. This could
cause our stock price to decline. In addition, we plan to increase significantly
our operating expenses to expand our sales and marketing, administration,
consulting and training, maintenance and technical support and research and
development groups. If revenues fall below our expectations for any period and
we are unable to quickly reduce our spending in response, our operating results
could be lower than expected and our stock price may fall.
6
<PAGE> 12
WE ARE DEPENDENT UPON THE SUCCESSFUL PERFORMANCE OF OUR ENVIRONMAX SYSTEM AND
UPON MAKING MODIFICATIONS THAT ARE NECESSARY TO KEEP UP WITH RAPID TECHNOLOGICAL
CHANGE.
Our EnvironMax system has not yet been externally tested. It is possible
that the EnvironMax system will fail to satisfactorily meet the needs of
potential commercial and governmental enterprises. Although we hope to prevent
such a scenario through rigorous beta-testing, client input and
trouble-shooting, there can be no assurance that we will be able to adequately
address all of the hazardous material management concerns which may arise. In
addition, the market for hazardous material and waste management software is
characterized by rapid technological advancements, changes in customer
requirements, frequent new product introductions and enhancements and changing
industry standards. The life cycles of our products are difficult to estimate
and our current market position could be undermined by rapid technological
changes and the introduction of new products and enhancements by new or existing
competitors. We currently have a number of new product development efforts
underway, including air, water and soil modules along with global positioning
system tracking to complement the suite of products already offered.
The Company's product development efforts are expected to require
substantial investment by the Company. There can be no assurance that the
Company will have sufficient resources to make the necessary investment or that
it will not experience difficulties that could delay or prevent the successful
development, introduction or marketing of new products or enhancements.
OUR FAILURE OR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY COULD
SIGNIFICANTLY HARM OUR COMPETITIVE POSITION, AND WE COULD ALSO INCUR SUBSTANTIAL
COSTS TO DEFEND CLAIMS THAT WE HAVE VIOLATED THE PROPRIETARY RIGHTS OF OTHERS.
Protecting our intellectual property is an important factor in
maintaining our competitive position in the environmental tracking and
management industry. If we do not or are unable to adequately protect our
intellectual property, our sales and profitability could be adversely affected.
We currently rely upon confidentiality agreements and trade secrets to protect
our intellectual property. This generally does not afford the same degree of
protection as does copyright, trademark or patent law. Therefore, we plan to
seek copyright and trademark registrations as well as apply for several U.S. and
international patents for various aspects of our proprietary technology.
However, we cannot assure you that these protections will be granted. If we are
unable to obtain proper copyright, trademark, and patent protection we might be
unable to protect our proprietary rights. Even if we are successful in obtaining
copyright, trademark, and patent protection, we cannot be certain that our means
of protecting our proprietary rights in the United States or abroad will be
adequate and competitors may independently develop similar or better
technologies. Our failure to protect our proprietary rights would have a
material adverse effect upon our ability to successfully compete in this market.
7
<PAGE> 13
Despite our efforts to protect our proprietary rights and technologies,
unauthorized parties may attempt to copy aspects of our products or to obtain
and use trade secrets or other information or technology that we regard as
proprietary. Legal proceedings to enforce our intellectual property rights could
be burdensome, time consuming and expensive, and there may be a high degree of
uncertainty as to the outcome. Such legal proceedings may also divert
management's attention from growing our business. In addition, the laws of some
foreign countries do not protect our proprietary rights as fully as do the laws
of the United States. If we do not, or are unable to enforce and protect our
intellectual property, our business may suffer substantial harm.
WE MAY NOT BE ABLE TO MEET ENVIRONMENTAL STANDARDS SET BY VARIOUS STATES OR
FOREIGN COUNTRIES
Although our system has been designed to assist commercial and
governmental enterprises in meeting the standards set by the Environmental
Protection Agency and the 14 states in which Enmax is now doing business, we
have not verified the compliance of EnvironMax with the remaining 36 states or
any foreign country. Failure of our product to facilitate compliance with the
environmental requirements of a state or a foreign country may inhibit our
business in that state or country and negatively affect our ability to obtain
new customers, expand our business and generate projected revenues.
OUR CONTRACTUAL LIMITATIONS ON LIABILITY AND DISCLAIMERS MAY NOT SUFFICIENTLY
PROTECT US AGAINST POSSIBLE CLAIMS
Our clients may be subject to liability for environmental damage.
Although our contracts will contain language designed to limit and disclaim
liability for violations by our customers of environmental regulations, this
language may not shield us from liability. If we are made a party to a suit for
violations of environmental regulations by a customer, such a suit could be
costly to defend and could have a negative impact upon our name and brand. This
would have a materially adverse effect upon our ability to generate revenues as
projected.
WE MUST ACHIEVE RAPID MARKET PENETRATION OF OUR PRODUCT IN ORDER TO COMPETE
SUCCESSFULLY.
Because the hazardous material, waste and other environmental management
markets are new and emerging, companies that are early in providing products and
solutions for these markets will have an advantage in building awareness and
consumer loyalty. Therefore, in order for us to successfully market our products
on a wide-scale basis, we must achieve rapid market penetration. For example, if
we are unable to demonstrate the viability of our products through rapid growth:
- we will be unable to achieve economies of scale;
- we will be less able to negotiate favorable terms with customers and
other partners; and
8
<PAGE> 14
- customers will be less likely to devote resources to purchasing and
implementing our products if they are not seen as an industry standard. We may
lack the economic and managerial resources necessary to promote this growth.
Also, the fact that we rely almost entirely on the success of a principal
product affects our ability to penetrate diversified markets. In addition, while
we believe our process of web-enabled software results in superior products, it
requires time and resources that may delay new product releases and upgrades.
These delays could affect our ability to take advantage of market opportunities
on a timely basis.
OUR BRAND MAY NOT ACHIEVE THE BROAD RECOGNITION NECESSARY TO SUCCEED.
We believe that broad recognition and a favorable audience perception of
the EnvironMax brand will be essential to our success. If our brand does not
achieve broad recognition as the leading provider of hazardous material and
waste management solutions for governmental agencies and commercial businesses,
our success will be limited. We intend to build brand recognition through
substantial advertising and public relations efforts. We expect to significantly
increase our expenses relating to the building of our brand awareness in future
periods as we build the EnvironMax brand and awareness of our products and
services, but may lack the resources necessary to accomplish these initiatives.
Even if the resources are available, we cannot be certain that our brand
enhancement strategy will deliver the brand recognition and favorable perception
that we seek. If our strategy is unsuccessful, these expenses may never be
recovered and we may be unable to increase revenues. Even if we achieve greater
brand recognition, competitors with greater resources or a more recognizable
brand could reduce our market share of the emerging hazardous material and waste
management market.
OUR STRATEGY TO PROVIDE SOLUTIONS FOR HAZARDOUS MATERIAL AND WASTE MANAGEMENT
AND TRACKING DEPENDS UPON OUR ABILITY TO SUCCESSFULLY INTRODUCE PRODUCTS
TAILORED FOR THAT BUSINESS.
For our strategy of providing hazardous material and waste management
and tracking solutions for customers to be successful, we must provide products
that meet the needs of those customers and their business. We are developing our
web-enabled version of EnvironMax for this purpose. This new product, which is
our primary environmental material and waste management product, may not be
adopted by potential customers for any number of reasons, including lack of
customer awareness of our company and our product, malfunction of the products
and failure to meet needs of hazardous material and waste producers. If our
products are not successful, we will fail to execute our strategy.
THE ENVIRONMENTAL HAZARDOUS MATERIAL AND WASTE MANAGEMENT INDUSTRY IS INTENSELY
COMPETITIVE AND WE MAY BE UNABLE TO COMPETE EFFECTIVELY WITH PROVIDERS OF
SOLUTIONS FOR PRODUCERS OF HAZARDOUS MATERIALS
We face direct competition in the area of software for hazardous waste
management from TRW, Inc., Science Application International Corporation, Radian
International, LLC and
9
<PAGE> 15
numerous other waste management software companies. Many of these competitors
are large, well-established companies with significantly greater financial
resources, more extensive marketing and distribution capabilities, larger
development staffs and more widely recognized brands and products. We also
compete for service revenue with a number of companies that provide technical
support and other professional services to users of various hazardous material
management systems, including some original equipment manufacturers with which
we have agreements. Many of these companies have larger and more experienced
service organizations than we do.
OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY MANAGE GROWTH.
In order to execute our business plan, we must grow significantly. We
have 54 employees and we anticipate that the number of our employees will
increase in the foreseeable future. Our planned growth entails risk. If we do
not expand our operations in an efficient manner, our expenses could grow
disproportionately to revenues or our revenues could decline or grow more slowly
than expected, either of which could negatively affect the value of your
investment. Our current and anticipated future growth, combined with the
requirements we will face as a public company, will place a significant strain
on our management, systems and resources. Our key personnel have limited
experience managing this type of growth. We also need to improve our financial
and managerial controls and reporting systems and procedures and to continue to
expand and maintain close coordination among our technical, accounting, finance
and sales and marketing organizations. If we do not succeed in these efforts,
our revenues and the value of your investment will fall.
IF WE DO NOT SUCCESSFULLY IMPLEMENT OUR INTERNATIONAL EXPANSION, OUR BUSINESS
MAY NOT GROW AS ANTICIPATED AND SUBSTANTIAL RESOURCES MAY BE DRAINED.
A key component of our growth strategy is to establish our presence in
foreign markets. It will be costly to establish international facilities and
operations, promote our brand internationally, and develop localized products
and support. Revenue from international activities may not offset the expense of
establishing and maintaining these foreign operations. In addition, we may not
be successful in marketing and distributing our products because we have little
experience in these markets. Some of the factors that may impact our ability to
initiate and maintain successful operations in foreign markets include:
- hiring and successful supervision of employees in foreign jurisdictions;
- language, technical and cultural differences;
- varying laws, including intellectual property protection and enforcement
laws;
- differences in reliability of telecommunications infrastructure and
Internet access;
- export controls that may prevent us from shipping our products into and
from some markets;
10
<PAGE> 16
- restrictions against repatriation of earnings from our foreign operations;
- unexpected changes in trading policies, regulatory requirements and
exchange rates; and
- general political and economic trends.
If we are unable to profitably operate in foreign markets, our business
may not grow as anticipated, substantial resources could be drained and our
stock price could suffer.
WE MAY SUFFER FROM THE RESULTS OF SOFTWARE ERRORS OR DEFECTS.
Software programs frequently contain errors or defects, especially when
first introduced or when new versions are released. We could lose revenue as a
result of errors or defects in our software products. We cannot assure you that
errors will not be found in new products or releases. While we test our products
prior to release, the fact that some of the components of our software products
used are developed by independent parties over whom we exercise no supervision
or control makes it particularly difficult to identify and remedy operational
errors or defects. Any errors could result in loss of revenue, or delay in
market introduction or acceptance, diversion of development resources, downtime
for customers, damage to our reputation and increased service costs.
DUE TO COMPETITIVE LABOR MARKETS, WE MAY NOT BE ABLE TO RECRUIT AND RETAIN
SUFFICIENT QUALIFIED PROFESSIONALS NECESSARY FOR OUR GROWTH.
In order to grow as we anticipate, we must hire significant numbers of
professionals to develop and market our products and provide technical support,
education and training and other services to our customers. Competition for
qualified professionals in the software industry is intense, and we may be
unable to recruit and retain sufficient professionals to manage our anticipated
growth.
OUR MANAGEMENT TEAM LACKS EXPERIENCE IN SOME AREAS, IS NOT COMPLETE, AND HAS
SEVERAL NEW MEMBERS.
Our business is highly dependent on our ability to acquire necessary
members of our management team and on our management team's ability to work
together effectively. Several members of our management lack significant
experience with an "internet" company or a public company. This may hinder our
ability to compete in this competitive arena. Some members of our management
have not previously worked together as a team and have had only limited
experience managing a rapidly growing company on either a public or private
basis. If we fail to find qualified individuals to serve in management
positions, or if our management team fails to work together effectively, this
could offset efficient decision-making, product development, sales and marketing
efforts and the management of our financial and other resources, which would
negatively impact our operating results.
11
<PAGE> 17
LOSS OF ANY OF OUR KEY MANAGEMENT PERSONNEL COULD NEGATIVELY IMPACT OUR
BUSINESS.
The loss or departure of any of our officers or key employees could harm
our ability to implement our business plan and could lower our revenues. Our
future success depends to a significant extent on the continued service and
coordination of our management team, particularly Robert F. Craig, our Chief
Executive Officer. Mr. Craig is the only member of our management team for whom
we maintain key person insurance.
DEVELOPMENT OF AIR AND WATER SYSTEMS
In addition to the management and tracking of hazardous materials, we
plan to develop and introduce products designed for the management and tracking
of water discharge and air emissions. We have very little experience in these
fields. This lack of experience could result in a failure to adequately compete
in these fields which could negatively effect our strategic plan and operating
results as a whole.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING NECESSARY TO EXECUTE OUR
BUSINESS STRATEGY.
We may need to raise additional funds to support more rapid expansion,
respond to competitive pressures, acquire complementary businesses or
technologies or respond to other unanticipated events. We cannot assure you that
additional funding will be available to us in amounts or on terms acceptable to
us. If sufficient funds are not available or are not available on acceptable
terms, our ability to fund our expansion, take advantage of acquisition
opportunities, develop or enhance our services or products, or otherwise respond
to competitive pressures would be significantly limited.
IF WE FAIL TO MANAGE TECHNOLOGICAL CHANGE EFFECTIVELY, DEMAND FOR OUR PRODUCTS
AND SERVICES WILL SUFFER.
The market for hazardous waste management solutions is in an early stage
of development and is characterized by rapidly changing technology, evolving
industry standards, frequent new service and product introductions and changes
in customer demands. Our future success will depend to a substantial degree on
our ability to continue to offer products and services that incorporate leading
technology and respond to technological advances and emerging industry standards
and practices on a timely and cost-effective basis. You should be aware that:
- our technology or systems may become obsolete upon the introduction of
alternative technologies;
- the technological life cycles of our products have been historically
short and are difficult to accurately estimate;
- we may not have sufficient resources to develop or acquire new
technologies or to introduce new services capable of competing with future
technologies or service offerings; and
12
<PAGE> 18
- the price of the products and services we provide may decline as
rapidly as, or more rapidly than, the cost of any competitive alternatives.
We may not be able to respond effectively to the technological
requirements of the changing market for hazardous waste management solutions. To
the extent we determine that new technologies and equipment are required to
remain competitive, the development, acquisition and implementation of those
technologies and equipment are likely to continue to require significant capital
investment by us. We may not have sufficient capital for this purpose in the
future, and even if it is available, investments in new technologies may not be
profitable or may not result in commercially viable technological processes. If
we do not develop and introduce new products and services and achieve market
acceptance in a timely manner, demand for our products and services will drop
and our business will suffer.
CHANGES IN ENVIRONMENTAL RULES AND REGULATIONS COULD ADVERSELY AFFECT OUR
ABILITY TO PROVIDE AN ADEQUATE HAZARDOUS MATERIAL MANAGEMENT SOLUTION
Our product provides hazardous material and waste management and
tracking solutions to those producing and handling hazardous material and waste
which enables those enterprises to comply with the rules and regulations
promulgated by the Environmental Protection Agency and other U.S. Government
Agencies. Changes in these regulations could have a material adverse effect upon
us. The success of our current and future products depends upon our ability to
adapt to changes in the environmental rules and regulations.
THERE ARE RISKS RELATED TO GOVERNMENT CONTRACTS
We believe that the success and development of our business will
continue in the next few years to be impacted by our ability to participate in
government contract programs. Accordingly, our financial performance may be
directly affected by changes in government contracting policies. Among the
factors that could materially adversely affect our government contracting
business are budgetary constraints and the adoption of new laws or regulations.
Most government contracts are subject to modification or termination in the
event of changes in funding, and our contractual costs and revenues are subject
to adjustments as a result of audits by government auditors. In addition, all
government contracts require compliance with various contract provisions and
procurement regulations and in certain cases, accounting requirements.
Violations of these regulations could result in the termination of a contract,
imposition of fines, and suspension or debarment from competing for or receiving
awards of additional government contracts. Our exclusion from federal
procurements, the termination of any of our significant government contracts or
the imposition of such penalties could materially and adversely affect our
success.
13
<PAGE> 19
THE CONTINUED STATUS OF ENMAX AS A SMALL DISADVANTAGED BUSINESS IN THE
PROCUREMENT OF CERTAIN GOVERNMENT CONTRACTS MAY BE IMPORTANT
Since 1995 our parent company, Enmax, has participated in the section
8(a) "Small Disadvantaged Business Program" administered by the U.S. Government
Small Business Administration. The 8(a) Program affords eligible firms with
advantages in competing for government contracts. EnvironMax.com, through Enmax,
has been awarded an "HMMS Sustainment" contract with the Department of Defense
pursuant to Enmax's participation in the 8(a) Small Disadvantage Business
Program, which is expected to generate approximately $1.5 million of revenue to
us.
We plan to continue to work with Enmax through government approved
"teaming arrangements" to continue to service these contracts and in the
procurement of future contracts. The Small Business Administration has been
advised of the formation of EnvironMax.com, Inc., and the plans of Enmax to use
the EnvironMax system and EnvironMax.com, Inc. employees and resources. If the
SBA denies the continued status of Enmax as a Small Disadvantaged Business and
we are not able to make sales pursuant to these contracts, there could be an
adverse effect on our anticipated revenue from these contracts.
THE GROWTH OF OUR BUSINESS WILL BE DIMINISHED IF WEB-BASED SOFTWARE IS NOT
ACCEPTED AS A MEDIUM FOR COMMERCE AND BUSINESS NETWORKING APPLICATIONS.
EnvironMax is a web-based software application which runs on LINUX based
and Windows NT capable operating systems through which our customers and
potential customers can execute the functions of our software over the Internet.
If the Internet is not accepted as a medium for networking applications, demand
for our products and services will be diminished. A number of factors may
inhibit Internet usage, including:
- inadequate network infrastructure;
- lack of knowledge and training on Internet use and benefits;
- consumer concerns for Internet privacy and security;
- lack of availability of cost-effective, high-speed service;
- changes in government regulation relating to the Internet; and
- Internet taxation.
If Internet usage grows, the infrastructure may not continue to support
the demands placed on it by that growth and its performance and reliability may
decline. Web sites have experienced interruptions as a result of delays or
outages throughout the Internet infrastructure. If
14
<PAGE> 20
these interruptions continue business may no longer see the Internet as an
effective forum on which to conduct business and Internet usage may decline.
A DISRUPTION OR MALFUNCTION THAT DISABLES OUR COMPUTER SYSTEMS COULD HARM OUR
ABILITY TO PERFORM OUR SERVICES AND NEGATIVELY AFFECT OUR BRAND.
The continuing and uninterrupted performance of our computer systems is
critical to our success. Our customers who access our services through the
Internet may become dissatisfied by any systems disruption or failure that
interrupts our ability to provide our services and content to them. Substantial
or repeated system disruptions or failures would reduce our ability to provide
adequate customer service and undermine our reputation in the business
community. We intend to house our communications hardware and database servers
in various locations throughout the U.S. This creates exposure for us to various
natural disasters as well as other events including, power loss,
telecommunications failures, break-ins and similar events which could negatively
affect the operation of our systems.
Computer viruses, electronic break-ins, computer hackers or other
similar disruptive problems could also harm our systems. Any of these
occurrences and any resulting dissatisfaction among our customers and members of
the business community could negatively affect the EnvironMax brand and image.
Our insurance policies may not adequately compensate us for any losses that may
occur due to any failures or interruptions in our systems. We do not presently
have a formal disaster recovery plan.
A SINGLE SHAREHOLDER WILL BE ABLE TO EXERT SIGNIFICANT CONTROL OVER
ENVIRONMAX.COM, INC.
After this offering, Robert F. Craig will have indirect ownership of
approximately 60 percent of our outstanding common shares. As a result, Mr.
Craig will be able to determine the outcome of actions that require shareholder
approval. For example, Mr. Craig could elect all of our directors, delay or
prevent a transaction in which shareholders might receive a premium over the
prevailing market price for their shares and control changes in management.
FUTURE SALES OF OUR COMMON SHARES AFTER THIS OFFERING MAY NEGATIVELY AFFECT OUR
STOCK PRICE.
The market price of our common shares could decline as a result of sales
of a large number of our common shares in the market following the offering, or
the perception that such sales could occur. Following this offering, we will
have a large number of common shares outstanding and available for resale
beginning at various points in time in the future. These sales also might make
it more difficult for us to sell equity securities in the future at a time and
at a price that we deem appropriate. In addition to the shares being registered
under this registration statement, an additional 13,810,000 shares are subject
to Rule 144 of the Securities and Exchange act of 1933. Under Rule 144, these
shares will not be available for sale on the open market until one year
following the effective date of this registration statement unless an additional
registration statement becomes effective subsequent to the effective date of
this registration statement.
15
<PAGE> 21
Additionally, 100,540 shares of stock, in the form of stock options or employee
held stock will be available for sale 90 days subsequent to the effective date
of this registration statement under rule 701 of the act.
THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON SHARES AND THEIR MARKET PRICE MAY
EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS. SUCH VOLATILITY COULD RESULT
IN CLAIMS AGAINST US.
Prior to this offering, investors could not buy or sell our common
shares in the public markets. An active public market for our common shares may
not develop or be sustained after the offering. The market price of our common
shares may decline below the initial public offering price after this offering.
We will unilaterally set the minimum bid price in the initial public offering
for the shares. This initial price may not be indicative of prices that will
prevail in the trading market. Fluctuations in market price and volume are
particularly common among securities of Internet-related and other technology
companies. The market price of our common shares may fluctuate significantly in
response to the following factors:
- variations in quarterly operating results;
- changes in market valuations of Internet-related and other technology
companies;
- our competitors' announcements of significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;
- failure to complete significant advertising and merchandise sales;
- additions or departures of key personnel;
- future sales of common shares; and
- changes in financial estimates by securities analysts.
In the past, securities class action litigation has often been brought
against companies following periods of volatility in the market price of their
outstanding securities. Although recent changes in securities law impose limits
upon such suits, we may be the target of litigation which could result in
substantial costs and divert management's attention and resources.
THIS OFFERING IS SELF UNDERWRITTEN AND OUR PLAN OF DISTRIBUTION DIFFERS FROM
TRADITIONAL PLANS
We plan to use a "Dutch Auction" as the primary method of distributing
our shares. We will solicit offers to purchase from prospective investors
through the internet as well as by traditional means. The auction is open for
purposes of receiving offers to purchase following the posting of the final
prospectus on our website, which is located at www.environmaxipo.com. This
method of distribution has the inherent
16
<PAGE> 22
risk that we will not sell the desired amount of securities or receive the
desired price for those securities. If this were to occur, we would likely
postpone or cancel the offering which could materially affect any future
attempts to sell our shares in a public offering.
THE DISTRIBUTION OF OUR SHARES THROUGH A DUTCH AUCTION, WITHOUT AN UNDERWRITER,
COULD RESULT IN A POOR AFTER MARKET FOR OUR SHARES
Because we are not using a traditional underwriter for this offering,
there may be a greater risk that our common shares will not receive adequate
support from securities firms in the after market, through market-making and
other activities. If this should occur, the market price for our common shares
may decline.
WE MAY SPEND THE NET PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH YOU MAY NOT
AGREE.
The net proceeds of this offering are not allocated for specific uses.
Our management will have broad discretion to spend the net proceeds of this
offering in ways with which investors may not agree. The failure of our
management to apply these funds effectively could result in unfavorable returns,
which could cause the price of our common shares to decline.
YOU WILL INCUR SUBSTANTIAL AND IMMEDIATE DILUTION.
You will incur substantial and immediate dilution in the proforma net
tangible book value of $14.07 per share, assuming an initial public offering
price of $17.00 per share. Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided by the number of
common shares then outstanding. To the extent that currently outstanding options
are exercised or converted, there will be further dilution in your shares. See
"Dilution."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute
forward-looking statements. In some cases, you can identify forward-looking
statements by terms such as "may," "might," "could," "will," "should," "expect,"
"plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict,"
"foreseeable," "potential," "continue" or the negative of these terms or other
comparable terminology. The forward-looking statements contained in this
prospectus involve known and unknown risks, uncertainties, and other factors
that may cause our or our industry's actual results, level of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
statements. These factors include, among others, those listed under "Risk
Factors" and elsewhere in this prospectus. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking
statements.
17
<PAGE> 23
USE OF PROCEEDS
We estimate that we will receive net proceeds of $50,300,000 from the
sale of the 3 million common shares offered if the minimum amount of shares in
this offering are sold to $118,300,000 for the sale of the 7 million common
shares offered as the maximum amount of shares in this offering; in both
instances assuming an initial public offering price of $17.00 per share, and
after deducting estimated offering expenses. We intend to use the net proceeds
of this offering for general corporate purposes, including sales and marketing
activities, product development and support, operations, infrastructure and
hiring of additional personnel. We have not determined the amount of net
proceeds to be used specifically for each of the foregoing purposes.
The cost, timing and amount of funds we need cannot be precisely
determined at this time and will be based on numerous factors. Accordingly, our
management will have broad discretion to spend flexibly in applying the net
proceeds of this offering. Pending their use, we intend to invest the net
proceeds of this offering in interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock
and do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain any future earnings for the expansion and operation
of our business.
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2000:
- On an actual basis
- On a pro forma basis to reflect the sale of 3,000,000 shares of common
stock by us in this offering at an assumed actual public offering price of
$17.00 per share, after deducting estimated underwriting discounts and
commissions and offering expenses payable by us.
18
<PAGE> 24
<TABLE>
<CAPTION>
As of June 30, 2000
-----------------------------
Actual Pro forma
------------ -----------
(unaudited) (unaudited)
<S> <C> <C>
Capital lease obligations, current portion $ 56,774 $ 56,774
Capital lease obligations,
long term portion 114,614 114,614
Stockholders' Equity (deficit):
Preferred shares, 20,000,000
shares authorized,
$0.001 par value, no shares
outstanding
Common shares, 100,000,000
shares authorized,
$0.001 par value,
13,910,710 shares
outstanding (actual)
16,910,710 shares
outstanding (pro forma) 13,911 16,911
Additional paid-in capital 1,101,635 51,398,635
Deferred compensation (499,220) (499,220)
Accumulated deficit (1,364,288) (1,364,288)
----------- -----------
Total stockholders' equity (deficit) (747,962) 49,552,038
----------- -----------
Total capitalization $ (576,574) $49,723,426
=========== ===========
</TABLE>
NOTE: The information in this table does not include 1,016,650 shares of common
stock issuable upon exercise of outstanding options as of June 30, 2000
with a weighted average exercise price of $10.00.
DILUTION
Our net tangible book value as of June 30, 2000 was approximately
$(747,962), or $(0.05) per outstanding common share. Net tangible book value per
share is determined by dividing the amount of our tangible assets less total
liabilities by the number of common shares outstanding at that date. Dilution in
net tangible book value per share represents the difference between the amount
per share paid by purchasers of common shares in this offering and the pro forma
net tangible book value per share of common shares immediately after the
completion of this offering.
After giving effect to the issuance and sale of the common shares
offered by us at an assumed initial public offering price of $17.00 per share
and after deducting the estimated offering expenses payable by us, and the
application of the estimated net proceeds from this offering, our pro forma net
tangible book value as of June 30, 2000 would have been $49.6 million or $2.93
per share. This represents an immediate increase in net tangible book value to
our existing shareholders of $2.98 per share and an immediate dilution to
19
<PAGE> 25
purchasers in this offering of $14.07 per share. If the initial public offering
price is higher or lower, the dilution to purchasers in this offering will be
greater or less, respectively.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share $17.00
Net tangible book value per share
at June 30, 2000, $(0.05)
Increase in net tangible book value per share
attributable to this offering 2.98
------
Pro forma net tangible book value per share
after this offering $ 2.93
------
Dilution per share to new investors $14.07
======
</TABLE>
The following table summarizes, on a pro forma basis as of June 30,
2000, the differences between the number of common shares purchased from us, the
aggregate effective cash consideration paid to us and the average price per
share paid by existing shareholders and new investors purchasing common shares
in this offering. The calculation below is based on an assumed initial public
offering price of $17 per share, before deducting estimated offering expenses
payable by us:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------------------- ---------------------------- Average Price
Number Percent Amount Percent Per Share
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing shareholders 13,910,710 82.3% $ 102,007 .2% $ 0.01
New investors 3,000,000 17.7% 51,000,000 99.8% 17.00
----------- ----------- ----------- -----------
Total 16,910,710 100% $51,102,007 100 %
=========== =========== =========== ===========
</TABLE>
This discussion and table assumes no exercise of any stock options
outstanding as of June 30, 2000. As of June 30, 2000, there were options
outstanding to purchase a total of 1,016,650 common shares with a weighted
average exercise price of $10.00 per share. To the extent that any of these
options are exercised, there will be further dilution to new investors. Please
see "Capitalization."
SELECTED FINANCIAL DATA
The tables that follow present portions of our financial statements and
are not complete. You should read the selected financial data set forth below in
conjunction with our financial statements and the related notes included
elsewhere in this prospectus and in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this prospectus. The selected statements of income data for the
period September 1, 1998 (date operations commenced) to December 31, 1998 and
for the year ended December 31, 1999 and the selected balance sheet data as of
December 31, 1999 are derived from, and are qualified by reference to, the
audited financial statements and related notes appearing elsewhere in this
prospectus. The selected statements of operations data for the six months ended
June 30, 1999 and 2000 and the balance sheet data as of June 30, 2000 are
derived from unaudited financial information.
20
<PAGE> 26
We began operations effective September 1, 1998 as a component of Enmax
Corporation ("Enmax"). Enmax is a certified small disadvantaged and
minority-owned 8(a) business, providing information technology solutions to the
government and commercial enterprises as well as prime contracts and
subcontractors who provide high-tech systems and services to the government.
Effective September 1, 1998 (date operations commenced), Enmax was awarded a
$1.7 million contract from a United States government agency to provide
maintenance and technical support on a hazardous material management system
("HMMS") software program utilized by various government sites. The operations
relating to the HMMS contract represented a separate operating component of
EnvironMax. In 1999, EnvironMax obtained two additional contracts totaling $1.5
million to provide additional HMMS support services to the various government
locations utilizing the HMMS software. Effective February 1, 2000,
EnvironMax.com, Inc. was incorporated as a C Corporation as a wholly-owned
subsidiary of Enmax.
SUMMARY FINANCIAL DATA
ENVIRONMAX.COM, INC.
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
------------------------------------------------- ----------- -----------
PERIOD SEPTEMBER 1, 1998 SIX MONTHS ENDED JUNE 30,
(DATE OPERATIONS COMMENCED) YEAR ENDED ---------------------------
TO DECEMBER 31, 1998(1) DECEMBER 31, 1999 1999 2000(2)
--------------------------- ----------------- ---------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues ............................. $ 745,980 $2,432,192 $1,288,748 $ 1,007,726
Cost of revenues ........................... 452,195 1,525,630 808,387 608,856
---------- ---------- ---------- -----------
Gross profit ............................... 293,785 906,562 480,361 398,870
Operating costs and expenses:
Selling, general and administrative....... 259,650 808,002 387,797 612,589
Compensation expense - founders stock .... -- -- -- 506,873
Research and development ................. -- 75,417 -- 666,852
Interest expense, net ...................... 856 4,671 2,336 59
---------- ---------- ---------- -----------
Income (loss) before income taxes .......... 33,279 18,472 90,228 (1,387,503)
Income taxes ............................. -- -- -- --
---------- ---------- ---------- -----------
Net income (loss) .......................... 33,279 18,472 90,228 (1,387,503)
Pro forma income tax expense (benefit)(3) .. 13,312 7,389 36,091 (9,286)
---------- ---------- ---------- -----------
Pro forma net income (loss) ................ $ 19,967 $ 11,083 $ 54,137 $(1,378,217)
========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 2000
----------------------------
BALANCE SHEET DATA: ACTUAL PRO FORMA(4)
----------- ------------
(unaudited) (unaudited)
<S> <C> <C>
Cash and cash equivalents ......................... $ 14,680 $50,314,680
Total assets ...................................... 568,386 50,868,386
Long-term obligations, including current portion .. 171,388 171,388
Stockholders' equity (deficit) .................... (747,962) 49,552,038
</TABLE>
(1) Represents the carved-out portion of the predecessor operations related to
the EnvironMax product included within Enmax. Financial information prior to
September 1, 1998 is not presented as there were no EnvironMax operations prior
to this date. All other operations of Enmax were not related to the
EnvironMax.com, Inc. operations and were excluded from the carved-out financial
information.
(2) The six months ended June 30, 2000 information reflects the combined results
of the predecessor operations for the one month ended January 31, 2000 and the
successor operations for the five months ended June 30, 2000.
(3) Pro forma income tax expense (benefit) represents the estimated tax expense
(benefit) based on a 40% effective tax rate that we believe would have been
incurred had Enmax not been an S corporation for income tax purposes. There are
no S corporation distributions as neither the EnvironMax operations nor Enmax
were converted to a C corporation.
(4) Pro forma amounts reflect the sale of the 3,000,000 common shares in this
offering at an assumed initial public offering price of $17 per share, after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us.
21
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
Financial Statements and Notes thereto, included elsewhere in this prospectus.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those set forth under "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
We develop and market environmental management, monitoring and tracking
solutions designed to assist commercial and governmental enterprises comply with
environmental regulations. Our initial product, EnvironMax, uses a combination
of computer software, label printers, bar code scanning devices and business
processes to manage and track hazardous materials from purchase through issue
and use, up through disposal. The EnvironMax system reduces purchase and
disposal expenditures, decreases personnel exposure, and helps eliminate such
environmental abuses as improper disposal.
Central to the EnvironMax system is the EnvironMax software. This
software client-server based and will be web-enabled, which will facilitate
distribution and operation as well as provides connectivity for the flow of
information to and from databases. We believe that web-enabled technologies are
the optimal solution for hazardous material and waste management software and
that our EnvironMax product, with its web-enabled application, provides a
universal solution for environmental control and reporting problems encountered
by enterprises worldwide. In addition, the EnvironMax software can function both
as a stand-alone solution, or as an integrated part of an enterprise wide ERP
software package.
HISTORICAL BACKGROUND
Enmax, our corporate parent, and its personnel developed, maintained,
serviced, and supported the Hazardous Material Management System (HMMS) for the
Department of Defense. Enmax obtained 8(a) status as a Small Disadvantaged
Business, which has facilitated its ability to compete in the bidding for
government contracts with the Department of Defense. Over the past few years,
Enmax has continued to develop and improve upon the HMMS software. We have used
this background and experience to develop the web-based EnvironMax system. We
believe the web-based version to be superior to the client-server system in
areas such as ease of use, cost efficiency and technological advancement. In
February 2000, EnvironMax.com, Inc. was incorporated by Enmax, following which,
Enmax transferred capital, technologies, contracts and personnel to us. The
transferred technology has been further developed into the current EnvironMax
product. For purposes of presenting our financial statements, we have segregated
the operations related to the EnvironMax product from the historical financial
statements of Enmax Corporation. Accordingly, our consolidated financial
statements in this prospectus and the following discussion present our
22
<PAGE> 28
financial condition and results of operations as if EnvironMax.com, Inc. had
existed as a separate legal entity for all periods presented.
Historically, Enmax derived a substantial part of its revenues from the
support and maintenance of the HMMS products under government contracts. We
expect that for the foreseeable future the overwhelming majority of our revenues
will be derived from the web-based EnvironMax system, and its associated
training, customer support, and consulting services.
We market our systems primarily in North America but plan to expand into
the international marketplace. We have had no revenues to date from customers
outside the United States.
We began to incur research and development costs in 1999 and have
invested heavily in the expansion of our sales, marketing and professional
services organizations to support our long-term growth strategy. As a result of
research and development investments, we anticipate that our operating expenses
will increase substantially for the foreseeable future as we increase the number
of people and programs in sales and marketing, product development and
professional services. Accordingly, we expect to incur net losses in the first
year of operation.
Revenues for EnvironMax have been comprised of new sales, maintenance,
and technical support of the HMMS software.
Cost of revenues primarily consist of our costs for maintaining and
providing technical support for the client server software and is largely labor
costs.
Research and development expenses consist of payroll and related costs
for software engineers, technical writers, quality assurance and research and
development management personnel and the costs of materials used by these
employees in the development of new or enhanced product offerings. Also included
in research and development are the costs associated with supporting
consultants.
General and administrative expenses are composed of professional fees,
salaries and related costs for accounting, administrative, finance, human
resources, information systems and legal personnel as well as costs associated
with implementing and expanding our internal information and management
reporting systems.
We plan to significantly increase our expenditures for sales and
marketing, research and development and general and administrative expenses in
fiscal 2000.
23
<PAGE> 29
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data as
the percentage of total revenues for the periods indicated attributable to what
would be the EnvironMax.com, Inc. product:
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain carved
out financial data as a percentage of revenues:
<TABLE>
<CAPTION>
Predecessor Predecessor Successor
------------------------------------------------------ ----------- ---------
Six Months ended
Period September 1, 1998 June 30,
(Date Operations Commenced) Year ended -----------------------
to December 31, 1998 December 31, 1999 1999 2000(1)
-------------------------- ----------------- ------ -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 60.6 62.7 62.7 60.4
----- ----- ----- ------
Gross profit 39.4 37.3 37.3 39.6
Selling, general and
administrative expenses 34.8 33.2 30.1 60.8
Compensation expense - founders stock -- -- -- 50.3
Research and development -- 3.1 -- 66.2
----- ----- ----- ------
Operating income (loss) 4.6 1.0 7.2 (137.7)
Interest expense, net 0.1 0.2 0.2 --
----- ----- ----- ------
Income (loss) before income taxes 4.5 0.8 7.0 (137.7)
Income taxes -- -- -- --
----- ----- ----- ------
Net income (loss) 4.5 0.8 7.0 (137.7)
Pro forma income tax expense 1.8 0.3 2.8 0.9
----- ----- ----- ------
Pro forma net income (loss) 2.7% 0.5% 4.2% (136.8)%
===== ===== ===== ======
</TABLE>
(1) The six months ended June 30, 2000 information reflects the combined results
of the predecessor operations for the one month ended January 31, 2000 and
the successor operations for the five months ended June 30, 2000.
For the purposes of presenting our financial statements, we have
segregated or "carved-out" the operations relating to the HMMS and
EnvironMax.com, Inc. products from the historical financial statements of Enmax
for the period September 1, 1998 (date operations commenced) to December 31,
1998, for the year ended December 31, 1999, for the six months ended June 30,
1999 and for the one month ended January 31, 2000 (included in successor
operations for the six months ended June 30, 2000). Accordingly, the results of
operations, and related analyses for the predecessor periods are presented as if
EnvironMax.com, Inc. has existed as a separate legal entity for all the
information presented. The carved out historical information results are not
necessarily indicative of what would have actually occurred had EnvironMax.com,
Inc. existed as a separate legal entity and any historical results are not
necessarily indicative of the results that may come from future operations.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000:
Revenues - Our revenues were $1.3 million for the six months ended June
30, 1999 and $1.0 million for the six months ended June 30, 2000. The decrease
in revenues for the six months ended June 30, 2000 as compared to the six months
ended June 30, 1999 was due to the expiration of certain government contracts in
2000.
Cost of revenues - Our cost of revenues was $808,000 for the six months
ended June 30, 1999 and $609,000 for the six months ended June 30, 2000,
representing a $199,000 or 24.7% decrease. As a percentage of revenues, cost of
revenues was 62.7% in 1999 and 60.4% in 2000. The decrease in the cost of
revenues percentage from 1999 to 2000 primarily resulted from the improved gross
margin for the 2000 contract with the United States Department of Defense.
Selling, general, and administrative - Selling, general, and
administrative expenses were $388,000 for the six months ended June 30, 1999 and
$613,000 for the six months ended June 30, 2000 representing an increase of
$225,000, or 58.0%, from 1999 to 2000. Selling, general, and administrative
expenses represented 30.1% of our total revenues in 1999 and 60.8% of our total
revenues in 2000. The increase in amounts expended from 1999 to 2000 and the
increase in selling, general, and administrative expenses as a percentage of
revenues from 1999 to 2000 was a result of increased costs to prepare the
Company for future revenue growth. Such costs would include the hiring of
additional employees and executives to support and market the new product and
costs of organizing the new legal C corporation.
24
<PAGE> 30
Compensation Expense - Founders Stock - In connection with the granting
of stock to employees during 2000, we recognized deferred compensation of $1.0
million. During the six months ended June 30, 2000, we amortized $507,000 of
deferred compensation. During the six-month period ended June 30, 1999, there
was no amortization of deferred compensation as there was no stock granted to
employees.
Research and Development - Research and development expenses were
$667,000 during the six months ended June 30, 2000 and represent the costs
incurred in the development of the Environmax system and its web-based
business-to-business application. There were no research and development in the
first six months of 1999 as the development of the new web-based software did
not begin until latter 1999.
Interest Expense Net - Interest expense net consists primarily of
interest expense on capital lease obligations, net of interest earned on cash
balances.
Pro Forma Income Taxes - Pro forma income taxes are based on a 40%
effective tax rate that we believe would have been incurred had Enmax not been
an S corporation.
Income Taxes - The Company did not record a tax benefit for losses
generated from the Company's date of incorporation as utilization of such losses
in future periods was deemed uncertain. The expected income tax benefit derived
by applying the statutory income tax rate has been eliminated as a result of a
deferred income tax asset valuation allowance.
PERIOD SEPTEMBER 1, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998 AND
YEAR ENDED DECEMBER 31, 1999
Revenues - Our revenues were $746,000 for the period September 1, 1998
to December 31, 1998 and $2.4 million for the year ended December 31, 1999. From
the date we started operations, we have generated revenues from our maintenance
contracts with the United States government. The increase in revenues for the
year ended December 31, 1999 as compared to the period September 1, 1998 to
December 1998 was due to the significant government contract only being in place
for four months in 1998 compared to a full year in 1999, as well as an increase
in the number of government contract awards received in 1999.
Cost of Revenues - Our cost of revenues was $452,000 for the period
September 1, 1998 to December 31, 1998 and $1.5 million for the year ended
December 31, 1999, representing a $1.1 million or 237% increase. As a percentage
of revenues, cost of revenues was 60.6% in 1998 and 62.7% in 1999. The increase
in the cost of revenues percentage from 1998 to 1999 primarily resulted from an
increase in labor rates incurred under the contracts.
Selling, General and Administrative - Selling, general and
administrative expenses were $260,000 for the period September 1, 1998 to
December 31, 1998 and $808,000 for the year ended December 31, 1999,
representing an increase of $548,000, or 211.2%, from 1998 to 1999. Selling,
general, and administrative expenses represented 34.8% of our total revenues in
1998 and 33.2% of our total revenues in 1999. The increase in amounts expended
from 1998 to 1999 was due to the increased revenues and increased depreciation
expense in 1999 due to purchases of furniture and equipment. The decrease in
selling, general, and administrative expenses as a percentage of revenues from
1998 to 1999 was a result of a higher revenue base without a corresponding
dollar-for-dollar increase in certain fixed costs.
Research and Development - Research and development expenses were
$75,000 in 1999 and represent the costs incurred in the development of the
EnvironMax system and its web-based business-to-business application.
Interest Expense - Interest expense consists of interest expense on
capital lease obligations. The leases were executed in late 1998 resulting in
lower interest expense as compared to 1999.
Pro Forma Income Taxes - Pro forma income taxes are based on a 40%
effective tax rate that we believe would have been incurred had Enmax not been
an S corporation.
25
<PAGE> 31
LIQUIDITY AND CAPITAL RESOURCES - Since our establishment, we have funded our
operations primarily through revenues generated from our contracts with the
United States government. Working capital requirements, primarily for research
and development in 2000, are funded by Enmax. As of June 30, 2000, we had a
working capital deficit of $820,000. Net cash provided by operating activities
was $74,000 for the year ended December 31, 1999 and net cash used in operations
was $648,000 for the six months ended June 30, 2000. Cash provided by operating
activities was primarily attributed to net income and changes in working capital
for the year ended December 31, 1999 and the cash used in operations in 2000 was
primarily attributable to a net loss of $1.4 million offset by $507,000 of
amortization of deferred compensation. Cash used in investing activities of
$29,000 during the year ended December 31, 1999 was a result of purchases of
property and equipment. Cash used in financing activities for the six months
ended June 30, 1999 was $44,000 and cash provided by financing activities for
the six months ended June 30, 2000 was $663,000. The cash used in financing
activities for the year ended December 31, 1999 was a result of the decrease in
net investment to Enmax. Cash provided by financing activities for the six
months ended June 30, 2000 was a result of $102,000 from the issuance of common
stock and due to an increase in amounts due to the parent of $703,000 to fund
operations, largely research and development expenses.
Our purchase of capital property and equipment totaled $29,000 and
$162,000 during the year ended December 31, 1999 and the six months ended June
30, 2000, respectively. We anticipate that we will experience an increase in our
capital expenditures and lease commitments consistent with our anticipated
growth in operations, infrastructure, and personnel.
We currently lease two facilities related to our primary operations that
are both classified as operating leases. Our Layton, Utah lease is $4,017 per
month and expires in October 2001. Our Clearfield, Utah lease is $1,209 per
month and expires in December 2000.
We have not undertaken any other financing activities. However, we have
recently entered into an agreement with a firm who will provide the planning,
structuring and funding of a proposed financing.
As of June 30, we believe that our current cash on hand together with
the proceeds from this offering will be sufficient to meet our capital
expenditures and working capital requirements for at least one year. However, in
the case that we need to raise additional funds to support more rapid expansion,
respond to competitive pressures, acquire complementary businesses or
technologies, or respond to unanticipated requirements, we cannot assure you
that additional funding will be available to us in amounts or on terms
acceptable to us. If sufficient funds are not available or are not available on
acceptable terms, our ability to fund our expansion, take advantage of
acquisition opportunities, develop or enhance our services or products, or
otherwise respond to competitive pressures would be significantly limited.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which established accounting and reporting
standards for derivative instrument and hedging activities. Generally, it
requires that an entity recognize all derivatives as either an asset or
liability and measure those instruments at fair value, as well as identify the
conditions for which a derivative may be specifically designed as a hedge. SFAS
No. 133, as amended, is effective for fiscal years beginning after June 15,
2000. We do not currently engage or plan to engage in any derivative or hedging
activities. The adoption of SFAS No. 133 is not expected to have an material
impact on our operating results.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 establishes accounting and reporting standards for the
recognition of revenue. It states that revenue generally is realized or
realizable and earned when all of the following criteria are met: (1)
persuasive evidence of an arrangement exists; (2) delivery has occurred or
services have been rendered; (3) the seller's price to the buyer is fixed or
determinable; (4) collectibility is reasonably assured. SAB 101 is effective no
later than the fourth quarter of fiscal years beginning after December 15,
1999. The Company does not believe the impact of SAB 101 will be material to
the Company's financial statements.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Our products and services are primarily developed in the United States.
We currently do not have an international marketing presence, but anticipate
expansion into the international market in the near future. As a result, our
financial results could be affected by changes in foreign currency exchange
rates or weak economic conditions in foreign markets. Because all of our
revenues are currently denominated in U.S. dollars, a strengthening of the
dollar could make our EnvironMax products less competitive in foreign markets.
26
<PAGE> 32
BUSINESS
OVERVIEW
We design, develop and market environmental management, monitoring and
tracking solutions. Our recent efforts have concentrated on the development,
deployment and management of the EnvironMax system. Our EnvironMax system is a
software and hardware system which promotes compliance with governmental
regulations by providing cradle-to-grave tracking and management of hazardous
material. The software component of our EnvironMax product is currently client
server based, but will be web-enabled in Fall 2000, as well as, stand-alone or
enterprise-wide ERP solution.
In addition to our EnvironMax system, we expect to develop other
environmental tracking, reporting, monitoring and management solutions. These
include systems that will manage, track, and monitor air emissions, safety
procedures, and water discharge.
INDUSTRY BACKGROUND
Hazardous Waste Management -- Based upon state environmental services
records, we believe there are tens of thousands of commercial and governmental
entities in the United States alone with mandated EPA reporting criteria. We
believe this represents only 10% of the potential worldwide market place. The
Department of Defense alone has several thousand sites with hazardous waste
problems. Other Federal agencies have similar problems. In addition, many
foreign countries and companies wishing to do business with the United States
and with companies within the U.S. must comply with stringent environmental
compliance regulations. Based on information provided in the 1997 Congressional
Research Service Report, we estimate the international market for management,
abatement, and tracking tools is approximately $2 Trillion per year.
The Internet -- The Internet has emerged as the fastest growing global
communications medium, enabling millions to connect to a world-wide network to
conduct business and share information electronically. The Internet has also
enabled and accelerated a trend towards distributed software applications. With
a distributed application, instead of installing and running software on an
individual desktop, end users can access the application from remote locations
using the Internet. The Internet makes the physical location of a software
application or service irrelevant to the end user. Rather than individually
installing programs on a number of PCs, businesses can use the Internet to allow
end users to access a single server maintaining the software. As a result of
this trend, application service providers, or ASPs, have emerged. An ASP is a
service provider that centrally hosts services and software applications and
leases them to companies. These companies can access these applications for a
fee through the Internet, rather than buying and installing the programs, thus
reducing the costs associated with hosting the software locally. Nonetheless,
operating under previous computing models, many companies have already invested
tremendous amounts of capital in their existing legacy computer systems and
applications. Therefore, new software applications must be developed to allow
seamless integration between existing legacy systems and applications being
offered by ASPs over the Internet.
27
<PAGE> 33
THE ENVIRONMAX SYSTEM SOLUTION
We provide effective, efficient and complete solutions for environmental
management and tracking in order to assure compliance with environmental rules
and regulations. The EnvironMax system facilitates such compliance and reduces
expenditures by tracking and reporting the procurement, use, and disposal of
hazardous materials and waste.
Business Focus -- With its HMMS system, our parent corporation Enmax
pioneered hazardous waste management solutions by supporting, maintaining and
upgrading a system that manages and tracks hazardous material and waste. This
product has been, and currently is, in use at several major Department of
Defense depots. The Web-based EnvironMax system will replace the Client Server
based HMMS EnvironMax program, incorporating a programming language that enables
it to be superior to the HMMS. Furthermore, the EnvironMax software uses
web-enabling technologies that can gather, track, manage, and distribute
information on a global basis.
Effective Distribution Channel -- We plan to provide products and
services to commercial and governmental enterprises that manage hazardous
material and waste, air emissions and water discharge. Our software will be
distributed directly to the users via the Internet, which will enable us to
customize the software and products specifically to the needs of the user. The
user will use our web-enabled software to access databases that we host.
Periodic reports will be generated either locally or from our facilities. Little
or no training would be involved that is not included on the distributed
software itself. The distribution of our software will require that we maintain
several servers throughout the country, and eventually throughout the world.
This will be expensive and may present obstacles that could affect our ability
to distribute the software. We will distribute the EnvironMax hardware, such as
the bar code scanners and label printers, directly to our customers.
Comprehensive Product Offerings -- We believe that our EnvironMax
technology is the de facto standard for hazardous material and waste management
and tracking solutions. EnvironMax should serve as a foundation upon which we
will build multiple products that perform different tasks. Each product has
specific components that can be modified to meet specific customer requirements.
Our business experience will enable us to provide scaleable business
enhancements to the EnvironMax suite of products.
Complementary Value-added Services -- In order for our customers to
implement our product offerings, we will provide a wide range of valuable
complementary services. We believe that our service offerings will provide
significant benefits for hazardous material and waste management. These service
offerings include:
- Technical Support
Our technical support will provide assistance during installation
and operation of the EnvironMax software;
28
<PAGE> 34
- Consulting and Custom Development
Our consultants have extensive technological and environmental
compliance specific business knowledge, which allows us to assist
our customers in implementing EnvironMax solutions;
- Hardware Optimization and Certification
Our consultants can optimize the EnvironMax software for a
specific hardware platform and provide a rigorous testing and
certification process; and
- Documentation
We will provide consistent and up-to-date documentation on the
EnvironMax system.
OUR STRATEGY
Our goal is to become the leading provider of environmental tracking and
monitoring solutions for commercial and governmental enterprises throughout the
world. Key elements of our strategy to achieve our goal include:
Providing the EnvironMax system to users and producers of hazardous
material and wastes--We seek to design a focused hazardous material management
and tracking system that simplifies and facilitates the effective management,
tracking and reporting of hazardous material from procurement through disposal
and provide this solution to users and producers of hazardous material and
wastes.
We plan to continue servicing governmental contracts entered into with
the Department of Defense and expand to other government departments that have
hazardous materials management and tracking requirements.
We also plan to market the EnvironMax product to commercial enterprises
that have a need for an effective management and tracking tool for hazardous
materials. We believe that we will be able to effectively do this by leveraging
our experience and by offering a web-enabled software and enterprise solution
that features comprehensive tracking and reporting functions for all stages of
hazardous material and waste management.
Remaining Committed to Research and Development--We are committed to
continuing our research and development efforts to enhance our products to be
efficient and effective platforms for delivering hazardous material and waste
management and tracking solutions. Our primary focus will be to continue to
improve upon and implement the first fully web-enabled hazardous materials
management, tracking, and reporting system, a fully integrated web-enabled
database management system and a web-enabled project management system.
29
<PAGE> 35
Expanding our Product Line--We plan to continue our marketing and
development efforts by expanding into other areas of environmental management.
In addition to the EnvironMax product, we plan to develop and market integrated
environmental monitoring, tracking and reporting solutions for water discharge
and air emissions.
Expanding Our International Presence--We plan to take advantage of what
we believe will be high international demand for EnvironMax solutions. We plan
to penetrate the international market by recruiting partners to help distribute
our brand and products. Local partners will also enable us to customize our
products to meet local language and regulatory requirements. As our
international penetration continues, we plan to expand our support resources to
meet time zone and language requirements.
PRODUCTS
The EnvironMax system is a tool specifically designed to meet the
complex needs of hazardous waste management and tracking. The EnvironMax system
utilizes Oracle-based dedicated databases, portable bar code scanners,
serialized label printers, and business processes to efficiently manage and
monitor hazardous materials. The EnvironMax system has been specifically
designed to enable compliance with the rules and regulations promulgated by the
Environmental Protection Agency. Similar to the approach used by pharmacies in
their management of prescription drugs, our EnvironMax product monitors and
tracks hazardous material and waste through all stages of use, such as:
Pre-Acquisition--Through the EnvironMax system, hazardous material
requests are sent to those responsible for authorizing the procurement.
Such requests can be automatically sent to multiple workgroups. For
example, requests for authorization may be directed towards fire,
environmental, and safety personnel. Once the material is authorized the
order can be placed.
Storage--Upon arrival, material is entered into the system as new
inventory and transferred to a hazardous material distribution supply
center where it can be assigned a location, shelf, or bin. The
EnvironMax system associates the hazardous material with that location.
Disbursement--As the materials are received and broken down into
job-specific quantities, each container is assigned a unique serial
number and bar code that is linked with its original parent container.
As the materials are distributed, they are weighed and scanned against
the employee's number so that the material location can be tracked as
well as the amount used. The EnvironMax software ensures that the
employee using the material has the proper training and equipment and
that the material is being used in an approved location.
Reuse and Waste--When an employee has completed a job, remaining
materials are again weighed, scanned, and placed back into inventory or
are disposed of. Material that becomes waste is tied to a waste
container. The label on each waste container specifies its waste,
profile which correlates with its disposal instructions.
30
<PAGE> 36
Central to the EnvironMax system is the EnvironMax software. The
EnvironMax software effectively tracks the hazardous materials and waste. It
will be web-enabled, which allows it to effectively operate with an array of
networks and operating systems. This also allows us to offer efficient and
direct distribution over the Internet. Through the Internet we are also able to
offer online customer support and instant updates of our products.
The web-based EnvironMax software is Linux based and Windows NT
compatible. It has been designed to be interoperable with multiple platforms to
enable our customers to make efficient use of their existing systems in
collaboration with the EnvironMax software. Many businesses have replaced or are
replacing their older legacy software systems with new integrated enterprise
systems. The EnvironMax software has been designed to be completely integrated
as an ERP solution that will be compatible with most industrial IT systems
currently in use.
In addition to the current EnvironMax system, we intend to expand the
EnvironMax technology into other areas requiring environmental waste monitoring
and tracking systems. We are developing pollution prevention products to assist
in regulatory compliance by managing, tracking, and monitoring air emissions and
water discharge.
SERVICES
In connection with our EnvironMax system we provide consulting and
support services that facilitate the ease and use of our products. We employ
both permanently deployed "Tiger Teams" as well as Help Desk support to assist
our customers at their locations as well as on the phone or via the web. We
employ proprietary tools and processes in supporting our customers on a
nation-wide basis and are preparing to expand globally.
Help Desk - Direct, dial-in 1-800 type support is available twenty-four
hours a day, seven days a week. Our Help Desk positions are staffed with trained
and proficient technicians, who are backed by the developers responsible for the
products in use.
Tiger Teams - Presently, three support teams or "Tiger Teams" are
deployed geographically across the US, with the intent of providing short notice
response to technical issues that cannot be resolved on the phone. Additionally,
each of our operational locations receives periodic visits from qualified
technicians who can help to resolve any lingering issues and quantify customer
concerns for the developers.
Embedded Help Files - This support is coupled with help files included
in the products themselves. We utilize user-friendly help files, including over
200 embedded instructional videos in EnvironMax. These systems have been and
will continue to be as forward thinking in the area of self help as technology
and instructional theory will allow. This three-tier support structure has been
in place for several years and provides an effective vehicle for insuring
immediate response to customer concerns and issues and will be implemented
worldwide.
31
<PAGE> 37
GENERATION OF REVENUE
We anticipate generating revenue from contracts with commercial and
governmental enterprises for the use of our EnvironMax system. Our initial
revenue will be obtained through the continued servicing of the client-server
system under our contracts with the Department of Defense. Upon implementation
of the web-based EnvironMax system, revenues will be generated primarily through
the sales of our EnvironMax system to commercial and governmental enterprises.
Each customers will obtain a limited license to use the EnvironMax software and
hardware for a specific fee. Customization may require additional compensation.
In addition, each customer will pay a separate maintenance and support fee.
CUSTOMERS
EnvironMax customers include a number of major Department of Defense
installations and depots such as:
- Warner-Robins Air Logistics Center, Macon, GA;
- Tobyhanna Army Depot, Allentown, PA;
- Cherry Point Naval Aviation Depot, Cherry Point, NC; and
- Marine Corps Logistic Base, Albany, GA.
In addition to the Department of Defense sites, the NASA Dryden Flight
Research Center at Edwards Air Force Base is also a user. Currently, the
EnvironMax product is contracted through the Federal Systems Integration and
Management (FEDSIM) organization under the U.S. Government General Services
Administration (GSA). EnvironMax.com is in the process of conducting discussions
to add a number of new sites under the U.S. Naval Supply command. We also
anticipate the addition of a number of new U.S. Navy facilities.
STRATEGIC TECHNOLOGY ALLIANCES
We are working to establish partnering agreements with several of the
leading providers of Enterprise Resource Planning (ERP) systems such as Oracle,
SAP and Peoplesoft. We are also working to establish alliances with leading
technical consulting firms such as AEEC, Andersen Consulting and Radian
International, LLC. We anticipate that such technical alliances will produce
benefits to all parties. We also are exploring teaming relationships with
network specialists Cisco Systems, Exodus as well as other Application Services
Providers. The objectives are to provide high quality integrated products
characterized by reliable operations at competitive pricing structures.
SALES, MARKETING AND DISTRIBUTION
Our marketing strategy is to capitalize on the increasing emphasis
placed on pollution prevention, which is driven by federal and local government
regulatory and enforcement agencies, non-government organizations such as
Greenpeace and the Sierra Club, and the general public. Companies that comply
with regulations can avoid costly fines, liability for personal
32
<PAGE> 38
injury and environmental remediation cleanup. In recent years, many companies
have become pro-active in their pollution prevention efforts.
EnvironMax.com plans to target its commercial marketing efforts towards
those companies who are on the EPA's lists of principal environmental
regulations violators as well as violator lists collected by environmental
organizations. Based on lists provided by some state environmental agencies, we
estimate that there are in excess of 100,000 companies throughout the United
States that could benefit from the implementation of EnvironMax.
Marketing plans include a campaign to establish brand name recognition.
We intend to accomplish this through multi-media advertising, trade-shows and
other traditional means.
In addition, we intend to obtain customers through the use of our
strategic alliances, particularly with environmental consultants, enterprise
software systems providers, and Application Service Providers. We also plan to
use, sponsor and conduct cyberseminars.
COMPETITION
The market for hazardous waste management solutions is evolving rapidly
and is intensely competitive, characterized by frequently changing technology
and changing standards. We expect competition to increase both from existing
competitors and new market entrants. We face direct competition in the area of
hazardous material management software. We also face competition from more
traditional non-software solutions to waste management.
In the commercial marketplace there are several providers of solutions.
Companies currently offering hazardous material management solutions for
commercial enterprises include TRW, Inc., Science Application International
Corporation, Radian International, LLC and many others. Many of these
competitors are large, well-established companies with significantly greater
financial resources, more extensive marketing and distribution capabilities,
larger development staffs and more widely recognized brands and products. We
believe that our systems surpass existing technology. However, we expect
competition to increase both from existing competitors and new market entrants.
SOFTWARE ENGINEERING AND DEVELOPMENT
We have invested and will continue to invest in the development of
innovative new product features and technologies in response to the evolving
market for hazardous waste management software solutions and input from key
customers. We seek to deliver consistently strong EnvironMax products targeted
at specific usage as opposed to the more traditional one-size-fits-all hazardous
material management. One of our key strategies has been to offer a scaleable
approach, so that our products can be used by organizations of all sizes. This
is accomplished through web-enabled software, which enables multiple users
throughout the world to connect to our databases.
33
<PAGE> 39
INTELLECTUAL PROPERTY
Our ability to protect our software, business processes and other
proprietary technology is important to our success. To accomplish this, we rely
primarily on trade secrets. We require that our employees and consultants sign
confidentiality and nondisclosure agreements. We generally regulate access to
and distribution of our documentation and other proprietary information. The
web-enabling technologies used to develop the EnvironMax product have been
obtained under a license from Enmax, which allows us to use specific
web-enabling technologies in the design of our EnvironMax product.
We also plan to seek trademark and copyright registration as well as
apply for U.S. and foreign patents. Despite our efforts to protect our
proprietary technology through trade secrets and possible patent, trademark,
tradename, and copyright applications and/or registrations, unauthorized third
parties may attempt to infringe or misappropriate our rights. We cannot be
certain that we will be able to prevent the infringement of our intellectual
property or its unauthorized use in the future. The laws of some foreign
countries do not protect our proprietary rights to the same extent as do the
laws of the United States.
We do not believe that our products infringe on the rights of third
parties. However, our products are comprised of many distinct software
components, some of which are developed by independent parties, and therefore
third parties may assert infringement claims against us which may result in
costly litigation or require us to obtain a license to third-party intellectual
rights. There can be no assurance that such licenses will be available on
reasonable terms or at all, which could have a negative effect on our business,
operating results and financial condition.
EMPLOYEES
As of August 1, 2000, we had a total of 54 employees. Of the total
employees, (11) were in software engineering, (6) in sales and marketing, (22)
in customer service and technical support, (4) in operations, (4) in finance and
administration and (7) assigned to development. Our employees are not
represented by any labor union and are not subject to a collective bargaining
agreement, and we have never experienced a work stoppage. We believe our
relations with our employees are good.
We have entered into a group benefit agreement with Workforce Solutions
Inc. (WSI). While this has proven to be an advantageous resource, as we grow, it
may become more economical for us to internalize our benefit packages and
employee management. Until that time, we intend to use WSI as our group benefit
provider.
FACILITIES
Our business headquarters are located in Salt Lake City, Utah. At this
location, our parent corporation, Enmax, has delivered IT services throughout
the mountain west and across the United States. We currently have a lease with
Associated Western Universities, Inc. for approximately 8591 square feet of
office space currently housing our Salt Lake City office. The current rent is
$6,369 per month. This 2 year lease expires in November 2000.
34
<PAGE> 40
A majority of our operational activities take place in Layton, Utah. In
October 1998 we entered into a lease with PEKA Properties for 5,124 square feet.
The term of this lease is three years and will expire in October 2001. The rent
under this lease is $4,107 per month. A substantial portion of the equipment
used at this site is also leased on a month by month basis.
We also have an office space lease in Clearfield, Utah for approximately
1100 square feet of office space for a monthly cost of $1,209.40, expiring in
June 2000.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The following table presents information regarding our executive
officers, directors and key employees as of March 1, 2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------- ---- -----------------------------------------
<S> <C> <C>
Robert F. Craig 53 Chief Executive Officer, Director
Fred Nichols 51 President and General Manager, Director
Dean Hutchings 39 Chief Financial Officer
George D. Torian, Jr. 50 Vice President, Sales and Marketing
Ron DeMass 32 Vice President, Systems
Judi Bergslien 48 Vice President, Support
Genowefa Z. Craig 48 Director
Charles M. Meredith 69 Director
Lynn B. Barney 52 Director
</TABLE>
Robert F. Craig, Chief Executive Officer, Chairman -- Mr. Craig serves
as our Chief Executive Officer and as Chairman of our Board of Directors. Mr.
Craig also has served as Chairman of the Board, President and Chief Executive
Officer of ENMAX Corporation since its incorporation in 1994. He formed ENMAX
initially in 1989, five years prior to its incorporation. From 1970 to 1984 Mr.
Craig held various responsible positions with IBM, initially in engineering and
then in marketing and sales. In 1999, the U.S. Small Business Administration
named Mr. Craig as the 8(a) Contractor of the Year. He earned his Master of
Business Administration degree in 1970 from Western Michigan University.
Fred Nichols, President, General Manager and Director -- Mr. Nichols
serves as our President and General Manager. Prior to joining EnvironMax.com,
Inc. Mr. Nichols served as Vice President of Operations & Marketing for Enmax
Corporation from February 1998 to February 2000. Prior to that date, Mr. Nichols
was with NCI Information Systems, Inc from 1992 until 1998, as the Field Office
Director, Director of Operations, and Program Manager.
35
<PAGE> 41
Prior to NCI, Mr. Nichols served in the U.S. Army from 1971 until 1992, in which
much of his experience involved the Program Management and/or Project Management
for telecommunications and software engineering projects. Mr. Nichols has an MS
in Systems Management from the University of Southern California, a BS in
Business Management from Southwest Missouri State University, and has completed
many additional courses in Program Management, Telecommunications
Systems/Management, and Software Development.
Dean Hutchings, Chief Financial Officer - Mr. Hutchings joined us in
March 2000 as our Chief Financial Officer. Mr. Hutchings has most recently been
with Novell as Marketing Controller from 1998 to March 2000. Prior to that, Mr.
Hutchings was the Chief Financial Officer for Ion Laser Technology, Inc. from
1993 until 1998, a Senior Accountant for Deloitte and Touche LLP from 1988 until
1993, and an Accounting Systems Consultant for PCS Business Solutions from 1986
to 1988. Mr. Hutchings has a BA in Business Administration from California State
University, Fullerton and is a CPA.
George D. Torian, Jr., Vice President, Marketing and Sales - Prior to
joining us, Mr. Torian has worked for IBM since 1973. His position at IBM
include: Sales Representative, Sales School Manager, Account Manager, Senior
Regional Marketing Representative, and Channel Account Manager. Most recently,
Mr. Torian served as a Strategic Alliance Manager responsible for developing and
implementing IBM's worldwide strategy for leveraging strategic alliances to
create marketing opportunities and grow IBM's Global Service revenue. Mr. Torian
earned a B.S. in Business Administration from Morgan State University in 1973.
Ron DeMass, Vice President, Systems - Mr. DeMass serves as our Vice
President of Systems. Most recently Mr. DeMass has served as Director and
Program Manager for the Hazardous Material Management System project for Enmax
Corporation from September 1998 to February 2000. Prior to that, Mr. DeMass was
a Systems Analyst Principle for NCI Information Systems, Inc. (April 1991 -
August 1998), a Programmer/Analyst for West Coast Information Systems, Inc.
(June 1989 - March 1991), and a Programmer for Alta Health Strategies (July 1988
- June 1989). Mr. DeMass has a BS in Computer Science from Westminster College
of Salt Lake City, and an AAS in Computer Information Systems from Salt Lake
Community College.
Judi Bergslien, Vice President, Support - Ms. Bergslien has been our
Vice President of Support since our inception in February 2000. Prior to this
Ms. Bergslien served as Director of Contracts for Enmax Corporation since August
1998. Prior to that, Ms. Bergslien was with NCI Information Systems, Inc. as the
Acting Director/Utah Regional Office (February 1998 - September 1998), Principal
Systems Analyst (July 1995 - September 1998), and a Senior Systems Analyst
(January 1991 - July 1995). Ms. Bergslien has a BS in General Management and
Accounting from Purdue University.
Genowefa Z. Craig, Director - Ms. Craig has been the Office
Administrator and is Secretary/Treasurer to the Board for Enmax Corporation
since April 1994. Prior to that, Ms. Craig was the Office Manager for CC&Q
Holdings, Inc. from March 1991 until April 1994. Ms.
36
<PAGE> 42
Craig has an AA in Business Administration from Tallahassee Community College.
Genowefa Craig is the spouse of Mr. Robert F. Craig.
Charles M. Meredith, Director - Mr. Meredith has been the Executive
Vice President of Enmax Corporation since 1995 where he directs all areas of the
Enmax corporate business activities, including performance activities for all
existing contracts and business development. Prior to that, Mr. Meredith was
President of The Meredith Group from 1982 until 1995. Mr. Meredith has a BS in
Electrical Engineering from the University of Southern California.
Lynn B. Barney, Director - Mr. Barney has been the principal of Siena
Investments since January 2000. Prior to that, Mr. Barney was a Director of
Strategic Planning for Alta Technology Corporation from 1998 to 1999. Prior to
that Mr. Barney was Director and CEO with Ion Laser Technology, Inc. from 1987
until 1998. He also was the Founder, President and CEO of Cottonwood Security
Bank from 1978 until 1987. Mr. Barney has a BA in Management from the University
of Utah and an MBA from the University of Utah.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We do not currently have a compensation committee, however our bylaws do
empower the board of directors to create one or more committees and appoint
members of the board of directors to serve on them. Our Chairman and Chief
Executive Officer participated in board deliberations regarding the compensation
of all executive officers including himself.
COMPOSITION OF THE BOARD
We currently have five directors. Directors are elected by the
shareholders at each annual meeting of shareholders to serve until the next
annual meeting or until a director's earlier death, resignation, or removal.
There are currently no voting agreements by and among our directors.
DIRECTOR COMPENSATION
Our directors do not receive cash compensation for their services as
directors, although members are reimbursed for expenses in connection with
attendance at board and compensation meetings. Some Directors, who also are
employees have received stock options under the 2000 Equity Incentive Plan.
EMPLOYMENT AGREEMENTS
We currently have entered into employment agreements with Dean Hutchings
and George D. Torian. Under the terms of his agreement, in exchange for a base
salary of $115,000 per year and options to acquire 30,000 of our common shares,
Mr. Hutchings is serving in the capacity of Chief Financial Officer and shall
work exclusively for EnvironMax.com, Inc. for a period of two years. Mr. Torian,
who will join us on May 1, 2000, is to serve as our Vice President of Marketing
for a two year term in consideration of his receiving a base yearly salary of
$125,000
37
<PAGE> 43
and options to purchase 50,000 of our common shares. Both Mr. Hutchings
and Mr. Torian have entered into covenants not to compete for a period of one
year following the termination of employment. Other than the contracts with Mr.
Hutchings and Mr. Torian, we have not entered into employment agreements with
any of our executive officers.
EXECUTIVE COMPENSATION
The following table presents annualized compensation information for the
calendar year 2000, paid or accrued by our Chief Executive Officer and each of
our other executive officers whose salary and bonus for calendar year 2000 will
be more than $100,000. Because EnvironMax was not incorporated until early 2000,
none of such officers has worked for more than a few months.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
ANNUALIZED AWARDS PAYOUTS
COMPENSATION
(A) (B) (C) (D) (E) (F) (G) (H) (I)
NAME AND PRINCIPAL POSITION RESTRICTED SECURITIES
OTHER STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
YEAR ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ROBERT F. CRAIG,
CHIEF EXECUTIVE OFFICER 2000 250,000 210,500
FRED NICHOLS, PRESIDENT
GENERAL MANAGER 2000 95,000 50,000
DEAN HUTCHINGS
CHIEF FINANCIAL OFFICER 2000 115,000 30,000
RON DEMASS
VICE PRESIDENT, SYSTEMS 2000 95,000 50,000
</TABLE>
OPTION GRANTS IN LAST YEAR
The following table presents the grants of stock options under our 2000
Equity Incentive Plan during fiscal 2000 to each of our executive officers named
in the Summary Compensation Table.
All option grants under the 2000 Equity Incentive Plan are either
"incentive stock options" (as defined in the Internal Revenue Code) or
nonqualified stock options. Options generally expire on the earlier of the 10
year anniversary of the grant or upon the termination of the optionee's
employment. The exercise price of each option that has been granted is equal to
the fair market value of the optioned securities on the date of grant, as
required by the incentive stock option rules. Nonqualified stock options may be
granted for less than fair market value, but not less than 85% of the stock's
fair market value on the date of the grant.
To date we have not granted any stock options other than those issued
under the 2000 Equity Incentive Plan in which we granted to our employees
incentive stock options to purchase a total of 1,042,150 common shares.
Potential realizable values are computed by:
38
<PAGE> 44
- Multiplying the number of common shares subject to a given option by
the exercise price per share,
- Assuming that the aggregate option exercise price derived from that
calculation compounds at the annual 5% or 10% rates shown in the table for the
entire 10 year term of the option, and
- Subtracting from that result the aggregate option exercise price. The
5% and 10% assumed annual rates of stock price appreciation are required by the
rules of the Securities and Exchange Commission and do not represent our
estimate or projection of future common stock prices.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------
Percent of
Number of Total Potential Realizable Value At
Securities Options Exercise Assumed Annual Rates of Stock
Underlying Granted to Price Per Price Appreciation for Option
Options Employees in Share Expiration Term
Granted Fiscal Year ($/share) Date ------------------------------------------
Name 0% 5% 10%
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert F. Craig (1)410,500 39.4% 10.00 20-Mar-10 0 $2,581,612 $ 6,542,313
Fred Nichols 50,000 4.8% 10.00 21-Mar-10 0 314,447 796,871
Dean Hutchings 30,000 2.9% 10.00 22-Mar-10 0 188,668 478,123
Ron DeMass (2) 80,000 7.7% 10.00 24-Mar-10 0 503,116 1,274,994
</TABLE>
(1) Includes 200,000 shares granted to his spouse beneficially owned by Mr.
Craig.
(2) Includes 30,000 shares granted to his spouse and beneficially owned by
Mr. DeMass.
The following table presents the number of shares of common stock
subject to vested and unvested stock options held at June 30, 2000 by each of
our executive officers named in the Summary Compensation Table. Also, presented
are values of "in-the-money" options, which represent the positive difference
between the exercise price of each outstanding stock option and the assumed
initial public offering price of $17.00 per share.
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
June 30, 2000 at June 30, 2000
------------------------- --------------------------
Name Vested Unvested Vested Unvested
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert F. Craig 0 410,500 0 $2,873,500
Fred Nichols 0 50,000 0 350,000
Dean Hutchings 0 30,000 0 210,000
Ron DeMass 0 80,000 0 560,000
</TABLE>
(1) Includes 200,000 shares granted to his spouse beneficially owned by Mr.
Craig.
(2) Includes 30,000 shares granted to his spouse and beneficially owned by
Mr. DeMass.
39
<PAGE> 45
2000 EQUITY INCENTIVE PLAN
The 2000 Equity Incentive Plan was adopted by the board of directors on
March 15, 2000. The plan became effective upon its adoption by the board.
2,210,000 common shares were authorized for issuance under the 2000 Equity
Incentive Plan. Under the 2000 Equity Incentive Plan eligible individuals in our
employ or service (including officers, non-employee board members and
consultants) could be granted options to purchase common shares. The 2000 Equity
Incentive Plan is administered by our board of directors. The exercise price for
the options may be paid in cash or in common shares valued at fair market value
on the exercise date. Each option assumed by any successor corporation will be
adjusted to apply to the number and class of securities which would have been
issuable to the option holder had the option been exercised immediately prior to
the merger or asset sale. Following such merger or asset sale, appropriate
adjustments will also be made to the number and class of securities available
for issuance under the 2000 Equity Incentive Plan and the exercise price payable
per share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. The board may amend or modify
the 2000 Equity Incentive Plan at any time, subject to any required shareholder
approval. The 2000 Equity Incentive Plan will terminate no later than March 1,
2010.
CERTAIN TRANSACTIONS
RELATIONSHIP WITH ENMAX CORPORATION
EnvironMax.com, is an affiliate corporation of Enmax Corporation. In
February 2000, EnvironMax.com, Inc. was incorporated and in March 2000 Enmax
transferred technologies constituting the EnvironMax system to EnvironMax.com.
We will continue to rely upon Enmax for the securing of certain government
contracts and performing those contracts in "teaming arrangements" with Enmax.
Robert F. Craig owns 100 percent of the outstanding shares of Enmax and
currently possesses 13,841,050 shares or 99.5 percent of EnvironMax.com, Inc..
In addition to the transfer of technology to EnvironMax.com, Enmax transferred
key personnel, management, equipment, inventory, contracts and intangibles. See
Note 5 of Notes to Financial Statements.
PRINCIPAL SHAREHOLDERS
The following table presents information as to the beneficial ownership
of our common shares as of June 30, 2000 by
- Each shareholder known by us to be the beneficial owner of more than 5%
of our common shares;
- Each of our directors;
- Each executive officer listed in our summary compensation table; and
40
<PAGE> 46
- All directors and executive officers as a group.
Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Common shares subject to options that are currently
exercisable or exercisable within 60 days of June 30, 2000 are deemed to be
outstanding and to be beneficially owned by the person holding the options for
the purpose of computing the percentage ownership of that person but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME & ADDRESS(3) OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------ -------------------- ----------------------- ----------------
<S> <C> <C> <C>
Common Shares Robert F. Craig 13,841,050 (1) 99.5%
Common Shares Fred Nichols 5,000 0.0%
Common Shares Dean Hutchings 1,500 0.0%
Common Shares Ron DeMass 8,000 (2) 0.1%
</TABLE>
(1) Includes beneficial ownership of 13,800,000 shares owned by Enmax
Corporation and 20,000 shares owned by Genowefa Z. Craig.
(2) Includes 3,000 shares beneficially owned by Judi Bergslien.
(3) The address for EnvironMax.com, Inc. is 4190 South Highland Drive, #210,
Salt Lake City, Utah 84124.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------- ------------------------------- ----------------------- ---------------
<S> <C> <C> <C>
Common Shares Genowefa Z. Craig 13,841,050 (1) 99.5%
Common Shares Charles M. Meredith 5,000 0.0%
Common Shares Lynn B. Barney -0- 0.0%
</TABLE>
(1) Includes beneficial ownership of 13,821,050 shares owned by Robert F.
Craig.
41
<PAGE> 47
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
The Company's Articles of Incorporation limit the personal liability of
directors and officers for monetary damages to the maximum extent permitted by
Utah law. Under Utah law, such limitations include monetary damages for any
action taken or failed to be taken as an officer or director except for (i)
amounts representing a financial benefit to which the person is not entitled,
(ii) liability for intentional infliction of harm on the corporation, or its
shareholders, (iii) unlawful distributions, or (iv) an intentional violation of
criminal law. The Articles of Incorporation also provide that the Company will
indemnify its directors and officers against any damages arising from their
actions as agents of the Company, and that the Company may similarly indemnify
its other employees and agents. The Company is also empowered under its Articles
of Incorporation to enter into indemnification agreements with its directors and
officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification by the
Company would be required or permitted. The Company is not aware of any
threatened litigation or proceeding which would result in a claim for such
indemnification.
COMPANY'S PLAN OF DISTRIBUTION
We propose to offer directly to the general public a minimum of
3,000,000 common shares and a maximum of 7,000,000 common shares at a price that
we estimate will fall within the offering price range set forth on the cover
page of this prospectus. This actual price will be determined in accordance with
the Dutch Auction process described below. We will offer and sell the shares on
a best-efforts basis through several of our officers and employees who will not
be separately compensated for these services. There are no underwriters involved
in this offering, and we do not intend to retain brokers to offer our common
shares.
The auction process will proceed as follows:
Prior to the effectiveness of the registration statement relating to
this offering, Environmax will solicit conditional offers to purchase from
prospective investors through the Internet. A copy of our preliminary prospectus
for the offering in electronic format, or the electronic prospectus is available
on a separate and special offering website, or the Offering Website, located at
www.environmaxipo.com. The electronic prospectus has the same content as the
paper copy of the preliminary prospectus prepared for the offering. We may
solicit prospective investors by publicizing the offering through tombstone
advertisements and otherwise as permitted by SEC Rule 134, placed on our general
website at www.environmax.com, and on other third party websites. All of such
publications will invite persons interested in the offering to view a copy of
the electronic prospectus on the Internet or to obtain a paper copy of our
preliminary prospectus by contacting us. We may reach additional potential
investors by direct mail solicitation.
42
<PAGE> 48
We will request potential investors to register with our website and
provide certain basic information to us. If an investor chooses to do so, the
investor will be requested to complete and send a conditional offer, or an
Offer, in accordance with the Conditional Offer Page and the Conditional Offer
Verification Page included in the Offering Website. A potential investor may
make an Offer at any price the investor chooses, whether it is above, within or
below the filing range set forth on the cover page of this prospectus. All
Offers and other information disclosed by potential investors are maintained as
confidential. Approximately 48 hours prior to expected effectiveness of the
registration statement, we will contact by e-mail (or by telephone, voice mail
or facsimile at our option) all potential investors who have previously
transmitted an Offer advising them that the registration statement will soon be
declared effective and requesting that each potential investor affirmatively
confirm his or her Offer, by submitting a Reconfirmation E-Mail. If a potential
investor does not reconfirm his or her Offer, it will be rejected.
A Reconfirmation E-Mail will remain valid for a period of five business
days from the transmission of our request for the Reconfirmation E-Mail. All
Offers that are not re-confirmed prior to the time specified, or if the time is
not specified, by the close of the Dutch Auction, will be deemed withdrawn. A
potential investor may be requested to reconfirm his or her Offer more than one
time if the offering is not completed within the five day period or if there is
a repricing or recirculation of the offering. If such a situation exists, we
will send another e-mail requesting the potential investor to reconfirm his or
her Offer once again. No Offer is binding on a potential investor until the
close of the auction.
After effectiveness, we will contact by e-mail (or by other means, at
our option) all potential investors to notify them the registration statement is
effective. This Effectiveness E-Mail will also notify the potential investor
that we can accept the confirmed Offer and create a binding agreement to
purchase shares after the auction has closed and the offering has been priced,
although the potential investor will have the right to withdraw his or her Offer
by notifying us at any time prior to the time we send a notice of acceptance.
The
43
<PAGE> 49
Effectiveness E-Mail will also identify a specific time prior to which we will
not send a notice of acceptance.
The actual time at which the Dutch Auction closes will be determined by
us based on general market conditions during the period immediately following
effectiveness of the registration statement. We anticipate that we will close
the auction within 45 days following the date of this prospectus, based on the
rate at which we receive Offers and the price range of the Offers. We will sell
offered shares to potential investors who have reconfirmed their Offers at or in
excess of the "public offering price." We will notify these investors by e-mail
(or by other means) as soon as practicable following the close of the auction
that their Offers have been accepted, but we will not send the notice of
acceptance, or the Allocation E-Mail, before the time stated in the
Effectiveness E-Mail. We will also notify potential investors if their offers
were not accepted.
Once the auction is closed, we will determine the highest price at which
valid Offers for at least 3 million shares have been received, or the clearing
price. This price need not fall between the minimum and maximum prices set forth
on the cover page of the preliminary prospectus, or the Filing Range, but must
be based on Offers for at least 3 million shares. An independent auditor will
verify and certify that the auction results are accurate and comply with the
details of the Dutch Auction process. The price the potential investors will pay
for the shares, or the public offering price, may be lower, but will not be
higher, than the clearing price. The public offering price will always determine
the allocation of shares. If the public offering price is below the clearing
price, all Offers which are below the clearing price but are at or higher than
the public offering price will receive a portion of the shares for which an
Offer is made. The number of shares sold to an investor submitting an Offer to
purchase precisely at the public offering price will be subject to a pro rata
reduction. We intend to accept all Valid Offers at prices above the public
offering price but under certain circumstances may allocate fewer shares to a
potential investor than the number included in the Offer. Valid Offers to
purchase are those that meet our requirements, including eligibility, and size.
Offers for fewer than 50 shares will not be accepted and larger offers must be
placed in additional increments of 50 shares. In order to facilitate the orderly
completion of this offering, we reserve the right to reject Offers that we deem
to be manipulative or disruptive and, in exceptional circumstances, to alter our
method of allocation as we deem necessary to ensure an orderly distribution of
the shares. For example, large orders may be reduced to ensure a broader public
distribution.
44
<PAGE> 50
If sufficient Offers are not received, or the clearing price is not
equal to or greater than $17.00 per share for the 3 million share minimum, we
will either cancel the offering or file a post-effective amendment and conduct a
new auction.
The public offering price of the shares may be below or above the Filing
Range. If the public offering price is outside this range, we will notify all
potential investors of this fact, and we may re-circulate the preliminary
prospectus with a new price range. If the public offering price is outside the
filing range, then no Offers will be accepted except to potential investors who
have again reconfirmed their Offers, regardless of whether the potential
investor's initial Offer was above, below or at the public offering price.
In addition, we may decide to re-circulate the prospectus if we
determine that re-circulation is necessary to ensure that the prospectus does
not contain an untrue or misleading statement of a material fact. If there is a
re-circulation for any reason, we will send another email, the Re-circulation
E-Mail notifying potential investors that the preliminary prospectus for the
offering has been amended. The Re-circulation E-Mail will also provide the
following information: (i) the material changes made to the prospectus; (ii) the
amended prospectus is available at our special offering website; (iii) in order
to participate in the offering, the potential investor must reconfirm his or her
previously transmitted Offer in response to the Re-circulation E-Mail; and (iv)
the potential investor should review the amended preliminary prospectus
carefully to determine whether or not he or she wishes to reconfirm his or her
previously transmitted Offer.
To illustrate how the auction process works, assume that we intend to
sell at least 1,000,000 shares. If we receive ten Offers at various prices for
1,500,000 shares, we will organize the offers from highest price offered to
lowest price offered. The highest price Offers for a total of at least 1,000,000
shares will be accepted as the clearing price, although we may decide to sell
the shares at a lower public offering price. In our example, if the prices
offered range from $17 per share to $22 per share, and the Offers at $20 per
share and above total 1,000,000 shares, the clearing price would be $20 per
share. This means that all potential investors would purchase shares at $20
per share, even potential investors who submitted offers at higher prices,
unless we decide to sell the shares at a discount to the clearing price. We
cannot accept an Offer for more than the clearing price, and only those
prospective investors submitting Offers at, or above, the public offering price
will purchase shares in the offering.
45
<PAGE> 51
The following table illustrates the example described above, assuming
that the clearing price and public offering price are both $20 per share. The
table also assumes that the Offers are final, and that they reflect any
modifications that have been made to reflect prior changes to the filing range
and avoids the issuance of fractional shares.
INITIAL PUBLIC OFFERING OF COMPANY - $20 Public Offering Price
<TABLE>
<CAPTION>
Bid Information Auction Result
-------------------------------------------------- ----------------------------------------------------
Approximate
Percentage
Cumulative of Requested
Shares Shares Shares Shares Offering Amount
Requested Requested Bid Price Allocated Allocated Price Raised
-------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
17 50,000 50,000 $17 -0-
--------------------------------------------------------------------------------------------------------
18 150,000 200,000 $18 -0-
--------------------------------------------------------------------------------------------------------
19 250,000 450,000 $19 -0-
--------------------------------------------------------------------------------------------------------
20 450,000 900,000 $20 400,000 89 $20 $800,000
--------------------------------------------------------------------------------------------------------
21 300,000 1,200,000 $21 300,000 100 $20 $600,000
--------------------------------------------------------------------------------------------------------
22 300,000 1,500,000 $22 300,000 100 $20 $600,000
--------------------------------------------------------------------------------------------------------
</TABLE>
If we decide the public offering price is $19 per share and the number
of shares we will sell is 1,200,000 shares, the Company will confirm all bids
that were made at or above $20 per share. We will not accept any Offers made at
a price of less than $19 per share and will accept 60% of the Offers at $19 per
share. The other potential investors not receive any shares.
We will sell shares to potential investors who have submitted Offers to
purchase at, or above, the public offering price, and these potential investors
will be notified by Allocation E-mail (or otherwise) as soon as practicable
following the close of the auction that their Offers to purchase have been
accepted.
Prior to the offering, there has been no public market for our shares.
The initial offering price for the shares determined by the Dutch Auction
process will not necessarily bear any direct relationship to our assets,
earnings, book value, or to other established criteria of value, although we
considered these factors in establishing the initial public offering price
range. Other factors considered in determining the initial public offering price
range include:
- market conditions;
- the industry in which we operate;
- an assessment of our management;
- our initial operating results; and
- our business potential.
46
<PAGE> 52
To complete a purchase of shares, each prospective investor who has been
notified that his or her offer has been accepted must submit a subscription
agreement through our Offering Website at www.environmaxipo.com or by fax, or
mail, and have paid the purchase price of the shares subscribed for by wire
transfer from banks and other institutions, by check or by credit card. All
payments should be payable to EnvironMax.com, Inc. We cannot accept any funds
until after the registration statement becomes effective and the Allocation
E-Mails have been sent. The subscription agreement is attached as an exhibit at
the end of this prospectus. We reserve the right to reject any subscription in
its entirety or to allocate shares among prospective investors, as noted above.
If any subscription is rejected, funds we receive for such subscription will be
promptly returned to the subscriber without interest or deduction.
Prospective investors who intend to purchase shares by using a credit
card should transmit their credit card number and other information through the
Internet as explained in the Allocation E-Mail and the subscription agreement.
We will encrypt and promptly forward this information to a credit card
transaction processor to obtain authorization for use of the credit card. Upon
receipt of the information and authorization, our bank will immediately credit
our account.
Potential investors should be aware that investors who continue to carry
balances on their credit cards as a result of the purchase of the shares could
incur related costs that could substantially increase the cost of the shares.
Neither we nor any of our affiliates are affiliated with any entity that issues
credit cards, and we are offering the credit card alternative for the
convenience of investors and to assure us that funds will be available. We will
absorb any discounts and other charges levied by the issuer of the credit card.
Promptly upon our receipt of funds for the purchase of shares pursuant
to an Offer that we have accepted, we will transfer the shares directly to an
existing brokerage account designated by you or we will mail an appropriate
share certificate by first class mail if so requested. We will not use the
proceeds paid by any investor until the share certificate evidencing such
investment has been transferred.
Although our long-term plan for providing liquidity to our shareholders
is to develop a public market for its shares by soliciting securities
broker/dealers to become market-makers of the shares, we have not solicited any
such brokers at this time. See "Limitations on Transfer of Shares."
47
<PAGE> 53
DESCRIPTION OF SECURITIES
We are authorized to issue 100,000,000 common shares, par value of
$0.001 per share, of which 13,910,710 shares are currently issued and
outstanding, and held of record by 63 shareholders. There are options to
purchase 1,016,650 of our common shares currently held by our employees. There
currently is no public market for our common shares. We are offering a minimum
of 3 million and a maximum of 7 million of our common shares to the general
public in this offering. Following this offering, the market price of our common
shares could decline as a result of the perception that a large number of our
common shares could be offered for sale in the market.
COMMON SHARES
Each common shareholder is entitled to one vote for each common share
held on all matters submitted to a vote of shareholders. Cumulative voting for
the election of directors is not provided for in our articles of incorporation,
which means that the holders of a majority of the shares voted can elect all of
the directors then standing for election.
Upon our liquidation, dissolution, or winding up, the assets legally
available for distribution to our shareholders, after payment of claims of
creditors, are distributable ratably among the holders of our common shares and
any participating preferred shares outstanding at that time after payment of
liquidation preferences, if any, on any outstanding preferred shares. Each
outstanding common share is, and all common shares to be outstanding upon
completion of this offering will be, fully paid and non-assessable.
Dividends may be paid on the outstanding common shares, if and when
declared by the board of directors, out of legally available funds.
Holders of our common shares are not entitled to preemptive rights, and
our common shares are not subject to conversion or redemption.
PREFERRED SHARES
The board of directors is authorized, without further shareholder
approval, to issue from time to time up to an aggregate of 20,000,000 preferred
shares in one or more series and to fix or alter the designations, preferences,
rights and any qualifications, limitations or restrictions of the shares of each
series thereof, including the dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, including sinking fund provisions,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designation of series. We have no present plans to
issue any preferred shares.
48
<PAGE> 54
SHARES ELIGIBLE FOR FUTURE SALE
RULE 144
IN GENERAL, UNDER RULE 144 AS CURRENTLY IN EFFECT, BEGINNING 90 DAYS
AFTER THE DATE OF THIS PROSPECTUS, A PERSON WHO HAS BENEFICIALLY OWNED COMMON
SHARES FOR AT LEAST ONE YEAR WOULD BE ENTITLED TO SELL WITHIN ANY THREE MONTH
PERIOD A NUMBER OF SHARES THAT DOES NOT EXCEED THE GREATER OF: 1% OF THE COMMON
SHARES THEN OUTSTANDING, WHICH WILL EQUAL BETWEEN 169,000 AND 209,000 SHARES
IMMEDIATELY AFTER THIS OFFERING; OR THE AVERAGE WEEKLY TRADING VOLUME OF THE
COMMON SHARES ON THE NASDAQ NATIONAL MARKET OR ANY OTHER NATIONAL MARKET ON
WHICH THE SHARES ARE TRADED DURING THE FOUR CALENDAR WEEKS PRECEDING THE FILING
OF A NOTICE ON FORM 144 FOR THE SALE. SALES UNDER RULE 144 ARE ALSO SUBJECT TO
MANNER OF SALE PROVISIONS AND NOTICE REQUIREMENTS AND TO THE AVAILABILITY OF
CURRENT PUBLIC INFORMATION ABOUT US.
RULE 144(k)
UNDER RULE 144(K), A PERSON WHO HAS NOT BEEN AN AFFILIATE, AS THAT TERM
IS DEFINED IN RULE 144, AT ANYTIME DURING THE 90 DAYS PRECEDING A SALE, AND WHO
HAS BENEFICIALLY OWNED THE SHARES PROPOSED TO BE SOLD FOR AT LEAST TWO YEARS, IS
ENTITLED TO SELL THOSE SHARES WITHOUT COMPLYING WITH THE MANNER OF SALE, PUBLIC
INFORMATION, VOLUME LIMITATION OR NOTICE PROVISIONS OF RULE 144. THEREFORE,
UNLESS OTHERWISE RESTRICTED, SHARES THAT HAVE BEEN HELD BY A NON-AFFILIATE FOR
AT LEAST TWO YEARS MAY BE SOLD IN THE OPEN MARKET IMMEDIATELY AFTER THE LOCK UP
AGREEMENTS EXPIRE.
RULE 701
Any employee, officer or director of, or consultant to, us who purchases
his shares under a written compensatory plan or contract may be entitled to sell
his shares in reliance on Rule 701. Rule 701 permits affiliates to sell their
Rule 701 shares under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that non-affiliates may sell
these shares in reliance on Rule 144 without having to comply with the holding
period, public information, volume limitation or notice provisions of Rule 144.
All holders of Rule 701 shares are required to wait until 90 days after the date
of this prospectus before selling those shares. However, all shares issued under
Rule 701 are subject to lock-up agreements and will only become eligible for
sale when the 180-day lock-up agreements expire.
There are 13,810,000 shares subject to Section 144 of the Securities and
Exchange act of 1933. These shares will not be available for sale on the open
market until one year following the effective date of this registration
statement unless an additional registration statement becomes effective
subsequent to the effective date of this registration statement. Additionally,
100,540 shares of stock, in the form of stock options or employee held stock
will be available for sale 90 days subsequent to the effective date of this
registration statement under rule 701 of the act..
STOCK OPTIONS
We may file a Form S-8 registration statement under the Securities Act
on or immediately after the date of this prospectus to register all common
shares covered by outstanding options or reserved for future issuance under the
2000 Equity Incentive Plan. Such registration statement will automatically
become effective upon filing. Accordingly, shares covered by that registration
statement will thereupon be eligible for sale in the public markets, unless such
options are subject to vesting restrictions or the contractual restrictions
described above.
49
<PAGE> 55
STOCK TRANSFER AND LISTING
STOCK TRANSFER AGENT
The planned stock transfer agent for our common shares is American Stock
Transfer & Trust Company.
SHAREHOLDER REPORTS
We furnish our shareholders with annual reports containing audited
financial statements and may furnish our shareholders with quarterly or
semi-annual reports containing unaudited financial information.
LISTING
We have applied for quotation on the American Stock Exchange under the
symbol "ENV".
LEGAL MATTERS
The validity of the common shares offered hereby will be passed upon for
us by Parsons Behle & Latimer, a Professional Law Corporation, Salt Lake City,
Utah.
EXPERTS
The financial statements of EnvironMax.com, Inc. included in this
prospectus as of February 1, 2000 and EnvironMax.com, Inc. (an operating
component of Enmax Corporation) included in this prospectus as of December 31,
1998 and 1999 and for the period September 1, 1998 (date operations commenced)
to December 31, 1998 and for the year ended December 31, 1999, have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
EnvironMax.com, Inc. has filed with the Securities and Exchange
Commission a registration statement on Form S-1, including exhibits, schedules
and amendments filed with the registration statement, under the Securities Act
with respect to the common stock to be sold in this offering. This prospectus
does not contain all of the information set forth in this registration
statement. For further information about EnvironMax.com, Inc. and the common
shares to be sold in the offering, please refer to this registration statement.
For additional information, please refer to the exhibits that have been filed
with our registration statement on Form S-1. You may read and copy all or any
portion of the registration statement or any other information EnvironMax.com,
Inc. files at the Securities and Exchange Commission's public reference room at
450 Fifth Street, N.W., Washington, D.C., 20549. You can request copies of these
documents upon payment of a duplicating fee, by writing to the Securities and
Exchange Commission. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information about the public reference rooms.
EnvironMax.com, Inc.'s Securities and Exchange Commission filings, including the
registration statement, will also be available to you on the Securities and
Exchange Commission's web site (http://www.sec.gov). We intend to furnish our
shareholders with annual reports containing audited financial statements by an
independent public accounting firm and quarterly reports containing unaudited
financial information for the first three quarters of each year.
50
<PAGE> 56
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ENVIRONMAX.COM, INC.
Independent Auditors' Report........................................................ F-2
Balance Sheets as of December 31, 1998 and 1999 and June 30, 2000 (unaudited)....... F-3
Statements of Operations for the period September 1, 1998 (date operations commenced)
to December 31, 1998, for the year ended December 31, 1999, for the six months
ended June 30, 1999 (unaudited), for the one month ended January 31, 2000
(unaudited), and for the five months ended June 30, 2000 (unaudited)................ F-4
Statements of stockholders' deficit and net investment for the period September 1,
1998 (date operations commenced) to December 31, 1998, for the year ended
December 31, 1999, for the one month ended January 31, 2000 (unaudited), and for the
five months ended June 30, 2000 (unaudited).......................................... F-5
Statements of Cash Flows for the period September 1, 1998 (date operations, commenced)
to December 31, 1998, for the year ended December 31, 1999 for the six months
ended June 30, 1999 (unaudited), for the one month ended January 31, 2000
(unaudited), and for the five months ended June 30, 2000 (unaudited)................... F-6
Notes to Financial Statements....................................................... F-7
ENVIRONMAX.COM, INC.
Independent Auditors' Report....................................................... F-15
Balance Sheet as of February 1, 2000............................................... F-16
Notes to Balance Sheet............................................................. F-17
</TABLE>
F-1
<PAGE> 57
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Environmax.com, Inc.:
We have audited the accompanying balance sheets of Environmax.com, Inc., an
operating component of Enmax Corporation (the "Company"), as of December 31,
1998 and 1999 and the related statements of operations, stockholders' deficit
and net investment and cash flows for the period September 1, 1998 (date
operations commenced) to December 31, 1998 and for the year ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998 and
1999, and the results of its operations and its cash flows for the period
September 1, 1998 (date operations commenced) to December 31, 1998 and for the
year ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Salt Lake City, Utah
March 1, 2000
F-2
<PAGE> 58
ENVIRONMAX.COM, INC.
BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUCCESSOR
----------------
PREDECESSOR ENVIRONMAX.COM,
----------------------------- INC. (A WHOLLY
ENVIRONMAX.COM, INC. OWNED SUBSIDIARY
(AN OPERATING COMPONENT OF ENMAX
OF ENMAX CORPORATION) CORPORATION)
----------------------------- ----------------
DECEMBER 31, JUNE 30, 2000
----------------------------- (UNAUDITED)
ASSETS 1998 1999
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 300 $ 439 $ 14,680
Receivables - trade 436,401 446,793 321,916
Prepaids and other current assets 45,483
----------- ----------- -----------
Total current assets 436,701 447,232 382,079
----------- ----------- -----------
FURNITURE AND EQUIPMENT, at cost:
Furniture and equipment - capital lease 43,989 73,358 205,837
Less accumulated depreciation (3,142) (13,426) (23,887)
----------- ----------- -----------
Furniture and equipment - net 40,847 59,932 181,950
----------- ----------- -----------
OTHER ASSETS 4,357 4,357 4,357
----------- ----------- -----------
TOTAL ASSETS $ 481,905 $ 511,521 $ 568,386
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT AND NET INVESTMENT
CURRENT LIABILITIES:
Trade accounts payable $ 70 $ 15,689 $ 205,236
Accrued payroll 46,415 60,177 132,485
Accrued liabilities 16,818 42,939 104,416
Due to parent 702,823
Capital lease obligations, current portion 6,869 7,720 56,774
----------- ----------- -----------
Total current liabilities 70,172 126,525 1,201,734
CAPITAL LEASE OBLIGATIONS, long-term portion 37,120 29,400 114,614
----------- ----------- -----------
Total liabilities 107,292 155,925 1,316,348
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 3, and 5)
STOCKHOLDERS' DEFICIT AND NET INVESTMENT:
Net investment 374,613 355,596
Preferred stock, $0.001 par value, 20,000,000 shares
authorized; no shares outstanding
Common stock, $0.001 par value; 100,000,000 shares
authorized; 13,910,710 shares outstanding at June 30, 2000 13,911
Additional paid-in capital 1,101,635
Deferred compensation (499,220)
Accumulated deficit (1,364,288)
----------- ----------- -----------
Total stockholders' deficit and net investment 374,613 355,596 (747,962)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT AND NET INVESTMENT $ 481,905 $ 511,521 $ 568,386
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 59
ENVIRONMAX.COM, INC.
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------------------------------------------------------------- --------------
ENVIRONMAX.COM, INC. ENVIRONMAX.COM
(AN OPERATING COMPONENT OF ENMAX CORPORATION) INC. (A WHOLLY
----------------------------------------------------------------- OWNED
PERIOD SUBSIDIARY
SEPTEMBER 1, OF ENMAX
1998 (DATE CORPORATION)
OPERATIONS ONE MONTH --------------
COMMENCED) YEAR SIX MONTHS ENDED FIVE MONTHS
TO ENDED ENDED JUNE JANUARY 31, ENDED JUNE
DECEMBER DECEMBER 30, 1999 2000 30, 2000
31, 1998 31, 1999 (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 745,980 $ 2,432,192 $ 1,288,748 $ 114,305 $ 893,421
COST OF REVENUES 452,195 1,525,630 808,387 68,583 540,273
----------- ----------- ----------- ----------- -----------
GROSS PROFIT 293,785 906,562 480,361 45,722 353,148
----------- ----------- ----------- ----------- -----------
EXPENSES:
Selling, general, and administrative 259,650 808,002 387,797 47,130 565,459
Compensation expense - founders stock 506,873
Research and development 75,417 21,446 645,406
----------- ----------- ----------- ----------- -----------
Total expenses 259,650 883,419 387,797 68,576 1,717,738
----------- ----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 34,135 23,143 92,564 (22,854) (1,364,590)
----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (856) (4,671) (2,336) (361) (1,403)
Interest income 1,705
----------- ----------- ----------- ----------- -----------
Total other income (expense) (856) (4,671) (2,336) (361) 302
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) BEFORE
INCOME TAXES 33,279 18,472 90,228 (23,215) (1,364,288)
INCOME TAXES None None None None None
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 33,279 $ 18,472 $ 90,228 $ (23,215) $(1,364,288)
=========== =========== =========== =========== ===========
PRO FORMA NET INCOME (LOSS)
DATA (UNAUDITED):
Net income (loss) as reported $ 33,279 $ 18,472 $ 90,228 $ (23,215)
Pro forma income tax provision (benefit) 13,312 7,389 36,091 (9,286)
----------- ----------- ----------- -----------
PRO FORMA NET INCOME (LOSS) $ 19,967 $ 11,083 $ 54,137 $ (13,929)
=========== =========== =========== ===========
NET LOSS PER SHARE - Basic and diluted $ (0.14)
===========
WEIGHTED AVERAGE SHARES USED
IN COMPUTATION 9,892,400
===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 60
ENVIRONMAX.COM, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT AND NET INVESTMENT
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
NET ----------------- PAID-IN DEFERRED ACCUMULATED
INVESTMENT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT TOTAL
---------- ------ ------ ------- ------------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ENVIRONMAX.COM, INC. (AN OPERATING
COMPONENT OF ENMAX CORPORATION)
BALANCE, SEPTEMBER 1, 1998
(date operations commenced) None
Net working capital funding to
operating component of Enmax
Corporation $ 341,334 $ 341,334
Net income applicable to operating
component of Enmax Corporation 33,279 33,279
---------- ---------- -------- ----------- ---------- ----------- ----------
BALANCE, DECEMBER 31, 1998 374,613 374,613
Net working capital funding to
operating component of Enmax
Corporation (37,489) (37,489)
Net income applicable to operating
component of Enmax Corporation 18,472 18,472
---------- ---------- -------- ----------- ---------- ----------- ----------
BALANCE, DECEMBER 31, 1999 355,596 355,596
Net loss applicable to operating
component of Enmax Corporation
(unaudited) (23,215) (23,215)
---------- ---------- -------- ----------- ---------- ----------- ----------
BALANCE, JANUARY 31, 2000 $ 332,381 $ 332,381
========== ==========
ENVIRONMAX.COM, INC. (A WHOLLY OWNED
SUBSIDIARY OF ENMAX CORPORATION)
Incorporation of Environmax.com, Inc.
(unaudited) 100,000 $ 100 $ 900 $ 1,000
Issuance of common stock in exchange
for contribution of net assets and
services by Enmax Corporation
(unaudited) 13,700,000 7,446 7,446
Issuance of common stock to founding
shareholders (unaudited) 100,710 101 1,006,999 $(1,006,093) 1,007
Issuance of common stock (unaudited) 10,000 10 99,990 100,000
Recapitalization of par value (unaudited) 6,254 (6,254)
Amortization of deferred compensation
(unaudited) 506,873 506,873
Net loss (unaudited) $(1,364,288) (1,364,288)
---------- -------- ----------- ---------- ----------- ----------
BALANCE, JUNE 30, 2000 (Unaudited) 13,910,710 $ 13,911 $ 1,101,635 $ (499,220) $(1,364,288) $ (747,962)
========== ========= ============ ============ ============= ==========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 61
ENVIRONMAX.COM, INC.
STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------------- ---------------
ENVIRONMAX.COM ENVIRONMAX.COM
(AN OPERATING COMPONENT OF ENMAX CORPORATION) INC.
------------------------------------------------------- (A WHOLLY OWNED
PERIOD SUBSIDIARY
SEPTEMBER 1, OF ENMAX
1998 CORPORATION)
(DATE SIX ONE ---------------
OPERATIONS YEAR MONTHS ENDED MONTH ENDED FIVE
COMMENCED TO ENDED JUNE 30, JANUARY 31, MONTHS ENDED
DECEMBER 31, DECEMBER 31, 1999 2000 JUNE 30, 2000
1998 1999 (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 33,279 $ 18,472 $ 90,228 $ (23,215) $(1,364,288)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation 3,142 10,284 3,666 524 13,937
Amortization of deferred compensation 506,873
Changes in operating assets and liabilities:
Receivables - trade (436,401) (10,392) 25,050 35,442 (321,916)
Prepaids and other current assets (45,483)
Other assets (4,357)
Trade accounts payable 70 15,619 16,593 107,560 205,236
Accrued payroll 46,415 13,762 41,884 42,937 132,485
Accrued liabilities 16,818 26,121 (16,818) (42,939) 104,416
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities (341,034) 73,866 160,603 120,309 (768,740)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment (29,369)
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities (29,369)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (6,869) (6,212) (6,170) (21,410)
Increase (decrease) in net investment 341,334 (37,489) (154,305) (113,891)
Increase in due to parent 702,823
Issuance of common stock 102,007
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities 341,334 (44,358) (160,517) (120,061) 783,420
----------- ----------- ----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 300 139 86 248 14,680
CASH AND CASH EQUIVALENTS,
Beginning of period None 300 300 439 None
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, End of period $ 300 $ 439 $ 386 $ 687 $ 14,680
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION: Cash paid during
the period for interest $ 856 $ 4,671 $ 2,336 $ 361 $ 1,403
=========== =========== =========== =========== ===========
SUPPLEMENTAL NONCASH FINANCING AND
INVESTING ACTIVITIES:
Property and equipment purchased
under capital leases $ 43,989 None None None $ 161,848
=========== =========== =========== =========== ===========
Contribution of net assets for common stock None None None None $ 7,446
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 62
ENVIRONMAX.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD SEPTEMBER 1, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31,
1998 AND FOR THE YEAR ENDED DECEMBER 31, 1999 (THE INFORMATION AS OF JUNE 30,
2000, AND FOR THE SIX MONTHS ENDED JUNE 30, 1999, THE ONE MONTH ENDED JANUARY
31, 2000, AND THE FIVE MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)
--------------------------------------------------------------------------------
1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF COMPANY - Enmax Corporation ("Enmax") is a certified
small disadvantaged and minority-owned 8(a) business, providing
information technology solutions to the government as well as prime
contracts and subcontractors who provide high-tech systems and services
to the government. Effective September 1, 1998 (date operations
commenced), Enmax was awarded a $1.7 million contract from a United
States government agency to provide maintenance and technical support on
a hazardous material management system ("HMMS") software program
utilized by various government sites. The operations relating to the
HMMS contract represent a separate operating component of Enmax,
hereinafter referred to as Environmax.com, Inc. ("Environmax" or the
"Company"). In 1999, the Company obtained two additional contracts
totaling $1.5 million to provide additional HMMS support services to the
various government locations utilizing the HMMS software. All revenues
in the accompanying financial statements represent services provided
under these HMMS contracts. Prior to September 1, 1998, there were no
material resources dedicated to the awarding of the HMMS contract. The
Company operates in one segment.
The accompanying financial statements as of December 31, 1998 and 1999
and for the period September 1, 1998 to December 31, 1998 and for the
year ended December 31, 1999 represent the "carve-out" of the Environmax
operations (all of which relate to the HMMS software) from the
historical financial statements of Enmax. In this context, no direct
ownership relationship existed in the component comprising Environmax.
Accordingly, a net investment in Environmax is shown in lieu of
stockholders' equity in the accompanying financial statements for the
audited periods presented. The statements of operations exclude the
other operations of Enmax that represent different operations than those
of Environmax. Revenues and cost of revenues relating to HMMS services
were tracked separately within Enmax. Allocations of general and
administrative expenses have been made primarily based on personnel,
revenue, space, direct costs of related activities, or estimates of time
spent to provide services. These allocations include amounts for
facilities, marketing, general management, professional services,
information management, and other miscellaneous services. Management
believes that the foregoing allocations were made on a reasonable basis;
however, they are not necessarily indicative of the costs that would
have been incurred on a stand-alone basis. Enmax's accounting systems
were not designed to track cash receipts and payments and liabilities on
a component-specific basis. Accordingly, all cash related transactions
are included as part of the net investment.
In 1999 and continuing into 2000, the Company dedicated research and
development resources to the development of a web-based hazardous
material management and tracking system software utilizing their
understanding and knowledge of the HMMS software. The new software is a
web-based, business-to-business internet application service provider
(IASP) software that has the functionality of the existing HMMS software
that is accessible through the internet. Effective February 1, 2000,
Environmax.com, Inc., a wholly owned subsidiary of Enmax, was
incorporated as a C corporation in the
F-7
<PAGE> 63
State of Utah to further develop and market the new web-based software
product to government and commercial entities with environmental
compliance and reporting requirements.
BASIS OF PRESENTATION - As discussed above, the accompanying financial
statements in 1998 and 1999 present, on a historical cost basis, the
assets, liabilities, revenues, and expenses related to Environmax, an
operating component of Enmax.
UNAUDITED INTERIM FINANCIAL STATEMENTS - The unaudited interim financial
statements as of June 30, 2000 and for the six months ended June 30,
1999, one month ended January 31, 2000, and the five months ended June
30, 2000 have been prepared on the same basis as the audited financial
statements and, in the opinion of management, reflect all normal
recurring adjustments necessary to present fairly the financial
information set forth therein in accordance with accounting principles
generally accepted in the United States of America. Operating results
for the five months ended June 30, 2000 are not necessarily indicative
of the results that may be expected for any future periods. All
financial statement disclosures related to the interim financial
statements are unaudited.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
instruments purchased with maturities of three or fewer months to be
cash equivalents. Cash equivalents primarily consist of investments in
money market mutual funds.
FURNITURE AND EQUIPMENT - Furniture and equipment are recorded at cost.
Depreciation is provided on the straight-line method over the estimated
useful lives of the related assets (3 to 10 years). Equipment leased
under capital leases is amortized over the lesser of its useful life or
the lease term.
OTHER ASSETS - Other assets consist of a deposit made on a capital lease
entered into by the Company.
DUE TO PARENT - Due to parent represents advances made to Environmax to
fund working capital requirements.
REVENUE RECOGNITION - Maintenance and technical support revenues under
the HMMS contracts are recognized as the services are performed based on
hours incurred.
RESEARCH AND DEVELOPMENT - Research and development costs are expensed
as incurred.
INCOME TAXES - For the period September 1, 1998 (date operations
commenced) to December 31, 1998, the year ended December 31, 1999, and
the one month ended January 31, 2000, the Company was not subject to
income tax as Enmax is an S corporation and taxes are paid by the
respective stockholder. Accordingly, no provision for federal and state
income taxes is recorded in the accompanying financial statements. The
pro forma income tax provision is based on a 40% effective tax rate that
the Company believes would have been incurred had Enmax not been an S
corporation for income tax purposes. The effective rate is comprised of
a 34 percent federal statutory rate plus an effective state tax rate net
of federal benefit of six percent.
From the date of incorporation, the Company utilizes the liability
method of accounting for income taxes. Under the liability method,
deferred taxes are determined based on the difference between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in
F-8
<PAGE> 64
which the differences are expected to reverse. Recognition of deferred
tax assets is limited to amounts considered by management to be more
likely than not of realization in future periods.
EARNINGS PER SHARE - Earnings per share have been omitted from the
accompanying statements of operations for the period September 1, 1998
(date operations commenced) to December 31, 1998, for the six and twelve
months ended December 31, 1999, and for the one month ended January 31,
2000 as there is no direct ownership relationship in the Environmax.com,
Inc. component and such information is not meaningful. For the five
months ended June 30, 2000, the Company computed net loss per share in
accordance with Statement of Financial Accounting Standards (SFAS) 128,
"Earnings Per Share."
STOCK-BASED COMPENSATION - The Company grants stock options for a fixed
number of shares to certain employees with an exercise price equal to or
greater than the fair value of the shares at the date of grant. The
Company accounts for stock option grants to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB 25"), and, accordingly, recognizes no compensation
expense for the stock option grants.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS - In accordance with Financial
Accounting Standards Board ("FASB") SFAS No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed",
development costs incurred in the research and development of new
software products to be sold, leased, or otherwise marketed are expensed
as incurred until technological feasibility in the form of a working
model has been established. The capitalized costs are then amortized on
a straight-line basis over the estimated product life, or on the ratio
of current revenues to total projected product revenues, whichever is
greater. Internally generated capitalizable software development costs
have not been material for the periods presented. The Company has
charged its software development costs prior to technological
feasibility to research and development expense in the accompanying
statements of operations.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the carrying
value of long-term assets based upon current and anticipated
undiscounted cash flows, and recognizes an impairment when such
estimated cash flows will be less than the carrying value of the asset.
Measurement of the amount of impairment, if any, is based upon the
difference between carrying value and fair value.
RISKS AND CONCENTRATION - For the period September 1, 1998 (date
operations commenced) to December 31, 1998 and the year ended December
31, 1999, the Company's revenue was derived from United States
government contracts. At December 31, 1999, the Company has one
significant contract outstanding with the United States government for
approximately $2,205,000 in fees which expires in May 2000. Unearned
amounts under the contract at December 31, 1999 are approximately
$935,000. In June 2000, the contract totaling approximately $1,600,000
was renewed and expires in December 2000. Unearned amounts under the
renewed contract are approximately $1,350,000. The Company is
financially dependent on the significant government contract and there
can be no assurance that a new HMMS maintenance contract will be
extended to the Company by the government upon its expiration.
Receivables due at December 31, 1998 and 1999 and June 30, 2000 of
$436,401, $446,793, and $321,916, respectively, are due from the United
States government.
Financial instruments that potentially subject the Company to a
concentration of credit risk, consist principally of trade accounts
receivable due from the United States Government. Historically, the
Company has not experienced significant losses related to such
receivables.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial instruments held or used
by the Company include accounts receivable, accounts payable, and
capital lease obligations. The fair values of these
F-9
<PAGE> 65
instruments, which could change if market conditions change, are based
on management's estimates. Management believes that the carrying value
of these instruments approximates their fair values.
OTHER COMPREHENSIVE INCOME - The only component of comprehensive income
is net income (loss).
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS - In June 1998, the FASB
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. Generally, it requires
that an entity recognize all derivatives as either an asset or liability
and measure those instruments at fair value, as well as identify the
conditions for which a derivative may be specifically designed as a
hedge. SFAS No. 133, as amended, is effective for fiscal years beginning
after June 15, 2000. The Company does not currently engage or plan to
engage in any derivative or hedging activities. The adoption of SFAS No.
133 is not expected to have a material impact on the Company.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101 , "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 establishes accounting and reporting
standards for the recognition of revenue. It states that revenue
generally is realized or realizable and earned when all of the following
criteria are met: (1) persuasive evidence of an arrangement exists; (2)
delivery has occurred or services have been rendered; (3) the seller's
price to the buyer is fixed or determinable; (4) collectibility is
reasonably assured. SAB 101 is effective no later than the fourth
quarter of fiscal years beginning after December 15, 1999. The Company
does not believe the impact of SAB 101 will be material to the Company's
financial statements.
2. LINE OF CREDIT
Enmax has a $2 million revolving line of credit (increased to $5 million
subsequent to December 31, 1999) with a bank to fund working capital
needs, which also includes the working capital needs of the Environmax
component. Because the Enmax accounting systems does not track cash
receipts and payments on a component operations-specific basis, no debt
or related interest expense was allocated to the Environmax operations.
3. STOCKHOLDERS' EQUITY AND NET INVESTMENT
Prior to incorporation, Enmax funded the working capital requirements of
the Company based upon a centralized cash management system. The net
investment at December 31, 1998 and 1999 includes accumulated equity as
well as any working capital funding requirements to/from Enmax.
Upon incorporation, the Company issued to Enmax 100,000 common shares
for $1,000. On March 7, 2000, the Company issued 100,710 shares of its
common stock to certain employees for $0.01 per share. Between 70% and
100% of the shares granted to employees are subject to repurchase by the
Company should any employee terminate or not execute employee and other
ancillary agreements. The Company's rights of repurchase expire on the
earlier of one year from the date of grant or the date of a public
offering of the Company's securities. The difference between the fair
value of the stock at the grant date and the exercise price of the
shares subject to repurchase will be recognized as compensation expense
in the Company's statements of operations over the period that the
repurchase rights expire. The difference between the fair value of the
shares at the grant date and the exercise price of the shares vested
upon grant was immediately expensed in the Company's statements of
operations. Fair value at the grant date was deemed to be $10 per share
based on an actual cash transaction with an unrelated party as described
in the following paragraph.
F-10
<PAGE> 66
On March 15, 2000, certain net assets consisting of property and
equipment, software and licenses related to the predecessor operations
of the Company were also transferred to the Company by its Parent at
historical cost for 13,700,000 shares of the Company's common stock. On
March 15, 2000, the Company issued 10,000 shares of its common stock at
$10.00 per share to an unrelated outside party.
On March 15, 2000, the Environmax.com, Inc. 2000 Incentive Plan ("Plan")
was adopted by the Company's board of directors. The Plan has authorized
the grant of options up to 2,210,000 shares to selected officers,
directors, or employees of the Company and selected non-employee agents,
advisors, and independent contractors with an exercise price equal to
fair market value at date of grant . The Plan allows for the grant of
incentive and nonqualified stock options, common stock, stock
appreciation rights, and cash bonuses.
The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options because, as discussed below,
the alternative fair value accounting provided for under SFAS No. 123,
"Accounting for Stock-Based Compensation," requires use of option
valuation models. Under APB 25, because the exercise price of the
Company's employee stock options equals or exceeds the fair value of the
underlying stock on the date of grant, no compensation expense was
recognized.
Disclosure of pro forma information regarding net income (loss) is
required by SFAS 123. The fair value of these options was estimated at
the date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions for 2000; risk-free interest rate
of 6.5 percent; a dividend yield of -0- percent; volatility factors of
the expected market price of the Company's common stock of .01; and a
weighted-average expected life of the option of five years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.
For purpose of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows for the five months ended June
30, 2000 (unaudited):
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED JUNE 30,
2000
(UNAUDITED)
<S> <C>
Net loss, as reported $1,364,288
Pro forma compensation expense for stock options 188,000
----------
Pro forma net loss $1,552,288
==========
Pro forma net loss per share $ 0.16
==========
</TABLE>
F-11
<PAGE> 67
Information regarding activity for stock options outstanding under the
Plans are as follows for the five months ended June 30, 2000
(unaudited):
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
---------------------------
WEIGHTED-
SHARES AVERAGE
AVAILABLE EXERCISE
FOR OPTIONS SHARES PRICE
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Outstanding at February 1, 2000 None
Authorized 2,210,000
Granted (1,042,150) 1,042,150 $10.00
Exercised
Forfeited (canceled) 25,500 (25,500) 10.00
---------- ---------- ------
Outstanding at June 30, 2000 1,193,350 1,016,650 $10.00
========== ========== ======
Options exercisable at June 30, 2000 None
==========
</TABLE>
The weighted-average contractual life for options outstanding at June
30, 2000 is approximately 4.5 years. The weighted-average fair value of
options granted during 2000 was approximately $2.80.
4. INCOME TAXES
Income tax expense consisted of the following for the five months ended
June 30, 2000 (unaudited):
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED JUNE 30,
2000
(UNAUDITED)
<S> <C>
Federal:
Current None
Deferred $(320,000)
---------
(320,000)
---------
State:
Current None
Deferred (56,000)
---------
(56,000)
---------
Valuation allowance 376,000
---------
Total None
=========
</TABLE>
F-12
<PAGE> 68
The Company's effective income tax rate differs from the federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED JUNE 30,
2000
(UNAUDITED)
<S> <C>
Income tax benefit at federal statutory rate $(464,000)
State taxes, net of federal benefit (88,000)
Increase in valuation allowance 376,000
Other, net (principally deferred compensation) 176,000
---------
Total None
=========
</TABLE>
The income tax effects of temporary differences that give rise to
significant portions of deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
JUNE 30,
2000
(UNAUDITED)
<S> <C>
Deferred tax assets:
Benefit accruals $ 37,000
Net operating loss carryforwards 340,000
---------
Total deferred tax assets 377,000
Deferred tax liabilities - depreciation on property and equipment (1,000)
Valuation allowance (376,000)
---------
Net deferred tax assets None
=========
</TABLE>
During the five months ended June 30, 2000, the valuation allowance
increased $376,000. At June 30, 2000, the Company has a net operating
loss carryforward of approximately $850,000 which begins to expire for
federal purposes in 2020 and for the state purposes in 2005.
5. LEASES
The Company leases certain furniture and equipment under capital leases.
It also leases its office facilities under long-term operating leases.
Rent expense under long-term operating leases for the period September
1, 1998 (date operations commenced) to December 31, 1998, the year ended
December 31, 1999, the six months ended June 30, 1999, the one month
ended January 31, 2000, and the five months ended June 30, 2000 was
approximately $22,000, $52,000, $26,000, $25,000, and $43,000,
respectively. The net book value of furniture and equipment under
capital leases totaled $40,847, $34,563, and $181,950 as of December 31,
1998 and 1999 and June 30, 2000, respectively.
F-13
<PAGE> 69
Future minimum lease payments under these lease agreements are as
follows as of December 31, 1999:
<TABLE>
<CAPTION>
CAPITAL OPERATING
<S> <C> <C>
Year ending December 31:
2000 $ 11,676 $ 53,199
2001 11,676 41,271
2002 11,676 2,058
2003 11,676 1,200
-------- --------
Total 46,704 $ 97,728
========
Less amount representing interest (9,584)
Less current portion (7,720)
--------
Obligations under capital leases, long-term portion $ 29,400
========
</TABLE>
6. TEAMING AGREEMENT
In 2000, Enmax and Environmax entered into a teaming agreement whereby
the two companies will team to expand Environmax's operations and
Environmax will provide services under the HMMS contracts executed with
Enmax. Enmax will pay the Company amounts as established in the HMMS
contracts plus an agreed upon fee of 2.0 percent of the contract value.
******
F-14
<PAGE> 70
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of EnvironMax.com, Inc.:
We have audited the accompanying balance sheet of EnvironMax.com, Inc.
(the "Company") (a wholly owned subsidiary of Enmax Corporation) as of February
1, 2000 (date of incorporation). This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit of the balance sheet provides a
reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of the Company as of February 1, 2000 in
conformity with accounting principles generally accepted in the United States of
America.
/s/ DELOITTE & TOUCHE LLP
-----------------------------------
Salt Lake City, Utah
April 4, 2000
F-15
<PAGE> 71
ENVIRONMAX.COM, INC.
(A WHOLLY OWNED SUBSIDIARY OF ENMAX CORPORATION)
BALANCE SHEET
FEBRUARY 1, 2000 (DATE OF INCORPORATION)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CASH $1,000
------
TOTAL ASSETS $1,000
======
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDER'S EQUITY
COMMON STOCK - $0.001 par value; 100,000,000 shares authorized;
100,000 shares issued and outstanding $100
PREFERRED STOCK - $0.001 par value; 20,000,000 shares authorized;
no shares issued and outstanding --
ADDITIONAL PAID-IN CAPITAL 900
------
TOTAL STOCKHOLDER'S EQUITY $1,000
======
</TABLE>
See notes to balance sheet.
F-16
<PAGE> 72
ENVIRONMAX.COM, INC.
(A WHOLLY OWNED SUBSIDIARY OF ENMAX CORPORATION)
NOTES TO BALANCE SHEET
AS OF FEBRUARY 1, 2000 (DATE OF INCORPORATION)
--------------------------------------------------------------------------------
1. BACKGROUND AND COMPANY DESCRIPTION
BACKGROUND - Enmax Corporation ("Enmax") is a certified small disadvantaged and
minority-owned 8(a) business, providing information technology solutions to the
government as well as prime contracts and subcontractors who provide high-tech
systems and services to the government. Effective September 1, 1998 (date
operations commenced), Enmax was awarded a $1.7 million contract from a United
States government agency to provide maintenance and technical support on a
hazardous material management system ("HMMS") software program utilized by
various government sites. The operations relating to the HMMS contract represent
a separate operating component of Enmax. In 1999, the Company obtained two
additional contracts totaling $1.5 million to provide additional HMMS support
services to the various government locations utilizing the HMMS software.
In 1999, Enmax dedicated research and development resources to the development
of a web-based hazardous material management and tracking system software
utilizing their understanding and knowledge of the HMMS software. The new
software is a web-based, business-to-business internet application service
provider (IASP) software that has the functionality of the existing HMMS
software that is accessible through the internet. Effective February 1, 2000,
EnvironMax.com, Inc. ("EnvironMax.com"), a wholly owned subsidiary of Enmax, was
incorporated as a C corporation in the State of Utah to further develop and
market the new web-based software product.
DESCRIPTION OF COMPANY - The accompanying balance sheet includes the accounts of
EnvironMax.com (the "Company"), a wholly owned subsidiary of Enmax.
EnvironMax.com is a developer and distributor of web-based, business-to-business
information technology services and products to government and commercial
enterprises that have environmental compliance and reporting requirements. The
Company also manages certain hazardous material management system (HMMS)
software program contracts of the United States government on behalf of Enmax
under a teaming agreement. The Company was initially funded on February 1, 2000.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS - The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
F-17
<PAGE> 73
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
3. SUBSEQUENT EVENTS
Effective March 1, 2000, all employees of Enmax, which provided services on the
government HMMS contracts and research on the new web-based HMMS software, were
transferred to the Company. As the contracts are not assignable, the Company
will continue to team with Enmax to provide services under these contracts.
Enmax will pay the Company an established rate, under an agreed-upon fee
schedule, for services performed on the existing HMMS contracts.
On March 7, 2000, the Company issued 97,840 shares of its common stock to
certain employees for $0.01 per share. Between 70% and 100% of the shares
granted to employees are subject to repurchase by the Company should any
employee terminate or not execute employee and other ancillary agreements. The
Company's rights of repurchase expire on the earlier of one year from the date
of grant or the date of a public offering of the Company's securities. The
difference between the fair value of the stock at the grant date and the
exercise price of the options subject to repurchase will be recognized as
compensation expense in the Company's statements of operations over the period
that the repurchase rights expire. The difference between the fair value of the
stock at the grant date and the exercise price of the options vested upon grant
was immediately expensed in the Company's statements of operations. Fair value
at the grant date was deemed to be $10 per share based on actual cash
transactions with unrelated parties.
On March 15, 2000, certain net assets consisting of property and equipment,
software and licenses related to the predecessor operations of the Company were
also transferred to the Company at historical cost for 13,700,000 shares of the
Company's common stock. In addition, on March 15, 2000 the Company issued to an
unrelated third party 10,000 shares of common stock for cash at $10.00 per
share.
On March 15, 2000, the EnvironMax.com, Inc. 2000 Incentive Plan ("Plan") was
adopted by the Company's board of directors. The Plan has authorized the grant
of options up to 2,210,000 shares to selected officers, directors, or employees
of the Company and selected non-employee agents, advisors, and independent
contractors. The Plan allows for the grant of incentive and nonqualified stock
options, common stock, stock appreciation rights, and cash bonuses. The Company
granted 889,100 options to employees of the Company on March 20, 2000 with an
exercise price of $10.00 per share. An additional 98,000 options were granted to
employees of the Company from March 21, 2000 through April 1, 2000 at $10.00 per
share.
******
F-18
<PAGE> 74
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
the Common Shares being registered. All the amounts shown are estimates except
for the registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee $ 29,400
NASD Filing Fee 7,000
National Market Listing Fee 5,000
Printing and Engraving and Expenses 5,000
Legal Fees and Expenses 125,000
Accounting Fees and Expenses 50,000
Transfer Agent and Registrar Fees and
Expenses 35,000
Web Site Licensing Fee 100,000
Web Site Promotional Fees 140,000
Miscellaneous 3,600
--------
Total $500,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation limit the personal liability of
directors and officers for monetary damages to the maximum extent permitted by
Utah law. Under Utah law, such limitations include monetary damages for any
action taken or failed to be taken as an officer or director except for (i)
amounts representing a financial benefit to which the person is not entitled,
(ii) liability for intentional infliction of harm on the Corporation or its
shareholders, (iii) unlawful distributions, or (iv) an intentional violation of
criminal law. The Articles of Incorporation also provide that the Company will
indemnify its directors and officers against any damages arising from their
actions as agents of the Company, and that the Company may similarly indemnify
its other employees and agents. The Company is also empowered under its Articles
of Incorporation to enter into indemnification agreements with its directors and
officers.
The Company's Bylaws provide that, to the full extent permitted by the
Company's Articles of Incorporation and the Utah Revised Business Corporation
Act, the Company will indemnify (and advance expenses to) the Company's
officers, directors and employees in connection with any action, suit or
proceeding (civil or criminal) to which those persons are
II-1
<PAGE> 75
made party by reason of their being a director, officer or employee). Any such
indemnification will be in addition to the advancement of expenses.
The terms of the Company's Equity Incentive Plan provide that, to the
fullest extent permitted by the Company's Articles of Incorporation and Bylaws
and by Utah law, no member of the committee which administers the plan will be
liable for any action or omission taken with respect to the plan or any options
issued thereunder. The Plan also provides that no member of the Board of
Directors will be liable for any action or determination made in good faith with
respect to the Plan or any option granted thereunder.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being sought, nor is the Company aware of any pending or threatened litigation
that may result in claims for indemnification by any director, officer, employee
or other agent.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(i) On February 1, 2000, we issued to EnMax Corporation 100,000 common
shares in exchange for $1,000.
(ii) On March 7, 2000, we issued to employees of EnvironMax.com, Inc.
and EnMax Corporation 100,710 common shares of common stock in exchange for
$978.40.
(iii) On March 15, 2000, we issued to EnMax Corporation 13,700,000
common shares in exchange for property and intellectual property rights.
(iv) On March 15, 1999, we issued and sold 10,000 common shares to Rand
& Jones at a purchase price of $10.00 per share.
(v) From March 20, 2000 through June 30, 2000, we granted options to
purchase an aggregate of 1,042,150 common shares under our 2000 Equity Incentive
Plan with a weighted average exercise price of $10.00.
No underwriters were involved in the foregoing sales of securities.
Except as noted such sales were deemed to be exempt under the Securities Act in
reliance upon Section 4(2) thereof relative to sales by an issuer not involving
any public offering, or, in the case of options to purchase common stock, Rule
701 under the Securities Act. All of the foregoing securities are deemed
restricted securities for purposes of the Securities Act.
II-2
<PAGE> 76
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C>
3.1** (i) Articles of Incorporation of EnvironMax.com, Inc.
(ii) By-laws of EnvironMax.com, Inc.
4.1** Shareholders Equity Incentive Plan, dated
5.1* Opinion regarding legality of the offering
10.1* USAF Cooperative Research and Development Agreement Between Logistics
Information Division and EnvironMax.com, Inc.
10.2+** Assignment Agreement
10.3+** License Agreement
10.4** Bill of Sale
10.5** Teaming Agreement
10.6* Website Development Contract with Inetz Media Group, Inc.
23.1 Independent auditors' consent
23.2** Consent of counsel
27** Financial data schedule
</TABLE>
* To be filed by amendment
** Previously filed
+ Application has been made to the Commission to seek confidential treatment
of certain provisions. Omitted material for which confidential treatment
has been requested will be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that:
(1) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 77
(3) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 78
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Salt Lake City, State
of Utah on the 4th day of August, 2000.
ENVIRONMAX.COM, INC.
By: /s/ Robert F. Craig
------------------------------------
Robert F. Craig
Chairman and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert F. Craig and Dean E. Hutchings,
and each of them, his attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for him in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully as to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C> <C>
/s/ Robert F. Craig Chairman and Chief Executive August 4, 2000
--------------------------------------- Officer
Robert F. Craig
/s/ Fred Nichols President and Director August 4, 2000
---------------------------------------
Fred Nichols
/s/ Dean Hutchings Chief Financial Officer August 4, 2000
---------------------------------------
Dean Hutchings
/s/ Charles M. Meredith Director August 4, 2000
---------------------------------------
Charles M. Meredith
/s/ Lynn B. Barney Director August 4, 2000
---------------------------------------
Lynn B. Barney
</TABLE>
II-5
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C>
3.1** (i) Articles of Incorporation of EnvironMax.com, Inc.
(ii) By-laws of EnvironMax.com, Inc.
4.1** Shareholders Equity Incentive Plan, dated March 15, 2000
5.1* Opinion regarding legality of the offering
10.1* USAF Cooperative Research and Development Agreement Between Logistics
Information Division and EnvironMax.com, Inc.
10.2+** Assignment Agreement
10.3+** License Agreement
10.4** Bill of Sale
10.5** Teaming Agreement
10.6* Website Development Agreement with Inetz Media Group, Inc.
23.1 Independent auditors' consent
23.2** Consent of counsel
27** Financial data schedule
</TABLE>
* To be filed by amendment
** Previously filed
+ Application has been made to the Commission to seek confidential treatment
of certain provisions. Omitted material for which confidential treatment
has been requested will be filed by amendment.
