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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 26, 2000
REGISTRATION FILE NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Enableware Technology, Inc.
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(Name of Small Business Issuer in Its Charter)
Delaware 7372 13-3999222
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(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Classification Identification No.)
Incorporation Code Number)
or Organization)
c/o Emerging Technologies, Inc., 668 North 44th Street - Suite 300,
Phoenix, Az 85008 (602) 685-1110
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(Address and Telephone Number of Principal Executive Offices)
c/o Emerging Technologies, Inc., 668 North 44Th Street - Suite 300,
Phoenix, AZ 85008
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(Address of Principal Place of Business or Intended Principal Place of Business)
Robert Ziglin, President
Enableware Technology, Inc.
c/o Emerging Technologies, Inc.
668 North 44th Street - Suite 300
Phoenix, AZ 85008
Tel: (602) 685-1110
With Copies to:
Frank J. Hariton, Esq. and Martin S. Siegel, Esq.
1065 Dobbs Ferry Road Berlack Israels & Liberman, LLP
White Plains, New York 10607 120 West 45th Street
Tel: (914) 674-4373 New York, New York 10036
Fax: (914) 693-2963 Tel: (212) 704-0100
Fax: (212) 704-0196
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(Name, Address and Telephone Number of Agent For Service)
Approximate Date of Proposed Sale to the Public as soon as is
practicable after the effective date of the Registration Statement
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. [X]
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 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 number of the earlier effective registration statement for the
same offering. [ ]
<PAGE>
If this Form is a post-effective amendment pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration 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, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Securities to Amount to be Price Aggregate Registration
be registered Registered Per Share* Offering Price* Fee**
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<S> <C> <C> <C> <C>
Units each comprised of 500,000 $ 6.20 $ 3,100,000 $818.40
one share of Common Stock,
par value $.0001 per
share, and two Common
Stock Purchase Warrants
("Warrants")
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Common Stock issuable upon 1,000,000 $7.00 $ 7,000,000 $1,848.00
exercise of Warrants
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Underwriter's Unit Options 50,000 $.0001 $ 50 $.13
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Units Comprised of one 50,000 $7.44 $ 372,000 $98.58
share of Common Stock and
two Warrants, issuable
upon exercise of
Underwriter's Unit Options
============================================================================================================================
Common Stock issuable upon 100,000 $7.00 $ 700,000 185.50
exercise of Warrants
included in Units issuable
upon exercise of
Underwriter's Unit Option
============================================================================================================================
TOTAL $11,172,550 $2,950.61
============================================================================================================================
</TABLE>
* Based on the offering price of the Units, and based upon the exercise price
of the Options and Warrants registered hereby.
** Calculated pursuant to Rule 457(h).
The registrant hereby amends this registration statement on such 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 in such date as the Commission, acting pursuant to said Section 8(a)
shall determine.
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
UNDER ITEM 501 (c) OF REGULATION S-B
ITEM AND NUMBER LOCATION IN PROSPECTUS
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<S> <C> <C>
1. Front of Registration Statement Front of Registration Statement
and Outside Front Cover of Prospectus and Outside Front Cover of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information and Risk Factors Prospectus Summary and Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price How We Determined the Offering Price
6. Dilution Dilution
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Promoters Management
and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Experts; Counsel
14. Disclosure of Commission Position Not Applicable
on Indemnification For Securities Act Liabilities
15. Organization Within Last Five Years Not Applicable
16. Description of Business Business of the Company
17. Management's Discussion and Analysis Management's Discussion and Analysis
or Plan of Operation
18. Description of Property Business of the Company - Property
19. Certain Relationships and Related Transactions. Certain Transactions
20. Market for Common Equity and Related Market for Common Equity and Related
Stockholder Matters Stockholder Matters
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements With Not applicable
Accountants on Accounting and
Financial Disclosure
</TABLE>
<PAGE>
SUBJECT TO COMPLETION DECEMBER 26, 2000
PROSPECTUS
500,000 Units
ENABLEWARE TECHNOLOGY, INC.
EACH UNIT CONSISTS OF
ONE SHARE OF COMMON STOCK
AND
TWO REDEEMABLE COMMON STOCK PURCHASE WARRANTS
OFFERING PRICE $6.20 PER UNIT
Minimum 100,000 Units
Maximum 500,000 Units
This is an initial public offering (the "Offering") by Enableware
Technology, Inc. (`we", "us" or the "Company") and we will be selling a minimum
of 100,000 Units (the "Minimum Units" or "Minimum Offering") on a best efforts
"all or none" basis and a maximum of up to 500,000 Units (the "Maximum Units" or
"Maximum Offering"). Until we have sold at least 100,000 Units, we will not
disburse the funds. We will deposit all proceeds of this offering into a
non-interest bearing escrow account. If we are unable to sell at least 100,000
Units within ___ days, we will promptly return all funds, without interest or
deduction to subscribers. The return will be effected within 10 days. The
Offering will remain open until all of the Units are sold or until __. We may
decide to cease our selling efforts at any date.
Each Unit consists of one share of our common stock (Common Stock") and
two redeemable warrants ("Warrants"). The offering price of each Unit is $6.20
with $6.00 being the payment for the Common Stock and $.10 being paid for each
Warrant. Each Warrant entitles the holder to purchase one share of our Common
Stock for $7.00 until, 2005 (five years from the date of this prospectus). The
Warrants and Common Stock will trade separately from the first day of trading
and we will not seek a trading symbol for our Units. For a more complete
description of the terms of the Common Stock, the Warrants and the Units, see
"Description of Securities".
We have retained Security Capital Trading, Inc. (the "Underwriter") to
assist us in selling the Units. No one has agreed to buy any of our Units, and
there is no assurance that any sales will be made. If 100,000 Units are sold,
neither we nor the Underwriter will refund any payments for the Units. We and
the Underwriter have the right to accept or reject any subscriptions for Units
in whole or in part.
The Underwriter will seek listing for the Common Stock and Warrants on
the Over the Counter Bulletin Board ("OTCBB"), but this might not happen. The
OTCBB is an unorganized, inter-dealer, over the counter market which provides
significantly less liquidity than Nasdaq SmallCap or Nasdaq National Market and
quotes of securities traded on the OTCBB are not listed in financial sections of
newspapers as are those for Nasdaq.
Prior to this offering there has been no public market for the trading
of our Common Stock or Warrants and it is possible that no such market will
develop or trading will not commence for a substantial period of time after the
<PAGE>
closing of this offering. We expect one or more brokers to trade our securities
and to apply for the approval of the Common Stock and the Warrants for quotation
on the Over the Counter Bulletin Board, but there is no assurance that we will
be able to secure such listing. The price of the Units and their composition has
been determined solely by the Underwriter and us, and does not bear any direct
relationship to our assets, operations, book value or other established criteria
of value.
THE PURCHASE OF THE UNITS INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. YOU SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS,"
COMMENCING ON PAGE 8, AND "DILUTION" COMMENCING ON PAGE 19.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS (1) US (2)
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<S> <C> <C> <C>
Per Unit $6.20 $.62 $5.58
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Total, Minimum Offering (3) $620,000 $62,000 $558,000
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Total, Maximum Offering (3) $3,100,000 $310,000 $2,790,000
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</TABLE>
(1) Does not include additional compensation to be received by the Underwriter.
The Company will pay Security Capital Trading a discount of 10% of the offering
price. The Underwriter will receive a non-accountable expense allowance equal to
3% of the gross sales price of the Units sold. We have paid Security Capital
Trading, Inc. $15,000 towards this non-accountable expense allowance in advance.
Security Capital Trading will receive other forms of compensation with respect
to this offering, including one option to purchase one Unit at $7.44 for each
ten Units sold in the Offering. We have also agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act of
1933, as amended, and granted the Underwriter a right of first refusal with
respect to certain future financings. See "Underwriting".
(2) Before deducting the non-accountable expense allowance to be paid by the us
to the Underwriter of $18,600 if the Minimum Units are sold and $93,000 if the
Maximum Units are sold and other expenses payable by us including legal,
accounting, printing and filing fees, estimated at $47,500.
(3) The first 100,000 Units are being offered by us on a "best efforts, all or
none" basis. We might not sell any of the Units. Pending the sale of the first
100,000 Units, all monies received from purchasers in the Offering (the
"Investors") will be placed in a non-interest bearing escrow account at
Continental Stock Transfer and Trust Company, 2 Broadway - 19th Floor, New York
New York 10004 (the "Escrow Agent"). Unless 100,000 Units are sold within 90
days from the date of this Prospectus, or a 90 day extension period which may be
applied at the option of us and the Underwriter (with an additional 10 days to
allow all funds that are received to clear), the Offering
2
<PAGE>
will terminate and all funds held by the Escrow Agent will be promptly returned
to the Investors. If the funds are returned, Investors will receive a return of
all of the money that they have invested but will not receive any interest.
During the time that their funds are held by the Escrow Agent, Investors do not
have the right to receive a return of their subscriptions. If we receive
subscriptions for 100,000 Units, the Offering will continue on a "best efforts"
basis for up to a maximum of 500,000 Units.
THE DATE OF THIS PROSPECTUS IS __.
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, UNITS
ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF THE
COMMON STOCK.
SECURITY CAPITAL TRADING, INC.
111 Broadway
New York, N.Y. 10006
Tel: (212) 406-0500
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<PAGE>
TABLE OF CONTENTS
HEADING PAGE
Where You Can Find More Information......................................... 4
Disclosure Regarding Forward Looking Statements............................. 6
Summary..................................................................... 7
Risk Factors................................................................ 8
How We Intend to Use the Proceeds of the Offering........................... 18
Capitalization.............................................................. 18
Dilution.................................................................... 19
How We Determined the Offering Price........................................ 19
Our Dividend Policy......................................................... 21
Plan of Operation........................................................... 21
Our Business................................................................ 22
Management.................................................................. 27
Executive Compensation......................................................
Principal Shareholders...................................................... 30
Certain Relationships and Related Transactions.............................. 30
Description of Securities................................................... 31
Shares Eligible for Future Sale............................................. 35
Underwriting Arrangements................................................... 36
Legal Matters............................................................... 38
Experts..................................................................... 38
Statement About Indemnification ............................................ 38
Index to Financial Statements.............................................. F-1
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission" or the "SEC") a registration statement on Form SB-2 (the
"Registration Statement"), pursuant to the Securities Act of 1933, as amended
(the "Securities Act") covering the Units offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For more information about the Units,
Warrants, Common Stock or the Company, you should read the Registration
Statement and related exhibits, annexes and schedules. The statements contained
in this Prospectus as to the contents of any contract or other document
identified as exhibits in this Prospectus are not necessarily complete, and in
each instance, reference is made to a copy of such contract or document filed as
an exhibit to the Registration Statement, each statement being qualified in any
and all respects by such reference. You may inspect and copy the Registration
Statement and related exhibits, annexes and schedules at the Commission's Public
Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549. Information
about the operation of the Public Reference Room of the Commission may be
obtained by calling the Commission at 1-800-SEC-0330. In addition, the
Commission maintains a site on the World Wide Web that contains reports, proxy
and information statements and other information regarding registrants, like we
will be after this offering, that file electronically with the Commission. The
address of the Web site is: http://www.sec.gov.
4
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AND THE WARRANTS AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL. SUCH STABILIZATION, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
A SIGNIFICANT AMOUNT OF THE UNITS TO BE SOLD IN THIS OFFERING MAY BE SOLD TO
CUSTOMERS OF THE UNDERWRITER. SINCE THE UNDERWRITER WILL NOT MAKE A MARKET IN
OUR SECURITIES, THIS MAY EFFECT THE MARKET FOR AND LIQUIDITY OF THE COMPANY'S
SECURITIES IN THE EVENT THAT ADDITIONAL BROKER-DEALERS DO NOT MAKE A MARKET IN
THE COMPANY'S SECURITIES, WHICH MAY NOT HAPPEN, IT IS POSSIBLE THAT THE MARKET
FOR YOUR COMMON STOCK AND WARRANTS COULD BECOME ILLIQUID. THIS COULD EFFECT YOUR
ABILITY TO TRADE YOUR COMMON STOCK AND WARRANTS.
5
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
EXCEPT FOR HISTORICAL FACTS THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS. ANY STATEMENTS IN THIS OFFERING DOCUMENT THAT ARE
NOT STATEMENTS OF HISTORICAL FACT MAY BE CONSIDERED TO BE FORWARD-LOOKING
STATEMENTS. WRITTEN WORDS SUCH AS "MAY", "WILL", "EXPECT", "PROJECT", "BELIEVE",
"ANTICIPATE", "ESTIMATE" OR "CONTINUE", OR OTHER VARIATIONS OF THESE OR SIMILAR
WORDS, IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE
INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY, DEPENDING ON A VARIETY OF FACTORS. POTENTIAL RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO:
o COMPETITIVE PRESSURES FROM OTHER COMPANIES OPERATING IN OUR AREAS
OF BUSINESS,
o CHANGING TECHNOLOGIES,
o THE DEVELOPMENT OF SUPERIOR SOFTWARE,
o THE LACK OF ADEQUATE CAPITAL TO FUND CONTINUING OPERATIONS,
o ACCEPTANCE OF OUR SOFTWARE AND SERVICES BY THE PROPOSED CUSTOMERS,
o GENERAL ECONOMIC CONDITIONS AND OTHER UNCERTAINTIES.
NO ASSURANCE CAN BE GIVEN THAT THE COMPANY HAS IDENTIFIED ALL OF SUCH RISKS OR
POTENTIAL RISKS.
WE DISCLAIM ANY OBLIGATION TO UPDATE ANY SUCH FACTORS OR TO PUBLICALLY
ANNOUNCE THE RESULT OF ANY REVISIONS TO ANY OF THESE FORWARD LOOKING STATEMENTS
CONTAINED IN THIS PROSPECTUS BASED ON SUBSEQUENT EVENTS OR DEVELOPMENTS.
6
<PAGE>
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SUMMARY
ALL SHARE AND PER SHARE INFORMATION IN THIS PROSPECTUS HAVE BEEN ADJUSTED TO
REFLECT A SEVEN FOR TEN REVERSE STOCK SPLIT WHICH WE EFFECTED IN OCTOBER, 2000.
Because this section of the Prospectus is only a summary, it does not
contain all the information that may be important to you. You should read the
entire Prospectus, especially "Risk Factors," beginning on Page 8, and the
Consolidated Financial Statements and Notes, before deciding to invest in our
common stock.
ABOUT US
We were formed in 1998 as a Delaware corporation and although we
conducted preliminary discussions regarding several acquisitions, we were
inactive until August, 2000 when we acquired all of the shares of our wholly
owned subsidiary, Emerging Technologies, Inc., an Arizona corporation ("our
Subsidiary" or "ETI") in exchange for 2,310,000 shares of our Common Stock.
Our business is operated by our Subsidiary. We are a software
development and services company that is developing a suite of applications
which allow organizations utilizing legacy (non-windows) mainframe computers to
enter the e-commerce marketplace which requires a familiar graphical interface
in a Windows/MacIntosh format and 24/7 access. Our management believes that many
organizations using legacy computer systems are reluctant to incur the costs of
replacing those systems, but also realize the importance of e-commerce to their
future. While our patent applied for EnableWareTM technology and software and
service offerings have potential applicability to many types of organizations,
ETI has determined to initially focus on the higher education market. ETI
believes that fulfilment of its current contracts with St. Lawrence College and
The University Systems of Maryland will give ETI specialized knowledge as to the
needs of those markets and result in a "CollegeWare" suite of applications that
can be marketed on a larger scale with the hope of becoming the dominant player
within that market. If ETI is successful in such strategy, it will attempt to
seek other markets for its EnableWareTM products and services through its own
sales and through strategic alliances. In a typical application, ETI is paid
both for the software that it delivers and for providing consulting services for
implementation.
SECURITIES OFFERED
Up to 500,000 Units, each comprised of one share of Common Stock and
two redeemable Warrants on a "best efforts, 100,000 Units or none" basis with
the remainder on a best efforts basis.
7
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<PAGE>
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CAPITALIZATION BEFORE AND AFTER THE OFFERING
The Company is authorized to issue 50,000,000 shares of Common Stock,
par value $.0001 per share, and 5,000,000 shares of Preferred Stock, par value
$.0001 per share, with such rights, privileges, limitations and preferences as
may be determined by the Company's Board of Directors. Prior to this offering
there were 6,328,000 shares outstanding and no shares of Preferred Stock were
designated or outstanding. See "Description of Securities". After the conclusion
of this offering there will be 6,828,000 shares of common stock outstanding
assuming that the maximum number of Units are sold and 6,428,000 if the minimum
number of Units are sold.
TERMS OF THE WARRANT
Each Warrant will entitle you to purchase one share of our Common Stock
for $7.00 for a period of five years commencing on the date of this prospectus.
The exercise of the Warrants will adjust in the event of stock splits,
combinations, stock dividends, recapitalizations and the like. We have the right
to redeem the Warrants for $.05 per Warrant by sending you a thirty day notice
at a time when the Common Stock has had a closing bid price of $8.40 or greater
for twenty consecutive trading days.
USE OF PROCEEDS
The Company will use the proceeds of this Offering as working capital,
principally to enable it to complete its installation contract at the University
Systems of Maryland, to hire additional personnel, to fund additional customer
projects and for an expanded marketing effort.
RISK FACTORS
Shares offered hereby are speculative, involve a high degree of risk,
and should not be purchased by anyone who can not afford to lose their entire
investment. The risks include risks common to new ventures, risks of the rapidly
changing high technology computer software - internet industry, risks regarding
the Company's financial prospects, control by management, future sales of
restricted stock and other risks. See "Risk Factors".
8
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<PAGE>
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SUMMARY FINANCIAL INFORMATION - ETI
The following table sets forth, for the periods and at the dates
indicated, selected historical consolidated financial data of ETI. The summary
information should be read in conjunction with, and is qualified in its entirety
by, "Management's Discussion and Analysis of Financial Condition and Plan of
Operations," the Consolidated Financial Statements of the Company and related
notes and the independent auditors' report included elsewhere in the Prospectus.
BALANCE SHEET DATA:
December 31, December 31, September 30,
1998 1999 2000 (unaudited)
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Current Assets $65,199 $71,978 $ 166,838
Net Property and Equipment $0 $0 $1,296
Total Assets $65,199 $71,978 $ 168,134
Current Liabilities $41,558 $39,241 $ 288,108
Stockholders' Equity (Deficit) $23,641 $32,737 $(119,974)
STATEMENT OF OPERATIONS AND RETAINED EARNINGS DATA:
FOR THE PERIODS
January 1, January 1,
January 1, January 1, 1999 to 2000 to
1998 to 1999 to September September
December December 30, 1999 30, 2000
31, 1998 31, 1999 (unaudited) (unaudited)
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Total Revenue $1,112,338 $ 328,267 $ 293,633 $ 0
Total Expenses $ 698,694 $ 319,771 $ 264,550 $ 148,089
Net Income (Loss) $ 22,718 $ 8,496 $ 22,083 $ (148,089)
Income (loss) per share
basic and diluted
based on 100,000 shares $ .23 $ .08 $ .22 $ (1.48)
9
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<PAGE>
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SUMMARY FINANCIAL INFORMATION - THE COMPANY
The following table sets forth, for the periods and at the dates
indicated, selected historical consolidated financial data of the Company. The
summary information should be read in conjunction with, and is qualified in its
entirety by, "Management's Discussion and Analysis of Financial Condition and
Plan of Operations," the Consolidated Financial Statements of the Company and
related notes and the independent auditors' report included elsewhere in the
Prospectus.
BALANCE SHEET DATA:
December 31, December 31, September 30,
1998 1999 2000 (unaudited)
--------------------------------------------------------------------------------
Total Current Assets $ 202 $ 202 $ 235,485
Goodwill $ 0 $ 0 $ 1,434,501
Total Assets $ 202 $ 202 $ 1,686,282
Total Liabilities $ 0 $ 0 $ 76,608
Stockholders' Equity $ 202 $ 202 $ 1,609,674
STATEMENT OF OPERATIONS DATA:
FOR THE PERIODS
January 1, January 1,
January 1, January 1, 1999 to 2000 to
1998 to 1999 to September September
December December 30, 1999 30, 2000
31, 1998 31, 1999 (unaudited) (unaudited)
--------------------------------------------------------------------------------
Income $ 0 $ 0 $ 0 $ 0
Expenses $ 312 $ 0 $ 0 $ 195,179
Net (loss) $ (312) $ 0 $ 0 $(195,179)
Income (loss) per share
basic and diluted $ .00 $ .00 $ .00 $ (.03)
Shares used in
per share calculation 5,140,000 5,140,000 5,140,000 5,515,000
10
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<PAGE>
RISK FACTORS
An investment in the Units offered hereby is speculative and involves a
high degree of risk, including the risk factors described below. In addition to
the other information presented in this Prospectus, each prospective investor
should carefully consider the following risk factors inherent in and affecting
our business and this Offering before making an investment decision. This
Prospectus contains certain forward-looking statements regarding our business
and prospects that are based upon numerous assumptions about future conditions,
which may ultimately prove to be inaccurate and actual events and results may
materially differ from anticipated results described in such statements. Our
ability to achieve such results is subject to certain risks and uncertainties,
such as those risks detailed in this section, and other risks detailed
throughout this Prospectus. These forward-looking statements represent
management's judgment as of the date of the filing of this Prospectus. We
disclaim, however, any intent or obligation to update these forward-looking
statements.
WE ARE A DEVELOPMENT STAGE COMPANY AND ANTICIPATE LOSSES. We are in the
development stage. Consequently, you may anticipate that our operations will be
subject to numerous problems, delays, expenses and difficulties typically
associated with the development of a new business, many of which may be beyond
our control. These include, but are not limited to, unanticipated problems and
additional costs relating to product development, marketing and competition. We
may incur operating losses until such time, if ever, that we derive regular and
substantial revenues from the sale of products. We incurred losses of ($195,179)
during the nine months ended September 30, 2000. There can be no assurance that
we will successfully complete the transition from a development stage company to
profitability or if such transition is successful, that we will be able to
maintain profitability. See "Business".
THERE IS A GREAT LIKELIHOOD THAT WE WILL REQUIRE ADDITIONAL FINANCING. If we are
successful in expanding our markets, we would be required to rapidly expand our
operations to take advantage of market opportunities. Furthermore, unforseen
difficulties may result in an increase in our expenses. In such event we will
have to raise additional capital. We can not assure you that we will be able to
raise additional financing on acceptable terms should we be required to do so
and if we can not raise additional financing, our business operations may have
to be cut back severely.
WE ARE DEPENDENT ON KEY PERSONNEL AND EMPLOYEES. The success of our business
will continue to be highly dependent upon key members of senior management. The
loss of services of one or more of such employees, particularly Mr. Robert
Ziglin, the President and Chief Executive Officer, could have a materially
adverse effect upon our business and development. Mr. Ziglin is responsible for
our operations and development. Upon the first closing of this offering we will
have a three year employment agreement with Mr. Ziglin and $1,000,000 key man
insurance on his life. We might not be able to replace Mr. Ziglin, even if we
11
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<PAGE>
had the proceeds of that policy. Our future operations will also depend in part
upon our ability to retain current employees and to attract and retain
additional qualified personnel. We might not be able to attract and retain such
personnel or, if we are able to do so, on terms deemed favorable by management.
See "Business -Employees" and "Management."
WE ARE UNCERTAIN OF THE COMMERCIAL ACCEPTANCE OF OUR PRODUCTS. Our success will
be largely dependent upon commercial acceptance of our EnableWare family of
software products and services. The market for this product and service line has
not been studied by us in any formal market research. Accordingly, demand for
our products and services and market acceptance are subject to a high level of
uncertainty. Sales of such products and services depend on a number of factors,
including the influence of market competition from products that might be
developed in the future, technological changes in the software market, our
ability to design, develop and introduce enhancements on a timely basis, the
acceptance of the software as the standard within a market niche, and our
ability to establish distribution channels. Moreover, the introduction of
competitive products may reasonably be anticipated, particularly if the demand
for EnableWare is substantial.
OUR PRODUCTS ARE SUBJECT TO OBSOLESCENCE. Software products, even those which
obtain general commercial acceptance, must be continually upgraded and modified
to match the features of competitive products, to meet the requirements of new
hardware and operating systems, to eliminate conflicts with other software or
the software will be perceived in the market as obsolete and will lose market
acceptance. While we will devote a significant portion of its resources to
product upgrades, no assurance is given that such efforts will prove successful
and that our products will be able to maintain any market share which they might
achieve.
WE CAN NOT BE CERTAIN THAT OUR PRODUCTS AND SERVICES WILL BE ACCEPTED IN NEW
MARKETS. In order for us to successfully penetrate other market areas, we will
have to expand our marketing and distribution efforts. There can be no assurance
that we will be able to successfully market our products in other areas. See
"Business - Marketing and Distribution."
WE WILL HAVE GREAT DISCRETION AS TO THE USE OF THE PROCEEDS OF THIS OFFERING.
Because a substantial portion of the proceeds of this Offering are allocated to
working capital, our management has broad discretion to apply and allocate the
proceeds. As a result of the foregoing, our success will be substantially
dependent upon the discretion and judgment of our management with respect to the
application and allocation of the net proceeds hereof See "Use of Proceeds,"
"Business" and "Management."
WE WILL NEED TO HIRE ADDITIONAL PERSONNEL. Upon the completion of this offering,
we will hire additional personnel in the area of sales and installation. In
addition we intend to hire several executive officers, including a chief
financial officer. However, the timing of these hires will be governed, in large
part, by our present management's ability to locate suitable personnel on
suitable terms. No assurance can be given that we will be successful in these
efforts.
12
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WE CAN NOT BE CERTAIN OF ANY PATENT PROTECTION. Robert Ziglin, our Subsidiary's
founder, has applied for a patent for ETI's layering software and assigned his
patent application to the Company. However, no assurance can be given that such
patent will be granted or that it will afford us meaningful protection against
claims of infringement. We also can not be certain that others will not raise a
claim that our patent infringes on a patent which they own.
WE ARE AND WILL BE SUBJECT TO INTENSE COMPETITION. We are subject to intense
competition from other companies engaged in software development and licensing
businesses. At each juncture in the development of the computer industry,
potential customers with legacy systems must decide whether to continue to
upgrade or modify the existing systems or to replace the same. In addition,
other companies may develop other software alternatives to our software programs
for enabling legacy computers to serve the needs of e-commerce. Many of these
competitors will have greater resources than we do. See "Business -
Competition."
WE MAY NOT BE ABLE TO MANAGE ANY GROWTH. If we succeed in growing, growth will
place significant burdens on our management and on our operational and other
resources. We will need to attract, train, motivate, retain and supervise our
senior managers and other employees and develop a managerial infrastructure. If
we are unable to do this, our business venture may not be successful.
SINCE WE HAVE NEVER PAID A DIVIDEND AND ARE UNLIKELY TO DO SO, YOU MAY ONLY
REALIZE A PROFIT ON YOUR INVESTMENT IN THE COMPANY THROUGH A MARKET RISE IN OUR
SECURITIES. We have never paid, and have no intentions in the foreseeable future
to pay, any dividends on our common stock. Therefore, if you purchase any Units
in this offering, in all likelihood, you will only realize a profit on your
investment if the market price of our Common Stock or Warrants. See "Dividend
Policy."
YOUR WARRANTS ARE REDEEMABLE AND THIS MAY IMPACT YOU. We may redeem the Warrants
in certain circumstances. Our exercise of this right would force a holder of the
Warrants to exercise the Warrants and pay the exercise price at a time when it
may be disadvantageous for the holder to do so, to sell the Warrants at the then
current market price when the holder might otherwise wish to hold the Warrants
for possible additional appreciation or to accept the redemption price, which is
$.05. Holders who do not exercise their Warrants prior to redemption will
forfeit their right to purchase the shares of Common Stock underlying the
Warrants. The foregoing notwithstanding, we may not redeem the Warrants at any
time that a current registration statement under the Act is not then in effect.
See "Description of Securities - Redeemable Warrants."
WE WILL GRANT UNDERWRITER'S OPTIONS WHICH MAY IMPACT YOU. In connection with the
Offering, we will issue up to 50,000 Underwriter's Options each to purchase a
Unit for $7.44. To the extent that the Underwriter's Options and the Warrants
issuable on their exercise are exercised, they would have a dilutive effect on
the percentage of outstanding shares of Common Stock owned by persons investing
in this Offering. The exercise of the Underwriter's Options is likely to occur
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at a time when we could probably obtain additional equity capital on terms more
favorable than those provided by the Underwriter's Options. See "Underwriting."
WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
AFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF OUR COMMON STOCK. Our
board of directors is authorized by our articles of incorporation to issue
shares of preferred stock without the consent of our shareholders. Our preferred
stock, when issued, may rank senior to common stock with respect to voting
rights, payment of dividends and amounts received by shareholders upon
liquidation, dissolution or winding up. Such preferences will be set by our
board of directors. The issuance of such preferred shares and the preferences
given the preferred shares, do not need the approval of our shareholders. The
existence of rights which are senior to common stock may reduce the price of our
common shares. We do not have any plans to issue any shares of preferred stock
at this time. See "Description of Securities".
WE ARE CONTROLLED BY OUR MANAGEMENT AND PURCHASERS IN THIS OFFERING WILL HAVE NO
CONTROL OVER OUR AFFAIRS. Robert Ziglin, one of our founders, owns 2,825,200
shares, or 44.6%, of the Company's outstanding common stock and our management,
as a group owns 3,021,200 shares or 47.7% of the outstanding Common Stock. After
the maximum offering our management, as a group, will own 44.2% of the
outstanding stock and will probably be in a position to elect all of the members
of our Board of Directors and control Our affairs. See "Principal Shareholders".
PENNY STOCK REGULATIONS MAY EFFECT THE VALUE OF YOUR UNITS. The U.S. Securities
and Exchange Commission (the "Commission") recently adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document prepared by the Commission that provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
sales person in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and sales person compensation
information, must be given to the customer orally or in writing before or with
the customer's confirmation. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from such rules the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. Although the Offering's price of
our Common Stock has been set at $6.00, a stock price above $5.00 might not be
maintained in any trading market that might develop. If the price of the Common
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Stock drops below $5.00 it would be subject to the penny stock rules and
investors in this Offering may find it more difficult to sell their Common Stock
until the Company's Common Stock trades on the Nasdaq and/or sells at a price
greater than $5.00 per share.
THE OFFERING PRICE AND STRUCTURE OF THE UNITS WAS ARBITRARILY DETERMINED. The
price of the Units and the terms of the Warrants have been determined by us and
the Underwriter. In determining the Offering Price, we have considered such
matters as our financial condition, estimates of our business potential, the
early stage of development of our business the general condition of the
securities market and the application of the "penny stock" rules. The Offering
Price of the Units should not, however, be considered an indication of the
actual value of the Company or its securities. The Offering Price of the Units
does not bear any relationship to the assets, net worth, results of operations,
or other objective criteria of value applicable to us. Moreover, the Offering
Price of the Units should not be viewed as any indication of the future value of
the Units.
YOU WILL SUFFER DILUTION WHEN YOU PURCHASE THE UNITS AND YOU MAY SUFFER MORE
DILUTION IN THE FUTURE. This Offering involves immediate substantial dilution
from the Offering Price. Subsequent to this Offering, the net tangible book
value of the Common Stock included in the Units offered hereby will be
substantially less than the price at which you will purchase the Units. The net
tangible book value of our shares (as at September 30, 2000) as adjusted for the
sale of the Minimum Units will be $650,777 or $0.10 per share. Accordingly,
purchasers of Units will sustain an immediate substantial dilution of their
investment of $5.90 per share included in the Unit if the Minimum Units are
sold. The net tangible book value of our shares (as at September 30, 2000) as
adjusted for the sale of the Maximum Units will be $2,808,377 or $0.41 per
share. Accordingly, purchasers of Units will sustain an immediate substantial
dilution of their investment of $5.59 per share included in the Unit if the
Maximum Units are sold.
OUR OUTSTANDING COMMON STOCK MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
SHARES, WARRANTS AND UNITS WHICH YOU ARE BUYING. We have 6,328,000 shares of our
common stock presently issued and outstanding which will not be sold in this
Offering. We cannot predict the effect, if any, that sales of these outstanding
shares or the availability of those shares for sale, will have on the market
prices of our common stock. These shares were all acquired at prices of $.50 or
less. All of these shares will become eligible for sale pursuant to Rule 144
under the Act at various times before September 1, 2001. While each of our
present shareholders has agreed that without the Underwriter's consent they will
not sell any of their shares until twelve months after the first closing
hereunder and while each of those persons has further agreed to sell no more
than 50% of their holdings prior to eighteen months from the first closing date
without the consent of the Underwriter, it is impossible to predict the effect
of these sales on any market that may develop.
NO TRADING MARKET MAY EVER DEVELOP FOR OUR COMMON STOCK AND WARRANTS AND ANY
MARKET THAT DOES DEVELOP MAY BE SPORADIC OR VOLATILE. Prior to this Offering
there is no trading market for our Common Stock or Warrants. Although we intend
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to seek inclusion of the Common Stock and the Warrants on the OTCBB, we might
not successfully accomplish this. Even if the Common Stock and the Warrants
trade on the OTCBB, a regular trading market may not develop and, if such market
does develop, it may not be sustained. The OTCBB is an unorganized, inter-dealer
over-the-counter market which provides significantly less liquidity than either
Nasdaq SmallCap or the Nasdaq National Market and quotes for securities traded
on the OTCBB do not appear in the financial sections of newspapers. Therefore
prices for securities traded on the OTCBB may be more difficult to obtain than
securities included in Nasdaq. Furthermore, it is unlikely that lending
institutions will be willing to accept the Common Stock or Warrants as
collateral for loans, even if a trading market does develop. See "Shares
Eligible for Future Sale" on Page 35.
WE MAY ISSUE A SUBSTANTIAL AMOUNTS OF ADDITIONAL SHARES WITHOUT SHAREHOLDER
APPROVAL. After this Offering, and assuming a sale of the maximum number of
Units in the Offering, we will have an aggregate of approximately 42,000,000
shares of Common Stock authorized but unissued and not reserved for specific
purposes. All of such shares may be issued without any action or approval by our
shareholders. Although there are no other present plans, agreements,
commitments, or undertakings by us with respect to the issuance of additional
shares, or securities convertible into shares, any shares issued would further
dilute the percentage ownership of the Company held by the purchasers in this
Offering. We have agreed that, with certain limited exceptions for stock options
to employees and consultants, we will not issue additional shares of our common
or preferred stock for a period of 24 months from the date of this prospectus
without the consent of the Underwriter. See "Description of Securities" on page
31.
IT WILL BE NECESSARY FOR US TO UPDATE THIS REGISTRATION STATEMENT. So long as
the Warrants or Option Units are exercisable, or in the event that we elect to
reduce the exercise price or exercise period of the Warrants, we will be
required to file one or more Post-Effective Amendments to its Registration
Statement to update the general and financial information contained in this
Prospectus. These obligations could result in substantial expense to us and
could be a hindrance to any future financing. Warrants may not be exercised
after _______ 2001 (nine months from the date of this Prospectus), unless and
until a Post-Effective Amendment has been filed and becomes effective. We will
notify our transfer agent and all Warrant holders if Warrants may not be
exercised due to the absence of an effective Post-Effective Amendment. Although
we have undertaken and intend to keep this Registration Statement current, we
might not keep this Registration Statement current, and, if for any reason we do
not do so, the Warrants will not be exercisable.
THE UNDERWRITER WILL NOT ACT AS A MARKET MAKER. A significant amount of the
Units which are to be sold in this Offering may be sold to customers of the
Underwriter. The Underwriter does not act as market maker in any securities and
will not be making a market in our securities. Broker/dealers other than the
Underwriter might not make a market in our securities. In the event that other
broker/dealers fail to make a market in our securities, the possibility exists
that the market for and the liquidity of your Common Stock and Warrants could be
severely adversely affected. This, in turn, could affect your ability to trade
your Common Stock and your Warrants.
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A CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION WILL BE REQUIRED TO
EXERCISE YOUR WARRANTS. We intend to qualify the sale of the Units in a limited
number of states, although certain exemptions under certain state securities
("blue sky") laws may permit the Warrants to be transferred to purchasers in
states other than those in which the Warrants were initially qualified. Although
the Units will not knowingly be sold to purchasers in jurisdictions in which
they are not registered or otherwise qualified for sale, purchasers may buy
Common Stock or Warrants in the aftermarket or may move to jurisdictions in
which the shares of Common Stock issuable upon exercise of the Warrants are not
so registered or qualified during the period that the Warrants are exercisable.
We may decide not to seek, or may not be able to obtain qualification of the
issuance of such Common Stock in all of the states in which the ultimate
purchasers of the Warrants reside. In this event, we would be unable to issue
shares of Common Stock to those persons desiring to exercise their Warrants. We
might not be able to effect any required registration or qualification of the
Common Stock in any jurisdiction. See "Description of Securities - Warrants."
BEST EFFORTS OFFERING; ESCROW OF INVESTOR'S FUNDS. This Offering is being made
on a "best efforts, all-or-none" basis with respect to the first 100,000 Units.
All or none of them will be sold. The remaining 400,000 Units offered will be
made on a "best efforts" basis. Since this Offering is being made on a "best
efforts" basis, there can be no assurance that any of the Units will be sold.
Under the terms of this Offering, the Underwriter is offering the Units for a
period of 90 days which may be extended up to an additional 90 days. Pending the
sale of 100,000 Units, all proceeds will be held in an escrow account. No
commitment exists by anyone to purchase all or any of the Units offered hereby.
Consequently, subscribers' funds may be escrowed for as long as 180 days and
then returned without interest thereon or deduction therefrom in the event
100,000 Units are not sold within the offering period. Investors, therefore,
will not have the use of any subscription funds during the subscription period.
See "Underwriting."
CERTAIN ANTI-TAKEOVER PROVISIONS. The ability of the Board of Directors to issue
shares of preferred stock in one or more series and to determine the
designation, voting and other rights, preferences, privileges and restrictions
applicable to such shares, and applicable provisions of Delaware law may have
the effect of discouraging a merger, tender offer, proxy contest or other
transaction involving a change in control of the Company that has not received
the prior approval of a majority of our Board of Directors. See "Description of
Securities".
FOR ALL OF THE FOREGOING REASONS AND OTHERS SET FORTH IN THIS PROSPECTUS, THE
SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD BE PURCHASED
ONLY BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN US.
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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING
We presently anticipate the net proceeds from the sale of the Units
after payment of commissions and expenses will amount to $ 491,900 if the
minimum of 100,000 Units are sold and $ 2,649,500 if all 500,000 Units are sold.
We currently intend to use the net proceeds as follows:
In the event the minimum number of Units are sold:
o $ 330,000 for product sales, marketing and promotion;
o $ 70,000 for equipment;
o $ 50,000 for product enhancements;
o $ 20,000 for our office lease and leasehold improvements; and
o $ 21,900 for working capital
In the event all of the Units are sold:
o $ 1,270,000 for product sales, marketing and promotion;
o $ 500,000 for product enhancements and development;
o $ 340,000 for equipment;
o $ 110,000 for our office lease and leasehold improvements; and
o $ 429,500 for working capital
Pending any such uses of the proceeds of this offering, we will invest
the net proceeds of this offering in short-term, investment grade,
interest-bearing instruments. We believe that the net proceeds from the offering
together with funds generated from operations, will meet our anticipated capital
funding needs for at least the next 18 months.
CAPITALIZATION
The following table presents Our capitalization at of September 30, 2000, and as
adjusted: (i) to give effect to the sale of maximum of 500,000 Units in this
offering and the application of the estimated net proceeds of approximately
$2,649,500 and (ii) to give effect to the sale of the minimum of 100,000 Units
in this offering and to the application of the estimated net proceeds of
approximately $491,900.
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<TABLE>
<CAPTION>
September 30, 2000 As Adjusted As Adjusted
Actual Maximum Offering Minimum Offering
------------------ ---------------- ----------------
<S> <C> <C> <C>
Shareholders' equity:
Common stock, $0.0001 par value,
50,000,000 shares authorized;
6,328,000 shares (actual),
6,828,000 shares (as adjusted
maximum); 6,428,000 shares (as
adjusted minimum)
issued and outstanding $ 904 $ 954 $ 914
Additional paid-in capital $ 1,804,261 $ 4,453,711 $ 2,296,151
Retained Earnings (Deficit) $ (195,491) $ (195,491) $ (195,491)
Total shareholders' equity
and capitalization $ 1,609,674 $ 4,259,174 $ 2,101,574
</TABLE>
DETERMINATION OF OFFERING PRICE
We and the Underwriter have arbitrarily determined the initial $6.00
offering price of the shares of Common Stock, a $.10 offering price for each of
the two Warrants in the Units, a $6.20 offering price for the Units and a $7.00
exercise price for the Warrants. The offering price and the terms of the
Warrants is not based on the general condition of the equities market or the
valuations of other companies in our market segment.
DILUTION
Dilution is the difference between the $6.00 purchase price you will
pay for a share and the net tangible book value of that share immediately after
you purchase it. In the event of a maximum offering you will experience an
immediate and substantial dilution of $5.59 out of the $6.00 you pay for a
share, because the net tangible book value of your shares will immediately be
reduced to $0.41. In the event of a minimum offering you will experience an
immediate and substantial dilution of $5.90 out of the $6.00 you pay for a
share, because the net tangible book value of your shares will immediately be
reduced to $0.10. In making these calculations, we have attributed $0.10 to each
of the two Warrants in the Units.
Our net tangible book value at September 30, 2000, is $158,877 or $0.03
per share of common stock. Net tangible book value per share represents the
amount of total tangible assets less liabilities, divided by 6,328,000, the
number of shares of common stock outstanding at September 30, 2000. See
"Description of Capital Stock." After giving effect to the sale of the minimum
of 100,000 Units, the as adjusted net tangible book value at September 30, 2000,
would be $650,777 or $0.10 per share. This represents an immediate increase in
net tangible book value of $0.07 per share to the existing shareholders and an
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immediate and substantial dilution of $5.90 per share to new investors. After
giving effect to the sale of the maximum of 500,000 Units, the as adjusted net
tangible book value at September 30, 2000, would be $2,808,377 or $0.41 per
share. This represents an immediate increase in net tangible book value of $0.38
per share to the existing shareholders and an immediate and substantial dilution
of $5.59 per share to new investors. The following table illustrates this per
share dilution:
Public offering price per share of common stock being offered $6.00
Net tangible book value per share - initial $0.03
Increase attributable to new investors (Minimum Shares) $0.07
Adjusted net tangible book value after offering (Minimum Shares) $0.10
Dilution per share to new investors (Minimum Shares) $5.90
Dilution as a percentage of offering price (Minimum Shares) 98%
Increase attributable to new investors (Maximum Shares) $0.38
Adjusted net tangible book value after offering (Maximum Shares) $0.41
Dilution per share to new investors (Maximum Shares) $5.59
Dilution as a percentage of offering price (Maximum Shares) 93%
The following tables summarize the relative investments of investors
pursuant to this offering and our current shareholders, based on a per share
offering price of $6.00 before deduction of offering expenses, and assuming the
sale of the minimum of 100,000 Units and the maximum of 500,000 Units.
Shares Total Average Price
purchased Consideration Per Share
Number % Amount %
Existing
Shareholders (1) 6,328,000 92.7% $1,805.165 75% $.29
New Investors
Minimum Shares 100,000 1.6% $ 600,000 25% $6.00
Total (1) 6,428,000 100.0% $2,405,165 100.0% $0.37
Existing
Shareholders (1) 6,328,000 98.4% $1,805,165 37.5% $.29
New Investors
Maximum Shares 500,000 7.3% $3,000,000 62.5% $6.00
Total (1) 6,828,000 100.0% $4,805,165 100.0% $0.70
(1) The foregoing table does not give effect to the exercise of any of the
Warrants, the Underwriter's Unit Option or any options issued or which may
be issued under our stock option plan.
You should note that in preparing the above tables, we have allocated
$.20 of the purchase price of the Units to the Warrants.
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DIVIDEND POLICY
We have not paid, and have no current plans to pay, dividends on our
common stock. Even if we were to elect to pay any dividends, we may incur
indebtedness in the future, the terms of which may prohibit or effectively
restrict dividend payments.
OVERVIEW AND PLAN OF OPERATIONS
Our Subsidiary (Emerging Technologies, Inc., an Arizona corporation)
was formed in August 1994 and is in the early stage of development. We are
engaged in software development, marketing, installation and service. We expect
to add value to our customers operations by allowing them to engage in
e-commerce without the expenditure of replacing their entire computer system.
Our goal is to identify target industry niches and to establish Our reputation
therein as providing a cost effective and viable solution for our customers
e-commerce needs. Our initial market is the higher education market and we are
fulfilling contractual obligations to the University Systems of Maryland and St.
Lawrence College. We will seek to obtain other contracts in the higher education
market based upon our performance under our initial contracts. We are also
engaged in preliminary discussions to provide software in a limited number of
other industries which we believe can benefit from our expertise, but our
overall plan is to limit the market niches which we enter. We hope that we will
be aided in this effort if our patent application is allowed and a patent is
granted to us.
We do not have any meaningful revenues, and will not generate any
meaningful revenues until after we implement our strategic plan and attract and
retain a significant number customers. We do not anticipate generating any
meaningful revenue until at least several months following the consummation of
this offering, if at all. Our previous revenues were from consulting fees that
were materially different from the fees We anticipate earning in the future.
Accordingly, a comparison of the quarter ended September 30, 2000 to the period
from the Company's formation in August 1994 through September 30, 1999 is not
meaningful.
Depending upon the level of our business activity, we anticipate that
we will use a portion of the proceeds of this offering to hire several
additional employees over the next twelve months to market our services to
potential customers, we are continually reviewing and considering e-commerce and
other related enterprises and ventures, but have not made any commitments at
this stage. At this time, there are no plans, proposals, arrangements or
understandings for the acquisition of other companies.
We have generated losses from our inception and anticipate that we will
continue to incur significant losses until, at the earliest, we generate
sufficient revenues to offset the substantial up-front expenditures and
operating costs associated with establishing, attracting and retaining a
significant business base. From January 1, 2000 to September 30, 2000 our net
loss was $(165,179) and ETI incurred losses of $(148,089) during that period.
There can be no assurance that we will be able to enter into a sufficient number
of software sales and service contracts to generate meaningful revenues or
achieve profitable operations.
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OUR BUSINESS
INTRODUCTION
Enableware Technology, Inc. a Delaware corporation (the "Company"), was
formed in March 1998 under the name Health Product Development, Inc., changed
its name to Internet Brandsmall, Inc. in January, 1999 and changed its name to
its present name in October, 2000. In June 2000, the Company entered into an
acquisition agreement (the "Acquisition Agreement") with Emerging Technologies,
Inc., an Arizona corporation ("ETI" or "our Subsidiary"), which provided, among
other things, that upon the completion of a private offering, which resulted in
net proceeds of approximately $294,000, we would acquire 100% of the issued and
outstanding shares of ETI in exchange for 2,310,000 shares of our common stock.
At that point ETI became a wholly owned subsidiary of the Company. Our business
is the business of our Subsidiary.
Our Subsidiary is a software development and services company that is
developing a suite of applications which allow organizations utilizing legacy
(non-windows) mainframe computers to enter the e-commerce marketplace which
requires a familiar graphical interface in a Windows/MacIntosh format and 24/7
access. Our management believes that many organizations using legacy systems are
reluctant to incur the costs of replacing those systems, but also realize the
importance of e-commerce to their future. While our patented EnableWareTM
technology and software and service offerings have potential applicability to
many types of organizations, we have determined to initially focus on the higher
education market. We believe that fulfilment of our current contracts with St.
Lawrence College and The University Systems of Maryland will give us specialized
knowledge as to the needs of customers in those markets. We believe that this
knowledge will result in a CollegeWare suite of applications that can be
marketed on a larger scale with the hope of becoming the dominant player within
that market. If we are successful in such strategy, we will attempt to seek
other markets for Our EnableWareTM software and services and to realize revenues
from its own sales and through strategic alliances. In a typical application, we
are paid both for the software delivered and for providing consulting services
for its implementation.
INDUSTRY OVERVIEW
We believe that many companies and organizations in all industries
around the world face the strategic imperative of re-creating themselves into
entities engaged in electronic commerce in order not to lose out to the
competition. By augmenting or even replacing their traditional distribution,
supply chain, customer-service and employee-service channels with around the
clock Internet-based channels, these organizations must seek to build new
revenue streams and gain competitive advantage. We believe that first generation
of e-commerce consisted primarily of basic web sites offering product
information for marketing purposes. These have largely been replaced by sites
enabling and creating value-added relationships with suppliers and distributors
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and offering differentiated, unique and accurate online information and
transaction services to customers. By extending and/or streamlining core
business processes over the Internet and integrating both new and legacy
information system with suppliers, distributors, customers and employees,
companies seek to achieve significant competitive advantage, increased customer
satisfaction, new sources of revenues and simply improve efficiency. This next
generation of e-commerce, often referred to as e-business, is transforming the
way business is done and has given rise to the "Internet economy."
With the evolution of the Internet as a primary means of conducting
business, both in business-to-business and business-to-consumer markets,
competitive pressures have driven new and more sophisticated forms of e-commerce
to emerge. In the Internet economy, also referred to as the "Global Connected
Economy" companies find it increasingly difficult to differentiate their
offerings on the basis of products, service, price, location or time. As a
result, vendors must deliver comprehensive business services and information to
offer enhanced value to their suppliers, distributors and customers. In
particular, companies seek to participate in two complementary e-business
channels, e-business portals and e-marketplaces as distinct ways to capitalize
on the Internet, expand their businesses and protect their revenue
opportunities. These channels are complementary since many vendors will create
e-business portals to directly sell their own goods and services in addition to
offering those goods and services through participation in an e-marketplace.
E-BUSINESS PORTALS. An e-business portal is an online destination web site where
vendors create value-added relationships with their suppliers, distributors and
customers by offering an expanded set of information and services. For example,
a business-to-consumer, travel-oriented e-business portal enables visitors to
gain information about all aspects of the travel experience, including airfare
and hotel availability, cultural activities, Weather and current events, and
then purchase all of the goods and services for a particular trip without having
to leave the portal at any point in the process.
E-MARKETPLACES. An e-marketplace is a comprehensive trading hub designed to
efficiently manage transactions and services among multiple buyers and sellers.
For example, a business-to-business e-marketplace acts as an intermediary to
enable businesses to interact with potentially thousands of discrete vendors,
compare parts, prices and configurations among those vendors, and then purchase
all of the goods and services from one or several vendors without having to
leave the e-marketplace at any point in the process.
The Internet economy is poised for rapid growth across both
business-to-business and business-to-consumer markets. According to Forester
Research, the volume of business-to-business e-commerce transacted through
e-business portals, e-marketplaces and other e-business offerings will grow from
$43 billion in 1998 to $1.3 trillion in 2003.
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THE LEGACY COMPUTER SEGMENT
There are many demands placed on the infrastructure of e-business
portals and e-marketplaces. Companies deploying e-business portals and
e-marketplaces must be able to offer a broad range of dynamic information and
services from a large, diverse set of information systems and trading partners,
and do so faster than their competitors. Compounding this challenge is the fact
that these e-business relationships require agility in terms of flexible,
adaptable connections that accommodate rapid change. No single standard can be
imposed on all suppliers of information and services offered by e-business
portals and e-marketplaces. Organizations with legacy computers, frequently turn
them off at fixed hours every day. The computer is accessed through a monochrome
terminal. E-commerce requires 24 hour a day - seven day a week (24/7) access and
more graphical interfaces. In their present configuration, these computers (and
hence these organizations) are ill equipped to enter e-commerce.
To successfully address these business requirements, e-business portals
and e-marketplaces must meet complicated technical requirements. Key technical
requirements include:
AGGREGATION - capturing and transforming diverse information from a broad range
of sources and in multiple formats;
EXCHANGE - enabling the exchange of business documents. including product or
service pricing availability, purchase orders and invoices, for secure,
real-time and around the clock business process automation;
INTEGRATION - integrating e-business portals and e-marketplaces with operational
systems to synchronize and automate services and transactions;
REUSABILITY - being able to leverage and extend the existing critical business
application logic, quickly and inexpensively;
MORPHING - integrating and transforming the existing infrastructure, to
e-business infrastructure;
Given these requirements, e-business portals and e-marketplaces face
significant challenges in effectively expanding their businesses to fully
capitalize on the opportunities created by the Internet. Existing approaches for
addressing these challenges are limited. The limitations are compounded by the
fact that industry estimates claim $2 trillion worth of legacy mainframe
applications are still locked away on older mainframe infrastructures and not
readily available for Internet access. Those applications account for 70% of the
world's critical business logic and associated cryptic data. The most common
approaches consist of manual, custom systems. This may be adequate initially for
a daily 9 to 5 type operation, but tend to break down as the e-business portals
and e-marketplaces expand to provide additional services and information around
the clock, from an ever-increasing number of suppliers, distributors and
customers. Another approach is to replace the current mainframe applications
with an Enterprise Resource Planning (ERP) application; an approach that the
market is substantially rejecting due to lengthy implementation cycles and
functionality losses. Many of these custom and replacement approaches
incorporate single-function products that address particular infrastructure
needs, but do not offer a comprehensive solution that spans each of the
important requirements. These approaches often lack:
- speed of deployment; or time-to-market;
- ability to accommodate growth to thousands of users;
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- ease of adaptability to end-users;
- ability to accommodate rapid change;
- reliability on standards; and
- comprehensiveness to meet the demands of a broad range of e-business
relationships and interactions.
As a result, there is a need for e-business infrastructure applications
that provide a comprehensive solution for e-business portals and e-marketplaces.
This solution must be open, expandable to many concurrent users, and adaptable
to enable the rapid aggregation, exchange, integration, business logic
evolution, morphing and access to dynamic information and services from a broad
range of suppliers, distributors and customers.
We have developed a comprehensive suite of applications with full
implementation services designed to enable companies to rapidly deploy and
easily migrate to e-business portals and e-marketplaces. We seek to address the
unique challenges faced by both current and new e-business portals and
e-marketplaces in both business-to-business and business-to-consumer e-commerce.
Our product suite covers each of the key infrastructure requirements:
aggregation and transformation of diverse content and information; automation of
critical business-to-business transactions; integration with operational
systems; and reusability and morphing for smooth transition to e-business.
Our software ("EnableWareTM") is intended to enable its clients with
legacy mainframe computers to be able to transition to e-business without
replacing those computers because it will enable them to:
ACHIEVE RAPID TIME-TO-MARKET. EnableWareTM customers can rapidly deploy
e-business portals and e-marketplaces. EnableWareTM is a comprehensive
application suite that eliminates the need for months of custom programming and
complete legacy application replacements, and that reduces the customer's
reliance on complex system integration and lengthy implementation.
ENGAGE AND RETAIN CUSTOMERS. By automating the aggregation of a wide variety of
rich, relevant and timely information and services, EnableWareTM allows
e-business portals and e-marketplaces to transform their disparate information
sources and Web sites into a highly convenient destination for their clients. In
addition to aggregating diverse information, EnableWareTM offers our clients a
robust product for enhancing their operational systems to keep the information
current, synchronized and available around the clock.
INCREASE REVENUES AND MARKET SHARE. EnableWareTM is designed to allow customers
to create superior Internet revenue channels through the rapid delivery of high
quality information and services, and through achieving efficient interactions
around the clock with suppliers, distributors, employees and other business
affiliates. These superior Internet revenue channels, coupled with high
efficiency, may in turn drive market share expansion for our customers as they
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are able to enhance their competitive positions and extend their market.
ENABLE EXPANDABLE AND AGILE E-BUSINESS. EnableWareTM allows our customers to be
more agile in responding to the rapid pace of change associated with the
Internet economy. By delivering an easy-to-use and highly flexible product
suite, we provide our customers with the ability to handle a broad range of
rapidly changing and expanding business requirements. Our solutions are capable
of growing and supporting thousands of users, flexible to accommodate rapidly
changing requirements and industry standards, and adaptable to manage disparate
systems and ways of doing business.
INITIAL MARKETING STRATEGY
Our objective is to become an industry recognized provider of
comprehensive e-business infrastructure solutions that enable the creation of,
and migration from legacy systems to e-business portals and e-marketplaces. We
realize that the Company's limited resources will require that it adopt a
directed approach to be effective. We intend to leverage the experience we have
gained from our contracts with St. Lawrence College and the University Systems
of Maryland to become the recognized provider for offering this type of software
to colleges and universities with legacy computers to enable them to enter the
world of e-commerce in an effective manner. The experience at the University
Systems of Maryland has led to relationships with industry leaders in the legacy
computer arena. We are working at the University Systems of Maryland under a
contract with Oracle, an industry leader. In addition, we have developed a group
of applications especially suited to the needs of institutions of higher
learning called CollegeWare. We are devoting our initial marketing effort to
becoming a recognized provider to the higher education niche. We believe that
the niche is sufficiently large to provide a base for further expansion into
other markets at a later date. In this connection, we are developing
enhancements to EnableWareTM to create a software suite to be called CollegeWare
that should have special value to colleges and universities. For example, today
students expect to be able to view course catalogs, plan their schedules, and
register for courses (or drop and add courses) and pay for tuition on line. This
is an area of e-commerce unique to higher education. CollegeWare will allow
colleges with legacy computers to offer these services to students.
SOURCES OF REVENUES
We intend to realize revenue from product licenses, installation fees
and service fees. The list price (product license fee) of each EnableWareTM or
CollegeWare product starts at $75,000. Installation fees typically range from
$100,000 to $400,000. Annual service fees will vary based upon the size and
complexity of the operation and economic conditions, but are anticipated to be
about 18% of the product license fee.
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PATENT APPLICATION AND PRODUCT PROTECTION
Robert Ziglin, the principal of ETI, has applied for a patent for the
interfacing programs that are the basis of EnableWareTM and CollegeWare. Mr.
Ziglin has assigned these rights to the Company. In addition ETI relies on
non-disclosure and non-competition agreements, as appropriate, to protect its
proprietary information. The grant of a patent may or may not afford us
protection against actions of competitors and may or may not afford us
protection in the event that claims are raised by third parties that our patent
infringes on their intellectual property.
COMPETITION
We have limited resources and will face competition from entities with
much greater resources and established name recognition. The Company will seek
to compete on price and service as well as by establishing strategic alliances
with established companies in our field. We are currently seeking to establish
relationships with Oracle Corporation, RSmart, Inc. and others, but may not be
successful in these efforts. We have also entered into a provider contract with
IBM which we hope will develop into a strategic relationship.
PROPERTIES
We lease an office of approximately 120 square feet within a
professional office suite pursuant to a lease expiring December 31, 2000 at a
base rental of $434 per month. We believe that, should it be required to do so
at the expiration of the lease term, it will be able to locate suitable
alternative space in the area of its present office.
EMPLOYEES
We currently employ 5 people, 3 in management and administration, 1 in
sales and 1 in installation. None of our employees are subject to a collective
bargaining agreement and the Company believes that its relations with its
employees are satisfactory.
MANAGEMENT
Our current officers and directors are as follows:
NAME AGE POSITION
Robert Ziglin 35 CEO, Chairman of the Board
James Cox 52 Executive Vice President and a Director
Frank J. Hariton 52 Secretary and a Director
DIRECTORS AND OFFICERS
ROBERT ZIGLIN was elected an officer and director of the Company in
August 2000. He started his career in 1986 with Management Science America Inc.
He was responsible for management and development of business software
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applications running on multiple hardware platforms and databases. After a
merger in 1990 with McCormick & Dodge to create the world's largest Software
Company, Dun & Bradstreet Software Services, Inc. (DBSS), he, along with the
President of his division at DBSS, started The Robinson Group (TRG) in Phoenix,
Arizona. Mr. Ziglin was responsible for the creation, management and
implementation of TRG's most successful product line. The products provided
client/server based information access to large mainframe and midrange systems.
In 1994, TRG was acquired. Shortly thereafter, Mr. Ziglin left TRG and founded
ETI.
JAMES COX was elected an officer and director of the Company in August,
2000. He has been a director of ETI, which he joined in 1998. Mr. Cox attended
the University of Phoenix for his undergraduate BSBM studies in business
management. A native of Illinois, he began his data processing career in Chicago
as an Actuarial Programmer at Central States, Southeast and SouthWest Areas,
Health, Welfare and Pension Fund. Later, he made a career change to work as a
Project Leader for Motorola's Corporate Human Resources Information Systems
(HRIS) organization in Schaumburg, IL. In 1987 he transferred to Motorola's
Semiconductor Products Sector headquarters in Phoenix, AZ. As Manager of its
global HRIS organization, his responsibilities included defining the strategies
and execution plans for achieving worldwide HR systems integration. He served a
customer base of 25,000 employees and managed a development staff located in
multiple geographic areas.
FRANK J. HARITON was elected assistant secretary of the Company in May
2000 and became Secretary and a Director in August, 2000. Mr. Hariton is an
attorney in private practice with offices in White Plains, New York and New York
City. He has been engaged in the private practice of law for more than the last
five years. He received a B.A. in 1971 and a J.D. in 1974 from Case Western
Reserve University. He is also assistant secretary of Vitafort International
Corporation (VRFT:OTCBB), a company engaged in developing, marketing and
distributing snack foods and low fat and fat free snacks. Since December 1999,
Mr. Hariton has been Assistant Secretary of Kushi Natural Foods Corp., a
reporting shell corporation.
EMPLOYMENT AGREEMENTS
In August 2000, we entered into a three year employment agreement with
Robert Ziglin which will provide for a base salary of $100,000 plus a bonus
equal to 8% of pre-tax profits, if any. Messrs. Ziglin and Cox have also
executed agreements requiring them to preserve our confidential information and
prohibiting them from competing with us for a period of two years after the
termination of their employment, unless they are terminated without cause.
STOCK OPTION PLAN
In August 2000 we adopted our 2000 Stock Option Plan (the "Plan")
pursuant to which 595,000 shares of common stock are reserved for issuance upon
the exercise of options. Options granted under the Plan may at the discretion of
the Board be incentive stock options ("ISOs") within the meaning of Section 422A
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of the Internal Revenue Code of 1986, as amended ("Code"), or non-incentive
stock options.
Under the terms of the Plan, all directors, officers and key employees
of, and consultants to, the Company and all its subsidiaries are eligible for
option grants of options. The Committee (which must include non-employee
directors) or, in the absence of the appointment of a committee, the Board,
determines in its discretion which persons will receive option grants, the
number of shares subject to each option, the exercise price, which may not be
less than the fair value of the shares subject to the option as determined by
the Committee, except that in the case of ISOs, the exercise price must be at
least one hundred percent (100%) of the fair market value of the optioned shares
on the date of grant, or one hundred and ten percent (110%) of such fair market
value if the optionee is the owner of more than ten percent (10%) of the total
combined voting power of all classes of voting stock of the Registrant (a "10%
Holder"), and the term (which may not be more than ten (10) years from the date
of grant, or five (5) years in the case of an ISO granted to a 10% holder)
thereof. The Plan permits options granted thereunder to be exercised by the
tender of shares of common stock having a fair market value equal to the
exercise price of such option or, if provided in the option, by the surrender of
options with an intrinsic value equal to the exercise price of the remaining
options being exercised.
Grants for 394,000 of the 595,000 options available under the plan have
been made. These options have an exercise price of $6.00 per share, are for four
years and vest as to one third of the shares covered thereby on each anniversary
date.
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PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to officers,
directors and persons who are known by the Company to be beneficial owners of
more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES % PRIOR TO % AFTER MINIMUM % AFTER MAXIMUM
SHAREHOLDER BENEFICIALLY OWNED OFFERING OFFERING OFFERING
<S> <C> <C> <C> <C>
Robert Ziglin 2,825,200 44.6% 44.0% 41.4%
James Cox 126,000 1.9% 1.9% 1.8%
Frank J. Hariton 70,000 1.1% 1.1% 1.0%
NAIS Corp. (2) 840,000 13.3% 13.1% 12.3%
Dr. Eugene Stricker 633,500 10.0% 9.9% 9.3%
Mark Schindler 425,500 6.7% 6.6% 6.2%
Directors and
Officers as a Group
(3 persons) 3,021,200 47.7% 47.1% 44.2%
</TABLE>
(1) Does not include 126,000 shares issuable upon exercise of four year
options with an exercise price of $6.00 which are not vested and will vest as to
one third of the shares covered thereby on October 1 of each year commencing in
2001.
(2) The principal shareholder of NAIS Corp. is Jack Erenhaus.
(3) Includes as to each of Mr. Stricker and Mr. Schindler 42,000 of
84,000 shares owned by Madison Venture Capital II, Inc., a company owned by
Messrs. Stricker and Schindler.
CERTAIN TRANSACTIONS
The Company sold an aggregate of 3,598,000 shares to its founders in
March 2000. These included, Robert Ziglin 840,000 shares; Dr. Eugene Stricker
623,000 shares; Mark Schindler 415,000 shares; NAIS Corp. 840,000 shares and
Frank J. Hariton 70,000 shares. Madison Venture Capital II, Inc. also purchased
84,000 shares.
The Company entered into an acquisition agreement, dated as of June 15,
2000 (the "Acquisition Agreement"), with Emerging Technologies, Inc., an
Arizona corporation ("ETI") and its shareholders, including Robert Ziglin and
others. Pursuant to the Acquisition Agreement, the Company acquired all of the
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shares of ETI from Robert Ziglin and other holders in exchange for 2,310,000
shares of its Common Stock. Mr. Ziglin received 1,985,200 shares and James Cox
received 126,000 shares in exchange for their ETI shares.
Messrs. Stricker and Schindler have a five year consulting agreement
with the Company which commenced in September 2000. Messrs. Stricker and
Schindler provide business consulting services to the Company and each receive
fees of $1,000 per month through the end of 2000 and increasing to $2,000 per
month each commencing in January 2001.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company currently consists of (i)
50,000,000 shares of Common Stock, par value $.0001 per share, of which
6,328,000 were issued and outstanding on September 30, 2000, and (ii) 5,000,000
shares of Preferred Stock, par value $.0001 per share, none of which have been
designated or issued.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders generally, including the election of
directors. Holders of Common Stock do not have cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors if they chose to do so, and in such
event, the holders of the remaining shares will not be able to elect any persons
to our Board of Directors. The holders of Common Stock have no preemptive or
other subscription or conversion rights with respect to any stock issued by the
Company, The Common Stock is not subject to redemption, and the holders thereof
are not liable for further calls or assessments. Holders of Common Stock are
entitled to receive such dividends as may be declared by our Board of Directors
out of funds legally available therefore and to share pro-rata in any
distributions to the holders of Common Stock. We have agreed that, with certain
exceptions for employee stock options, we will not issue any shares of our
capital stock for 24 months from the date of this prospectus without the
Underwriter's consent.
PREFERRED STOCK
The Preferred Stock is issuable with such rights, preferences,
privileges and such number of shares constituting each series to be fixed by our
Board of Directors without further action by the holders of Common Stock or
Preferred Stock. Our Board of Directors could, without stockholder approval,
issue Preferred Stock with voting and conversion rights, which could dilute the
voting power of the holders of the Common Stock. The issuance of shares of
Preferred Stock by our Board of Directors could be utilized, under certain
circumstances, as a method of preventing a takeover of the Company. As of the
date hereof, our Board of Directors has not authorized any series of Preferred
Stock and has no plans to do so.
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WARRANTS
The Company is offering up to 500,000 Units, each of which include two
redeemable warrants. Each Warrant entitles the holder to purchase one share of
our Common Stock for $7.00 until , 2005 (five years from the date of this
prospectus. The Warrants may be redeemed by us for $.05 if our Common Stock
trades at $8.40 or above for twenty consecutive trading days. The Warrants and
Common Stock will not trade separately from the first day of trading and the
Company will not seek a trading symbol for the Units.
The Company has reserved a sufficient number of shares of Common Stock
for issuance upon any exercise of the Warrants and such shares, upon issuance,
will be fully paid and non-assessable. The shares of Common Stock so reserved
are included in the Registration Statement of which this Prospectus forms a
part, and the Company has filed an undertaking with the Securities and Exchange
Commission that it will maintain an effective Registration Statement, by filing
post effective amendments to this Registration Statement, throughout the term of
the Warrants, with respect to the shares of Common Stock issuable upon exercise
of the Warrants.
The number of shares of Common Stock issuable upon exercise of the
Warrants are subject to adjustments upon certain events, including the
declaration by the Company of a stock split, the reclassification, subdivision
or combination of outstanding shares of Common Stock into a greater or lesser
number of shares. In such event, the exercise price of the Warrants shall be
adjusted accordingly.
Warrant holders are not entitled to vote upon any matters presented to
the holders of the Common Stock or to receive dividends until their Warrants
have been exercised. There is no market for the Warrants, nor is there any
assurance that a market might develop. Because only 1,000,000 Warrants will be
outstanding in the event of a Maximum Offering and because substantially fewer
Warrants could be outstanding after the Offering, the likelihood of an active
trading market developing in the Warrants, in the opinion of Management, is
uncertain.
For the life of the Warrants, the holders thereof are given the
opportunity to profit from any rise in the market value of the Company's Common
Stock at the expense of the holders of the Common Stock through the dilution of
their equity interest in the Company. The presence of the Warrants might
adversely impact the Company's ability to raise additional capital on favorable
terms.
With respect to the Company, the lapse or non-exercise of any of the
Warrants may result in ordinary income.
The Warrants may be exercised by filling out and signing the
appropriate notice of exercise form attached to the Warrant and mailing or
delivering the same (together with the Warrant) to the Warrant Agent in time to
reach the Warrant Agent prior to the time fixed for termination or redemption of
the Warrants, accompanied by payment of the full warrant exercise price. Payment
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of the warrant exercise price must be made in United States currency by check,
cash or bank draft payable to the order of the Company. A certificate
representing the shares of Common Stock issuable upon exercise of the Warrants
will be issued as soon as practicable after receipt of the holder's request.
As compensation for the Underwriter's services in soliciting the
exercise of the Warrants issued herein, we have agreed to pay to the Underwriter
a commission of five percent of the exercise price of all Warrants exercised
beginning one year after the date hereof as the result of a solicitation made by
the Underwriter. A commission for Warrant exercise will not be paid if (i) the
market price of the Common Stock is lower than the exercise price; (ii) the
Warrants are held in a discretionary account; (iii) disclosure of the
compensation arrangements have not been made in documents provided to the holder
of Warrants both as part of this offering and at the time of exercise; or (iv)
the exercise of Warrants is unsolicited. An exercise of warrants will be
presumed to be unsolicited pursuant to (iv) above unless the holder has
indicated in writing that the transaction was not solicited and has designated
the broker/dealer which is to receive compensation for the exercise.
TRANSFER AGENT WARRANT AGENT
The Transfer Agent for the Common Stock and Units and the Warrant Agent
for the Warrants is Continental Stock Transfer and Trust Company, 2 Broadway -
19th Floor, New York, New York 10004.
POSSIBLE ANTI-TAKEOVER EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The Company has a large number of authorized but unissued Common Stock
and Preferred Stock. One of the effects of the existence of authorized but
unissued capital stock may be to enable our Board of Directors to render more
difficult or to discourage an attempt to obtain control of the Company by means
of a merger, tender offer, proxy contest or otherwise, and thereby to protect
the continuity of the Company's management. In this regard, the Company's
Articles of Incorporation grant our Board of Directors broad power to establish
the rights and preferences of the authorized and unissued Preferred Stock, one
or more series of which could be issued entitling holders to vote separately as
a class on any proposed merger or share exchange, to convert Preferred Stock
into a large number of shares of Common Stock or other securities, to demand
redemption at a specified price under prescribed circumstances related to a
change in control, or to exercise other rights designed to impede a takeover.
LIMITATION OF LIABILITY
The Company's Certificate of Incorporation and By-laws limit the
liability of directors and officers to the maximum extent permitted by Delaware
law. Delaware law provides that directors of a corporation will not be
personally liable for monetary damages for breach of their fiduciary duties as
directors, including gross negligence, except liability for
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(i) breach of the directors' duty of loyalty;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law,
(iii) the unlawful payment of a dividend or unlawful stock purchase or
redemption, and
(iv) any transaction from which the director derives an improper personal
benefit. Delaware law does not permit a corporation to eliminate a
director's duty of care, and this provision of the Company's Certificate
of Incorporation has no effect on the availability of equitable
remedies, such as injunction or rescission, based upon a director's
breach of the duty of care.
The Company's Certificate of Incorporation authorizes the Company to
purchase and maintain insurance for the purposes of indemnification. At present,
there is no pending litigation or proceeding involving any director, officer,
employee or agent for which indemnification will be required or permitted under
the Company's Certificate of Incorporation, By-laws or indemnification
agreements. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.
CORPORATION TAKEOVER PROVISIONS
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock generally is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that such
stockholder became an interested stockholder, unless (i) the corporation has
elected in its original certificate of incorporation not to be governed by
Section 203 (the Company did not make such an election), (ii) the business
combination was approved by our Board of Directors of the corporation before the
other party to the business combination became an interested stockholder, (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to render or vote stock held by
the plan) or, (iv) the business combination was approved by our Board of
Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of the majority of the corporation's
directors. The term "business combination" is defined generally to include
mergers or consolidations between a Delaware corporation and an "interested
stockholder," transactions with an "interested stockholder" involving the assets
or stock of the corporation or its majority-owned subsidiaries and transactions
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which increase an interested stockholder's percentage ownership of stock. The
term "interested stockholder" is defined generally as a stockholder who,
together with affiliates and associates, owns (or, within three years prior, did
own) 15% or more of a Delaware corporation's voting stock. Section 203 could
prohibit or delay a merger, takeover or other change in control of the Company
and therefore could discourage attempts to acquire the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this Offering, we will have 6,428,000 shares
of Common Stock outstanding if the minimum number of Units are sold and
6,828,000 shares of Common Stock outstanding if the maximum number of Units are
sold. Only those sold in this Offering (100,000 shares if the minimum number of
Units are sold, 500,000 shares if the maximum number of Units are sold) will be
freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended, except for any shares purchased by an
"affiliate" of the Company (in general, a person who has a control relationship
with the Company, including our officers and directors) which will be subject to
the limitations of Rule 144 adopted under the Securities Act of 1933, as
amended. All of the remaining 6,328,000 shares are deemed to be "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended, in that such shares were issued and sold by
the Company in private transactions not involving a public offering. None of
such remaining shares will be eligible for sale under Rule 144 prior to May
2001.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least one year is entitled
to sell, within any three month period, a number of shares that does not exceed
the greater of one percent of the total number of outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale and who has beneficially
owned shares of Common Stock for at least two years is entitled to sell such
shares under Rule 144 without regard to any of the limitations described above.
Our present shareholders have agreed with the Underwriter not to sell
or otherwise dispose of any of their shares of Common Stock for a period of 12
months from the date of this Prospectus and thereafter not to sell more than 50%
of their shares for an additional six months without the prior written consent
of the Underwriter.
Prior to this Offering, there has been no market for the Units, Common
Stock or Warrants and no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of such shares for
sale will have on the market prices prevailing from time to time. Nevertheless,
the possibility that substantial amounts of Common Stock may be sold in the
public market may adversely affect prevailing market prices for the Common Stock
and could impair the our ability to raise capital through the sale of its equity
securities.
35
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, Security Capital Trading, Inc. (the "Underwriter") has agreed to use
its best efforts to offer a minimum of 100,000 Units and a maximum of 500,000
Units to the public. The first 100,000 Units are offered on a best efforts,
"all-or-none" basis at a purchase price of $6.20 per Unit. If the first 100,000
Units are sold, the Offering will continue on a "best efforts" basis, up to
500,000 Units. The Underwriter has made no commitment to purchase or take down
all or any part of the Units offered hereby. The Underwriter has agreed to use
its best efforts to find purchasers for the Units offered hereby within a period
of 90 days from the date of this Prospectus, subject to an extension by mutual
agreement of the Underwriter and us for an additional period of 90 days (and an
additional period of 10 business days thereafter to permit clearance of the
funds in escrow). Each subscriber will receive from the Underwriter confirmation
of his subscription to purchase Units with instructions to forward their funds
to Continental Stock Transfer and Trust Company. All proceeds raised in this
offering will be deposited by noon of the next business day following receipt,
in an escrow account maintained at Continental Stock Transfer and Trust Company.
All subscriber checks will be made payable to the "Continental Stock Transfer
and Trust Company as escrow agent for Enableware Technology, Inc". If 100,000
Units are not sold within 90 days from the date of this Prospectus (which may be
extended an additional 90 days) and the offering is cancelled, all monies
received and held in the escrow account will be promptly returned to the
investor without interest thereon (unless the offering is extended for an
additional 90 days). In addition, during the period of escrow subscribers will
not be entitled to a refund of their subscription.
The Units will be sold on a fully paid basis only. Common Stock and
Warrant certificates will be issued to purchasers only if the proceeds from the
sale of at least 100,000 Units are released to us. Until such time as the funds
have been released by the escrow agent, such purchasers, if any, will be deemed
subscribers and not stockholders. The funds in escrow will be held for the
benefit of those subscribers until released to us, and will not be subject to
our creditors or applied to the expenses of this offering.
In addition to the discounts. set out on the cover page which the
Company has agreed to allow to the Underwriter, we have agreed to pay to the
Underwriter a non-accountable expense allowance equal to three percent of the
aggregate price of all Units sold. We have already paid $15,000 towards this
non-accountable expense allowance.
Upon the completion of this offering, we have also agreed to sell to
the Underwriter for $.001 per option, or an aggregate of from $10 to $50, as
additional compensation, an option for the purchase of up to 50,000 Units on the
basis of one Unit for each ten Units sold to the public (the "Underwriter's
Option"), each exercisable to purchase one Unit at a price equal to $7.44
beginning on the first anniversary and continuing until the fifth anniversary of
the date of this Prospectus. The Underwriter's Option may be exercised as to all
36
<PAGE>
or any lesser number of Units and contain provisions which require, under
certain circumstances, that we register the Underwriter's Option and the
underlying securities for sale to the public. The Underwriter's Options are
nontransferable for a period of one year except to officers of the Underwriter,
members of the underwriting group and their respective officers or partners. The
Underwriter's Option's exercise price and the number of Option Units covered by
the Underwriter's Options are subject to adjustment to protect the holders
thereof against dilution in certain events. The Warrants underlying the
Underwriter's Option are intended to be identical to the Warrants offered to the
public hereunder.
We have granted to the Underwriter the right to designate a member of
our Board of Directors for a period of three years or, in the alternative, to
designate a person to attend all Board of Directors meetings and to receive all
notices and communications to Directors during such three year period, all at
our expense.
As compensation for the Underwriter's services in soliciting the
exercise of the Warrants issued herein, we have agreed to pay to the Underwriter
a commission of five percent of the exercise price of all Warrants exercised
beginning one year after the date hereof as the result of a solicitation made by
the Underwriter. A commission for Warrant exercise will not be paid if (i) the
market price of the Common Stock is lower than the exercise price; (ii) the
Warrants are held in a discretionary account; (iii) disclosure of the
compensation arrangements have not been made in documents provided to the holder
of Warrants both as part of this offering and at the time of exercise; or (iv)
the exercise of Warrants is unsolicited. An exercise of warrants will be
presumed to be unsolicited pursuant to (iv) above unless the holder has
indicated in writing that the transaction was not solicited and has designated
the broker/dealer which is to receive compensation for the exercise.
The Company and the Underwriter have agreed in the Underwriting
Agreement to indemnify each other against certain liabilities, including
liabilities under the Securities Act of 1933. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be provided to
officers, directors or controlling persons of the Company, such indemnification,
in the opinion of the Securities and Exchange Commission, is against public
policy and therefore unenforceable.
Our present shareholders have agreed with the Underwriter not to sell
or otherwise dispose of any of their shares of Common Stock for a period of 12
months from the date of this Prospectus and thereafter not to sell more than 50%
of their shares for an additional six months without the prior written consent
of the Underwriter. The Company has agreed with the Underwriter to refrain from
issuing new Shares for a period of 24 months from the date of this prospectus
(other than shares issued to employees under the Stock Option Plan).
37
<PAGE>
PRICING OF THE OFFERING
Prior to this offering, there has been no public market for our Units,
Common Stock or the Warrants. Consequently, the offering price has been
determined by negotiation among us and the Underwriter. Among the factors
considered in the negotiations were prevailing market and general economic
conditions, our revenues, earnings and other financial and operating
information, our the future prospects and our industry's prospects and certain
ratios, market prices of securities and financial and operating information of
comparable companies. The initial public offering price of the Units is not
necessarily related to or indicative of our assets, book value, earnings, net
worth or any other established criteria of value.
LEGAL MATTERS
Certain legal matters in connection with the Offering are being passed
upon for the Company by Frank J. Hariton, Esq., 1065 Dobbs Ferry Road, White
Plains, New York 10607. Mr. Hariton owns 70,000 shares of the Company's Common
Stock. Berlack, Israels & Liberman LLP, 120 East 45th Street, New York, New York
10036, has acted as counsel to the Underwriter.
EXPERTS
The financial statements included in this Prospectus have been audited
by Simon Krowitz Bolin & Associates, P.A., 11300 Rockville Pike - Suite 800
Rockville, Maryland 20852, independent certified public accountants, for the
periods and to the extent as set forth in their report appearing elsewhere
herein, and are included in reliance upon such report and upon the authority of
said firm as experts in accounting and auditing.
STATEMENT ABOUT INDEMNIFICATION
We have adopted the provisions of Section 102(b)(7) of the Delaware
General Corporation Act (the "Delaware Act") which eliminates or limits the
personal liability of a director to the Company or its stockholders for monetary
damages for breach of fiduciary duty under certain circumstances. Furthermore,
under Section 145 of the Delaware Act, the Company may indemnify each of its
directors and officers against his expenses (including reasonable costs,
disbursements and counsel fees) in connection with any proceeding involving such
person by reason of his having been an officer or director to the extent he
acted in good faith and in a manner reasonably believed to be in, or not opposed
to the best interest of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
determination of whether indemnification is proper under the circumstances,
unless made by a court, shall be determined by our Board of Directors. Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed 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.
38
<PAGE>
INDEX TO FINANCIAL STATEMENTS
================================================================================
EMERGING TECHNOLOGIES, INC.
Independent Auditors' Report F - 2 to F - 3
Financial Statements
Balance Sheets F - 4
Statements of Income and Retained Earnings F - 5
Statements of Cash Flows F - 6
Notes to Financial Statements F - 7 to F - 8
ENABLEWARE TECHNOLOGY, INC.
Independent Auditors' Report F - 9 to F - 10
Financial Statements
Balance Sheets F - 11
Statement of Operations F - 12
Statements of Stockholder's Equity F - 13
Statements of Cash Flows F - 14
Notes to Financial Statements F - 15 to F - 18
F-1
<PAGE>
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE, SUITE 800
ROCKVILLE, MARYLAND 20852
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Emerging Technologies, Inc.
We have audited the accompanying balance sheets of Emerging Technologies, Inc.
(an Arizona corporation) as of December 31, 1999 and 1998 and the related
statements of income and retained earnings and cash flows for the years then
ended. 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 generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Emerging Technologies, Inc. as
of December 31, 1999 and 1998 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
We have reviewed the accompanying balance sheet of Emerging Technologies, Inc.
as of September 30, 2000 and the related statement of operations and retained
(deficit) and comprehensive income and cash flows for the nine month periods
ended September 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
F-2
<PAGE>
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States.
/s/ SIMON KROWITZ BOLIN AND ASSOCIATES, P.A.
--------------------------------------------
Simon Krowitz Bolin and Associates, P.A.
Rockville, Maryland
May 15, 2000
November 3, 2000 (as to review)
F-3
<PAGE>
<TABLE>
<CAPTION>
EMERGING TECHNOLOGIES, INC.
BALANCE SHEETS
==========================================================================================================
September 30,
December 31, December 31, 2000
1998 1999 (Unaudited)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 20,809 $ 12,292 $ 111,838
Accounts Receivable 44,390 59,686 55,000
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 65,199 71,978 166,838
----------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Office Equipment 6,202 6,202 7,757
Less: Accumulated Depreciation (6,202) (6,202) (6,461)
----------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 0 0 1,296
----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 65,199 $ 71,978 $ 168,134
==========================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable 41,558 23,449 41,364
Accrued Payroll Taxes 0 15,792 33,744
Due to Parent 0 0 213,000
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 41,558 39,241 288,108
----------------------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common Stock, 100,000 shares authorized issued and
outstanding, no par value 1,000 1,000 1,000
Retained Earnings (Deficit) 22,641 31,737 (120,974)
----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY (DEFICIT) 23,641 32,737 (119,974)
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$ 65,199 $ 71,978 $ 168,134
==========================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
EMERGING TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE PERIODS
================================================================================================================
January 1, January 1,
January 1, January 1, 1999 to 2000 to
1998 to 1999 to September September
December 31, December 31, 30, 1999 30, 2000
1998 1999 (unaudited) (unaudited)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Consulting $ 580,133 $ 211,133 $ 211,133 $ 0
Product Sales 532,205 117,134 82,500 0
----------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 1,112,338 328,267 293,633 0
COSTS OF GOODS SOLD
Purchase of Software for Resale 390,950 0 7,000 0
----------------------------------------------------------------------------------------------------------------
GROSS MARGIN 721,388 328,267 286,633 0
----------------------------------------------------------------------------------------------------------------
EXPENSES
Sales Expenses 0 10,500 0 3,500
Office Supplies 1,052 400 1,031 3,492
Interest 0 1,000 1,000 0
Consulting 31,809 40,664 30,694 70,055
Rent, Lease Expense 20,724 31,472 25,561 8,968
Payroll - Wages 0 48,302 19,333 36,000
Payroll - Employer Expenses 0 4,570 2,156 2,980
Travel Expenses 52,058 12,196 16,746 19,124
Depreciation, Amortization 0 0 0 130
Staff Leasing 593,051 170,667 168,029 3,840
Legal, Accounting 0 0 0 0
----------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 698,694 319,771 264,550 148,089
----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS 22,694 8,496 22,083 (148,089)
OTHER INCOME (EXPENSE)
Interest Income 24 0 0 0
----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 22,718 8,496 22,083 (148,089)
RETAINED EARNINGS - BEGIN 30,523 53,241 53,241 31,737
DISTRIBUTION TO S SHAREHOLDER 0 (30,000) 0 (4,622)
----------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) - END $ 53,241 $ 31,737 $ 75,324 $ (120,974)
================================================================================================================
INCOME PER SHARE - BASIC $ .23 $ .08 $ .22 $ (1.48)
INCOME PER SHARE - DILUTED $ .23 $ .08 $ .22 $ (1.48)
SHARES USED IN PER SHARE CALCULATION - BASIC 100,000 100,000 100,000 100,000
SHARES USED IN PER SHARE CALCULATION - DILUTED 100,000 100,000 100,000 100,000
================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
EMERGING TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIODS
==================================================================================================================
January 1,
January 1, January 1, 2000 to
1998 to 1999 to September 30,
December 31, December 31, 2000
1998 1999 (unaudited)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 22,718 $ 8,496 $ (148,089)
Adjustments to Reconcile Changes in Cash (Used) by
Operations:
Depreciation 0 0 259
(Increase) Decrease in Accounts Receivable (44,390) (15,297) 4,686
Increase (Decrease) in Accounts Payable 37,464 (18,118) 17,915
Increase in Accrued Payroll Expenses 1,230 15,802 17,952
------------------------------------------------------------------------------------------------------------------
NET CASH (USED) BY OPERATING ACTIVITIES 17,022 (9,117) (107,277)
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan from Parent 0 0 213,000
Purchase of Equipment 0 0 (1,555)
------------------------------------------------------------------------------------------------------------------
NET CASH (USED) BY INVESTING ACTIVITIES 0 0 211,445
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions from Stockholders 0 29,600 0
Payments to S Corporation Stockholders (29,600) (29,000) (4,622)
------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (29,600) 600 (4,622)
------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH (12,578) (8,517) 99,546
CASH - JANUARY 1 33,387 20,809 12,292
------------------------------------------------------------------------------------------------------------------
CASH - DECEMBER 31 $ 20,809 $ 12,292 $ 111,838
==================================================================================================================
SUPPLEMENTAL DISCLOSURES:
INTEREST PAID $ 0 $ 1,000 $ 0
==================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F-6
<PAGE>
EMERGING TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2000
================================================================================
NOTE 1 - NATURE OF BUSINESS
Emerging Technologies, Inc., an Arizona corporation, provides a
comprehensive suite of applications with full implementation services
that enable companies to rapidly deploy and easily migrate to
e-business portals and e-marketplaces. The Company's solution addresses
the unique challenges faced by both current and new e-business portals
and marketplaces in both business-to-business and business-to-consumer
e-commerce. The Company's infrastructure solutions, EnableWare(TM),
allow companies to rapidly automate, deploy and continuously manage
business-to-business and business-to-consumer transactions on a 24x7
basis.
On August 11, 2000, the Company was acquired by Enableware Technology,
Inc. (formerly Internet Brandsmall, Inc.) through an exchange of stock.
All of the common stock of the Company (100,000 shares) was exchanged
for 3,300,000 shares of Enableware Technology, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS - For purposes of the statement of cash flows, the
Company considers all short-term debt securities purchased with a
maturity of three months or less to be cash equivalents. There were no
cash equivalents at December 31, 1999.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
ACCOUNTS RECEIVABLE - The Company considers accounts receivable to be
fully collectible; accordingly, no allowance for doubtful accounts is
required. If amounts become uncollectible, they will be charged to
operations at that time.
EQUIPMENT - Equipment is recorded at cost when acquired and is
depreciated over estimated useful lives of 3 to 5 years. Expenditures
for repairs and maintenance are expensed as incurred.
INCOME TAXES - The Company had elected to be taxed under provisions of
Subchapter S of the Internal Revenue Code. Under those provisions, the
Company did not pay federal corporate income taxes on its taxable
income. Instead, the stockholder was liable for individual federal
income taxes on the Company's taxable income. Upon the Company's
acquisition, the S Corporation election was terminated.
BASIC AND DILUTED NET INCOME (Loss) Per Share - Basic net income (loss)
per share is computed using the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per
share is also computed using the weighted average number of common
shares outstanding during the period. The company has no convertible
debentures or preferred shares and no stock options or warrants
outstanding.
COMPREHENSIVE INCOME - The Company has no significant components of
other comprehensive income and, accordingly, comprehensive income is
the same as net income for all periods.
F-7
<PAGE>
EMERGING TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Software - The Company filed a patent application for "Method And
Apparatus For Interfacing Application Programs With Database Functions"
during 1999.
The Company entered in an executive consulting agreement on April 1,
2000, under which the Company will receive strategic and general
management advice with respect to activities of the Company, including
working with the Company's other service providers, investors, partners
or customers. The advisory services are qualitative in nature and not
based on the time required to deliver. The term of the agreement is for
18 months with a $5,000 monthly fee and a $10,000 refundable retainer.
Such payments may be deferred if Company cannot reasonably make a
payment. Such deferred payments will accrue interest until paid. This
agreement is a nonexclusive agreement between the Company and the
Advisor.
NOTE 4 - CONCENTRATION OF RISK
As of December 31, 1999, the Company had one significant contract which
provided the majority of its revenue in 1999.
F-8
<PAGE>
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE, SUITE 800
ROCKVILLE, MARYLAND 20852
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Enableware Technology, Inc.
New York, New York
We have audited the accompanying balance sheet of Enableware Technology, Inc.
(formerly Internet Brandsmall, Inc.) as of December 31, 1999 and 1998 and the
related statements of retained (deficit) and cash flows for the years then
ended. These financial statements are the responsibility of Internet
Brandsmall's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Enableware Technology, Inc.
(formerly Internet Brandsmall, Inc.) as of December 31, 1999 and 1998 and the
results of its operations and retained (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.
We have reviewed the accompanying balance sheet of Enableware Technology, Inc.
(formerly Internet Brandsmall, Inc.) as of September 30, 2000 and 1999 and the
related statement of operations and retained deficit and comprehensive income
and cash flows for the nine month periods ended September 30, 2000 and 1999.
These financial statements are the responsibility of the Company's management.
F-9
<PAGE>
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States.
/s/ SIMON KROWITZ BOLIN & ASSOCIATES, PA
----------------------------------------
Simon Krowitz Bolin & Associates, PA
Rockville, Maryland
May 15, 2000
October 31, 2000 (as to review)
F-10
<PAGE>
<TABLE>
<CAPTION>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
BALANCE SHEETS
==============================================================================================================
Consolidated
December December September
31, 31, 30, 2000
1998 1999 (unaudited)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 202 $ 202 $ 180,485
Accounts Receivable 0 0 55,000
--------------------------------------------------------------------------------------------------------------
TOTAL 202 202 235,485
--------------------------------------------------------------------------------------------------------------
FIXED ASSETS
Office Equipment 0 0 1,426
Accumulated Depreciation 0 0 (130)
--------------------------------------------------------------------------------------------------------------
TOTAL 0 0 1,296
--------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Goodwill (less amortization of $37,384) 0 0 1,434,501
Prepaid Stock Issue Cost 0 0 15,000
--------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 202 $ 202 $ 1,686,282
==============================================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts Payable $ 0 $ 0 $ 42,863
Accrued Payroll Tax 0 0 33,745
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 0 0 76,608
--------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - 50,000,000 Shares Authorized,
Par Value $.0001, 5,140,000 issued and
outstanding at December 31, 1999 and 1998,
6,328,000 issued and outstanding at
September 30, 2000 514 514 904
Preferred Stock - 5,000,000 Shares
Authorized, Par Value $.0001. No shares
issued and outstanding 0 0 0
Additional Paid-in Capital 0 0 1,804,261
Retained Earnings (Deficit) (312) (312) (195,491)
--------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 202 202 1,609,674
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY $ 202 $ 202 $ 1,686,282
==============================================================================================================
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
STATEMENTS OF OPERATIONS
FOR THE PERIODS
================================================================================================
Consolidated
March 7, January 1, January 1,
1998 1999 2000
January 1, (inception) to to
1999 to to September September
December 31, December 30, 1999 30,2000
1999 31, 1998 Unaudited Unaudited
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------------------------------------
EXPENSES
Salaries 0 0 0 36,000
Staff Leasing 0 0 0 3,840
Employee Travel 0 0 0 19,124
Consulting 0 0 0 70,055
Rent 0 0 0 8,968
Office Expenses 0 0 0 5,491
Payroll Taxes 0 0 0 2,980
Miscellaneous 0 312 0 3,707
Depreciation 0 0 0 130
Amortization 0 0 0 37,384
Legal, Accounting 0 0 0 7,500
------------------------------------------------------------------------------------------------
TOTAL EXPENSES 0 312 0 195,179
------------------------------------------------------------------------------------------------
NET (LOSS) $ 0 $ (312) $ 0 $ (195,179)
================================================================================================
(Loss) per Share - Basic $ (.00) $ (.00) $ (.00) $ (.03)
(Loss) per Share - Diluted $ (.00) $ (.00) $ (.00) $ (.03)
Shares Used in Per Share
Calculation - Basic 5,140,000 5,140,000 5,140,000 5,515,000
Shares Used in Per Share
Calculation - Diluted 5,140,000 5,140,000 5,140,000 5,515,000
================================================================================================
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY
SEPTEMBER 30, 2000
=================================================================================================================================
Common Stock Additional
------------------------ Paid-in Retained
Shares Amount Capital (Deficit) Total
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at March 7, 1998 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock to founders March 1998 5,140,000 514 0 0 514
Net Income (Loss) for Period 0 0 0 (312) (312)
---------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1998 5,140,000 $ 514 $ 0 $ (312) $ 202
---------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) for Year 0 0 0 0 0
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 5,140,000 $ 514 $ 0 $ (312) $ 202
---------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock, July, 2000 600,000 60 299,940 0 300,000
Contribution by Officer 4,651 4,651
Issuance of common stock for acquisition of Emerging
Technologies, Inc. August 11, 2000 by exchange of stock 3,300,000 330 1,499,670 1,500,000
Loss for Nine Months Ended September 30, 2000 (195,179) (195,179)
---------------------------------------------------------------------------------------------------------------------------------
Total 9,040,000 904 1,804,261 (195,179) 1,609,472
Reverse Split Seven for Ten Shares Common Stock (2,712,000)
---------------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2000 $ 6,328,000 $ 904 $ 1,804,261 $ (195,491) $ 1,609,674
---------------------------------------------------------------------------------------------------------------------------------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
STATEMENT OF CASH FLOWS
FOR THE PERIODS
==========================================================================================================
Consolidated Consolidated
January 1, January 1,
March 7, January 1, 1999 to 2000 to
1998 to 1999 to September September
December 31, December 30, 1999 30, 2000
1998 31, 1999 (Unaudited) (Unaudited)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) from Operations $ (312) $ 0 $ 0 $ (195,179)
Adjustments to Reconcile Accumulated (Deficit)
to Net Cash Used By Operating Activities:
Depreciation 0 0 0 130
Amortization 0 0 0 37,384
Changes In Assets and Liabilities: 0
(Increase) in Accounts Receivable 0 0 0 (55,000)
Increase in Prepaid Fee 0 0 0 (15,000)
(Decrease) Increase in Accounts Payable 0 0 0 42,863
Increase in Accrued Payroll Taxes 0 0 0 33,745
Increase in Goodwill 0 0 0 (1,471,885)
----------------------------------------------------------------------------------------------------------
CASH FLOWS (USED) BY OPERATING
ACTIVITIES (312) 0 0 (1,622,942)
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of Fixed Assets 0 0 0 (1,426)
----------------------------------------------------------------------------------------------------------
NET CASH (USED) BY INVESTING
ACTIVITIES 0 0 0 (1,426)
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of Common Stock 514 0 0 1,804,651
----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 514 0 0 1,804,651
----------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH 202 0 0 180,283
CASH - BEGINNING 0 202 202 202
----------------------------------------------------------------------------------------------------------
CASH - ENDING $ 202 $ 202 $ 202 $ 180,485
==========================================================================================================
</TABLE>
F-14
<PAGE>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 2000
================================================================================
NOTE 1 - NATURE OF BUSINESS
Internet Brandsmall, Inc., (now Enableware Technology, Inc.) a Delaware
corporation (the Company), was formed in March 1998 under the name
Health Product Development, Inc. and in January 1999, changed its name
to Internet Brandsmall, Inc. The Company has not conducted any
operations since its incorporation. On August 11, 2000, the Company
acquired all of the stock of Emerging Technologies, Inc. (see Note 2).
Emerging Technologies, Inc. will continue as a wholly owned subsidiary.
On October 10, 2000, the Company changed its name to Enableware
Technology, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS - For purposes of the statement of cash flows, the
Company considers all short-term debt securities purchased with a
maturity of three months or less to be cash equivalents. There were no
cash equivalents at September 30, 2000.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
GOODWILL - Good will represents the excess of the cost of the Company's
acquisition of ;the Subsidiary over the fair value of its net
liabilities at the date of acquisition. Goodwill is being amortized on
the straight-live method over 10 years.
ACCOUNT RECEIVABLE - The amount represents an amount billed but unpaid
by the Company's major client.
BAD DEBT ALLOWANCE - It is the policy of management to review
outstanding receivables at year-end to determine if an allowance for
bad debt is necessary.
FIXED ASSETS - Office equipment are recorded at cost when acquired.
Depreciation is provided by the straight-line method over estimated
useful lives of five to seven years. Expenditures for material repairs
and maintenance are added to the cost. Other amount of repairs and
maintenance are charged to operations.
F-15
<PAGE>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 2000
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRINCIPLES OF CONSOLIDATION - In exchange for 3,300,000 shares of its
common stock; the Company acquired all of the stock of Emerging
Technologies, Inc. (ETI). The common stock issued was valued at
$1,500,000. The acquisition was effective August 11, 2000. The
consolidated financial statements at September 30, 2000 and the three
months then ended include the accounts of ETI after elimination of any
intercompany accounts and transactions. The combination was accounted
for as a purchase. Under the purchase method, the combination is
recorded at cost. Cost is determined as the fair value of the net
assets acquired or as the fair value of the consideration given,
whichever is more objectively determinable. Any excess of the purchase
price over the fair market value of identifiable assets acquired less
liabilities assumed is recorded as goodwill. Goodwill recorded from the
combination is being amortized on the straight-line method over 10
years.
INCOME TAXES - Income taxes are computed using the asset and liability
method. Under asset and liability method, deferred income tax assets
and liabilities are determined based on the differences between the
financial reporting and tax bases of assets and liabilities and are
measured using the currently enacted tax rates and laws.
BASIC AND DILUTED NET INCOME (Loss) Per Share - Basic net income (loss)
per share is computed using the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per
share is also computed using the weighted average number of common
shares outstanding during the period. The company has no convertible
debentures and no stock options or warrants outstanding.
COMPREHENSIVE INCOME - The Company has no significant components of
other comprehensive income and, accordingly, comprehensive income is
the same as net income for all periods.
PREFERRED STOCK - The Company has 5,000,000 shares authorized, par
value $.0001. The preferred stock is issuable with such rights,
preferences, privileges and such number of shares constituting each
series to be fixed by the Board of Directors without further action by
the holders of common stock or preferred stock. The Board of Directors
could, without stockholder approval, issue preferred stock with voting
and conversion rights, which could dilute the voting power of the
holders of common stock. There are no shares of preferred stock
outstanding.
COMMON STOCK - The common stock shares outstanding, 6,328,000, in these
statements have been adjusted to reflect a seven for ten stock split
which the Company effected October 2000. Prior to this split the
Company had 9,040,000 shares outstanding.
F-16
<PAGE>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 2000
================================================================================
NOTE 3 - FINANCIAL INSTRUMENTS
FAIR VALUE - The carrying values of cash and due to related parties
approximate fair values.
NOTE 4 - INCOME TAXES
Since the company has not yet realized income as of the date of this
report, no provision for income taxes has been made. At September 30,
2000, a deferred tax asset has not been recorded due to the company's
lack of operations to provide income to use the net operating loss
carryover of $142,015 which expires in 2020.
NOTE 5 - STOCK OPTION PLAN
The Company, in August, 2000, adopted its 2000 Stock Option Plan (the
"Plan). Under this 595,000 shares of commons stock are reserved for
issuance upon exercise of options. The Board of the Company has the
discretion to determine if these will be incentive stock options (ISOs)
under Sec. 422A of the Internal Revenue Code of 1986, as amended
(Code), or non-incentive stock options.
Under the terms of the Plan, all directors, officers and key employees
of, and consultants to, the Company and all its subsidiaries are
eligible for option grants of options. The Committee (which must
include non-employee directors), or, in the absence of the appointment
of a committee, the Board determines, in its discretion, which persons
will receive option grants, the number of shares subject to each
option, the exercise price, which may not be less than the fair value
of the shares subject to the option as determined by the Committee,
except that in the case of ISOs, the exercise price must be at least
one hundred percent (100%) of the fair market value of the optioned
shares on the date of grant, or one hundred and ten percent (110%) of
such fair market value if the optionee is the owner of more than ten
percent (10%) of the total combined voting power of all classes of
voting stock of the Registrant (a "10% Holder"), and the term (which
may not be more than ten (10) years from the date of grant, or five (5)
years in the case of an ISO granted to a 10% holder) thereof. The Plan
permits options granted thereunder to be exercised by the tender of
shares of common stock having a fair market value equal to the exercise
price of such option or, if provided in the option, by the surrender of
options with an intrinsic value equal to the exercise price of the
remaining options being exercised.
Grants for 394,000 of the 595,000 options available under the plan have
been made. These options have an exercise price of $6.00 per share, are
for four years and vest as to one third of the shares covered thereby
on each anniversary date.
F-17
<PAGE>
ENABLEWARE TECHNOLOGY, INC.
(FORMERLY INTERNET BRANDSMALL, INC.)
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 2000
================================================================================
NOTE 6 - COMMITMENT
The Company has entered into a 3-year employment agreement with Robert
Ziglin, President and CEO. It provides for a base salary of $100,000
plus a bonus equal to 8% of pre-tax profits, if any.
NOTE 7 - SUBSEQUENT EVENT
The Company is in the process of filing a Registration Statement Form
SB-2 for the sale of minimum of 100,000 units to a maximum of 500,000
units at $6.20 per unit. A unit consists of one share of common stock
for $6.00 and two redeemable Warrants at $.10 each. The units are to be
sold on best efforts "100,000 units or none" basis. Each warrant
entitles the holder to purchase one share of common stock for $7.00 for
a period of five years from the date of the prospectus. The Company
retains the right to redeem the Warrants for $.05 each with a 30-day
notice at a time when the Common stock has had a closing bid price of
no less than $8.40 for twenty consecutive trading days.
F-18
<PAGE>
================================================================================
100,000 Units Minimum
500,000 Units Maximum
ENABLEWARE TECHNOLOGY, INC.
----------------------------------
PROSPECTUS
----------------------------------
SECURITY CAPITAL TRADING, INC.
December __, 2000
================================================================================
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Company's Certificate of Incorporation provides for
indemnification of the Company's officers and directors to the fullest extent
permitted under the General Corporation Law of the State of Delaware ("DGCL").
SECTION 145 of the DGCL, as amended, applies to the Company and the
relevant portion of the DGCL provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
II-1
<PAGE>
of any action, suit or proceeding referred to in subsections (a) and
(b) of this section, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence
had continued, would have had power and authority to indemnify its
directors, officer and employees or agents, so that any person who is
or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had continued.
II-2
<PAGE>
(i) For purpose of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
The Company maintains insurance for the benefit of its directors and
officers and the directors and officers of its subsidiaries, insuring such
persons against certain liabilities, including liabilities arising under the
securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable. Furthermore, the Company has given certain
undertakings with respect to indemnification in connection with this
Registration Statement.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission filing fee $ 2,960.59
National Association of Securities Dealers, Inc. filing fee $ 1,617.21
Printing Costs $ 10,000.00*
Blue Sky Fees and Expenses $ 10,000.00*
Legal fees and expenses $ 10,000.00*
Accounting fees and expenses $ 7,500.00*
Miscellaneous $ 5,422.20
-------------
Total $ 47,500.00*
=============
* All amounts estimated except for Securities and Exchange Commission and
National Association of Securities Dealers, Inc. filing fee.
All of these expenses of issuance and distribution will be paid by the
Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In May 2000, the Company sold an aggregate of 5,140,000 shares of its
common stock to its founders at $.001 per share. These sales were exempt from
the registration provisions of the Securities Act of 1933, as amended, by reason
of section 4(2) thereof as a transaction by an issuer no involving any public
offering. As a result of a seven for ten reverse stock split effected in October
2000, the 5,140,000 shares were reduced to 3,598,000 shares.
II-3
<PAGE>
In August 2000, the Company effected an acquisition of all of the
issued and outstanding shares of Emerging Technologies, Inc., a privately held
Arizona corporation, in exchange for 3,300,000 of the Company's common stock.
This exchange was exempt from the registration provisions of the Securities Act
of 1933, as amended, by reason of section 4(2) thereof as a transaction by an
issuer no involving any public offering. As a result of a seven for ten reverse
stock split effected in October 2000, the 3,300,000 shares were reduced to
2,310,000 shares.
In July and August, 2000, the Company sold an aggregate of 600,000
shares of its common stock in a private placement under Rule 506 under the
Securities Act of 1933, as amended, to accredited investors at $.50 per share.
These sales were exempt from the registration provisions of the Securities Act
of 1933, as amended, by reason of section 4(2) thereof as a transaction by an
issuer no involving any public offering. As a result of a seven for ten reverse
stock split effected in October 2000, the 600,000 shares were reduced to 420,000
shares.
ITEM 27. EXHIBITS.
Exhibit
Number Description
------ -----------
1.1 Form of Underwriting Agreement
1.2 Form of Selected Dealer's Agreement
3.1 Certificate of Incorporation of the Company under the name Health
Product Development.
3.2 Certificate of Amendment to the Certificate of Incorporation of
the Company changing its name to Enableware Technology, Inc. and
effecting a seven for ten reverse stock split.
3.3 Certificate of Amendment to the Certificate of Incorporation of
the Company changing its name to Internet Brandsmall, Inc.
3.4 By-laws of Company
4.1 Specimen certificate for Common Stock of the Company. *
4.2 Specimen Warrant Certificate.
4.3 Form of Warrant Agreement
4.4 Form of Underwriter's Unit Purchase Option
5.01 Opinion of Frank J. Hariton*
10.1 Form of Employment Contract between the Company and Robert Ziglin.
10.2 Customer Solutions Agreement between the Company and International
Business Machines Corporation, dated October 4, 2000*
10.3 Acquisition Agreement, dated as of June 15, 2000, by and among
Internet Bransdsmall, Inc., a Delaware corporation ("Acquiror")
and Emerging Technologies, Inc., a Arizona corporation and its
shareholders
11-4
<PAGE>
23.1 Consent of Simon Krowitz Bolin & Associates, P.A.
23.2 Consent of Frank J. Hariton (to be included in Exhibit 5.01)*
24.1 Power of Attorney - included in Part II
27.1 Financial Data Schedule
* To be filed by amendment
Item 29. Undertakings.
A. Rule 415 Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement or the most recent post-effective
amendment thereof which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3, Form S-8, and the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. INDEMNIFICATION UNDERTAKINGS.
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 provisions described in Item 15 above, 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 against the Registrant 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
II-5
<PAGE>
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-6
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of Phoenix
and State of Arizona on December 21, 2000.
Enableware Technology, Inc.
By: /S/ ROBERT ZIGLIN
--------------------------------------
Robert Ziglin, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert Ziglin his true and lawful
attorney-in-fact and agent, with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all 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 and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitutes may lawfully 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 by the following persons in the
capacities and on the dates indicated:
/s/ ROBERT ZIGLIN Director, Chairman of the Board, December 21, 2000
-------------------- President and Chief Executive Officer
Robert Ziglin (Principal Executive, Accounting and
Financial Officer)
/s/ JAMES COX Director and Executive Vice President December 21, 2000
--------------------
James Cox
/s/ FRANK J. HARITON Director and Secretary December 21, 2000
--------------------
Frank J. Hariton
II-7
