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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFORETECH WIRELESS TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
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Nevada 8900 88-0350120
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
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Suite 214
5500 - 152nd Street
Surrey, BC Canada V358E7
Tel: (604) 576-7442
Fax: (604) 576-7460
Attention: Robert C. Silzer, Sr.
(Name, Address, Telephone Number and Facsimile Number of Agent For Service of
Process)
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Copies of all communications to:
DAVID L. FICKSMAN, ESQ.
Loeb & Loeb LLP
10100 Santa Monica Boulevard
Suite 2200
Los Angeles, California 90067-4164
Tel: (310) 282-2350
Fax: (310) 282-2192
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Approximate Date of Proposed Sale to the Public: As soon as possible after the
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Title of Each Class Amount Proposed Maximum Proposed Maximum Amount
of Securities To Be Offering Price Aggregate Offering of
To Be Registered Registered (1) Per Unit Price Registration Fee
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Common Stock underlying the Series 425,000 (2) $ 5.25(4) $ 2,231,250 $ 589.00
A 8% Convertible Notes
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Common Stock underlying the 8% 500,000 (3) $ 5.25(4) $ 2,625,000 $ 693.00
Convertible Debenture
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Class A Common Stock underlying 100,000 $ 6.25 $ 625,000 $ 165.00
the Augustine Warrants
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Class A Common Stock underlying 100,000 $ 6.21 $ 621,000 $ 164.00
the Shaar Warrants
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TMR Shares 230,000 $ 5.25(4) $ 1,207,500 $ 318.00
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Class A Common Stock underlying 430,000 $ 2.00 $ 860,000 $ 227.00
the TMR Warrants
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Abacus Shares (Details to come 20,000 $ 5.25(4) $ 105,000 $ 28.00
from John Greenslade or Susan
Leah, counsel to Abacus)
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Total 1,805,000 -- $ 8,274,750 $ 2,184.00
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(1) Represents the shares of class A common stock being registered are being
offered by certain security holders of Inforetech. See "Recent
Transactions" and "Selling Security Holders". Pursuant to Rule 416(a) of
the Securities Act of 1933, as amended (the "Securities Act") the shares of
class A common stock offered hereby also include such presently
indeterminate number of shares of class A common stock as shall be issued
by Inforetech in connection with the conversion of certain debt securities.
Such number of shares is subject to adjustment and could be materially less
than such estimated amount depending upon factors that cannot be predicted
by Inforetech at this time, including, among others, the future market
price of the class A common stock. This presentation is not intended to
constitute a prediction as to the future market price of the class A common
stock or as to the number of shares of class A common stock issuable upon
exercise of the convertible debenture or convertible notes.
(2) Includes: (i) 301,703 shares issuable upon conversion of the Series A 8%
Convertible Notes and related potential interest expense, and (ii) 123,297
shares representing reserve shares that may be needed to account for market
fluctuations in the price of the common stock prior to the conversion of
the Series A 8% Convertible Notes.
(3) Includes: (i) 347,238 shares issuable upon conversion of the 8% Convertible
Debenture and related potential interest expense, and (ii) 152,762 shares
representing reserve shares that may be needed to account for market
fluctuations in the price of the common stock prior to the conversion of
the 8% Convertible Debenture.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effectiveness 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, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said section 8(a), may determine.
PART I
INFORMATION REQUIRED IN PROSPECTUS
The selling security holders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time that the registration statement becomes effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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PROSPECTUS
INFORETECH WIRELESS TECHNOLOGY, INC.
1,805,000 Shares of Class A Common Stock
The 1,805,000 shares of class A common stock par value $.001 being offered
by this prospectus are being offered by the selling security holders listed on
page 32.
Our common stock trades on the Over-the-Counter Bulletin Board, also called
the OTCBB, under the trading symbol "WYRE". On September 29, 2000, the closing
bid for our common stock as reported on the OTCBB was $4.38 per share.
This investment involves risk. See "Risk Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities or determined that this
prospectus is complete or accurate. Any representation to the contrary is a
criminal offense.
The date of this prospectus is October 4, 2000
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information; Incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the SEC will automatically update or supersede this information. We
incorporate by reference the documents listed below and any future filing we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
1. General Registration on Form 10-SB12G filed on June 4, 1999;
2. Annual Report on Form 10K-SB for the fiscal year ended December 31, 1999; and
3. Quarterly Reports on Form 10-QSB for the periods ended May 31, 2000, and June
30, 2000.
You may request a copy of these filings, at no cost, by writing to us at 5500
52nd Street, Suite 214, Surrey, BC V358E7, phone (604) 576-7442, attention
Corporate Secretary.
We have retained no underwriters in connection with this offering.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. 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.
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TABLE OF CONTENTS
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Page
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Prospectus Summary...................................................................... 1
Recent Transactions..................................................................... 1
Corporate Information................................................................... 2
This Offering........................................................................... 3
Risk Factors............................................................................ 4
Forward-looking Statements.............................................................. 9
Use of Proceeds......................................................................... 9
Market Price for the Common Stock....................................................... 9
Transfer Agent and Registrar............................................................ 10
Dividend Policy......................................................................... 10
Management's Discussion and Analysis or Plan of Operation............................... 10
Business................................................................................ 16
Property................................................................................ 23
Management.............................................................................. 23
Executive Compensation.................................................................. 25
Security Ownership of Certain Beneficial Owners and Management.......................... 26
Limitation on Liability and Indemnification Matters..................................... 28
Certain Relationships and Related Transactions.......................................... 29
Description of Securities............................................................... 30
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Description of Debt Securities and Warrants............................................. 30
Nevada Anti-Takeover Provisions......................................................... 33
Plan of Distribution.................................................................... 33
Selling Security Holders................................................................ 34
Legal Proceedings....................................................................... 35
Experts................................................................................. 35
Legal Matters........................................................................... 35
Changes in Registrant's Certifying Accountants.......................................... 35
Additional Information.................................................................. 36
Financial Statements.................................................................... F-1
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PROSPECTUS SUMMARY
You should read this entire prospectus and our consolidated financial
statements and related notes carefully. Unless the context requires otherwise,
'we', 'us', 'our' and similar terms refer to Inforetech Wireless Technology,
Inc.
Our Company
Inforetech was; Incorporated on December 12, 1995 as Diversified Marketing
Services, Inc. On January 3, 2000, we changed our name from "Diversified
Marketing Services, Inc." to "Inforetech Wireless Technology Inc." We are a
development stage company which, through our wholly owned subsidiary Inforetech
Golf Technology 2000 Inc., have created a wireless pace of play information
system for golf courses under the name "Inforemer 2000". The Inforemer 2000
system uses data from global positioning satellites (GPS), managed and
communicated through a variety of advanced technologies.
In February, 2000, we completed the acquisition of Inforetech Golf
Technology 2000 Inc. Pursuant to the terms of a Share Exchange and Finance
Agreement dated December 16, 1999. As a result of this transaction, the former
shareholders of Inforetech Golf Technology 2000 Inc. now hold the majority of
the shares of Inforetech.
Since our inception, we have been engaged in research and development of
the Inforemer 2000 system. During the latter half of 1999, we brought in house a
considerable portion of the research and development that we had formerly sub-
contracted. This strategic decision enabled us to better monitor the integration
of the various technologies and to position the Inforemer 2000 system for the
transition from prototype to commercial production.
We are currently conducting product evaluations. Early results from these
evaluations indicate that the Inforemer 2000 is performing well in a number of
respects; the results also indicate the need for further modifications in order
to meet performance expectations. We anticipate that our product evaluations and
modifications will continue well into the fourth quarter of 2000 and we intend
to commercialize the system following the successful completion of our
evaluations and modifications.
RECENT TRANSACTIONS
Financings
On August 4, 2000, we entered into a securities purchase agreement with
Augustine Fund, L.P. relating to the sale of $1,000,000 in principal amount of
our Series A Eight Percent (8%) Convertible Notes Due August 4, 2003 and
warrants to purchase up to 100,000 shares of our class A common stock. The notes
are convertible (plus related interest expense) into our
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class A common stock at the lessor of (i) $5.25 or (ii) 75% of the average
closing bid price of our common shares for the five days immediately preceding
the conversion date.
On August 4, 2000, we entered into a securities purchase agreement with The
Shaar Fund Ltd. relating to the sale of $1,000,000 in principal amount of our 8%
Convertible Debenture Due August 4, 2005 and warrants to purchase up to 100,000
shares of our class A common stock. The debenture is convertible (plus related
interest expense) into our class A common stock at the lessor of (i) $5.25 or
(ii) 75% of the average of the lowest three closing bid prices of our common
shares during the ten trading days immediately preceding the conversion date.
On September 8, 2000, we entered into a subscription agreement with Dr.
Terrance H. Matthews relating to the sale of 222,223 shares of class A common
stock for an aggregate amount of $1,000,000. Closing is expected to be on
October 10, 2000.
Acquisition
We signed a binding letter of intent on August 21, 2000 to acquire ProShot
Golf, Inc. in a share exchange transaction. Completion of the transaction is
subject to the completion of due diligence and the execution of a definitive
purchase agreement. Closing is expected to be on October 15, 2000.
CORPORATE INFORMATION
Our corporate offices are located at 5500 - 152nd Street, Suite 214,
Surrey, British Columbia V35-8E7. Our telephone number at that location is (604)
576-7442, and our facsimile number is (604) 576-7460. The URL for our Web site
is http://www.Inforetech.com.
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THIS OFFERING
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Total Number of Class A Common Stock 1,805,000.
offered pursuant to this prospectus
Class A Common Stock to be Includes up to 425,000 shares underlying the Series
offered by the Note Holders A Eight (8%) Convertible Notes and 100,000 shares
underlying the Augustine Warrants.
Class A Common Stock to be Includes up to 500,000 shares underlying the 8%
offered by the Debenture Holders Convertible Debenture and 100,000 shares underlying
the Shaar Warrants.
Class A Common Stock to be 20,000 shares issued to Abacus Capital L.L.C. in
offered by the Abacus Capital L.L.C. exchange for 20,000 shares of Inforetech Golf 2000,
Inc. issued to Abacus in connection with the Loan
Agreement, dated September 2, 1998 by and between
Inforetech Golf 2000, Inc. and Abacus Capital,
L.L.C.
Class A Common Stock to be Includes up to 430,000 shares issuable upon
offered by the TMR Investments 1 LLC exercise of the TMR Warrants and 230,000 shares
issued to TMR Investments 1 LLC in exchange for
230,000 shares of Inforetech Golf 2000, Inc. issued
to TMR upon conversion of the principal and
accumulated interest due to TMR as assignee of the
Loan Agreement, dated September 2, 1998 by and
between Inforetech Golf 2000, Inc. and Abacus
Capital, L.L.C.
Trading Our class A common stock trades on the Over-the
Counter Bulletin Board, also called OTCBB, under
the trading symbol "WYRE". The market for our
common stock is volatile.
Use of Proceeds We will not receive any proceeds from the sales of
the shares of common stock being offered by the
selling security holders. We will receive the
proceeds from the exercise of the warrants, when
and if any warrants are exercised. We will use any
proceeds for working capital.
Risk Factors All of the shares of class A common stock offered
hereby involve a high degree of risk. See "Risk
Factors.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment in Inforetech. The risks and uncertainties described below are not
the only ones facing Inforetech, and there may be additional risks that we do
not presently know of or that we consider immaterial. All of these risks may
impair our business operations. If any of the following risks actually occurs,
our business, financial condition or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
Risks Related to Inforetech
We have a Limited Operating History.
We have a limited operating history and we are in our emerging stages.
There can be no assurance that we will continue to develop or will be able to
meet our objectives, or that there will be a market for our products and
services, or that we will operate at a profit. We face a number of risks
encountered by early-stage companies, including:
. the uncertainty of market acceptance of our services;
. our need to introduce reliable and robust products and services that
meet the demanding needs of customers;
. our need to expand our marketing, sales and support organizations, as
well as our distribution channels; and
. our ability to anticipate and respond to market competition; our need
to manage expanding operations.
We have a history of losses.
We have incurred operating losses since our inception and we expect to sustain
additional operating losses in the future. Our operating losses are attributable
to the developing nature of our business and have resulted primarily from:
. significant costs associated with the development of our products;
. marketing and distribution of our products; and
. minimal sales history of our recently developed products.
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We cannot be certain that additional funds will be available when needed on
satisfactory terms, if at all. Without additional funds, we will cease
operating.
We cannot be certain of the amount of additional capital we will need. Our
future capital needs depend on many factors, including the success and timing of
our development efforts; market acceptance of the Inforemer 2000; the level of
promotion and advertising required to launch our product; changes in technology;
and unanticipated competition. Without additional funds, we will cease
operating.
We depend on GPS technology owned and controlled by others. If we do not have
continued access to GPS technology and satellites, we will be unable to deliver
our services and our revenues will decrease.
Our services rely on signals from GPS satellites built and maintained by
the U.S. Department of Defense. GPS satellites and their ground support systems
are subject to electronic and mechanical failures and sabotage. If one or more
satellites malfunction, there could be a substantial delay before they are
repaired or replaced, if at all, and our services may cease and customer
satisfaction would suffer.
In addition, the U.S. government could decide not to continue to operate
and maintain GPS satellites over a long period of time or to charge for the use
of GPS. Furthermore, because of ever-increasing commercial applications of GPS,
other U.S. government agencies may become involved in the administration or the
regulation of the use of GPS signals in the future. If the foregoing factors
affect GPS, such as by affecting the availability and pricing of GPS technology,
our business will suffer.
Our GPS technology depends on the use of radio frequency spectrum controlled by
others.
Our GPS technology is dependent on the use of radio frequency spectrum. The
assignment of spectrum is controlled by an international organization known as
the International Telecommunications Union or ITU. The Federal Communications
Commission or FCC is responsible for the assignment of spectrum for non-
government use in the United States in accordance with ITU regulations. Any ITU
or FCC reallocation of radio frequency spectrum, including frequency band
segmentation or sharing of spectrum, could cause interference with the reception
of GPS signals and may materially and adversely affect the utility and
reliability of our products, which would, in turn, cause a material adverse
effect on our operating results. In addition, emissions from mobile satellite
service and other equipment operating in adjacent frequency bands or inband may
materially and adversely affect the utility and reliability of our products,
which could result in a material adverse effect on our operating results.
On May 11, 2000, the FCC issued a Notice of Proposed Rulemaking that
proposes rules for the operation of Ultra-Wideband or UWB radio devices on an
unlicensed basis in the frequency bands allocated to GPS. If the FCC issues
final rules authorizing such operation, UWB devices might cause interference
with the reception of GPS signals. Such interference could reduce demand for GPS
products in the future. Any resulting change in market demand for GPS products
could have an adverse effect on our financial results.
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Speculative Nature of Business.
The profits of an enterprise involved in the hand held electronics industry
are generally dependent upon many variables. Our customer appeal depends upon
factors, which cannot be reliably ascertained in advance and over which we have
no control, such as unpredictable critical reviews and appeal to the public.
We believe our products will be unsuccessful unless we establish market
recognition quickly after we introduce our products.
We believe it is imperative to our success that we obtain significant
market share for our products quickly, before other competitors establish a
significant market share. We believe that, if a market for products like ours
develops, an early entrant that gains significant market share will dominate the
market significantly reducing opportunities for competitors. We have very
limited experience conducting marketing campaigns, and we may fail to generate
significant interest. We cannot be certain that we will be able to build our
brand and realize commercial acceptance of our products.
Government regulations and standards may harm our business and could increase
our costs or reduce our opportunities to earn revenues.
In addition to regulations applicable to businesses in general, we may also
be subject to direct regulation by governmental agencies, including the FCC and
Department of Defense. A number of legislative and regulatory proposals under
consideration by federal, state, provincial, local and foreign governmental
organizations may lead to laws or regulations concerning various aspects of,
wireless communications and GPS technology. Additionally, it is uncertain how
existing laws governing issues such as taxation, intellectual property, libel,
user privacy and property ownership, will be applied to our services. The
adoption of new laws or the application of existing laws may expose us to
significant liabilities and additional operational requirements, which could
decrease the demand for our services and increase our cost of doing business.
We depend on intellectual property rights and development of new products and
the inability to obtain patents or develop new products may have an adverse
effect on our ability to be profitable.
Our success is partly dependent upon our intellectual property rights.
Effective protection may not be available for these rights. There can be no
assurance that a patent will provide adequate protection for the underlying
technology. While we have patents covering our technology, there is no assurance
that such patents will be able to prevent other companies from developing
substantially similar products. In addition, litigation may be necessary in the
future to enforce the intellectual property rights. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions of
resources, either of which could negatively affect our business.
We have a limited number of products in development. Developing additional
products requires a substantial investment of time and money. We do not
anticipate that we will be in a
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position to sell additional products in the foreseeable future. As such, our
success is largely dependent on generating licensing revenue and successfully
completing development of the Inforemer 2000.
Our future success is dependent upon our ability to retain key management.
Our success is dependent upon the continued services of Robert C. Silzer,
Sr., our chief Executive Officer and Chairman of the Board of Directors and upon
the skills, experience and efforts of our key marketing and other management
personnel. The loss of the continued services of any of these individuals could
have a negative effect on our business.
Conflicts of Interest.
We have engaged in transactions with our management in the past, and we can
be expected to engage in such transactions in the future. In each case, the
transactions are approved by our Board of Directors and are considered to be
fair to and in the best interests of Inforetech.
Competition.
We face competition in all aspects of our business. We compete for
customers with other electronics and recreation companies, many of which have
substantially greater assets and resources. Our primary competitors are
companies such as Par View, Inc., ProLink, Inc. and UpLink Corp. We have entered
into a letter of intent to acquire all of the capital stock of ProShot Golf,
Inc. See "Recent Transactions".
Our ability to compete successfully in the future will depend on several
factors, including:
. the cost effectiveness, quality, price, service and market acceptance
of our products;
. response to the entry of new competitors or the introduction of new
products by competitors;
. ability to keep pace with changing technology and customer
requirements;
. timely development or acquisition of new or enhanced products; and
. timing of new product introductions by Inforetech or our competitors.
Acquisitions of companies may disrupt telecom wireless' business and distract
management due to difficulties in assimilating personnel and operations.
If we acquire a company, we could face difficulties in assimilating that
company's personnel and operations. Acquisitions also involve the need for
integration into existing administration, services marketing, and support
efforts. These acquisitions and investments could disrupt its ongoing business,
distract management and employees and increase its expenses. In addition, key
personnel of the acquired company may decide not to work for us.
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Risks Related to This Offering
Like many technology companies, our stock price is likely to be volatile, which
may cause you to lose your investment and may result in costly litigation that
could divert our resources.
Stock markets have recently experienced dramatic price and volume
fluctuations, particularly for shares of technology companies. These
fluctuations can be unrelated to the operating performance of these companies.
Broad market fluctuations may reduce the market price of our common stock and
cause you to lose some or all of your investment. These fluctuations may be
exaggerated if the trading volume of our common stock is low. In addition, due
to the technology-intensive and emerging nature of our business, the market
price of our common stock may rise and fall in response to:
. announcements of technological or competitive developments;
. acquisitions or strategic alliances by us or our competitors;
. the gain or loss of a significant customer or order;
. changes in estimates of our financial performance or changes in
recommendations by securities analysts; and
. security breaches.
Future sales of our class A common stock registered for public sale by this
registration statement could cause our stock price to plummet, adversely
affecting our ability to raise funds in new stock offerings.
After this offering, approximately 13,000,000 class A common stock shares
may be sold on the public market as compared to 11,000,000 prior to this
offering. If demand to purchase our shares is weak, our stock price could
plummet and cause a significant loss of investment.
Our Common Stock is Penny Stock as defined in the Exchange Act and an investor
may find it more difficult to dispose of or obtain accurate quotations as to the
price of the shares of the Common Stock.
Our Stock is classified as penny stock which is traded in the over-the-
counter market on the OTC Bulletin Board. As a result, an investor may find it
more difficult to dispose of or obtain accurate quotations as to the price of
the shares of the common stock being registered hereby. In addition, the "penny
stock" rules adopted by the Commission under the Exchange Act subject the sale
of the shares of the common stock to certain regulations which impose sales
practice requirements on broker-dealers. For example, broker-dealers selling
such securities must, prior to effecting the transaction, provide their
customers with a document that discloses the risks of investing in such
securities. Furthermore, if the person purchasing the securities is someone
other than an accredited investor or an established customer of the broker-
dealer, the broker-
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dealer must also approve the potential customer's account by obtaining
information concerning the customer's financial situation, investment experience
and investment objectives. The broker-dealer must also make a determination
whether the transaction is suitable for the customer and whether the customer
has sufficient knowledge and experience in financial matters to be reasonably
expected to be capable of evaluating the risk of transactions in such
securities. Accordingly, the Commission's rules may limit the number of
potential purchasers of the shares of the common stock.
There may be resale restrictions with respect to our common stock.
Various state securities laws impose restrictions on transferring penny
stocks and as a result, investors in the common stock may have their ability to
sell their shares of the common stock impaired. For example, the Utah Securities
Commission prohibits brokers from soliciting buyers for penny stocks, which
makes selling them more difficult.
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus that are not related to historical
results, including statements regarding our business strategy and objectives and
future financial position, are forward-looking statements within the meaning of
the federal securities laws. Although we believe that the assumptions on which
these forward-looking statements are based are reasonable, we cannot assure that
they will prove to be accurate. Actual results could be substantially different
from those discussed in the forward-looking statements, due to a variety of
factors, including unforeseen changes in regulatory policies, competition from
other similar businesses, market factors and general economic conditions. All
forward-looking statements contained in this prospectus are qualified in their
entirety by this statement.
USE OF PROCEEDS
We will not receive any proceeds from the sales of the shares of common
stock being offered by the selling security holders. We will receive the
proceeds from the exercise of the warrants, when and if any warrants are
exercised. We will use any proceeds for working capital.
MARKET PRICE FOR COMMON STOCK
Our common stock was approved for trading on the OTC Bulletin Board under
the symbol "WYRE" and commenced trading in January 2000. The trading market is
limited and sporadic and should not be deemed to constitute an established
trading market. The high and low sales prices of the common stock as reported on
the OTC Bulletin Board for the time periods indicated are set forth on the table
below. Sales prices do not reflect any commission or discount.
Price Range
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High Low
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Fiscal Year Ended December 31, 2000
First Quarter $10.28 $5.00
Second Quarter $ 9.50 $5.13
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Third Quarter $ 6.59 $4.38
As of September 29, 2000, there were 11,076,522 shares of our class A
common stock outstanding and we had approximately 100 shareholders of record.
TRANSFER AGENT AND REGISTRAR
Our transfer agent is Signature Stock Transfer, Inc. located at 14675
Midway Road, Suite 221 Addison, TX 75001.
DIVIDEND POLICY
We have never paid dividends on our common stock and we do not anticipate
paying dividends in the foreseeable future, any earnings will be retained for
use in our business.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read along with the consolidated
financial statements and the related notes appearing elsewhere in this
prospectus.
Overview:
We are a development stage company and through our wholly owned subsidiary,
Inforetech Golf Technology 2000, Inc. we have created a wireless pace of play
information system, we call the Inforemer 2000, for golf courses. The Inforemer
2000 system uses data from global positioning satellites (GPS) managed and
communicated through a variety of advanced technologies.
In February, 2000, we completed an acquisition of Inforetech Golf. Pursuant
to the terms of a Share Exchange and Finance agreement dated December 16, 1999,
we issued 3,308,582 Class A common shares and 7,095,750 units consisting of
Class B preference shares of Inforetech Holdings Ltd. and Class B special voting
shares of Inforetech, in exchange for all the issued and outstanding shares of
Inforetech Golf. As a result of this transaction, the former shareholders of
Inforetech Golf held the majority of the shares of Inforetech and accordingly,
the business combination was accounted for as a reverse takeover with Inforetech
Golf as the deemed acquiror. The consolidated financial statements reflect the
acquisition of Inforetech Golf by Inforetech and are deemed to be a continuation
of Inforetech Golf. As a consequence, the comparative figures presented are
those of Inforetech Golf.
Since our inception, we have been engaged in research and development of
our basic system. During the latter half of 1999, we brought in house a
considerable portion of the research and development that it had formerly sub-
contracted. This strategic decision enabled the company to better monitor the
integration of the various technologies and to position itself for the
transition from prototype to commercial production. This decision also resulted
in a sharp increase in payroll costs as company employees replaced sub-
contractors.
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We are currently conducting product evaluations. Early results from these
evaluations indicate that the Inforemer 2000 is performing well in a number of
respects; the results also indicate the need for further modifications in order
to meet performance expectations. We anticipate that our product evaluations and
modifications will continue into the fourth quarter of 2000 and we intend to
commercialize the system following their successful completion.
These forward looking statements reflect assumptions made by management and
management's beliefs based on information currently available to it and they
will be impacted by the company's ability to timely and successfully complete
product development and testing, the outcome of end-user product evaluations,
the available supply of units to meet anticipated market demand and obtaining
additional financial resources. As of the date of this report, Inforetech
believes that it has made significant progress toward identifying and completing
the product refinements.
The Period August 1, 1999 To December 31, 1999 Compared To The Period August 11,
1998 To July 31, 1999
Sales Revenue.
We had no sales revenue in either period.
Operating expenses increased on a pro-rata basis in the period August 1,
1999 to December 31st, 1999 compared to the earlier period August 11, 1998 To
July 31, 1999. The following table sets forth the operating expenses:
<TABLE>
<CAPTION>
Period August 1, 1999 to
December 31, 1999 on a pro rata Period August 1, 1999 to Period August 11, 1998
basis to period July 31, 1999 December 31, 1999 to July 31, 1999
----------------------------- ----------------- -----------------
(dollars in thousands)
<S> <C> <C> <C>
Administration $1,154 $ 499 $ 627
Amortization 51 22 11
Finance costs 641 277 278
Marketing 571 247 304
Research and Development 1,788 773 1,154
Total Expenses $4,205 $1,818 $2,374
</TABLE>
Administration Expenses
The increase in administration expenses is attributable to an increase in
legal, audit, and consulting fees as well as employee related costs and lease
costs as we grew our administration.
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Amortization
The increase in amortization is a result of (1) an increase in the Fixed
Asset base and (2) Fixed Assets acquired in the prior period incurred only half
a year's depreciation in that period compared to a full years depreciation in
subsequent years.
Finance Costs
The increase in finance costs is primarily due to the increase in finders
and other fees incurred in order to obtain financing for Inforetech Golf.
Marketing
The increase in marketing expenses is attributable to an increase in
salaries, traveling expenses, trade shows and promotional activities.
Research and Development
During the latter period there was a substantial increase on a pro-rata
basis of research and development expenses over the prior period. The primary
reasons for the increase are as follows: (1) corporate decision to accelerate
the completion of the first stage of development; (2) the decision to bring in
house a substantial part of the work that was formerly undertaken by sub-
contractors; (3) a major increase in payroll costs as the company undertook a
major hiring program of engineers and other technical staff.
Scientific Research and Experimental Development Tax Credits
Certain of the Inforetech Golf's research expenditures may be eligible for
the Canadian Government Scientific Research and Experimental Development
("SR&ED") tax credit. Under this program, Canadian controlled private
corporations (Inforetech Golf was a Canadian controlled private corporation up
to February 2, 2000) can receive a refundable tax credit of up to 35% for
qualifying SR&ED expenditures to a maximum limit of $2,000,000 in expenditures.
Companies with expenditures over $2,000,000 can receive an investment tax credit
of up to 20% for qualifying SR&ED expenditures.
No determination has been made as to eligibility or amount of the
investment tax credit. Any amounts received under the program would be applied
against research and development expenditures in the period received.
Liquidity And Capital Resources.
At December 31, 1999 we had bank indebtedness of $4,214 compared to
$156,404 at July 31, 1999. Working capital was ($3,703,687) and ($3,005,204) at
December 31, 1999 and July 31, 1999 respectively.
Operating activities used cash of $1,656,305 and $2,037,001 for the periods
August 1, 1999 to December 31, 1999 and August 11, 1998 to July 31, 1999
respectively. The increase in cash
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usage on a pro-rata basis for the period August 1, 1999 to December 31, 1999 was
principally caused by an increase in operating losses as we geared up our
administration, marketing and research and develop departments.
Financing for the period August 1, 1999 to December 31, 1999 provided cash of
$1,930,545 consisting primarily of Loans, compared to $3,050,559 for the period
August 11, 1998 to July 31, 1999 where the principal source of finance was
Promissory Notes.
We will require substantial additional financing to complete the current and
long-term product development, marketing and working capital. On February 2,
2000, we raised $3,152,000 through a private placement of common stock of which
$2,000,000 was used to repay loans of Inforetech Golf. There can be no
assurances that any additional financing will take place or, if so, the terms
thereof. To the extent of any shortfall in financing, our product development
and commercialization programs will be delayed, curtailed or prevented and we
may be required to suspend or substantially modify our operations.
Six-month period Ended June 30, 2000 compared to the six-month period ended June
30, 1999
Results of Operations.
We had no revenue for the six-months ended June 30, 2000 or six-months ended
June 30, 1999.
The net loss for the six-months ended June 30, 2000 was $3,373,122 compared
with a net loss of $1,160,313 for the six-months ended June 30, 1999.
Administration expenses for the six-months ended June 30, 2000 were $837,709
compared to $342,057 for the same period in 1999. The increase was primarily due
to a substantial increase in the amount of legal, audit and consulting fees
incurred. In addition, administrative salaries increased period over period as
we added to our administrative staff.
Depreciation expense for the six-months ended June 30, 2000 was $27,909,
compared to $5,781 for the same period in 1999. The increase was a result of an
increase in the property and equipment asset base.
Financing costs for the six-months ended June 30, 2000 were $415,578 compared
to $157,360 for the same period in 1999. The primary reason for the increase
was the $ 388,800 beneficial conversion charge related to a convertible loan.
Marketing costs for the six-months ended June 30, 2000 were $538,473 compared
to $186,982 for the same period in 1999. The primary reason for the increase
was an increase in both salaries and trade show expenses.
Research and development expenses for the six-months ended June 30, 2000 were
$1,553,453 compared to $468,133 for the same period in 1999. The primary
reasons for the increase were (1) acceleration of the completion of the first
stage of development; (2) the bringing in house of a substantial part of the
work that was formerly undertaken by sub-
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<PAGE>
contractors; (3) and an increase in payroll costs as we undertook a major hiring
program of engineers and other technical staff.
Liquidity and Capital Resources.
At June 30, 2000 we had bank indebtedness of $212,580 compared to bank
indebtedness of $69,628 at June 30, 1999 and $4,214 at December 31, 1999.
For the six-months ended June 30, 2000 operating activities used cash of
$2,067,674 compared to $1,027,124 for the same period in 1999. The principal
reason for the increase in cash usage in the current period was the increase in
the net loss as we expanded our administration, marketing and research and
development departments.
During the six-months ended June 30, 2000 we purchased property and equipment
of $79,827 compared to $43,438 for the same period in 1999.
For the six-months ended June 30, 2000 financing activities provided cash of
$2,147,501. We raised $3,102,000 of equity through a private placement of
common stock, $100,000 from the exercise of options and $300,000 from a
convertible loan, from which loans and promissory notes of $1,562,865 were
repaid.
For the six-months ended June 30, 1999, financing activities provided cash of
$1,070,562. We raised $477,251 of equity and $599,850 in loans and promissory
notes.
For the six-months ended June 30, 2000, $543,720, of convertible notes were
converted to shares of our class A common stock and shares of our class A common
stock were issued for $294,253 of services.
Since June 30, 2000 we acquired additional financing of $1,000,000 through the
issuance of convertible notes; $1,000,000 through the issuance of a convertible
debenture; and $1,000,000 through the sale of 222,223 shares of class A common
stock. We will require substantial additional financing to complete current and
long-term product development, marketing and working capital.
We have historically relied upon sales of our common stock, debt instruments
and loans from our founder to finance research and development, marketing and
operations. Additional financing will be required for current and long-term
research and development, marketing and working capital. We continue to pursue
opportunities for a private equity offering and/or debt financing. There can be
no assurances that any additional financing will take place or, if so, the terms
thereof. To the extent of any shortfall in financing, our product development
and commercialization programs will be delayed, curtailed or prevented, and we
may be required to suspend or substantially modify our operations.
Quantitative and Qualitative Disclosure about Market Risks.
The SEC's rule related to market risk disclosure requires that we describe and
quantify our potential losses from market risk sensitive instruments
attributable to reasonably possible market
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changes. Market risk sensitive instruments include all financial or commodity
instruments and other financial instruments that are sensitive to future changes
in interest rates, currency exchange rates, commodity prices and other market
factors. We are not exposed to market risks from changes in foreign currency
exchange rates, commodity prices or other market factors. We do not hold
derivative financial instruments nor do we hold securities for trading or
speculative purposes.
Inflation.
We do note believe that inflation has had a material effect on our business
over the past two years.
Year 2000 Issues.
The Year 2000 computer problem refers to the potential for system and
processing failure of date-related data as a result of computer-controlled
systems using two digits rather than four digits to define the applicable year.
For example, computer programs that have time-sensitive software may recognize a
date represented as ''00'' as the year 1900 rather than the Year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations including a temporary inability to process transactions, send
invoices or engage in similar normal business activities. To date, we have not
experienced any Year 2000 issues with any of our internal systems or services,
and we do not expect to experience any.
Recent Accounting Pronouncements.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," ("SFAS No. 130"), which is effective for
financial statements issued for fiscal years beginning after December 15, 1997.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income, its components and accumulated balances in a full set of
general-purpose financial statements. SFAS No. 130 defined comprehensive
income to include all changes in equity except those resulting from investments
by owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is presented with the same prominence as other
financial statements. Inforetech's only current component of comprehensive
income is foreign currency translation adjustment. We adopted SFAS No. 130 for
our fiscal year beginning January 1, 1998. Adoption of SFAS No. 130 did not
have a material effect on Inforetech's financial statement presentation and
disclosures.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS No. 131"), which supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise" and which is effective for financial
statements issued for fiscal years beginning after December 15, 1997. SFAS No.
131 establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial
statements. SFAS No. 131
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<PAGE>
also establishes standards for disclosures by public companies regarding
information about their major customers, operating segments, products and
services, and the geographic areas in which they operate. SFAS No. 131 defines
operating segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. SFAS No. 131 requires comparative information for earlier years to
be restated. Inforetech operates in only one segment, the manufacture and sale
of cartonboard packaging materials. We adopted SFAS No. 131 for our fiscal year
beginning January 1, 1998. Adoption of SFAS No. 131 did not have a material
effect on Inforetech's financial statement presentation and disclosures.
In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, "Employers' Disclosures about Pensions and Other Post Retirement
Benefits" ("SFAS No. 132"), which is effective for financial statements issued
for fiscal years beginning after December 15, 1997. SFAS No. 132 revises
employers' disclosures about pension and other post retirement benefit plans.
SFAS No. 132 requires comparative information for earlier years to be restated.
Inforetech does not have any pension or other post retirement benefit plans. We
adopted SFAS No. 132 for our fiscal year beginning January 1, 1998. Adoption of
SFAS No. 132 did not have a material effect on Inforetech's financial statement
presentation and disclosures.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"), which is effective for financial statements for all fiscal quarters of
all fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at fair value. SFAS No. 133 also addresses the accounting for hedging
activities. We will adopt SFAS No. 133 for our fiscal year beginning January 1,
2001. Inforetech currently does not have any derivative instruments nor is it
engaged in any hedging activities, thus Inforetech does not believe that
implementation of SFAS No. 133 will have a material effect on our financial
statement presentation and disclosures.
BUSINESS
Overview
Inforetech is a development stage technology company, which has created a
pace-of-play information system, Inforemer 2000, for golf courses. The Inforemer
2000 system uses data from global positioning satellites (GPS), managed and
communicated through a variety of advanced technologies, to provide, among other
things, pace-of-play information to golf course managers and "game and shot
management" to golfers. Inforetech believes that the Inforemer 2000 is the only
GPS information system which is completely portable, as opposed to being mounted
on a golf cart, and that this will provide a competitive advantage. Inforetech
intends to install the Inforemer 2000 system in three to four North American
golf courses on a test basis by late fall of 2000 to enable it to attempt to
fine tune and balance the various components.
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Inforetech's objective is to have the system ready for commercial distribution
by the fourth quarter of 2000.
Industry
As one of the oldest organized sports in the world, golf is enjoyed by over 30
million Americans. The game's ongoing vitality is evidenced by its ability to
attract participants from all demographic strata and skill groups. The game has
been transformed from a sport enjoyed by a few, to a sport enjoyed by a broad
cross-section of society. According to the National Golf Foundation's 1999
publication "A Strategic Perspective on the Future of Golf," prepared
collaboratively by the National Golf Foundation and the international management
consulting firm, McKinsey & Company, golf has enjoyed explosive growth over the
last 50 years. Over the more recent past, there has also been a strong growth in
golf course investment.
The number of United States golfers has grown from 3.5 million in 1950 to over
30 million today, making it one of the most widely enjoyed leisure pastimes. In
1950, nearly two out of three golf courses were restricted to members and their
guests. Today, that ratio has reversed, and public access golf courses now
represent over 70% of all golf facilities in the United States.
According to the National Golf Foundation, North American golfers play more
than 600 million rounds of golf annually on over 18,000 golf courses in America.
Inforetech believes that golf is a high growth activity whose popularity
coincides with the affluence of the baby boomer generation, which is turning to
golf as a healthy leisure activity. The National Golf Foundation believes that
over 2,000 new golf courses are being planned or are under construction in North
America. Golf also enjoys significant popularity outside of North America. Over
50 million golfers play on more than 37,000 courses worldwide.
Products
Traditional Attributes of Golf Which Create an Opportunity for GPS Systems Such
As Inforemer 2000
Inforetech believes that pace-of-play is a major concern for golf course
owners and managers, as it directly impacts on both revenue potential and bottom
line results of golf facilities. Research on golf course operations undertaken
by the National Golf Foundation appears to support Inforetech's view of the
pace-of-play issue. Simply stated, pace-of-play is shorthand for the speed by
which golf twosomes or foursomes move through the golf course. Because a
foursome cannot proceed to the next hole until the foursome in front of them has
completed the hole, one slow foursome can slow down an entire golf course. This
reduces the number of paying golfers that can work through the course, and
frustrates the vast majority of golfers that wish to play through the course in
a timely fashion.
A major cause of slow foursomes is the time that players take attempting to
eyeball the distance to the flagstick or using course markers to determine it.
Players regularly consult their partners, or walk part way to the flagstick to
locate markers, or to otherwise better judge distance,
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in order to select a suitable club. The result is slow play, reduction in paying
golfers working through the course and reduction in golfers' enjoyment and
loyalty which in turn reduces golfer participation at facilities. All of these
result in reduced revenues.
The traditional system of course marshals moving players through a course is
of limited effectiveness, as it is not always immediately apparent where the
slow foursome is located, it is time-consuming for the marshal to travel from
point to point, and the marshal can only be in one place at a time.
Technical Description of Inforemer 2000
The Inforemer 2000 is a comprehensive data network having the ability to
collect data from the global positioning satellites (GPS) and transfer data
between a central computer and a variety of peripherals including base station,
repeater, mobile handsets and charging cradles. The method of data communication
is unique to the Inforemer 2000 system and is achieved through a combination of
wireless radio and infra red (IR) technologies, as well as hard wired phone and
fiber optic cables all managed by internet protocols. Wireless radio is used to
communicate with the handsets while in operation on the golf course; IR links
fiber optic cabling and a dedicated internet connection is used to communicate
with the handsets while being recharged on the charging cradles.
Transmission Control Protocol/Internet Protocol (TCP/IP) is the communication
protocol used by the pace-of-play system to ensure reliability and maximum
system availability. TCP/IP provides virtually unlimited expandability and
unparalleled reliability and flexibility to meet future technological
enhancements thereby offering a continually advanced, unique and competitive
pace-of-play system. The TCP/IP protocol facilitates remote updating of
Clubhouse Computer and handset software via the internet. Every Inforemer 2000
system in operation will be updated with the latest software version in a
transparent and trouble free manner for the golf course management and users.
User golf courses will have a custom version of the proprietary software with
maps and information relating to that specific golf course. The maps are
created from digitized, image enhanced aerial photographs.
The core technical features of the system are the ability to communicate with
all the handsets in the field on a regular basis, and provide an accurate
positioning reading at the handset that allows the golfer to read distances on
the golf course. This is done through the use of a GPS device within the
handset, working in unison with a radio link that provides error correction
information from the clubhouse computer. This technology is known as
Differential GPS ("DGPS").
Benefits of the Inforemer 2000 GPS System
Benefits to Golf Course Owners and Management
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Inforetech believes that the Inforemer 2000 system will be a valuable tool
for managing a golf course. The system pinpoints course bottlenecks in real
time, and in theory should significantly increase revenues through greater
operational efficiencies and new revenue sources. The Inforemer 2000 system also
allows course administrators to view and analyze data and statistics relating to
the overall course operation and functionality. In particular, management
benefits from the following:
. increased golf course revenue by increasing pace-of-play,
. increased ability to sell food, beverage and pro shop items to golfers
on the course,
. potential advertising revenues through handset advertising,
. enhanced ability of course marshals/rangers to monitor and manage
pace-of-play in an impersonal and non-offensive manner,
. greater golfer satisfaction and playing enjoyment which enhances
golfer loyalty and attracts new golfers,
. management's ability to interact with all golfers on course, whether
in carts or walking,
. system is truly portable, provides access to 100% of golf course,
. monitors and manages tournament play and leader board, attracts
tournaments to course,
. provides messaging capability to each handset user from the pro shop
(a prompt to speed up play) or to alert all golfers about an impending
storm and provide emergency response access, and
. provides comprehensive custom prepared management reports.
Benefits to Golfers
Inforetech believes the Inforemer 2000 will increase golfers' enjoyment of
their golf game by providing them with accurate and real time data and
information displayed by light, portable handsets attached to power carts, hand
carts or carry bags. The handsets provide golfers with instant data relating to
ball position and golf course information, which is needed to facilitate "game
and shot management". In particular, Inforetech believes golfers will benefit
from the following features:
. real time information to 100% of the golf course,
. instant drive measurements from the tee,
. distance measurements to the flagstick, hazards, sand traps and land
marks, constantly updated via DGPS technology,
. detailed LCD screen layout of the entire golf course, each hole and
each green including green contours,
. professional golf tips for each hole and course,
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. ability to order food, beverages and pro-shop supplies while on the
course,
. receipt of important messages such as weather and storm advisories,
. emergency response access,
. detailed digital score card,
. ability to request attendance of the course marshal/ranger, or
notification of need for medical attention,
. increased pace-of-play,
. instant access to Professional Golfers Association rules and local
rules,
. access to tournament information,
. real time event information, and
. access to promotions and advertisements.
Marketing and Sales
General Business Plan
Inforetech currently intends to install the Inforemer 2000 system in three
to four golf courses in North America, by the fall of 2000. Because these
installations are to test and fine-tune the system, Inforetech will not receive
any revenues from these installations. Inforetech is attempting to get the
Inforemer 2000 system completely fine-tuned and ready for the general golf
course marketplace by the fourth quarter of 2000.
Inforetech currently hopes to enter the marketplace in the fourth quarter
of 2000, initially targeting high-end public courses, resort courses, semi-
private and also some private courses located in North America as described
below:
Private golf courses - focus on quality of service to members. Apart from
visitor fees, revenue is largely derived from membership dues. Potential
course revenue enhancement will likely be less important than increased
golfer satisfaction.
Semi-private courses - are owned by members but open to the public (revenue
subsidizes membership costs) or are owned privately but offering partial
public playing privileges. Golf courses in this category are expected to be
more receptive to increased revenue flows from additional rounds of golf,
increased food and beverage sales, and from external advertising.
Public golf courses - municipal governments or private ownership. Less
commitment to a fixed clientele and, with generally lower fee structures,
are likely to be more receptive to revenue enhancement opportunities. Many
such courses accept advertising on course promotional material and
scorecards. Payment terms will emphasize no initial capital outlay. Use of
the system by golfers on public courses may be optional (golfer's choice),
or required by course management. In each case the course owner can look to
revenue
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enhancement from possible increased fees, additional advertising revenue, and
increased numbers of golfers (the result of improved pace-of-play).
Resort courses - in North America, resort destinations (eventually a global
focus) will be strongly targeted. The trend for these types of developments
is to include full family recreation facilities utilizing new technology often
touted as a drawing card for attendance at the resort.
In addition, while Inforetech's primary focus is North American, international
opportunities will be reviewed and monitored as progress is made domestically.
In this regard, Inforetech will attempt to establish appropriate and profitable
international golfing contacts, and maintain contact with international firms
who indicate an interest in the system. Ultimately, Inforetech hopes to
establish an international sales network in Europe and Asia.
Marketing Strategy
Inforetech's advertising and promotional strategy will focus on "brand
recognition" of "Inforemer" 2000 pace-of-play systems, with a focus on the
portable nature of our system and our commitment to "100%-of-course-coverage."
Inforetech believes branding is a strategic advantage, and Inforetech hopes to
develop, implement, monitor and strictly enforce graphic design specifications,
including font, color and use of the brand.
Inforetech's intended marketing activities include:
. direct contact with golf course decision makers at trade shows and by
personal contact, mail, advertising and telephone to inform them of our
product,
. soft-sell opportunities such as speaking at industry related conferences to
establish and help solidify our position as a leader in the field, and
. quality media coverage to promote greater awareness of our system.
Inforetech currently intends to implement these activities through a
communications program consisting of the following traditional methodologies:
. brochures and print material
. web site and web site promotion
. trade shows
. trade magazines
. mail-outs
. newsletters
. foundations and associations
. multi-media programs
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Manufacturing Process
Inforetech has a limited in-house manufacturing capability at our Vancouver BC
facility. Inforetech's manufacturing operation consists primarily of testing
sub-assemblies and components purchased from third parties, the configuration,
final assembly and testing of pre-production units. Inforetech also uses this
facility for developing the manufacturing process and documentation in
preparation for outsourcing to a turnkey supplier. Inforetech's future success
will depend in significant part on the ability to obtain turnkey high volume
manufacturing at low costs. Inforetech is currently dependent on sole source
suppliers for certain key parts used in the product. Inforetech does not carry
significant inventories of these parts and at this time does not have long-term
supply arrangements.
Competition
GPS based golf management systems installed in North America to date have been
installed predominately at high-end resort courses principally by the suppliers
indicated below.
Company Founded System Mounting
------- ------- ------ --------
ProShot Golf, Inc. (1) 1994 Omni Cart
Newport Beach, CA
ParView, Inc. 1994 ParView Cart
Sarasota, Florida
Player Systems Corporation 1996 Skylinks Cart
Charlestown, MA
ProLink, Inc. N/A ProLink Cart
Chandler, AZ
UpLink Corp. Austin, TX 1998 UpLink Cart
________________________
(1) We have entered into a letter of intent to acquire all of the
capital stock of Proshot Golf, Inc.
Inforetech has thoroughly investigated each of these companies and systems
at several levels including:
. using competitor systems at golf courses,
. discussions with our advisory board, golf course professionals and
golfers about the advantages or disadvantages of these systems,
. discussions with personnel of competitor systems at golf trade shows,
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. and actual visits to competitor offices to discuss and review system
features with competitor management and technical personnel.
As a result of our research, Inforetech believes the Inforemer 2000 is the
most accurate, user-friendly system with the most features and innovative
technology available today. Further, the Inforemer 2000 is the only truly
unrestricted portable system on the market using TCP/IP technology for
transparent, real time service and support.
Accordingly, while there are no assurances that Inforetech will be able to
effectively compete in this industry, Inforetech believes that it can do so.
PROPERTY
The principal executive offices of Inforetech are located in Greater Vancouver
BC Canada in an approximately 8000 square foot facility. The current lease
expires in 2002 and has one three-year renewal option. We also leased a 2,500
square foot facility next to our main faculty in September 2000. The lease for
this facility lease is for a three-month period and month-to-month thereafter.
We believe that our facilities are adequate to meet our current needs and that
our future growth can be accommodated by leasing additional or alternate space
near our current facilities.
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth the names and ages of our current directors,
executive officers and significant employees. Our board of directors is
comprised of only one class. All of the directors will serve until the next
annual meeting of stockholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal.
Executive officers serve at the discretion of the board of directors, and are
appointed to serve until the first Board of Directors meeting following the
annual meeting of stockholders. Also provided is a brief description of the
business experience of each director and executive officer and the key
management personnel during the past five years and an indication of
directorships held by each director in other companies subject to the reporting
requirements under the federal securities laws.
Name Age Position
---- --- --------
Robert C. Silzer, Sr. 53 Chairman of the Board, Chief
Executive Officer and Director
Robert C. Silzer, Jr. 34 President, Secretary,
Treasurer and Director
John Regan 57 Chief Financial Officer
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Jerry L. Smith 59 Director
Graham Neathway 64 Director
William Kiss 56 Director
Terence H. Matthews 57 Director
Background and Experience
Robert C. Silzer, Sr. is CEO and Chairman of the Board of Inforetech and
Inforetech Golf. Mr. Silzer founded Inforetech Golf in 1997 and is a major
shareholder of Inforetech. Mr. Silzer has extensive experience in managing both
private and public corporations, in raising capital and introducing new
products. In addition, he has considerable experience in marketing and sales,
with numerous business contacts throughout North America, Europe and Asia. Mr.
Silzer was financier and developer of the electronic bingo machine, a wireless
hand-held gaming device. Mr. Silzer was founder and CEO of Supercart
International, a privately held corporation, from 1985 to 1990.
Robert C. Silzer, Jr. is President, Secretary, Treasurer and a Director of
Inforetech and Inforetech Golf. Mr. Silzer started his relationship with
Inforetech Golf in early 1996 on a consulting basis. He started full-time
employment with the company in August 1998 as Project Manager and in April 1999
was appointed President. Mr. Silzer has significant experience in the
development, manufacturing, sales and service of hand held electronic devices.
Prior to joining Inforetech Golf, Mr. Silzer was employed by AGT Inc. from 1993
to 1998 as Executive Vice President. Mr. Silzer is the son of Robert C. Silzer,
Sr.
John Regan is the Chief Financial Officer of Inforetech. Mr. Regan began his
relationship with Inforetech in 1999 and was appointed Chief Financial Officer
in 2000. Mr. Regan brings to Inforetech more than 30 years of experience in the
accounting profession and industry. From 1996 to 1997 Mr. Regan was Chief
Financial Officer of Automed. Prior to 1996, Mr. Regan was Vice president of
Finance of Electrovert Ltd., Corporate COntroller of Crane Canada Inc. and held
various senior financial positions with RCA Canada. Mr. Regan is a graduate of
University College Dublin (Ireland) and a fellow of the Institute of Chartered
Accountants in England and Wales.
Jerry L. Smith is a Director of Inforetech and Inforetech Golf. Mr. Smith is
the Managing Member of Abacus Capital, LLC, a private investment firm. From 1986
to present, Mr. Smith has been President and majority owner of Gateway Group,
Inc., a merger, acquisition, and investment banking firm specializing in
manufacturing, distribution, and service companies. He is a Director of
EndoBiologics, Inc., a protein based anti-microbial therapeutics developer, a
Director of Centurion Technologies, Inc., an on-line web access software
developer for instant data retrieval through "Smart Cards"; and is President and
Director of Iconn Sports International, a manufacturer of high-end wakeboards,
water skis, and accessories. Previously, Mr. Smith was a director of Digital
Data Networks, Inc., a digital information systems operator and developer; a
Director of AskRex.com, an interactive Internet travel service company and has
owned and operated manufacturing, distribution, retail and financial companies.
He was a founding Director of the Western Washington Youth Foundation and is a
Seattle Pacific University Fellow.
William Kiss joined Inforetech as a Director in August 2000. Mr. Kiss brings
to Inforetech more than 35 years of engineering experience working with both
private and public high-tech companies. Since January 1994, Mr. Kiss has been
Vice President of Engineering for Ridgeway Research Corporation. Prior to 1994,
Mr. Kiss served as President of Murata Erie Canada, a
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subsidiary of Murata Manufacturing Company in Japan, which manufactures
sophisticated electronic products. Prior to becoming President of Murata Erie
Canada, Mr. Kiss served as Vice President of Product Engineering, Vice President
of Operations, Canada, Vice President and General Manager of Canada and
International divisions, Vice President of Corporate Quality and Vice President
of Operations, Semiconductor Division.
Graham Neathway joined Inforetech as a Director in August 2000. Mr.
Neathway brings to Inforetech more than 45 years of engineering experience
working with both private and public corporations in the electronics engineering
industry. Sine January 1992, Mr. Neathway has been President of Ridgeway
Research Corporation, an organization focused on providing engineering
consulting services with an emphasis on reducing manufacturing costs through
strong industry relationships in Hong Kong and China. Prior to 1992 Mr. Neathway
held Vice President positions with Mitel Corporation and Newbridge Networks
Corporation, and also served as President of Trillium Telephone Systems and
Elcombe Systems.
Terence H. Matthews joined Inforetech as a Director in September 2000. Dr.
Matthews is the Chairman and CEO of March Networks Corporation, a specialist in
broadband IP networked video centric applications. Prior to joining March
Networks, Dr. Matthews served as CEO and Chairman of Newbridge Networks
Corporation which he founded in 1986. Prior to the development of Newbridge
Networks, Dr. Matthews served in various capacities at Mitel Corporation which
he co-founded in 1972. Dr. Matthews is also the founder and principle investor
in Celetic House International, an international venture capital firm. Dr.
Matthews serves as Chairman of CrossKeys Systems Corporation, Convedia
Corporation and Tundra Semiconductor Corporation. Dr. Matthews holds an honors
degree in Electronics from the University College of Wales and an honorary
Doctor of Technology degree from the University of Glamogan, Wales and a Doctor
of Engineering degree from Carleton University, Canada.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during fiscal year
ended December 31, 1999 to Inforetech's Chief Executive Officer. No officer of
Inforetech received annual compensation in excess of $100,000 per annum.
Summary Compensation Table
Name and
Principal Position Year Salary
------------------ ---- ------
Robert C. Silzer 1999 $17,700
Chief Executive Officer
Compensation Agreements
We have no long-term employment or consulting agreements with any of our
executive officers or directors.
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Board of Directors
During the year ended December 31, 1999, the board of directors met nine
times; certain corporate actions were also conducted by unanimous written
consent of the board of directors. Directors receive no compensation for serving
on the board of directors, but are reimbursed for any out-of-pocket expenses
incurred in attending board meetings. We have no audit, nominating or
compensation committees or committees performing similar functions.
Stock Option Plan
Effective February 2, 2000 our directors and stockholders approved our 2000
Stock Option Plan. The purpose of the plan is to provide additional incentives
to those directors, officers, and key employees and consultants of the company
and its subsidiaries whose substantial contributions are essential to the
continued growth and success of the company's business in order to strengthen
their commitment to Inforetech, to motivate them to faithfully and diligently
perform their assigned responsibilities and to attract and retain competent and
dedicated individuals whose efforts will result in the long-term growth and
profitability of Inforetech. To accomplish this purpose the plan provides that
Inforetech may grant incentive stock options or nonqualified stock options.
The plan is to be administered by the board of directors. The board is
empowered to select those directors, officers, key employees or consultants of
the company or its subsidiaries eligible to receive stock options under the
plan. The board is also empowered to determine the number of incentive stock
options and nonqualified stock options to be granted each optionee, to construe
and interpret the plan, and to amend and revoke rules and regulations for the
administration of the plan.
A total of 4,000,000 shares of our class A common stock are authorized for
issuance under the plan. The purchase price or the manner in which the purchase
price is to be determined for shares under each option is to be set forth by the
board provided that the purchase price per share for an incentive stock option
shall not be less than 100% of the fair market value of a share at the time the
option is granted.
The terms pertaining to the exercise of any option granted under the plan
shall be determined by the board, provided that no option shall be exercisable
more than 10 years after the date it is granted. The board may accelerate the
exercisability of any option or portion thereof at any time.
The plan will terminate, unless amended by the board, on the day before the
tenth anniversary of the effective date, which is February 2, 2010.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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The following table sets forth certain information as of September 29, 2000
with respect to the beneficial ownership of the common stock of Inforetech by
each beneficial owner of more than 5% of the outstanding shares of common stock
of Inforetech, each director, each executive officer and all executive officers
and directors of Inforetech as a group, (i) the number of shares of common stock
owned by each such person and group and (ii) the percent of Inforetech's common
stock so owned.
As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Exchange Act as consisting of sole
or shared voting power (including the power to vote or direct the vote) and/or
sole or shared investment power (including the power to dispose of or direct the
disposition of) with respect to the security through any contract, arrangement,
understanding, relationship or otherwise, subject to community property laws
where applicable. Each person has sole voting and investment power with respect
to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated. The address of those persons for which an address is not
otherwise indicated is: 550 - 152/nd/ Street, Suite 214 Surrey, British Columbia
V35-8E7
Number of Shares of Percentage of Outstanding
Common Stock Common Stock
Name of Beneficial Owner Beneficially Owned Beneficially Owned (1)
------------------------ ------------------ ----------------------
Robert Silzer, Sr. 5,581,750 (2) 28.94%
Robert C. Silzer, Jr. 850,000 (3) 4.41%
Jerry L. Smith 548,000 (4) 2.84%
William Kiss 50,000 (5) .26%
Graham Neathway 50,000 (6) .26%
Terence C. Matthews 50,000 (7) .26%
--------- -----
All Officers and Directors 7,129,750 36.97%
As a Group (six persons)
(1) Common stock subject to options or warrants currently exercisable, or
exercisable within 60 days, is deemed outstanding for purposes of computing the
percentage of the person holding such options or warrants (including the
percentage of all officers and directors as a group), but is not deemed
outstanding for purposes of computing the percentage for any other person.
Percentages based on 11,076,522 shares of class A stock and 7,002,030 shares of
class B stock outstanding as of September 29, 2000.
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(2) Includes (i) 4,470,750 shares of class B stock owned of record by
Robert Silzer, Sr., (ii) 525,000 shares of class B stock owned of record by
Robert Silzer, Sr.'s wife, Madj Silzer, (iii) 425,000 options owned by Robert
Silzer, Sr. to purchase shares of class A stock at $1.00 per share (as to
375,000 options) and $3.00 per share (as to 50,000 options), and (iv) 161,000
shares of class A stock which Robert Silzer, Sr. may obtain beneficial ownership
of via the conversion of $161,000 in convertible notes, which notes are
convertible into shares at $1.00 per share, and which notes are owned by RCS
Financial Group, an affiliate of Robert Silzer, Sr.
(3) Includes (i) 525,000 shares of class B stock and (ii) 325,000 options
owned by Robert Silzer, Jr. to purchase shares of class A stock at $1.00 per
share (as to 275,000 options) and $3.00 per share (as to 50,000 options).
(4) Includes (i) 125,000 options owned by Jerry Smith to purchase shares of
class A stock at $1.00 per share (as to 75,000 options) and $3.00 per share (as
to 50,000 options) and (ii) 24,000 warrants owned by Jerry Smith convertible
into shares of class A stock at $2.00 per share.
(5) Includes 50,000 options owned by William Kiss to purchase shares of
class A common stock at $7.00.
(6) Includes 50,000 options owned by Graham Neathway to purchase shares of
class A common stock at $7.00.
(7) Includes 50,000 options owned by Terence H. Matthews to purchase shares
of class A common stock at $5.00.
We believe that the beneficial owners of securities listed above, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding such
options or warrants (including the percentage of all officers and directors as a
group), but are not deemed outstanding for purposes of computing the percentage
of any other person.
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
Our Articles of Incorporation limit the liability of directors to the
maximum extent permitted by Nevada law. In addition, our bylaws require us to
indemnify our directors and officers, and allow us to indemnify our other
employees and agents to the fullest extent permitted by law. At present, there
is no pending litigation or proceeding involving any director, officer, employee
or agent where indemnification will be required or permitted. We are not aware
of any threatened litigation or proceeding that might result in a claim for
indemnification. If we permit indemnification for liabilities arising under the
Securities Act to directors, officers or controlling persons under these
provisions, we have been informed that, in the opinion of the Securities and
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Exchange Commission, this indemnification is against public policy as expressed
in the Securities Act and is unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fernando Carranza, a former President and Director of Diversified Financial
Services, Inc. predecessor to Inforetech, received 4,545,000 shares of
Inforetech's common stock for work on Inforetech's business plan on March 15,
1999. The shares held by Mr. Carranza were canceled as of December 10, 1999.
Jackie L. Kruger, a former Secretary, Treasurer and Director of Inforetech,
received for administrative services 10,000 shares of Inforetech's common stock
on March 15, 1996, an additional 100 shares were issued to her on March 15, 1998
as a correction to the issuance of stock dated March 15, 1996. Inforetech's
90,900 shares of common stock were issued to her per a stock split on December
31, 1998 and an additional 4,444,000 shares were issued to her per a stock split
on February 8, 1999. The shares held by Ms. Kruger were canceled as of December
10, 1999.
Pursuant to the Share Exchange Agreement dated as of December 16, 1999,
Inforetech issued to Robert Silzer, Sr., the Chief Executive Officer and
Chairman of the Board of Inforetech, 4,470,750 shares of class B stock and
options to acquire 425,000 shares of class A stock.
Pursuant to the Share Exchange Agreement dated as of December 16, 1999,
Inforetech issued to Robert C. Silzer, Jr., the President, Secretary, Treasurer
and a Director of Inforetech, 525,000 class B stock and options to acquire
325,000 shares of class A stock.
Pursuant to the Share Exchange Agreement dated as of December 16, 1999,
Inforetech issued to other members of the Silzer family 2,100,000 shares of
class B stock and options to acquire 300,000 shares of class A stock.
Pursuant to the Share Exchange Agreement dated as of December 16, 1999,
Inforetech entered into certain Put and Call Agreements with members of the
Silzer Family.
Pursuant to the Share Exchange Agreement dated as of December 16, 1999,
Inforetech purchased 67.15% of the issued class A voting shares of Inforetech
Golf Inc. from the Silzer Family.
Pursuant to the Subscription Agreement dated as of September 8, 2000,
Inforetech will issue to Dr. Terrence Matthews, a director of Inforetech,
222,223 shares of class A common stock for an aggregate amount of $1,000,000.
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DESCRIPTION OF SECURITIES
General
As of the date of this prospectus, the authorized capital stock of our
Company consists of 110,000,000 shares $0.001 par value, per share of common
stock of which 100,000,000 are designated class A common stock which 11,076,522
shares are issued and outstanding; and 10,000,000 shares of Class B Special
Voting Common Stock, $0.001 par value, of which 7,002,030 shares are issued and
outstanding. There are approximately 100 shareholders of record.
The following is a description of our securities taken from provisions of
our Articles of Incorporation and By-laws, each as amended. The following
description is a summary and is qualified in its entirety by the above
referenced provisions of the Articles of Incorporation and By-laws as currently
in effect.
Common Stock
The authorized capital stock of Inforetech consists of 110,000,000 shares
of common stock, $.001 par value per share. All shares of common stock have one
vote and vote together as a single class. Voting rights are not cumulative, and,
therefore, the holders of more than 50% of the common stock could, if they chose
to do so, elect all of the Directors.
Upon liquidation, dissolution or winding up, our assets, after the payment
of our liabilities, will be distributed pro rata to the holders of the class A
--- ----
common stock. The holders of the class A and class B common stock do not have
preemptive rights to subscribe for any of our securities and have no right to
require us to redeem or purchase their shares.
Holders of Class A common stock are entitled to share equally in dividends
when, as and if declared by our board of directors, out of funds legally
available for the payment of dividends. We have not paid any cash dividends on
the common stock, and it is unlikely that any dividends will be declared in the
foreseeable future.
DESCRIPTION OF THE DEBT SECURITIES AND THE WARRANTS
Series A Eight Percent (8%) Convertible Notes Due August 4, 2003
The securities being offered by certain of the selling security holders
include shares of class A common stock that are issuable upon the conversion of
convertible notes and upon the exercise of warrants that we issued in a private
offering on August 4, 2000. The notes sold in that offering were in the original
aggregate principal amount of $1,000,000 and bear interest at 8% per annum .
The notes are convertible into our class A common stock at a rate equal to
the lower of $5.25 or 75% of the average closing bid price for the class A
common stock during the 5 trading days immediately preceding the conversion
date. However, the notes may not be converted into
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common stock, nor may the holder receive shares in payment of interest, if the
note holder and any affiliate would, as a result, beneficially own more than
4.9% of our issued and outstanding shares of common stock.
8% Convertible Debenture Due August 4, 2005
The securities being offered by certain of the selling security holders
include shares of class A common stock that are issuable upon the conversion of
convertible debentures and upon the exercise of warrants that we issued in a
private offering on August 4, 2000. The debentures sold in that offering were in
the original aggregate principal amount of $1,000,000 and bear interest at 8%
per annum.
The debentures are convertible into our class A common stock at a rate
equal to the lower of $5.25 or 75% of the average of the lowest three closing
bid prices during the ten trading days immediately preceding the conversion
date. However, the debentures may not be converted into common stock, nor may
the holder receive shares in payment of interest, if the debenture holder and
any affiliate would, as a result, beneficially own more than 4.9% of our issued
and outstanding shares of common stock. This limitation could be waived by the
holder as to itself by giving 5 days prior notice to us. Further, as a separate
restriction, a holder may not convert the debentures into common stock, nor may
the holder receive shares in payment of interest, if as a result, he together
with his affiliates would beneficially own in excess of 10% of our issued and
outstanding common stock.
If a selling security holder transfers its notes, debentures or warrants
prior to conversion or exercise, the transferee of the debentures or warrants
may not sell the shares of common stock issuable upon conversion or exercise of
the debentures or warrants under the terms of this prospectus unless this
prospectus is appropriately amended or supplemented by us.
Warrants
. Augustine Warrants - five-year warrants to purchase up to100,000 shares
of our class A common stock were issued to Augustine Capital Investment
issued in connection with the Securities Purchase Agreement, dated as of
August 4, 2000 for the purchase of Inforetech's $1,000,000 Series A
Eight Percent (8%) Convertible Notes Due 2003. The Augustine Warrants
are exercisable at a price of $6.25;
. Shaar Warrants - five-year warrants to purchase up to 100,000 shares of
our class A common stock were issued to The Shaar Fund Ltd. in
connection with the Securities Purchase Agreement, dated as of August,
2000 for the purchase of Infortech's $1,000,000 8% Convertible Debenture
Due August 4, 2005. The exercise price of the Shaar Warrants is
adjustable and determined according to the terms of the common stock
purchase warrant; and
. TMR Warrants - warrants issued to purchase up to 230,000 shares of our
class A common stock were issued to TMR Investments 1, L.L.C. in
exchange for 230,000 shares of Inforetech Golf 2000, Inc. that were
issued to TMR upon conversion of the
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principal and accumulated interest due to TMR as the assignee of the
Loan Agreement, dated September 2, 1998 by and between Inforetech Golf
2000, Inc. and Abacus Capital, L.L.C.; and warrants to purchase up to
200,000 shares of class A common stock which were issued to TMR by
Abacus Capital L.L.C. The exercise price of the TMR Warrants is $2.00.
The exercise price of each of the warrants will be adjusted in a stock
split of, or stock dividend on, or a subdivision, combination, or
recapitalization of the common stock. In a liquidation, dissolution or winding
up, holders of the warrants, unless exercised, will not be entitled to
participate in our assets. Holders of the warrants will have no voting,
preemptive, liquidation or other rights of a stockholder, and no dividends will
be declared on the warrants.
Registration Rights
We agreed to file a Registration Statement to register under the Securities
Act all of the class A common stock to be issued upon exercise of the warrants
and upon conversion of the notes and the debenture. This prospectus is a part of
that Registration Statement. We also agreed to include in the Registration
Statement the 20,000 shares of class A common stock issued to Abacus Capital
L.L.C. as consideration for the loan made to Inforetech Golf pursuant to the
Loan Agreement between Inforetech Golf and Abacus Capital, L.L.C., dated
September 2, 1998 and 230,000 shares of class A common stock and 430,000 shares
of class A common stock issuable upon exercise of TMR warrants held by TMR
Investments 1, L.L.C. We agreed to pay all expenses for registration of the
securities. In addition, we agreed to comply with all necessary state securities
laws so as to permit the sale of the common stock by the investors.
We agreed to use our best efforts to cause this Registration Statement to
become effective on or before February 2, 2001. We also agreed that, if this
Registration Statement has not been declared effective by the close of business
on February 2, 2001, we will pay certain liquidated damages for each day from
February 2, 2001 until the effective date of the Registration Statement. In
addition, we agreed that, if the Registration Statement has not been declared
effective by the close of business on June 2, 2001, we will pay additional
liquidated damages.
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NEVADA ANTI-TAKEOVER PROVISIONS
The anti-takeover provisions of Sections 78.411 through 78.445 of the
Nevada Corporation Law apply to Inforetech. Section 78.438 of the Nevada law
prohibits us from merging with or selling Inforetech or more than 5% of our
assets or stock to any shareholder who owns or owned more than 10% of any stock
or any entity related to a 10% shareholder for three years after the date on
which the shareholder acquired the Inforetech shares, unless the transaction is
approved by Inforetech's Board of Directors. The provisions also prohibit us
from completing any of the transactions described in the preceding sentence with
a 10% shareholder who has held the shares more than three years and its related
entities unless the transaction is approved by our Board of Directors or a
majority of our shares, other than shares owned by that 10% shareholder or any
related entity. These provisions could delay, defer or prevent a change in
control of Inforetech.
PLAN OF DISTRIBUTION
The selling security holders and any of their pledges, assignees, and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market, or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. There is no assurance that the selling security holders will
sell any or all of the common stock in this offering. The selling security
holders may use any one or more of the following methods when selling shares:
. Ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers; Block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
Purchases by a broker-dealer as principal and resale by the broker-
dealer for its own account; an exchange distribution following the rules
of the applicable exchange; Privately negotiated transactions; short
sales or sales of shares not previously owned by the seller; Broker-
dealers may agree with the selling security holders to sell a specified
number of such shares at a stipulated price per share; A combination of
any such methods of sale; or any other lawful method
Broker-dealers engaged by the selling security holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from selling security holders in amounts to be
negotiated. If any broker-dealer acts as agent for the purchaser of shares, the
broker-dealer may receive commission from the purchaser in amounts to be
negotiated.
The selling security holders do not expect these commissions and discounts
to exceed what is customary in the types of transactions involved. The selling
security holders and any broker-dealers or agents that are involved in selling
the shares may be considered to be "underwriters" within the meaning of the
Securities Act for such sales. An underwriter is a person who has purchased
shares from an issuer with a view towards distributing the shares to the public.
In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be considered to be
underwriting commissions or discounts under the Securities Act.
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We are required to pay all fees and expenses incident to the registration
of the shares in this offering. However, we will not pay any commissions or any
other fees in connection with the resale of the common stock in this offering.
We have agreed to indemnify the selling security holders and their officers,
directors, employees and agents, and each person who controls any selling
shareholder, in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act. Each selling shareholder has
agreed to indemnify Inforetech and our directors and officers in certain
circumstances against certain liabilities, including liabilities arising under
the Securities Act.
If we are notified by the selling security holder that they have a material
arrangement with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling security holder and the broker-dealer.
SELLING SECURITY HOLDERS
The following table sets forth certain information regarding beneficial
ownership of common stock of each selling security holder and as adjusted to
give effect to the sale of the common stock offered through this prospectus.
<TABLE>
<CAPTION>
Number of Number of
Shares Held Shares Number of Shares Percentage Owned
Prior to this Being held after Upon Completion of
Name of Beneficial Owner Offering (1) Registered this Offering Number offering (2)
------------------------ -------------- ---------- ---------------- ------------------
<S> <C> <C> <C> <C>
Abacus Capital LLC 20,000 20,000 20,000 .10%
Augustine Capital Management (3) - 500,000 - 2.67%
The Shaar Fund Limited (4) - 600,000 - 3.06%
TMR Investments 1 LLC (5) 230,000 660,000 230,000 3.36%
Total - 1,805,000 9.19%
</TABLE>
_______________
(1) Other than Abacus Capital and TMR Investments, to the best of our
knowledge, none of the selling security holders are owners of any shares of
class A common stock and will only become holders upon conversion of the notes
or the debenture or upon exercise of their respective warrants.
(2) Common stock subject to conversion of the notes, the debentures or exercise
of the warrants, is deemed outstanding for purposes of computing the percentage
of the person holding such notes, debentures or warrants, but is not deemed
outstanding for purposes of computing the percentage for any other person.
Percentages based on 11,076,522 shares of class A stock and 7,002,030 shares of
class B stock outstanding as of September 29, 2000.
(3) Includes: (i) 301,703 shares issuable upon conversion of the Series A 8%
Convertible Notes and related potential interest expense; (ii) 123,297 shares
representing reserve shares that
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may be needed to account for market fluctuations in the price of the common
stock prior to the conversion of the Series A 8% Convertible Notes; and (iii)
100,000 shares issuable upon exercise of the Augustine Warrants. The number of
shares of common stock issuable upon conversion of the notes and as payments of
interest thereon is dependent in part upon the market price of the common stock
prior to a conversion and is subject to certain conversion limitations. As such,
the number of conversion shares included in the table for this selling security
holder represents a good faith estimate of the number of shares of common stock
issuable upon conversion of the notes and as payment of interest thereon. See
"Description of Debt Securities and Warrants."
(4) Includes: (i) 347,238 shares issuable upon conversion of the 8% Convertible
Debenture and related potential interest expense, and (ii) 152,762 shares
representing reserve shares that may be needed to account for market
fluctuations in the price of the common stock prior to the conversion of the 8%
Convertible Debenture.; and (iii) 100,000 shares issuable upon exercise of the
Shaar Warrants. The number of shares of common stock issuable upon conversion of
the debenture and as payments of interest thereon is dependent in part upon the
market price of the common stock prior to a conversion and is subject to certain
conversion limitations. As such, the number of conversion shares included in the
table for this selling security holder represents a good faith estimate of the
number of shares of common stock issuable upon conversion of the debenture and
as payment of interest thereon. See "Description of Debt Securities and
Warrants."
LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings and, to the
best of our knowledge, no such action by or against Inforetech has been
threatened.
EXPERTS
The consolidated financial statements of Inforetech for the fiscal year
ended December 31, 1999 included in this prospectus and Registration Statement
have been audited by Lemieux Deck Millard Bond independent certified
accountants, as indicated in their report, a copy of which is attached to this
prospectus, and are included in this prospectus in reliance upon authority of
Lemieux Deck Millard Bond as experts in accounting and auditing.
LEGAL MATTERS
The validity of the securities offered hereby are being passed upon for us
by Loeb & Loeb, LLP, Los Angeles, California.
CHANGES IN CERTIFYING ACCOUNTANTS
Effective as of July 13, 2000, we dismissed Lemieux Deck Millard Bond. The
decision to change accountants was approved by the Board of Directors of
Inforetech.
The report of Lemieux of Inforetech's balance sheet as of December 31, 1999
and the related statement of stockholders' equity at December 31, 1999, and
statement of cash flows for the year ended December 31, 1999 did not contain an
adverse opinion or disclaimer of opinion, and was
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<PAGE>
not qualified or modified as to uncertainty, audit scope or accounting
principles except as to the ability of Inforetech to continue as a going
concern.
During the fiscal year ended December 31, 1999 and the interim period
subsequent to December 31, 1999 through July 13, 2000, there were no
disagreements between Inforetech and Lemieux as to any matter of accounting
principles or practices, financial statement disclosure, or audit scope or
procedure, which disagreements, if not resolved to the satisfaction of Lemieux,
would have caused it to make a reference to the subject matter of the
disagreement in connection with its report on the financial statements for such
periods within the meaning of Item 304(a)(1)(iv)(A) of Regulation S-B. During
the fiscal year ended December 31, 1999 and the interim period subsequent to
December 31, 1999 through July 13, 2000, there have been no reportable events
(as defined in Item 304(a)(1)(iv)(B) of Regulation S-B). Lemieux has furnished
Inforetech with a letter addressed to the Securities and Exchange Commission
stating that it agrees with the above statements. A copy of this letter is
included as an exhibit to this Report on Form 8-K.
We engaged the firm of Ernst & Young LLP on July 13, 2000 as independent
auditors for our fiscal year ending December 31, 2000 to replace Lemieux. The
board of directors approved the selection of Ernst & Young LLP as independent
auditors. Inforetech has not consulted Ernst & Young LLP prior to its engagement
regarding the application of accounting principles to a specified transaction,
either completed or proposed or the type of audit opinion that might be rendered
on our financial statements or any matter that was either the subject of a
disagreement or a reportable event within the meaning of Item 304(a)(1) of
Regulation S-B.
ADDITIONAL INFORMATION
We have filed with the Commission a registration statement on Form SB-2
under the Securities Act covering the common stock offered by this prospectus.
This prospectus, which constitutes a part of the registration statement, omits
some of the information described in the registration statement under the rules
and regulations of the Commission. For further information on Inforetech
Wireless Technology and the common stock offered by this prospectus, please
refer to the registration statement and the attached exhibits. Statements
contained in this prospectus as to the content of any contract or other document
referred to are not necessarily complete, and in each instance, reference is
made to the copy filed as an exhibit to the registration statement; each of
these statements is qualified in all respects by that reference. The
registration statement and exhibits can be inspected and copied at the public
reference section at the Commission's principal office, 450 5th Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, the Commission's Regional Offices
located at the Northwestern Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York,
New York 10048 and through the Commission's Web site (http://www.sec.gov).
Copies may be obtained from the Commission's principal office upon payment of
the fees prescribed by the Commission.
36
<PAGE>
INFORETECH GOLF
TECHNOLOGY 2000 INC.
(a development stage company)
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1999
(U.S.$)
1. Auditors' Report
2. Consolidated Statement of Operations and Deficit
3. Consolidated Balance Sheet
4. Consolidated Statement of Stockholders' Equity
5. Consolidated Statement of Cash Flows
6. Notes to the Consolidated Financial Statements.
F-1
<PAGE>
AUDITORS' REPORT
To the Directors of
InForetech Golf Technology 2000 Inc.
We have audited the consolidated balance sheet of InForetech Golf Technology
2000 Inc. as at December 31, 1999 and the consolidated statements of operations
and deficit, stockholders' equity and cash flows for the period from July 31,
1999 to December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted audited standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and the results of its operations and the changes in its cash flows for the
period then ended in accordance with generally accepted accounting principles.
/s/ Lemieux Peck Millard Bond
Chartered Accountants
Langley, British Columbia
January 20, 2000
F-2
<PAGE>
INFORETECH GOLF TECHNOLOGY 2000 INC.
(a development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(U.S.$)
<TABLE>
<CAPTION>
Total from
inception
August 1, (August 11,
1999 to August 11, 1998) to
December 31, 1998 to December 31,
1999 July 31, 1999 1999
-------------------- ------------------- ------------------
EXPENSES
<S> <C> <C> <C>
Administration $ 498,741 $ 626,867 $ 1,125,608
Amortization 21,727 11,099 32,826
Finance costs 277,239 277,995 555,234
Marketing 246,936 303,667 550,603
Research and development 773,266 1,153,966 1,927,232
-------------------- ------------------- ------------------
NET LOSS (1,817,909) (2,373,594) (4,191,503)
DEFICIT, BEGINNING (3,428,712)
Deficiency on acquisition of subsidiary
company acquired in a related party
transaction (Note 3) (1,055,118) (1,055,118)
------------------- ------------------
DEFICIT, ENDING $(5,246,621) $(3,428,712) $(5,246,621)
==================== =================== ==================
</TABLE>
F-3
<PAGE>
INFORETECH GOLF TECHNOLOGY 2000 INC.
(a development stage company)
CONSOLIDATED BALANCE SHEET
(U.S.$)
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999
-------------------- ----------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Accounts receivable $ 83,507 $ 16,641
Prepaid expenses and deposits 47,786 8,557
-------------------- ----------------------
131,293 25,198
PROPERTY AND EQUIPMENT, net (Note 4) 204,068 103,745
-------------------- ----------------------
$ 335,361 $ 128,943
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness (Note 5) $ 4,214 $ 156,404
Accounts payable and accrued liabilities 526,261 350,288
Loans payable (Note 6) 1,500,000 500,000
Convertible promissory notes- Series A (Note 7) 100,000 225,000
- others (Note 7) 834,759 838,241
Promissory notes payable, related parties (Note 8) 869,746 960,469
-------------------- ----------------------
COMMITMENTS AND CONTINGENCIES (Note 13) 3,834,980 3,030,402
STOCKHOLDERS' EQUITY (Note 9)
Common stock, without par value
Authorized:
50,000,000 Class A, participating shares
50,000,000 Class B, participating shares
50,000,000 Class C, non-participating shares
Issued:
9,269,667 Class A common shares (July 31, 1999;
8,025,000 shares) 1,747,001 527,251
100,000 Class C common shares (July 31, 1999; 225,000
shares) 1 2
Accumulated deficit (5,246,621) (3,428,712)
-------------------- ----------------------
(3,499,619) (2,901,459)
-------------------- ----------------------
$ 335,361 $ 128,943
==================== ======================
</TABLE>
F-4
<PAGE>
INFORETECH GOLF TECHNOLOGY 2000 INC.
(a development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(U.S.$)
<TABLE>
<CAPTION>
Class A Class C
Common Stock Common Stock Total
-------------------------------------------------------- Stock-
Number Number Accumulated holders'
of Shares Amount of Shares Amount Deficit Equity
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issue of common stock on $ 1 $ $ $ 1
organization of the Company 1
Issue of common shares for
purchase of InForetech Golf 5,250,000 1 1
Technology Inc.
Issue of common stock for 404,250 404 404
services
Issue of common stock for cash 2,070,749 226,845 226,845
Issue of convertible 525,000 5 5
promissory notes
Conversion of $300,000 of
promissory notes 300,000 300,000 (300,000) (3) 299,997
Deficiency on acquisition of (1,055,118) (1,055,118)
subsidiary company
Net loss (2,373,594) (2,373,594)
--------
------------------ -------------
Balance, July 31, 1999 8,025,000 $ 527,251 225,000 $ 2 $(3,428,712) $(2,901,459)
Issue of common stock for 40,000 40,000 40,000
services
Issue of common stock for cash 399,667 324,750 324,750
Exercise of stock purchase 50,000 100,000 100,000
warrants
Conversion of $125,000 of
promissory notes 125,000 125,000 (125,000) (1) 124,999
Issue of common stock to 600,000 600,000 600,000
settle debt
Issue of common stock for 30,000 30,000 30,000
interest
Net loss (1,817,909) (1,817,909)
-------- m ------------------ -------------
Balance, December 31, 1999 9,269,567 $1,747,001 100,000 $ 1 $(5,246,621) $(3,499,619)
============ ============= ========== ======== ============= =============
</TABLE>
F-5
<PAGE>
INFORETECH GOLF TECHNOLOGY 2000 INC.
(a development stage company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S.$)
<TABLE>
<CAPTION>
Total from
inception
August 1, August 11, (August 11,
1999 to 1998 to 1998) to
December 31, July 31, December 31,
1999 1999 1999
------------------- ------------------- --------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,817,909) $(2,373,594) $(4,191,503)
Adjustment to reconcile net loss to cash used
in operating activities:
Amortization 21,727 11,099 32,826
Expenses paid by issuance of stock 70,000 404 70,404
Changed in operating assets and liabilities:
Accounts receivable (66,866) (16,641) (83,507)
Prepaid expenses (39,229) (8,557) (47,786)
Accounts payable 175,972 350,288 526,260
------------------- ------------------- --------------------
(1,656,305) (2,037,001) (3,693,306)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (122,050) (114,844) (236,894)
Deficiency on acquisition of subsidiary
company (1,055,118) (1,055,118)
------------------- ------------------- --------------------
(122,050) (1,169,962) (1,292,012)
CASH FLOWS FROM FINANCING ACTIVITIES 424,750 226,849 651,599
Common stock issued for cash 1,700,000 500,000 2,200,000
Loan proceeds (100,000) (100,000)
Loan repayments (94,205) 2,323,710 2,229,505
Promissory Notes 1,930,545 3,050,559 4,981,104
INCREASE (DECREASE) IN CASH 152,190 (156,404) (4,214)
CASH (DEFICIENCY), BEGINNING (156,404)
------------------- ------------------- --------------------
CASH (DEFICIENCY), ENDING $ (4,214) $ (156,404) $ (4,214)
=================== =================== ====================
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued on conversion of
convertible notes $ 125,000 $ 300,000 $ 425,000
Common stock issued to settle debt 600,000 600,000
Common stock issued for interest 30,000 30,000
Common stock issued for services 40,000 404 40,404
------------------- ------------------- --------------------
$ 795,000 $ 300,404 $ 1,095,404
=================== =================== ====================
</TABLE>
F-6
<PAGE>
INFORETECH GOLF TECHNOLOGY 2000 INC.
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(U.S.$)
DECEMBER 31, 1999
-----------------
1. NATURE OF OPERATIONS
InForetech Golf Technology 2000 Inc. ("InForetech") is involved in the
development of golf course management technology. The Company is in the process
of developing the technology and has not yet determined the ultimate economic
viability of the technology. Commercial operations have not yet commenced.
The continuation of the Company's research and development activities and
the commercialization of the technology is dependent upon the Company's ability
to successfully complete its research and development programs and finance its
cash requirements through a combination of equity financings and payments from
potential strategic partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Consolidation
These consolidated financial statements include the accounts of InForetech
Golf Technology 2000 Inc. and its wholly-owned inactive subsidiary, InForetech
Golf Technology Inc.
Cash equivalents
Cash equivalents include holdings of highly liquid investments with
maturities of three months or less when purchased.
Financial instruments
The fair value of the financial instruments approximates their carrying
value except as otherwise disclosed in the financial statements.
Property and equipment is recorded at cost less depreciation. Depreciation
is provided in amounts sufficient to relate the cost of depreciable assets to
operations over their estimated useful lives.
F-7
<PAGE>
Research and Development
Research costs are expensed as incurred. Development costs are deferred if
they meet all criteria under generally accepted accounting principles. All
development costs have been expensed as incurred.
Government assistance
Government assistance towards current expenses is included as a reduction
of those expenses when there is a reasonable assurance that the Company has
complied with all conditions necessary to receive the assistance.
Foreign currency translation
The Company follows the temporal method of accounting for the translation
of foreign currency amounts into U.S. dollars. Under this method, monetary
assets and liabilities in foreign currencies are translated at the exchange
rates in effect at the year end. All other assets and liabilities are
translated at rates prevailing when the asset was acquired or the liability
incurred. Income and expense items are translated at the exchange rates in
effect on the date of the transaction. Resulting exchange gains or losses are
included in the determination of loss for the year.
3. ACQUISITION
In August 1998, the Company acquired all of the issued and outstanding
shares of InForetech Golf Technology Inc. ("IGTI") by issuing 5,250,000 Class A
shares to the shareholders of IGTI. IGTI was wholly-owned by the president and
other family members of the Company prior to the purchase.
The acquisition has been recorded using the purchase method of accounting
and includes the operating results of IGTI in the financial statements from the
date of acquisition, August 11, 1998.
Net assets acquired at carrying value at acquisition dates:
<TABLE>
<S> <C>
Current assets $ 72,821
Current liabilities (1,165,171)
Capital assets 37,232
-----------
Deficiency on acquisition $(1,055.118)
===========
</TABLE>
F-8
<PAGE>
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999
-------------------- ----------------------
<S> <C> <C>
Office equipment and furnishings $135,645 $ 70,307
Computer software 37,435
Leasehold improvements 64,259 44,982
-------------------- ----------------------
237,339 115,289
Less: accumulated amortization (33,271) (11,544)
-------------------- ----------------------
$204,068 103,745
==================== ======================
</TABLE>
5. BANK INDEBTEDNESS
The bank line of credit is secured by: the personal guarantee of the
principal shareholder, an assignment of book debts and a general security
agreement and bears interest at bank prime plus 3%, and is repayable on demand.
Current account overdrafts bear interest at 21 %.
6. LOANS PAYABLE
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999
-------------------- ----------------------
<S> <C> <C>
Base Capital LLC
The loan payable is secured by the Company's
intellectual property and guaranteed by the majority
shareholder. The loan bears interest at bank prime
plus 4%. $ 500,000
Mercer Capital Corp.
The loan bears interest at 12% per annum, is secured
by a general security agreement and is repayable from
private placement proceeds as set out in Note 14.
The loan grants Mercer Capital Corp. the right to
convert the debt into Class A shares of the Comfy at
a ice of $1.00 per share. $1,500,000
-------------------- --------------------
$1,500,000 $ 500,000
==================== ====================
</TABLE>
F-9
<PAGE>
7. CONVERTIBLE PROMISSORY NOTES
(a) Series A
Under the terms of a private placement offering memorandum, the Company
issued $525,000 Series A convertible notes.
The holders of the convertible notes also received 525,000 Class C shares
of the Company. The Class C shares are surrendered to the Company upon
conversion of the notes.
The convertible notes bear interest at 10% per annum, mature two years from
issuance and are convertible into units of the Company. Each unit consists of
one Class A share and one share purchase warrant to purchase one Class A share
at $2.00. To December 31, 1999, $425,000 of the notes have been converted to
units.
(b) Others
Promissory notes payable to others are unsecured, repayable on demand and
are non-interest bearing. These notes may be converted into Class A shares of
the Company at the price of $1.00 per Class A share.
8. PROMISSORY NOTES PAYABLE, RELATED PARTIES
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999
-------------------- ----------------------
<S> <C> <C>
Related parties $869,746 $960,469
</TABLE>
Promissory notes payable to officers and directors or companies controlled
by officers and directors of the Company are unsecured and repayable on demand.
$850,210 (July 31, 1999; $941,751) of these notes bear interest at 10%. The
note holders have waived their interest for the period August 1, 1999 to
December 31, 1999.
9. STOCKHOLDERS' EQUITY
Pursuant to a special resolution dated September 3, 1998, the authorized
common stock of the Company was increased from 10,000 Class A voting common
shares without par value to 150,000,000 shares without par value divided as
follows:
. 50,000,000 Class A voting common shares without par value
. 50,000,000 Class B voting common shares without par value
. 50,000,000 Class C voting, non-participating common shares without par value
F-10
<PAGE>
10. PRIVATE PLACEMENTS
(a) On April 30, 1999, the Company completed a private placement of
$525,000 of Series A convertible notes. The notes bear interest at 10% per
annum, mature two years from issuance and are convertible into units of the
Company.
Each unit comprises one Class A common share and one Class A share purchase
warrant. Each share purchase warrant entitles the holder to acquire one Class A
share at $2.00 at any time within two years of date of issuance.
The holders of the notes also received Class C shares. The Class C shares
are to be surrendered to the Company upon conversion of the notes. To December
31, 1999, $425,000 of the notes have been converted into 425,000 units.
(b) Under the terms of a private placement offering, the Company has sold
225,000 units at $1.00 per unit for gross proceeds of $225,000.
Each unit comprises one Class A common share and one Class A share purchase
warrant. Each share purchase warrant entitles the holder to acquire one Class A
share at $2.00 at any time within two years of date of issuance.
11. OTHER COMMITMENTS TO ISSUE SHARES
Under the terms of two consulting agreements the Company agreed to issue
200,000 Class A shares. At December 31, 1999, 170,750 shares remain to be
issued.
12. STOCK PURCHASE WARRANTS
At December 31, 1999, Class A share purchase warrants were outstanding as
follows:
<TABLE>
<CAPTION>
Number of Class A
Shares Issuable Exercise Price Month of Expiry
------------------ ----------------- ----------------
<S> <C> <C>
175,000 $2.00 January 2001
150,000 2.00 February 2001
150,000 2.00 March 2001
100,000 2.00 May 2001
125,000 2.00 June 2001
120,000 2.00 October 2001
530,000 2.00 December 2001
--------------
1,350,000
==============
</TABLE>
During the period ended December 31, 1999, 50,000 warrants were exercised.
F-11
<PAGE>
13. COMMITMENTS AND CONTINGENCIES
Lease commitments
The Company leases office premises and certain of its office equipment for
use in its operations. Rent expense was $23,409 for the period. This table
shows future minimum lease commitments under the leases at December 31, 1999.
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
Lease commitments $59,637 $57,712 $23,064 $3,837 $2,476
Consulting agreement
The Company has entered into a consulting services agreement with a company
with a common director. Under the terms of the agreement, the Company will pay
a fee of 10% of any equity financing, convertible debt financing, merger or
business combination or sale. The fee for non-convertible debt. is 2%.
Contingencies
The holder of patents for a "golf distance measuring system and method" has
licensed non-exclusive rights to several of the Company's competitors. The
patents are currently subject to litigation with respect to their validity. If
the patents are upheld, the Company may be required to become a licensee. There
is no assurance that if the patents are upheld, a license would be available to
the Company.
14. SHARE EXCHANGE AND FINANCE AGREEMENT
Pursuant to the terms of a Share Exchange and Finance Agreement dated
December 16, 1999, between the Company, its founding shareholders, Diversified
Marketing Services, Inc. ("Diversified"), an inactive U.S. public company, and
Mercer Capital Corp. ("Mercer"), the founding shareholders have agreed to
exchange their shares of the Company for shares of Diversified, or shares that
are convertible into shares of Diversified. Shareholders who are not founding
shareholders are also requested to exchange their shares under the agreement.
Upon closing, the founding shareholders of the Company who exchanged their
shares will hold a controlling interest in Diversified and the transaction will
be accounted for as a reverse takeover.
Under the terms of the agreement, Diversified will create a stock option
plan for the directors, officers and employees of the Company.
Mercer has agreed to complete two private placements of Diversified shares
to raise a minimum of $3,150,000. Funds from the first private placement of a
minimum of $1,500,000 are to be advanced to the Company as an intercompany loan
which is to be used to repay the $1,500,000 loan from Mercer (see Note 6.)
Proceeds from the second private placement of a minimum $1,650,000 are also to
be advanced to the Company as an intercompany loan. Up to
F-12
<PAGE>
$1,000,000 of the second intercompany loan is to be used to repay amounts owing
to a director of the Company.
The director has agreed to defer repayment of amounts owing to him until
such time as the working capital of the Company is sufficient to allow for
repayment.
15. INCOME TAXES
The Company has accumulated losses for tax purposes which may be carried
forward and used to reduce taxable income otherwise calculated. The benefit of
these available carry forwards has not been recorded in the accounts. '
16. SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT TAX CREDITS
Certain of the Company's research expenditures may be eligible for the
Canadian Government Scientific Research and Experimental Development ("SR&ED")
tax credit. Under this program Canadian controlled private corporations can
receive a refundable tax credit of up to 35% for qualifying SR&ED expenditures
to a maximum limit of $2,000,000 in expenditures. Companies with expenditures
over $2,000,000 can receive an investment tax credit of up to 20% for qualifying
SR&ED expenditures.
No determination has been made as to eligibility or amount of the
investment tax credit. Any amounts received under the program would be applied
against research and development expenditures in the period received.
F-13
<PAGE>
17. RELATED PARTY TRANSACTIONS
<TABLE>
<CAPTION>
December 31, July 31,
1999 1999
-------------------- ----------------------
<S> <C> <C>
(a) Consulting fees paid to officers of the Company $ $ 34,598
(b) Commissions and consulting fees paid to a company
with a common director $ 32,500 $ 62,875
(c) Interest paid or payable to officers and/or
directors $ $ 98,738
(d) Included in the balance sheet are the following
amounts due to directors and officers and/or
companies controlled by officers and directors of the
Company:
Promissory notes payable $1,024,505 $1,118,710
Accounts payable $ 24,944 $
(e) Included in the balance sheet are the following
amounts due from directors and officers and/or
companies controlled by officers and directors of the
Company:
Accounts receivable $ 15,393 $
</TABLE>
18. SUBSEQUENT EVENTS
Subsequent to December 31, 1999, the Company received $2,050,959 pursuant
to the Share Exchange and Finance Agreement as set out in Note 14. $1,550,959
was used to repay the Mercer Capital loan (Notes 6 and 14) and accrued interest
on the loan.
19. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date.
The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure, which
could affect an entity's ability to conduct normal business operations. It is
not possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
F-14
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
1 Independent Auditors' Report
2 Statement of Operations and Deficit
3 Balance Sheet
4 Statement of Stockholders' Equity
5 Statement of Cash Flows
6 Notes to the Financial Statements
F-15
<PAGE>
[LETTERHEAD OF LEMIEUX DECK MILLARD BOND]
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
We have audited the accompanying balance sheet of Inforetech Wireless Technology
Inc. (a development stage company), (formerly Diversified Marketing Services,
Inc.) as at December 31, 1999 and the related statements of operations and
deficit, stockholders' equity and changes in cash flows for the year then ended
in conformity with generally accepted accounting principles in the United States
of America. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1999 and the
results of its operations and cash flows for the year then ended in accordance
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. The company is in the development
stage and will need additional working capital for its planned activities which
raises substantial doubts about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 8. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The financial statements for the years ended December 31, 1998 and December 31,
1997 were audited by other auditors who expressed an opinion without reservation
on those statements in their report dated March 10, 1999.
/s/ Lemieux Deck Millard Bond
Chartered Accountants
Langley, British Columbia
April 6, 2000
F-16
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
STATEMENT OF OPERATIONS AND DEFICIT
(U.S.$)
<TABLE>
<CAPTION>
Total from
inception
(December 12,
1995) to
December 31,
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997 1999
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $ $ $ $
-----------------------------------------------------------------------------------------
EXPENSES
General, selling and administrative 1,004 2 1,165
Legal and accounting 10,170 10,170
Listing and share transfer fees 1,126 1,126
2
-----------------------------------------------------------------------------------------
LOSS BEFORE OTHER ITEMS (12,300) (2) (12,461)
-----------------------------------------------------------------------------------------
NET LOSS (12,300) (2) (12,461)
DEFICIT, BEGINNING (202) (200) (200)
-----------------------------------------------------------------------------------------
DEFICIT, ENDING $(12,502) $(202) $(200) $(12,461)
-----------------------------------------------------------------------------------------
LOSS PER COMMON SHARE (Note 4) $ $ $
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
BALANCE SHEETS
(U.S.$)
<TABLE>
<CAPTION>
DECEMBER 31, 1999 1998
----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash $ $4,800
==============================================================================================
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 7,500 $
---------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (Note 3)
Common stock, $.001 par value.
Authorized 100,000,000 Class A, voting, participating shares;
Issued: 1999-6,156,000; 1998-250,000 6,156 250
Special voting stock, $.001 par value.
Authorized 100,000,000 Class B, voting, non-participating shares;
Issued: 1999-NIL; 1998-NIL
Additional paid-in capital (1,154) 4,752
Accumulated deficit (12,502) (202)
---------------------------------------------------------------------------------------------
(7,500) 4,800
---------------------------------------------------------------------------------------------
$ $4,800
==============================================================================================
</TABLE>
Approved by the Directors:
___________________ Director
___________________ Director
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
(U.S.$)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional Total
Number paid-in Accumulated stockholders'
of shares Amount capital deficit equity
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 and 1997 24,800 $ 5,000 $ $ (200) $ 4,800
March 15, 1998 stock issued for services 200 2 2
December 15, 1998 changed par value no par value to $0.001 (4,977) 4,977
December 31, 1998 forward stock split 10:1 225,000 225 (225)
Net loss (2) (2)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,1998 250,000 250 4,752 (202) 4,800
February 8, 1999 forward stock split 45:1 11,000,000 11,000 (11,000)
December 10, 1999 common stock cancelled (9,090,000) (9,090) 9,090
December 13, 1999 forward stock split 2.85:1 3,996,000 3,996 (3,996)
Net loss (12,300) (12,300)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 6,156,000 $ 6,156 $ (1,154) $(12,502) $ (7,500)
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
STATEMENT OF CASH FLOWS
(U.S.$)
<TABLE>
<CAPTION>
Total from
inception
(December 12,
1995) to
December 31,
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(12,300) $ (2) $ $(12,502)
Adjustment to reconcile net loss to cash used in operating activities:
Expenses paid by issuance of stock 2 202
Changes in operating assets and liabilities:
Accounts payable 7,500 7,500
---------------------------------------------------------------------------------------------------------------------------
Net decrease in cash (4,800) (4,800)
Cash, beginning 4,800 4,800 4,800
---------------------------------------------------------------------------------------------------------------------------
Cash, ending $ $4,800 $4,800 $ (4,800)
---------------------------------------------------------------------------------------------------------------------------
Non-cash financing and investing activities
Common stock issued for services $ $ 2 $ $ 202
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(U.S.$)
DECEMBER 31, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated December 12, 1995, under the laws of the State
of Nevada as Diversified Marketing Services, Inc. Pursuant to a Director's
resolution dated December 6, 1999, the Company changed its name from
Diversified Marketing Services, Inc. to Inforetech Wireless Technology Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern which assume
that the Company will realize its assets and discharge its liabilities in the
normal course of business. Realization values may be substantially different
from the carrying values as shown in these financial statements should the
Company be unable to continue as a going concern. The Company's ability to
meet its obligations and maintain its operations is contingent upon
successful completion of additional financial arrangements and the continuing
support of its creditors.
(a) Accounting estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(b) Cash equivalents
Cash equivalents include holdings of highly liquid investments with
maturities of three months or less when purchased.
(c) Earnings per common share
Statement of Financial Accounting Standards No. 128, "Earnings per
Share", which became effective in 1997, requires presentation of two
calculations of earnings per common share. "Basic" earnings per common
share equals net income divided by weighted average number of common
shares outstanding during the period. "Diluted" earnings per common
share equal net income divided by the sum of weighted average common
shares outstanding during the period plus common stock equivalents.
Common stock equivalents are shares assumed to be issued if outstanding
stock options were exercised and are only considered if their effect on
earnings per common share is dilutive.
(d) Comprehensive income
The Company has adopted Statement of Financial Accounting Standard
("SFAS") No. 130, "Reporting Comprehensive Income". SFAS 130 establishes
standards for the reporting of comprehensive income and its components.
As defined in SFAS 130, the Company has no comprehensive income items.
F-21
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(U.S.$)
DECEMBER 31, 1999
3. STOCKHOLDERS' EQUITY
On March 15, 1996, the Company issued 20,000 shares of its no par value
common stock in consideration of $200.00 to its directors.
On September 30, 1996, the Company issued 4,800 shares of its no par value
common stock for cash of $4,800 to investors.
On March 15, 1998, the Company issued 200 shares of its no par value common
stock to its directors as a correction to the original issuance of stock
dated March 15, 1996, to equal the authorized number of shares per the board
of directors meeting dated March 15, 1996.
On December 15, 1998, the State of Nevada approved the Company's restated
Articles of Incorporation, which changed the par value from no par value to
$0.001, and increased its Authorized Common Stock from 25,000 shares to
50,000,000 shares.
On December 31, 1998, the Company approved a forward stock split on the basis
of 10:1 increasing the outstanding common stock from 25,000 shares to 250,000
shares.
On February 8, 1999, the Company approved a forward stock split on the basis
of 45:1 increasing the outstanding common stock from 250,000 shares to
11,250,000 shares.
On December 10, 1999, the directors approved the cancellation of 9,090,000
common shares previously issued to two directors.
On December 13, 1999, the Directors authorized a forward stock split on the
basis of 2.85:1 increasing the outstanding common stock from 2,160,000 shares
to 6,156,000 shares.
On December 6, 1999, the directors amended the Articles of Incorporation to
increase the authorized share capital to 110,000,000 shares, $0.001 par value
per share, of which 100,000,000 shares are Class A common, voting
participating shares and 10,000,000 are Class B Special, voting, non-
participating shares.
4. LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss by the average
number of common shares and common stock equivalents outstanding during the
year. The weighted average number of common shares outstanding during the
years ended December 31, 1999, 1998 and 1997 were approximately 9,778,871.
5. INCOME TAXES
The Company has accumulated losses for tax purposes which may be carried
forward and used to reduce taxable income otherwise calculated. The benefit
of these available carry forwards has not been recorded in the accounts.
F-22
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(U.S.$)
DECEMBER 31, 1999
6. SHARE EXCHANGE AND FINANCE AGREEMENT
Pursuant to the terms of a Share Exchange and Finance Agreement dated
December 16, 1999, between the Company, InForetech Golf Technology 2000 Inc.
("IGTI"), its founding shareholders, and Mercer Capital Corp., the founding
shareholders have agreed to exchange their shares of IGTI for shares of the
Company, or shares that are convertible into shares of the Company.
Shareholders who are not founding shareholders are also requested to exchange
their shares under the agreement.
Upon closing, the founding shareholders of IGTI who exchanged their shares
will hold a controlling interest in the Company and the transaction will be
accounted for as a reverse takeover.
Under the terms of the agreement, the Company will create a stock option plan
for its directors, officers and employees.
Mercer Capital Corp. has agreed to complete two private placements of the
Company's shares to raise a minimum of $3,150,000. Funds from the first
private placement of a minimum of $1,500,000 are to be advanced to IGTI as an
inter-company loan which is to be used to repay a previous $1,500,000 loan
from Mercer Capital Corp. Proceeds from the second private placement of a
minimum of $1,650,000 are also to be advanced to IGTI as an inter-company
loan. See Note 8.
7. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent something other
than a date.
Although the change in date has occurred, it is not possible to conclude that
all aspects of the Year 2000 Issue that may affect the Company, including
those related to customers, suppliers, or other third parties, have been
fully resolved.
8. SUBSEQUENT EVENTS
(a) Private Placements
Subsequent to December 31, 1999, the Company sold 775,000 shares in two
private placements to net the treasury $3,152,000. As set out in Note 6
"Share Exchange and Finance Agreement", these funds were loaned to
InForetech Golf Technology 2000 Inc.
(b) Incorporation of Subsidiary Company
On January 12, 2000, the Company formed a wholly-owned Canadian
subsidiary company, Inforetech Holdings Inc.
(c) Reverse Takeover
Subsequent to December 31, 1999, the Company issued 7,095,750 Class B
Special Rights shares, and Inforetech Holdings Inc. issued 7,095,750
Class A preferred shares to the founding shareholders of Inforetech Golf
Technology 2000 Inc. ("IGTI") for their shares of IGTI as required under
the Share Exchange and Finance Agreement. The issue of these shares
results in the shareholders of IGTI acquiring control of the Company and
is therefore accounted for as a reverse takeover.
F-23
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
(formerly Diversified Marketing Services, Inc.)
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(U.S.$)
DECEMBER 31, 1999
8. SUBSEQUENT EVENTS (Continued)
Reverse takeovers are accounted for as a continuation of the legal
subsidiary. Future consolidated financial statements will be issued under
the Company's name but will be a continuation of the financial statements
of IGTI, not the Company.
(d) Other Stock Transactions
Subsequent to December 31, 1999, the Company had the following
additional stock transactions:
i) 100,000 Class A shares were issued as consideration for a placement
fee.
ii) 193,720 Class A shares were issued to settle $193,720 of IGTI debt.
iii) 162,500 Class A shares were issued as consideration for legal fees.
iv) 193,720 Class A shares were issued on the exercise of 193,720 puts.
v) 1,658,332 Class A shares were issued to IGTI shareholders pursuant
to an exchange offer and letter of transmittal forwarded to non-
founding shareholders of IGTI which offered to exchange their
shares of IGTI for shares of the Company.
F-24
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Amounts receivable $ 37,105 $ 83,507
Deposits and prepaid expenses 56,368 47,786
---------------------------------------------------------------------------------------------------------------------------------
93,473 131,293
PROPERTY AND EQUIPMENT, net 255,986 204,068
---------------------------------------------------------------------------------------------------------------------------------
$ 349,459 $ 335,361
=================================================================================================================================
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 212,580 $ 4,214
Accounts payable and accrued liabilities 701,754 526,261
Loans payable 300,000 1,500,000
Convertible promissory notes - Series A 100,000 100,000
- others 279,951 834,759
Promissory notes payable, related parties 817,969 869,746
-------------------------------------------------------------------------------------------------------------------------------
2,412,254 3,834,980
-------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value.
Authorized 100,000,000 Class A, voting, participating shares;
Issued: 2000-10,989,522; 1999-2,173,917 10,989 2,174
Special voting stock, $.001 par value.
Authorized 10,000,000 Class B, voting, convertible, non-participating shares;
Issued: 2000-6,902,030; 1999-7,095,750 6,902 7,096
Additional paid-in capital 6,539,057 1,737,732
Deficit accumulated during development stage (8,619,743) (5,246,621)
--------------------------------------------------------------------------------------------------------------------------------
(2,062,795) (3,499,619)
--------------------------------------------------------------------------------------------------------------------------------
$ 349,459 $ 335,361
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND INCEPTION TO JUNE 30, 2000
<TABLE>
<CAPTION>
Total from
For the 3 months ended For the 6 months ended inception to
June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPENSES
Administration $ 381,629 $ 233,961 $ 837,709 $ 342,057 $ 1,963,317
Depreciation 7,355 2,891 27,909 5,781 60,735
Finance costs 388,281 91,044 415,578 157,360 970,812
Marketing 438,377 121,331 538,473 186,982 1,089,076
Research and development 1,138,505 197,404 1,553,453 468,133 3,480,685
------------------------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS (2,354,147) (646,631) (3,373,122) (1,160,313) (7,564,625)
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE, BEGINNING (6,265,596) (2,550,932) (5,246,621) (2,037,250) -
Deficiency on acquisition of subsidiary
company acquired in a related party
transaction - - - - (1,055,118)
------------------------------------------------------------------------------------------------------------------------
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE, ENDING $(8,619,743) $(3,197,563) $(8,619,743) $(3,197,563) $(8,619,743)
========================================================================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,924,687 3,308,582 10,426,602 3,308,582
------------------------------------------------------------------------------------------------------------------------
LOSS PER COMMON SHARE $(0.22) $(0.20) $(0.32) $(0.35)
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2000
----------------------------------------------------------------------------------------------------------------------------------
Common stock Special voting stock
-------------------- ----------------------
Additional Total
Number Number paid-in Accumulated stockholders'
of shares Amount of shares Amount capital deficit equity
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deemed common shares issued to
founders for cash - $ - 1 $ - $ 1 $ - $ 1
Deemed common shares issued for
purchase of InForetech Golf
Technology Inc. - - 5,250,000 5,250 (5,249) (1,055,118) (1,055,117)
Deemed common shares issued for
services 404,250 404 - - - - 404
Deemed common shares issued for cash 225,000 225 1,845,749 1,846 224,774 - 226,845
Deemed common shares issued on
conversion of convertible
promissory notes 300,000 300 - - 299,702 - 300,002
Deemed common shares issued for
services 40,000 40 - - 39,960 - 40,000
Deemed common shares issued for cash 399,667 400 - - 324,350 - 324,750
Deemed common shares issued on
exercise of stock purchase warrants 50,000 50 - - 99,950 - 100,000
Deemed common shares issued on
conversion of promissory notes 125,000 125 - - 124,874 - 124,999
Deemed common shares issued to
settle debt 600,000 600 - - 599,400 - 600,000
Deemed common shares issued for
interest 30,000 30 - - 29,970 - 30,000
Net loss - - - - - (4,191,503) (4,191,503)
----------------------------------------------------------------------------------------------------------------------------------
Deemed balance, December 31, 1999 2,173,917 2,174 7,095,750 7,096 1,737,732 (5,246,621) (3,499,619)
Deemed common shares issued for
services 174,333 174 - - 69,076 - 69,250
Deemed common shares issued to
settle debt 960,332 960 - - 349,040 - 350,000
-----------------------------------------------------------------------------------------------------------------------------------
Deemed outstanding as at February
2, 2000 3,308,582 3,308 7,095,750 7,096 2,155,848 (5,246,621) (3,080,369)
Acquisition of InForetech Wireless
Technology Inc. by InForetech Golf
Technology 2000 Inc. 6,156,000 6,156 - - (6,156) - -
Common stock issued for cash 775,000 775 - - 3,101,225 - 3,102,000
Common stock issued for services 262,500 262 - - 224,741 - 225,003
Common stock issued on conversion
of Class B shares 193,720 194 (193,720) (194) - - -
Common stock issued to settle debt 193,720 194 - - 193,526 - 193,720
Common stock issued on exercise
of stock options 100,000 100 - - 99,900 - 100,000
Compensation related to stock
options - - - - 381,173 - 381,173
Conversion benefit related to
convertible loan - - - - 388,800 - 388,800
Net loss - - - - - (3,373,122) (3,373,122)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000 10,989,522 $10,989 6,902,030 $6,902 $6,539,057 $(8,619,743) $(2,062,795)
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND INCEPTION TO JUNE 30, 2000
<TABLE>
<CAPTION>
Total from
For the 3 months ended For the 6 months ended inception to
June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss and comprehensive loss $(2,354,147) $(646,631) $(3,373,122) $(1,160,313) $(7,564,625)
Adjustment to reconcile net loss to
cash used in operating activities:
Compensation related to stock options 381,173 - 381,173 - 381,173
Conversion benefit related to
convertible loan 388,800 - 388,800 - 388,800
Depreciation 7,355 2,891 27,909 5,781 60,735
Expenses paid by issuance of stock - - 294,253 - 364,657
Changes in operating assets and liabilities:
Accounts receivable 26,896 (7,082) 46,402 (12,555) (37,105)
Deposits and prepaid expenses 393,408 (3,720) (8,582) (7,045) (56,368)
Accounts payable and accrued liabilities 262,686 25,840 175,493 147,008 701,753
-----------------------------------------------------------------------------------------------------------------------------
(893,829) (628,702) (2,067,674) (1,027,124) (5,760,980)
-----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (25,137) (20,530) (79,827) (43,438) (316,721)
Advances to related company - - - - (1,055,118)
-----------------------------------------------------------------------------------------------------------------------------
(25,137) (20,530) (79,827) (43,438) (1,371,839)
-----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 100,000 477,251 3,202,000 477,251 3,853,599
Loan proceeds 300,000 500,000 300,000 500,000 2,500,000
Loan repayments - - (1,500,000) - (1,600,000)
Borrowings under line of credit 212,580 7,785 208,366 (6,539) 212,580
Promissory notes 49,151 (335,804) (62,865) 99,850 2,166,640
-----------------------------------------------------------------------------------------------------------------------------
661,731 649,232 2,147,501 1,070,562 7,132,819
-----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (257,235) - - - -
CASH, BEGINNING 257,235 - - - -
-----------------------------------------------------------------------------------------------------------------------------
CASH, ENDING $ - $ - - $ - $ -
=============================================================================================================================
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued to settle debt $ - $ - $ - $ - $ 600,000
Common stock issued on conversion of
convertible notes - - 543,720 - 968,720
Common stock issued for interest - - - - 30,000
Common stock issued for services - - 294,253 - 364,657
Common stock issued on conversion of
Class B shares - - 193,720 - 193,720
-----------------------------------------------------------------------------------------------------------------------------
$ - $ - $ 1,031,693 $ - $ 2,157,097
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------------------------------
JUNE 30, 2000
1. UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions for Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation of results of operations have been included in the financial
statements. Results of operations for the six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the fiscal
year ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. A summary of the Company's significant
accounting policies and other information necessary to understand the
consolidated financial statements is included in the Company's audited
financial statements for the year ended December 31, 1999 and 1998 as
contained in the Company's Form 10-KSB for its year ended December 31, 1999.
Such financial statements should be read in connection with these financial
statements.
Since June 30, 2000 the Company has acquired additional financing of
$1,000,000 through the issuance of a convertible note. The Company has
historically relied upon sales of its common stock, debt instruments and
loans from its founder to finance research and development, marketing and
operations. Additional financing will be required for current and long-term
research and development, marketing and working capital. The Company
continues to pursue opportunities for a private equity offering and/or debt
financing. There can be no assurances that any additional financing will take
place or, if so the terms thereof. To the extent of any shortfall in
financing, the Company's product development and commercialization programs
will be delayed, curtailed or prevented, and the Company may be required to
suspend or substantially modify its operations.
2. INCOME TAXES
The Company has reviewed its net deferred tax asset for the six month period
ended June 30, 2000, together with net operating loss carryforwards, and
accordingly has not given recognition of potential tax benefits arising
therefrom. In making this determination, the Company has considered the
Company's history of tax losses incurred since inception and the fact that
the Company is still within the development stage. As a result, the Company's
net deferred tax has been fully reserved.
3. NEW ACCOUNTING STANDARD
In June 1998, the U.S. Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities and in June 2000 the companion
statement No. 138 (collectively "SFAS 133"). SFAS 133, which will become
effective for all fiscal quarters for all fiscal years beginning after June
15, 2000, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments on the balance sheet as
either assets or liabilities with measurement at fair value. Changes in the
fair value of derivatives are recorded each period in the current earnings or
other comprehensive income, depending on the intent and nature of the
derivative instrument. There are many complexities to this new standard and
the Company is currently evaluating the
F-29
<PAGE>
impact that SFAS 133 will have on its financial statements. The effects of
adopting the new standard are not reasonably determinable at this time, nor
has the Company determined how it will account for the transition provisions
contained in SFAS 133. The Company will adopt SFAS 133 on or before January
1, 2001.
4. RECLASSIFICATION
Certain reclassifications of prior year balances have been made to conform to
current year classifications.
5. REVERSE ACQUISITION OF INFORETECH GOLF TECHNOLOGY 2000 INC.
On February 2, 2000, the shareholders of InForetech Golf Technology 2000 Inc.
("IGT") sold their 100% interest in IGT to the Company in consideration for
3,308,582 Class A common shares and 7,095,750 units consisting of Class B
preference shares of InForetech Holdings Ltd. and Class B special voting
shares of the Company pursuant to a share exchange and finance agreement
dated December 16, 1999. As a result of the transaction, the former
shareholders of IGT held the majority of the shares of the Company.
Accordingly, this transaction is considered an acquisition of the Company
(the accounting subsidiary/legal parent) by IGT (the accounting parent/legal
subsidiary) and has been accounted for as a purchase of the net assets of the
Company by IGT in these consolidated financial statements. The Company had no
business operations at the time of the acquisition. The costs of
recapitalization have been recorded as additional paid-in capital.
These consolidated financial statements are issued under the name of the
Company, but are a continuation of the financial statements of the accounting
acquirer, IGT. IGT's assets and liabilities are included in the consolidated
financial statements at their historical carrying amounts. The comparative
figures presented in the consolidated financial statements are those of IGT.
6. PRIVATE PLACEMENTS
During the six months ended June 30, 2000, the Company completed two private
placements totaling 775,000 common shares. Proceeds from these placements
totaled $3,152,000. $1,500,000 of the proceeds were used to repay a loan from
Mercer Capital Corp.
See Part II "Other Information", Item 2 - Changes in Securities and Use of
Proceeds.
7. CONVERTIBLE LOAN AGREEMENT
Pursuant to a Convertible Loan Agreement dated May 9, 2000, the Company
borrowed $300,000. The loan is secured by a general security agreement over
the Company's assets and promissory note. The loan bears interest at 12% and
matures November 8, 2000.
The lender has the right, at any time prior to the maturity date, to convert
any or all of the balance outstanding into Units of the Company at $5.00 per
unit. Each unit is comprised of one Class A common share and one share
purchase warrant to purchase a Class A share at a price of $5.00 per share.
The warrants expire May 9, 2002.
F-30
<PAGE>
8. STOCK OPTION PLAN
Pursuant to the terms of the December 16, 1999 Share Exchange and Finance
Agreement the Company has created a stock option plan to allow key employees,
directors, advisors and representatives of the Company to acquire Company
common stock. The company has allocated a total of 4,000,000 options under
this plan.
Stock options outstanding under this plan are summarized as follows:
<TABLE>
<CAPTION>
Option price Stock options
per share outstanding
-----------------------------------------------------------------------------
<S> <C> <C>
$1.00 1,710,000
$3.00 250,000
$7.00 285,000
-----------------------------------------------------------------------------
$1.00 - $7.00 2,245,000
=============================================================================
</TABLE>
The stock options vest over the next 1 to 3 years and the stock option plan
expires on February 1, 2005.
9. STOCK PURCHASE WARRANTS
At June 30, 2000, Class A share purchase warrants were outstanding as
follows:
<TABLE>
<CAPTION>
Number of Class A Exercise Month
Shares Issuable Price of Expiry
------------------------------------------------------------------------
<S> <C> <C>
75,000 $2.00 January 2001
150,000 2.00 February 2001
150,000 2.00 March 2001
100,000 2.00 May 2001
125,000 2.00 June 2001
200,000 2.00 September 2001
120,000 2.00 October 2001
530,000 2.00 December 2001
274,000 2.00 January 2002
62,500 4.00 January 2002
------------------------------------------------------------------------
1,786,500
========================================================================
</TABLE>
No warrants were exercised during the quarter.
10. AMALGAMATION OF SUBSIDIARY COMPANIES
Effective June 30, 2000, the Company's subsidiaries, InForetech Golf
Technology 2000 Inc., InForetech Golf Technology, Inc. and InForetech
Holdings Inc. were amalgamated into one company which continues under the
name InForetech Golf Technology 2000 Inc.
F-31
<PAGE>
INFORETECH WIRELESS TECHNOLOGY, INC.
__________________
Prospectus
__________________
<PAGE>
PART II
Item 24. Indemnification of Directors and Officers
The Company's Articles of Incorporation include provisions, which limit the
liability of our directors. As permitted by applicable provisions of the Nevada
Law, directors will not be liable to Inforetech for monetary damages arising
from a breach of their fiduciary duty as directors in certain circumstances.
This limitation does not affect liability for any breach of a director's duty to
Inforetech or our stockholders (i) with respect to approval by the director of
any transaction from which he or she derives an improper personal benefit, (ii)
with respect to acts or omissions involving an absence of good faith, that the
director believes to be contrary to the best interests of Inforetech or our
stockholders, that involve intentional misconduct or a knowing and culpable
violation of law, that constitute an unexcused pattern or inattention that
amounts to an abdication of his or her duty to Inforetech or our stockholders,
or that show a reckless disregard for duty to Inforetech or our stockholders in
circumstances in which he or she was, or should have been aware, in the ordinary
course of performing his or her duties, of a risk of serious injury to
Inforetech or our stockholders, or (iii) based on transactions between
Inforetech and our directors or another corporation with interrelated directors
or based on improper distributions, loans or guarantees under applicable
sections of Nevada Law. This limitation of directors' liability also does not
affect the availability of equitable remedies, such as injunctive relief or
rescission.
The Company has been advised that it is the position of the Commission that
insofar as the provision in Inforetech's Articles of Incorporation, as amended,
may be invoked for liabilities arising under the Securities Act, the provision
is against public policy and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The Company is not issuing any common stock under this Registration
Statement. All common stock registered pursuant to this Registration Statement
is being registered on behalf of selling security holders. The Company has
agreed to pay all costs of this Registration Statement. The estimated expenses
for the distribution of the common stock registered hereby, other than
underwriting commissions, fees and Representative's nonaccountable expense
allowance are set forth in the following table:
<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
SEC Registration Fee......................................................... $ 2,500
Transfer Agent Fees.......................................................... 500
Legal Fees................................................................... 35,000
Accounting Fees.............................................................. 500
Printing and Engraving Costs................................................. 500
Miscellaneous................................................................ 1,000
-------
Total................................................................ $40,000
=======
</TABLE>
II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities
During the past three years, the following transactions were effected by us
in reliance upon exemptions from registration under the Securities Act as
amended. Unless stated otherwise; (i) that each of the persons who received
these unregistered securities had knowledge and experience in financial and
business matters which allowed them to evaluate the merits and risk of the
receipt of these securities, and that they were knowledgeable about our
operations and financial condition; (ii) no underwriter participated in, nor did
we pay any commissions or fees to any underwriter in connection with the
transactions; (iii) the transactions did not involve a public offerings; and
(iv) each certificate issued for these unregistered securities contained a
legend stating that the securities have not been registered under the Act and
setting forth the restrictions on the transferability and the sale of the
securities.
On March 15, 1998, the shareholders authorized the issuance of 100 shares
of common stock for services to each of the officers and directors of the
Registrant for a total of 200 Rule 144 shares. The Registrant issued the shares
in satisfaction of management services rendered to officers and directors, which
does not constitute a public offering.
On December 31, 1998, the Board of Directors authorized a forward stock
split of 9 to 1 resulting in a total of 250,000 shares of common stock issued
and outstanding.
On February 8, 1999, the Board of Directors authorized a forward stock
split of 44 to 1 resulting in a total of 11,250,000 shares of common stock
issued and outstanding.
In December 1999, the Registrant issued 174,333 shares of its class A
common stock Voting Stock to one accredited investor as consideration for
services rendered pursuant to Section 4(2) of the Securities Act.
In January 2000, the Registrant issued 375,000 shares to two accredited
investors for an aggregate of $1,500,000 in connection with a private placement
pursuant to Section 4(2) of the Securities Act.
In January 2000, the Registrant issued 400,000 shares to two accredited
investors for an aggregate of $1,652,000 in connection with a private placement
pursuant to Section 4(2) of the Securities Act. As consideration for a placement
fee in connection with the private placements listed above, the Registrant
issued 100,000 shares of its class A common stock Voting Stock pursuant to
Section 4(2) of the Securities Act and paid $50,000 to one accredited investor
pursuant to Section 4(2) of the Securities Act.
In February 2000, pursuant to the Share Exchange Agreement dated as of
December 16, 1999, the Registrant issued to Robert Silzer, Sr., the Chief
Executive Officer and Chairman of the Board of the Registrant, 4,470,750 shares
of class B stock and options to acquire 425,000 shares class A common stock.
II-2
<PAGE>
In February 2000, pursuant to the Share Exchange Agreement dated as of
December 16, 1999, the Registrant issued to Robert C. Silzer, Jr., the
President, Secretary, Treasurer and a Director of the Registrant, 525,000 Class
B Stock and options to acquire 325,000 shares of class A common stock.
In February 2000, pursuant to the Share Exchange Agreement dated as of
December 16, 1999, the Registrant issued to other members of the Silzer family
2,100,000 shares of Class B Stock and options to acquire 300,000 shares of class
A common stock.
In March 2000, the Registrant issued 193,720 shares of its class A common
stock Voting Stock to one accredited investor to settle the $193,720 debt owed
by Inforetech Golf Technology Inc. pursuant to Section 4(2) of the Securities
Act.
In March 2000, the Registrant issued 162,500 shares of its class A common
stock Voting Stock to two accredited investors as consideration for legal fees
pursuant to Section 4(2) of the Securities Act.
In May 2000, the Registrant issued 100,000 shares of class A common stock
in connection with the exercise of an option. The Registrant received $100,000
in payment of the exercise price. The shares were issued pursuant to Section
4(2) of the Securities Act.
In August 2000, the Registrant issued $1,000,000 of Series A Eight (8%)
Convertible Notes and accompanying warrants to purchase up to 100,000 shares of
class A common stock to at an initial exercise price of $6.25. The notes and the
warrants were issued to one accredited investor. The securities were issued
pursuant to Section 4(2) of the Securities Act.
In August 2000, the Registrant issued a $1,000,000 of 8% Convertible
Debenture and accompanying warrants to purchase up to 100,000 shares of class A
common stock to at an exercise which will be calculated on the exercise date.
The debenture and the warrants were issued to one accredited investor. The
securities were issued pursuant to Section 4(2) of the Securities Act.
In September 2000, the Registrant entered into a subscription agreement for
the sale of 222,223 shares of class A common stock to Dr. Terrance H. Matthews
for an aggregate amount of $100,000 pursuant to Section 4(2) of Securities Act.
Certain key employees, directors, advisors and representatives of the
Registrant may be granted, options under our stock option plan to purchase a
total up to 4,000,000 shares of class A common stock.
Item 27. Exhibits
II-3
<PAGE>
Exhibit
Number Description
----- -----------
2.1 Share Exchange and Finance Agreement dated as of December 16, 1999;
Incorporated by reference to the Exhibits to the Registration
Statement Form 10SB12G filed 6/14/99.
3.1 Articles of Incorporation as filed with the Nevada Secretary of State
on December 12, 1995;; Incorporated by reference to the Exhibits to
the Form 8-K filed 7/20/00.
3.2 Certificate of Amendment to the Articles of Incorporation as filed
with the Nevada Secretary of State on January 3, 2000; Incorporated by
reference to the Exhibits to the Registration Statement Form 10SB12G
filed 6/14/99.
3.3 Certificate of Amendment to the Articles of Incorporation as filed
with the Nevada Secretary of State on January 20, 2000; Incorporated
by reference to the Exhibits to the Registration Statement Form
10SB12G filed 6/14/99.
3.4 Bylaws; Incorporated by reference to the Exhibits to the Form 8-K
filed 7/20/00.
4.1 Securities Purchase Agreement dated as of August 4, 2000, by and
between Inforetech Wireless Technology Inc. and The Shaar Fund Ltd.*
4.2 8% Convertible Debentures Due August 4, 2005*
4.3 Registration Rights Agreement dated as of August 4, 2000, by and
between Inforetech Wireless Technology Inc. and The Shaar Fund Ltd.*
4.4 Pledge Agreement dated as of August 4, 2000, by and between Robert C.
Silzer and The Shaar Fund Ltd.*
4.5 Common Stock Purchase Warrant dated as of August 4, 2000, by and
between Inforetech Wireless Technology Inc. and The Shaar Fund Ltd.*
4.6 Registration Rights Agreement dated as of July 5, 2000, by and between
Inforetech Wireless Technology, Inc., Abacus Capital, LLC and TMR
Investments 1, LLC.*
4.7 Warrant to Purchase 200,000 shares of Class A Common Stock dated July
5, 2000, by and between Inforetech Wireless Technology Inc. and TMR
Investments 1, LLC.*
4.8 Warrant to Purchase 230,000 shares of Class A Common Stock dated July
5, 2000, by and between Inforetech Wireless Technology Inc. and TMR
Investments 1, LLC.*
4.9 Form of Securities Purchase Agreement dated as of August 4, 2000 by
and between Inforetech Wireless Technology and Augustine Fund, L.P.*
II-4
<PAGE>
4.10 Subscription Agreement and Residency Declaration dated as of
September 8, 2000 by and between Terry Matthews and Inforetech
Wireless Technology Inc. *
5.1 Opinion Regarding Legality*
13.1 Annual Report, Form 10K-SB40 as filed with the commission on 4/14/00
13.2 Quarterly Report, Form 10-QSB as filed with the commission on 8/14/00
13.3 Quarterly Report, Form 10-QSB as filed with the commission on 5/15/00
16.1 Letter on Change in Certifying Accountant; Incorporated by reference
to the Exhibits to the Form 8-K filed 7/20/00.
21.1 Subsidiaries of Registrant
23.1 Consent of Independent Accountants relating to the financial
statements of Inforetech Wireless Technology Inc.*
23.2 Consent of Independent Accountants relating to the financial
statements of Inforetech Golf Technology 2000 Inc.*
23.3 Consent of Legal Counsel; contained in exhibit 5.1
27.1 Financial Data Schedule for the year ended December 31, 1999*
27.2 Financial Data Schedule for the period ended June 30, 2000*
_________________________
* Filed herewith.
Item 28. Undertakings
The undersigned Registrant hereby undertakes as follows:
(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;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the
II-5
<PAGE>
provisions described above in Item 24, or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction of the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(3) For purposes of determining any liability under the Securities
Act, to treat the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1), or (4), or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it effective.
(4) For the purpose of determining any liability under the Securities
Act, to treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in
the Registration Statement, and the offering of such securities at that
time as the initial bona fide offering of those securities.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INFORETECH WIRELESS TECHNOLOGY, INC.
By: /s/ Robert C. Silzer, Sr.
--------------------------------
Robert C. Silzer, Sr.
Chief Executive Officer
Dated: October 3, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ Robert C. Silzer, Sr. Dated: October 3, 2000
----------------------------
Robert C. Silzer, Sr.
Chief Executive Officer
By: /s/ Robert C. Silzer, Jr. Dated: October 3, 2000
----------------------------
Robert C. Silzer, Jr.
President, Secretary, Treasurer
By: /s/ Jerry L. Smith Dated: October 3, 2000
----------------------------
Jerry L. Smith
Director
By: Dated:
____________________________
Graham Neathway
Director
II-7
<PAGE>
By: /s/ William Kiss Dated: October 3, 2000
----------------------------
William Kiss
Director
By: Dated:
----------------------------
Terence H. Matthews
Director
II-8
