As filed with the Securities and Exchange Commission on
June 10, 1999
Registration No. 333-78889
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________________
DYNAMICWEB ENTERPRISES, INC.
(Name of Small Business Issuer in Its Charter)
New Jersey 7372 22-2267658
(State or other Juris- (Primary Standard (I.R.S. Employer
diction of Incorpora- Industrial Classif- Identification
tion or Organization ication Code Number) Number)
DynamicWeb Enterprises, Inc.
271 Route 46 West
Building F, Suite 209
Fairfield, New Jersey 07004
(973) 276-3100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Steven L. Vanechanos, Jr.
Chief Executive Officer
DynamicWeb Enterprises, Inc.
271 Route 46 West
Building F, Suite 209
Fairfield, New Jersey 07004
(973) 276-3100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Stephen F. Ritner, Esquire Ira R. Halperin, Esquire
Scott H. Spencer, Esquire Weil, Gotshal & Manges LLP
Stevens & Lee 767 Fifth Avenue
One Glenhardie Corporate Center New York, New York 10153
1275 Drummers Lane (212) 310-8383
P.O. Box 236
Wayne, Pennsylvania 19087
(610) 964-1480
___________________________
Approximate date of commencement of proposed sale to the public:
From time to time, at the discretion of the selling shareholders,
after the effective date of this Registration Statement.
<PAGE 1>
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [__]
If this Form is a post-effective registration statement
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 delivery of the prospectus is expected to be made
pursuant to Rule 434 please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=================================================================
Proposed Proposed
Title of Each Amount Maximum Maximum
Class of Secur- to be Offering Aggregate Amount of
ities to be Regis- Price Per Offering Registra-
Registered tered(1) Unit(1) Price(1) tion Fee
_________________________________________________________________
Common Stock(2) 238,295 $7.16 $ 1,706,192 $ 503.32
_________________________________________________________________
Common Stock 1,519,230 $7.16 $10,877,687 $3,208.91
issuable upon
conversion of
convertible
preferred stock(3)
_________________________________________________________________
Common Stock 162,500 $6.00 $ 975,000 $ 287.62
issuable upon
exercise of
warrants(4)
_________________________________________________________________
Common Stock 135,000 $8.93 $1,205,550 $ 355.64
issuable upon
exercise of
warrants(5)
_________________________________________________________________
<PAGE 2>
Common Stock 45,000 $5.50 $ 247,500 $ 73.01
issuable upon
exercise of
options of
Perry & Co.(6)
_________________________________________________________________
Common Stock 45,000 $5.50 $247,500 $ 73.01
issuable upon
exercise of
options of
Joel Arberman(6)
=================================================================
(1) Estimated pursuant to Rule 457(a) solely for purposes of
calculating the Registration Fee.
(2) Calculated pursuant to Rule 457(c), using the average of the
bid and asked prices on May 17, 1999, solely for the purpose
of calculating the Registration Fee.
(3) Calculated pursuant to Rule 457(g)(3), using the average of
the bid and asked prices on May 17, 1999, solely for the
purpose of calculating the Registration Fee.
(4) Calculated pursuant to Rule 457(g)(1) using a fixed exercise
price of $6.00 per share for the Common Stock, solely for
the purpose of calculating the Registration Fee.
(5) Calculated pursuant to Rule 457(g)(1) using a fixed exercise
price of $8.93 per share for the Common Stock, solely for
the purpose of calculating the Registration Fee.
(6) Calculated pursuant to Rule 457(g)(1) using a fixed exercise
price of $5.50 per share for the Common Stock, solely for
the purposes of calculating the Registration Fee.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall become
effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
=================================================================
<PAGE 3>
Cross Reference Table
Location in Prospectus of
Information Required by Part I of Form S-2
Item
No. Caption Location in Prospectus
1 Front of the Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2 Inside Front and Outside Back Inside Front Cover Page,
Cover Pages of Prospectus Where You Can Find More
Information About
DynamicWeb Enterprises,
Inc.
3 Summary Information and Risk Factors
Risk Factors
4 Use of Proceeds Not Applicable
5 Determination of Offering Offering Price
Price
6 Dilution Not Applicable
7 Selling Security Holders Selling Shareholders
8 Plan of Distribution Plan of Distribution
9 Description of Securities Description of Securities
10 Interests of Named Experts Legal Matters, Experts
and Counsel
11 Information with Respect to Where You Can Find More
Registrant Information About
DynamicWeb Enterprises,
Inc.
12 Incorporation of Certain Where You Can Find More
Information by Reference Information About
DynamicWeb Enterprises,
Inc.
13 Disclosure of Commission Disclosure of Commission
Position on Indemnification Position on
for Securities Act Indemnification for
Liabilities Securities Act
Liabilities
<PAGE 4>
Prospectus
2,145,025 shares of
DynamicWeb Enterprises, Inc.
common stock
Offering Price: The shares will be offered for sale at market
prices from time to time.
Selling Shareholders: The shares are being offered by several
shareholders of DynamicWeb who are named on page 7, not by
DynamicWeb itself. The several selling shareholders are acting
individually, not as a group.
Trading Market: DynamicWeb's common stock is traded on the
National Association of Securities Dealers, Inc. Over-the-Counter
Bulletin Board under the symbol "DWEB."
Proceeds: DynamicWeb will not receive any of the proceeds from
sales made by the selling shareholders.
There are risks associated with the purchase of these
shares. An investor should carefully read the Risk Factors
section of this prospectus located at Page 1.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of the
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is June 14, 1999.
<PAGE 5>
TABLE OF CONTENTS
Risk Factors ................................................. 1
Selling Shareholders ......................................... 7
Plan of Distribution ......................................... 13
Description of Securities to be Registered ................... 14
Where You Can Find More Information
About DynamicWeb Enterprises, Inc. ...................... 15
Legal Matters ................................................ 17
Experts ...................................................... 17
Disclosure of Commission Position on
Indemnification for Securities Act Liabilities .......... 18
Financial Statements .........................................F-1
<PAGE 6>
Risk Factors
The purchase of our common stock is very risky. You
should not invest any money you cannot afford to lose. Before
you buy our stock, you should carefully read this entire
prospectus. We have highlighted for you what we think are the
major risks which could most affect our business. There are
certainly other risks that could affect our business.
We Anticipate We Will Incur Continued Losses For The
Foreseeable Future
To date, we have not been profitable. We expect to
lose substantial amounts of money in the near future. We have
intentionally increased our expenses substantially, and will
continue to do so, by hiring more employees and spending more
money to develop and market our products. Presently we have cash
flow deficiencies of approximately $200,000 per month. We cannot
give any assurances that our increased expenditures will result
in sufficient increases in sales to make us profitable.
If We Do Not Raise Additional Capital We May Go Out Of
Business
Because we are losing money in our operations, unless
we raise a significant amount of new capital we will run out of
money. We anticipate that our resources on hand will last until
approximately November 1999. We expect that we will need to
raise substantial additional capital in order to continue
operations after that date.
There is no assurance that we will be able to raise new
capital. If we are not able to raise additional funding in a
timely manner, we may have to scale back our operations or
possibly cease operations. If we sell more common stock, the
interests of existing investors in DynamicWeb may be diluted,
meaning that their percentage ownership will be reduced.
Our Auditors Have Questioned Our Viability But Our Financial
Statements Have Not Been Adjusted To Reflect That Concern
Our auditors' opinion on our financial statements as of
September 30, 1998, calls attention to substantial doubts as to
the ability of DynamicWeb to continue as a going concern. This
means that they question whether we can continue in business. If
we cannot continue in business, our common stockholders would
likely lose their entire investment. Our financial statements
are prepared on the assumption that we will continue in business.
They do not contain any adjustments to reflect the uncertainty
over our continuing in business.
<PAGE 1>
Our Products Are So New That We Cannot Be Sure That Customers
Will Want Them
In general, electronic commerce products and services
are new. DynamicWeb's particular products and services are very
new. These products and services may never gain enough
acceptance for us to make a profit selling them.
At this time, there is limited use of electronic
commerce products. As with any new product, its acceptance by
customers is unpredictable. Companies have used other
traditional means of doing business for many years. It is
difficult to convince companies to adopt new technology. We need
to convince a large number of industries that using electronic
commerce means is the best way for them to conduct business. We
may not be successful in doing so.
Concerns About The Security And Reliability Of The Internet
May Negatively Affect Our Business
We have based our particular business strategy on the
development of the Internet. The Internet has a number of
specific problems that are of concern to our business. The main
ones are the security of information, access to and the
reliability of connections, and the speed of information
transmission. If these problems are not overcome, fewer people
will be attracted to our services.
Our Market Is Characterized By Rapid Technological Change
Which We May Not Be Able To Keep Up With
Technological changes in the computer software industry
happen rapidly. If we do not respond to those changes quickly
and efficiently, we will not be a competitive company in the
industry. We face a significant danger because we presently only
have four groups of products to sell and they all provide
essentially one service.
Our Stock Has Been A Penny Stock Which Is More Difficult To
Sell
Our common stock recently has been a "penny stock." It
is relatively difficult for an investor to sell shares of a penny
stock.
Any stock which falls below $5.00 per share selling
price in the public market is called a penny stock. Our common
stock traded below $5.00 per share throughout the last six months
of 1998, and near or under $5,00 during much of 1999. It is much
more difficult to sell a penny stock than other shares that trade
on a national market or stock exchange because of the extra steps
the broker\dealer must take before selling the stock. A sale of
penny stock does not usually take place as quickly as a sale of
shares that trade on a national market or stock exchange.
Because of the difficulty in dealing in penny stocks, many
<PAGE 2> broker\dealers are unwilling to participate in buying
and selling our shares.
A penny stock is subject to special rules issued by the
Securities and Exchange Commission that regulate how an investor
can purchase the shares. These rules are designed to protect
investors from gambling on cheap stocks in hopes of picking the
occasional big winner. Although there are exceptions to the
rules for certain institutional or high net worth individuals,
usually, the broker\dealer must take the following steps:
- determine the suitability of the purchase for the
particular investor;
- provide a first time investor in penny stock with a
document disclosing the risks of investing in this type of stock;
and
- have the purchase approved by a compliance officer of
the brokerage firm.
Because of the time required to comply with these
requirements it could become difficult for you to sell an
investment in DynamicWeb if our stock is subject to the penny
stock rules. You may want to sell your shares of DynamicWeb at a
time when you can show a profit, however by the time a sale of
your shares is approved, the stock price may have declined to the
point where you will have a loss on your investment.
There Is A Small Market For Our Common Stock Which Makes It
More Difficult To Sell
It may be difficult for an investor to sell shares of
our common stock, since there is only a small market for our
common stock.
Our common stock has not been traded actively. The
investment community has not shown a great deal of interest in
our shares. Simply, there have been relatively few buyers and
sellers of our stock.
Although we have recently agreed to have our shares
marketed over the Internet, this has not resulted in a
significant change in the number of shares being traded.
Because we are not traded on a national exchange, the
quotation for the price of our stock is difficult for an investor
to obtain without professional help. Out stock quote is
generally not found in daily newspaper quotations.
One Of Our Investors Can Acquire Substantial Amounts Of Our
Stock At Below Market Prices Which Negatively Affects Our Other
Shareholders
<PAGE 3>
The Shaar Fund possesses warrants and conversion rights
to acquire a substantial amount of our common stock at below
market prices. Its exercise of its warrants and rights may
further dilute the net tangible book value of your investment in
DynamicWeb, or have a negative effect on the market price of our
common stock. Its conversion rights under DynamicWeb's
convertible preferred stock are determined under a formula. As
the market price of our common stock goes down, the Shaar Fund
can acquire a greater number of shares of common stock. Also,
the discount from the market price becomes greater over time.
The number of shares of common stock and the purchase prices are
described below under the caption "Selling Shareholders -- The
Shaar Fund."
We May Not Successfully Compete With The Many Significant
Competitors In Our Business
The electronic commerce industry is intensely
competitive and changes rapidly. There are many larger, more
established companies such as Microsoft and IBM that sell
electronic commerce packages. We are faced with significant
competition from those companies that are already established in
the industry. They have significantly more resources than we do.
We expect competition to intensify in the industry.
We Could Lose Our Access To Valuable Software Which We License
From Others
We use software that is licensed from other companies
with our software products. The licensed software is an
essential part of our products. We do not have exclusive rights
to any of the essential software; it can be licensed to anyone,
including our competitors. Any of the essential software could
become unavailable or too expensive for us to use with our
products. If any of the essential software licenses becomes
unavailable, our products would have to be redesigned or new
software obtained. There can be no assurance that is possible.
Our Core Computer Language Could Become Obsolete And Force Us
To Write New Computer Code
DynamicWeb's software is written using a computer
language called Practical Extraction and Reporting Language.
This language is presently used to write software for use on the
Internet. Because the Internet design and standards for use are
not controlled by any certain organization or individual, the
continued use of this language for Internet programs is not
guaranteed. If the programming language for the Internet were to
change, we could incur substantial expenses in an attempt to
continue to support and develop this language.
<PAGE 4>
We May Not Be Successful In Building A Network Of Third Party
Sellers Of Our Services
We do not have a large number of sales and marketing
employees. Consequently, our distribution channels are limited.
This hinders our efforts to increase sales. We need to achieve
broad distribution of our products to generate sales. We must
maintain and develop relationships with leading companies that
market software products and electronic commerce services. We
may not be successful in doing this.
We May Not Be Able To Protect Our Proprietary Rights
We use software technology that we developed for use on
the Internet. Our proprietary name for that software is NetCat.
It is an important asset of DynamicWeb. We have a patent on the
software but it may not sufficiently protect our rights in the
technology. The patent would not provide protection outside of
the United States. It may be challenged and we may have to spend
a significant amount of money to defend the patent.
Patent infringement litigation is common in the
electronic commerce industry. If we are accused of violating
another company's intellectual property rights, even if
improperly accused, we may have to spend significant amounts of
money defending ourselves.
We Could Incur Substantial Uninsured Liability If We Do Not
Properly Execute Our Customers' Transactions
We are responsible for the electronic exchange of many
types of business documents using our products and systems.
These documents include the operational documents of our
customers such as orders, invoices, shipping and payment
documents. If for any reason we were unable to provide our
service, we could be liable to our customers for their loss of
business. There is no guarantee that the insurance that we carry
will be sufficient to cover all potential losses. We may,
therefore, have a substantial financial obligation to our
customers.
Our Success Depends Upon The Efforts Of A Few Key People
Our success will depend largely on retaining several of
our key senior management and technical personnel. This includes
our Chairman of the Board, Steven L. Vanechanos Jr., James D.
Conners, President of the Company and Kenneth R. Konikowski,
Executive Vice President of the Company. The departure of any of
these key personnel would cause DynamicWeb to lose valuable
knowledge and expertise.
<PAGE 5>
We Could Not Be Able To Retain And Hire Enough Qualified
People To Run Our Business
We may not be able to attract enough qualified
personnel to run our business effectively or meet our customers'
demands. We are a very small, service-based technology company.
We feel our success in the future is highly dependent on
attracting additional highly skilled personnel, particularly
those who can operate in a technical environment. The market for
these types of professionals is highly competitive and more
established companies are able to provide higher salaries and
better benefits than we are.
Management Can Block A Takeover Of DynamicWeb Even If Many
Shareholders Favor The Offer
There are several provisions in our certificate of
incorporation and under New Jersey law that can operate to make
it more difficult for a third party to acquire DynamicWeb. These
could allow DynamicWeb's management to resist or prevent a
purchase of DynamicWeb, even at a premium price which the
shareholders would like to accept. Those are:
- The board of directors has the authority to
issue 5,000,000 shares of preferred stock without the approval of
the shareholders.
- Our system of election of the board of
directors in staggered classes.
- Provisions of New Jersey Law which prevent a
10% stockholder who has not received the prior approval of the
board of directors from engaging in a "business combination"
transaction with DynamicWeb for a period of five years after the
date on which the person became such a 10% stockholder.
Our Common Stock Price Is Very Volatile
Our stock price is particularly volatile, because of
its low price and because we are a technology company. Investors
may perceive volatility to be an undesirable characteristic for a
stock, and volatility also may increase the risk of subjecting us
to lawsuits.
Investors react to news of operating results,
innovations in the industry and changes in general economic
conditions. Stocks in the technology industry are particularly
volatile in their reaction to these types of factors.
When there is a fluctuation in market price, there is
the possibility that our shareholders will blame us for taking
some inappropriate action. In the past these types of situations
have resulted in shareholder litigation. If this type of
shareholder action were to happen, it would cost us significant
amounts of money to litigate. <PAGE 6>
Some Of Our Employees, Directors And Shareholders Hold Options
Which Could Dilute The Interest Of Other Shareholders
In addition to the Shaar Fund's warrants and conversion
rights, we have substantial other warrants and options
outstanding. The exercise of any or all of those options and
warrants may further dilute the net tangible book value of your
investment in DynamicWeb, or have a negative effect on the market
price of our common stock. Additionally, the holders of the
options and warrants may exercise them at a time when DynamicWeb
would have been able to sell the associated shares to someone
else at a higher price.
We have an Employee Stock Option Plan. We can issue
options to purchase a total of 334,764 shares of common stock to
our employees and officers under this plan. To date, we have
issued 331,176 options under this plan.
We also have a Stock Option Plan for Outside Directors
and we may issue a total of 78,254 options under this plan. We
have granted 31,296 options to outside directors to date.
We have granted warrants to existing shareholders to
purchase 125,000 shares of common stock at $6.00 a share in
return for a previous contribution of their common stock back to
the company.
Perry & Co. and its principal hold options to purchase
90,000 shares of common stock at $5.50 per share.
The Selling Shareholders
General
There are eight selling shareholders. The selling
shareholders are acting individually, not as a group. None of
the selling shareholders or their affiliates has held any
position, office or other material relationship, other than as a
shareholder, with DynamicWeb. The identity of the selling
shareholders and the maximum number of shares of common stock
offered under this prospectus by each of them are as follows:
The Shaar Fund, Ltd. 1,791,730 shares(1)
Keeway Investments, Ltd. 141,177 shares
Cranshire Capital, L.P. 94,118 shares
Perry & Co. 45,000 shares
Joel Arberman 45,000 shares
Zazoff Associates, L.L.C. 10,000 shares
The Malachi Group, Inc. 8,500 shares
Peter Baxter, Jr. 9,500 shares
___________________
(1) This number of shares is the initial number that the Shaar
Fund has the right to require DynamicWeb to register for it. The
actual number of shares that the Shaar Fund will acquire and then
sell under this prospectus is determined, in part, by a formula
<PAGE 7> described below under "The Shaar Fund," although the
maximum number of shares of common stock offered under this
prospectus by the Shaar Fund will not exceed 1,791,730. If the
conversion formula yields a greater number of shares, then
DynamicWeb will file a new registration statement covering those
additional shares.
The above numbers of shares for each selling
shareholder other than the Shaar Fund represents 100% of the
shares of common stock of DynamicWeb which each of those persons
owns or has a right to acquire. None of those persons would own
or have the right to acquire any other shares of common stock of
DynamicWeb after this offering is complete.
In the case of the Shaar Fund, it potentially could
acquire substantial additional shares of DynamicWeb's common
stock other than the shares offered under this prospectus if the
market price of our common stock falls below $2.50 per share.
Specifically:
- It may acquire more than 769,230 shares of
DynamicWeb common stock underlying the Series A preferred stock
if the actual conversion price for the conversion of the Series A
preferred stock held by the Shaar Fund is less than $1.95 per
share.
- It may acquire more than 750,000 shares of
DynamicWeb common stock underlying the Series B preferred stock
if the actual conversion price for the conversion of the Series B
preferred stock held by the Shaar Fund is less than $2.00 per
share.
The Shaar Fund
Shares Offered Under this Prospectus
The Shaar Fund is offering up to 1,791,730 shares of common
stock of DynamicWeb. It has acquired or has the right to acquire
those shares under the terms of 1,500 shares of Series A
preferred stock, 1,500 shares of Series B preferred stock, and
272,500 warrants of DynamicWeb that the Shaar Fund acquired
during 1998 and 1999.
The number of shares offered under this prospectus by the
Shaar Fund consists of the following three components:
- 272,500 shares of DynamicWeb common stock which the
Shaar Fund can acquire under warrants. 137,500 of those warrants
are exercisable at $6.00 per share; and the other 135,000 of
those warrants are exercisable at $8.93 per share.
- 769,230 shares of common stock into which the
Series A preferred stock is assumed to be convertible. Under
DynamicWeb's agreement with the Shaar Fund, DynamicWeb is
required initially to register this number of shares. This
<PAGE 8> number is determined based upon the assumption that the
conversion of the Series A preferred stock into common stock will
occur at a conversion price of $1.95 per share. Shaar Fund has
already converted 125 shares of Series A preferred stock into
95,420 shares of common stock.
- 750,000 shares of common stock into which the
Series B preferred stock is assumed to be convertible. Under
DynamicWeb's agreement with the Shaar Fund, DynamicWeb is
required initially to register this number of shares. This
number is determined based upon the assumption that the
conversion of the Series B preferred stock into common stock will
occur at a conversion price of $2.00 per share.
Series A Preferred Stock
The Series A preferred stock has a conversion value of
$1,000 per share. That conversion value is credited towards the
purchase of shares of common stock at an agreed-upon purchase or
conversion price. The applicable conversion price is a discount
to the "market price" of the common stock at the time of
conversion. For these purposes, the "market price" is the
average of the lowest 3 days closing bid prices of the common
stock for the 20 trading days immediately preceding the
conversion.
Until November 8, 1999, the conversion price can never
exceed $2.75 per share. After that date, the conversion price
can never exceed $5.50 per share. The conversion price also may
be less than those ceilings, based upon the following:
Time of Conversion Conversion Price
0-179 days after purchase 85% of market price
180-359 days after purchase 80% of market price
360 days or more after purchase 78% of market price
Therefore, the higher the market price of DynamicWeb common
stock at the time of conversion, the fewer number of shares will
be acquired; and the lower the market price of DynamicWeb common
stock at the time of conversion, the greater number of shares
will be acquired. Except for the conversion price falling to one
cent per share, there is no ceiling on the maximum number of
shares that the Shaar Fund might acquire upon conversion of the
Series A preferred stock.
The Shaar Fund may elect when to convert the Series A
preferred stock; however, on August 7, 2000, the Shaar Fund must
elect either to convert all outstanding shares of Series A
preferred stock at the applicable conversion price or to have
DynamicWeb redeem all outstanding shares of Series A preferred
stock for $1,350 per share.
<PAGE 9>
On December 3, 1998, it converted 125 shares of the Series A
preferred stock into 95,420 shares of common stock.
Series B Preferred Stock
The Series B preferred stock has a conversion value of
$1,000 per share, which is credited towards the purchase of
shares of common stock at an agreed-upon conversion price. The
conversion price is a discount to the "market price" of the
common stock at the time of conversion. For these purposes, the
"market price" is the average of the closing bid prices of the
common stock for the lowest 7 days closing bid prices of the
common stock for the 20 trading days immediately preceding the
conversion.
The conversion price of the Series B preferred stock can
never exceed $9.74 per share, but may be less than that ceiling,
based upon the following:
Time of Conversion Conversion Price
0-179 days after purchase 85% of market value
180 days or more after purchase 80% of market value
Except for the conversion price falling to one cent per
share, there is no ceiling on the maximum number of shares that
the Shaar Fund might acquire upon conversion of the Series B
preferred stock.
The Shaar Fund may elect when to convert the Series B
preferred stock; however, on February 12, 2003, the Shaar Fund
must elect either to convert all outstanding shares of Series B
preferred stock at the applicable conversion price or to have
DynamicWeb redeem all outstanding shares of Series B preferred
stock for $1,350 per share.
All shares being offered by the Shaar Fund are being
registered under registration rights agreements between
DynamicWeb and the Shaar Fund.
Examples of the Effect of the Formula Conversion Price
The following tables give several examples of the number of
shares of common stock into which the remaining 1,375 shares of
Series A and 1,500 shares of Series B preferred stock could be
converted, depending on the market price of the common stock.
Since there are maximum conversion prices for both the
Series A and Series B preferred stock, the Shaar Fund will always
be able to acquire a substantial number of shares of common
stock, even if the market price of DynamicWeb's common stock is
high. That minimum number of shares will be greater until
November 8, 1999, because the maximum conversion price applicable
<PAGE 10> to the Series A preferred stock is only $2.75 per share
until that date, but increases to $5.50 per share after that
date.
Up to November 8, 1999, the Shaar Fund will be able to
acquire at least 654,004 shares of common stock, even if the
market price exceeds $12.50 per share, because the $2.75 maximum
conversion price for the Series A preferred stock and the $9.74
maximum conversion price for the Series B preferred stock will
apply.
After November 8, 1999, the Shaar Fund will be able to
acquire at least 404,004 shares of common stock, even if the
market price exceeds $12.50 per share, because the $5.50 maximum
conversion price for the Series A preferred stock and the $9.74
maximum conversion price for the Series B preferred stock will
apply.
Assuming all 1,375 remaining shares of the Series A
preferred stock are converted prior to November 8, 1999, at the
lower of 80% of Market Price or the $2.75 maximum conversion
price:
Number of
Market Price Conversion Price Common Shares
$ 0.50 $0.40 3,437,500
1.95 1.56 881,410
3.00 2.40 572,916
4.00* 2.75* 500,000
______________________
* At any Market Price greater than $3.43, the maximum
conversion price of $2.75 applies to the Series A preferred
stock.
Assuming all 1,500 shares of the Series B preferred stock
are converted at the lower of 85% of Market Price or the $9.74
maximum conversion price:
Number of
Market Price Conversion Price Common Shares
$ 0.50 $0.425 3,529,411
1.95 1.657 905,250
5.00 4.25 352,941
10.00 8.50 176,470
12.00* 9.74* 154,004
______________________
* At any Market Price greater than $11.46, the maximum
conversion price of $9.74 applies to the Series B preferred
stock.
The exact number of shares that the Shaar Fund will actually sell
pursuant to this prospectus may be less than the full 1,791,730
because the Shaar Fund has the discretion to determine when and
<PAGE 11> whether it will sell any shares under this prospectus,
and also because the actual number of shares which the Shaar Fund
will acquire by converting the Series A or Series B preferred
stock is not known. If the Shaar Fund acquires a greater number
of shares upon conversion of the Series A or Series B preferred
stock, then DynamicWeb will file a new registration statement
covering those additional shares. Also, DynamicWeb must file
another registration statement covering additional shares of
common stock underlying the Series B preferred stock if the
market price of DynamicWeb's common stock falls below $4.00 per
share on any day.
Keeway Investments, Ltd.
Keeway Investments, Ltd. is offering 141,177 shares of
common stock that it has acquired in a private placement.
Cranshire Capital, L.P.
Cranshire Capital, L.P. is offering 94,118 shares of common
stock that it has acquired in the same private placement
transaction as Keeway.
Perry & Co.
Perry & Co. is offering shares of common stock of DynamicWeb
that it has acquired or has the right to acquire under the terms
of options of DynamicWeb held by Perry & Co. Perry & Co. has an
option to purchase 45,000 shares of DynamicWeb common stock at an
exercise price of $5.50 per share. The options were received as
compensation for services rendered in 1998.
Joel Arberman
Mr. Arberman is offering shares of common stock of
DynamicWeb that he has acquired or has the right to acquire under
the terms of options of DynamicWeb held by Mr. Arberman. Mr.
Arberman has an option to purchase 45,000 shares of DynamicWeb
common stock at an exercise price of $5.50 per share. The
options were received as compensation for services rendered in
1998. Mr. Arberman is a principal of Perry & Co.
The Malachi Group, Inc.
The Malachi Group is offering shares of common stock of
DynamicWeb that it has acquired or has the right to acquire under
the terms of warrants of DynamicWeb held by Malachi. Malachi
holds warrants to purchase 8,500 shares of DynamicWeb common
stock at an exercise price of $6.00 per share. Those warrants
were received as compensation for services rendered in 1998.
Peter Baxter, Jr.
Mr. Baxter is offering shares of common stock of DynamicWeb
that he has acquired or has the right to acquire under the terms
<PAGE 12> of warrants held by Mr. Baxter. Mr. Baxter holds 1,000
shares of common stock and warrants to purchase an additional
8,500 shares of DynamicWeb common stock at an exercise price of
$6.00 per share. The shares and warrants were received as
compensation for services rendered in 1998. Mr. Baxter is a
principal of Malachi.
Zazoff Associates, L.L.C.
Zazoff Associates is offering shares of common stock of
DynamicWeb that it has acquired or has the right to acquire under
the terms of warrants held by Zazoff. Zazoff holds 2,000 shares
of common stock and warrants to purchase an additional 8,000
shares of DynamicWeb common stock at an exercise price of $6.00
per share. The shares and warrants were received as compensation
for services rendered in 1998.
Other
The shares being offered by the selling shareholders other
than the Shaar Fund are being registered under registration
rights provided for in various agreements between DynamicWeb and
those persons.
DynamicWeb is unable to determine the exact number of shares
that those persons will actually sell pursuant to this prospectus
because each of them has the discretion to determine when and
whether they will sell any shares under this prospectus.
The Plan of Distribution
The registration statement of which this prospectus forms a
part has been filed to satisfy registration rights held by the
selling shareholders under agreements between DynamicWeb and the
selling shareholders. To DynamicWeb's knowledge, as of this
date, none of the selling shareholders has entered into any
agreement, arrangement or understanding with any particular
broker or market maker with respect to the shares offered by
them, nor does DynamicWeb know the identity of the brokers or
market makers which might participate in such offering.
The shares being registered and offered may be sold from
time to time by the selling shareholders. The selling
shareholders will act independently of DynamicWeb in making
decisions with respect to the timing, manner, and size of each
sale. The sales may be made on the OTC Bulletin Board or
otherwise, at prices and on terms then prevailing or at prices
related to the market price, or in negotiated transactions.
The shares may be sold by one or more of the following
methods:
(1) A block trade in which the broker-dealer engaged by
a selling shareholder will attempt to sell shares as agent but
<PAGE 13> may position and resell a portion of the block as
principal to facilitate the transaction.
(2) Purchases by the broker-dealer as principal and
resale by such broker or dealer for its account according to this
prospectus.
(3) Ordinary brokerage transactions and transactions in
which the broker solicits purchasers.
To the best of the DynamicWeb's knowledge, none of the
selling shareholders has, as of this date, entered into any
arrangement with a broker or dealer for the sale of shares
through a block trade, special offering, or secondary
distribution of a purchase by a broker-dealer. In effecting
sales, broker-dealers engaged by a selling shareholder may
arrange for other broker-dealers to participate. Broker-dealers
may receive commissions or discounts from a selling shareholder
in amounts to be negotiated.
In offering the shares, the selling shareholders and any
broker-dealers who execute sales for the selling shareholders may
be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 in connection with such sales, and any
profits realized by the selling shareholders and the compensation
of such broker-dealer may be deemed to be underwriting discounts
and commissions.
Regulation M under the Securities and Exchange Act of 1934
prohibits participants in a distribution and their affiliates
from bidding for or purchasing any of the securities that are the
subject of the distribution. It also governs bids and purchases
made to stabilize the price of a security in connection with a
distribution of the security.
There can be no assurance that any selling shareholder will
sell any or all of the shares of common stock registered under
this registration statement.
Description of the Securities to be Registered
General
DynamicWeb's authorized capital stock consists of
50,000,000 shares of common stock, $.0001 par value per share,
and 5,000,000 shares of undesignated preferred stock. As of the
date of this prospectus, there were 2,587,844 shares of common
stock issued and outstanding. As of December 31, 1998, the
common stock is held of record by approximately 392 stockholders.
<PAGE 14>
Common Stock
Holders of common stock have the right to cast one
vote, in person or by proxy, for each share owned of record on
the record date on all matters submitted to a vote of the holders
of common stock, including the election of directors. Holders of
common stock do not have cumulative voting rights, which means
that holders of more than 50% of the outstanding shares voting
for the election of the class of directors to be elected by the
common stock can elect all of such directors, and, in such event,
the holders of the remaining shares of common stock will be
unable to elect any of DynamicWeb's directors.
Holders of the common stock are entitled to share
ratably in such dividends as may be declared by the board of
directors out of funds legally available for dividends, when, as
and if declared by the board of directors and are also entitled
to share ratably in all of the assets of DynamicWeb available for
distribution to holders of shares of common stock upon the
liquidation, dissolution or winding up of the affairs of
DynamicWeb. Holders of common stock do not have preemptive,
subscription or conversion rights. All outstanding shares of
common stock are, and those shares of common stock offered here
will be, validly issued, fully paid and non-assessable.
Where You Can Find More Information About
DynamicWeb Enterprises, Inc.
This Registration Statement
DynamicWeb has filed with the Securities and Exchange
Commission a registration statement on Form S-2, including all
amendments and exhibits to that registration statement, under the
Securities Act of 1933 for the shares being offered. This
prospectus is only a part of the registration statement and does
not contain all of the information filed with the Securities and
Exchange Commission. While statements in this prospectus
concerning the provisions of contracts or other documents
describe the material terms of the provisions which are being
described, they do not discuss all of the terms of those
contracts or other documents. In each instance, the complete
details of each contract or document are contained in the
exhibits filed with the registration statement. Refer to the
exhibit of each contract or document to obtain additional
information. For additional information about DynamicWeb and the
shares being sold, refer to the registration statement and the
accompanying exhibits and schedules.
For a fee, a copy of the registration statement, with
exhibits, may be obtained from the SEC's office in Washington, DC
at 450 Fifth Street, NW, Washington, DC 20549 or is available for
you to read at their office without charge.
<PAGE 15>
Other SEC Filings
DynamicWeb is required by the Securities Exchange Act of
1934 to file reports, proxy statements, and other information
with the Securities and Exchange Commission. Reports, proxy
statements and other information filed with the SEC can be
inspected and copied at the public reference facilities of the
Commission at 450 Fifth Street, NW, Washington, DC 20549. For a
fee, copies of this material can be obtained from the Public
Reference Section of the Commission at its principal office at
450 Fifth Street, NW, Washington, DC 20549.
The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
Commission. The address of the site is http://www.sec.gov.
DynamicWeb incorporates by reference the following documents
filed with the Securities and Exchange Commission.
1. DynamicWeb's annual report on Form 10-KSB for the
fiscal year ended September 30, 1998;
2. DynamicWeb's quarterly reports on Form 10-QSB for the
quarter ended December 31, 1998 and the quarter ended
March 31, 1999;
3. DynamicWeb's Current Reports on Form 8-K filed
February 19, 1999 and May 10, 1999, and amended Current
Reports on Form 8-K/A filed November 10, 1998 and
February 23, 1999.
4. DynamicWeb's proxy statement filed June 25, 1998;
5. All other reports filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 since
September 30, 1998.
Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
Copies of Documents
This prospectus includes a copy of the our latest Form 10-
KSB and Form 10-QSB. To each person who receives a prospectus,
we will provide upon request and without charge a copy of the
additional documents listed above, not including the exhibits to
those documents unless such exhibits are specifically
incorporated by reference into those documents. Requests for
those documents should be made to: DynamicWeb Enterprises, Inc.,
<PAGE 16> 271 Route 46 West, Building F, Suite 209, Fairfield,
New Jersey 07004. Telephone number (973) 276-3100.
Predictions and Other Forward-Looking Information
This prospectus and registration statement contain many
forward-looking statements and information that are based on the
beliefs and plans of DynamicWeb's management, on estimates and
assumptions made by DynamicWeb's management, or on information
currently available to DynamicWeb's management. Those forward-
looking statements and information are also contained in
DynamicWeb's other reports filed from time to time with the
Securities and Exchange Commission, including its Form 10-KSB for
the fiscal year ended September 30, 1998.
When used in those SEC documents, words such as
"anticipate," "believe," "estimate," "expect," "future,"
"intend," "plan" and similar expressions, as they relate to
DynamicWeb and its management, identify forward-looking
statements. Such statements reflect the current views of
DynamicWeb and its management with respect to future events.
They are subject to many risks, uncertainties and assumptions
relating to the future.
Some of those risks, uncertainties and assumptions include
DynamicWeb's operations and results of operations, competitive
factors and pricing pressures, shifts in market demand, the
performance and needs of the customers served by us, and the
costs of pursuing our business plan. Other risks and
uncertainties are specifically discussed in "Risk Factors"
elsewhere in this prospectus.
Should one or more of these risks or uncertainties
materialize, or should the underlying estimates or assumptions
prove incorrect, actual results or outcomes may vary
significantly from those anticipated, believed, estimated,
expected, intended or planned.
Legal Matters
The law firm of Stevens & Lee, Wayne, Pennsylvania and
Lancaster, Pennsylvania, on behalf of DynamicWeb, has issued its
legal opinion that the common stock being sold in this offering
is validly issued, fully paid and non-assessable.
Experts
The consolidated financial statements of DynamicWeb
Enterprises, Inc. and Design Crafting, Inc. incorporated by
reference or appearing in this prospectus and registration
statement have been audited by Richard A. Eisner & Company, LLP,
independent auditors, to the extent indicated in their reports on
those financial statements also appearing elsewhere in this
prospectus and registration statement or incorporated by
reference. In the case of the financial statements of <PAGE 17>
DynamicWeb, their report contains an explanatory paragraph with
respect to substantial doubt as to the ability of DynamicWeb to
continue as a going concern. Such financial statements have been
incorporated into this prospectus and registration statement by
reference or included in this prospectus and registration
statement in reliance upon such reports given upon the authority
of Richard A. Eisner & Company, LLP as experts in accounting and
auditing.
Disclosure of Commission Position of Indemnification For
Securities Act Liabilities
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the company pursuant to the
provisions set forth in the company's articles of incorporation,
the company has been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the act and is therefore
unenforceable.
<PAGE 18>
DESIGN CRAFTING, INC.
FINANCIAL STATEMENTS
September 30, 1997
<PAGE F-1>
Contents
Page
Financial Statements
Independent auditors' report................................ 1
Balance sheet as of September 30, 1997...................... 2
Statements of income for the years ended
September 30, 1997 and 1996................................. 3
Statement of changes in stockholder's equity
for each of the years ended September 30, 1997
and 1996.................................................... 4
Statements of cash flows for the years ended
September 30, 1997 and 1996................................. 5
Notes to financial statements............................... 6
<PAGE F-2>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Design Crafting, Inc.
We have audited the accompanying balance sheet of Design
Crafting, Inc. as of September 30, 1997, and the related
statements of income, changes in stockholder's equity and cash
flows for each of the years in the two year period then ended.
These financial statements are the responsibility of the
DynamicWeb'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 the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present
fairly, in all material respects, the financial position of
Design Crafting, Inc. as of September 30, 1997, and the results
of its operations and its cash flows for each of the years in the
two-year period then ended, in conformity with generally accepted
accounting principles.
/s/ Richard A. Eisner & Company, LLP
Florham Park, New Jersey
July 10, 1998
<PAGE F-3>
Balance Sheet
September 30, 1997
ASSETS
Current assets:
Cash $ 5,015
Accounts receivable 56,812
Prepaid expenses and other current assets 468
Total current assets 62,295
Equipment, net of accumulated depreciation of $6,662 4,602
$66,897
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $30,597
Taxes payable - current 1,480
Taxes payable - deferred 6,195
Total current liabilities 38,272
STOCKHOLDER'S EQUITY
Common stock, no par value, authorized 1,000
shares issued and outstanding 100 shares 1,000
Retained earnings 27,625
Total stockholder's equity 28,625
$66,897
<PAGE F-4>
Statements of Income
Year Ended
September 30,
1997 1996
Revenues - services $462,541 $311,363
Cost of services 384,244 241,427
Gross profit 78,297 69,936
Expenses:
Selling, general and administrative 65,772 58,905
Income before taxes 12,525 11,031
Income taxes 3,250 2,870
Net income $ 9,275 $ 8,161
<PAGE F-5>
Statements of Changes in Stockholder's Equity
<TABLE>
<CAPTION>
Common Stock
Number of Retained
Shares Amount Earnings Total
<S> <C> <C> <C> <C>
Balance, October 1, 1995 100 $1,000 $10,189 $11,189
Net income -- -- 8,161 8,161
Balance, September 30, 1996 100 1,000 18,350 19,350
Net income -- -- 9,275 9,275
Balance, September 30, 1997 100 $1,000 $27,625 $28,625
</TABLE>
<PAGE F-6>
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,275 $ 8,161
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,948 648
Deferred income taxes 1,390 2,700
Changes in:
Accounts receivable (867) (29,993)
Prepaid expenses and other current assets 718 687
Accounts payable and accrued expenses (10,249) 18,691
Taxes payable 1,310 (725)
Net cash provided by operating activities 4,525 169
Cash flows from investing activities:
Purchase of equipment (6,902) (1,296)
Net decrease in cash (2,377) (1,127)
Cash, beginning 7,392 8,519
Cash, ending $ 5,015 $ 7,392
Supplemental disclosure of cash flow information:
Cash paid for:
Income taxes $ 550 $ 895
</TABLE>
<PAGE F-7>
Note A - Summary of Significant Accounting Policies and Basis of
Presentation
[1] Operations:
Design Crafting, Inc. (the "Company") is a software
developer and provides services primarily to customers in
the distribution, retail and financial industries.
In 1997, two customers and in 1996 one customer accounted
for approximately 91% and 99% of revenues, respectively. As
of September 30, 1997, two customers represented 100% of
accounts receivable. No allowance for bad debts is required.
[2] Revenue recognition:
Revenue is recognized as the work is performed and services
are provided at the customer's locations.
[3] Use of estimates:
The financial statements were prepared on an accrual basis
in conformity with generally accepted accounting principles;
estimates and assumptions were utilized to quantify certain
components of the financial statements in the absence of
specific amounts of the respective assets, liabilities,
revenues and expenses. Actual results could differ from
those estimates.
[4] Equipment:
Equipment is recorded at cost less accumulated depreciation.
Depreciation is provided using accelerated and
straight-line methods over the estimated lives of the assets
(2 to 3 years).
[5] Income taxes:
The Company accounts for income taxes under the provisions
of Statement of Financial Accounting Standard No. 109
Accounting for Income Taxes ("SFAS 109") which requires use
of the liability method of Accounting for Income Taxes. The
liability method measures deferred income taxes by applying
enacted statutory rates in effect at the balance sheet date
to the differences between the tax bases of assets and
liabilities and their reported amounts in the financial
statements. Deferred income taxes arise from temporary
differences resulting primarily from income and expense
items being reported on an accrual basis for financial
statement purposes and on a cash basis for tax purposes. As
a result, the Company had deferred federal and state
liabilities of $6,195 as of September 30, 1997.
<PAGE F-8>
Note B - Employee Benefit Plans
The Company has a qualified simplified employee pension (SEP)
under Section 408(k) of the Internal Revenue Code. Employer
contributions under a SEP are discretionary and are excluded from
the participants taxable income to the extent of 15% of the
participant's compensation subject to limits. The Company's
contributions to the plan were $25,742 and $7,573 for the years
ended September 30, 1997 and 1996, respectively.
Note C - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
Wages $18,486
Payroll taxes 2,544
Employee benefit plan 7,796
Other 1,771
$30,597
Note D - Income Taxes
Year Ended
September 30,
1997 1996
Current tax expenses:
Federal $1,120 $ 20
State 740 150
1,860 170
Deferred tax expenses:
Federal 830 1,700
State 560 1,000
1,390 2,700
Provision for taxes $3,250 $2,870
The differences between the statutory income tax rate of 34% and
the income taxes reported on the statement of income and retained
earnings are as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
1997 1996
<S> <C> <C> <C> <C>
Statutory rate $ 4,259 34% $ 3,751 34%
Reduction due to graduated
income tax rate (2,380) (19) (2,096) (19)
State taxes, net of federal benefit 1,105 9 978 9
Other 266 2 237 2
Provision for taxes $ 3,250 26% $ 2,870 26%
</TABLE>
<PAGE F-9>
Note E - Business Combination
On May 1, 1998, the Company completed a merger with Dynamicweb
Enterprises, Inc. (Dynamicweb) by exchanging all of its issued
and outstanding stock for 92,500 shares of common stock of
Dynamicweb with a provision for up to an additional 10,000 shares
to be calculated under a formula based on the value at closing
and the realization of certain assets within 120 days of the
closing.
<PAGE F-10>
DYNAMICWEB ENTERPRISES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Financial Statements
On May 1, 1998, DynamicWeb Enterprises, Inc. and
subsidiaries (the "Company") completed a stock-for-stock exchange
transaction with Design Crafting, Inc. ("Design") which will be
accounted for as a purchase in accordance with Accounting
Principle Board No. 16. The following unaudited pro forma
condensed consolidated statement of operations for the year ended
September 30, 1997 and the unaudited pro forma consolidated
balance sheet as of September 30, 1997 are adjusted to give
effect to the combination with Design by the issuance by the
Company of 92,500 of its common shares in exchange for 100% of
the Design shares as if such transaction had occurred on
October 1, 1996 for the purposes of presenting pro forma
statement of operations data and as of September 30, 1997, for
presenting the pro forma balance sheet data.
The unaudited condensed pro forma consolidated balance sheet
and statement of operations should be read in conjunction with
the notes thereto and the audited financial statements of the
Company and Design and the notes thereto. The pro forma
information is not necessarily indicative of what the financial
position and results of operations would have been had the
transactions occurred earlier, nor do they purport to represent
the future financial position or results of operations of
DynamicWeb Enterprises, Inc. and subsidiaries.
Unaudited Pro Forma Condensed Financial Statement Adjustments
[1] To record the preliminary allocation of the purchase of
Design valued at $474,063. The pro forma information
includes the issuance of 92,500 shares of the Company's
common stock on May 1, 1998. It does not reflect any
contingently issuable shares, up to 10,000, that may be
issued in the event that the Company collects certain
amounts from the realization of certain assets reported on
the Design Crafting, Inc. balance sheet as of May 1, 1998.
[2] To record amortization of excess of cost over net
assets of acquired business over ten years.
[3] The pro forma weighted average number of shares
outstanding is as follows:
(a) Includes 654,597 shares of the Company's common
stock subsequently contributed by certain of the Company's
shareholders in exchange for 125,000 warrants.
(b) 92,500 shares issued in connection with the
purchase transaction as if they were outstanding for the
entire period presented. <PAGE F-11>
<PAGE F-12>
DynamicWeb Enterprises, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet Data
Unaudited
<TABLE>
<CAPTION>
Historical
--------------------------------------
DynamicWeb
Enterprises, Inc. Design
and Subsidiaries Crafting, Inc. As Revised As Revised
as of as of Pro Forma Pro Forma
September 30, 1997 September 30, 1997 Adjustments Consolidated
------------------ ------------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 188,270 $ 5,015 $ 193,285
Accounts receivable, less allowance for
doubtful accounts 100,425 56,812 157,237
Prepaid and other current assets 20,738 468 21,206
---------- -------- ----------
Total current assets 309,433 62,295 371,728
Property and equipment 284,512 4,602 289,114
Excess of cost over net assets of acquired
business $445,438 445,438
Patents and trademarks, less accumulated
amortization 21,808 21,808
Customer list, less accumulated amortization 83,333 83,333
Deferred registration costs 128,169 128,169
Other assets and fees 60,461 60,461
---------- -------- -------- ----------
$ 887,716 $ 66,897 $445,438 $1,400,051
========== ======== ======== ==========
LIABILITIES
Current liabilities:
Accounts payable $ 182,340 $ 182,340
Accrued expenses 165,941 $ 30,597 196,538
Current maturities of long-term debt 7,925 7,925
Loan payable - banks 24,049 24,049
Loans from stockholders 117,163 117,163
Deferred revenue 15,065 15,065
Subordinated notes payable 840,873 840,873
Taxes payable - current 1,480 1,480
Taxes payable - deferred 6,195 6,195
---------- -------- ----------
Total current liabilities 1,353,356 38,272 1,391,628
Long-term debt, less current maturities 185,811 185,811
---------- -------- ----------
1,539,167 38,272 1,577,439
---------- -------- ----------
CAPITAL DEFICIENCY
$ (1,000)(1)
Common stock 214 1,000 9 (1) 223
Additional paid-in capital 3,530,324 474,054 (1) 4,004,378
Unearned portion of compensatory stock options (204,000) (204,000)
Accumulated deficit (3,577,989) 27,625 (27,625)(1) (3,577,989)
---------- -------- -------- ----------
(251,451) 28,625 445,438 222,612
Less treasury stock (400,000) (400,000)
---------- -------- -------- ----------
Total capital deficiency (651,451) 28,625 445,438 (177,388)
---------- -------- -------- ----------
$ 887,716 $ 66,897 $445,438 $1,400,051
========== ======== ======== ==========
</TABLE>
<PAGE F-13>
DynamicWeb Enterprises, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations Data
Unaudited
<TABLE>
<CAPTION>
Historical
---------------------------------------
DynamicWeb
Enterprises, Inc. Design
and Subsidiaries Crafting, Inc. As Revised As Revised
for the year ended for the year ended Pro Forma Pro Forma
September 30, 1997 September 30, 1997 Adjustments Consolidated
(Unaudited)
<S> <C> <C> <C> <C>
Net sales:
System sales $ 116,106 $ 116,106
Services 521,071 $462,541 983,612
---------- -------- ----------
637,177 462,541 1,099,718
---------- -------- ----------
Cost of sales:
System sales 40,323 40,323
Services 213,180 384,244 597,424
---------- -------- ----------
253,503 384,244 637,747
---------- -------- ----------
Gross profit 383,674 78,297 461,971
---------- -------- ----------
Expenses:
Selling, general and administrative 1,854,686 65,772 $ 44,543 (2) 1,965,001
Research and development 234,808 234,808
---------- -------- -------- ----------
2,089,494 65,772 44,543 2,199,809
---------- -------- -------- ----------
Operating income (loss) (1,705,820) 12,525 (44,543) (1,737,838)
Purchased research and development (713,710) (713,710)
Interest expense (770,041) (770,041)
Interest income 5,068 5,068
---------- -------- -------- ----------
Income (loss) before income taxes (3,184,503) 12,525 (44,543) (3,216,521)
Income tax (expense) benefit 21,700 (3,250) 18,450
---------- -------- -------- ----------
Net income (loss) $(3,162,803) $ 9,275 $(44,543) $(3,198,071)
=========== ======== ======== ===========
Pro forma net loss per pro forma weighted
average number of shares outstanding $(2.16)
======
Pro forma weighted average number of shares
outstanding 1,386,383 (3)(a) 92,500 (3)(b) 1,478,883
========== ======== ===========
</TABLE>
<PAGE F-14>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in
connection with filing this Registration Statement:
Securities and Exchange Commission filing fee....... $ 4,501.51
Printing and Engraving Expenses..................... 1,000.00
Accounting Fee and Expenses......................... 7,500.00
Legal Fees and Expenses............................. 50,000.00
Miscellaneous....................................... 500.00
Reimbursement of Legal Fees and Expenses to
Shaar Fund, Ltd................................... 5,000.00
Total.......................................... $68,501.51
Item 15. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation provides that
the Registrant shall indemnify any person who is or was a
director, officer, employee or agent of the Registrant to the
fullest extent permitted by the New Jersey Business Corporation
Act (the "NJBCA"), and to the fullest extent otherwise permitted
by law. The NJBCA permits a New Jersey corporation to indemnify
its directors, officers, employees and agents against liabilities
and expenses they may incur in such capacities in connection with
any proceeding in which they may be involved, unless a judgment
or other final adjudication adverse to the director, officer,
employee or agent in question establishes that his or her acts or
omissions (a) were in breach of his or her duty of loyalty (as
defined in the NJBCA) to the Registrant or its shareholders,
(b) were not in good faith or involved a knowing violation of law
or (c) resulted in the receipt by the director, officer, employee
or agent of an improper personal benefit.
Pursuant to the Registrant's Certificate of Incorporation
and the NJBCA, no director or officer of the Registrant shall be
personally liable to the Registrant or to any of its shareholders
for damages for breach of any duty owed to the Registrant or its
shareholders, except for liabilities arising from any breach of
duty based upon an act or omission (i) in breach of such
director's or officer's duty of loyalty (as defined in the NJBCA)
to the Registrant or its shareholders, (ii) not in good faith or
involving a knowing violation of law or (iii) resulting in
receipt by such director or officer of an improper personal
benefit.
In addition, the Registrant's Bylaws include provisions to
indemnify its officers and directors and other persons against
expenses, judgments, fines and amounts incurred or paid in
settlement in connection with civil or criminal claims, actions,
suits or proceedings against such persons by reason of serving or
having served as officers, directors, or in other capacities, if
such person acted in good faith, and in a manner such person
<PAGE II-1> reasonably believed to be in or not opposed to the
best interests of the Registrant and, in a criminal action or
proceeding, if he had no reasonable cause to believe that his/her
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contenders or its equivalent shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the corporation or that he
or she had reasonable cause to believe his or her conduct was
unlawful. Indemnification as provided in the Bylaws shall be
made only as authorized in a specific case and upon a
determination that the person met the applicable standards of
conduct.
Item 16. Exhibits and Financial Statement Schedules.
EXHIBIT INDEX
Exhibit
Number Title
3.1.10 Amendment to the Certificate of Incorporation of
DynamicWeb Enterprises, Inc. dated May 12, 1999, as
filed with the State of New Jersey on May 18, 1999,
regarding the Series A 6% Cumulative Preferred
Stock**
3.1.11 Amendment to the Certificate of Incorporation of
DynamicWeb Enterprises, Inc. dated May 12, 1999, as
filed with the State of New Jersey on May 13, 1999,
regarding the Series B 6% Cumulative Preferred
Stock.**
5.1 Form of Opinion of Stevens & Lee: Legality**
10.1 Release and Severance Agreement dated February 12, 1993
between Seahawk Capital Corporation and Robert S.
Friedenberg (incorporated by reference to Exhibit 10.2
to DynamicWeb's Annual Report on Form 10-K for the year
ended December 31, 1992).
10.2 Agreement dated February 24, 1995 between DynamicWeb
and Jonathan B. Lassers as to the purchase of common
stock (incorporated by reference to Exhibit 10.1 to
DynamicWeb's Current Report on Form 8-K dated as of
May 8, 1995).
10.3 Amendment Agreement dated May 1, 1995 between
DynamicWeb and Jonathan B. Lassers as to the purchase
of common stock and common stock purchase warrants
(incorporated by reference to Exhibit 10.2 to
DynamicWeb's Current Report on Form 8-K dated as of
May 8, 1995).
<PAGE II-2>
10.4 Agreement dated February 29, 1996 between DynamicWeb
and Jonathan B. Lassers as to the exchange of common
stock for his common stock purchase warrants
(incorporated by reference to Exhibit 10.4 filed with
DynamicWeb's Report on Form 10-KSB for the year ended
September 30, 1996).
10.5 Stock Exchange Agreement dated as of December 31, 1994
among DynamicWeb, John C. Fitton and Seahawk Overseas
Exploration Corporation (incorporated by reference to
Exhibit 10.4 to DynamicWeb's Current Report on Form 8-K
dated as of May 8, 1995).
10.6 Stock Purchase Agreement dated March 5, 1996 among
DynamicWeb, DynamicWeb Transaction Systems, Inc.
("DWTS") and the shareholders of DWTS (incorporated by
reference to Exhibit 10.14 to DynamicWeb's Annual
Report on Form 10-KSB for the year ended December 31,
1995).
10.7 Amendment to Stock Purchase Agreement dated May 14,
1996 between DynamicWeb and DWTS (incorporated by
reference to Exhibit 10.14(A) to DynamicWeb's annual
Report on Form 10-KSB for the year ended December 31,
1995).
10.8 Amendment to Stock Purchase Agreement dated June 13,
1996 between DynamicWeb and DWTS (incorporated by
reference to Exhibit 10.14(B) to DynamicWeb's Form 10-
QSB for the period ended March 31, 1996).
10.9 Stock Purchase Agreement dated September 30, 1996 among
DynamicWeb, Megascore, Inc. and the shareholders of
Megascore, Inc. (incorporated by reference to Exhibit 1
to the DynamicWeb's Current Report on Form 8-K dated
November 30, 1996).
10.10 Stock Purchase Agreement dated November 30, 1996 among
DynamicWeb, Software Associates, Inc. and Kenneth R.
Konikowski (incorporated by reference to Exhibit 2 to
DynamicWeb's Current Report on Form 8-K dated
November 30, 1996).
10.11 Amendment to Stock Purchase Agreement dated April 7,
1997 between DynamicWeb and Kenneth R. Konikowski
(incorporated by reference to Exhibit 10.11 filed with
DynamicWeb's Report on Form 10-KSB for the year ended
September 30, 1996).
10.12 Lock-Up Agreement dated November 30, 1996 among
DynamicWeb, Steve L. Vanechanos, Jr. and Kenneth R.
Konikowski (incorporated by reference to Exhibit 10.12
filed with DynamicWeb's Report on Form 10-KSB for the
year ended September 30, 1996).
<PAGE II-3>
10.13 Employment Agreement dated December 1, 1996 between
DynamicWeb and Kenneth R. Konikowski (incorporated by
reference to Exhibit 10.13 filed with DynamicWeb's
Report on Form 10.KSB for the year ended September 30,
1996).
10.14 Employment Agreement dated May 1, 1998 between
DynamicWeb and Douglas Eadie.**
10.15 DynamicWeb Enterprises, Inc. 1997 Employee Stock Option
Plan (incorporated by reference to Annex B to
DynamicWeb's Information Statement filed May 15, 1997,
pursuant to Section 14(c) of the Securities Exchange
Act of 1934).
10.16 DynamicWeb Enterprises, Inc. 1997 Stock Option Plan for
Outside Directors (incorporated by reference to Annex C
to DynamicWeb's Information Statement filed May 15,
1997, pursuant to Section 14(c) of the Securities
Exchange Act of 1934).
10.17 Lease Agreement dated November 1, 1996 between Beauty
and Barber Institute, Inc. and DynamicWeb Transaction
Systems, Inc. (incorporated by reference to
Exhibit 10.16 filed DynamicWeb's Report on Form 10-KSB
for the year ended September 30, 1996).
10.18 Lease Agreement dated November 1, 1994 between Software
Associates, Inc. and The Mask Group (incorporated by
reference to Exhibit 10.17 filed with DynamicWeb's
Report on Form 10-KSB for the year ended September 30,
1996).
10.19 Amendment No. 1 to Lease Agreement between Software
Associates, Inc. and The Mask Group (incorporated be
reference to Exhibit 3 to DynamicWeb's Form 8-K dated
September 9, 1997).
10.20 Employment Agreement dated August 26, 1997 between
DynamicWeb and James D. Conners (incorporated by
reference to Exhibit 1 to DynamicWeb's Form 8-K dated
September 9, 1997).
10.21 Form of financial Consulting Agreement between
DynamicWeb and H.J. Meyers & Co., Inc. (incorporated by
reference to Exhibit 10.20 to DynamicWeb's SB-2 filed
September 15, 1997).
10.22 Form of Mergers and Acquisition Agreement between
DynamicWeb and H.J. Meyers & Co., Inc. (incorporated by
reference to Exhibit 10.21 to DynamicWeb's SB-2 filed
September 15, 1997).
10.23 Letter of amendment dated November 20, 1997 amending
Stock Purchase Agreement dated April 7, 1997 between
<PAGE II-4> DynamicWeb and Kenneth R. Konikowski
(incorporated by reference to Exhibit 10.22 to
DynamicWeb's SB-2 filed September 15, 1997).
10.24 Letter of Amendment dated December 15, 1997 amending
Stock Purchase Agreement dated April 7, 1997 between
DynamicWeb and Kenneth R. Konikowski (incorporated by
reference to Exhibit 10.23 to DynamicWeb's SB-2 filed
September 15, 1997).
10.25 Form of Warrant and Warrant Agreement with certain
shareholders of DynamicWeb (incorporated by reference
to Exhibit 10.24 to DynamicWeb's SB-2 filed
September 15, 1997).
10.26 Securities Purchase Agreement dated August 7, 1998
between DynamicWeb Enterprises, Inc. and Shaar Fund
Ltd.**
10.27 Registration Rights Agreement dated August 7, 1998
between DynamicWeb Enterprises, Inc. and Shaar Fund
Ltd.**
10.28 Service Agreement and Option Grant with Perry & Co.
dated April 2, 1998.**
10.29 Letter Agreement dated December 3, 1998 between
DynamicWeb Enterprises, Inc. and Shaar Fund Ltd.*
10.30 Securities Purchase Agreement dated February 12, 1999
between DynamicWeb Enterprises, Inc. and the Shaar
Fund, Ltd. (incorporated by reference to DynamicWeb's
Current Report on Form 8-K/A dated February 23, 1999).
10.31 Registration Rights Agreement dated February 12, 1999
between DynamicWeb Enterprises, Inc. and the Shaar
Fund, Ltd. (incorporated by reference to DynamicWeb's
Current Report on Form 8-K/A dated February 23, 1999).
10.32 Securities Purchase Agreement dated April 26, 1999
between DynamicWeb Enterprises, Inc. Cranshire Capital,
L.P., and Keeway Investments, Ltd. (incorporated by
reference to DynamicWeb's Current Report on Form 8-K
dated May 10, 1999).
10.33 Registration Rights Agreement dated April 26, 1999
between DynamicWeb Enterprises, Inc. Cranshire Capital,
L.P., and Keeway Investments, Ltd. (incorporated by
reference to DynamicWeb's Current Report on Form 8-K
dated May 10, 1999).
10.34 Letter Agreement dated May 12, 1999 between DynamicWeb
Enterprises, Inc. and the Shaar Fund, Ltd.**
<PAGE II-5>
16.1 Letter on change in certifying account (R. Andrew
Gately & Co.) (incorporated by reference to
Exhibit 16.1 to DynamicWeb's Current Report on Form 8-K
dated February 19, 1997.
16.2 Letter on change in certifying accountant (Allen G.
Roth, P.A.) (incorporated by reference to Exhibit 16.2
to DynamicWeb's Current Report on Form 8-K dated
February 19, 1997, as amended by amendment dated
March 12, 1997).
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP*
* Filed herewith
** Previously filed with this Registration Statement
Item 17. Undertakings
(a) The undersigned DynamicWeb hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration
statement.
(2) That the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the Offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
<PAGE II-6>
(b) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 ("Securities Act") may be
permitted to directors, officers and controlling persons of
DynamicWeb pursuant to the foregoing provisions, or otherwise,
DynamicWeb has been advised that in the opinion of the Securities
and Exchange Commission such indemnifications against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
labilities (other than the payment by DynamicWeb of expenses
incurred or paid by a director, officer or controlling person of
DynamicWeb 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,
DynamicWeb will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE II-7>
SIGNATURES
In accordance with the requirements of the Securities Act
of 1933, DynamicWeb Enterprises, Inc. has duly caused this
registration statement to be signed on its behalf by the
undersigned in the City of Fairfield, State of New Jersey on
June 10, 1999.
DYNAMICWEB ENTERPRISES, INC.
By:/s/ Steven L. Vanechanos, Jr.
Steven L. Vanechanos, Jr.
Chief Executive Officer
- - -----------------------------------------------------------------
In accordance with the requirements of the Securities Act of
1933, as amended, this Pre-Effective Amendment No. 1 to the
registration statement was signed below by the following persons
and in the capacities and on the dates stated.
/s/STEVEN L. VANECHANOS, JR. Chief Executive June 10, 1999
Steven L. Vanechanos, Jr. Officer and Director
/s/ STEVE VANECHANOS, SR. Treasurer, Chief June 10, 1999
Steve Vanechanos, Sr. Financial Officer,
and Chief Accounting
Officer, Director
/s/ DENIS CLARK* Director June 10, 1999
Denis Clark
/s/ FRANK T. DiPALMA* Director June 10, 1999
Frank T. DiPalma
/s/ ROBERT DROSTE* Director June 10, 1999
Robert Droste
/s/ ROBERT W. GAILUS* Director June 10, 1999
Robert W. Gailus
/s/ KENNETH R. KONIKOWSKI* Director June 10, 1999
Kenneth R. Konikowski
* By Steve L. Vanechanos, Jr., Attorney-in-fact
<PAGE II-8>
EXHIBIT INDEX
Exhibit
Number Title
3.1.10 Amendment to the Certificate of Incorporation of
DynamicWeb Enterprises, Inc. dated May 12, 1999, as
filed with the State of New Jersey on May 18, 1999,
regarding the Series A 6% Cumulative Preferred
Stock**
3.1.11 Amendment to the Certificate of Incorporation of
DynamicWeb Enterprises, Inc. dated May 12, 1999, as
filed with the State of New Jersey on May 13, 1999,
regarding the Series B 6% Cumulative Preferred
Stock.**
5.1 Form of Opinion of Stevens & Lee: Legality**
10.1 Release and Severance Agreement dated February 12, 1993
between Seahawk Capital Corporation and Robert S.
Friedenberg (incorporated by reference to Exhibit 10.2
to DynamicWeb's Annual Report on Form 10-K for the year
ended December 31, 1992).
10.2 Agreement dated February 24, 1995 between DynamicWeb
and Jonathan B. Lassers as to the purchase of common
stock (incorporated by reference to Exhibit 10.1 to
DynamicWeb's Current Report on Form 8-K dated as of
May 8, 1995).
10.3 Amendment Agreement dated May 1, 1995 between
DynamicWeb and Jonathan B. Lassers as to the purchase
of common stock and common stock purchase warrants
(incorporated by reference to Exhibit 10.2 to
DynamicWeb's Current Report on Form 8-K dated as of
May 8, 1995).
10.4 Agreement dated February 29, 1996 between DynamicWeb
and Jonathan B. Lassers as to the exchange of common
stock for his common stock purchase warrants
(incorporated by reference to Exhibit 10.4 filed with
DynamicWeb's Report on Form 10-KSB for the year ended
September 30, 1996).
10.5 Stock Exchange Agreement dated as of December 31, 1994
among DynamicWeb, John C. Fitton and Seahawk Overseas
Exploration Corporation (incorporated by reference to
Exhibit 10.4 to DynamicWeb's Current Report on Form 8-K
dated as of May 8, 1995).
10.6 Stock Purchase Agreement dated March 5, 1996 among
DynamicWeb, DynamicWeb Transaction Systems, Inc.
("DWTS") and the shareholders of DWTS (incorporated by
<PAGE II-9> reference to Exhibit 10.14 to DynamicWeb's
Annual Report on Form 10-KSB for the year ended
December 31, 1995).
10.7 Amendment to Stock Purchase Agreement dated May 14,
1996 between DynamicWeb and DWTS (incorporated by
reference to Exhibit 10.14(A) to DynamicWeb's annual
Report on Form 10-KSB for the year ended December 31,
1995).
10.8 Amendment to Stock Purchase Agreement dated June 13,
1996 between DynamicWeb and DWTS (incorporated by
reference to Exhibit 10.14(B) to DynamicWeb's Form 10-
QSB for the period ended March 31, 1996).
10.9 Stock Purchase Agreement dated September 30, 1996 among
DynamicWeb, Megascore, Inc. and the shareholders of
Megascore, Inc. (incorporated by reference to Exhibit 1
to the DynamicWeb's Current Report on Form 8-K dated
November 30, 1996).
10.10 Stock Purchase Agreement dated November 30, 1996 among
DynamicWeb, Software Associates, Inc. and Kenneth R.
Konikowski (incorporated by reference to Exhibit 2 to
DynamicWeb's Current Report on Form 8-K dated
November 30, 1996).
10.11 Amendment to Stock Purchase Agreement dated April 7,
1997 between DynamicWeb and Kenneth R. Konikowski
(incorporated by reference to Exhibit 10.11 filed with
DynamicWeb's Report on Form 10-KSB for the year ended
September 30, 1996).
10.12 Lock-Up Agreement dated November 30, 1996 among
DynamicWeb, Steve L. Vanechanos, Jr. and Kenneth R.
Konikowski (incorporated by reference to Exhibit 10.12
filed with DynamicWeb's Report on Form 10-KSB for the
year ended September 30, 1996).
10.13 Employment Agreement dated December 1, 1996 between
DynamicWeb and Kenneth R. Konikowski (incorporated by
reference to Exhibit 10.13 filed with DynamicWeb's
Report on Form 10.KSB for the year ended September 30,
1996).
10.14 Employment Agreement dated May 1, 1998 between
DynamicWeb and Douglas Eadie.**
10.15 DynamicWeb Enterprises, Inc. 1997 Employee Stock Option
Plan (incorporated by reference to Annex B to
DynamicWeb's Information Statement filed May 15, 1997,
pursuant to Section 14(c) of the Securities Exchange
Act of 1934).
<PAGE II-10>
10.16 DynamicWeb Enterprises, Inc. 1997 Stock Option Plan for
Outside Directors (incorporated by reference to Annex C
to DynamicWeb's Information Statement filed May 15,
1997, pursuant to Section 14(c) of the Securities
Exchange Act of 1934).
10.17 Lease Agreement dated November 1, 1996 between Beauty
and Barber Institute, Inc. and DynamicWeb Transaction
Systems, Inc. (incorporated by reference to
Exhibit 10.16 filed DynamicWeb's Report on Form 10-KSB
for the year ended September 30, 1996).
10.18 Lease Agreement dated November 1, 1994 between Software
Associates, Inc. and The Mask Group (incorporated by
reference to Exhibit 10.17 filed with DynamicWeb's
Report on Form 10-KSB for the year ended September 30,
1996).
10.19 Amendment No. 1 to Lease Agreement between Software
Associates, Inc. and The Mask Group (incorporated be
reference to Exhibit 3 to DynamicWeb's Form 8-K dated
September 9, 1997).
10.20 Employment Agreement dated August 26, 1997 between
DynamicWeb and James D. Conners (incorporated by
reference to Exhibit 1 to DynamicWeb's Form 8-K dated
September 9, 1997).
10.21 Form of financial Consulting Agreement between
DynamicWeb and H.J. Meyers & Co., Inc. (incorporated by
reference to Exhibit 10.20 to DynamicWeb's SB-2 filed
September 15, 1997).
10.22 Form of Mergers and Acquisition Agreement between
DynamicWeb and H.J. Meyers & Co., Inc. (incorporated by
reference to Exhibit 10.21 to DynamicWeb's SB-2 filed
September 15, 1997).
10.23 Letter of amendment dated November 20, 1997 amending
Stock Purchase Agreement dated April 7, 1997 between
DynamicWeb and Kenneth R. Konikowski (incorporated by
reference to Exhibit 10.22 to DynamicWeb's SB-2 filed
September 15, 1997).
10.24 Letter of Amendment dated December 15, 1997 amending
Stock Purchase Agreement dated April 7, 1997 between
DynamicWeb and Kenneth R. Konikowski (incorporated by
reference to Exhibit 10.23 to DynamicWeb's SB-2 filed
September 15, 1997).
10.25 Form of Warrant and Warrant Agreement with certain
shareholders of DynamicWeb (incorporated by reference
to Exhibit 10.24 to DynamicWeb's SB-2 filed
September 15, 1997).
<PAGE II-11>
10.26 Securities Purchase Agreement dated August 7, 1998
between DynamicWeb Enterprises, Inc. and Shaar Fund
Ltd.**
10.27 Registration Rights Agreement dated August 7, 1998
between DynamicWeb Enterprises, Inc. and Shaar Fund
Ltd.**
10.28 Service Agreement and Option Grant with Perry & Co.
dated April 2, 1998.**
10.29 Letter Agreement dated December 3, 1998 between
DynamicWeb Enterprises, Inc. and Shaar Fund Ltd.**
10.30 Securities Purchase Agreement dated February 12, 1999
between DynamicWeb Enterprises, Inc. and the Shaar
Fund, Ltd. (incorporated by reference to DynamicWeb's
Current Report on Form 8-K/A dated February 23, 1999).
10.31 Registration Rights Agreement dated February 12, 1999
between DynamicWeb Enterprises, Inc. and the Shaar
Fund, Ltd. (incorporated by reference to DynamicWeb's
Current Report on Form 8-K/A dated February 23, 1999).
10.32 Securities Purchase Agreement dated April 26, 1999
between DynamicWeb Enterprises, Inc. Cranshire Capital,
L.P., and Keeway Investments, Ltd. (incorporated by
reference to DynamicWeb's Current Report on Form 8-K
dated May 10, 1999).
10.33 Registration Rights Agreement dated April 26, 1999
between DynamicWeb Enterprises, Inc. Cranshire Capital,
L.P., and Keeway Investments, Ltd. (incorporated by
reference to DynamicWeb's Current Report on Form 8-K
dated May 10, 1999).
10.34 Letter Agreement dated May 12, 1999 between DynamicWeb
Enterprises, Inc. and the Shaar Fund, Ltd.**
16.1 Letter on change in certifying account (R. Andrew
Gately & Co.) (incorporated by reference to
Exhibit 16.1 to DynamicWeb's Current Report on Form 8-K
dated February 19, 1997.
16.2 Letter on change in certifying accountant (Allen G.
Roth, P.A.) (incorporated by reference to Exhibit 16.2
to DynamicWeb's Current Report on Form 8-K dated
February 19, 1997, as amended by amendment dated
March 12, 1997).
<PAGE II-12>
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP*
* Filed herewith
** Previously filed with this Registration Statement
<PAGE II-13>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated July 10, 1998 with
respect to the financial statements of Design Crafting, Inc. in
the Registration Statement (Amendment No. 1 to Form S-2) and
related prospectus of DynamicWeb Enterprises, Inc. for the
registration of 2,145,025 shares of its common stock and to the
incorporation by reference therein of our report dated
November 30, 1998 (December 3, 1998 with respect to the last
paragraph of Note H[7]) with respect to the consolidated
financial statements of DynamicWeb Enterprises, Inc. and
subsidiaries included in its annual report (Form 10-KSB) for the
year ended September 30, 1998, filed with the Securities and
Exchange Commission.
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
New York, New York
June 10, 1999
