U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to ___________.
Commission file number 000-14614
NET LNNX, INC.
(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-1726390
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7700 N.W. 37th Avenue, Miami, Florida 33147
(Address of principal executive offices) (Zip Code)
(305) 691-2800
(Issuer's telephone number, including area code)
324 Datura Street, Suite 200, West Palm Beach, Florida 33401
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the (issuer) (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or such shorter period that registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 19,134,102 as of April
30, 1999.
Transitional Small Business Disclosure Format
(Check one):
Yes [ ] No [X]
<PAGE>
NET LNNX, INC.
INDEX TO FORM 10-QSB
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet
of March 31, 1999........................................... 3
Condensed Consolidated Statement of Operations
for the period from January 27, 1999 to March 31, 1999...... 4
Condensed Consolidated Statement of Cash Flows for the
period from January 27, 1999 to March 31, 1999.............. 5
Notes to Condensed Consolidated Financial Statements........ 6&7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 8-10
Part II-Other Information
Item 1. Legal Proceedings..................................... 11
Item 2. Changes in Securities................................. 11
Item 3. Defaults Upon Senior Securities....................... 11
Item 4. Submission of Matters to a Vote of
Security Holders...................................... 11
Item 5. Other Information..................................... 11
Item 6. Exhibits and Reports on Form 8-K...................... 11
Signatures....................................................... 12
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
NET LNNX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 1,231
PROPERTY AND EQUIPMENT 6,595
DEPOSITS 10,000
----------
TOTAL ASSETS $ 17,826
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,716
COMMITMENT
SHAREHOLDERS' EQUITY
Preferred stock, no par value
(stated value $.001 per share)
5,000,000 shares authorized;
1,000,000 shares issued and outstanding 1,000
Common stock, no par value; 20,000,000
shares authorized, 19; 134,102 issued
and outstanding 15,771
Deficit accumulated during the development
stage (11,661)
----------
TOTAL SHAREHOLDERS' EQUITY 5,110
----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 17,826
==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 3
NET LNNX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the period from January 27, 1999 (inception) to March 31, 1999
(Unaudited)
Operating expenses:
Advertising and promotion $ 6,067
Professional fees 2,451
Other operating expenses 3,143
----------
TOTAL OPERATING EXPENSE AND NET LOSS $ 11,661
==========
Net loss per share:
Basic (.00)
==========
Weighted average shares outstanding 19,134,102
==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 4
NET LNNX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period from January 27, 1999 (inception) to March 31, 1999
(Unaudited)
Cash flows from operating activities:
Net loss $ (11,661)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 219
Increase in accounts payable 12,716
-----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,274
-----------
Cash flows from investing activities:
Expenditures for property and equipment 6,814
Expenditures for deposits 10,000
-----------
NET CASH USED BY INVESTING ACTIVITIES (16,814)
-----------
Cash flows from financing activities:
Proceeds from issuance of common and
preferred stock 16,771
-----------
NET INCREASE IN CASH AND CASH,
END OF PERIOD $ 1,231
===========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 5
NET LNNX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
Basis of Presentation
The financial information included herein is unaudited; however
such information reflects all adjustments (consisting solely of
normal recurring adjustments), which are, in the opinion of
management, necessary for a fair statement of results for the
interim period. These financial statements should be read in
connection with Net Lnnx's annual financial statements included
in its form 10-KSB and in connection with the Net Lnnx's Form 8-
K/A filed May 7, 1999, which included POTN's audited balance
sheet as of February 17, 1999.
The accompanying condensed consolidated financial statements
include the accounts of Net Lnnx, Inc. (an inactive company) and
its wholly owned subsidiary PrintOnTheNet.Com, Inc. (a
development stage company) (POTN), (collectively referred to as
the "Company").
On March 11, 1999 a newly formed subsidiary of Net Lnnx, Inc.
acquired all of the outstanding common stock of POTN in exchange
for 16,500,000 no par value shares of Net Lnnx's common stock and
1,000,000 no par value shares (stated value of $.001) of Net
Lnnx's preferred stock, which is convertible into 7,200,000
shares of common stock. Concurrent with this transaction the
newly formed subsidiary was merged into POTN with POTN being the
surviving wholly owned subsidiary of Net Lnnx. For accounting
purposes the acquisition has been treated as a recaptilization of
POTN with POTN as the acquirer (reverse acquisition). The
historical financial statements prior to March 11, 1999 are those
of POTN.
Loss Per Share
Loss per share has been calculated using the weighted average
number of shares outstanding during the period. Shares issued in
the reverse acquisition noted above have been treated as
outstanding since inception (January 27, 1999).
Shareholders equity
POTN was capitalized with $52,000 of cash (of which $27,000 was
provided during the month of March 1999) which was used to fund
POTN's operation, and to pay Net Lnnx's liabilities. The net
effect of the reverse acquisition on equity was to reflect
$16,771 of net proceeds from the issuance of common and preferred
stock.
<PAGE> 6
Commitment
On March 17, 1999 POTN entered into a software development
agreement, requiring the developer to design, develop and
implement applications software and web site that will allow
POTN's customer to design, store, recall and order commercially
printed products. POTN is required to pay the developer $147,500
for this service, which includes a $10,000 deposit at the date of
the signing of the agreement. The agreement requires the
software to be delivered to POTN by July 17, 1999. POTN
currently plans on funding this obligation through capital
contributions by Net Lnnx's majority shareholder.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-QSB contains forward-looking
statements. For this purpose, any statements contained in it that
are not statements of historical fact may be deemed to be forward-
looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," and "expects," and similar
expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated
by such forward-looking statements. These factors include those
set forth in the Company's 1998 Annual Report on Form 10-KSB under
the caption "Certain Factors That May Affect Future Results."
The following discussion for the Company's results of operations
and financial condition should be read in conjunction with the
Company's condensed consolidated unaudited Financial Statements
listed in Part I, Item 1 and the Notes thereto appearing elsewhere
in this Form 10-QSB, and the Company's audited Financial Statements
listed in Item 7 and the Notes thereto appearing in the Company's
1998 Annual Report on Form 10-KSB.
GENERAL
On March 11, 1999, a newly formed subsidiary of Net Lnnx, Inc.
acquired all of the outstanding common stock of POTN in exchange
for 16,500,000 no par value shares of Net Lnnx's common stock and
1,000,000 no par value shares (stated value of $.001) of Net Lnnx's
preferred stock, which is convertible into 7,200,000 shares of
common stock. Concurrent with this transaction the newly formed
subsidiary was merged into POTN, with POTN being the surviving
wholly owned subsidiary of Net Lnnx, Inc. For accounting purposes,
the acquisition has been treated as a re-capitalization of POTN
with POTN as the acquirer (reverse acquisition). The historical
financial statements prior to March 11, 1999 are those of POTN. As
a result, POTN shareholders now own approximately 90% of the
Company's common stock, assuming the shares of preferred stock are
converted into shares of common stock. This change in control was
previously reported in the Company's Form 8-K filed on March 26,
1999.
The Company is authorized to issues 20,000,000 shares of common
stock, almost all of which were issued in the acquisition described
above. There are not enough shares of common stock currently
available to allow all the preferred stock issued in the
acquisition described above to be converted into common stock. The
Company intends to increase the number of shares of common stock
authorized to issue to cover the conversion of preferred stock into
shares of common stock.
PLAN OF OPERATION
POTN plans to operate an Internet business that provides a fully
interactive venue through which companies of all sizes will be able
to design and order their printing materials via the World Wide
Web. The site will allow the user to see an image of what they
will be receiving in a "what you see is what you get" format before
submitting an order. The system will allow a wide choice of
<PAGE> 8
options including font, layout, paper, color and graphics. The
choices extend to any type of printing including letterhead, forms,
business cards, envelopes and invitations.
On February 17, 1999, POTN entered into an Exclusive Production and
Sales Agreement (the "Agreement") with National Lithographers and
Publishers, Inc. and PrintAmerica Management Co., Inc.
(collectively the "PrintAmerica Companies") which provides that
POTN shall, for a period of at least two (2) years, have the
exclusive right to purchase at a preferred price from the
PrintAmerica Companies all printed goods and items required in the
course of POTN's business operations. Benjamin Rogatinsky and
Samuel Rogatinsky, through a family trust, collectively the
majority shareholders of Net Lnnx, own the PrintAmerica Companies.
Building and Maintaining the Web Site
The Company is currently building its web site. It is anticipated
that the POTN site will offer two features which POTN believes will
distinguish it from other interactive sites on the web selling
printing services. First, the site will employ graphic on-the-fly
technology, allowing purchasers to see an image of what they will
be receiving before they submit the order. This interactive web
site will employ the "what you see is what you get" technology.
Secondly, POTN expects to use the PrintAmerica Companies' large
printing sales force to negotiate and establish web based secure
accounts directly with existing and new large corporate clients.
It is anticipated that clients will be able to set up accounts for
free and pay only when orders are made. Business cards, forms and
other documents will be laid-out in standard templates, and users
can view and make real time changes to names, addresses and other
adjustable items. Each secure site will have a unique look and
nomenclature. The secure sites will be developed to meet the
particular nuances of each client's needs. While POTN expects to
be purchasing its own dedicated servers, it anticipates contracting
with an off-site location to house and maintain the server for a
fee. The site will have a T1 connection, 24-hour support, and
redundant backup systems. Programmers and graphic artists familiar
with web site design will be hired in-house to establish and update
the open and secure platforms as required.
Marketing
The Company intends to utilize the sales force of the PrintAmerica
Companies to market to large corporate clients and will also rely
on search engines to attract business. POTN expects to use direct
advertising to market the web site to individuals and small
businesses.
Production
The Company will be contracting printing work related to its
business to the PrintAmerica Companies, through the exclusive
Agreement with the PrintAmerica Companies. This arrangement offers
the following advantages.
* Ability to leverage the PrintAmerica Companies' sales staff
and customer base.
* The PrintAmerica Companies have already made the capital
investment for machinery and equipment and have the
system in-place to produce work product within 48 hours
in most cases.
* The PrintAmerica Companies currently operate three plants
and currently have excess capacity. The Company will be
provided a high priority given the volume of work
anticipated. The PrintAmerica Companies can immediately
accommodate the projected work flow and have the ability
to add machinery and equipment as warranted.
* Under the Exclusive Production and Sales Agreement and
given the ownership structure of PrintAmerica Companies,
control and quality of production will be assured to a
greater degree than is the case with most third party
arrangements.
* The Company will be able to focus all of its attention on
building and maintaining the interactive web site.
* The Company will not carry inventory, a major impediment
to realizing profit for many web based retailers today.
Distribution
All shipping will be handled by the PrintAmerica Companies.
Shipping will be completed from the PrintAmerica Companies'
production facilities directly to consumers via U.S. Mail, and for
additional charges via UPS and FedEx. International shipping will
be done on a case-by-case basis.
RESULTS OF OPERATIONS
Revenues
The company had no revenues for the quarter ended March 31, 1999.
Operating Expenses
Operating expenses for the quarter ended March 31, 1999 included
$6,067 in advertising and promotion costs, $2,541 in professional
fees and $3,143 in office expenses and licenses, all being
considered startup activities. The Company did not have any
operations during the same time period last year so no comparisons
can be made.
Liquidity
The Company is currently being funded by capital contributions from
its major stockholders. Funds are contributed as needed to pay the
ongoing expenses of the Company and the development of the web
site.
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On March 17, 1999, POTN entered into a software development
agreement, requiring the developer to design, develop and implement
applications software and web site that will allow POTN's customer
to design, store, recall and order commercially printed products.
POTN is required to pay the developer $147,500 for this service,
which includes a $10,000 deposit at the date of the signing of the
agreement. The agreement requires the software to be delivered to
POTN by July 17, 1999. POTN currently plans on funding this
obligation through capital contributions by Net Lnnx's majority
shareholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Exhibit Description
10.1 Software Development Agreement between the
Company's sole wholly owned subsidiary,
PrintOnTheNet.com, Inc. and Ducat Commerce, L.L.C.
dated March 17, 1999.
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
Form 8-K filed on March 26, 1999 reported the
following items: (1) the Change in Control of the
Registrant; (2) the Acquisition of POTN; and (3)
the change of the Company's Certifying Accountant.
Form 8-K/A filed on May 7, 1999 reported financial
information concerning the Acquisition of POTN.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
NET LNNX, INC.
By:/s/ Paul Lambert
Paul Lambert, Chief Financial Officer,
Director (Principal Accounting Officer &
Duly Authorized Director & Officer of
the Registrant)
By:/s/ Benjamin Rogatinsky
Benjamin Rogatinsky, Chief Executive
Officer, Director
(Duly Authorized Director & Officer of
the Registrant)
Dated: May 17, 1999
<PAGE> 12
EXHIBIT 10.1
SOFTWARE DEVELOPMENT AGREEMENT
This Software Development Agreement ("Agreement") is made and
effective this March 17, 1999, by and between PrintOnTheNet.com,
Inc., a Delaware Corporation ("Buyer") and Ducat Commerce, LLC, a
Delaware Limited Liability Company ("Developer").
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. Duties and Responsibilities.
Developer shall serve as a contractor of Buyer and shall
design, develop, and implement applications software and web site
that allows the Buyer's customer to design, store, recall, and
order commercially printed business cards, letterhead, envelopes,
business forms, announcement invitations and other commercial
business printed items (any and all products, coding, software, and
services provided by Developer shall collectively be referred to
herein as the "Software") according to the functional
specifications and related information, if any, attached hereto as
Exhibit A and incorporated herein by this reference (the
"Specifications") and as more fully set forth in this Agreement.
Developer acknowledges that it has been contracted for this
specific task, and that it shall report all findings and make all
recommendations directly to the management of Buyer. The Software,
including all versions in either source code or object code form,
shall be delivered to Buyer not later than four (4) months from the
date of execution of this agreement.
2. Ownership of Software.
Developer agrees that the development of the "printing related
work" of the Software is "work made for hire" within the meaning of
the Copyright Act of 1976, as amended, and that the Software shall
be the sole property of Buyer. Printing related work is defined as
1) the software that provides WYSWYG generation of print designs 2)
the software that integrates with PrintOnTheNet's internal print
operations. Ducat Commerce, LLC will retain the rights for all
other aspects of the project, but will give PrintOnTheNet
exclusive, royalty-free, worldwide rights to modify and use the
Work provided by Developer. Developer hereby assigns to Buyer,
without further compensation, all of its right, title and interest
in and to the "printing related work" of the Software and any and
all related patents, patent applications, copyrights, copyright
applications, trademarks and trade names in the United States and
elsewhere. Developer will keep and maintain adequate and current
written records with respect to the Software (in the form of notes,
sketches, drawings and as may otherwise be specified by Buyer),
which records shall be available to and remain the sole property of
Buyer at all times. All versions of the "printing related work" of
the Software shall contain Buyer's conspicuous notice of copyright.
Developer will assist Buyer, at Buyer's expense, in obtaining and
enforcing patent, copyright, and other forms of legal protection
for the "printing related work" of the Software in any country.
Upon request, Developer will sign all applications, assignments,
instruments and papers and perform all acts necessary or desired by
Buyer to assign the "printing related work" of the Software fully
and completely to Buyer and to enable Buyer, its successors,
assigns and nominees, to secure and enjoy the full and exclusive
benefits and advantages thereof.
<PAGE> EX-1
3. Compensation.
A. Buyer shall pay Developer $147,500 as follows: $10,000.00 upon
execution of this Agreement, receipt of which is hereby
acknowledged; $15,000 upon the completion of the first milestone;
$35,000 upon the completion of the second milestone; $45,500 upon
the completion of the third milestone; $25,000 upon the completion
of the fourth milestone; $17,500 upon the completion of the fifth
milestone. Payment is due upon receipt of invoice.
The Milestones are defined as follows:
* First milestone: Completion of PrintOnTheNet corporate site and
approval of overall site design.
* Second milestone: Completion of "Print Design Tool".
* Third milestone Completion of "Graphic Server".
* Fourth milestone: Completion of "Print Design Publishing Tool".
Fifth milestone: Delivery of final Work with all features
specified in the Addendum, Exhibit "A".
B. Subject to Buyer's prior approval, Buyer will reimburse
Developer for all reasonable out-of-pocket expenses, including, but
not limited to, air fare, lodging, meals and rental of automobiles
incurred by Developer during the development of the Software on
behalf of Buyer.
C. Buyer shall pay for all hardware, software, development tools,
license fees, and co-location costs that are necessary for the
project.
4. Independent Contractor.
Developer is acting as an independent contractor with respect
to the services provided to Buyer. Neither Developer nor the
Developers of the Developer performing services for Buyer will be
considered Developers or agents of Buyer. Buyer will not be
responsible for Developer's acts or the acts of Developer's
employees, contractors or agents while performing services under
this Agreement. Nothing contained in this Agreement shall be
construed to imply a joint venture, partnership or principal-agent
relationship between the parties, and neither party by virtue of
this Agreement shall have any right, power or authority to act or
create any obligation, express or implied, on behalf of the other
party.
5. Development Staff-Monitoring.
A. Developer will utilize Developers and/or contractors
capable of designing and implementing the Software to be developed
hereunder, and agrees that all work performed in accordance with
this Agreement shall be supervised and performed primarily by Jim
O'Neill and Ari Goldberg ("Key Developers"). All work shall be
performed in a professional and workmanlike manner. Developer
shall arrange for such Developers and/or contractors, if any, to
<PAGE> EX-2
execute and deliver any document or instrument reasonably requested
by Buyer to reflect Buyer's ownership of the Software or in
connection with any application for patent or copyright.
B. Buyer shall have the right to reasonably observe and
monitor all aspects of the performance by Developer of its
obligations hereunder and Developer shall use reasonable efforts to
facilitate such observation and monitoring, including, without
limitation, access to work in progress both on-site at the
Developer's location, via the Internet, and/or via modem access.
Information, functions and operations of Developer not directly
related to its obligations hereunder shall not be subject to
observation and monitoring.
6. Change in Specifications.
Buyer may, in its sole discretion, request that changes be
made to the Specifications, or other aspects of the Agreement and
tasks associated with this Agreement. If Buyer requests such a
change, Developer will use its best efforts to implement the
requested change at no additional expense to Buyer and without
delaying delivery of the Software. In the event that the proposed
change will, in the reasonable opinion of Developer, require a
delay in delivery of the Software or would result in additional
expense to Buyer, then Buyer and Developer shall confer and Buyer
shall, in its discretion, elect either to withdraw its proposed
change or require Developer to deliver the Software with the
proposed change and subject to the delay and/or additional expense.
7. Confidentiality and Non-Competition
A. Non-Competition
During the Restricted Period (as hereinafter defined) and
within the Restricted Area (as hereafter defined), Developer shall
not, directly, or indirectly, alone or as a partner, officer,
director, Developer, consultant, agent, independent contractor,
member or stockholder of any Buyer or business organization (a)
engage in any business which is directly in competition with the
Business; (b) provide goods or services to anyone else that is
directly in competition with the Business and (c) shall not solicit
to sell nor sell to any current or past customer or competitor of
Buyer, any service, product, computer software, and/or computer
hardware that is the same and/or materially the same as that which
was used and/or developed at any time (prior to and/or during the
term of this Agreement) by, and/or on behalf of, Buyer by
Developer.
B. Confidentiality
1. Developer acknowledges that all material and information
supplied by Buyer which has or will come into Developer's
possession or knowledge of Developer in connection with its
performance hereunder, is to be considered Buyer's confidential and
proprietary information (the "Confidential Information"). By way
of illustration, but not as a limitation, Confidential Information
includes the Software, trade secrets, processes, data, know-how,
program codes, documentation, flowcharts, algorithms, marketing
plans, forecasts, unpublished financial statements, budgets,
licenses, prices, costs, and Developer and customer lists.
Developer's undertakings and obligations under this Section will
not apply, however, to any Confidential Information which: (i) is
or becomes generally known to the public through no action on
<PAGE> EX-3
Developer's part, (ii) is generally disclosed to third parties by
Buyer without restriction on such third parties, or (iii) is
approved for release by written authorization of Buyer. Upon
termination of this Agreement or at any other time upon request,
Developer will promptly deliver to Buyer all notes, memoranda,
notebooks, drawings, records, reports, files, documented source
codes and other documents (and all copies or reproductions of such
materials) in its possession or under its control, whether prepared
by Developer or others, which contain Confidential Information.
Developer acknowledges that Confidential Information is the sole
property of Buyer. Developer agrees that disclosure of such
information to, or use by, third parties, either during or after
this Agreement, will cause Buyer irreparable damage. Developer
agrees to use best efforts to hold Confidential Information in the
strictest confidence, not to make use of it other than for the
performance of its obligations hereunder, to release it only to the
Developer's Developers or contractors with a need to know such
information and not to release or disclose it to any other party.
Developer further agrees not to release such information to any
Developer or contractor who has not signed a written agreement
between Developer and the Developer expressly binding the Developer
not to use or disclose the Confidential Information, except as
expressly permitted herein. Buyer shall be listed as a third-party
beneficiary of any such agreement. Developer will notify Buyer in
writing of any circumstances within its knowledge relating to any
unauthorized possession, use, or knowledge of such Confidential
Information. At any time, upon request, the Developer will return
any such information within its possession to Buyer.
Developer also agrees and acknowledges that Buyer is a
publicly traded corporation and that Developer may receive
"Confidential Information" that is material, nonpublic information
about the Buyer's business and its stock/securities. Accordingly,
Developer agrees that neither it, nor its employees will engage in
any trading of the Buyer's securities after learning of
significant, confidential corporate developments.
2. Developer acknowledges that Buyer's purpose in pursuing
the development of the Software is to gain a significant
competitive advantage over competitors operating without such
Software and that such advantage will be jeopardized if such
competitors learn of Buyer's negotiations with Developer or the
performance by Developer of its obligations hereunder.
Accordingly, Developer agrees to keep such negotiations and
performance of its obligations hereunder strictly confidential and
not to disclose any information to any third party or entity
without the prior written permission of Buyer. In no event, shall
Developer or any of its Developers use Buyer as a reference in
marketing Developer's services to any third party or entity without
Buyer's prior written permission.
C. Certain Definitions.For purposes of this Agreement:
"Restricted Period" shall mean the period commencing as of the
date hereof and terminating three (3) years from the date that
Developer ceases to provide and services to Buyer.
"Restricted Area" means any and all geographic areas where
there is access to the Internet and/or a Global Computer Network.
<PAGE> EX-4
"Business" shall, notwithstanding anything herein to the
contrary, include the business of providing printing services,
printed goods, and print advertising specialties.
8. Training.
Developer shall provide Buyer and its Developers with training
consultations with respect to the use of the Software as may
reasonably be requested by Buyer from time to time for a total of
forty (40) hours that can be spread over three (3) months after
acceptance at no additional costs to Buyer ("Training Period"). To
this end, Developer shall train Buyer as to how to modify and/or
enhance the web site and software (without the Developer's
intervention) and shall deliver a detailed user's manual to Buyer
on or before completion of acceptance that will enable Buyer's
Developers who are otherwise unfamiliar with the Software to become
adequately informed about using and modifying the Software. All
training that Developer is required to provide hereunder shall be
performed at such locations and at such times as are mutually
agreed to by the parties hereto. Upon the expiration of the
Training Period and following Buyer's request, Developer will
provide any support services necessary to insure Buyer's continued
use of the Software. Such services will be performed on a time and
material basis at Developer's then current hourly rates for such
services.
9. Warranties.
A. Developer warrants that for a period of six (5) weeks
following acceptance, the Software will operate substantially
according to the Specifications. In the event of any breach of the
warranty in this Section 9. A., in addition to any other remedy to
which Buyer may be entitled, Developer shall take all action
necessary to cause the Software to operate according to the
warranty. The first 100 hours of work needed to remedy the warranty
will be at the expense of Developer and any additional amount of
time will be billed to Buyer at $120 per hour.
10. Term and Termination.
A. This Agreement shall commence upon the effective date and
continue until all of the obligations of the parties have been
performed (and in no event later than June 30, 1999) or until
earlier terminated as provided herein.
B. Developer's appointment as consultant pursuant to this
Agreement and this Agreement shall terminate upon the occurrence of
any of the following events:
(i) In the event either party defaults in any material
obligation owed to the other party pursuant to this Agreement,
then this Agreement may be terminated if the default is not
cured following at least thirty (30) days' written notice to
the defaulting party.
(ii) Either party is bankrupt or insolvent, or
bankruptcy or insolvency proceedings are instituted against a
party and the proceeding is not dismissed within sixty (60)
days after commencement.
<PAGE> EX-5
(iii) Both or either of the Key Developers dies or
becomes disabled.
C. Section 2, Ownership of Software, and Section 7,
Confidentiality, shall survive the expiration or termination of
this Agreement. In the event of early termination due to
Developer's default or the death or disability of the individual(s)
identified in subsection B. (iii). above. Developer agrees to
deliver the Software then completed.
D. If the Agreement is terminated due to the death or
disability of Developer, then Developer (or Developer's executor,
administrator or other representative) shall deliver that part of
the Software then completed, provided payment is made by Buyer for
such completed part.
11. Notices.
All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall
be in writing and shall be deemed to have been given when mailed by
certified or registered mail, postage prepaid, or by commercial
overnight delivery service addressed as follows.
If to Buyer to:
PrintOnTheNet.com, Inc.
7700 NW 37th Ave., Miami, Florida 33147
If to Developer to:
Ducat Commerce, LLC
77 Salem Street. Suite #4
Boston, MA 02113
Or to such other address as identified by a party to the other
in writing.
12. No Waiver.
The failure of a party to require strict performance of any
provision of this Agreement by the other, or the forbearance to
exercise any right or remedy, shall not be construed as a waiver by
such party of any such right or remedy or preclude any other or
further exercise thereof or the exercise of any other right or
remedy.
13. Assignment.
The rights, duties and privileges of Developer shall not be
transferred or assigned by it, in whole or in part, without the
prior written consent of Buyer.
14. Entire Agreement.
This Agreement constitutes the entire agreement between
parties as to the subject matter hereof and supersedes all prior
understandings or agreements whether oral or written. This
<PAGE> EX-6
Agreement may be modified only by written instrument signed by the
parties hereto.
15. Successors.
This Agreement shall be binding upon and insure to the benefit
of the successors and permitted assigns of the parties hereto.
16. Severability.
If any term of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, will remain in full force and
effect as if such invalid or unenforceable term had never been
included.
17. Governing Law.
The terms of this Agreement shall be construed and enforced
under the laws of the State of Florida and, where applicable, any
and all Federal statutory laws.
18. Headings.
The headings used in this Agreement are for convenience only
and are not to be used in construction or interpretation.
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized representatives on the dates below written.
PrintOnTheNet.com, Inc. Ducat Commerce, LLC
By:/s/Samuel Rogatinsky By:/s/James P. O'Neill
Samuel Rogatinsky James P. O'Neill
President Principal
<PAGE> EX-7
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<LEGEND>
This schedule contains summary financial information extracted from registrant's
Form 10-QSB for the quarter ended March 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 1231
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<TOTAL-ASSETS> 17826
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