<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Small Business Issuers
Under Section 12(b) or 12(g) of the Securities Exchange
Act of 1934
ANTs SOFTWARE.COM.
(Name of Small Business Issuer in its Charter)
NEVADA 13-3054685
(state or other jurisdiction of incorporation (IRS Employer Identification
or organization) Number)
37 Santa Teresita Way, Santa Barbara CA, 93105
(805) 687-4731
(Issuer's Telephone Number)
Securities to be issued pursuant to Section 12 (b) of the act:
Title of each class to be registered: Name of each exchange on which
Each class is to be registered:
N/A N/A
Securities to be registered pursuant to Section 12 (g) of the Act:
Common Shares
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ANTS SOFTWARE.COM
(A Nevada Corporation)
Index to Form 10-SB Registration Statement
Item Number and Caption Page
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PART I
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of Operation 9
3. Property 9
4. Security Ownership of Certain Beneficial Owners and Management 10
5. Directors, and Executive Officers 11
6. Executive Compensation 12
8. Description of Securities 12
PART II
1. Market for Common Equity 12
2. Legal Proceedings 13
3. Changes in and Disagreement with Accountants 13
4. Recent Sales of Unregistered Securities 13
5. Indemnification of Officers and Directors 14
PART F/S
1. Financial Statements F 1-8
6. Signatures 15
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PART I
Item 1. DESCRIPTION OF BUSINESS.
INTRODUCTION
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ANTs SOFTWARE.COM is a Nevada corporation (the "Company" or "ANTs") with
proprietary software that provides software solutions for enterprise business
management problems.
BACKGROUND
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ANTs was originally a Delaware corporation incorporated on January 29.1979
under the name Sullivan Computer Corporation. The company was formed for the
purpose of the development of and the subsequent application for patents on a
theory of high speed parallel computing processing developed by Mr. Herbert W.
Sullivan and his associates. This work had started in 1975.
The company was able to arrange a $300,000.00 funding with American
Research and Development and used these funds to go after its first patents. The
first patent application was on its shared memory computer method and apparatus
and a patent was issued on November 20, 1984 as U.S. Patent No.4,484,262.
In April 1985, the company entered into a series of agreements with Chopp
Computer Corporation, Inc. a British Columbia Corporation ("Chopp of Canada")
including a License Agreement which granted Chopp of Canada certain rights under
the patent, and a research agreement, pursuant to which the company undertook to
pursue the development of its parallel data processing technology (the" Chopp
Technology") with funding provided by Chopp of Canada.
On November 14, 1986 the company issued 19,009,851 shares of its common
stock, .00002 par value, in exchange for 99% of the issued and outstanding
shares of the common stock of Chopp of Canada. Upon completion of this
acquisition, the obligations of the Company and Chopp of Canada under the
Research Agreement were terminated and the name of the company was changed to
Chopp Computer Corporation.
On May 9, 1986 the Company was advised that a class action suit had been
filed against the company for $400,000,000.00 by a shareholder. Subsequent
events determined that the action had been initiated by the accountant of an
ex-IRS attorney by the name of Alexandr Laurins. Mr. Laurins in association with
Lawrence Merryman, an attorney from Orange, California and Nash Dowdle, an oil
promoter from Midland, Texas had decided that the plans of Chopp to build a new
supercomputer were a pipe dream and in fact part of a stock scam. Unknown to the
company Mr. Laurins was already under investigation by the FBI and the SEC for
among other things, selling $150,000,000.00 of non-existent shipping containers
as tax shelters.
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The class action mentioned above became the center-piece of an Investment
Advisory Letter, called the Durant Livermore Cutten & Bliss Report which was
mailed to all of the shareholders of the company whose names had been listed
with the SEC when the company had filed its SEC 12(g) exemption, as well as
brokers all over Canada and the U.S. The newsletter was in fact prepared and
distributed by Laurins from his office on Union Street in San Francisco, and was
filled with lies and mis-information about the Company. Laurins printed 10 or 11
issues up to June 30, 1986.
Laurins, Merryman & Dowdle had made illegal short sales of approximately
100,000 shares of the company for approximately $ 1.25 million, without
borrowing the shares to offset their short position. The stock price did not go
down as they had anticipated so they manufactured the bogus newsletter to help
things along. This all became apparent when the Secretary-Treasurer of the
company was approached and was advised by Mr. Dowdle that the matter could be
resolved if a meeting could be arranged between the Secretary-Treasurer and the
three conspirators. It took about three weeks to arrange for a meeting in San
Francisco to take place on June 26, 1986.
Once the meeting had been arranged the Company's attorney contacted the FBI
and arranged for the Secretary-Treasurer to be wired, but only after convincing
the FBI that the only purpose of the meeting was to attempt to extort the
100,000 shares that the three were illegally short. The meeting took place in
the Presidio where Laurins, Merryman and Dowdle did, in fact do exactly that.
The entire conversation was recorded and was the basis for the Company being
awarded a $30,000,000.00 RICO award, jointly and severally against the three
conspirators. Unfortunately the court system moved very slowly as the case did
not come to court to be resolved until September, 1990. The victory saved the
reputation of the Company, but legal fees ate up everything recovered to date.
During the years waiting to resolve this legal issue the Company struggled
through on two Government Grants, developing potential products for the U.S.
Navy. Nothing commercial was developed from this work. While our work was on
hold the computer industry, particularly the personal computer industry was
expanding rapidly, driven by Intel with its faster chips and Microsoft providing
the software which further fueled the growth. During this period nobody was
giving any thought to parallel computers, the basis of our patents and
existence.
The company was able to maintain its patent and in fact was granted U.S.
Patent 4,707,781 on November 17, 1987 on Shared Memory Computer Method and
Apparatus. Another U.S. patent Number 5,438,680 was issued on August 1, 1995
entitled Method and Apparatus for Enhancing Concurrency in a Parallel Digital
Computer.
In January, 1993 the Company sold a license to develop and market a
software product to Mosaic Multisoft Corp. a Nevada Corporation based in San
Diego. The payment schedule was not met and the license was cancelled in 1995.
The company had made the decision in 1993 that the best way to advance the
core technology of the company was to concentrate all of its efforts on creating
software for distributed computing and distributed multi-processor computers. In
1995 the company was introduced to Mr. Clifford Hersh of Berkeley, California,
an experienced software engineer, whose expertise totally complemented the
company's plans. His work with Mr. Herbert Sullivan over the next three years
culminated in the invention of ANTs (Asynchronous Non-preemptive Tasks). The
company has filed one patent on this proprietary technology and expects to file
a second patent before the year-end.
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The name of the Company was changed to ANTs SOFTWARE.COM on February 12,
1999 to more accurately describe the direction the Company was taking, using the
acronym ANTs, for Asynchronous Non-preemptive Tasks which represents a paradigm
shift for the programming of distributed multi-processors.
BUSINESS
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ANTs is embarking on a new path for the company, complete with a new
"Business Model". The latest trend in business accounting and record keeping is
called "Out-sourcing". The simple principle is that every business should do
what they do best, and that is to use all of their management skills and all of
their capital to grow their own business. If they happen to be in the tire
business and have over a number of years spent millions of dollars building up
their own computer division, with its specialized staff, specialized management,
constantly having to up-grade its hardware and software they reach the point
where they ask "Why are we in the computer business".
In the next few years, every business will ask itself this question and many
will come to the decision that looking outside their company , and out-sourcing
all of their accounting and record keeping is the way to go.
This new trend has created the need for Server Farms. Server Farms are large
computer installations with thousands of computers all networked or connected
together as receptacles for the storage of data for an expanding list of
clients.
Our Company envisages the following scenario unfolding before our eyes:
-A business decides to out-source all of its accounting and record keeping.
-It approaches an out-sourcer such as Arthur Anderson or a business software
company such as SAP or Lawson Software and outlines the specific problems
unique to their business and determines the route they decide to take.
-Once they have determined the software that bests suits their business the
only decision left is the location of their data.
-At this point the out-sourcers contact our company as an intermediary with
the server-farms. The ANTs proprietary technology provides the following
advantages to the business:
- Lower overall costs
- Total confidence in the security of their data.
- Virtual assurance of no system down-time due to system failure or
natural disaster.
- Data will be recorded in real-time and records will be current at all
times.
- Access to data and records will be available at all times; 24 hours a
day, 7 days a week, 365 days a year.
- Confidence that their records are maintained on current
state-of-the-art hardware and software.
- The only capital costs incurred are those associated with the purchase
of computer terminals for their employees.
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Management of the company is currently preparing a comprehensive business
plan that will describe in detail how the Company will structure itself to take
advantage of the unique nature of ANTs proprietary technology. In the computer
world , software is overhead, i.e. a processor is not doing productive work
while it is receiving the instructions for its next task. This delay is called
"latency". One of the major benefits of ANTs is that the amount of latency is
reduced to such a low level, that for all practical purposes the problem of
latency disappears and programmers can move on to other problems.
The acronym ANTS, for Asynchronous Non-premptive Tasks further describes two
very important advantages of the company's proprietary and copyrighted
technology. Asynchronous means all at once, and Non-preemptive means
non-blocking. These features are very important in the Company's future plans as
the Server Farms will want to run at as close to 100% capacity as possible, to
maximize their revenues. If all of the data flowing to the servers is running
under ANTs , and ANTs is delivering multiple copies of the data to three
different server farms for purposes of redundancy, the server farm can virtually
guarantee that the stored information is available 24 hours a day, 7 days a
week, 365 days a year. This advantage, the ability to guarantee no down-time,
would by itself justify the implementation of ANTs.
The Company expects to derive its revenue from billings on a monthly basis to
the customers that want to use the WWW and the server farms as an alternative to
maintaining their own servers with all of their inherent costs. ANTs will bill
the client on a volume or flow-through basis with a minimum monthly charge. ANTs
will act as the out-sourcer, using current out-sourcers as agents and pay a
percentage of its fees as a commission for this service. ANTs will buy the
application software from existing application software providers , complete
with all support services, as the Company will not be responsible for providing
that support. The Company will contract with the server farms for space on their
servers and pay them for that on a volume basis. The server farms are
responsible for all servicing and up-grades as ANTs is just a customer of the
server farms.
The main responsibility will be to have highly competent senior staff to
ensure the smooth installation of ANTs and the maintenance of the working
relationship between the customer, the software provider and the server farms.
Summary:
After years of development, the Company's technology now coincides with
opportunities made available by the internet, telecommunication and other
computer technologies. The Company can assist its users by providing faster,
cheaper, better and totally secure and reliable services for numerically
intensive applications.
The Company's advantages have been proven in tests carried out to date and
are protected by its intellectual property position.
GROWTH STRATEGY
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ANTs is a development stage company in the process of developing a
comprehensive business plan which will support the raising of at least $5
Million to provide the company sufficient funds to be quoted on NASDAQ and to
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enable the Company to be able to hire the highly qualified staff capable of
carrying out the business plan.
ANTs office is currently located at 37 Santa Teresita Way in Santa Barbara,
California. The Company will be moving to San Francisco, with offices fairly
close to the airport and Silicon Valley. It is crucial that the company be
located in this area as that is where most of ANTs customer base will be, and
every conceivable type of employee is available within driving distance,
regardless of his or her areas of expertise.
AS a first crucial step the company was fortunate in being able to hire Mr.
Frederick D. Pettit as President and CEO as of August 1, 1999. Mr. Pettit had
the unique opportunity of examining the Company as an investment banker for
about two months, during which time he was able to look at the whole computer
industry, noticing the overwhelming trend towards out-sourcing ,huge server
farms and the unique role available to ANTs as this trend unfolds. After this
comprehensive examination Mr. Pettit identified ANTs and its proprietary
position with its intellectual property portfolio as a very important potential
participant. He approached the Company and asked if he could have the job of
President and CEO. After numerous meetings and discussions it was obvious that
his knowledge and senior management experience totally matched our requirements,
and accordingly he was hired.
MARKETING AND ADVERTISING
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Assuming the successful completion of funding, ANTs has to embark on an
aggressive marketing plan.
- -The Company has to complete a demonstration model that clearly discloses that
ANTs works with existing software applications that run on existing servers as
well as distributed computers, including the burgeoning server farm industry.
- -The company must run the appropriate tests to compare the results of the speed
of recording the entry of data, with ANTs in operation, and without ANTs. It
will be very important to the company to have this empirical data available as
soon as possible, as an important building block in its marketing plans.
- -This new exploitation of server farms as the ultimate destination of business
data has quietly slipped onto the world computer scene with an explosive impact.
The Company recognizes that extensive market studies will have to be made to
make certain that ANTs in its embryonic stage makes the right decisions as it
goes forward. The Bay area is the best place to find employees and consultants
to complete this job.
- -The Company has already initiated discussions with some potential customers.
- -The Company expects to employ one of the leading Silicon Valley advertising
agencies to assist it in its advertising program.
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COMPETITION
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The future of the World Wide Web as the global conduit for world commerce is
going to attract competition from every major Application Software Provider in
the world. The ANTs technology does not appear to attack or take away any
business from the other computer related companies, in fact the ANTs approach
totally complements the existing out-sourcers and application software providers
by making it easier for them to distribute their data over the Internet. The
only certainty is that as more business-to-business communication is handled
over the Internet, competition will be fierce and there can be no assurance that
ANTs will be able to compete successfully or that its proprietary approach will
be accepted by the computer industry.
SEASONALITY
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ANTs business is totally diversified and management does not anticipate any
seasonal upturns or downturns.
WORKFORCE
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The Company currently is managed by Mr. Frederick D. Pettit as President and
CEO and Mr. Donald Hutton as Chairman of the Board. They report to the board of
directors. The development of the technology is in the hands of Mr. Clifford
Hersh, the co-inventor of the ANTs technology. Mr. Hersh has a number of well
qualified programmers available to him as he expands the development program.
TRADEMARKS
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The Company has two registered trademarks:
- ANTS is registered as the identification of our proprietary technology,
an acronym for Asynchronous Non-preemptive Tasks.
- SPEEDSHEET is the registered name of our proprietary spreadsheet
technology.
GOVERNMENT REGULATION
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State and local Regulations. The Company is subject to state, county and city
licensing requirements, taxes and other local standards as may be required.
Reports to Security holders. The Company will become a reporting issuer with
the Securities and Exchange Commission (SEC) when this Form 10-SB is effective
and will be obligated to provide an annual report to its security holders, which
will include audited financial statements. As a reporting issuer, the Company
will also be required to file with the SEC quarterly reports on Form 10-QSB
containing unaudited financial statements. The public may read and copy any
materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth St.
N.W., Washington, D.C. 20549. The public may also obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. The Company also
has a web site under construction. The address of that site is
http://www.ants.com.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company had $250,000.00 cash on hand as of July 31, 1999 with a monthly
burn rate of approximately $30,000.00-35,000.00. Management is in the process of
completing a comprehensive business plan to use as a fund-raising document.
While there is no certainty that the company will be successful in raising the
additional working capital, the initial reaction from the investment community
appears to be very positive.
ANTs immediate plans call for the completion of a Beta test that will run
ANTs software on a simulated business application, using application software
provided by Lawson Software. This test will be run with ANTs and without ANTs so
that the benefits of ANTs can be independently documented. All tests completed
to date have indicated that ANTs is totally scalable, i.e. the software can run
1-64,000 processors without having to re-write the software, is independent of
any operating system and runs on all platforms, restricted only by the
architecture of the multiprocessors or computer network. This Beta test is all
that the Company will need to prove its technology and create the investment
interest needed to raise the funds needed to adequately finance the future
growth of ANTs.
The amount of capital the company expects to raise is $5 million - $10
million, as suggested by the investment bankers currently in discussion with the
Company.
ANTs will provide services in the form of out-sourcing the data from the
customer to the server farm, providing the customer with an alternative to
buying his own server, complete with all of the problems of owning and
maintaining the hardware and software, managing the installation with all of the
staff and administrative costs. ANTs will provide lower costs for all of his
accounting and data needs, give instant access to the data, and because it
places multiple copies of all of the data in three different geographical
locations ANTs can guarantee 99.999% performance. A 100% guarantee is not
possible, because as we know computers are still computers.
The company is not capital cost intensive and most of the funds raised will
go to marketing and sales costs with the balance going to working capital. It is
anticipated that 10-15 additional employees will be added in the next year.
ANTs has raised approximately $800,000.00 in the last two years, $400,000.00
in small private placements of Rule 144 shares and $400,000.00 from a private
placement completed by Berry-Shino Securities, Inc. on June 2, 1999.
In summary, the future of the company hinges on its ability to raise the
necessary funds to carry out its business plan, successfully demonstrate that
its software will be able to deliver the same results achieved in all of its
tests in a real world application, and then successfully market its services.
Item 3. PROPERTY.
The Company does not own any property. The corporate office is currently
maintained, rent free at 37 Santa Teresita Way, Santa Barbara, CA. 93105. ANTs
intends to move its office to the San Francisco area in the very near future as
that is the location of most of our potential customers and employees.
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Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following table includes all of the shareholders known to be the
beneficial owners of more than 5% of the common voting shares of the
Company.
(b) The following table shows that the following list of directors and
principal executive officers of the company beneficially own, in the
aggregate, 4,100,000 shares of the Company's public stock, or approximately
40.6% of the Company.
<TABLE>
<CAPTION>
Name and address Amount beneficially Percent
Title of class of owner owned of class
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<S> <C> <C> <C>
Common Donald Hutton 800,000 # 6.4%
Chairman of the Board
37 Santa Teresita Way
Santa Barbara CA. 93105.
Common Whistler Design Systems Inc. 2,500,000 * 21%
21 Godolphin House
76-84 Fellows Road
London NW3 3LG, U.K.
Common Frederick D. Pettit 600,000 ** 5%
President and CEO
330 Eucalyptus Avenue
Hillsborough, CA. 94010.
Common Alison B. Hicks 200,000 * & *** 1.6%
Secretary-Treasurer
37 Santa Teresita Way
Santa Barbara CA. 93105.
Common Clifford Hersh 600,000 **** 5%
Vice-President, Product Development
2631 Piedmont Ave.
Berkeley, CA. 94704
Common Dr, Peter Patton 200,000 ***** 1.6%
1300 Godward street
Minneapolis, MN. 55413
</TABLE>
# Mr. Hutton is the owner of 300,000 issued shares of the company and has an
option to purchase another 500,000 shares at $,25 per share at any time up to
April 30, 2003.
* Whistler Design Systems Inc. is a family trust controlled by Donald Hutton
and his wife, Alison B. Hicks.
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** Mr. Pettit is the owner of 300,000 shares and has an option to purchase
another 300,000 shares at $.75 per share at any time up to July 31, 2004.
*** Ms. Hicks has an option to buy 200,000 shares of the company at $.25 per
share at any time up to April 30, 2003.
**** Mr. Hersh has an option to buy 600,000 shares of the Company at $.25 per
share at any time up to April 30, 2002.
***** Dr. Patton has an option to buy 200,000 shares of the company at $.25 per
share at any time up to September 1, 2003.
Item 5. DIRECTORS, AND EXECUTIVE OFFICERS.
Donald Hutton, Director and Chairman of the Board, 63 years of age, has served
on the board since 1986, and prior to that was the President of the Canadian
company, Chopp Computer Corporation (Canada). Mr. Hutton, along with Mr. Herbert
W. Sullivan, the original inventor of the Company's proprietary technology are
the co-founders of the Company. Mr. Hutton was Secretary- Treasurer from 1986 to
1996, and President and CEO until this year. Mr. Hutton has been totally
responsible for the management of the company since 1996 and shared that
responsibility with Mr. Sullivan for the ten years from 1986 to 1996. He is not
a director of any other reporting companies.
Frederick D. Pettit, 63 years of age, was appointed a director , President and
CEO on August 1, 1999. From 1995 until he took the senior management position
with ANTs, Mr. Pettit was the managing Director of The Kriegsman Group, a
California based investment bank engaged primarily in providing financial
consulting and capital markets services to early stage companies. From 1991 to
1994 Mr. Pettit was the Chairman and CEO of Eeonyx Corporation, a private
California company engaged in advanced conductive polymer technologies by
acquiring patent rights from leading corporations and universities and
establishing the necessary relationships with the inventors in the process. The
company was sold to an investor group in 1994. Mr. Pettit was the Chief
Operating Officer at the Chemical Bank in New York from 1989 to 1991 after
having spent over 20 years in senior banking positions in Europe. He is not a
director of any other reporting companies.
Alison B. Hicks, 45 years of age, has been a director and Secretary- Treasurer
of the company since 1996. Ms. Hicks is the wife of Donald Hutton, The Chairman
of the Board and has acted as his assistant and business associate for the last
ten years. She is not a director of any other reporting companies.
Dr. Peter Patton, 63 years of age was appointed a Director and Chairman of the
Technical Advisory Board in 1998. Dr. Patton is Senior Vice-President of
International Business Development of Lawson Software, based in Minneapolis, MN.
He is responsible for both international operations and business development,
with a mandate to grow the business by 150% by the year 2003. Lawson is
recognized as the industry leader in scalable software, a crucial ingredient in
the development of ANTs software. Prior to joining Lawson in 1996 Dr Patton held
numerous prestigious high tech positions including the post of Chief Information
Officer of the University of Pennsylvania, a lead consultant to the National
Technology Transfer Center at NASA's Jet Propulsion Laboratory. He was founding
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director of the Minnesota Supercomputer Institute, vice-president and director
of computing at the University of Minnesota. Dr. Patton is not a director of any
reporting companies.
Mr. Clifford Hersh, 51 years of age, is Vice-President in charge of Product
Development, and as the surviving inventor of the ANTs technology is a
significant employee, crucial to the continuing development of the Company and
maintaining the patent position of ANTs. Mr. Hersh has been working on the
development of the ANTs technology since he was first introduced to Mr. Herbert
Sullivan in 1995. He is the Founder and CEO of his own company, Move Resources
Inc., formed in 1991 that focuses on providing affordable, high bandwidth
networking solutions for multiprocessing and digital signal processing
companies. Mr. Hersh is not a director of any reporting companies.
Family relationships. The chairman of the board Donald Hutton and Alison B.
Hicks, the secretary-treasurer are married.
Item 6. EXECUTIVE COMPENSATION.
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The only director to receive any compensation in the last two fiscal periods
was the President and CEO, now the Chairman of the Board, Mr. Donald Hutton. He
was paid management fees of $60,000.00 per annum.
Item 8. DESCRIPTION OF SECURITIES
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The Company is authorized to issue 20,000,000 Common Voting shares of a par
value of $.001 per share. Each shareholder is entitled to one vote for each
share held, and are entitled to dividends when and as declared by the board of
directors. At April 30, 1999 the number of common shares issued and outstanding
totaled 9,985,451. The Company has not paid and does not anticipate paying
dividends in the future on its common stock.
PART II
Item 1. MARKET FOR COMMON EQUITY
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The common shares trade on the NASDAQ- BULLETIN BOARD and the following are
the high and low sales prices for each quarter within the last two fiscal years,
and the subsequent quarter ended July 31, 1999.
Quarter ended High Sale Low Sale
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July 31,1997 3/4 3/8
October 31, 1997 21/32 3/8
January 31, 1998 19/32 13/32
April 30, 1998 2 5/16 13/32
July 31, 1998 2 1/16 3/4
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October 31, 1998 1 1/16 13/32
January 31, 1999 2 13/32 1 1/8
April 30, 1999 2 1/16 1 7/16
July 31, 1999 1 11/16 15/16
Item 2. LEGAL PROCEEDINGS
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The Company had no outstanding lawsuits as of its fiscal period April 30,
1999, but on August 2, 1999 the Company was served with a lawsuit by The
Superior Court of California, the plaintiff being a Mr. Hubert Lauffs of Rancho
Santa Fe, California. The suit was filed on February 2, 1999 and served on the
Company on August 2, 1999. This suit is identical to the suit filed by Mr.
Lauffs some three years earlier and dismissed by the court, without prejudice,
last year. The Company has responded to the court and will aggressively defend
itself in what appears to be a frivolous court case. The case is being handled
by Hughes, Hubbard & Reed, of Los Angeles.
Item 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS.
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None.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
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The following securities were sold in the last year in reliance upon Section
4(2) of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. The Company kept 100% of the proceeds from the sale of
these securities and no underwriters were used and no commissions or discounts
were paid.
<TABLE>
<CAPTION>
ISSUE NO. OF
DATE TITLE SHARES SHARES ISSUED TO CONSIDERATION AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
09/01/98 Common 40,000 Tim Zuch Cash $ 20,000.00
09/01/98 Common 10,000 D. Taylor Cash 5,000.00
10/01/98 Common 20,000 Dan Scammel Cash 10,000.00
10/06/98 Common 65,000 Tim Zuch Cash 32,500.00
11/02/98 Common 20,000 S. Still Cash 10,000.00
11/05/98 Common 20,000 Wm. Cuda Cash 10,000.00
11/10/98 Common 42,000 Tim Zuch Cash 21,000.00
11/17/98 Common 30,000 Arnold Wattum Cash 15,000.00
11/20/98 Common 16,000 Tim Zuch Cash 8,000.00
11/23/98 Common 30,000 Jimmy W. Gantt Jr. Cash 15,000.00
12/23/98 Common 10,000 Tim Zuch Cash 5,000.00
12/23/98 Common 20,000 Con J. Fecher Jr. Cash 10,000.00
12/23/98 Common 6,667 I. Vincent Hagar Cash 7,500.00
01/15/99 Common 5,000 Robert Zimmerman Cash 5,000.00
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03/01/99 Common 8,000 Tim Zuch Cash 6,000.00
03/22/99 Common 25,000 Dan Scammel Cash 18,750.00
03/23/99 Common 25,000 Marjorie Hicks Cash 12,500.00
03/23/99 Common 25,000 Guilford Investments Ltd. Cash 12,500.00
</TABLE>
On June 2, 1999 Berry-Shino Securities, Inc. completed a Private Placement on
behalf of the Company of 525,000 unregistered Common Shares at $.75 per share.
Berry-Shino Securities, Inc. was paid a commission of $39,375.00 and in
addition received 52.500 unregistered Common Shares.
Item 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
- --------------------------------------------------------------------------------
The Company has not yet, but intends to put in place the indemnification of
officers and directors who, while acting in good faith, on behalf of the
Corporation, are made a party to or are threatened in an action as a result
thereof.
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
AntsSoftware.Com (fka Chopp Computer Corporation)
I have audited the accompanying balance sheet of AntsSoftware.Com (fka
Chopp Computer Corporation) as of April 30, 1999 and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years ended April 30, 1999 and April 30, 1998. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of AntsSoftware.Com
(fka Chopp Computer Corporation) as of April 30, 1999 and the results of its
operations and its cash flows for the years ended April 30, 1999 and April 30,
1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered significant losses from
operations that raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Beverly Hills, California
July 2, 1999
F-1
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
BALANCE SHEET
APRIL 30, 1999
ASSETS
Current Assets
Cash $ 16,050
------------
16,050
Total current assets
Property and Equipment
Office furniture and fixtures 2,711
Less accumulated depreciation (2,711)
------------
Total property and equipment -
Other Assets
Patents 52,553
Less valuation allowance (52,553)
------------
Total other assets -
------------
$ 16,050
============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 372,378
Accounts Payable to Officers,
Directors and Stockholders 205,332
Accrued Expenses 10,000
------------
Total current liabilities 587,710
Stockholders' equity (deficit)
Common stock, $.001 par
value; 20,000,000 shares
authorized; 10,179,665 shares
issued and outstanding 10,180
Additional paid-in capital 6,811,295
Retained earnings (deficit) (7,393,135)
------------
Total stockholders' equity (deficit) (571,660)
------------
$ 16,050
============
See accompanying notes to financial statements.
F-2
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
STATEMENTS OF OPERATIONS
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
----------- -----------
Revenues $ - $ -
Expenses:
General and
Administrative 610,691 339,707
Valuation
Allowance - 52,553
----------- -----------
(Loss) before
income taxes (610,691) (392,260)
Income Taxes - -
----------- -----------
NET (LOSS) $ (610,691) $ (392,260)
=========== ===========
(Loss) per
common share $ (.06) $ (.05)
=========== ===========
Weighted average
common shares
outstanding 9,985,451 8,503,908
=========== ===========
See accompanying notes to financial statements.
F-3
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT) FOR THE TWO
YEARS ENDED APRIL 30, 1999
ADDITIONAL RETAINED
COMMON STOCK PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
------ ------ ------- --------- -----
Balance,
April 30, 1997 6,717,843 $ 6,718 $5,877,257 $(7,070,199) $(1,186,224)
Shares issued
for cash in
private
placements
during year
ended
April 30, 1998 2,079,097 2,079 206,671 - 208,750
Shares issued
for debt
cancellation
during the year
ended
April 30, 1998 1,000,000 1,000 499,000 - 500,000
Net (loss)
for year ended
April 30, 1998 - - - (392,260) (392,260)
--------- -------- ----------- ------------ ------------
Balance,
April 30, 1998 9,796,940 9,797 6,582,928 (7,462,459) (869,734)
Shares issued
for cash in
private
placements
during year
ended
April 30, 1999 324,667 325 193,675 - 194,000
Shares issued
for debt
cancellation
during the year
ended
April 30, 1999 58,058 58 34,692 - 34,750
Transfer of
contingent payable/
asset in 1999 - - - 680,015 680,015
Net (loss)
for year ended
April 30, 1999 - - - (610,691) (610,691)
--------- -------- ----------- ------------ ------------
Balance,
April 30, 1999 10,179,665 $10,180 $6,811,295 $(7,393,135) $ (571,660)
========== ======== =========== ============ ============
See accompanying notes to financial statements.
F-4
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
STATEMENTS OF CASH FLOWS
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
---------- ----------
Operating activities:
Continuing operations
(loss) from operations $(610,691) $(392,260)
Adjustments to
reconcile net
(loss) to net cash
provided by operating
activities:
Depreciation - 2,711
Valuation allowance-
Patents - 52,553
Changes in assets
and liabilities:
Accounts Payable 367,141 197,324
Accrued Expenses 5,000 15,000
Subscriptions Receivable
and other 45,483 (75,000)
---------- ----------
Net Cash provided by
operating activities: (193,067) (199,672)
Investing activities: - -
Financing activities:
Issuance of shares 194,000 208,750
---------- ----------
Net cash provided by
financing activities: 194,000 208,750
Net increase in cash 933 9,078
Cash at beginning of period 15,117 6,039
---------- ----------
Cash at end of period $ 16,050 $ 15,117
========== ==========
Supplemental disclosures:
Cash paid during the period for:
Interest $ - $ -
========== ==========
Income taxes $ - $ -
========== ==========
Noncash financing transactions:
Common stock for debt $ 34,750 $ 500,000
========== ==========
See accompanying notes to financial statements.
F-5
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
NOTE 1 - Significant Accounting Policies
NATURE OF OPERATIONS
AntsSoftware.Com (fka Chopp Computer Corporation), (the "Company"), a
Nevada corporation, was incorporated on September 24, 1996. (The Company is a
successor to another company as the Company merged with a predecessor entity, a
Delaware corporation, in June, 1996). In February, 1999 the Company changed its
name from Chopp Computer Corporation to AntsSoftware.Com. The planned operations
of the Company is in the computer field. From inception (September 24, 1996) to
date (July 2, 1999) the Company has had no revenues.
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment is recorded at cost and is depreciated over the
estimated lives of approximately two to three years using the straight-line
method.
PATENTS AND VALUATION ALLOWANCE
Patents are recorded at cost. Due to uncertainty as to recovery, a
valuation allowance for the full carrying amount of the patents is recorded.
CASH AND CASH EQUIVALENTS
The Company does not have a policy for cash equivalents at this time.
LOSS PER SHARE
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the period presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INCOME TAXES
The Company records its income tax provision in accordance
with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". (See Note 3).
F-6
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
APRIL 30, 1999
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to SFAS No. 107, Disclosures about Fair Value of Financial
Instruments, the Company is required to estimate the fair value of all financial
instruments included on its balance sheet at April 30, 1999. The Company
considers the carrying value of such amounts in the financial statements to
approximate their expected realization and interest rates, which approximate
current market rates.
COMPREHENSIVE INCOME (LOSS)
In fiscal 1999, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. This statement establishes standards for the reporting of
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. The adoption
of SFAS No. 130 required no additional disclosure for the Company and did not
have any effect on the Company's financial position, as there was no difference
between comprehensive loss and the net loss as reported.
SEGMENT DISCLOSURES
In fiscal 1999, the Company adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information. This statement establishes
standards for the way companies report information regarding operating segments
in annual financial statements. The adoption of SFAS No. 131 required no
additional disclosure for the Company as the Company operated in one principal
business segment.
RECLASSIFICATIONS
Certain items in prior year financial statements have been reclassified
to conform to the current year's presentation.
NOTE 2 - Basis of presentation and considerations related to
continued existence (going concern)
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred net losses for the years ended April 30, 1999 and April 30, 1998 of
$610,691 and $392,260, respectively. Additionally, the Company's current
liabilities significantly exceed its current assets. These factors, among
others, raise substantial doubt as to the Company's ability to continue as a
going concern.
The Company's management intends to raise additional operating funds
through equity and/or debt offerings. However, there can be no assurance
management will be successful in its endeavors.
F-7
<PAGE>
ANTSSOFTWARE.COM
(FKA CHOPP COMPUTER CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
APRIL 30, 1999
NOTE 3 - Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for deferred
income taxes.
Since the Company has not generated taxable income since inception, no
provision for income taxes has been provided. At April 30, 1999, the Company did
not have any significant tax net operating loss carryforwards (tax benefits
resulting from losses for tax purposes have been fully reserved due to the
uncertainty of a going concern). At April 30, 1999, the Company did not have any
significant deferred tax liabilities or deferred tax assets.
The Company is delinquent in its income tax return filings.
NOTE 4 - Warrants
As of April 30, 1999, the Company had 1,500,000 warrants outstanding.
These securities give the holder the right to purchase shares of the Company's
restricted common stock in accordance with the terms of the instrument.
1,300,000 warrants are exercisable at 25 through March 1, 2002. 100,000 warrants
are exercisable at 50 through October 29, 1999. 100,000 warrants are exercisable
at 50 through March 7, 2000.
NOTE 5 - Subsequent Events
In June, 1999 the Company raised capital approximately $350,000 from
private placement investors.
F-8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
ANTs SOFTWARE.COM
------------------------------
(Registrant)
Date: 9/13/99 By: /s/ Donald Hutton
---------------- ------------------------------
Donald Hutton
Director and Chairman
15
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<ARTICLE> 5
<LEGEND>
this is the legend
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> May-01-1998
<PERIOD-END> APR-30-1999
<CASH> 16,050
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,050
<PP&E> 52,553
<DEPRECIATION> (52,553)
<TOTAL-ASSETS> 16,050
<CURRENT-LIABILITIES> 587,710
<BONDS> 0
0
0
<COMMON> 10,180
<OTHER-SE> (583,840)
<TOTAL-LIABILITY-AND-EQUITY> 16,050
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 339,707
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (339,707)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.05)
</TABLE>
