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As filed with the Securities and Exchange Commission on October 30, 2000
Registration File No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
(Amendment No. ____
Dominix, Inc.
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(Name of Small Business Issuer in Its Charter)
Delaware 54519 13-41276424
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(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Classification Identification No.)
Incorporation Code Number)
or Organization)
142 West 36th Street - 2nd Floor, New York, New York 10018 Tel: (212) 268-5600
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(Address and Telephone Number of Principal Executive Offices)
142 West 36th Street - 2nd Floor, New York, New York 10018 Tel: (212) 268-5600
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(Address of Principal Place of Business or Intended Principal Place of Business)
Ray Vahab, CEO
142 West 36th Street - 2nd Floor
New York, New York 10018
Tel: (212) 268-5600 Fax: (212) 736-4343
With a Copy to:
Frank J. Hariton, Esq.
1065 Dobbs Ferry Road
White Plains, New York 10607
Tel: (914) 674-4373 Fax: (914) 693-2963
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(Name, Address and Telephone Number of Agent For Service)
Approximate Date of Proposed Sale to the Public FROM TIME TO TIME AFTER THE
EFFECTIVE DATE OF THE REGISTRATION STATEMENT
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.
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If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering.
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
--
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to Amount to be Proposed Proposed Amount of
be registered Registered Maximum Maximum Registration
Price Aggregate Fee**
Per Share* Offering Price*
--------------------------- ---------------------- ------------------------ ---------------------------- -----------------------
<S> <C> <C> <C> <C>
Common Stock, 1264714 $5.625 $7,114,016 $1,885.21
par value
$.0001 per
share
=========================== ====================== ======================== ============================ =======================
Common Stock Issuable 1883875 $7.23 $13,624,450 $3,610.48
Upon Exercise of
Options and Warrants
=========================== ====================== ======================== ============================ =======================
Total $5,495.69
=========================== ====================== ======================== ============================ =======================
</TABLE>
* Based on the closing bid price of the Common Stock on October 27, 2000 and
based upon the weighted average of the exercise price of the Options and
Warrants registered hereby.
** Calculated pursuant to Rule 457(h).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective in such date as the Commission, acting pursuant to said Section 8(a)
shall determine.
<PAGE>
Cross Reference Sheet
Under Item 501 (c) of Regulation S-B
<TABLE>
<CAPTION>
Item and Number Location in Prospectus
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<S> <C> <C>
1. Front of Registration Statement Front of Registration Statement
and Outside Front Cover of Prospectus and Outside Front Cover of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information and Risk Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Our Business - Legal Proceedings
10. Directors, Executive Officers, Promoters Management
and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Experts; Legal Matters
14. Disclosure of Commission Position Statement on Indemnification
on Indemnification For Securities Act Liabilities
15. Organization Within Last Five Years Not Applicable
16. Description of Business Our Business
17. Management's Discussion and Analysis Plan of Operation
or Plan of Operation
18. Description of Property Our Business - Property
19. Certain Relationships and Related Transactions. Certain Transactions
20. Market for Common Equity and Related The Market for Our Common Stock
Stockholder Matters
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements With Not applicable
Accountants on Accounting and
Financial Disclosure
</TABLE>
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IN NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 30, 2000
DOMINIX, INC.
3,148,589 SHARES OF COMMON STOCK
This prospectus relates to the proposed sale of 2,942,589 shares of
common stock, $.0001 par value per share, of Dominix, Inc. ("We", "Us", "Our",
or the "Company") by certain selling shareholders, of which 1,883,875 shares are
which will be issued upon exercise of options and warrants with exercise prices
ranging from $8.40 to $.02. The selling shareholders acquired their shares in
transactions not involving a public offering. We will not receive any proceeds
from the sale of the shares by the selling shareholders. However, we will
receive the proceeds from the cash exercise of any options or warrants.
The selling shareholders may, from time to time, offer their shares of
common stock through public or private transactions at prevailing market prices
or privately negotiated transactions.
We are a Delaware corporation and Our principal executive offices are
located at 142 West 36th Street 2nd Floor, New York, New York 10018, telephone
number (212) 268-5600. Our common stock trades on the Over-the Counter Bulletin
Board, also called the OTCBB, under the trading symbol "DMNX". On October 27,
2000, the closing bid for Our common stock as reported on the OTCBB was $5.625
per share.
The Securities offered hereby are speculative and involves a high
degree of risk. You should carefully read and consider our risk factors section
starting on page 3 before making an investment decision.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Shares of our common stock being offered by the selling
stockholders have not been registered for sale under the securities laws of any
state or jurisdiction as of the date of this prospectus.
We have retained no underwriters in connection with this offering.
THE DATE OF THIS PROSPECTUS IS October XX, 2000
<PAGE>
TABLE OF CONTENTS
Page No.
Forward Looking Information ........................................ 3
Risk Factors ....................................................... 3
Use of Proceeds .................................................... 10
Plan of Operations ................................................. 11
Our Dividend Policy ................................................ 11
The Market For Our Common Stock .................................... 11
Selling Security Holders ........................................... 12
Plan of Distribution ............................................... 21
Our Business ....................................................... 22
Management ......................................................... 28
Executive Compensation ............................................. 30
Principal Stockholders ............................................. 31
Certain Transactions ............................................... 32
Description of Securities .......................................... 32
Legal Matters ...................................................... 36
Experts ............................................................ 36
Statement on Indemnification ....................................... 36
Index to Financial Statements ...................................... F-1
2
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
EXCEPT FOR HISTORICAL FACTS THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS. ANY STATEMENTS IN THIS PROSPECTUS THAT ARE NOT
STATEMENTS OF HISTORICAL FACT SHOULD BE CONSIDERED BY YOU TO BE FORWARD-LOOKING
STATEMENTS. WRITTEN WORDS SUCH AS "MAY", "WILL", "EXPECT", "PROJECT", "BELIEVE",
"ANTICIPATE", "ESTIMATE" OR "CONTINUE", OR OTHER VARIATIONS OF THESE OR SIMILAR
WORDS, IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE
INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY, DEPENDING ON A VARIETY OF FACTORS. POTENTIAL RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO:
O COMPETITIVE PRESSURES FROM OTHER COMPANIES OPERATING IN OUR AREAS
OF BUSINESS,
O CHANGING TECHNOLOGIES,
O ACCEPTANCE OF OUR WEB SITE OFFERINGS BY CONSUMERS,
O GENERAL ECONOMIC CONDITIONS AND OTHER UNCERTAINTIES.
NO ASSURANCE CAN BE GIVEN THAT THE COMPANY HAS IDENTIFIED ALL OF SUCH
RISKS OR POTENTIAL RISKS.
WE DISCLAIM ANY OBLIGATION TO UPDATE ANY SUCH FACTORS OR TO PUBLICALLY
ANNOUNCE THE RESULT OF ANY REVISIONS TO ANY OF THESE FORWARD LOOKING STATEMENTS
CONTAINED IN THIS PROSPECTUS BASED ON SUBSEQUENT EVENTS OR DEVELOPMENTS.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE BUYING
SHARES IN THIS OFFERING. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY AND
ADVERSELY AFFECTED, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU
COULD LOSE ALL OR PART OF YOUR INVESTMENT.
INVESTING IN OUR COMMON STOCK MAY EXPOSE YOU
TO THE FOLLOWING RISKS INHERENT IN OUR BUSINESS.
WE HAVE A LIMITED OPERATING HISTORY, WE CURRENTLY ARE NOT PROFITABLE AND WE MAY
RECORD SIGNIFICANT LOSSES FOR THE FORESEEABLE FUTURE. Bookdigital.com, Inc. was
incorporated on March 25, 1999 pursuant to the laws of the State of Delaware.
Bookdigital.com, Inc. ("Our Subsidiary" or "Bookdigital") is Our 99% owned
subsidiary and conducts all of our operations. To date, Bookdigital has
generated limited revenues. Since incorporating, the Company has devoted its
efforts to various organizational activities, including efforts to build its
various web sites and conducting several private placements in which We raised
gross proceeds of $6,275,202.
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We might not operate profitably or have adequate working capital to
meet Our obligations as they become due. We believe that Our success will depend
in large part on Our ability to (i) offer aesthetic, comprehensive and diverse
reference material on Our web site, (ii) attract customers and provide them with
outstanding service, (iii) successfully implement our e-Business solution,
TIES(Happy Face)TM; (iv) successfully implement our LawExpressUSA database to
attorneys; and (v) achieve name recognition. Accordingly, We intend to invest
heavily in site development, technology as well as marketing and promotion. As a
result, We expect to incur operating losses in the initial stages of Our
business.
As of June 30, 2000 We had an accumulated net deficit of $2,519,039,
and We anticipate that We will incur net losses for the foreseeable future. The
extent of these losses will be dependent, in part, on Our ability to attract and
build a membership base, to generate sales and advertising revenues, and to
offer products and services at competitive prices. We expect Our operating
expenses to increase, especially in the areas of sales and marketing and brand
promotion, and, as a result, We will need to commence operations and generate
revenue, and to offer products and services at competitive prices if
profitability is to be achieved.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL. We only had $438,408 of current assets
at June 30, 2000 and We operated at a loss of $956,693 for the quarter ended
June 30, 2000. Since We will not receive any proceeds from the sale of the
shares offered by the Selling Security Holders, we will be required to raise
additional funds, through the sale of Our shares to maintain operations at their
current level. If we are not able to raise additional financing, We will be
required to curtail Our operations and this would adversely affect Our results.
THERE ARE TECHNOLOGICAL RISKS IN OUR BUSINESS. The performance of the Our web
site, e-Business and database will be critical to Our ability to attract web
users and advertisers. Any web site system failure that causes an interruption
in service or a decrease in responsiveness or failure of Our server and
networking systems to handle the volume of traffic on Our web site could impair
the attractiveness of Our web site and negatively impact Us. Our business is
also dependent upon Our ability to protect Our server and network infrastructure
against damage from human error, power loss, telecommunications failure,
sabotage, intentional acts of vandalism and computer viruses.
OUR BUSINESS IS SUBJECT TO TECHNOLOGICAL CHANGES. The market in which We compete
is characterized by rapidly changing technology, evolving industry standards,
frequent new product and service announcements and enhancements and changing
customer demands. Our success will depend on its ability to adapt to rapidly
changing technologies and industry standards, and its ability to continually
improve the speed, performance, features, ease of use and reliability of its web
site. If we fail to rapidly adapt in a changing environment it will have a
material adverse effect on Our business. Introducing new technology into Our
systems may require significant amounts of capital, substantial amounts of
personnel resources and could take significant time to complete. We might not be
successful at integrating such technology into Our web site on a timely or
effective basis.
WE HAVE NOT CONDUCTED ANY FORMAL MARKET STUDIES. We will establish a web site
specializing in certain types of printed information. There are other companies
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offering web sites that are similar to portions of Our web site. We believe that
We can distinguish our self from other similar web sites through Our marketing
effort and by the unique mix of information that We will offer in one place.
But, We have not conducted and will not conduct any formal marketing studies
regarding the effectiveness of Our proposed operations. If Our business plan
fails to attract a sufficient number of subscribers to distinguish Our web site
from other similar web sites, then the investors may lose their entire
investment in their shares.
OUR MANAGEMENT LACKS RELEVANT EXPERIENCE AND WE WILL NEED ADDITIONAL PERSONNEL.
Ray Vahab, Our CEO, was elected in March 2000 and has limited prior experience
in operating a technology based business. We have limited resources with which
to hire or retain qualified personnel to operate Our business and no assurance
is given that We will be able to do so. If We are not able to hire qualified
technical and administrative personnel, We will not be able to operate Our
business effectively and investors may lose their entire investment in Us.
WE ARE CONTROLLED BY OUR MANAGEMENT AND PURCHASERS OF THE SHARES OFFERED BY THIS
PROSPECTUS WILL HAVE NO CONTROL OVER OUR AFFAIRS. Zhara Yamani and Ray Vahab,
two of Our directors, and entities controlled by them own a majority of our
issued and outstanding shares and are in a position to elect all of the members
of the Board of Directors and control Our affairs. See "Principal Shareholders".
WE FACE SEVERE COMPETITION. There are competing sites on the internet that offer
copyrighted books for sale and other sites that offer public domain books for
free. We do not intend to directly compete with these sites. We may offer some
copyrighted books for sale through our web site, but Our main focus is in
gathering and cataloging the selection of quality reference material under one
site. Most of this material is not copyrighted. Many of Our competitors have
substantially greater capital, research and development, computing, marketing,
advertising and human resources available to them than We do. New companies may
succeed in developing, producing, promoting, marketing and publicizing their
online sites, which may adversely effect Our operations.
In addition, there are several competing sites on the Internet that
offer legal information via a subscriptions basis. Some of these sites are well
known such as West Law and Lexis. Our legal division, LawXpressUSA.com will
directly compete against these sites other sites may begin to offer general
reference works on line. Some of these competitors may have substantially
greater capital, research and development, computing, marketing, advertising and
human resources experience than Us. In addition, new companies may succeed in
developing, producing, promoting, marketing and publicizing their online sites,
which may have an adverse effect on Our operations. As a result We may not be
successful in Our online business.
WE COULD BE SUBJECT TO GOVERNMENT REGULATION DIRECTED AT INTERNET COMMERCE. We
do not intend to be subject to direct regulation by any government agency, other
than regulations applicable to businesses generally, and there are currently few
laws or regulations directly applicable to access to or commerce on the
Internet. But, due to the increasing popularity and use of the Internet, a
number of legislative and regulatory proposals are under consideration by
federal, state, local and foreign governmental organizations, and it is possible
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that a number of laws or regulations may be adopted with respect to the Internet
on matters including user privacy, user screening, taxation, infringement,
pricing, content regulation and intellectual property ownership and
infringement. The adoption of any such laws or regulations could slow or reverse
the rate of growth in the use of the Internet, which could, in turn, decrease
the demand for Our services, and increase Our cost of doing business. The
applicability to the Internet of existing laws governing issues such as property
ownership, copyright, trademark, trade secret, obscenity, libel and personal
privacy is uncertain and developing. Any new legislation or regulation, or
application or interpretation of existing laws, could have a material adverse
effect on Our results. A number of legislative proposals have been made at the
federal, state, and local level that would impose additional taxes on the sale
of goods and services over the Internet and certain jurisdictions have taken
measures to tax Internet-related activities. It is possible that some type of
taxes will be imposed upon Internet commerce in the future, and such legislation
or other attempts at regulating commerce over the Internet might substantially
impair the growth of commerce on the Internet and, as a result, adversely affect
Our opportunity to derive financial benefit from such activities. Due to the
global nature of the web, it is possible that, although transmissions by Us over
the Internet originate in the United States, the governments of various foreign
countries might claim jurisdiction over Us or Our transmissions. There can be no
assurance that violations of local laws will not be alleged or charged by state
or foreign governments, that We might not unintentionally violate such laws or
that such laws will not be modified, or new laws enacted, in the future. Any of
the foregoing developments could have a material adverse effect on Our results.
OUR OPERATIONS WILL BE SUBJECT TO INTERNET SECURITY RISKS. Experienced
programmers or "hackers" may attempt to penetrate Our computer network and
effect Our operations. A party who is able to penetrate Our computer network
security could misappropriate proprietary information or cause interruptions in
Our web site. Concerns over the security of Internet transactions and the
privacy of users may also inhibit the growth of the Internet generally,
particularly as a means of conducting commercial transactions. Security breaches
or the inadvertent transmission of computer viruses could expose Us to loss,
litigation and possible third party liability. We cannot be certain that any
contractual provisions or legal disclaimers intended to limit Our liability in
such areas will be successful or enforceable.
WE ARE NOT SURE THAT OUR MARKETING PLAN WILL BE SUCCESSFUL. The market for
e-education has only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market entrants. As is typical in the
case of a new and rapidly evolving industry, demand and market acceptance for
recently introduced products and services are subject to a high level of
uncertainty. Our ability to generate revenue will depend on, among other
factors:
- the continued development of our e-education business;
- the amount of traffic on the Our web site;
- the development and expansion of Our sales force;
- fully developing and marketing Our LawExpressUSA database
- Our being able to establish and maintain desirable advertising sales agency
relationships.
Most potential advertisers and their advertising agencies have only limited
experience with the Internet as an advertising medium and have not historically
devoted a significant portion of their advertising expenditures to Web-based
advertising. We might not be able to persuade advertisers or advertising
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agencies to allocate portions of their budgets to advertising at Our web site.
Even if they do advertise at Our web site, they may later determine to
discontinue such advertising. There are no standards for the measuring the
effectiveness of web-based advertising and web based advertising may never
become a large market.
WE ARE DEPENDENT ON KEY PERSONNEL AND EMPLOYEES. The success of Our business
will continue to be highly dependent upon key members of senior management. The
loss of services of one or more of such employees, particularly Mr. Ray Vahab,
the Chairman of the Board and Chief Executive Officer, could have a materially
adverse effect upon Our business and development. We have entered into a five
year employment agreement with Mr. Vahab and maintain a $1 million key-man life
insurance on Mr. Vahab. We might not be able to replace Mr. Vahab should We be
required to do so. The loss of Mr. Vahab's services could have a substantial
negative impact on Our business. See "Management-Compensation-Employment
Agreements" on page __.
WE WILL NEED TO HIRE MORE EMPLOYEES. We will have to hire additional personnel
to operate Our business, and competition for qualified personnel, experienced
sales and marketing personnel, qualified web engineers and other employees is
and is expected to continue to be intense, and there can be no assurance that We
will be successful in attracting and retaining such personnel. Our future
operations will also depend in part upon Our ability to retain current employees
and to attract and retain additional qualified personnel. No assurance can be
given that We will be able to attract and retain such personnel or, if able to
do so, that it will be on favorable terms. See "Business - Employees" and
"Management."
OUR REVENUES MAY FLUCTUATE. We expect that Our operating results will fluctuate
significantly in the future as a result of a variety of factors, many of which
are beyond Our control. These factors include
- fluctuating demand for Our services,
- consumers' acceptance of e-education,
- the level of traffic on Our web site,
- the introduction of new or enhanced services by Our competitors,
- changing personnel requirements to address changes in technology,
- competition and promotional campaigns by Us or any of Our competitors,
- general economic conditions, and economic conditions specific to the Internet
or all or a portion of the technology market.
In response to changes in the competitive environment, We may, from time to
time, make certain pricing, service or marketing decisions or business
combinations that could have a material adverse effect on Our financial
condition and operating results. We expect to experience seasonality in Our
business, with user traffic on Our web site potentially being lower during the
summer and year-end vacation and holiday periods when overall usage of the
Internet may be lower and schools are not in session. We have no experience on
which to base Our expectations regarding seasonality of Our business. Web-based
e-commerce is an emerging market, additional seasonal and other patterns may
develop in the future as the market matures. Any seasonality is likely to cause
quarterly fluctuations in Our operating results.
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WE COULD FACE LIABILITY FOR INFORMATION ON OUR WEB SITE AND FOR PRODUCTS OR
SERVICES SOLD OVER THE INTERNET. We will provide third-party content on certain
of Our web sites, particularly reference works. We could be exposed to liability
with respect to third-party information. Persons might assert, among other
things, that, by directly or indirectly providing links to web sites operated by
third parties, we should be liable for copyright or trademark infringement or
other wrongful actions by the third parties operating those web sites. They
could also assert that our third party information contains errors or omissions,
and consumers could seek damages for losses incurred if they rely upon incorrect
information.
We enter into agreements with other companies under which we share with
these other companies revenues resulting from advertising or the purchase of
services through direct links to or from our Website. These arrangements may
expose us to additional legal risks and uncertainties, including local, state,
federal and foreign government regulation and potential liabilities to consumers
of these services, even if we do not provide the services ourselves. We cannot
assure you that any indemnification provided to us in our agreements with these
parties, if available, will be adequate.
Even if these claims do not result in liability to us, we could incur
significant costs in investigating and defending against these claims. Our
general liability insurance may not cover all potential claims to which we are
exposed and may not be adequate to indemnify us for all liability that may be
imposed.
THE MARKET FOR OUR COMMON STOCK HAS BEEN VERY LIMITED. Our common stock began
trading on the Over the Counter Bulletin Board (OTCBB) in November 1999 under
the symbol MMGS. Since early August, 2000 Our common stock has traded under the
symbol DMNX. The trading volume in Our common stock has always been limited and
this limited trading volume may make it difficult for you to sell your stock.
IF OUR BUSINESS GROWS, WE WILL BE REQUIRED TO MANAGE OUR GROWTH. If We achieve
market acceptance for Our services and are able to obtain adequate working
capital, We anticipate a period of rapid growth that will place a strain on Our
administrative, financial and operational resources. Our ability to manage any
staff and facilities growth effectively may require Us to continue to improve
Our operations, financial and management controls, reporting systems and
procedures, install new management information and control systems and to train,
motivate and manage its employees. If We can not successfully do those things in
an efficient and timely manner, We could experience significant delays or
unforeseen costs in its development, which delays or costs could have a material
adverse impact on Our results.
SINCE WE HAVE NEVER PAID A DIVIDEND AND ARE UNLIKELY TO DO SO, YOU MAY ONLY
REALIZE A PROFIT ON YOUR INVESTMENT IN THE COMPANY THROUGH A MARKET RISE IN OUR
COMMON STOCK. YOU SHOULD NOT EXPECT TO RECEIVE A DIVIDEND FROM US. We have never
paid, and have no intentions in the foreseeable future to pay, any dividends on
Our common stock. Therefore, if you purchase any stock in this offering, in all
likelihood, you will only realize a profit on your investment if the market
price of Our common stock increases in value. See "Dividend Policy."
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WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
EFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF OUR COMMON STOCK. Our
board of directors is authorized by Our Certificate of Incorporation to issue
shares of preferred stock without the consent of Our shareholders. Our preferred
stock, when issued, may rank senior to common stock with respect to voting
rights, payment of dividends and amounts received by shareholders upon
liquidation, dissolution or winding up. Such preferences will be set by Our
board of directors. The issuance of such preferred shares and the preferences
given the preferred shares, do not need the approval of Our shareholders. The
existence of rights which are senior to common stock may reduce the price of Our
common shares. We do not have any plans to issue any shares of preferred stock
at this time. See "Description of Securities".
WE MAY NEVER SATISFY THE QUALIFICATION REQUIREMENTS FOR NASDAQ OR AMEX
SECURITIES. We believe that the value of Our common stock would be enhanced if
it were included in Nasdaq or listed on the Amex. Our long-range goal is to have
this occur. Under the criteria of the National Association of Securities
Dealers, Inc. (the "NASD"), which administers the Nasdaq system, an issuer
seeking initial inclusion of its securities on the Nasdaq Small Cap market is
required to have $4 million in net tangible assets (or) a $50 million market
capitalization (or) $750,000 in net income in the latest fiscal year or 2 of the
last 3 fiscal years. In addition, an issuer must have a public float of a
minimum of 1 million shares, a market value of the public float of a minimum of
$5 million, a minimum bid price of $4.00 per share, three market makers, a
minimum of 300 shareholders (round lot holders), and either a one year operating
history (or) a $50 million market capitalization and meet certain standards of
corporate governance. Even if Our common stock were to qualify for inclusion in
the Nasdaq system in the future, Our common stock could nonetheless be delisted
in the event We Were unable to maintain $2 million in net tangible assets (or) a
$35 million market capitalization (or) $500,000 in net income in the latest
fiscal year or two of the last three fiscal years; a public float of $1 million;
a minimum bid price of $1 per share; two market makers; 300 shareholders (round
lot holders); and corporate governance, and any such delisting could cause a
precipitous decline in the price of Our securities and adversely affect their
liquidity. AMEX has similar listing criteria.
PENNY STOCK REGULATIONS MAY AFFECT THE VALUE OF YOUR SHARES. The U.S. Securities
and Exchange Commission (the "Commission") recently adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document prepared by the Commission that provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
sales person in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and sales person compensation
information, must be given to the customer orally or in writing before or with
the customer's confirmation. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from such rules the
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broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. Although Our stock has traded at
prices above $5.00 in recent months and has not been subject to the penny stock
rules, no assurance can be given that prices above $5.00 will be maintained on
the OTCBB in the future. If the price of the Common Stock drops below $5.00 it
would be subject to the penny stock rules and investors in this Offering may
find it more difficult to sell their Common Stock until the Company's Common
Stock trades on the Nasdaq and/or sells at a price greater than $5.00 per share.
OUR CERTIFICATE OF INCORPORATION HAS CERTAIN ANTI-TAKEOVER PROVISIONS. Our
Certificate of Incorporation contain provisions that may discourage acquisition
bids for your stock. After completion of the Offering, We will have substantial
authorized but unissued capital stock available for issuance. Our Certificate of
Incorporation contains provisions which authorize Our Board of Directors,
without the consent of stockholders, to issue additional shares of Common Stock
and issue shares of Preferred Stock in series, including establishment of the
voting powers, designation, preferences, limitations, restrictions and relative
rights of each series of Preferred Stock. Preferred Stock, issued in series,
could potentially be utilized to discourage or defeat a take-over bid to control
Us. We know of no proposed take-over bid.
WE MAY ISSUE ADDITIONAL SHARES WHICH WOULD FURTHER DILUTE YOUR SHARES We may be
required to issue significant additional shares of Our common stock to attract
employees and other personnel. If we do this the percentage of Our shares owned
by purchasers in this Offering could be substantially reduced and their
respective voting power over Us significantly diluted.
FOR ALL OF THE FOREGOING REASONS AND OTHERS SET FORTH IN THIS PROSPECTUS, THE
SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD BE PURCHASED
ONLY BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN US.
USE OF PROCEEDS
All shares of common stock being offered hereby will be sold by the
selling shareholders for their own account. Dominix, Inc. will not receive any
proceeds from such sales. However, We may receive up to $13,624,450 in the event
all of the warrants are exercised (which may not occur). We intend to use any
proceeds received from the exercise of warrants for general corporate purposes,
including funding working capital requirements.
PLAN OF OPERATION
10
<PAGE>
We are a development stage company. Our mission is to become the
premier library site on the Internet and sell Our e-education Internet product
to schools. Our Internet site, www.Bookdigital.com, is designed to maintain a
very comprehensive set of books, manuals, pamphlets, journals, research data and
links. Bookdigital.com serves as a home base library for educational and
intellectual advancement. Viewers may search, review, browse and download
information needed in any subject such as physics, law, astronomy, etc. at the
Bookdigital.com site. Our other internet sites are www.bookdigitalschools.com
and www.lawXpressusa.com Bookdigitalschools.com serves educational centers such
as schools k-12 in order to enhance quality of education for students.
LawXpressUSA.com provides legal and business research to attorneys nationwide.
The search can be made by title, subject or author for any reference materials.
Currently all reference materials are in English. However, the Company intends
to develop a global reference site in Spanish, French, German, Italian, etc. The
Company intends to register its viewers and may charge a subscription fee in the
future.
We had $436,265 in cash as of June 30, 2000. In order to reach these
goals, We must raise additional working capital. We anticipate doing so. We also
engage in preliminary discussions, from time to time regarding mergers or
business combinations, but have no agreements for any such transaction.
OUR DIVIDEND POLICY
We have not paid, and have no current plans to pay, dividends on Our
common stock. Even if We were to elect to pay any dividends, We may incur
indebtedness in the future, the terms of which may prohibit or effectively
restrict dividend payments.
THE MARKET FOR OUR COMMON STOCK
Our common stock is traded over-the-counter on the Bulletin Board
operated by the National Association of Securities Dealers, Inc. under the
symbol DMNX. Until early August, 2000, Our common stock traded under the symbol
MMGS. The table shows the high and low bid of Our common stock since November 3,
1998, when MMGS' common stock began trading.
QUARTER ENDED BID
HIGH LOW
1998
12/31 0.00 0.00
1999
3/31 1.00 1.00
6/30 1.00 1.00
9/30 1.00 1.00
12/31 1.00 1.00
QUARTER ENDED BID
11
<PAGE>
HIGH LOW
2000
3/31 5.00 1.00
6/30 11.00 5.00
9/30 7.75 5.00
On October 27, 2000, the closing bid price for Our common stock was
$6.00. Our common stock has traded sporadically.
As of October 27, 2000, We had 280 holders of record of Our common
stock.
SELLING SECURITY HOLDERS
SECURITIES COVERED BY THIS PROSPECTUS
This prospectus covers a total of 1,264,714 shares of our common stock
and 1,883,875 common stock purchase warrants. All of these shares were issued in
various private transactions, including two private offerings conducted by Our
Subsidiary, and as fees to various consultants. The Selling Security Holders who
bought their shares in private placements by Our Subsidiary, exchanged their
shares in Our Subsidiary for Our shares in May and June 2000. Also included are
certain shares underlying warrants to purchase Our stock issued to Our founders
in connection with a reorganization transaction in April 2000. We agreed to file
a registration statement with respect to the shares underlying these warrants.
STOCK OWNERSHIP
The following table sets forth, as of the date of this prospectus, the
name of each selling shareholder and the amount of shares of stock held directly
or indirectly underlying the warrants owned by the selling shareholder at the
date hereof. The table also shows the amount of shares of common stock being
offered by the selling shareholder and the amount to be owned by the selling
shareholder following the sale of such shares of common stock.
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
David Oberlander (1) 10,000 10,000 0 0
Dennis Weinstein (1) 10,000 10,000 0 0
Henry Schwartz (1) 10,000 10,000 0 0
Joanne Iucci (1) 125,000 125,000 0 0
Lawrence Dobroff (2) 10,000 10,000 0 0
Mayer Guttman (1) 10,000 10,000 0 0
Meyer Grunbaum (1) 25,000 25,000 0 0
Mindi Bornstein (2) 10,000 10,000 0 0
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Abraham Kohn 3,600 3,600 0 0
Burlington Green
Development Company (1) 6,000 6,000 0 0
Abraham Kohn (1) 3,600 3,600 0 0
Abraham Stern 1,245 1,245 0 0
Abraham Stern (1) 4,000 4,000 0 0
Adalbert Wais 623 623 0 0
Adalbert Wais (1) 2,000 2,000 0 0
Alan Bentley Johnson 623 623 0 0
Alan Bentley Johnson (1) 2,000 2,000 0 0
Alan Pearl 667 667 0 0
Alex Yelensky 1,245 1,245 0 0
Alex Yelensky (1) 2,000 2,000 0 0
Alexander Vais 1,868 1,868 0 0
Alexander Vais (1) 6,000 6,000 0 0
Alfred Bromberg 1,254 1,254 0 0
Alfred Bromberg (1) 4,000 4,000 0 0
Alfred Schiffrin 26,463 26,463 0 0
Alfred Schiffrin (1) 85,000 85,000 0 0
Allison Lopez 334 334 0 0
Alon Ben Ami 623 623 0 0
Alon Ben Ami (1) 2,000 2,000 0 0
Amir Cohen 2,500 2,500 0 0
Amir Cohen (1) 10,000 10,000 0 0
Andrew Astrove 681 681 0 0
Andrew Astrove (1) 2,000 2,000 0 0
Angelina Salli 623 623 0 0
Angelina Salli (1) 2,000 2,000 0 0
Anthony LaPlaca 667 667 0 0
Anton Fischman 3,113 3,113 0 0
Anton Fischman (1) 10,000 10,000 0 0
Antonia Casioro 6,227 6,227 0 0
Antonia Castoro (1) 2,000 2,000 0 0
Antonis Matsoulis 500 500 0 0
Antonis Natsoulis (1) 500 500 0 0
Armin Miller 5,700 5,700 0 0
Armin Miller (1) 5,700 5,700 0 0
Audrey Arnsdorf 934 934 0 0
Audrey Arnsdorf (1) 3,000 3,000 0 0
B Moskowitz, FM Computer
Technology (1) 40,000 40,000 0 0
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
B. Moskowitz 30,000 30,000 0 0
Bais Chaim c/o David Braver (1) 40,000 40,000 0 0
Barry Timberg 3,113 3,113 0 0
Barry Timberg (1) 10,000 10,000 0 0
Bernanrd Grotell (1) 2,000 2,000 0 0
Bernarhrd Grotell 623 623 0 0
Bob Reid,
Venture Investing Associates (1) 70,000 70,000 0 0
Bonnie Rost 334 334 0 0
Bruce J. Carusi 62,500 62,500 0 0
Bruno Carmine(1) 4,000 4,000 0 0
Bruno Carmine 1,254 1,254 0 0
Cameo Investments Ltd 100,000 100,000 0 0
Chana Gold 5,000 5,000 0 0
Charles C. Papp 623 623 0 0
Cheryl Eisner 624 624 0 0
Cheryl Weiss 623 623 0 0
Cheryl Weiss (1) 2,000 2,000 0 0
Craig Agranoff 5,000 5,000 0 0
Daniel Herman 1,868 1,868 0 0
Daniel Herman (1) 6,000 6,000 0 0
Darlene Cox 167 167 0 0
Darlene Cox (1) 500 500 0 0
David Dorff 623 623 0 0
David Dorff (1) 2,000 2,000 0 0
David Goldstein 167 167 0 0
David Goldstein (1) 500 500 0 0
David Green 1,254 1,254 0 0
David Green (1) 4,000 4,000 0 0
David Johnson 667 667 0 0
Debra Lopez 412 412 0 0
Devorah Braver 10,000 10,000 0 0
Devorah Braver (1) 10,000 10,000 0 0
Eddy Zaken 623 623 0 0
Eddy Zaken (1) 2,000 2,000 0 0
Elimelech Gold 5,000 5,000 0 0
Ellen J. Berger 45,000 45,000 0 0
Emil Weiss 623 623 0 0
Emil Weiss (1) 2,000 2,000 0 0
Emilio Villegas 1,245 1,245 0 0
Emilio Villegas (1) 4,000 4,000 0 0
Emily Karzhevsky (1) 9,000 9,000 0 0
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Eric A Kahn 623 623 0 0
Eric A Kahn (1) 2,000 2,000 0 0
Esther Eisner 623 623 0 0
Esther Eisner (1) 2,000 2,000 0 0
Eta Glickman 623 623 0 0
Eta Glickman (1) 2,000 2,000 0 0
Eugene Gulka 623 623 0 0
Eugene Gulka (1) 2,000 2,000 0 0
Eva Kotowitz
Custodian of Ledra Kotowitz 500 500 0 0
Faigy Gold 5,000 5,000 0 0
Felix Daniel 623 623 0 0
Felix Daniel (1) 2,000 2,000 0 0
First Argentum LLC 7,783 7,783 0 0
First Argentum LLC (1) 25,000 25,000 0 0
Frank J. Hariton (3) 5,000 5,000 0 0
Frank Lewis 167 167 0 0
Frank Lewis (1) 500 500 0 0
Freydoon Zkashani 1,245 1,245 0 0
Freydoon Zkashani (1) 4,000 4,000 0 0
Gabi Aharoni 3,113 3,113 0 0
Gabi Aharoni (1) 10,000 10,000 0 0
Gabriel Guttman 623 623 0 0
Gabriel Guttman (1) 2,000 2,000 0 0
Gary L Wasserman (1) 2,000 2,000 0 0
Gary Medwick 334 334 0 0
Gary Wasserman 623 623 0 0
Gemilin Chelsed Keren T.H. 4,000 4,000 0 0
Gemilth Chelsed Keren Y.N. (1) 4,000 4,000 0 0
Genilth Chesed of Keren V. N. (1) 44,000 44,000 0 0
George Watson 1,000 1,000 0 0
George Watson (1) 3,000 3,000 0 0
Glenn C Ross (1) 1,000 1,000 0 0
Glenn C. Ross 311 311 0 0
Goldie Engel 2,491 2,491 0 0
H P Industries, Inc. (1) 4,000 4,000 0 0
Hector Florimon 2,491 2,491 0 0
Hector Florimon (1) 8,000 8,000 0 0
Hector Valencia 3,113 3,113 0 0
Hector Valencia (1) 10,000 10,000 0 0
Hedi Hertz 1,254 1,254 0 0
Hedi Hertz (1) 2,000 2,000 0 0
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Henry Schwartz 10,000 10,000 0 0
Herbert Bradley 334 334 0 0
Herbert Bradley(1) 1,000 1,000 0 0
Herman Lebovitch 623 623 0 0
Herman Lebovitch (1) 2,000 2,000 0 0
Hindy Amsel Sherman (1) 5,000 5,000 0 0
Hindy Ansel Sherman 1,557 1,557 0 0
Howard Ackerman 5,000 5,000 0 0
Howard Pomerzntz 71 71 0 0
HP Industries, Inc. 1,254 1,254 0 0
Ike Abady 1,868 1,868 0 0
Ira Siegel 5,000 5,000 0 0
Irwin Friedman 623 623 0 0
Irwin Friedman (1) 2,000 2,000 0 0
Israel Jacobowitz 6,000 6,000 0 0
Israel Jacobowitz, Bais. (1) 6,000 6,000 0 0
ITS AG 25,000 25,000 0 0
Jack Friedman 1,868 1,868 0 0
Jack Friedman (1) 6,000 6,000 0 0
Jack Gartenberg (1) 10,000 10,000 0 0
Jackie Irni 3,113 3,113 0 0
Jackie Irni (1) 10,000 10,000 0 0
Jacob Eisner,
Under NY Tran Min Act 624 624 0 0
James Staley 500 500 0 0
Janene Fimmeran 334 334 0 0
Janis Fidotta (1) 13,000 13,000 0 0
Janis Fidotta 15,656 15,656 0 0
Janis L Fidotta (1) 10,000 10,000 0 0
Jay Youngerman 2,334 2,334 0 0
Jay Youngerman (1) 7,000 7,000 0 0
Jean Davies 623 623 0 0
Jean Davies (1) 2,000 2,000 0 0
Joanne Iucci 31,133 31,133 0 0
Joanne Iucci (1) 100,000 100,000 0 0
Joanne Iucci 125,000 125,000 0 0
John C. Lee (4) 100,000 100,000 0 0
John Reeves 623 623 0 0
John Reeves (1) 2,000 2,000 0 0
John Walton 134 134 0 0
Joseph Sterrantino 623 623 0 0
Joseph Sterrantino 1,000 1,000 0 0
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Joseph Sterrantino (1) 2,000 2,000 0 0
Josephine Canzoneri (1) 2,000 2,000 0 0
Josephine Canzoneri 6,227 6,227 0 0
Juan Estevez 747 747 0 0
Juan Estevez (1) 2,400 2,400 0 0
Kalma Strobel 3,113 3,113 0 0
Kalma Strobel (1) 10,000 10,000 0 0
Kasil Karzhevsky
& Emily Karzhevsky JTTEN 1,868 1,868 0 0
Kenneth Defeo 1,667 1,667 0 0
Kevin Upton 1,557 1,557 0 0
Kevin Upton (1) 5,000 5,000 0 0
Larry Schatz 334 334 0 0
Larry Schatz (1) 1,000 1,000 0 0
Lawrence G Frisa (1) 4,000 4,000 0 0
Lawrence G. Frisa 1,254 1,254 0 0
Leah Gold 5,000 5,000 0 0
Leonard Freund (1) 14,300 14,300 0 0
Leonard Freund 14,300 14,300 0 0
Leora Kotowitz (1) 1,500 1,500 0 0
Linda Levy 3,113 3,113 0 0
Linda Levy(1) 10,000 10,000 0 0
Louise Guardino 667 667 0 0
Louise Guardino (1) 2,000 2,000 0 0
Ludwig Eisner and Cheryl Eisner 623 623 0 0
Ludwig Eisner and Jacob Eisner 623 623 0 0
Ludwig Eisner and Jacob Eisner 623 623 0 0
Ludwig Eisner and Sheila Eisner 623 623 0 0
Ludwig Eisner and Cheryl Eisner (1) 2,000 2,000 0 0
Ludwig Eisner and Jacob Eisner (1) 2,000 2,000 0 0
Ludwig Eisner and Rebecca Eisner (1) 2,000 2,000 0 0
Ludwig Eisner and Sheila Eisner (1) 2,000 2,000 0 0
Luisa Sanchez 623 623 0 0
Luisa Sanchez (1) 2,000 2,000 0 0
M Brach 7,200 7,200 0 0
M Brach, Binat Yesosschon (1) 7,200 7,200 0 0
Marcus Weiss 623 623 0 0
Marcus Weiss (1) 2,000 2,000 0 0
Maria Vertsberger 623 623 0 0
MariaVertsberger (1) 2,000 2,000 0 0
Marie Frisa 1,254 1,254 0 0
Marie Frisa (1) 4,000 4,000 0 0
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Mario Ingordo 623 623 0 0
Mario Ingordo (1) 2,000 2,000 0 0
Mark Frisch (1) 10,000 10,000 0 0
Mark Greenstein 25,000 25,000 0 0
Mark Greenstein (2) 25,000 25,000 0 0
Martha Weber 667 667 0 0
Martin Janis & Co. (1) 5,000 5,000 0 0
Martin Janis and Co. 1,557 1,557 0 0
Mayer Guttman (1) 33,000 33,000 0 0
Mayer Greenbaum 60,000 60,000 0 0
Mayer Guttman 10,000 10,000 0 0
Mayer Guttman 31,133 31,133 0 0
Meyer Greenbaum 25,000 25,000 0 0
Michael Collelo 3,113 3,113 0 0
Michael Collelo (1) 10,000 10,000 0 0
Michael Peluso 167 167 0 0
Michael Weiss 1,868 1,868 0 0
Michael Weiss (1) 6,000 6,000 0 0
Morowitz 334 334 0 0
Morowitz (1) 1,000 1,000 0 0
Moses Jacobowitz 21,500 21,500 0 0
Moses Jacobwitz, Bais Moishe Inc. (1) 21,500 21,500 0 0
Moshe Sherman 623 623 0 0
Moshe Sherman (1) 2,000 2,000 0 0
Moysey Shiaynberg 1,868 1,868 0 0
Moysey Shtaynberg (1) 6,000 6,000 0 0
Nancy Harold 667 667 0 0
Nancy Harold (1) 2,000 2,000 0 0
Neal V Muccio (1) 2,000 2,000 0 0
Neal V. Muccio 623 623 0 0
Nechama Gold 5,000 5,000 0 0
Nicolay Yahuhouid (1) 3,300 3,300 0 0
Nicolay Yakubovich 3,113 3,113 0 0
Nina Ghayami 623 623 0 0
Orly Farahan 623 623 0 0
Pat Crincoli 334 334 0 0
Patricia Quinn 623 623 0 0
Patricia Quinn (1) 2,000 2,000 0 0
Paul Donnelly 334 334 0 0
Pegasus Asset Management 71,606 71,606 0 0
Pegasus Asset Management (1) 230,000 230,000 0 0
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Peggy Weiss 623 623 0 0
Peggy Weiss (1) 2,000 2,000 0 0
Peter Aftakin 1,000 1,000 0 0
Peter Fernholz 167 167 0 0
Peter Fernholz (1) 500 500 0 0
Philip J. Davis (4) 100,000 100,000 0 0
Philip Friedman 3,892 3,892 0 0
Philip Friedman (1) 4,200 4,200 0 0
Pinchus Gold 5,000 5,000 0 0
Prolearner.com Inc. (1) 40,000 40,000 0 0
Prolearner.com, Inc. 12,543 12,543 0 0
Ralph Bradley 1,524 1,524 0 0
Ralph Bradley (1) 5,875 5,875 0 0
Rebecca Eisner, Ludwig Eisner Cust 624 624 0 0
Richard A Sulzman (1) 2,000 2,000 0 0
Richard A. Sulzman 623 623 0 0
Richard Kneidel 334 334 0 0
Richard M Timothy (1) 2,000 2,000 0 0
Richard M. Timothy 623 623 0 0
Rita P. Shea 623 623 0 0
Riven Trebits 1,100 1,100 0 0
Robert Apoian 2,000 2,000 0 0
Robert Keilman (1) 2,000 2,000 0 0
Robert Keilman 100,000 100,000 0 0
Robert Russo 1,325 1,325 0 0
Robert Russo (1) 4,000 4,000 0 0
Ronald Balkin 1,170 1,170 0 0
Ronald Defeo 1,667 1,667 0 0
Rose Lemkin 1,254 1,254 0 0
Rose Lemkin (1) 4,000 4,000 0 0
Ruth Cohen 1,254 1,254 0 0
Ruth Cohen (1) 4,000 4,000 0 0
Salman Gutterman 1,500 1,500 0 0
Salman Gutterman (1) 4,500 4,500 0 0
Sam Schwartz 3,113 3,113 0 0
Sam Schwartz (1) 10,000 10,000 0 0
Samuel Sherman 623 623 0 0
Samuel Sherman (1) 2,000 2,000 0 0
Sandra M Perez (1) 2,000 2,000 0 0
Sandra M. Perez 623 623 0 0
Sandra Rysa 167 167 0 0
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES PERCENTAGE
OWNED AVAILABLE OWNED OF CLASS
PRIOR TO THIS PURSUANT TO THIS AFTER AFTER
SELLING SHAREHOLDER OFFERING PROSPECTUS OFFERING OFFERING
--------------------------------- ------------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Scott Burdo 3,113 3,113 0 0
Scott Burdo (1) 10,000 10,000 0 0
Sherman Rubin 3,113 3,113 0 0
Sherman Rubin (1) 3,300 3,300 0 0
Silkes Family Ltd Partnership 624 624 0 0
Silkes Family LTD Partnership (1) 2,000 2,000 0 0
Solomon Marciano (1) 2,000 2,000 0 0
Solomon Marciano 3,113 3,113 0 0
Steven Keene 25,000 25,000 0 0
Steven Keene (1) 25,000 25,000 0 0
Strategic Corporate Initiative LTD 100,000 100,000 0 0
Susan Schuler (1) 13,300 13,300 0 0
Svetlana Galperin 1,254 1,254 0 0
Svetlana Galperin (1) 4,000 4,000 0 0
Teresa Berger 167 167 0 0
The Parkview Group Inc. (1) 50,000 50,000 0 0
The Parkview Group, Inc. 15,567 15,567 0 0
Thomas Hayden 1,000 1,000 0 0
Tibor Gershokovich 623 623 0 0
Tibor Gershokovich (1) 2,000 2,000 0 0
Tzvi Gold 5,000 5,000 0 0
Victor Friedman 3,892 3,892 0 0
Victor Friedman (1) 12,500 12,500 0 0
Vincent Garcia 311 311 0 0
Vincent Garcia (1) 1,000 1,000 0 0
Wendy Greenberg 623 623 0 0
Wendy Greenberg (1) 2,000 2,000 0 0
Wing Ng 623 623 0 0
Wing Ng (1) 2,000 2,000 0 0
Z Freund, Mesamche Lev 7,200 7,200 0 0
Z Freund, Mesamche Lev (1) 7,200 7,200 0 0
Zarto LTD (1) 13,000 13,000 0 0
Zarto Ltd 15,567 15,567 0 0
Universal Strategic Tech (2) 25,000 25,000 0 0
Strategic Corporative
Initiative LTD (2) 100,000 100,000 0 0
</TABLE>
(1) Represents warrants or options with an exercise price of $8.40.
(2) Represents warrants or options with an exercise price of $5.00.
(3) Represents an option with an exercise price of $.02.
(4) Represents and option with an exercise price of $.50.
20
<PAGE>
We have agreed to pay full costs and expenses in preparing, filing and
printing the registration statement and prospectus and related exhibits,
amendments and supplements thereto and mailing of such items. We will not pay
selling commissions and expenses associated with any sale by the selling
shareholders.
Beneficial ownership is determined in accordance with rules promulgated
by the Securities and Exchange Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. As the
date of this Prospectus, We believe that each person named in the table has sole
voting and investment power with respect to all of the shares of our common
stock listed as beneficially owned by it.
The selling shareholders identified above may have sold, transferred or
otherwise disposed of all or a portion of such securities in transactions exempt
from the registration requirements of the Securities Act of 1933. The selling
shareholders may sell all, part or none of the shares of common stock listed
above.
Generally, only selling shareholders identified in the foregoing table who
beneficially own the shares of common stock set forth opposite their respective
names may sell such offered shares pursuant to the Registration Statement of
which this prospectus forms a part. We may from time to time include additional
selling shareholders in supplements to this prospectus
PLAN OF DISTRIBUTION
The shares offered hereby may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market (including the Over the Counter Bulletin Board), or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The shares may be sold
by one or more of the following methods:
(a) a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
(d) face-to-face or other direct transactions between the selling
shareholders and purchasers without a broker-dealer or other intermediary.
In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate in the
resales. Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders in amounts to be
negotiated in connection with the sale. Such broker-dealers and agents and any
other participating broker-dealers or agents may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, in connection with such sales.
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In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 of the Securities Act of 1933 might be sold under Rule
144 rather than pursuant to this prospectus.
In connection with distributions of the shares or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered hereunder in the course of hedging the positions they
assume with selling shareholders. The selling shareholders may also sell shares
short and deliver the shares to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the shares
registered hereunder, which the broker-dealer may resell pursuant to this
prospectus. The selling shareholders may also pledge the shares registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this prospectus.
Information as to whether an underwriter(s) who may be selected by the
selling shareholders, or any other broker-dealer, is acting as principal or
agent for the selling shareholders, the compensation to be received by
underwriters who may be selected by the selling shareholders, or any
broker-dealer, acting as principal or agent for the selling shareholders and the
compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Until such time, any broker-dealer purchasing securities offered by
this Prospectus off the shelf can not receive compensation (calculated as the
difference between the purchase and resale price of the securities) in excess of
8% on principal transactions or in excess of normal and ordinary brokerage
commissions (which, in any event, may not exceed 5% of the sale price) for any
agency transactions. Any dealer or broker participating in any distribution of
the shares may be required to deliver a copy of this prospectus to any person
who purchases any of the shares from or through such dealer or broker.
We have advised the selling shareholders that during such time as they
may be engaged in a distribution of the shares included herein they are required
to comply with Regulation M promulgated under the Securities Exchange Act of
1934. With certain exceptions, Regulation M precludes any selling shareholders,
any affiliated purchasers and any broker-dealer or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. All of the
foregoing may affect the marketability of our common stock.
It is anticipated that the selling shareholders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of our common stock.
Phil Davis and John Lee were founders of the Company and its officers
and directors until April 2000, when they resigned in connection with the
Exchange Offer transaction and present management was appointed. Lawrence S.
Dobroff and Mindi Bornstein, Esq. are corporate officers. Except as specifically
set forth herein, none of the selling shareholders has, or within the past three
years has had, any position, office or other material relationship with us or
any of our predecessors or affiliates.
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OUR BUSINESS
Dominix, Inc. ("We", "Us" or the "Company") is a Delaware corporation.
In May and June 2000 we conducted an Exchange Offer where we acquired over 99%
of the stock of Bookdigital.com, Inc.,"(Our Subsidiary") which operates several
web sites that make books, primarily reference books, e-education, legal
materials, and educational materials available for free and to paid subscribers.
Prior to the Exchange Offer we had operated several businesses. Until August
2000, We were a Colorado corporation and Our name was Medical Management
Systems, Inc. ("MMGS").
DEVELOPMENT OF MMGS AND ITS BUSINESS
MMGS was organized under the laws of the State of Colorado, on July 30,
1987. MMGS was formed for the purpose of creating a corporate vehicle to seek,
investigate and, if such investigation warranted, acquire an interest in
business opportunities.
On March 24, 1989, MMGS completed a public offering of 150,000 Units.
Each Unit consisted of one share of its no par value common stock (the "Common
Stock"), one Class A common stock purchase warrant and one Class B common stock
purchase warrant. The Class A and Class B warrants expired on October 19, 1992.
In connection with the offering, the underwriter received for $100 a purchase
warrant for 15,000 shares of common stock at $0.60 per share.
On September 10, 1991, MMGS' Board of Directors approved a 20 to 1
reverse stock split. On September 30, 1991, pursuant to a Share Exchange
Agreement(the "Exchange"), MMGS issued an aggregated of 4,680,000 shares of
Common Stock in connection with its acquisition of Staley Corp. ("Staley"), a
privately held development stage Colorado corporation, wherein MMGS acquired all
of the issued and outstanding shares of Staley. Prior to the exchange, MMGS had
an aggregate of 610,000 shares issued and outstanding. On the same date MMGS'
name was changed to Dog World, Inc. In accordance with the Agreement, all but
one of MMGS' officers and directors resigned, and the directors and executive
officers of Staley were elected directors and executive officers of MMGS.
From February 1, 1992 to November 1, 1993, MMGS operated a dog training
and obedience facility located in Grand Prairie, Texas under the name Dogs Only,
Inc., a wholly owned subsidiary of Dog World, Inc. MMGS also offered dog
boarding and kenneling, retail sales of dog and cat care supplies, dog and cat
food, as well as, veterinary services through arrangements with independent
veterinarians. Prior to February 1, 1992, MMGS was considered to be in the
development stage and had not generated any revenues.
During the second and third quarter of fiscal 1993, MMGS raised
$543,100 in a private placement sale of 1,810,333 shares of Common Stock. The
proceeds from this sale of stock were used to open a new retail facility,
enhance MMGS' veterinary service capabilities and to repay outstanding bank
debt.
In June 1993, using the proceeds from the private placement, MMGS
opened a second retail facility in Irving, Texas under the trade name Vet
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Works+. This facility provided a wide range of total pet care services including
a complete veterinary hospital, "Dogs Only" discipline training, all breed
grooming, and indoor lodging and boarding, as well as, the sale of pet foods and
pet care products. The original Dogs Only facility in Grand Prairie, Texas was
consolidated on November 1, 1993 with MMGS' Irving, Texas Vet Works+ facility.
On June 1, 1993, MMGS entered into an agreement with Willis C. Dearing,
DVM, to purchase the assets of Dearing Animal Hospital, Inc. for cash. This
agreement allowed MMGS to offer veterinary services to patrons of its stores,
also provided for certain stock option arrangements with Dr. Dearing.
In 1994, MMGS issued 860,000 shares of Common Stock to individuals in a
private placement that raised net cash proceeds of $250,471.
On March 15, 1995, MMGS filed a Form 15 with the SEC to terminate its
duty to file reports under section 13 and 15(d) of the Securities Exchange Act
of 1934.
In April 1995, substantially all of MMGS' assets and business
operations were sold and MMGS subsequently changed its name to Medical
Management Systems, Inc.
On June 26, 1995, MMGS issued 6,000,000 shares to Jack R. Daugherty, a
former officer and director of MMGS, in lieu of payment of a loan in the amount
of $150,000 due to Mr. Daugherty.
On June 26, 1995, MMGS issued 3,000,000 shares to Donald L. Parnell, a
former officer and director of MMGS, in lieu of payment of salary in the amount
the $75,000 due Mr. Parnell.
On June 26, 1995, MMGS issued 400,000 shares to Gary A. Agron, in lieu
of payment of legal fees in the amount of $10,000.
In August 1996, Mr. Davis, MMGS' President, acquired 9,825,498 shares
from Jack Daugherty and Donald Parnell, former officers and directors of MMGS
and MMGS changed its business purpose to that of a "shell" corporation.
On May 7, 1997, MMGS entered into an Agreement and Release with Vet
Works+ and Willis C. Dearing, DVM, modifying their previous agreement dated
March 28, 1995. The Agreement and Release is a settlement of all disputes and
claims between the parties. The Agreement and Release provides the surrender and
cancellation of the options granted to Dr. Dearing under the 1994 Incentive
Stock Option Agreement under the Dog World, Inc. Incentive Stock Option Plan.
In June 1997, Mr. Davis transferred 3,275,000 shares of Common Stock
each to Mr. Lee, MMGS' Secretary, and Mr. Van Gundy, MMGS' Treasurer,
respectively.
On October 15, 1998, MMGS issued 3,334,934 shares of Common Stock to
Philip J. Davis in consideration of cash advances to MMGS in the amount of
$16,724.67 and 3,334,934 shares of Common Stock to John C. Lee in consideration
of cash advances to MMGS in the amount of $16,724.67.
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On January 19, 1999, MMGS reverse split its shares on a one-for one
hundred basis.
On April 9,1999, MMGS' board of directors granted bonuses to the three
directors totaling $300,000. These bonuses have been satisfied as set forth
below.
July 15, 1999, MMGS issued 5,518 shares of Common Stock to Philip J.
Davis in consideration of cash advances to MMGS in the amount of $5,518.00 and
5,518 shares of Common Stock to John C. Lee in consideration of cash advances to
MMGS in the amount of $5,518.00.
On September 30, 1999, MMGS issued 1,109 shares of Common Stock to
Philip J. Davis in consideration of cash advances to MMGS in the amount of
$1,109.00 and 1,109 shares of Common Stock to John C. Lee in consideration of
cash advances to MMGS in the amount of $1,109.00.
MMGS filed its Form 10-SB on a voluntary basis. It had no obligations
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). MMGS believed that by filing such Form 10-SB and being obligated to file
reports pursuant to Section 13 of the Exchange Act, it could attract an
acquisition candidate of greater financial value with a track record of success.
While MMGS believes it will be a more attractive acquisition candidate, there is
no assurance that the foregoing assumption is correct.
Pursuant to a letter agreement, dated April 17, 2000, but executed on
April 26, 2000, Messrs. Davis, Lee and van Gundy, all of the then members of
MMGS' board have resigned as officers and directors of MMGS and appointed Ray
Vahab and Zahra S. Yamani, the then directors of Bookdigital as the officers and
directors of MMGS. Messrs. Davis and Lee also reduced their bonuses due from
MMGS so that all of the outstanding indebtedness of MMGS could be satisfied by
the payment of $200,000. Bookdigital paid $200,000 on behalf of MMGS (which is
being treated as a loan from Bookdigital to MMGS) to satisfy this indebtedness.
In addition, each of Messrs. Davis and Lee were granted a 3 year option to
purchase 100,000 shares of MMGS' common Stock at $.50 per share. These options
are included in this Prospectus.
THE EXCHANGE OFFER AND OUR REINCORPORATION AS A DELAWARE CORPORATION
In May and June 2000 We conducted the Exchange Offer for all of the
shares of Our Subsidiary. The Exchange Offer provided that each share of
Bookdigital.com, Inc. could be exchanged for .31133 of Our shares. The then
shareholders of Our Subsidiary consisted of its present and former officers and
directors, purchasers in two private placements (all of whom were accredited
investors) and persons who had received securities of Our Subsidiary pursuant to
various consulting arrangements. Over 99% of Our Subsidiary's shares were
exchanged for Our shares in the Exchange Offer and the former holders of Our
Subsidiary received approximately 93% of Our issued and outstanding stock. In
August 2000, We completed Our reincorporation merger where We became a Delaware
corporation named Dominix, Inc. The shares of Medical Management Systems, Inc.
were exchanged for the shares of Dominix, Inc. on a one for one basis.
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OUR PRESENT BUSINESS
Our current business is operated through Our Subsidiary,
Bookdigital.com, Inc. Bookdigital.com Inc., is a Delaware corporation formed in
March of 1999 and is a development stage company engaged in certain areas of web
commerce. Bookdigital is comprised of three sites/divisions,
WWW.BOOKDIGITAL.COM, a general comprehensive online reference site,
WWW.BOOKDIGITALSCHOOLS.COM, a site that serves schools, and
WWW.LAWXPRESSUSA.COM , an online legal subscription service for attorneys,
consultants and paralegals, which is in beta testing.
The BOOKdigital.com web site was developed after surveys showed that
greater than 87% of users utilize the Internet to research and/or find
information, and yet there were not any sites on the Internet devoted to this.
In fact, finding information on the Internet has gotten much more difficult as
the size of the Internet has grown. The past method of finding information
online was to use a search engine. With the current size of the Internet, if you
utilize a search engine and attempt to find information, on breast cancer for
example, the amount of hits can range up to 7,000,000 depending upon the search
engine used. This amount of information is hard to digest and is not useful.
We have designed Our web site to exploit this untapped online reference
niche by organizing what We believe is the best information available on both
the Internet and in printed material, and then arranging the information in a
logical easy-to-use format. WWW.BOOKDIGITAL.COM has a comprehensive set of
books, pamphlets, journals, research data and links that, to Our knowledge, is
unsurpassed in content. Currently, Bookdigital.com contains in excess of 10,000
digitalized books as well as journals, reference materials and other useful
sources of information. The Company is developing strategic relationships with
certain publishers to increase additional books to its Domain and at this time
all the books are in English however the Domain will be adding additional books
in Spanish, German, Italian, French, etc. The search format to obtain any data
and or information is easy to use and friendly and is provided through the
Company's proprietary search engine. Any search may be conducted by entering a
key word, title, author and or subject.
Our WWW.BOOKDIGITALSCHOOLS.COM web site is designed to serve primary
and secondary schools. WWW.BOOKDIGITALSCHOOLS.COM offers schools the "Total
Internet Education Solution" ("TIES(TM)") internet package which includes a
customized school browser, real time and taped tutoring via the Internet,
calendaring, chat rooms, community news and activities, school events and other
features.
The WWW.BOOKDIGITALSCHOOLS.COM web site is designed to provide premier
educational services and curriculum programs to enhance the quality of
education, especially for students. We attempt to provide the highest quality
multimedia content available and integrate it with current Internet
communications technologies to create a rich learning environment. Our format is
designed to create an entertaining format for the learning experience. We have
entered into various strategic alliances with ISP's, IP's, and hardware and
software suppliers to provide Internet access, hardware, software, networking
and other related services to schools nationwide. We are marketing Our package
in the United States, Puerto Rico and the Carribean.
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The legal division/site, WWW.LAWXPRESSUSA.COM , will be a comprehensive
online legal subscription service that will cater to attorneys, consultants,
paralegals and accountants, among others. We believe that this is a highly
desirable and lucrative area since the legal profession is an area of business
where research is essential. In all areas of legal practice whether traffic
tickets, family issues, or criminal issues, attorneys and other legal
professionals must use some type of research device to find laws, precedents,
cases, etc. We identified through consultations with attorneys and other study
groups that if We could capture all laws, regulations, statutes, and case law,
and then display this data in the format preferred by legal professionals, that
they are willing, indeed anxious, for affordable legal research tools.
Bookdigital.com has incorporated banner advertising. Research has shown
that the demographics of personnel conducting reference searches on the internet
is quite unique, and of a high educational and economic status. This has led to
over 130 companies (such as Borders, Staples, Amazon.com, Barnes & Noble etc.)
entering into an agreement with Bookdigital.com to advertise on its site.
Bookdigital also plans to start charging a flat fee to any users of the
new electronic books for unlimited download access to our digital books in their
required format.
Dominix, through two recently established subsidiaries, Universal
Wireless Telecom Inc, and Worldwide Wireless Telecom Inc.. is in the initial
stages of entering the telecommunications business. We are contemplating such
areas as Web Hosting, being an ISP, and selling telecommunication services
through a switch that we are considering purchasing.
Dominix is constantly reviewing strategic relationships, including
joint ventures, acquisitions and investments in those companies that will
benefit Our operations, including those of Our subsidiaries. To date we have not
entered into any definitive agreements regarding such agreements.
COMPETITION
Each of Our web sites faces competition from several sources. Certain
reference materials offered by our WWW.BOOKDIGITAL.COM web site are available
elsewhere on the Internet. We also compete with libraries and non-electronic
forms of these works. We try to compete by offering a large selection of
non-copyrighted material efficiently organized at one web site.
WWW.LAWXPRESSUSA.COM is not yet operational, but will face competition
from other established companies offering legal research tools, such as
Lexis-Nexis and Westlaw and from new companies, such as Louis Law which also
offer legal research through the Internet.
WWW.BOOKDIGITALSCHOOLS.COM operates in a highly competitive market
characterized by many new entrants. We are seeking to compete by combining Our
content with a telecommunication solution for schools.
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In each of Our divisions we face competitors who have established
reputations or have far greater resources than Us. We will seek to compete based
on the unique presentation of our information and on price.
EMPLOYEES
We have 23 employees of which 22 are employed on a full time basis. 5
of our employees are management executives, 6 are in sales and marketing, 9 are
computer programmers and 3 are clerical employees. None of Our employees are
represented under a collective bargaining agreement and We consider our
relations with Our employees to be good.
PROPERTIES
Our principal executive office consists of approximately 7,500 square
feet located at 142 West 36th Street - 2nd Floor, New York, New York and we
lease this these premises under a 5 year lease expiring August 2005. The monthly
rental is presently $18,150 and will increase at 4% per year. We will also be
responsible for our proportionate share of the increase in real estate taxes.
We also lease approximately 3,000 square feet at 647 Franklin Avenue,
Garden City, New York, which is used for sales and marketing. This space is
leased through February 2003 with a base rent of $2,750 per month which will
increase approximately 5% per year.
We also lease approximately 1,850 square feet of space at 65 Broadway,
New York, New York, which is used for programming. This space is leased through
December 2007 with a current base rent of $2,992.50 per month. We will also be
responsible for our proportionate share of the increase in real estate taxes.
We believe that Our leased premises are adequate for Our present needs.
LITIGATION
We are not currently party to any material litigation.
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
-----------------------------------------------
The following sets forth the names of Our directors and officers. Our
directors are elected annually by the shareholders and the officers are
appointed annually by the Board of Directors. The executive officers, directors
and key employees of Bookdigital and their respective ages as of October 13,
2000, are as follows:
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NAME AGE POSITION
Ray Vahab 52 Chairman, CEO and a Director
Zahra S. Yamani 29 Director, President and Secretary
Mindi Bornstein 39 Vice President and General Counsel
Lawrence S. Dobroff 43 Chief Financial Officer
Henry Schwartz 73 Director
Robert Keilman 55 Vice Chairman and Director
RAY VAHAB has been an officer and director of Director of Bookdigital since
December 1999 and an officer and director of the Company since April 2000. Mr.
Vahab's experience is in the areas of business and finance for the past twenty
years. Mr. Vahab was also the Senior Managing Director of First Madison
Securities, Inc. , a NASD member firm from 1995 to February 2000. He has been
involved in advising and assisting private and public companies in their growth,
financing, capital structuring and mergers and acquisitions. Mr. Vahab is a
graduate of Isfahan University and holds a Doctorate degree in Pharmacy.
ZAHRA YAMANI has been an officer and a director of Bookdigital since its
inception and an officer and a director of the Company since April 2000. Ms.
Yamani has experience in research and development in the areas of physics and
computation technology. She is currently completing her Ph.D. in research on
high temperature super conductivity from the University of Toronto. Ms. Yamani
has been a research assistant in the physics department of the University of
Toronto since 1998. From 1992 to 1998 Ms. Yamani was a teaching assistant in the
physics department of Sharif University of Technology in Iran.
MINDI BORNSTEIN, ESQ. was appointed Vice President/General Counsel in June, 2000
and is an attorney with fifteen years of experience. Ms. Bornstein worked for
seven years as Litigation Manager of Professional Liability claims for two major
insurance companies, American International Group and Great American Financial.
Ms. Bornstein graduated from New York University School of Law and holds a BS in
Business/Marketing from the University of Maryland-summa cum laude.
LAWRENCE S. DOBROFF was appointed elected Chief Financial Officer in July, 2000.
Mr. Dobroff is a Certified Public Accountant and received his MBA from Baruch
College and holds a BA from Queens College. From 1996 to 2000, Mr. Dobroff was a
consultant to various development stage and start up companies. From 1997 to
1998, Mr. Dobroff was the Chief Financial Officer of Ecotyre Technologies, a
publicly held manufacturer of remolded tires. From 1990 to 1995, Mr. Dobroff was
the Vice President, Finance and Administration of Austin Productions, Inc., a
privately held multi-national manufacturer of decorative home accessories.
HENRY SCHWARTZ joined the Company in February 2000 as special advisor for its
BOOKdigitalSchools educational program. He became a member of the Board of
Directors as of October 2000. Mr. Schwartz's past 30 years experience include
evaluating and advising emerging educational technology companies, expansion and
funding. From 1969 to 1980, Mr. Schwartz was an officer and director of National
Information and Education Utilities, California Information and Education, Inc.,
Florida Information and Utilities, Inc., Southwest Information and Education and
Utilities, Inc. and Long Island Information and Education Utilities, Inc. Mr.
Schwartz has been a director of WaterChef, Inc. since 1990 and a director of
Civilization Communications since 1995, Mr. Schwartz attended Norwich
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University, MIT and Brooklyn Polytechnic Institute where he received his
engineering degree.
ROBERT KEILMAN joined the Company is October 2000 as its Vice Chairman and a
Director. From 1999 to 2000 Mr. Keilman was CEO/Chairman of Focus Strategies,
Inc., a marketing company which specializes in corporate entertainment for
multinational corporations. Previously, Mr. Keilman worked for The Bank of New
York for 23 years of which the last 17 years was as their Comptroller/Senior
Vice President. Mr. Keilman also served as a director of the Bank of New York's
credit card and insurance subsidiaries. Mr. Keilman was also a director of the
Bankers Insurance Captive, Ltd. until 1998.
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EXECUTIVE COMPENSATION
----------------------
The following table sets forth the compensation (all cash) paid to Our
five highest paid executive officers during the years ended December 31, 1998;
December 31, 1999; and during the nine months ended September 30, 2000.
2000 1999 1998
---- ---- ----
Don Rose 39,919 49,616 0
Ray Vahab 67,260 0 0
Lawrence Dobroff 22,308 0 0
John C. Lee 75,000 0 0
Philip J. Davis 75,000 0 0
Charles Van Gundy 50,000 0 0
Zahra S. Yamani 11,375 43,750 0
EMPLOYMENT AGREEMENTS
We entered into a five year employment agreement with Ray Vahab, dated
as of September 1, 2000, which provides for compensation of $195,000 during the
first year of its term, $250,000 during the second year of its term, $300,000
during the third year of its term, $400,000 during the fourth year of its term
and $500,000 during the fifth year of its term. The employment agreement
contains a covenant not to compete and provides that Mr. Vahab may be paid a
bonus in the discretion of our Board of Directors.
We entered into a one year employment agreement with Mindi Bornstein in
June, 2000 which provides for an annual salary of $70,000.
We entered into an employment agreement with Lawrence S. Dobroff in
July, 2000 which provides for an annual salary of $100,000
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PRINCIPAL STOCKHOLDERS
The following table sets forth information, as of October 13, 2000,
with respect to Our directors, named executive officers and each person who is
known by Us to own beneficially more than 5% of Our stock, and with respect to
shares owned beneficially by all of Our directors and executive officers as a
group. The address for all of Our directors and executive officers is 142 West
36th Street - 2nd Floor, New York, New York 10018.
Name and Amount and Nature of
Address of Beneficial Percent of
Beneficial Owner Ownership (1) Class
---------------- -------------------- ----------
Ray Vahab 2,083,316 (2) 31.7%
Zahra S. Yamini 1,773,336 (3) 27.0%
321 Floor St. West
Toronto, Ontario
M55155, Canada
Lawrence S. Dobroff 10,000 (4) .2%
Mindi Bornstein 10,000 (4) .2%
Henry Schwartz 17,783 (5) .3%
Robert Keilman 102,000 (6) 1.6%
Homework 911.com, Inc. 965,123 14.7%
1675 Broadway
New York, New York 10019
All officers and directors
as a group (6 persons) 3,996,435 (2)(3)(4)(5)(6) 60.9%
(1) Beneficial ownership of the Common Stock has been determined for this
purpose in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended ("Exchange Act"), under which a person is deemed to
be the beneficial owner of securities if he or she has or shares voting
power or investment power with respect to such securities or has the
right to acquire beneficial ownership within 60 days.
(2) These shares are owned by the Ray Vahab Trust. Includes 1,922,660
shares subject to a currently exercisable option with an exercise price
of $.0001 per share.
(3) Zahra S. Yamani, is the sole officer and director of Knightsbridge
Capital, Inc., as well as its controlling shareholder. 1,262,754 of
Ms. Yamani's shares are held by Knightsbridge.
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(4) These shares represent a stock option exercisable at $5.00 per share
and expiring on July 31, 2002.
(5) 7,783 of these shares are owned by First Argentum, LLC, which is
partially owned by Mr. Schwartz. Mr. Schwartz does not disclaim
beneficial ownership of these shares.
(6) 2,000 of these shares are issuable upon exercise of currently
exercisable warrants with an exercise price of $8.40 per share expiring
October 1. 2001.
CERTAIN TRANSACTIONS
During May and June of 2000 We made an exchange offer to the
stockholders of BookDigital.com, Inc., a privately held Delaware corporation.
See "Our Business- The Exchange Offer and Our Reincorporation in Delaware on
Page __. Each of our officers and directors who owned shares of BookDigital.com,
Inc. participated in the exchange offer and received the shares set forth under
"Principal Shareholders" on the same terms as each of our other shareholders.
During August, 2000 Our Board of Directors determined to honor certain
groups of the outstanding options and warrants of Bookdigital.com, Inc. for the
full amount of shares and for their original exercise price, notwithstanding the
fact that each Bookdigital.com, Inc. share was converted into only .31133 of Our
shares in the Exchange Offer. To the extent that Our officers and directors
owned options or warrants, they also benefitted from this action by Our Board,
except that a certain option owned by The Ray Vahab Trust was reverse split on
the same ratio as the Bookdigital.com, Inc. shares were exchanged and became
exercisable for fewer shares. The options and warrants received by Our officers
and directors are set forth under "Principal Shareholders".
On October 1, 2000, Ray Vahab lent Us $70,000 for working capital. The
loan is evidenced by a Note bearing interest at 8% per annum, is payable on
November 1, 2000 and, at Mr. Vahab's option, is convertible into our Common
Stock at Mr. Vahab's option at 70% of the then market price for Our Common
Stock.
In April, 2000, in connection with their resignation as Our officers
and directors, each of Phillip J. Davis and John C. Lee were granted options to
purchase 100,000 shares of Our Common Stock at $.50.
DESCRIPTION OF SECURITIES
We are authorized to issue 20,000,000 shares of Common Stock, $.0001
par value, and 5,000,000 shares of Preferred Stock, $.0001 par value. As of
September 30, 2000 We had 6,534,785 shares of Common Stock outstanding and no
shares of preferred stock were designated or outstanding.
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COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders generally, including the election of
directors. Holders of Common Stock do not have cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors if they chose to do so, and in such
event, the holders of the remaining shares will not be able to elect any persons
to the Board of Directors. The holders of Common Stock have no preemptive or
other subscription or conversion rights with respect to any stock issued by Us.
The Common Stock is not subject to redemption, and the holders thereof are not
liable for further calls or assessments. Holders of Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors out of funds
legally available therefore and to share pro-rata in any distributions to the
holders of Common Stock. There are no redemption or sinking fund provisions
available to the Common Stock. All outstanding shares of Common Stock are
validly authorized and issued and are fully paid and non-assessable, and the
shares of Common Stock to be issued upon completion of the Offering will be
validly authorized and issued, fully paid and non-assessable.
PREFERRED STOCK
The Preferred Stock is issuable with such rights, preferences,
privileges and such number of shares constituting each series to be fixed by the
Board of Directors without further action by the holders of Common Stock or
Preferred Stock. The Board of Directors could, without stockholder approval,
issue Preferred Stock with voting and conversion rights, which could dilute the
voting power of the holders of the Common Stock. The issuance of shares of
Preferred Stock by the Board of Directors could be utilized, under certain
circumstances, as a method of preventing a takeover of the Company. As of the
date of this Prospectus, the Board of Directors has not designated any series of
Preferred Stock and has not issued any Preferred Stock. There are no agreements
or understandings for the issuance of any shares of Preferred Stock.
WARRANTS
We currently have outstanding 9,231,875 Class A Redeemable Common Stock
Purchase Warrants. Each Class A Warrant entitles the holder thereof to purchase
one Share for $8.40 until expiration or redemption. The Class A Warrants expire
on October 1, 2001, and We have the right to redeem the Warrants at a price of
$.10 per Warrant on twenty days written notice to the Warrant holders provided
that the closing bid price of the Common Stock, as reflected in a trading
market, has been at least $10.08.
We have reserved a sufficient number of shares of Common Stock for
issuance upon any exercise of the Class A Warrants and such shares, upon
issuance, will be fully paid and non-assessable.
The number of shares of Common Stock issuable upon exercise of the
Class A Warrants are subject to adjustments upon certain events, including the
declaration by the Company of a stock split, the reclassification, subdivision
or combination of outstanding shares of Common Stock into a greater or lesser
number of shares. In such event, the exercise price of the Warrants shall be
adjusted accordingly.
34
<PAGE>
Holders of Warrants are not entitled to vote upon any matters presented
to the holders of the Common Stock or to receive dividends until such Warrants
have been exercised. There is no market for the Warrants, nor is there any
assurance that a market might develop.
For the life of the Warrants, the holders thereof are given the
opportunity to profit from any rise in the market value of the Our Common Stock
at the expense of the holders of the Common Stock through the dilution of their
equity interest in the Company. The presence of the Warrants might adversely
impact Our ability to raise additional capital on favorable terms.
With respect to the Company, the lapse or non-exercise of any of the
Warrants may result in ordinary income.
The Warrants may be exercised, in whole or in part, upon surrender of
the Warrant Certificate representing the Warrants on or prior to the expiration
or redemption date of the Warrants accompanied by payment of the exercise price
of the Warrants. The holders of the Warrants will not have the rights or
privileges of holders of Common Stock until the Warrants are exercised. The
Company included the shares of Common Stock underlying the Warrant in the
Registration Statement of which this Prospectus forms a part.
TRANSFER AGENT WARRANT AGENT
The Transfer Agent for the Common Stock and Units and the Warrant Agent
for the Warrants is American Stock Transfer Company, Inc., 6201 15th Avenue -
3rd Floor, Brooklyn, NY 11219.
POSSIBLE ANTI-TAKEOVER EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The Company has a large number of authorized but unissued Common Stock
and Preferred Stock. One of the effects of the existence of authorized but
unissued capital stock may be to enable the Board of Directors to render more
difficult or to discourage an attempt to obtain control of the Company by means
of a merger, tender offer, proxy contest or otherwise, and thereby to protect
the continuity of the Company's management. In this regard, the Company's
Articles of Incorporation grant the Board of Directors broad power to establish
the rights and preferences of the authorized and unissued Preferred Stock, one
or more series of which could be issued entitling holders to vote separately as
a class on any proposed merger or share exchange, to convert Preferred Stock
into a large number of shares of Common Stock or other securities, to demand
redemption at a specified price under prescribed circumstances related to a
change in control, or to exercise other rights designed to impede a takeover.
LIMITATION OF LIABILITY
The Company's Certificate of Incorporation and By-laws limit the
liability of directors and officers to the maximum extent permitted by Delaware
law. Delaware law provides that directors of a corporation will not be
personally liable for monetary damages for breach of their fiduciary duties as
directors, including gross negligence, except liability for
(i) breach of the directors' duty of loyalty;
35
<PAGE>
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law,
(iii) the unlawful payment of a dividend or unlawful stock purchase or
redemption, and
(iv) any transaction from which the director derives an improper personal
benefit.
Delaware law does not permit a corporation to eliminate a director's duty of
care, and this provision of the Company's Certificate of Incorporation has no
effect on the availability of equitable remedies, such as injunction or
rescission, based upon a director's breach of the duty of care.
The Company's Certificate of Incorporation authorizes the Company to
purchase and maintain insurance for the purposes of indemnification. At present,
there is no pending litigation or proceeding involving any director, officer,
employee or agent for which indemnification will be required or permitted under
the Company's Certificate of Incorporation, By-laws or indemnification
agreements. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.
CORPORATION TAKEOVER PROVISIONS
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock generally is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that such
stockholder became an interested stockholder, unless (i) the corporation has
elected in its original certificate of incorporation not to be governed by
Section 203 (the Company did not make such an election), (ii) the business
combination was approved by the Board of Directors of the corporation before the
other party to the business combination became an interested stockholder, (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to render or vote stock held by
the plan) or, (iv) the business combination was approved by the Board of
Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of the majority of the corporation's
directors. The term "business combination" is defined generally to include
mergers or consolidations between a Delaware corporation and an "interested
stockholder," transactions with an "interested stockholder" involving the assets
or stock of the corporation or its majority-owned subsidiaries and transactions
which increase an interested stockholder's percentage ownership of stock. The
term "interested stockholder" is defined generally as a stockholder who,
together with affiliates and associates, owns (or, within three years prior, did
own) 15% or more of a Delaware corporation's voting stock. Section 203 could
prohibit or delay a merger, takeover or other change in control of the Company
and therefore could discourage attempts to acquire the Company.
36
<PAGE>
STOCKHOLDER MEETINGS AND OTHER PROVISIONS
Under the By-laws, special meetings of the stockholders of the Company
may be called only by the Company's President or by the Company's President and
Secretary at the request of a majority of the members of the Board of Directors.
Stockholders are required to comply with certain advance notice provisions with
respect to any nominations of candidates for election to the Company's Board of
Directors or other proposals submitted for stockholder vote. These provisions
may have the effect of deterring hostile takeovers or delaying changes in
control or management of the Company.
LEGAL MATTERS
Certain legal matters in connection with the Offering are being passed
upon for the Company by Frank J. Hariton, Esq., 1065 Dobbs Ferry Road, White
Plains, New York 10607. Mr. Hariton owns a warrant to purchase 5,000 shares of
the Company's common stock with an exercise price of $.02 per share.
EXPERTS
The financial statements included in this Prospectus have been audited
by Simon Krowitz Bolin & Associates, P.A., 11300 Rockville Pike - Suite 800
Rockville, Maryland 20852, independent certified public accountants, for the
periods and to the extent as set forth in their report appearing elsewhere
herein, and are included in reliance upon such report and upon the authority of
said firm as experts in accounting and auditing.
STATEMENT ON INDEMNIFICATION
The Company has adopted the provisions of Section 102(b)(7) of the
Delaware General Corporation Act (the "Delaware Act") which eliminates or limits
the personal liability of a director to the Company or its stockholders for
monetary damages for breach of fiduciary duty under certain circumstances.
Furthermore, under Section 145 of the Delaware Act, the Company may indemnify
each of its directors and officers against his expenses (including reasonable
costs, disbursements and counsel fees) in connection with any proceeding
involving such person by reason of his having been an officer or director to the
extent he acted in good faith and in a manner reasonably believed to be in, or
not opposed to the best interest of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The determination of whether indemnification is proper under the
circumstances, unless made by a court, shall be determined by the Board of
Directors. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
37
<PAGE>
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS
BALANCE SHEET - DECEMBER 31, 1999 F-3
STATEMENT OF INCOME AND COMPREHENSIVE INCOME - FOR THE PERIOD
MARCH 25 (INCEPTION) TO DECEMBER 31, 1999 F-4 - F-5
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY - FOR THE PERIOD
MARCH 25 (INCEPTION) TO DECEMBER 31, 1999 F-6
STATEMENT OF CASH FLOWS - FOR THE PERIOD MARCH 25 (INCEPTION)
TO DECEMBER 31, 1999 F-7
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED
DECEMBER 31, 1999 F-8 - F-11
BALANCE SHEET - (UNAUDITED) JUNE 30, 2000 F-12
STATEMENT OF INCOME AND COMPREHENSIVE INCOME - FOR THE PERIOD
MARCH 25 (INCEPTION) TO JUNE 30, 2000 F-13 - F-14
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY - FOR THE PERIOD
MARCH 25 (INCEPTION) TO JUNE 30, 2000 F-15
STATEMENT OF CASH FLOWS - FOR THE PERIOD MARCH 25 (INCEPTION)
TO JUNE 30, 2000 F-16
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED JUNE 30, 2000 F-17
F - 1
<PAGE>
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE, SUITE 800
ROCKVILLE, MARYLAND 20852
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Bookdigital.com, Inc.
New York, New York
We have audited the accompanying balance sheet of Bookdigital.com, Inc. (a
development stage company) as of December 31, 1999 and the related statements of
income and retained earnings and cash flows for the period from March 25, 1999
(inception) to December 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bookdigital.com, Inc. as of
December 31, 1999 and the results of its operations and its cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.
April 7, 2000
F - 2
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1999
================================================================================
ASSETS
CURRENT ASSETS
Cash $ 43,319
Marketable Equity Securities 2,144
Development Costs 3,054,800
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS $ 3,100,263
--------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Furniture and Fixtures 20,251
Equipment 39,021
Leasehold Improvements 16,250
Accumulated Depreciation, Amortization (4,245)
--------------------------------------------------------------------------------
TOTAL PROPERTY AND EQUIPMENT 71,277
--------------------------------------------------------------------------------
OTHER ASSETS
Investment 5,000
Security Deposits 27,601
--------------------------------------------------------------------------------
TOTAL OTHER ASSETS 32,601
--------------------------------------------------------------------------------
TOTAL ASSETS $ 3,204,141
================================================================================
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITY
Accounts Payable $ 104,372
--------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - $.001 Par Value; 20,000,000 Shares
Authorized, 5,199,000 Shares Issued and Outstanding 5,390
Paid-in Capital 3,787,167
Paid-in Capital - Warrants 213,204
Retained (Deficit) accumulated during development stage (905,992)
--------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 3,099,769
--------------------------------------------------------------------------------
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 3,204,141
================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
F - 3
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE PERIOD MARCH 25 (INCEPTION) TO DECEMBER 31, 1999
================================================================================
REVENUES $ 0
--------------------------------------------------------------------------------
EXPENSES
Officer's Salaries 117,300
Clerical Salaries 10,740
Project Salaries 34,243
Developers Salaries 46,390
Other Salaries 10,243
Temporary Help 9,860
Consulting Fees 115,412
Advertising 18,396
Insurance 9,062
Office Expenses 23,725
Professional Fee - Public Relations 47,500
Professional Fee - Accounting 17,024
Professional Fee - Legal 45,094
Professional Fee - Other 74,092
IPO Expenses 174,640
Software Expense 6,312
Rent 25,460
Retainer Fee 65,000
Stock/Registration Fees 7,462
Advertising - Internet 39,500
Depreciation Expense, Amortization 4,245
Payroll Tax Expense 20,979
Miscellaneous 8,375
Telephone Expenses 13,578
--------------------------------------------------------------------------------
TOTAL EXPENSES 944,632
--------------------------------------------------------------------------------
F - 4
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME (CONTINUED)
FOR THE PERIOD MARCH 25 (INCEPTION) TO DECEMBER 31, 1999
================================================================================
OTHER INCOME (EXPENSE)
Interest Income $ 2,972
Gain on Sale of Marketable Securities 36,792
Interest Expense (1,313)
--------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) $ 38,451
NET (LOSS) (906,181)
OTHER COMPREHENSIVE INCOME
Unrealized Gain on Securities 189
--------------------------------------------------------------------------------
COMPREHENSIVE (LOSS) $(905,992)
================================================================================
SEE ACCOUNTANTS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
F - 5
<PAGE>
<TABLE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 25, 1999 (INCEPTION) TO DECEMBER 31, 1999
<CAPTION>
=======================================================================================================================
ACCUMULATED
RETAINED OTHER
PAID-IN EARNINGS COMPREHENSIVE
COMMON STOCK CAPITAL (DEFICIT) INCOME TOTAL
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance March 25, 1999 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock 5,390 5,390
Paid-in Capital 3,787,167 3,787,167
Paid-in Capital - Warrants 213,204 213,204
Comprehensive Income (Loss) to
December 31, 1999 (906,181) (906,181) (906,181)
Unrealized Gain on Securities 189 189
-----------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 5,390 $ 4,000,371 $ (906,181) $ (905,992) $ 3,099,769
=======================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F - 6
<PAGE>
<TABLE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 25, 1999 (INCEPTION) TO DECEMBER 31, 1999
<CAPTION>
=====================================================================================
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (906,181)
Adjustments to Reconcile Net (Loss) to Net Cash Used by Operating
Activities
Depreciation 3,974
Amortization 271
Changes in Operating Assets and Liabilities:
Increase in Development Costs (3,054,800)
(Increase) in Security Deposits (27,601)
Increase in Accounts Payable 104,372
-------------------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (3,879,965)
-------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Furniture and Fixtures (20,251)
Purchase of Equipment (39,021)
Leasehold Improvements (16,250)
Proceeds from Sale of Securities 6,263,344
Purchase of Securities (6,265,299)
Purchase Investment (5,000)
-------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (82,477)
-------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Common Stock 3,792,557
Issuance of Warrants 213,204
-------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,005,761
-------------------------------------------------------------------------------------
NET INCREASE IN CASH 43,319
CASH - BEGINNING 0
-------------------------------------------------------------------------------------
CASH - ENDING $ 43,319
-------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE:
Interest Paid $ 888
-------------------------------------------------------------------------------------
NONCASH INVESTING ACTIVITIES:
Issuance of Common Stock for Services included in Start-up Costs $ 2,718,400
Issuance of Warrants for Services included in Start-up Costs 213,204
=====================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F - 7
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY AND BUSINESS ACTIVITY - Bookdigital.com, Inc. (the Company) is
a development stage company. The Company was incorporated in Delaware
on March 25, 1999 and has a December 31 year end. The Company's mission
is to become the premier library site on the internet. The company's
site (www.Bookdigital.com) on the internet is designed to maintain a
very comprehensive set of books, manuals, pamphlets, journals, research
data and links. Bookdigital.com serves as a home base library for
educational and intellectual advancement. Viewer may search, review,
browse and download information needed in any subject such as physics,
law, astronomy, etc. at the Bookdigital.com site.
The Company's other internet sites are www.bookdigitalschools.com and
www.lawxpressusa.com. Bookdigitalschools.com serving educational
centers such as schools k-12 in order to enhance quality of education
for students. Lawxpressusa.com provides legal and business research to
attorneys nationwide.
The search can be made by title, subject or author for any reference
materials. Currently all reference materials are in English. However,
the Company intends to develop a global reference site in Spanish,
French, German, Italian, etc. The Company intends to register its
viewers and may charge a subscription fee in the future.
CASH AND CASH EQUIVALENTS - Bookdigital.com, Inc. maintains a bank
account and a petty cash fund, both of which it classifies as cash for
purposes of the statement of cash flows.
INVESTMENT SECURITIES - Marketable equity securities are classified as
"available for sale" and are carried at fair value, with unrealized
gains and losses reported in other comprehensive income.
Realized gains and losses and declines in value judged to be other than
temporary are included in earnings. The specific identification method
is utilized in determining the cost of a security that has been sold.
PROPERTY, EQUIPMENT - Property, equipment and leasehold improvements
are carried at cost, maintenance and repairs are charged to operations.
Depreciation and amortization expense are computed on a straight-line
method over the estimated useful lives of the respective assets.
Estimated useful lives are:
Furniture and Fixtures 7-10 years
Equipment 3-5 years
Leasehold Improvements 15 years
F - 8
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMMON STOCK - Common stock issued by the company as payment for
services has been valued by management at the estimated fair market
value of the stock existing at the time of its issuance.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE - Basic net income (loss)
per share is computed using the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per
share is also computed using the weighted average number of common
shares outstanding during the period, including conversion of any
warrants to equivalent common stock.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reported period. Actual
results could differ from those estimates.
ADVERTISING - Advertising costs are expensed when incurred.
INCOME TAXES - The Company accounts for income taxes 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 income taxes. Accordingly, deferred tax liabilities and
asset are determined based upon the differences between the financial
statement and tax bases of assets and liabilities, using enacted rates
in effect for the year in which the differences are expected to
reverse. Current income taxes are based upon the year's taxable income
for federal and state income tax reporting purposes.
NOTE 2 - INVESTMENTS
At December 31, 1999 gross unrealized gains and losses on marketable
securities were as follows:
Gross unrealized gains $189
Gross unrealized losses $ 0
F - 9
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
================================================================================
NOTE 3 - STOCKHOLDERS' EQUITY
COMMON STOCK - The Company is authorized to issue 20,000,000 common
shares, $0.001 par value per share and 5,175,200 shares of common stock
were issued and outstanding. The holders of common stock have one vote
per share on all matters (including election of directors) without
provision for cumulative voting. Thus, holders of more than 50% of the
shares voting for the election of director can elect all of the
directors, if they choose to do so. The common stock is not redeemable
and has no conversion or pre-emptive rights. There are no sinking fund
provisions. In the event of liquidation of the company, the holders of
common stock will share equally in any balance of the company's assets
available for distribution to them after satisfaction of creditors and
preferred stockholders, if any.
WARRANTS - Each Class A warrant entitles the holder to purchase one
share of common stock at an exercise price of 120% of the initial
public offering price (the "Exercise Price") during the two-year period
commencing March 30, 1999 ("Exercise Period"). The Class A warrants are
subject to redemption by the company at a price of $0.10 per warrant,
at any time on twenty-day prior written notice provided the closing bid
price of the common stock is at least 120% of the exercise price for
twenty consecutive trading days ending three days prior to the date
that notice of redemption was given to warrant holders. The shares and
Class A warrants shall be detachable and separately tradable as
determined by the company. These warrants will have a one-year holding
period. They may be exercised any time after this one-year period, up
to the expiration period of two years.
NOTE 4 - INCOME TAXES
Since the Company has not yet realized income as of the date of this
report, no provision for income taxes has been made. At December 31,
1999, a deferred tax asset has not been recorded due to the company's
lack of operations to provide income to use the net operating loss
carryover of $(3,960,981) which expires in 2019.
NOTE 5 - CONTINGENCIES
The Company is not currently aware of any other legal proceedings or
claims that the company believes will have, individually or in the
aggregate, a material adverse effect on the company's financial
position or results of operations.
F - 10
<PAGE>
BOOKDIGITAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
================================================================================
NOTE 6 - COMMITMENT
In September, 1999, the Company entered into a lease for office space.
The term of the lease is from October 1, 1999 to December 31, 2007. The
lease has annual increases of 3%. Minimum annual rentals for the year
ending December 31 are:
2000 $ 23,940
2001 45,990
2002 50,400
2003 52,290
2004 54,180
----------
$ 226,800
==========
NOTE 7 - SUBSEQUENT EVENTS
LEASE - On February 15, 2000, the Company entered into a three-year
lease for additional office space. Annual rentals are:
Year 1 $ 33,000
2 34,644
3 36,384
----------
$ 104,028
==========
STOCK SALE - During the first quarter of 2000, the Company sold an
additional 52,500 shares of stock for proceeds of $367,500.
F - 11
<PAGE>
<TABLE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
JUNE 30,
<CAPTION>
==========================================================================================
2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 436,265 $ 98,026
Marketable Equity Securities 2,143 978,478
Software Costs 2,884,556 1,528,554
------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS $ 3,322,964 $ 2,605,058
------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Furniture and Fixtures 24,794 0
Equipment 111,376 15,800
Leasehold Improvements 16,250 0
Accumulated Depreciation, Amortization (11,573) (263)
------------------------------------------------------------------------------------------
TOTAL PROPERTY AND EQUIPMENT 140,847 15,537
------------------------------------------------------------------------------------------
OTHER ASSETS
Investment 11,202 0
Other 5,000 0
Security Deposits 27,601 0
------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 43,803 0
------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,507,614 $ 2,620,595
===========================================================================================
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 179,225 $ 322,561
Payroll Taxes Payable 22,610 0
------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES $ 201,835 322,561
------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - $.001 Par Value; 40,000,000 Shares
Authorized; 4,616,034 Shares Issued and Outstanding 4,616 5,175
Paid-in Capital 5,820,202 2,675,138
Retained (Deficit) Accumulated during Development Stage (2,519,039) (382,279)
------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 3,305,779 2,298,034
------------------------------------------------------------------------------------------
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 3,507,614 $ 2,620,595
==========================================================================================
</TABLE>
F - 12
<PAGE>
<TABLE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
FOR THE PERIOD
<CAPTION>
===========================================================================================
March 25,
March 25 1999
(inception) (inception)
April 2000 to to
to June 30, March 31, June 30,
2000 1999 2000
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 147 $ 0 $ 490
-------------------------------------------------------------------------------------------
EXPENSES
Officer's Compensation 343,313 0 499,032
Management, Administrative Salaries 116,350 0 176,152
Programming 0 0 143,561
Commission 61,000 0 61,000
Employee Benefits 4,467 0 13,110
Consulting Fees 71,130 23,000 186,542
Advertising, Printing 18,496 0 39,392
Insurance 0 0 18,218
Office Expenses 11,369 4,263 51,725
Professional Fee - Public Relations 5,000 0 58,000
Professional Fee - Accounting 7,479 11,500 29,200
Professional Fee - Legal 56,565 13,500 111,028
Professional Fee - Other 0 17,550 116,579
IPO Expenses 0 0 221,920
Software Expense 0 0 10,136
Rent 21,457 7,200 65,070
Retainer Fee 0 40,000 65,000
Stock/Registration Fees 25,430 0 30,070
Advertising - Internet 1,500 0 42,000
Depreciation Expense, Amortization 4,271 263 11,573
Payroll Tax Expense 37,853 0 74,030
Miscellaneous 0 0 14,074
Telephone Expenses 7,167 4,500 23,936
Training, Education 9,337 0 9,337
Contributions 90,000 90,000
Travel, Entertainment 19,834 2,200 19,834
-------------------------------------------------------------------------------------------
TOTAL EXPENSES 912,018 0 2,180,519
-------------------------------------------------------------------------------------------
</TABLE>
F - 13
<PAGE>
<TABLE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME (CONTINUED)
(UNAUDITED)
FOR THE PERIOD
<CAPTION>
===========================================================================================
March 25,
April 1, April 1, 1999
2000 to 1999 to (inception)
June 30, June 30, to June 30,
2000 1999 2000
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OTHER INCOME (EXPENSE)
Interest Income $ 0 $ 816 $ 2,979
Gain on Sale of Marketable Securities 0 59,275 36,792
Shareholder Meeting 44,965 0 0
Interest Expense 0 (376) (1,313)
-------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) (44,965) 59,715 (6,507)
NET (LOSS) (956,836) (64,261) (2,186,536)
PRIOR PERIOD ADJUSTMENT
Start-up Costs 0 0 (332,978)
OTHER COMPREHENSIVE INCOME
Unrealized Gain on Securities 143 3,943 475
-------------------------------------------------------------------------------------------
COMPREHENSIVE (LOSS) $ (956,693) $ (393,296) $(2,519,039)
===========================================================================================
(Loss) per Share - Basic $ (.21) $ (.55)
Loss per Share - Diluted $ (.21) $ (.55)
Shares Used in Per Share Calculation - Basic 4,616,034 4,616,034
Shares Used in Per Share Calculation - Diluted 4,616,034 4,616,034
===========================================================================================
</TABLE>
F - 14
<PAGE>
<TABLE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE PERIOD FROM MARCH 25, 1999 (INCEPTION) TO JUNE 30, 2000
<CAPTION>
=======================================================================================================================
ACCUMULATED
RETAINED OTHER
PAID-IN EARNINGS COMPREHENSIVE
COMMON STOCK CAPITAL (DEFICIT) INCOME TOTAL
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance March 25, 1999 $ 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock 4,328 4,328
Paid-in Capital 3,787,167 3,787,167
Paid-in Capital - Warrants 213,204 213,204
Comprehensive Income (Loss) to
December 31, 1999 (906,181) (906,181) (906,181)
Unrealized Gain on Securities 189 189
-----------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 4,328 4,000,371 (906,181) (905,992) 3,098,707
Issuance of Common Stock 53 53
Paid-in Capital 353,018 353,018
Comprehensive Income
(Loss) to March 31, 2000 (323,519) (323,519) (323,519)
Unrealized Gain on Securities 143 143
-----------------------------------------------------------------------------------------------------------------------
Balance - March 31, 2000 4,381 4,353,389 (1,229,700) (1,229,368) 3,128,402
Issuance of Common Stock 235 235
Paid-in Capital 1,466,813 1,466,813
Loss for April 1 to June 30,
2000 (956,836) (956,693) (741,281)
Unrealized Gain on Securities 143 143
Prior Period Adjustment (332,978) (332,978) (332,978)
-----------------------------------------------------------------------------------------------------------------------
Balance - June 30, 2000 $ 4,616 $5,820,202 $(2,519,514) $(2,519,039) $3,305,779
=======================================================================================================================
</TABLE>
F - 15
<PAGE>
<TABLE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
===================================================================================================
March 26,
April 1, 1999
2000 to (inception)
June 30, to June 30,
2000 2000
---------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (956,836) $(2,518,896)
Adjustments to Reconcile Net (Loss) to Net Cash
Used by Operating
Activities
Depreciation 4,000 11,031
Amortization 271 542
Changes in Operating Assets and Liabilities:
(Increase) in Software Costs (163,653) (2,884,556)
(Increase) in Security Deposits 0 (27,601)
Increase in Accounts Payable 97,501 179,225
Increase in Payroll Taxes Payable 21,533 22,610
---------------------------------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (997,184) (5,217,645)
---------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Furniture and Fixtures (4,543) (24,794)
Purchase of Equipment (52,694) (111,376
Leasehold Improvements 0 (16,250)
Other Assets (11,202) (11,202)
Proceeds from Sale of Securities 0 6,263,344
Purchase of Securities 0 (6,265,487)
Purchase Investment 0 (5,000)
---------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (68,439) (170,765)
---------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Common Stock 1,467,048 5,611,471
Issuance of Warrants 0 213,204
---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,467,048 5,824,675
---------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 401,425 436,265
CASH - BEGINNING 34,840 0
---------------------------------------------------------------------------------------------------
CASH - ENDING $ 436,265 $ 436,265
---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE:
Interest Paid $ 0 $ 888
---------------------------------------------------------------------------------------------------
NONCASH INVESTING ACTIVITIES:
Issuance of Common Stock for Services by Officer $ 215,412 $ 215,412
Issuance of Common Stock for Services included in Software Costs 0 2,718,400
Issuance of Warrants for Services included in Software Costs 0 213,204
===================================================================================================
</TABLE>
F - 16
<PAGE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
(UNAUDITED)
JUNE 30, 2000
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY AND BUSINESS ACTIVITY - Medical Management Systems, Inc. (MMSI)
was a Colorado corporation. It was initially incorporated as Apache
Investments, Inc. in 1987. The name was changed in 1991 to Dog World,
Inc. and in 1995 this name was changed to Medical Management Systems,
Inc. MMSI was an inactive "shell" corporation until June 17, 2000 when
Bookdigital.com, Inc. was merged into the company. MMSI's officers and
directors resigned at that time and were replaced by the officers and
directors of Bookdigital.com, Inc. The Company's mission is to become
the premier reference library site on the internet. The company's site
(www.Bookdigital.com) on the internet is designed to maintain a very
comprehensive set of books, manuals, pamphlets, journals, research data
and links. Bookdigital.com serves as a home base library for
educational and intellectual advancement. Viewer may search, review,
browse and download information needed in any subject such as physics,
law, astronomy, etc. at the Bookdigital.com site.
The Company's other internet sites are www.bookdigitalschools.com and
www.lawxpressusa.com. Bookdigitalschools.com serving educational
centers such as schools k-12 in order to enhance quality of education
for students. Lawxpressusa.com provides legal and business research to
attorneys nationwide.
The search can be made by title, subject or author for any reference
materials. Currently all reference materials are in English. However,
the Company intends to develop a global reference site in Spanish,
French, German, Italian, etc. The Company intends to register its
viewers and may charge a subscription fee in the future.
CASH AND CASH EQUIVALENTS - Bookdigital.com, Inc. maintains a bank
account and a petty cash fund, both of which it classifies as cash for
purposes of the statement of cash flows.
INVESTMENT SECURITIES - Marketable equity securities are classified as
"available for sale" and are carried at fair value, with unrealized
gains and losses reported in other comprehensive income.
Realized gains and losses and declines in value judged to be other than
temporary are included in earnings. The specific identification method
is utilized in determining the cost of a security that has been sold.
F - 17
<PAGE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
(UNAUDITED)
JUNE 30, 2000
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, EQUIPMENT - Property, equipment and leasehold improvements
are carried at cost, maintenance and repairs are charged to operations.
Depreciation and amortization expense are computed on a straight-line
method over the estimated useful lives of the respective assets.
Estimated useful lives are:
Furniture and Fixtures 7-10 years
Equipment 3-5 years
Leasehold Improvements 15 years
COMMON STOCK - Common stock issued by the company as payment for
services has been valued by management at the estimated fair market
value of the stock existing at the time of its issuance.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE - Basic net income (loss)
per share is computed using the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per
share is also computed using the weighted average number of common
shares outstanding during the period, including conversion of any
warrants to equivalent common stock.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reported period. Actual
results could differ from those estimates.
ADVERTISING - Advertising costs are expensed when incurred.
INCOME TAXES - The Company accounts for income taxes 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 income taxes. Accordingly, deferred tax liabilities and
asset are determined based upon the differences between the financial
statement and tax bases of assets and liabilities, using enacted rates
in effect for the year in which the differences are expected to
reverse. Current income taxes are based upon the year's taxable income
for federal and state income tax reporting purposes.
F - 18
<PAGE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
(UNAUDITED)
JUNE 30, 2000
================================================================================
NOTE 2 - BUSINESS COMBINATION
In June, 2000 the Company merged with Bookdigital.com, Inc. The merger
was accounted for by the pooling-of-interests method. Shares were
exchanged on a one for one basis to effect the merger. As part of the
transaction, there was a 3-to-1 reverse stock split after which there
are 4,616,034 of common stock outstanding.
Prior to the merger, Medical Management Systems, Inc. had no operating
activity. Bookdigital.com, Inc. had no operating income in prior
periods and accumulated losses of $(2,519,039). During the quarter in
which the merger took place, MMSI had no income or expenses and
Bookdigital had no operating income and expenses of $956,693.
There were no adjustments to net assets, no changes to retained
earnings or either Company as a result of the merger. There were no
changes in income or revenues as previously reported by MMSI.
NOTE 3 - INVESTMENTS
At June 30, 2000 gross unrealized gains and losses on marketable
securities were as follows:
Gross unrealized gains $475
Gross unrealized losses $ 0
NOTE 4 - STOCKHOLDERS' EQUITY
COMMON STOCK - The Company is authorized to issue 40,000,000 common
shares, $0.001 par value per share and 4,616,034 shares of common stock
are issued and outstanding. The holders of common stock have one vote
per share on all matters (including election of directors) without
provision for cumulative voting. Thus, holders of more than 50% of the
shares voting for the election of director can elect all of the
directors, if they choose to do so. The common stock is not redeemable
and has no conversion or pre-emptive rights. There are no sinking fund
provisions. In the event of liquidation of the company, the holders of
common stock will share equally in any balance of the company's assets
available for distribution to them after satisfaction of creditors and
preferred stockholders, if any.
F - 19
<PAGE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
(UNAUDITED)
JUNE 30, 2000
================================================================================
NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
WARRANTS - Each Class A warrant entitles the holder to purchase one
share of common stock at an exercise price of 120% of the initial
public offering price (the "Exercise Price") during the two-year period
commencing March 30, 1999 ("Exercise Period"). The Class A warrants are
subject to redemption by the company at a price of $0.10 per warrant,
at any time on twenty-day prior written notice provided the closing bid
price of the common stock is at least 120% of the exercise price for
twenty consecutive trading days ending three days prior to the date
that notice of redemption was given to warrant holders. The shares and
Class A warrants shall be detachable and separately tradable as
determined by the company. These warrants will have a one-year holding
period. They may be exercised any time after this one-year period, up
to the expiration period of two years.
NOTE 5 - INCOME TAXES
Since the Company has not yet realized income as of the date of this
report, no provision for income taxes has been made. At June 30, 2000,
a deferred tax asset has not been recorded due to the company's lack of
operations to provide income to use the net operating loss carryover of
$(2,519,039) which start expiring in 2019.
NOTE 6 - CONTINGENCIES
The Company is not currently aware of any other legal proceedings or
claims that the company believes will have, individually or in the
aggregate, a material adverse effect on the company's financial
position or results of operations.
NOTE 7 - COMMITMENT
In September, 1999, the Company entered into a lease for office space.
The term of the lease is from October 1, 1999 to December 31, 2007. The
lease has annual increases of 3%. Minimum annual rentals for the year
ending March 31 are:
2001 $ 29,451
2002 47,088
2003 50,874
2004 52,767
2005 54,585
----------
$ 234,765
==========
F - 20
<PAGE>
MEDICAL MANAGEMENT SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
(UNAUDITED)
JUNE 30, 2000
================================================================================
NOTE 8 - SUBSEQUENT EVENTS
In July, 2000 the name of the Company was changed by a vote of the
majority of shareholders to Dominix, Inc. and was reincorporated as a
Delaware corporation.
F - 21
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The selling security holders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
================================================================================
DOMINIX, INC.
PROSPECTUS
3,148,589 SHARES OF COMMON STOCK
OCTOBER , 2000
================================================================================
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Company's Certificate of Incorporation provides for
indemnification of the Company's officers and directors to the fullest extent
permitted under the General Corporation Law of the State of Delaware ("DGCL").
SECTION 145 of the DGCL, as amended, applies to the Company and the
relevant portion of the DGCL provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b) of this section, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
II - 1
<PAGE>
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by_law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officer
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in
the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purpose of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee
II - 2
<PAGE>
or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
The Company maintains insurance for the benefit of its directors and
officers and the directors and officers of its subsidiaries, insuring such
persons against certain liabilities, including liabilities arising under the
securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable. Furthermore, the Company has given certain
undertakings with respect to indemnification in connection with this
Registration Statement.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission filing fee $ 5,495.69
National Association of Securities Dealers, Inc. filing fee $ 2,573.85
Legal fees and expenses $ *
Accounting fees and expenses $ *
Miscellaneous $ *
------------
Total $ *
* To be provided by amendment.
All amounts estimated except for Securities and Exchange Commission and
National Association of Securities Dealers, Inc. filing fee.
All of these expenses of issuance and distribution will be paid by the
Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In July, 2000, the Company issued an aggregate of 4,309,855 shares of
Common Stock to the holders of common stock of Bookdigital.com, Inc. pursuant to
an exchange offer. The exchange offer was conducted in accordance with Rule 506
of Regulation D under the Exchange Act and was Exempt from the registration
provisions of the Securities Act of 1933, as amended, by reason of section 4(2)
thereof as a transaction by an issuer no involving any public offering.
During 2000, the Company has issued an aggregate of 461,000 shares to
various to consultants and vendors for services and products. These shares were
valued at from $5.50 to $5.88. During 2000, the Company also issued an aggregate
of 421,000 warrants to consultants and vendors for services and products. The
II - 3
<PAGE>
exercise prices of these warrants ranged from $.02 to $8.40. These transactions
were exempt from the registration provisions of the Securities Act of 1933, as
amended, by reason of section 4(2) thereof as a transaction by an issuer no
involving any public offering.
In April, 2000 the Company issued 200,000 options with an exercise
price of $.50 to two of its former officers and directors. These transactions
were exempt from the registration provisions of the Securities Act of 1933, as
amended, by reason of section 4(2) thereof as a transaction by an issuer no
involving any public offering.
In July, 2000 the Company agreed to honor an aggregate of 8,749,875
options and warrants issued by Bookdigital.com, Inc. These transactions were
exempt from the registration provisions of the Securities Act of 1933, as
amended, by reason of section 4(2) thereof as a transaction by an issuer no
involving any public offering.
ITEM 27. EXHIBITS.
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 By-laws of Company
4.1 Specimen certificate for Common Stock of the Company.
4.2 Specimen Class A Warrant Certificate.
5.01 Opinion of Frank J. Hariton*
10.1 Employment Contract between the Company and Ray Vahab.
10.2 Employment Agreement between the Company and Mindi Bornstein
10.3 Employment Agreement between the Company and Lawrence S. Dubroff
10.4 Promissory Note, dated October 1, 2000 made by the Company and payable
to Ray Vahab.
10.5 Lease for premises at 142 West 36th Street, New York, New York.*
10.6 Lease for premises at 65 Broadway, New York, New York
10.7 Lease for the premises at 647 Franklin Avenue, Garden City, New York*
22.1 Subsidiaries of the registrant.
Bookdigital.com, Inc., a 99% owned Delaware corporation
23.1 Consent of Simon Krowitz Bolin & Associates, P.A.
23.2 Consent of Frank J. Hariton (to be included in Exhibit 5.01)
24.1 Power of Attorney - included in Part II
* To be filed by amendment
II - 4
<PAGE>
ITEM 29. UNDERTAKINGS.
A. Rule 415 Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement or the most recent post-effective
amendment thereof which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3, Form S-8, and the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post_effective amendment shall be deemed to be a new
registration statement relating to the securities herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a post_effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
B. INDEMNIFICATION UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II - 5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City and State of
New York on October 30, 2000.
DOMINIX, INC.
By: /s/ Ray Vahab
---------------------------------
Ray Vahab, Chief Executive Officer
II - 6
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ray Vahab his true and lawful
attorney-in-fact and agent, with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ Ray Vahab Director, Chairman of the October 30, 2000
-------------------------- Board and Chief Executive Officer
Ray Vahab (Principal Executive and Financial
Officer)
Director and President October , 2000
--------------------------
Zahra S. Yamini
/s/ Robert Keilman Director October 30, 2000
--------------------------
Robert Keilman
/s/ Henry Schwartz Director October 30, 2000
--------------------------
Henry Schwartz
/s/ Lawrence S. Dobroff Chief Financial Officer October 30, 2000
-------------------------- (Principal Accounting Officer)
Lawrence S. Dobroff
II - 7
