PROSPECTUS
eConnect
61,000,000 Shares
Common Stock
Offering Price Error! Reference source not found.1.00 per Share
eConnect, a Nevada corporation ("Company"), is hereby offering up
to 61,000,000 shares and warrants of its $0.001 par value common
stock ("Shares") at an offering price of $1.00 per Share on a
delayed basis under Rule 415 pursuant to the terms of this
Prospectus for the purpose of providing working capital for the
Company.
The Shares offered hereby are highly speculative and involve a
high degree of risk to public investors and should be purchased
only by persons who can afford to lose their entire investment
(See "Risk Factors" on page 7)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Public Underwriting Proceeds to
Discounts and Issuer (3)
Commissions (2)
Per Share $1.00 $0 $1.00
Total Maximum
(1) $300,000 $0 $300,000
Information contained herein is subject to completion or
amendment. The registration statement relating to the securities
has been filed with the U.S. Securities and Exchange Commission.
The securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Dated: February 29, 2000
* Pursuant to SEC Rule 416, there will be a change in the
amount of securities being issued to prevent dilution resulting
from stock splits, stock dividends, or similar transaction.
THE SHARES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE,
ACCEPTANCE OF THE SUBSCRIPTIONS BY THE COMPANY AND APPROVAL OF
CERTAIN LEGAL MATTERS BY COUNSEL TO THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OPEN OFFER TO BUY INTO SECURITIES OFFERED HEREBY A
STATE IN WHICH, OR TO A PERSON TRUE, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION
CONTAINED HEREIN SUBSEQUENT TO THE DATE THEREOF. HOWEVER, IF A
MATERIAL CHANGE OCCURS, THIS PROSPECTUS WILL BE AMENDED OR
SUPPLEMENTED ACCORDINGLY FOR ALL EXISTING SHAREHOLDERS, AND FOR
ALL PROSPECTIVE INVESTORS WHO HAVE NOT YET BEEN ACCEPTED AS
SHAREHOLDERS IN THE COMPANY.
THIS PROSPECTUS DOES NOT INTENTIONALLY OMIT ANY MATERIAL FACT OR
CONTAIN ANY UNTRUE STATEMENT OF MATERIAL FACT. NO PERSON OR
ENTITY HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION
OR MAKE A REPRESENTATION, WARRANTY, COVENANT, OR AGREEMENT WHICH
IS NOT EXPRESSLY PROVIDED FOR OR CONTAINED IN THIS PROSPECTUS; IF
GIVEN OR MADE, SUCH INFORMATION, REPRESENTATION, WARRANTY,
COVENANT, OR AGREEMENT MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THE COMPANY IS A REPORTING COMPANY. EACH PERSON WHO RECEIVES A
PROPSECTUS WILL HAVE AN OPPORTUNITY TO MEET WITH REPRESENTATIVES
OF THE COMPANY, DURING NORMAL BUSINESS HOURS UPON WRITTEN OR ORAL
REQUEST TO THE COMPANY, IN ORDER TO VERIFY ANY OF THE INFORMATION
INCLUDED IN THIS PROSPECTUS AND TO OBTAIN ADDITIONAL INFORMATION
REGARDING THE COMPANY. IN ADDITION, EACH SUCH PERSON WILL BE
PROVIDED WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST, A COPY OF
ANY OF THE INFORMATION THAT IS INCORPORATED BY REFERENCE IN THE
PROSPECTUS AND THE ADDRESS (INCLUDING TITLE OR DEPARTMENT) AND
TELEPHONE NUMBER TO WHICH SUCH REQUEST IS TO BE DIRECTED.
ALL OFFEREES AND SUBSCRIBERS WILL BE ASKED TO ACKNOWLEDGE IN
WRITING THAT THEY HAVE RECEIVED A COPY OF THIS PROSPECTUS.
(1) A maximum of 61,000,000 shares may be sold on a delayed basis
under Rule 415 under the Securities Act of 1933, as amended. See Plan
of Distribution The offering will remain open until
September 7, 2001, which is a date which two years from the
effective date of this Registration Statement (September 7,
1999).
(2) No commissions will be paid in connection with the sale of
the Shares on this delayed basis.
(3) The Net Proceeds to the Company is before the payment of
certain expenses in connection with this offering. See "Use of
Proceeds."
TABLE OF CONTENTS
PROSPECTUS SUMMARY 5
RISK FACTORS 8
USE OF PROCEEDS 14
DETERMINATION OF OFFERING PRICE 15
PLAN OF DISTRIBUTION 15
LEGAL PROCEEDINGS 16
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 18
DESCRIPTION OF SECURITIES 19
INTEREST OF NAMED EXPERTS AND COUNSEL 21
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 21
ORGANIZATION WITHIN LAST FIVE YEARS 22
DESCRIPTION OF BUSINESS 22
PLAN OF OPERATION 28
DESCRIPTION OF PROPERTY 28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 28
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 30
EXECUTIVE COMPENSATION 31
FINANCIAL STATEMENTS 32
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 32
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus
("Prospectus"). Each prospective investor is urged to read this
Prospectus, and the attached Exhibits, in their entirety.
The Company.
(A) Background.
eConnect was originally organized under the laws of the
State of Missouri on September 1, 1981, as HANDY-TOP, INC. On
April 20, 1983, the Articles of Incorporation were amended to
change the name of the corporation to HTI Corporation. On May
28, 1993, the Articles of Incorporation were amended to change
the name of the corporation to Leggoons, Inc. In addition to
changing the company's name, the May 28,1993, amendment to the
Articles of Incorporation increased the number of authorized
shares of common stock from 40,000 to 10,000,000 and decreased
the par value of the common stock from $1.00 per share to $.01
per share. Also on May 28, 1993, Leggoons, Inc., declared a 14-
for-1 stock split.
Leggoons, Inc., was engaged in the design, manufacture and
distribution of apparel and related accessories which are sold to
better specialty and department stores nationwide under the
brands Leggoons, CPO by Leggoons, John Lennon Artwork Apparel,
and Snooggel. On January 19, 1996, Leggoons, Inc., entered into
a Licensing Agreement with Robert Tamsky, a former director and
employee of the Leggoons, Inc. Pursuant to the terms of the
Licensing Agreement, the Leggoons, Inc., granted Mr. Tamsky
effective January 1, 1996, the right to use the LEGGOONS
trademark in connection with the design, production, marketing,
sales and sublicensing of all clothing, wearing apparel and
accessories bearing the "LEGGOONS" symbol. This right will
continue until December 31, 1998, and may be extended thereafter
each year for an additional year. In consideration for the
license, Mr. Tamsky, according to the Licensing Agreement, shall
pay to the Leggoons, Inc. a royalty of five percent of the net
sales of "LEGGOONS" products.
Also on January 19, 1996, the Leggoons, Inc., adopted a formal
plan to discontinue the designing, selling, manufacturing and
distribution of its apparel products. As part of such plan,
Leggoons, Inc., discontinued production on April 30, 1996, and
intended to either sell or liquidate the operations within twelve
months of that date.
On June 12, 1996, Leggoons, Inc., transferred all of its assets
and liabilities to a third party assignee, under an "Assignment
for the Benefit of Creditors" (the "Assignment"). An Assignment
is a business liquidation device available as an alternative to
bankruptcy. The third party assignee, a Nebraska corporation,
also named Leggoons, Inc. (the "Assignee"), will be required to
properly, timely, and orderly dispose of all remaining assets for
the benefit of creditors. Included in the Assignment were the
rights and obligations of the Licensing Agreement. Leggoons,
Inc. continued to maintain its status as a shell corporation.
On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales, Inc.(now
know as Electronic Transactions & Technology - "ET&T")) for the
purpose of licensing certain technology for the development of
Personal Encrypted Remote Financial Electronic Card Transactions
("PERFECT"). ET&T is a privately held corporation 70% owned by
Thomas S. Hughes, President of the Company. This technology
provides consumers with the option to instantly pay bills or
impulse purchase from home with real time cash transactions.
Management believes the proprietary technology and the large
demand for wagering opportunities in today's marketplace will
combine to generate substantial sales for the Company over the
medium term.
Thomas S. Hughes, Chairman of ET&T, became Chairman and
President of Leggoons, Inc., on March 1, 1997. At that time, the
name was changed to Betting, Inc.
On April 28, 1997, the Company entered into a Host
Processing Agreement with ET&T for the purpose of having ET&T act
as the bank host processing for all Betting, Inc.'s transactions
that are sent by terminal s that read credit cards or ATM cards.
On March 27, 1998, the Company entered into a License Agreement
with ET&T for the purpose of licensing additional technology for
processing electronic banking transactions. This licensing
supplements the technology licensed under the Agreement dated
February 18, 1997.
On May 17, 1999, an Agreement and Plan of Merger between
Betting, Inc., a Missouri corporation, into Betting, Inc., a
Nevada corporation ("Company") was executed by an authorized
signatory of each company. At a duly called meeting of
shareholders on May 21, 1999, the merger of the two companies was
approved by a majority of the shareholders appearing in person or
by proxy. Effective on June 1, 1999, Articles of Merger were
filed with the Nevada Secretary of State, which formally resulted
in the redomicile to the State of Nevada. On June 4, 1999, a
Certificate of Amendment to Articles of Incorporation was filed
with the Nevada Secretary of State changing the name of the
Company to "eConnect" and increasing the number of authorized
common shares to 100,000,000. On August 23, 1999, a Certificate
of Amendment to Articles of Incorporation was filed with the
Nevada Secretary of State increasing the number of authorized
common shares to 200,000,000.
(b) Business.
The Company is made up of two divisions: The first, eGaming, is
presently generating revenues and earnings from its eSportsbet
and 777WINS.com acquisitions (internet gaming). The second
division of eGate which is developing technology for ATM card
with PIN or smart card payments (same-as-cash - only the merchant
can reverse the transaction) using the Personal Encrypted Remote
Financial Electronic Card Transactions ("PERFECT"). Thus, the
Company is both an Internet and non Internet company, and both a
gaming and non gaming company. focused on connecting the consumer
directly to the recipient merchant... no middlepersons. See
"Description of Business."
The internet gaming industry is an industry that has
developed significantly in recent years. The internet gaming
industry as a whole is under increasing governmental scrutiny as
the industry develops. It is possible that at some point in the
future there could be legislation against gambling on the
internet or other similar methods. See "Risk Factors."
The Offering.
Shares of the Company will be offered as a shelf registration
under U.S. Securities and Exchange Commission ("SEC") Rule 415 at
$1.00 per Share (except for the subscribed shares and warrants
described below in parts (b), (c), and (d), and the Shares to be
issued for the purpose of repaying certain loan to the Company, as
described in part (h) below). 14,743,375 Shares have already been
subscribed under this offering for various acquisitions and consulting
services for the Company, and all 10,500,000 warrants have been issued
for consulting services for the Company. The remaining offering will be
used for the following purposes (maximum amounts): (a) sales to the
general public for cash, in connection with certain acquisitions
by the Company, and in connection with certain consulting
services for the Company, of 300,000 Shares; (b) 20,000,000
Shares in connection with the registration of restricted shares
issued in connection with a Common Stock Purchase Agreement
("Purchase Agreement"), dated September 28, 1999; (c) 1,000,000
Shares to cover the exercise of warrants to purchase these Shares in
connection with the Purchase Agreement (exercisable at a price equal to
80% ofthe closing bid price of the common stock on the effective date of
the Purchase Agreement from said date until a date which is five years
thereafter); (d) 500,000 Shares to cover the exercise of warrants to
purchase these Shares in connection with certain drawdowns under the
Purchase Agreement (exercisable at the closing bid price on the
date of each draw from the effective date of the Purchase
Agreement until a date which is five years thereafter); (e)
5,000,000 Shares to cover options to be issued in the future under
a Stock Incentive Plan to employees of the Company, exercisable at $0.40
per Share; (f) 3,000,000 Shares to cover options to be issued in the future
under a Stock Incentive Plan to Thomas S. Hughes, President of the Company,
xercisable at $0.40 per Share; and (g) 5,200,000 of restricted
shares being registered by certain shareholders of the Company: Ranco
Plasticos, a Costa Rica corporation, and Menhur Azul, S.A., a
Costa Rica corporation; and (h) 756,625 Shares for the repayment of
Loans made to the Company totaling $302,650. See "Plan of Distribution."
If all the Shares being offered to the public under the current
offering are sold for cash, this will represent net proceeds of a
maximum of $300,000, less certain costs associated with this
offering. See "Use of Proceeds." This balance will be used as
working capital for the Company.
Liquidity of Investment.
Although the Shares will be "free trading," there has been only a
limited public market for the Shares. Therefore, an investor may
not be able to sell is Shares when he or she wishes; therefore,
an investor may consider his or her investment to be long-term.
See "Risk Factors."
Risk Factors.
And investment in the company involved risks due in part to a
limited previous financial and operating history of Company, as
well as competition in the internet gaming industry. Also,
certain potential conflicts of interest arise due to the
relationship of the Company to management and others. See "Risk
Factors."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE
AND INVOLVE A HIGH DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY
BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
THEREFORE, EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE,
CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS AMONG OTHER
THINGS, AS WELL AS ALL OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS.
Limited Prior Operations and Experience.
The Company is newly reorganized, has only limited revenues from
its new internet operations, and has only limited assets. There
can be no assurance that the Company will generate significant
revenues in the future; and there can be no assurance that the
Company will operate at a profitable level. See "Description of
Business." If the Company is unable to obtain customers and
generate sufficient revenues so that it can profitably operate,
the Company's business will not succeed. In such event,
investors in the Shares may lose their entire cash investment.
Also the Company and its management do not have significant
experience in the internet business, and in particular the on-
line gaming business. See "Directors, Officers, Promoters, and
Control Persons."
Dependence on the Internet Industry
The Company's business is influenced by the rate of use and
expansion in the internet industry. Although this industry, and
in particular on-line gaming, have been expanding at a rapid
rate in recent years, there is no guarantee that it will continue
to do so in the future. Declines in these industries may
influence the Company's revenues adversely.
Influence of Other External Factors.
The internet industry, and internet gaming in particular, is a
speculative venture necessarily involving some substantial risk.
There is no certainty that the expenditures to be made by the
Company will result in commercially profitable business. The
marketability of internet gaming will be affected by numerous
factors beyond the control of the Company. These factors include
market fluctuations, and the general state of the economy
(including the rate of inflation, and local economic conditions),
which can affect peoples' discretionary spending. Factors which
leave less money in the hands of potential clients of the Company
will likely have an adverse effect on the Company. The exact
effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Company not
receiving an adequate return on invested capital.
Regulatory Factors.
Existing and possible future consumer legislation,
regulations and actions could cause additional expense, capital
expenditures, restrictions and delays in the activities
undertaken in connection with the party planning business, the
extent of which cannot be predicted. The U.S. Senate is
presenting discussing a proposed bill by Senator Jon Kyl of
Arizona which would ban internet gaming in the United States.
The passage of such a bill may adversely affect the operation of
the Company, including increased costs if certain of the Company
operations are then moved to a foreign jurisdiction. The exact
affect of such legislation cannot be predicted until it is in
final form. If, however, a federal statute was passed into
legislation making Internet gambling illegal, eSportsbet.com is
prepared to make the necessary adjustments to continue to operate
legally.
Competition.
The Company may experience substantial competition in its
efforts to locate and attract clients. Many competitors in the
internet industry, and in particular internet gaming, have
greater experience, resources, and managerial capabilities than
the Company and may be in a better position than the Company to
obtain access to attractive clientele. There are a number of
larger companies which will directly compete with the Company.
Such competition could have a material adverse effect on the
Company's profitability.
Success of Management.
Any potential investor is strongly cautioned that the purchase of
these securities should be evaluated on the basis of: (i) the
limited diversification of the venture capital opportunities
afforded to the Company, (ii) the high-risk nature and limited
liquidity of the Company, and (iii) the Company's ability to
utilize funds for the successful development and distribution of
revenues as derived by the revenues received by the Company's yet
undeveloped portfolio of clients, and any new potentially
profitable ventures, among other things. The Company can offer no
assurance that any particular client and/or property under its
management contract will become successful.
Reliance on Management.
The Company's success is dependent upon the hiring of key
administrative personnel. None of the officers or directors, or
any of the other key personnel, has any employment or non-
competition agreement with the Company. Therefore, there can be
no assurance that these personnel will remain employed by the
Company. Should any of these individuals cease to be affiliated
with the Company for any reason before qualified replacements
could be found, there could be material adverse effects on the
Company's business and prospects. In addition, management has no
experience is managing companies in the same business as the
Company.
In addition, all decisions with respect to the management of
the Company will be made exclusively by the officers and
directors of the Company. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Company. The success of the Company,
to a large extent, will depend on the quality of the directors
and officers of the Company. Accordingly, no person should
invest in the Shares unless he is willing to entrust all aspects
of the management of the Company to the officers and directors.
Use of Proceeds Not Specific.
The proceeds of this offering have been allocated only generally.
Proceeds from the offering have been allocated generally to legal
and accounting, and working capital. Accordingly, investors will
entrust their funds with management in whose judgment investors
may depend, with only limited information about management's
specific intentions with respect to a significant amount of the
proceeds of this offering. See "Use of Proceeds."
Lack of Diversification.
The size of the Company makes it unlikely that the Company will
be able to commit its unds to diversify the business until it has
a proven track record, and the Company may not be able to achieve
the same level of diversification as larger entities engaged in
this type of business.
No Cumulative Voting
Holders of the Shares are not entitled to accumulate their votes
for the election of directors or otherwise. Accordingly, the
holders of a majority of the Shares present at a meeting of
shareholders will be able to elect all of the directors of the
Company, and the minority shareholders will not be able to elect
a representative to the Company's board of directors.
Absence of Cash Dividends
The Board of Directors does not anticipate paying cash dividends
on the Shares for the foreseeable future and intends to retain
any future earnings to finance the growth of the Company's
business. Payment of dividends, if any, will depend, among other
factors, on earnings, capital requirements, and the general
operating and financial condition of the Company, and will be
subject to legal limitations on the payment of dividends out of
paid-in capital.
Conflicts of Interest.
The officers and directors have other interests to which they
devote substantial time, either individually or through
partnerships and corporations in which they have an interest,
hold an office, or serve on boards of directors, and each will
continue to do so notwithstanding the fact that management time
may be necessary to the business of the Company. As a result,
certain conflicts of interest may exist between the Company and
its officers and/or directors which may not be susceptible to
resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities which cannot be resolved through arm's
length negotiations. All of the potential conflicts of interest
will be resolved only through exercise by the directors of such
judgment as is consistent with their fiduciary duties to the
Company. It is the intention of management, so as to minimize
any potential conflicts of interest, to present first to the
Board of Directors to the Company, any proposed investments for
its evaluation.
Investment Valuation Determined by the Board of Directors.
The Company's Board of Directors is responsible for valuation of
the Company's investments. There are a wide range of values which
are reasonable for an investment for the Company's services.
Although the Board of Directors can adopt several methods for an
accurate evaluation, ultimately the determination of fair value
involves subjective judgment not capable of substantiation by
auditing standards. Accordingly, in some instances it may not be
possible to substantiate by auditing standards the value of the
Company's investments. The Company's Board of Directors will
serve as the valuation committee, responsible for valuing each of
the Company's investments. In connection with any future
distributions which the Company may make, the value of the
securities received by investors as determined by the Board may
not be the actual value that the investors would be able to
obtain even if they sought to sell such securities immediately
after a distribution. In addition, the value of the distribution
may decrease or increase significantly subsequent to the
distributee shareholders' receipt thereof, notwithstanding the
accuracy of the Board's evaluation.
Additional Financing May Be Required.
Even if all of the Shares offered to the public and in connection
with the acquisition hereby are sold, the funds available to the
Company may not be adequate for it to be competitive in the areas
in which it intends to operate. See "Plan of Distribution."
There is no assurance that additional funds will be available
from any source when needed by the Company for expansion; and, if
not available, the Company may not be able to expand its
operation as rapidly as it could if such financing were
available. The proceeds from this offering are expected to be
sufficient for the Company to become develop and market it line
of services. Additional financing could possibly come in the form
of debt/preferred stock. If additional shares were issued to
obtain financing, investors in this offering would suffer a
dilutive effect on their percentage of stock ownership in the
Company. However, the book value of their shares would not be
diluted, provided additional shares are sold at a price greater
than that paid by investors in this offering. The Company does
not anticipate having within the next 12 months any cash flow or
liquidity problems
Purchases by Affiliates.
Certain officers, directors, principal shareholders and
affiliates may purchase, for investment purposes, a portion of
the Shares offered hereby, which could, upon conversion, increase
the percentage of the Shares owned by such persons. The purchases
by these control persons may make it possible for the Offering to
meet the escrow amount.
No Assurance Shares Will Be Sold.
The Shares being offered to the public and in connection with the
acquisition are to be offered directly by the Company, and no
individual, firm, or corporation has agreed to purchase or take
down any of the shares. No assurance can be given that any or
all of the Shares will be sold.
Offering Price.
The offering price of the Shares bears no relation to book value,
assets, or earnings. There can be no assurance that the Shares
will maintain market values commensurate with the offering price.
See "Determination of Offering Price."
"Shelf" Offering
The Shares are offered directly by the Company on a delayed basis
pursuant to certain exercise rights of warrants and conversion
rights of debentures. No individual, firm or corporation has
agreed to elect such exercise or conversion of any of the offered
Shares. No assurance can be given that any or all of the Shares
will be issued. No broker-dealer has been retained as an
underwriter and no broker-dealer is under any obligation to
purchase any of the Shares. In addition, the officers and
directors of the Company, collectively, have limited experience
in the offer and sale of securities on behalf of the Company.
See "Plan of Distribution."
Limited Public Market for Company's Securities.
Prior to the Offering, there has been only a limited public
market for the Shares being offered. There can be no assurance
that an active trading market will develop or that purchasers of
the Shares will be able to resell their securities at prices
equal to or greater than the respective initial public offering
prices. The market price of the Shares may be affected
significantly by factors such as announcements by the Company or
its competitors, variations in the Company's results of
operations, and market conditions in the retail, electron
commerce, and internet industries in general. The market price
may also be affected by movements in prices of stock in general.
As a result of these factors, purchasers of the Shares offered
hereby may not be able to liquidate an investment in the Shares
readily or at all.
Penny Stock Regulations.
The Company's Shares are quoted on the Over the Counter Bulletin
Board maintained by the National Association of Securities
Dealers, Inc., which reports quotations by brokers or dealers
making a market in particular securities. In view of the fact
that no broker will be involved in this offering, it is likely to
be difficult to find a broker who is willing to make an active
market in the stock. The SEC has adopted regulations which
generally define "penny stock" to be any equity security that has
a market price less than $5.00 per share. The Company's shares
will become subject to rules that impose additional sales
practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, broker-dealers
must make a special suitability determination for the purpose of
such securities and must have received the purchaser's written
consent to the transaction prior to the purchase.
Additionally, for any transaction effected involving a penny
stock, unless exempt, the rules require the delivery, prior to
the transaction, of a disclosure schedule prepared by the
Commission relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker--
dealer and the registered representative, and current quotations
for the securities. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of
broker-dealers to sell the Company's Shares and may affect the
ability of purchasers in the Offering to sell the Company's
securities in the secondary market. There is no assurance that a
market will develop for the Company's Shares.
Shares Eligible For Future Sale.
All of the 9,900,000 Shares which are currently held, directly or
indirectly, by management have been issued in reliance on the
private placement exemption under the Securities Act of 1933, as
amended ("Act"). See "Security Ownership of Certain Beneficial
Owners and Management." Such Shares will not be available for
sale in the open market without separate registration except in
reliance upon Rule 144 under the Act. In general, under Rule 144
a person (or persons whose shares are aggregated) who has
beneficially owned shares acquired in a non-public transaction
for at least on year, including persons who may be deemed
affiliates of the Company (as that term is defined under the Act)
would be entitled to sell within any three-month period a number
of shares that does not exceed the greater of 1% of the then
outstanding shares of common stock, or the average weekly
reported trading volume on all national securities exchanges and
through NASDAQ during the four calendar weeks preceding such
sale, provided that certain current public information is then
available. If a substantial number of the Shares owned by these
shareholders were sold pursuant to Rule 144 or a registered
offering, the market price of the Common Stock could be adversely
affected.
Forward-Looking Statements.
This Prospectus contains "forward looking statements" within
the meaning of within the meaning of Rule 175 under the
Securities Act of 1933, as amended, and Rule 3b-6 under the
Securities Act of 1934, as amended, including statements
regarding, among other items, the Company's business strategies,
continued growth in the Company's markets, projections, and
anticipated trends in the Company's business and the industry in
which it operates. The words "believe," "expect," "anticipate,"
"intends," "forecast," "project," and similar expressions
identify forward-looking statements. These forward-looking
statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, certain of
which are beyond the Company's control. The Company cautions that
these statements are further qualified by important factors that
could cause actual results to differ materially from those in the
forward looking statements, including those factors described
under "Risk Factors" and elsewhere herein In light of these
risks and uncertainties, there can be no assurance that the
forward-looking information contained in this Prospectus will in
fact transpire or prove to be accurate. All subsequent written
and oral forward-looking statements attributable to the Company
or persons acting on its behalf are expressly qualified in their
entirety by this section.
Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000, and if
not addressed, the impact on operations and financial reporting
may range from minor errors to significant system failure which
could affect the Company's ability to conduct normal business
operations. This creates potential risk for all companies, even
if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
The Company currently believes that its systems are Year 2000
compliant in all material respects, its current systems and
products may contain undetected errors or defects with Year 2000
date functions that may result in material costs. Although
management is not aware of any material operational issues or
costs associated with preparing its internal systems for the Year
2000, the Company may experience serious unanticipated negative
consequences (such as significant downtime for one or more of
its web site properties) or material costs caused by undetected
errors or defects in the technology used in its internal systems.
Furthermore, the purchasing patterns of advertisers may be
affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000
compliance. The Company does not currently have any information
about the Year 2000 status of its advertising customers.
However, these expenditures may result in reduced funds available
for web advertising or sponsorship of web services, which could
have a material adverse effect on its business, results of
operations, and financial condition. The Company's Year 2000
plans are based on management's best estimates.
USE OF PROCEEDS
Following the issuance of the Shares offered for sale by the Company to
the public (assuming they are sold for cash), as well as $1,633,000
already raised in connection with the issuance of Shares under the Common
Stock Purchase Agreement (an 8% placement fee is paid in connection
with obtaining these funds; this is not included below since the number
of shares sold will depend on the market price), this will represent gross
proceeds to the Company of approximately $1,933,000 (less certain expenses
of this offering) (assuming no additional shares are sold under the
Stock Purchase Agreement). See "Plan of Distribution." These proceeds,
less the expenses of the offering, will be used to provide working
capital for the Company.
The following table sets forth the use of proceeds from this
offering (based on the minimum and maximum offering amounts):
Use of Proceeds Maximum Offering
Amount Percent
Transfer Agent Fee $1,000 0.05%
Printing Costs $1,000 0.05%
Legal Fees $50,000 2.59%
Accounting Fees $1,500 0.08%
Working Capital $1,879,500 97.23%
Total $1,933,000 100.00%
Management anticipates expending these funds for the purposes
indicated above. To the extent that expenditures are less than
projected, the resulting balances will be retained and used for
general working capital purposes or allocated according to the
discretion of the Board of Directors. Conversely, to the extent
that such expenditures require the utilization of funds in excess
of the amounts anticipated, supplemental amounts may be drawn
from other sources, including, but not limited to, general
working capital and/or external financing. The net proceeds of
this offering that are not expended immediately may be deposited
in interest or non-interest bearing accounts, or invested in
government obligations, certificates of deposit, commercial
paper, money market mutual funds, or similar investments.
DETERMINATION OF OFFERING PRICE
The offering price is not based upon the Company's net worth,
total asset value, or any other objective measure of value based
upon accounting measurements. The offering price was determined
by viewing the current prospects for the company, as well as
expressions on interest in purchasing the Shares from potential
investors.
PLAN OF DISTRIBUTION
Shares of the Company will be offered as a shelf registration
under SEC Rule 415 at $1.00 per Share, except for the Subscribed
Shares and Warrants and Further Warrants (as defined below) and the
Shares in repayment of certain loans to the Company (the public
offering price of the Shares will be modified, from time
to time, by amendment to this Prospectus, in accordance with
changes in the market price of the Company's common stock).
14,743,375 Shares have already been subscribed under this offering
for various acquisitions and consulting services for the Company, and all
10,500,000 warrants have been issued for consulting services for the
Company. The remaining offering will used for the following purposes
(maximum amounts): (a) sales to the general public, in connection
with certain acquisitions by the Company, and in connection with
certain consulting services for the Company, of 300,000 Shares; (b)
20,000,000 Shares in connection with the registration of restricted
shares issued in connection with a Common Stock Purchase Agreement
("Purchase Agreement"), dated September 28, 1999 (as of January 5, 2000
9,392,578 issued for a total consideration of $1,333,000); (c) 1,000,000
Shares to cover the exercise of warrants to purchase these Shares in
connection with the Purchase Agreement (exercisable at a price equal to 80%
of the closing bid price of the common stock on the effective date
of the Purchase Agreement from said date until a date which is
five years thereafter); (d) 500,000 Shares to cover the exercise
of warrants to purchase these Shares in connection with certain
drawdowns under the Purchase Agreement (exercisable at the
closing bid price on the date of each draw from the effective
date of the Purchase Agreement until a date which is five years
thereafter); (e) 5,000,000 Shares to cover options to be issued
in the future under a Stock Incentive Plan to employees of the Company,
exercisable at $0.40 per Share; (f) 3,000,000 Shares to cover options to
be issued in the future under a Stock Incentive Plan to Thomas S. Hughes,
President of the Company, exercisable at $0.40 per Share; and (g) 5,200,000
of restricted shares being registered by certain shareholders of the Company:
Ranco Plasticos, a Costa Rica corporation, and Menhur Azul, S.A.,
a Costa Rica corporation; and (h) 756,625 Shares for the repayment
of loans made to the Company totaling $302,650.
As set forth in the Registration Rights Agreement and based
upon the terms and subject to the conditions of the Subscription
Agreement, the Company has agreed to issue and sell to the
subscriber up to $5,000,000 of the common stock of the Company,
which will be converted into free trading shares of the common
stock of the Company upon the terms and subject to the conditions
of the Subscribed Shares (the number of Shares to be issued in
connection with any drawdown under the Subscription Agreement
will equal the dollar amount of such drawdown divided by 80% of
the lowest closing reported bid price of the Shares for the five
trading days immediately preceding the drawdown date). In
addition, under the Registration Rights Agreement, the Company
will register 1,500,000 Shares to cover the exercise of the
Warrants and Further Warrants, as set forth above. The
Subscription Agreement, Registration Rights Agreement, and
Warrant are incorporated herein by reference, and are set forth
in their entirety as Exhibits 4.2, 4.2, and 4.4 to this Form SB-2/A.
Under the Registration Rights Agreement, the Company is
obligated to prepare and file with the SEC, no later than ten
(10) days after the effective date of the Subscription Agreement,
a post-effective amendment to the Registration Statement on Form
SB-2/A declared effective by the SEC on September 7, 1999,
covering a sufficient number of shares of common stock to cover
the registration of the maximum of $5,000,000 of the Subscribed
Shares and the conversion of a maximum of 1,500,000 Warrants and
Further Warrants. If at any time the number of Shares of into
which such Subscribed Shares and Warrants and Further Warrants
issued in this offering may be converted exceeds the aggregate
number of shares of common stock then registered, the Company is
obligated to, within ten business days after receipt of written
notice from any subscriber, file with the SEC an additional
Registration Statement on Form SB-2 or any other applicable
registration statement, to register the shares of common stock
into which the Subscribed Shares may be converted that exceed the
aggregate number of shares of common stock already registered.
There can be no assurance that all of these Shares will be issued
or that any of them will be issued for cash. The gross proceeds
to the Company represented by issue of all the Shares for cash
under this amended offering to the public (300,000) will be $300,000;
this does not include the Subscribed Shares and the Warrants and
further Warrants since the amount raised from these sales will fluctuate
depending on the current market price of the Shares (to February 24, 2000, a
total of 9,670,356 were issued for a total gross consideration of $1,633,000)
No commissions or other fees will be paid, directly or
indirectly, by the Company, or any of its principals, to any
person or firm in connection with solicitation of sales of the
Shares (certain placement fees in the amount of 8% are paid in
connection with the funds provided under the Purchase Agreement; a
total of $130,640 has been paid to date). The public offering price of
the Shares will be modified, from time to time, by amendment to this
Prospectus, in accordance with changes in the market price of the Company's
common stock. These securities are offered by the Company
subject to prior issue and to approval of certain legal matters
by counsel.
Opportunity to Make Inquiries.
The Company will make available to each Offeree, prior to any
issue of the Shares, the opportunity to ask questions and receive
answers from the Company concerning any aspect of the investment
and to obtain any additional information contained in this
Prospectus, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or
expense.
Execution of Documents.
Each person desiring to be issued Shares, either as a conversion
of a debenture, or an exercise of a warrant, must complete,
execute, acknowledge, and delivered to the Company certain
documents, By executing these documents, the subscriber is
agreeing that such subscriber will be, a shareholder in the
Company and will be otherwise bound by the articles of
incorporation and the bylaws of the Company in the form attached
to this Prospectus.
LEGAL PROCEEDINGS
On August 19, 1999, counsel for Thomson Kernaghan threatened
to file suit against the Company in connection with certain funds
provided to the Company in the amount of $500,000 by CALP II, LP
under a debenture agreement. On November 15, 1999, the Company
was served with a federal district court complaint in this matter
seeking damages in the amount of $1,233,889, as well as an
application for various orders. The Company has reached a
settlement with CALP, dated December 3, 1999, which calls for the
payment of $200,000 and 5,000,000 free trading shares of the
Company in accordance with the terms of the debenture agreement.
This settlement fully and finally resolves that litigation.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The names, ages, and respective positions of the directors,
officers, and significant employees of the Company are set forth
below. There are no other persons which can be classified as a
promoter or controlling person of the Company.
Thomas S. Hughes, President/Director.
Mr. Hughes, Age 52, has been President of the Company since
March 1997. From 1993 to the present, he has also served as the
President of Electronic Transactions & Technologies, a privately
held Nevada corporation which developed terminals for wireless
home and internet applications.
Jack M. Hall, Secretary/Director.
Mr. Hall, age 72, founded and is currently President of Hall
Developments, a real estate development company he founded in
1991, which employs a staff of 10 people. Mr. Hall spends
approximately 20 hours per week searching out strategic alliances
for the Company.
Diane Hewitt, Treasurer/Director.
Ms. Hewitt, age 51, has been an interior designer since
1991. Currently she owns and manages her own firm, D. Diane
Hewitt Designs. This firm's expertise is churches and employs a
staff of five people. Ms. Hewitt currently devotes approximately
25 hours per week in working with the Company's image development
and consulting with the Company's advertising firm.
Anthony L. Hall, Vice President, Director of Technology.
Mr. Hall, age 34, has been Vice President and Director of
Technology of the Company since inception. Mr. Hall has been the
creative mind behind the state of the art advancements made by
the company. Mr. Hall is responsible for all technological
decisions including but not limited to telephone call center, web
site design and in- house software implementation and computer
systems engineering and support. Mr. Hall is a unique individual
within the technological community. A technological savante who
combines incomparable knowledge of the computer world with the
savvy of a successful businessman. Mr. Hall learned his trade
over the last six years with such renowned institutions as the
Kraft Group (owners of International Forest Products and the New
England Patriots), Fidelity Investments, Partners Health Care and
most recently as Managing Director of the firm he founded, Isis
Technology Group.
Kevin J. Lewis, Vice President, Sports Book Operations.
Mr. Lewis, age 36, has been Vice President and Senior Manager of
Sports Book Operations of the Company since it was founded.
After a long and exhaustive process, Mr. Lewis was selected from
a select group of candidates to lead the operations and sports
handicapping management of the company. He has 19 years
experience as a sports book manager with several of the largest
and most profitable sports books in the world. He has worked in
Las Vegas, the Domincan Republic, Antigua, Costa Rica and Canada
with such respected sports books as Tradewinds, Grand Prix Sports
Book and WWTS. Mr. Lewis is known as a sage amongst his peers
and is, with little doubt, the best sports book and betting line
manager in the industry.
Over the next few months, James Wexler, will phase into the
position as CEO of the Company. Presently, Thomas S. Hughes is
fulfilling that role. Hughes will remain as the chairman of the
Company once James Wexler has taken the CEO position.
Mr. Wexler is a highly motivated professional with almost six
years experience in the investment banking industry primarily
with the firms of Morgan Stanley Dean Witter and Bear Stearns &
Co., Inc. In addition, Mr. Wexler has more than twelve years
experience in the gambling and sports handicapping fields and is
considered a knowledgeable expert within the industry. For many
years, he has served as a consultant to off shore sports books,
handicappers and sports bettors. Mr. Wexler's visionary
leadership creates the ideal union between fundamental business
theory, state of the art technology and the necessary knowledge
of sports gambling.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 13, 1999, the
outstanding Shares of common stock of the Company owned of record
or beneficially by each person who owned of record, or was known
by the Company to own beneficially, more than 5% of the Company's
Common Stock, and the name and share holdings of each officer and
director and all officers and directors as a group (out of a
total issued and outstanding shares of 60,523,775 as of that
date):
Title of Name and Address of Amount and Percent of
Beneficial Owner (1) Nature of Class
Beneficial Owner (2)
Common
Stock Thomas S. Hughes 4,500,000 7.35%
31310 Eaglehaven Circle
Rancho Palos Verdes
California 90275
Common
Stock Electronic Transactions 5,400,000 8.92%
& Technologies
2500 Via Cabrillo
Marina, Suite 112
San Pedro, Ca 90731
Common
Stock Rogel Technologies 5,000,000 8.26%
3399 East 19th St.
Signal Hill, Ca 90804
(1) Other than the Shares owned by Mr. Hughes directly and
indirectly through Electronic Transactions & Technologies, none
of the other officers or directors of the Company own any of the
Shares.
(2) Neither Mr. Clinton nor Mr. Hughes have the right to acquire
any amount of the Shares within sixty days from options,
warrants, rights, conversion privilege, or similar obligations.
DESCRIPTION OF SECURITIES
General Description.
The securities being offered are shares of common stock. The
Articles of Incorporation authorize the issuance of 200,000,000
shares of common stock, with a par value of $0.001. The holders
of the Shares: (a) have equal ratable rights to dividends from
funds legally available therefore, when, as, and if declared by
the Board of Directors of the Company; (b) are entitled to share
ratably in all of the assets of the Company available for
distribution upon winding up of the affairs of the Company; (c)
do not have preemptive subscription or conversion rights and
there are no redemption or sinking fund applicable thereto; and
(d) are entitled to one non-cumulative vote per share on all
matters on which shareholders may vote at all meetings of
shareholders. These securities do not have any of the following
rights: (a) cumulative or special voting rights; (b) preemptive
rights to purchase in new issues of Shares; (c) preference as to
dividends or interest; (d) preference upon liquidation; or (e)
any other special rights or preferences. In addition, the Shares
are not convertible into any other security. There are no
restrictions on dividends under any loan other financing
arrangements or otherwise. See a copy of the Articles of
Incorporation, and amendments thereto, and Bylaws of the Company,
attached as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3,
respectively, to this Form SB-2.
Non-Cumulative Voting.
The holders of Shares of Common Stock of the Company do not have
cumulative voting rights, which means that the holders of more
than 50% of such outstanding Shares, voting for the election of
directors, can elect all of the directors to be elected, if they
so choose. In such event, the holders of the remaining Shares
will not be able to elect any of the Company's directors.
Dividends.
The Company does not currently intend to pay cash dividends. The
Company's proposed dividend policy is to make distributions of
its revenues to its stockholders when the Company's Board of
Directors deems such distributions appropriate. Because the
Company does not intend to make cash distributions, potential
shareholders would need to sell their shares to realize a return
on their investment. There can be no assurances of the projected
values of the shares, nor can there be any guarantees of the
success of the Company.
A distribution of revenues will be made only when, in the
judgment of the Company's Board of Directors, it is in the best
interest of the Company's stockholders to do so. The Board of
Directors will review, among other things, the investment quality
and marketability of the securities considered for distribution;
the impact of a distribution of the investee's securities on its
customers, joint venture associates, management contracts, other
investors, financial institutions, and the company's internal
management, plus the tax consequences and the market effects of
an initial or broader distribution of such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
Upon the completion of this Offering, assuming the maximum
offering of 61,000,000 is sold, the Company's authorized but
unissued capital stock will consist of 78,476,225 shares of
common stock (based on the issued and outstanding Shares of
60,523,775 as of August 13, 1999). One effect 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. If, in the due
exercise of its fiduciary obligations, for example, the Board of
Directors were to determine that a takeover proposal was not in
the Company's best interests, such shares could be issued by the
Board of Directors without stockholder approval in one or more
private placements or other transactions that might prevent, or
render more difficult or costly, completion of the takeover
transaction by diluting the voting or other rights of the
proposed acquiror or insurgent stockholder or stockholder group,
by creating a substantial voting block in institutional or other
hands that might undertake to support the position of the
incumbent Board of Directors, by effecting an acquisition that
might complicate or preclude the takeover, or otherwise.
Transfer Agent.
The Company has engaged the services of Corporate Stock Transfer,
370 17th Street, Suite 2350, Denver, Colorado 80202, to act as
transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
No named expert or counsel was hired on a contingent basis,
will receive a direct or indirect interest in the small business
issuer, or was a promoter, underwriter, voting trustee, director,
officer, or employee of the small business issuer.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
No director of the Company will have personal liability to the
Company or any of its stockholders for monetary damages for
breach of fiduciary duty as a director involving any act or
omission of any such director since provisions have been made in
the Articles of Incorporation limiting such liability. The
foregoing provisions shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the payment of
dividends in violation of Section 78.300 of the Nevada Revised
Statutes or, (v) for any transaction from which the director
derived an improper personal benefit.
The By-laws provide for indemnification of the directors,
officers, and employees of the Company in most cases for any
liability suffered by them or arising out of their activities as
directors, officers, and employees of the Company if they were
not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a
settlement the indemnification will apply only when the Board of
Directors approves such settlement and reimbursement as being for
the best interests of the Corporation. The Bylaws, therefore,
limit the liability of directors to the maximum extent permitted
by Nevada law (Section 78.751).
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means they are required to exercise
good faith and fairness in all dealings affecting the Company.
In the event that a shareholder believes the officers and/or
directors have violated their fiduciary duties to the Company,
the shareholder may, subject to applicable rules of civil
procedure, be able to bring a class action or derivative suit to
enforce the shareholder's rights, including rights under certain
federal and state securities laws and regulations to recover
damages from and require an accounting by management..
Shareholders who have suffered losses in connection with the
purchase or sale of their interest in the Company in connection
with such sale or purchase, including the misapplication by any
such officer or director of the proceeds from the sale of these
securities, may be able to recover such losses from the Company.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer 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.
ORGANIZATION WITHIN LAST FIVE YEARS
The names of the promoters of the registrant are the
officers and directors as disclosed elsewhere in this Form SB-2.
None of the promoters have received anything of value from the
registrant.
DESCRIPTION OF BUSINESS
In its' aggressive pursuit to deliver diverse, leading-edge
solutions, the Company has created a wide range of customer-
driven service programs and patent-pending products that are
technologically proven, accepted by consumers and endorsed by
businesses of every size. The Company is made up of two
divisions: The first, eGaming, is presently generating revenues
and earnings from its eSportsbet and 777WINS.com acquisitions.
The second division of eGate which is developing technology for
ATM card with PIN or smart card payments (same-as-cash - only the
merchant can reverse the transaction) using the Personal
Encrypted Remote Financial Electronic Card Transactions
("PERFECT"). Thus, the Company is both an Internet and non
Internet company, and both a gaming and non gaming company.
focused on connecting the consumer directly to the recipient
merchant... no middlepersons.
eGaming Division.
This division of of the Company consists of 777WINS.com and
eSportsbetcom. These recent acquisitions are generating revenues
and earnings for the Company. eSportsbet and 777WINS.com are
both located in Costa Rica. eSportsbet is projecting $1 million
in revenue by the fourth quarter of 1999 and 777WINS.com is
projecting $500,000 in revenue by the same time period.
It is intended that eSportsbet will have a web presence shortly.
777WINS.com is increasing their band width and is the first
Internet casino to offer a Tournament whereby the winners travel
to a real Casino in Costa Rica. eGaming will be creating the
sites of Bingo and Slots over the next several months.
The Company is presently generating about $150,000 per month in
revenues from this division. A new business unit will be
EzyGame,which will be the on site or off site usage of the
Company's equipment to effect Lottery and Powerball transactions
by ATM card or EzyCard.
(a) Business Strategy.
There are currently less than 50 off shore sports books servicing
an average less than 1000 clients each. In fact, there are less
than 10 Internet sites that are fully operational for on-line
wagering. In concise terms, less than 0.06 % of bettors are
wagering off shore. More significantly, less than 0.0125% of
bettors are wagering through the Internet. The off shore
gambling market is a virgin industry with over 80 million
potential customers and virtually no place for these people to
bet. We are in a position to exploit this opportunity and have
already begun the process.
eSportsbet.com was founded in early 1998 and has recently emerged
from its development stage. The sports book has been fully
operational since September 1, 1998. Development of on-line
sports wagering services is now complete. This division of the
company can best be described as being in the business of
providing a legal, reliable, and secure home or bank to place
wagers. Our key strengths include state-of-the-art-technology,
customer service and innovative marketing. Our management team is
in place. We have hired a sports book manager to complete our
team. We are currently hiring ten employees to answer phone calls
from prospective customers and current clients who wish to place
wagers.
The marketplace has been expanding rapidly. The Company is now
poised to capitalize on the convergence increased Internet
access, ease of web site operability and security with a
flourishing demand to place wagers in this form. Current
customers of offshore sports books are requesting that the
Company provide the ability to place wagers on-line much in the
same way that individual investors can enact stock transactions
on-line with companies such as Fidelity, Schwabb and E-Trade.
To assure the best possible service decisions are made, the
Company has implemented the following criteria for servicing the
most important asset, the Company's clients: Service assistance
for customers with opening new accounts, reducing time, effort
and expense by delineating responsibilities by department.
Service will be implemented using six separate departments: new
accounts, accounts payable and receivable, customer service,
phone clerks to accept wagers and the executive office.
Advertising and marketing will be the Company's largest expense;
the focus on attaining customers and keeping clients is the
Company's foremost goal. The idea is to keep customers
indefinitely by continually offering them a valuable service,
thereby diminishing the Company's costs of continually reaching
and appealing to them. In order to separate the Company from
others in this field, wise selection of service offerings is
therefore critical to eSportsbet.com's success.
(b) Marketing and Advertising Strategy.
eSportsbet.com's marketing strategy is to enhance, promote and
support the fact that the Company's product is unique in terms of
ease of operability, reliability, security. Most importantly,
from a bettor's perspective it is the opinion of management that
the Company's product offer the highest odds pay outs in the
entire industry.
eSportsbet.com's marketing strategy incorporates plans to sell
its product through several channels. These distribution channels
include: Friday, Saturday and Sunday sports sections of regional
newspapers; print media in direct market sports and male
dominated periodicals; thirty and sixty second radio spots on
popular sports talk radio shows; printed flyers and brochures
handed out at major sporting events. The determining factors in
choosing these channels are customer profile; i.e., age, gender,
sports enthusiast, etc. Key competition uses only print media in
industry publications and word of mouth as distribution channels.
The Company's mix of distribution channels will give the
advantages of complete market saturation, not limiting the
Company to region or sports specific publications versus the
competition.
eSportsbet.com recognizes the key to success at this time
requires extensive promotion. This must be done aggressively on
a wide scale. To accomplish the Company's sales goals, an
extremely capable advertising agency and public relations firm
will be required.
The Company will develop an advertising campaign built around
ease of operability, reliability, security, instant pay outs if
requested and most importantly from a bettor's perspective, and,
in the opinion of the Company, the highest pay out odds available
anywhere in the industry. Further, the Company will develop a
consistent reach and frequency with advertising throughout the
year. In addition to standard advertising practices,
eSportsbet.com will gain considerable recognition through grass
roots, guerrilla marketing campaigns. This strategy will include
flyers handed out to spectators of the four major sporting events
and boxing, promotions made available to local sports bars in
Boston and other metropolitan areas.
eSportsbet.com's overall advertising and promotional objectives
are to: Position eSportsbet.com as the leader in the market;
increase company awareness and brand name recognition; generate
qualified sales leads and potential new distributors; create
product-advertising programs supporting our market dominant
position; coordinate sales literature, materials, telemarketing
programs; and direct response promotions in order to continually
saturate the market with our name and logo. Establish the proper
image of eSportsbet.com which in our opinion is the "bank" of the
betting world and indicates that association with security,
safety and stability.
The Company is building its capabilities in database marketing.
Registration cards and periodic customer surveys will help the
Company understand the customer, and help to measure the success
of the marketing, sales and product activities. The Company
plans to develop a customer information system that will help
make sound decisions by providing historical answers to the
marketing questions that are posed.
The Company will use in house telemarketing service to perform
the following functions:
Address customer complaints
Respond to inquiries
Generate new business
(c) Direct Response Mail.
The Company will be exploring the benefits of incremental,
coordinated direct mail programs in the next several months. The
Company will be approaching this quantitatively, as customer
targeting ability is improved. The Company has purchased mailing
lists from sports gambling magazines and newsletters and sports
bettors from Las Vegas casinos. In addition, the direct mail
activities will be continually directed to the existing customer
base to ask for referrals. A $100 betting voucher will be
provided to these clients for every referral that signs up.
(d) Internal/External Newsletter.
The Company is currently planning to produce a newsletter to
serve as an informational piece for internal personnel, the sales
force, and customers. It will include sections covering each
major department or organization within eSportsbet.com, useful
trade information and the latest updates. Importantly, these
newsletters will provide incentives and promotions for clients
and new customers.
eGate Division.
EzyLink Consumer Sales Group:
(a) EzyDepot Transaction Terminal.
The EzyDepot is a low-cost terminal that can be used as a
consumer activated shopping and pay-station kiosk. The EzyDepot
is an intelligent and programmable device, and features a 4-line
display, qwerty keyboard, modem, and built-in receipt printer.
New programming and data can be remotely loaded to units already
in the field. In terms of flexibility for consumer operation, any
functions that a kiosk or ATM is able to perform, can also be
achieved by the EzyDepot
(b) EzyShop Shopping System.
EzyShop is an exciting new service that allows people to shop for
goods while in waiting rooms and other public areas. Catalogs
from leading merchandisers and an EzyDepot unit, a compact
terminal designed to process credit card transactions, is placed
at all EzyShop locations. Consumers browse the catalogs and then
place their orders using the EzyDepot. The process simply
involves keying in a product code, typing in a delivery address
and swiping a major credit card through the EzyDepot's built in
credit card reader. A printed receipt confirms the transaction.
By using a small, low-cost device, rather than a traditional PC-
based kiosk, an EzyDepot can be profitably placed in locations
where a traditional kiosk could not, such as waiting rooms in
doctors' offices, car washes, etc
EzyShop is not a catalog merchandising company. Instead, we work
with some of the nation's leading catalog retailers, providing
our client's the flexibility to promote demographically targeted
merchandise to their own customers. Therefore, any product or
service can be easily sold through EzyShop.
Companies featuring the EzyShop service, called EzyRetailers,
earn a percentage of all sales generated through the EzyDepot.
EzyRetailers carry no inventory and have no overhead, yet benefit
from the profits generated by this revolutionary new distribution
channel.
(c) EzyPay.
Recent reports from the U.S. Federal Reserve state that an
estimated 70+ billion checks are written every year. Overall
costs incurred by a merchant or financial institution to process
each consumer check can be as high as $3.50. This adds up to
more than $40 billion spent each year by retailers to accept
check payments.
The Company's EzyPay eliminates the ongoing inconvenience of
accepting, processing and handling payments by check, cash or
other paper instruments. Designed to dramatically improve
customer service and reduce the inherent cost of processing paper
transactions, EzyPay is the means by which pre-authorized debits
are electronically transmitted from a customer's credit card
account to the businesses' accounts.
EzyPay Benefits
- - Simple to use
- - Simple implementation
- - 100% electronic: no physical handling
- - Proven technology
- - Flexible
- - Automatic collection and deposit
- - Pre-authorized payments
- - Provides faster funds availability
- - Reduces costs of accepting paper checks
- - Improves customer retention
EzyPay Applications
- - Mortgage or medical payments
- - Dues or subscriptions
- - Utility bills
- - Cable companies
- - Telephone companies
- - Insurance premiums
eSecure Internet Group:
(a) eSecure Systems.
One of the Company's most exciting concepts is the use of a
traditional ATM card to make purchases over the Internet. The
use of an ATM card with PIN ID offers a cost advantage to the
retailer, and security advantages to both the consumer and
retailer. In the ever expanding world of e-commerce, it is
imperative that card based business transactions be safe and
secure. The Company's patented eSecure "Same-As-Cash" technology
enabling encrypted remote financial transactions is our solution
for providing secure ATM-card transactions via the Internet.
These ATM card with PIN or smart card payments are the same-as-
cash in that only the merchant can reverse the transaction. The
Company has positioned itself as a "processor", or "gateway", for
these transactions and work with banks and ISOs to sign up web
merchants for debit acceptance, just as store fronts are signed
up for on-line debit acceptance today.
For users of major credit cards, the Company's eSecure "SafeTpay"
system allows people to make purchases and payments on-line. By
simply swiping a major credit card through any of the Company's
eSecure hardware products, the encryption processing systems
provide the ultimate in current anti-piracy technology.
(b) ePINpad.
At the heart of our new ePINpad product is eSecure technology.
This system enables the consumer to utilize his or her PC to make
on-line purchases and payments with an ATM or credit card! Plug-
in software enables the ePINpad to work seamlessly with your
current web browser.
(c) ePocketPay.
For the busy consumer in today's world, desktop or counter top
convenience is not enough. The ultimate solution is a portable
device, carried with the conumer, which can transact business at
any tine. That device is the "ePocketPay".
The ePocketPay looks and works like a cell phone. But, because a
card reader with processing capabilities is built into it, it
represents a whole new class of device. While walking down the
street, riding in a cab, or sitting in your office, someone can
order flowers for a spouse, pay a bill, book airplane
tickets.and simply swipe the card to pay. The transaction is
done and the merchandise or service provider can proceed without
risk of non-payment; a risk that is always present in a
traditional phone order.
The Company has been granted a broad patent for the ePocketPay,
and is seeking strategic alliance(s) with cellular equipment
and/or service providers to develop working prototypes.
(d) eKeys.
For good reason, many consumers have a strong desire to make
internet based payments with an ATM or credit card, but don't
want any additional hardware cluttering their desktops. As a
solution to that dilemma, the Company has patented "eKeys", a
simple, integrated and elegant keyboard / credit card reader.
eKeys simply attaches to a PC or Macintosh computer. Finally, an
integrated ATM / credit card compatible encrypting keyboard /
reader is at the consumer's fingertips. eKeys also features a
built in modem so that the consumer can bypass the internet to
make direct secure payments to a vendor or service provider.
Company Staff.
The Company staff consists of 7 employees at 777WINS.com, 11
employees at eSportsbet.com, 4 employees at EzyShop, 6 employees
at Rogel Technologies and 5 corporate staff. The staff expertise
ranges from sportsgaming specialists to transaction processing
specialists to encryption specialists.
PLAN OF OPERATION
A discussion of the Company's plan of operation over the
next 12 months in incorporated into the discussion of the
Company's business. See "Description of Business."
DESCRIPTION OF PROPERTY
The Company currently owns the following property in connection
with its operations:
(a) Four servers for the operation of eSportsbet.com and
777WINNS.com, valued at $15,000 each.
(b) Approximately $50,000 of various office equipment, including
personal computers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, certain transactions which occurred
between the Company and its officers and directors are set forth
below. With respect to each such transaction, the Company
believes that the terms of each transaction were approximately as
favorable to the Company as could have been obtained from an
unrelated third party:
(1) The Company utilized cash accounts maintained by ET&T to
fund day to day operations of the Company over the period of
March 1998 through September 1998. At August 31, 1998, the net
result of these transactions is a payable to ET&T of $18,969.
(2) The Company issued 1,000,000 shares of restricted common
stock to Thomas S. Hughes during May 1997 in exchange for service
rendered to the Company. The Company did not receive any cash
consideration for this common stock issuance and has treated this
as an expense to the Company of $375,000.
(3) On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales,
Inc.("HPOS") (now know as Electronic Transactions & Technology -
"ET&T")) (this agreement is incorporated by reference at Exhibit
10.1 to this Form SB-2). ET&T is a privately held corporation
70% owned by Thomas S. Hughes, President of the Company, which is
focused on the emergence of the Personal Encrypted Remote
Financial Electronic Card Transactions industry (although this
agreement was entered into prior to Mr. Hughes becoming
affiliated with the Company, it is included here since certain of
the conditions under that agreement have not been completely
fulfilled, as discussed below).
The assets included under this agreement are the following: (a)
The name "Betting, Inc.", as trademarked by HPOS; (b) The
Wagering Gate (receive incoming data transfer commands from the
Host Center and other competitive Host Centers who have received
ATM and SMART card wagering payment from off site home or office
locations and then who command the Wagering GATE to alert the
recipient gaming companies that they have been paid and to
respond back with an acknowledgement of such payment; and, the
general promotion and education of home ATM and SMART card
wagering over the Internet through the HPOS Secure Computer
Keyboard or over the telephone through the HPOS stand alone
Infinity unit); (c) the specific application of Wagering with an
ATM card or SMART card with the Secure Computer Keyboard (any
other uses of the Secure Computer Keyboard, such as Bill Pay or
Impulse Purchase that are not Wagering transactions, are not
included); (d) the HPOS developed Merchant Response Software for
the specific application only of transacting Off Site ATM and
Smart card Wagering through the Wagering Gate; and (e) HPOS'
interest in the use of and revenue from the HPOS Personal
Encrypted Remote Financial Electronic Card transaction relating
to the Wagering Business in all HPOS partner countries.
Under terms of this licensing agreement, the Company is to issue
2,900,000 shares of restricted common stock to HPOS in exchange
for licensing home ATM card and SMART card wagering technology
developed by HPOS. Of this amount, 2,755,000 shares were placed
in escrow subject to cancellation on February 10, 1998, in the
event the bid price of the common stock of the Company is not at
least $3.00 per share for any twenty consecutive day period as
reported on the NASD's Electronic Bulletin Board or NASDAQ's
Small Cap Market from the date of the agreement through February
10, 1998 (this escrow agreement is incorporated by reference at
Exhibit 10.2 to the Form SB-2).
As of the date of this Prospectus, the terms of the Licensing
Agreement have not been met by the Company. However, the Company
has entered into amendment(s) of the original agreement that
provide for an extension of the cancellation deadline from
February 10, 1998, to September 1, 1999, subject to certain
conditions specified in the agreement. All conditions set forth
in the original agreement need to be met on or before September
1, 1999. The Company is currently negotiating an extension of
the agreement.
The License Agreement also provides that in the event that the
bid price for the common stock of the Company is more than $3.00
per share for any twenty consecutive day period, then HPOS shall
have the option to purchase up to 13,822,000 additional shares of
the Company common stock at an exercise price of $.30 per share.
(4) On April 28, 1997, the Company entered into a Host
Processing Agreement with ET&T for the purpose of having ET&T act
as the bank host processing for all Company transactions that are
sent by terminals that read credit cards or ATM cards (this
agreement is incorporated by reference at Exhibit 10.3 to this
Form SB-2). ET&T is to charge the Betting, Inc. a fee of $0.25
per transaction or 2.5% of the wager being sent by Betting, Inc.
to gaming operators. These transactions are to originate from
globally placed Betting, Inc. equipment and/or Betting, Inc.
licensed operators.
(5) On March 27, 1998, the Company entered into a
License Agreement with ET&T for the purpose of licensing
additional technology for processing electronic banking
transactions (this agreement is incorporated by reference at
Exhibit 10.4 to this Form SB-2). This licensing supplements the
technology licensed under the Agreement date February 18, 1997.
This agreement states that ET&T licenses the following ET&T
products to Betting, Inc. for the exclusive global usage of
wagering by PERFECT originated ATM cards, credit cards, and smart
cards:
The PayMaster, defined as a stand alone terminal that attaches to
phone lines and which calls the ET&T host processing center with
bank data.
The SLICK, defined as a stand alone keyboard terminal that
attaches to phone lines and call the ET&T host processing center
with bank data that has bypassed the Internet.
The PocketPay, defined as a pocket sized terminal and telephone
that sends bank data by wireless transmission to the ET&T host
processing center.
The TV Pin Pad Remote, defined as a set top box and TV remote
that sends bank data by landline dial up transmission to the ET&T
host processing center.
Each ET&T product is exclusively licensed to Betting, Inc. on a
global basis for the application of PERFECT wagering at a
licensing fee of $2,000,000 each. The duration of the exclusive
license is 20 years. The licensing fee is to be paid by the
Company at the rate of $30,000 per month; however, under the
terms of this License Agreement, this fee is not due and payable
until the technology for a particular product covered by the
license has been perfected and is ready for public use. As of
the date of this Form SB-2, only the PayMaster has been
perfected. This liability was satisfied in full in June 1999
through the issuance of common stock (as reflected in the Form
10-QSB for the quarter ended June 30, 1999).
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) Market Information.
The Company's Shares are traded in the over-the-counter market
and the range of closing bid prices shown below is as reported
by the OTC Bulletin Board. The quotations shown reflect inter-
dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 1999
High Low
First Quarter 1.0625 0.375
Second Quarter 0.85 0.41
Per Share Common Stock Bid Prices by Quarter
For the Transition Period Ended on December 31, 1998 *
High Low
Transition Period 0.98 0.05
* Due to a change in the fiscal year end of the Company from
August 31 to December 31 as a result of the merger of the Company
with Betting, Inc. (Missouri).
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1998
High Low
First Quarter 0.12 0
Second Quarter ** 0.08 0
Third Quarter 0.15 0.03
Fourth Quarter 0.20 0.06
** The Shares did not trade from February 18, 1998 through
February 28, 1998
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1997
High Low
First Quarter 8 5.875
Second Quarter *** 8.125 7.625
Third Quarter *** 0.8125 0.0625
Fourth Quarter 0.5625 0.06
*** The Shares did not trade from December 13, 1996 through
April 24, 1997
(b) Holders of Common Equity.
As of August 13, 1999, there were 415 shareholders of record of
the Company's common stock.
(c) Dividends.
The Company has not declared or paid a cash dividend to
stockholders since it became a "C" corporation on November 18,
1993. The Board of Directors presently intends to retain any
earnings to finance Company operations and does not expect to
authorize cash dividends in the foreseeable future. Any payment
of cash dividends in the future will depend upon the Company's
earnings, capital requirements and other factors.
EXECUTIVE COMPENSATION
(a) No officer or director of the Company is receiving any
remuneration at this time, except as follows: Thomas S. Hughes
received a salary payment in June 1999 of $50,000. He had not
previously received any salary from the Company.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
corporation in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed
to by the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be in the future directly or
indirectly by the corporation to any officer or director under
any plan which is presently existing.
FINANCIAL STATEMENTS
The Financial Statements required by Item 310 of Regulation S-B
(in the form of the latest Annual Report on Form 10-KSB and
Quarterly Report on Form 10-QSB) are incorporated by reference in
this Prospectus, and are set forth in their entirety as Exhibits
13.1 and 13.2 to this Form SB-2.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
(a) On August 1, 1998, the Company engaged the services of
George Brenner, C.P.A. of Beverly Hills, California, to provide
an audit of the Company's financial statements for the fiscal
years ended August 31, 1997 and 1998. The former accountant for
the Company, BDO Seidman L.L.P. of St. Louis Missouri declined
the stand for re-election for the 1997 engagement. The
independent auditor's reports for August 31, 1996 and 1995, were
modified as to the uncertainties about the Company's ability to
continue as a going concern. The decision to change accountants
was approved by the Company's Board of Directors with the
selection of the successor accountant. The Company and its former
accountants had no disagreement during the fiscal years ended
August 31, 1996 and 1995, and through the date they declined to
stand for re-election.
(b) Effective on July 19, 1999, the independent accountant
who was previously engaged as the principal accountant to audit
the registrant's financial statements, resigned. This
accountant's report on the financial statements for the past two
years neither contained an adverse opinion or a disclaimer of
opinion, nor was qualified or modified as to uncertainty, audit
scope, or accounting principles. The decision to change
accountants was approved by the Board of Directors.
During the registrant's two most recent fiscal years and any
subsequent interim period preceding such resignation, there were
no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. In addition, there
were no "reportable events" as described in Item 304(a)(1)(v)(A)
through (D) of Regulation S-K that occurred within the
registrant's two most recent fiscal years and the subsequent
interim period preceding the former accountant's resignation.
(c) Effective on July 22, 1999, the firm of Farber & Hass has
been engaged to serve as the new principal accountant to audit
the registrant's financial statements. During the registrant's
two most recent fiscal years, and the subsequent interim period
prior to engaging that accountant, neither the registrant (nor
someone on its behalf) consulted the newly engaged accountant
regarding any matter.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Information on this item is set forth in Propsectus under the
heading "Disclosure of Commission Position on Indemnification for
Securities Act Liabilities."
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Information on this item is set forth in the Prospectus
under the heading "Use of Proceeds."
RECENT SALES OF UNREGISTERED SECURITIES
None.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding
the forgoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation From the
low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(d) Provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer 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 small
business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the small business issuer
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
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, thereunto duly authorize, in the
City of San Pedro, State of California, on September 28, 1999.
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
Special Power of Attorney
The undersigned constitute and appoint Thomas S. Hughes their
true and lawful attorney-in-fact and agent with full power of
substitution, for him and in his name, place, and stead, in any
and all capacities, to sign any and all amendments, including
post-effective amendments, to this Form SB-2 Registration
Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and
Exchange Commission, granting such attorney-in-fact the 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 and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact 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 date indicated:
Signature Title Date
/s/ Thomas S. Hughes President,, Chief Executive September 28, 1999
Thomas S. Hughes Officer, Director
/s/ Jack M. Hall Secretary, Director September 28, 1999
/s/ Diane Hewitt Treasurer (Principal September 28, 1999
Diane Hewitt Financial and Accounting
Officer), Director
