<PAGE>
As filed with the Securities and Exchange Commission on June 20, 1996
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
WIZ TECHNOLOGY, INC.
(Name of registrant as specified in its charter)
Nevada 33-0560855
(State or Jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
32951 Calle Perfecto Mar-Jeanne Tendler
San Juan Capistrano, CA 92675 32951 Calle Perfecto
(714) 443-3000 San Juan Capistrano, California 92675
(Address, including zip code, (Name, address, including zip code
and telephone number, including and telephone of agent for service)
area code of Registrant's principal
executive offices)
(714) 443-3000
of Re
COPY TO:
Jehu Hand, Esq.
Hand & Hand
24901 Dana Point Harbor Drive, Suite 200
Dana Point, California 92629
(714) 489-2400
Facsimile (714) 489-0034
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this registration
statement.
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or
interest reinvestment plan, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:
[ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share(1) Offering Price(1) Registration Fee
<S> <C> <C> <C> <C>
Common Stock offered by
selling shareholders................. 2,130,333 $7.75 $16,510,080.75 $ 5,693.13
Total.................................. 2,130,333 $7.75 $16,510,080.75 $ 5,693.13
<FN>
(1) Estimated solely for purposes of calculating the registration fee.
Pursuant to Rule 457(c) under the Securities Act, the maximum offering
price per share is based upon the closing price of the Common Stock on
the American Stock Exchange on June 13, 1996, or $8.00. Includes 178,333
shares issuable upon conversion of debt; also includes reoffers of such
shares.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
WIZ TECHNOLOGY, INC.
2,130,333 Shares of Common Stock
($.001 par value)
The 2,130,333 shares (the "Shares") of Common Stock, par value $.001 per
share (the "Common Stock") of WIZ Technology, Inc., a Nevada corporation (the
"Company") are being offered by selling stockholders (the "Selling
Shareholders"). The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholders. See "Selling Stockholders." The
expenses of the offering, estimated at $40,000, will be paid by the Company.
The Common Stock currently trades on the American Stock Exchange under the
symbol "WIZ." On June 13, 1996, the closing price of the Common Stock as
reported by the American Stock Exchange was $7.75 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ___________, 1996
1
<PAGE>
This Prospectus relates to the offer and sale of the following securities:
$500,000 in value of Common Stock of the Company, valued at 80% of the closing
sale price of the Company's Common Stock on the date immediately prior to the
effective date of this Prospectus, issuable upon conversion of the Company's
convertible Promissory Notes dated August 16, 1995 and due August 16, 1996, in
the aggregate principal amount of $500,000 (the "Notes") [125,000 estimated
shares]; 120,000 shares of Common Stock issuable upon exercise of the options
attached to the Notes at a price of $2.50 per share as well as options for
120,000 additional shares issuable at $2.50 per share if the Notes are extended
until August 16, 1997; 1,500,000 shares of Common Stock, including 1,200,000
shares of common stock issuable upon conversion of 1,200,000 shares of Series B
Convertible Preferred Stock, all issued in connection with the acquisition of Q
& A Sales and Marketing, Inc., 30,000 shares of common stock issuable to acquire
software from AIM Software, Inc., 53,333 shares issuable upon conversion of a
promissory note for $80,000 issued in December 1992; and 182,000 shares of
common stock issuable upon exercise of Underwriter's Warrants.
See "Selling Stockholders."
No person has been authorized in connection with this offering to give any
information or to make any representation other than as contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities covered by this Prospectus in any state or other jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such state
or jurisdiction. Neither the delivery of this Prospectus nor any sales made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, as well as proxy statements and
other information filed by the Company with the Commission, can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its Regional
Offices located at 7 World Trade Center, New York, New York 10048, and at
Citibank Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, Washington, D.C. 20549, during regular
business hours. The Company's Common Stock is listed on the American Stock
Exchange Emerging Company Marketplace, and all reports, proxy statements,
information statements and other information concerning the Company can be
inspected at the public reference facilities maintained by the American Stock
Exchange Emerging Company Marketplace, at 86 Trinity Place, New York, New York
10006-1881.
This Prospectus incorporates by reference the Company's Form 10-KSB for
the year ended July 31, 1995, the Company's Quarterly Reports on Form 10-QSB for
the quarters ended October 31, 1995, January 31, 1996 and April 30, 1996, the
Company's Current Report on Form 8-K dated March 12, 1996 as amended by Form
8-KA, and the description of securities included in the Company's Registration
Statement on Form 8-A, File No. 1-12726, and all other documents subsequently
filed by the Company pursuant to Section 13(a), 13(c) or 14 of the Exchange Act
prior to the termination of the offering made hereby. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in its entirety by such reference. The Company
will provide, without charge upon oral or written request of any person, a copy
of any information incorporated by reference herein. Such request should be
directed to the Company at 32951 Calle Perfecto, San Juan Capistrano, California
92675, telephone (714) 443-3000.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the information
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety.
The Company
WIZ Technology, Inc., a Nevada corporation (the "Company") markets a
comprehensive line of computer software at prices under $20.00 per program,
including both licensed software and "shareware," for IBM Pcs and compatibles.
The Company markets its products directly and through distributors. The
Company's product line of over 200 programs is designed for a wide range of
personal computer users, particularly small business and home users who may have
limited technical expertise. The Company selects software programs which it
believes are most suitable for general public use in the categories of games,
utilities, educational, and business and integrates these programs with
user-friendly menu screens. Recently, the Company acquired its first major
property software title, Lunar Landing. Software is sold in CD Rom jewel cases,
shrink wrapped boxes and colorful diskette envelopes. The Company's software
products are sold in the United States and abroad under the names "The $5
Computer Software StoreTM," for 3.5" diskettes, "White Wolf" and "Silver Coyote"
for CD Roms, and Digital System Research for boxed software through computer
stores such as Comp USA, Computer City, and Ingram Micro, national retailers
such as K-Mart-Canada, Osco Drugs, Toys-R-Us Canada, regional discount chains
such as Longs Drugstores, Pharma Plus Drug Canada, grocery stores such as Alpha
Beta Supermarkets, Army & Air Force Exchange Service and national and local
specialty retailers.
The Company's objective is to become a leading marketer of affordable
computer software. The Company's strategy for achieving this objective consists
of three components: (1) acquire rights to distribute high quality, easy to use
software; (2) continue to develop effective distribution channels for marketing
such software; and (3) market software at prices under $20.00 that meet the
needs of a broad base of users. In March 1996, in furtherance of this strategy,
the Company acquired Q & A Sales and Marketing, Inc. ("Q & A"), with sales in
calendar 1995 of $3,893,000 specializing in home office, productivity and
lifestyle software.
In March 1996, in connection with the acquisition of Q & A, the Company
acquired rights to a new generation of internet technology from Digital Systems
Research, Inc. ("DSR") originally developed for the United States Department of
Defense. This technology enables internet "home pages" to be connected into a
relational database, and thereby converts the current "static" internet home
page, which only has that information designed by the sponsor of the page, into
a "dynamic" page which can reflect the needs of the consumer. The Company
intends to market this technology to manufacturers and distributors of consumer
products in order to give consumers internet access to product information and
to facilitate direct purchasing. Pursuant to a Software Development and License
Agreement dated March 8, 1996 with DSR (the "Software Agreement"), the Company
obtained a worldwide, exclusive right to market this technology to the public at
large or to retailers, as well as distributors, and original equipment
manufacturers or wholesalers who support retail operations. The Software
Agreement is for a term of five years, with automatic extensions each five years
in perpetuity. DSR is required under the Software Agreement to assist the
Company in developing the functional specifications for each contract and to
provide ongoing support.
The Company plans to establish the world's largest virtual shopping
mall (the "Wiz Mall") using this technology through its wholly owned subsidiary,
Capotec Business Solutions, Inc.. The WIZ Mall will be anchored by a WIZ
department store, which will offer products from many vendors, and individual
outlets similar to those found in conventional malls. The Company has entered
into negotiations with several vendors and merchandisers for WIZ Mall contracts.
Capotec will also market its Corporate Information Services division ("CIS").
CIS enables customers to establish customized "virtual" networks (known as the
"intranet") by using the Internet and customized relational databases.
Traditional networks require users to be hard wired together, whether
through local cable or dedicated telephone lines. The virtual networks to be
marketed by CIS enable anyone who has access to the Internet to access the
customers network, provided that appropriate passwords are supplied. The
security level and type of information which is accessible can be customized for
each user or group of users.
3
<PAGE>
Most internet users locate information by using web browsers to search
for their topics of interest. The information search can be compared to a
library: the user searches for the home page of the desired source (similar to
locating a book or periodical) and then peruses the home page, book or
periodical. The user is able to access only one home page at a time. In the view
of management, this limitation of one homepage web site at a time has hindered
the development of the use of the internet for shopping. The Company's
technology permits the consumer to access multiple web pages simultaneously, and
in effect design a customized electronic product catalog. For example, a
consumer could request information on all women's tennis shoes of a particular
color from a number of retailers or manufacturers simultaneously. The dynamic
home page produced by the software would list all such shoes offered, together
with pictures, prices and ordering information.
The Company's principal executive offices are located at 32951 Calle
Perfecto, San Juan Capistrano, California 92675 and its telephone number is
(714) 443-3000.
The Offering
Securities Offered: 2,130,333 shares of Common Stock, $.001 par value per
share, including 178,333 shares issuable upon conversion
of debt, 422,000 shares issuable upon exercise of
Warrants or options, 1,530,000 shares issued for
acquisitions (including 1,200,000 shares issuable upon
conversion of Series A Preferred Stock) and 182,000
shares issuable upon exercise of Underwriters' Warrants.
Common Stock Outstanding(1) Before Offering:............. 8,618,558(1) shares
Common Stock Outstanding After Offering:................. 10,748,891(1) shares
AMEX symbol.............................................. WIZ
(1) Based on shares outstanding as of April 30, 1996.
Risk Factors
Investment in the Shares offered hereby involves a high degree of risk,
including the limited operating history of the Company and competition.
Investors should carefully consider the various risk factors before investing in
the Shares. This Prospectus contains forward looking statements which may
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors." See "Risk Factors."
Summary Financial Information
Set forth below is selected financial data with respect to the Company
as of and for fiscal years ended July 31, 1995, 1994, 1993 and 1992, and the
period January 1, 1991 (inception) to July 31, 1991. The selected financial data
as of July 31, 1995 and the selected operating data for the year ended July 31,
1995 have been derived from consolidated financial statements audited by Coopers
& Lybrand, L.L.P. The selected financial data as of July 31, 1994 and the
selected operating statement data for the year ended July 31, 1994 have been
derived from consolidated financial statements which have been audited by Corbin
& Wertz, independent accountants. The selected balance sheet data as of July 31,
1993, 1992 and 1991 and the selected operating statement data for the two years
ended July 31, 1993 and for the period from January 1, 1991 (inception) through
July 31, 1991 have been derived from audited financial statements which are not
included herein. The financial information as of April 30, 1996 and for the nine
months ended April 30, 1996 and 1995 is derived from the unaudited consolidated
interim period financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Operating Statement Data:
(Revised) Period from
Nine Months Ended Year Year Year Year Inception
April 30, Ended Ended Ended Ended (January 1, 1991)
1996 1995 July 31, 1995 July 31, 1994 July 31, 1993 July 31, 1992 thru July 31, 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $6,336,879 $2,124,157 $ 3,680,634 $ 1,667,589 $ 1,899,001 $ 2,344,046 $ 153,703
Costs and Expenses 5,448,503 2,583,229 4,349,524 4,315,579 1,781,763 2,196,321 167,278
Income (Loss) from
Operations 888,376 (459,072) (668,890) (2,647,990) 117,238 147,725 (13,575)
Other Income (Loss) (62,625) 40,547 (73,347) (311,079) (20,197) 7,313 (1,750)
Net Income (Loss) 794,055 (418,526) (562,711) (2,337,711) 75,911 71,003 (15,325)
Net Income (Loss)
Per Share(1) $ .09 $ .05 $ (.07) $ (.36) $ .01 $ .02 $ --
Weighted Average
Number of Shares
Outstanding 8,957,422 8,213,863 7,944,034 6,531,155 5,386,340 4,500,000 4,500,000
(1) Fully diluted earnings per share are not materially different from primary
earnings per share.
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
As of As of As of As of As of As of
April 30, 1996 July 31, 1995 July 31, 1994 July 31, 1993 July 31, 1992 July 31, 1991
<S> <C> <C> <C> <C> <C> <C>
Total Assets $ 12,350,797 $ 4,093,741 $ 4,258,861 $ 1,092,970 $ 734,333 $ 90,566
Working Capital 3,615,994 1,473,096 1,942,192 265,413 124,565 19,461
Total Current Liabilities 2,405,238 1,177,447 1,282,374 553,272 480,507 65,291
Long Term Debt 249,426 112,131 79,310 17,163 157,548 --
Shareholders' Equity 9,696,133 2,804,163 2,897,177 1,092,970 96,278 25,275
</TABLE>
5
<PAGE>
Pro Forma Financial Information
Set forth is selected pro forma financial information with respect to the
acquisition of Q & A by the Company on March 12, 1996. The acquisition was
effected by the issuance of 300,000 shares of Common Stock and 1,200,000 shares
of Series B Preferred Stock. The statement of operations data is set forth
assuming the acquisition was effected as of January 1, 1995 and includes
information derived from the audited financial statements of Q & A for the year
ended December 31, 1995 included elsewhere herein. The pro forma balance sheet
information assumes that the acquisition was effected on December 31, 1995. The
acquisition of Q & A has been accounted for as a purchase.
<TABLE>
<CAPTION>
WIZ TECHNOLOGY,INC & Q&A SALES AND MARKETING, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JANUARY 31, 1996
WIZ Q & A
TECHNOLOGY SALES &
INC. MARKETING, INC.
HISTORICAL HISTORICAL (A)
AS OF AS OF PRO FORMA
JAN. 31, 1996 DEC. 31, 1995 ADJUSTMENTS TOTAL
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash and Equivalents $ 1,985,515 $ 32,114 $ (32,114) $ 1,985,515
Accts. Rec., Net 1,545,249 993,432 (564,372) 1,974,309
Notes Rec From Stockholders 103,732 0 103,731
Inventories 1,149,862 495,527 (201,067) 1,444,322
Income Tax Receivable 0 37,144 (282) 36,862
Deferred Tax Asset 0 204,597 (204,597) 0
Prepaid Exp & Other 126,369 8,443 (538) 134,274
Employee Advances 3,377 3,951 (3,951) 3,377
TOTAL CURRENT ASSETS 4,914,103 1,775,208 5,682,390
PROP & EQUIP, NET 667,055 148,814 (34,910) 780,959
License Agreement - DSR 3,500,000 3,500,000
Software Development
Costs, Net 903,249 202,585 (202,585) 903,249
Deposits/Certificate 100,000 12,656 (61) 112,595
Notes Rec. 13,129 0 13,129
Covenants Not to Compete 145,108 76,146 443,854 665,108
Goodwill 0 15,520 (15,520) 0
Deferred Tax Asset 0 79,407 (79,407) 0
Cash Value Life Insurance 0 129,126 (129,126) 0
Other Assets 42,531 0 0 42,531
TOTAL OTHER 1,204,017 515,440 3,517,155 5,236,612
TOTAL ASSETS $ 6,785,175 $ 2,439,462 $2,475,324 $ 11,699,961
6
<PAGE>
<CAPTION>
WIZ TECHNOLOGY, INC. & Q &A SALES AND MARKETING, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JANUARY 31, 1996
WIZ Q & A
TECHNOLOGY SALES &
INC. MARKETING, INC.
HISTORICAL HISTORICAL (A)
AS OF AS OF PRO FORMA
JAN. 31, 1996 JAN. 31, 1996 ADJUSTMENTS TOTAL
LIABILITIES & STOCKHOLDERS
EQUITY
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 359,338 $ 961,480 $ 74,886 $ 1,395,704
Accrued Expense/Royalties/
Salaries 229,096 93,699 (1,992) 320,803
Debt to Related Parties 80,000 1,934,507 (1,934,507) 80,000
Deferred Compensation 0 260,000 (164,125) 95,875
Income Taxes Payable 0 1,600 (1,600) 0
Current Portion Long Term 561,837 39,977 601,814
TOTAL CURRENT LIABILITIES 1,230,271 3,291,263 (2,037,338) 2,494,196
LONG TERM LIABILITIES 80,595 69,834 (10,473) 139,956
TOTAL LIABILITIES 1,310,866 3,361,097 (2,037,811) 2,634,152
STOCKHOLDERS' EQUITY
Preferred Stock 2 0 1,200 1,202
Common Stock 8,186 50,000 (49,700) 8,486
Services Rec. for Stock (78,500) 0 (78,500)
Notes Rec. from Stockhldr (157,500) 0 (157,500)
Paid in Capital -
Preferred 1,664,998 0 3,358,800 5,023,798
Paid in Capital -
Common 6,325,193 10,715 288,985 6,624,893
Retained Earnings/Deficit (2,809,140) 55,729 (2,753,411)
Net Income 521,069 (1,038,079) 913,851 396,841
TOTAL STOCKHOLDERS'
EQUITY 5,474,308 (921,635)(B)(C)4,513,136 9,065,809
TOTAL LIAB &
STOCKHOLDERS' EQUITY $ 6,785,175 $ 2,439,462 $ 2,475,324 $ 11,699,961
7
<PAGE>
WIZ TECHNOLOGY, INC. & Q&A SALES AND MARKETING, INC. PRO FORMA
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JANUARY 31, 1996
WIZ Q & A
TECHNOLOGY SALES &
INC. MARKETING, INC.
SIX MONTHS SIX MONTHS
ENDED ENDED PRO FORMA
JAN. 31, 1996 DEC. 31, 1995 ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
Net Sales $ 3,634,881 $ 1,946,606 $ (37,466) $ 5,544,021
Cost of Revenues 1,783,412 1,105,352 (18,358) 2,870,406
GROSS PROFIT 1,851,469 841,254 19,108 2,673,615
Administrative Expenses 1,310,487 1,470,234 2,780,721
Operating Profit (Loss) 540,982 (628,980) 19,108 (107,106)
Other Income (Expense)
Interest & Other Income 70,706 0 70,706
Interest Expense (69,816) (54,926) 52,732 (72,010)
Total Other Income (Exp) 890 (54,926) 52,732 (1,304)
NET INCOME (LOSS) PRE-TAX 541,872 (683,906) 33,624 (108,140)
PROVISION FOR TAXES
(TAX BENEFIT) 20,803 (164,867) (144,064)
NET INCOME (LOSS) $ 521,069 $ (519,039) $ 33,624 $ 35,654
NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Primary $ .06 $ .01
Fully Diluted $ .06 $ .01
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 8,608,766 8,920,514
Fully Diluted 8,865,504 10,034,016
8
<PAGE>
WIZ TECHNOLOGY, INC. & Q&A SALES AND MARKETING, INC. PRO FORMA
CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED JULY 31, 1995
WIZ Q & A
TECHNOLOGY SALES &
INC. MARKETING, INC.
HISTORICAL HISTORICAL
YEAR TWELVE MONTHS
ENDED ENDED PRO FORMA
JULY 31, 1995 JUNE 30, 1995 ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
Net Sales $ 3,680,634 $ 3,212,148 $ $ 6,892,782
Cost of Revenues 1,932,746 1,619,936 3,552,682
GROSS PROFIT 1,747,888 1,592,212 3,340,100
Administrative Exp. 2,416,778 2,255,830 4,672,608
Operating (Loss) (668,890) (663,618) (1,332,508)
Other Income (Expense)
Interest & Other Income 148,139 0 148,139
Interest Expense (41,160) (69,507) 62,637 (48,030)
Total Other Income (Exp) 106,979 (69,507) 62,637 100,109
NET INCOME (LOSS) PRE-TAX (561,911) (733,125) 62,637 (1,232,399)
PROVISION FOR TAXES
(TAX BENEFIT) 800 (158,567) (157,767)
NET INCOME (LOSS) $ (562,711) $ (574,558) $ 62,637 $(1,074,632)
NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Primary $ .07 $ (0.13)
Fully Diluted $ .07 $ (0.13)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 7,944,034 8,244,034
Fully Diluted 7,944,034 8,244,034
(A) Adjustments made as a result of purchase price allocations
(B) Adjustments made to eliminate sales and profit on transactions between
WIZ Technology, Inc. and Q & A Sales and Marketing, Inc.
(C) Adjustments made as a result of eliminating interest on debt forgiven
by Digital Systems Research, Inc., parent of Q & A Sales and Marketing,
Inc., in connection with acquisition.
</TABLE>
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree
of risk. Prospective investors should carefully consider the following risk
factors relating to the business of the Company and this offering, together with
the information and financial data set forth elsewhere in this Prospectus,
before investing in the Shares offered hereby.
Limited History of Business Operations; Sustainability of Past Results
The Company has limited operating history, having commenced operations
in January 1991. The Company's revenues and income, which until April 1995 were
derived primarily from the sale of shareware, have increased significantly in
the past fiscal periods. The Company's growth has been dependent on a number of
factors, such as the Company's marketing efforts, trends in personal computer
sales and usage, changes in available technology, changes in the competitive
environment of personal computer software, and general economic conditions. The
Company has enjoyed limited competition to date in the emerging market for under
$20 computer software, and an increase in competition or the loss of additional
customers could have an adverse effect on the Company's revenues and
profitability. In fiscal 1995, the Company continued its expansion of its
software and began marketing CD Rom software. The Company has recently acquired
exclusive marketing rights to certain internet technology, and intends to expand
marketing efforts in this area. As a result of the increase in operating
expenses caused by this expansion and other factors, operating results may be
adversely affected if sales do not increase sufficiently, whether due to
increased competition or otherwise. There can be no assurance that the Company
will be able to grow in future periods or sustain its historic rates of revenue
growth and profitability. As a result, the Company believes that period to
period comparisons of its results of operations are not necessarily meaningful
and should not be relied upon as an indication of future performance.
Management of Growth
The Company's growth to date has required and is expected to continue
to require, the full utilization of the Company's management, financial and
other resources. The Company's ability to manage growth effectively will depend
on its ability to improve and expand its operations, including its financial and
management information systems, and to recruit, train and manage executive staff
and employees. There can be no assurance that management will be able to manage
growth effectively, and the failure to effectively manage growth may have a
materially adverse effect on the Company's results of operations.
Dependence on Limited Number of Customers
The Company is dependent upon a limited number of distributors and
retail customers for the majority of its revenues. In the fiscal years ended
July 31, 1995 and 1994, six distributors and retail customers accounted for an
aggregate of 47.2% and 71.0%, respectively, of total net revenues. In fiscal
1994, the Company terminated its relationship with its largest customer, its
former Canadian distributor, and wrote off $405,329 of accounts receivable from
this customer. Although the Company is vigorously pursuing collection of this
account, there can be no assurance that the Company will collect any of this
amount. The Company's acquisition of Q & A in March 1996 has lessened the
Company's dependence on any one customer, but the Company's dependence on a
limited number of customers could result in sales declines or similar losses in
the future if its relationship with any one significant customer is interrupted
for any reason.
10
<PAGE>
Competition
The market for software products, while fragmented, is highly
competitive and subject to rapid change. Consumer demand for particular software
products may be adversely affected by the increasing number of competitive
products from which to choose. The Company's low priced software competes with
computer specialty stores, software specialty stores, direct sales
organizations, software publishers that sell directly to end users, mail-order
companies, bookstores, electronic bulletin boards, other software distributors
employing marketing plans similar to the Company and other types of retail
chains that sell software products. Many of these competitors have substantially
greater resources than the Company. Several small companies have emulated the
Company's concept of marketing low priced software to the general public, but to
the Company's knowledge such competition has not materially adversely affected
the Company. Should a larger and better financed company decide to compete with
the Company, and be successful in its competitive efforts, the Company's
business could be materially adversely affected. The Company's internet
technology will compete with other companies marketing internet software and
services. These competitors include several large companies with substantially
greater financial, technological and marketing resources than the Company and a
large number of companies of varying sizes and resources. Competitors may
broaden their product line, and potential competitors, including large computer
or software manufacturers, entertainment companies, entertainment software
companies and educational publishers, may enter, or increase their focus on,
shareware or educational or game software business, or internet application
software, resulting in increased competition.
There can be no assurance that the Company will be able to compete
successfully against current and future competitors or that competitive
pressures faced by the Company will not have a material adverse effect on the
Company. Additionally, the channels of distribution for personal computer
software are constantly changing and new channels, such as software rental
stores or other channels, are likely to emerge. Changes in the channels of
personal computer software distribution could have a material adverse effect on
the Company's results of operations.
Developing and Changing Market
Consumer preferences for particular software products, including the
educational, self-help and small business software and entertainment software
currently marketed by the Company, are difficult to predict and are subject to
rapid change. The market for software is continually evolving, and is highly
dependent upon changes in computer hardware technology. Changes in technology
and consumer preferences may render software obsolete, and computer software is
subject to unauthorized duplication. The Company does not believe that these
risks are material at this time in the low price software segment, but there can
be no assurance that the Company's assessment is correct, nor that the Company's
products will continue to be accepted by the public in the future. Since the
Company sells its programs on recycled floppy disks, shortages in the supply of
recycled floppy disks (or other media on which software may be recorded in the
future) could adversely affect the Company's results of operations.
Risks of New Internet Business
Dependence of Continued Growth in Use of the Internet. The Wiz Mall's
future success is substantially dependent, and the success of the Corporate
Information Services division is partially dependent, upon continued growth in
the use of the Internet and the Web. Rapid growth in the use of and interest in
the Internet and the Web is a recent phenomenon. There can be no assurance that
communication or commerce over the Internet will become widespread or that
extensive content will continue to be provided over the Internet. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary infrastructure,
such as a reliable network backbone, or timely development of performance
improvements including high speed modems. In addition, to the extent that the
Internet continues to experience significant growth in the number of users and
level of use, there can be no assurance that the Internet infrastructure will
continue to be able to support the demand placed upon it by such potential
growth. In addition, the Internet could lose its viability due to delays in the
development or adoption of newer standards and protocols required to handle
increased levels of Internet activity, or due to increased governmental
regulation. Changes in or insufficient availability of telecommunications
services to support the internet also could result in slower response times and
adversely affect usage of the Wiz Mall. If use of the Internet does not continue
to grow, or if the Internet infrastructure does not
11
<PAGE>
effectively support growth that may occur, the Company's business, results of
operations and financial condition would be materially and adversely affected.
Uncertain Adoption of the Web as a Marketing Medium. Because the Wiz
Mall expects to derive substantially all of its revenues in the foreseeable
future from sales to vendors and residual fees, the future success of the
Company is highly dependent on the development of the Internet as a marketing
medium. The Company's Wiz Mall vendors are expected to have no or limited
experience with the Web as a marketing medium, have not devoted a significant
portion of their expenditures to Web-based marketing and may not find such
marketing to be effective for selling their products and services relative to
traditional print and broadcast media. No standards have yet been widely
accepted for the measurement of the effectiveness of Web-based marketing and
advertising, and there can be no assurance that such standards will develop
sufficiently to support Web-based advertising as a significant achieving medium.
The internet industry is young and has few proven products and services.
Moreover, critical issues concerning the commercial use of the Internet
(including security, reliability, cost ease of use and access, quality of
service and acceptance of advertising) remain unresolved and may negatively
affect the growth of Internet use or the attractiveness of Internet advertising.
If widespread commercial use of the Internet does not develop, or if the
Internet does not develop as an effective and measurable medium for advertising,
the Company's business, results of operations and financial condition will be
materially and adversely affected.
Start-up Nature of Internet Business. The Company's ability to generate
revenues will depend, among other factors, on customer's and vendor's acceptance
of the Web and the Corporate Information Services and Wiz Mall as an attractive
and sustainable medium and the development of a large base of users of the Wiz
Mall.
The Company's Corporate Information Services will compete with other
companies offering virtual network services. In addition, there is intense
competition in the sale of advertising on the Internet, including competition
from other Internet navigational tools as well as other high-traffic sites,
which has resulted in a wide range of rates quoted by different vendors for a
variety of advertising services, which makes it difficult to project future
levels of Internet advertising revenues that will be realized generally or by
any specific company. Competition among current and future suppliers of Internet
navigational services or Web sites, as well as competition with traditional
marketing and advertising channels, may lead to reductions in revenues. There
can also be no assurance that the Company's advertising customers will accept
the internal and third-party measurements of impressions received by the Wiz
Mall, or that such measurements will not contain errors.
Technology and Infrastructure. The Company has licensed the technology
used in the WIZ Mall and Corporate Information Services from DSR under an
exclusive, five year agreement renewable for successive five year terms. Under
the license agreement, DSR is responsible for implementation of the hardware and
software portions of the vendor contracts, and the Company will be substantially
dependent upon ongoing maintenance and technical support from DSR to ensure
effective operation. Any failure of DSR to implement each contract or to provide
prompt and effective support and maintenance to the Company, could have a
material adverse effect of the Company's business, results of operations and
financial condition.
Lack of Property Protection. The internet/intranet technology licensed
from DSR involves a combination of hardware and software technology. Although
the Company believes that the technology would be time consuming and expensive
for another party to duplicate, the concept of linking together information and
computers with relational databases is not protected by any proprietary rights,
such as a patent or copyright. There can be no assurance that competitors will
not develop competing intranet systems.
12
<PAGE>
Dependence on Key Personnel
The Company is dependent upon Mar-Jeanne Tendler, Chief Executive
Officer, Arthur Tendler, President, and Bruce Allen Gilgen, Chief Operating
Officer and other key employees with respect to administration and marketing.
The Company has entered into employment agreements with these individuals and
has obtained key men life insurance on the lives of Messrs. Tendler and Bruce
Gilgen and Ms. Tendler in the amount of $1 million each. The Company's future
success also depends on its ability to attract and retain other qualified
personnel, for which competition is intense. The loss of certain key employees
or the Company's inability to attract and retain other qualified employees could
have a material adverse effect on the Company's results of operations.
Dependence on Third Party Authors; Nonexclusivity
The Company does not currently develop or own most of its software
products, but either distributes them free of royalty (shareware) or pays a
royalty on each copy sold of licensed programs sold. The Company is currently
dependent on third party authors for the development of new software products,
although the Company believes that the lack of in-house program developers
represents a cost advantage, since it enables the Company to avoid the costs of
development, to select from products developed by the thousands of independent
programmers, and to be introduced to products and trends in computer software as
they occur. However, there can be no assurance that the Company will be able to
continue to obtain a supply of quality software programs from independent
authors.
The Company receives many new programs each month for evaluation from
independent software developers. Although the Company may acquire exclusive
rights to software in the future, or may acquire the exclusive right to
customize versions of software in the future, the lack of exclusive rights means
that the Company's competitive advantage, if any, will be limited to its ability
to select and market software which is responsive to consumer preferences.
However, management does not believe that the lack of exclusive proprietary
rights is critical in the low priced software market in which it competes.
Protection of Trademark Rights
The Company considers its trademark and service marks in the aggregate,
and in particular, "The $5 Computer Software Store," to be valuable and of
substantial commercial benefit with consumers and retailers of its product. The
Company has filed or is in the process of filing for federal trademark
protection on several of its trademarks and service marks including those named
herein, one of which has been challenged. There can be no assurance that any
federal trademarks will be granted, in which case the Company intends to rely on
common law trademark protections, to the extent available. The Company has
obtained and collected on a judgment against a former distributor for
misappropriation of trademarks and similar causes of action, and intends to
pursue any other infringing parties with vigor. Litigation to enforce these
rights can be protracted and expensive, and the outcome of any litigation may be
uncertain. If the Company is unable to defend ownership of its proprietary
rights, its operating results could be materially adversely affected due to
consumer confusion and sales lost to infringing competitors.
Control by Officers and Directors
Directors and officers of the Company beneficially own 5,945,001 shares
of the Company's outstanding Common Stock, or approximately 58.7% of the
outstanding voting stock. As a result, the Company's officers and directors are
able to elect a majority of the Company's Board of Directors, to dissolve,
merge, or sell the assets of the Company, and to direct and control the
Company's operations, policies and business decisions.
Anti-takeover Effect of Possible Issuance of Preferred Stock and Nevada
Corporate Law
The Company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of Preferred Stock, par value $.001 per share ("Preferred
Stock"). Preferred Stock may be issued in one or more series, the terms of which
may be determined at the time of issuance by the Board of Directors, without
further action by stockholders, and may include voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and liquidation, conversion and redemption rights and sinking fund provisions.
There are currently
13
<PAGE>
1,300 shares of Series A Preferred Stock outstanding and 1,200,000 shares of
Series B Preferred stock outstanding. The Company has no present plans for any
issuances of additional Preferred Stock. The issuance of any Preferred Stock
could adversely affect the rights of the holders of Common Stock, and therefore
reduce the value of the Common Stock and make it less likely that holders of
Common Stock would receive a premium for the sale of their shares. In
particular, specific rights granted to future holders of Preferred Stock could
be issued to restrict the Company's ability to merge with or sell its assets to
a third party, thereby preserving control of the Company by present owners. In
addition, the Nevada General Corporation Law prohibits any merger,
consolidation, sale of assets or similar transaction over a certain de minimus
size between the Company on the one hand and another company which is, or is an
affiliate of, a beneficial holder of ten percent or more of the Company's voting
power (defined as an "interested stockholder"), for three years after the
acquisition of the voting power, unless the acquisition of the voting power was
approved beforehand by the Company's Board of Directors or the transaction is
approved by a majority of Company stockholders (excluding the interested
stockholder). Another provision of the Nevada General Corporation Law would
limit the voting rights of shares acquired in a "control share acquisition," as
defined, in the event the Company has more than 100 stockholders of record in
Nevada and the Company does business in Nevada. Although the Company is not
expected to satisfy either of these two prerequisites in the foreseeable future,
the application of the Nevada control share acquisition statute, and the
provisions prohibiting interested stockholder transactions, could also preserve
control of the Company by management.
General Economic and Market Conditions
Personal computer software sales are highly dependent upon sales of
personal computers. During recent years, segments of the personal computer
industry have experienced significant economic downturns characterized by
decreased product demand and price erosion. Although the Company does not
believe such factors have affected the Company, there can be no assurance that
the Company will not be affected if such situation continues or worsens or by
future events in the industry.
Lack of Dividends
The Company has not paid cash dividends in the past and does not
anticipate paying cash dividends on the Common Stock in the foreseeable future.
14
<PAGE>
MARKET PRICE OF COMMON STOCK
The Company's Common Stock has been listed on the American Stock
Exchange Emerging Company Marketplace ("ECM") under the symbol "WIZ" since
February 9, 1994. From August 28, 1992 to February 8, 1994, the Company's Common
Stock was quoted on the Electronic Bulletin Board sponsored by the National
Association of Securities Dealers, Inc. Prior to August 28, 1992, the Company's
Common Stock traded only intermittently and sporadically on the "pink sheets"
maintained by the National Quotation Bureau. The prices set forth in the table
below represent closing sales prices on ECM, as recorded in the Wall Street
Journal (from February 9, 1994) and "bid" and "ask" prices as reported by
National Quotations Bureau, without adjustments for retail markups, markdowns or
commissions, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Bid Prices Ask Prices
Quarter Ended 1994 High Low High Low
------------------ ---- --- ---- ---
<S> <C> <C> <C> <C>
January 1, 1994-
February 2, 1994 3 1/2 1 7/8 5 1/4 2 3/4
Closing Sales
February 3, 1995-
March 31, 1994 5 5/8 3 1/16
June 30, 1994 5 1/8 2 3/16
September 30, 1994 4 11/16 2 1/16
December 31, 1994 3 15/16 2 5/8
Quarter Ended 1995
March 31, 1995 4 1/16 2 7/16
June 30, 1995 3 3/16 2 1/16
September 30, 1995 5 5/16 2 5/8
December 31, 1995 4 7/16 3 1/4
Quarter Ended 1996
March 31, 1996 5 11/16 3 1/2
June 30, 1996 8 11/16 4 5/8
(through May 31, 1996)
</TABLE>
<PAGE>
The Company has not paid any dividends on its Common Stock.
The Company currently intends to retain any earnings for use in its business,
and therefore does not anticipate paying cash dividends in the foreseeable
future.
As of April 30, 1996, there were 172 record holders of Company
Common Stock.
16
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is selected financial data with respect to the Company
as of and for fiscal years ended July 31, 1995, 1994, 1993 and 1992, and for the
period from January 1, 1991 (inception) through July 31, 1991. The selected
financial data as of July 31, 1995 and the selected operating data for the year
ended July 31, 1995 have been derived from consolidated financial statements
audited by Coopers & Lybrand, L.L.P. The selected financial data as of July 31,
1994 and the selected operating statement data for the year ended July 31, 1994
have been derived from consolidated financial statements which have been audited
by Corbin & Wertz, independent accountants. The selected balance sheet data as
of July 31, 1993, 1992 and 1991 and the selected operating statement data for
the two years ended July 31, 1993 and for the period from January 1, 1991
(inception) through July 31, 1991 have been derived from audited financial
statements which are not included herein. The financial information as of April
30, 1996 and for the nine months ended April 30, 1996 and 1995 is derived from
the unaudited consolidated interim period financial statements.
<TABLE>
<CAPTION>
Operating Statement Data:
(Revised) Period from
Nine Months Ended Year Year Year Year Inception thru
April 30, Ended Ended Ended Ended (January 1, 1991)
1996 1995 July 31, 1995 July 31, 1994 July 31, 1993 July 31, 1992 July 31, 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $6,336,879 $2,124,157 $ 3,680,634 $ 1,667,589 $ 1,899,001 $ 2,344,046 $ 153,703
Costs and Expenses 5,448,503 2,583,229 4,349,524 4,315,579 1,781,763 2,196,321 167,278
Income (Loss) from
Operations 888,376 (459,072) (668,890) (2,647,990) 117,238 147,725 (13,575)
Other Income (Loss) (62,625) 40,547 (73,347) (311,079) (20,197) 7,313 (1,750)
Net Income (Loss) 794,044 (418,526) (562,711) (2,337,711) 75,911 71,003 (15,325)
Net Income (Loss)
Per Share(1) $ .09 $ .05 $ (.07) $ (.36) $ .01 $ .02 $ --
Weighted Average
Number of Shares
Outstanding 8,957,422 8,213,863 7,944,034 6,531,155 5,386,340 4,500,000 4,500,000
<FN>
(1) Fully diluted earnings per share are not materially different than primary
earnings per share.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
As of As of As of As of As of As of
April 30, 1996 July 31, 1995 July 31, 1994 July 31, 1993 July 31, 1992 July 31, 1991
<S> <C> <C> <C> <C> <C> <C>
Total Assets $ 12,350,797 $ 4,093,741 $ 4,258,861 $ 1,092,970 $ 734,333 $ 90,566
Working Capital 3,615,994 1,473,096 1,942,192 265,413 124,565 19,461
Total Current Liabilities 2,405,238 1,177,447 1,282,374 553,272 480,507 65,291
Long Term Debt 249,426 112,131 79,310 17,163 157,548 --
Shareholders' Equity 9,696,133 2,804,163 2,897,177 1,092,970 96,278 25,275
</TABLE>
BUSINESS - NEW DEVELOPMENT
Background and Strategy
WIZ Technology, Inc., a Nevada corporation (the "Company")
, markets a comprehensive line of
computer software at prices under $20.00 per program, including both licensed
software and "shareware," for IBM Pcs and compatibles. The Company markets its
products directly and through distributors. The Company has commenced marketing
its internet/intranet software technology. This technology which is currently
utilized by the U.S. Defense Department, enables customers to establish their
own virtual networks at a relatively low cost.
The Company's product line of over 200 programs is
designed for a wide range of personal computer
users, particularly small business and home users who may have limited technical
expertise. The Company selects software programs which it believes are most
suitable for general public use in the categories of games, utilities,
educational, and business and integrates these programs with user-friendly menu
screens. Recently, the Company acquired its first major property software title,
Lunar Landing. Software is sold in CD Rom jewel cases, shrink wrapped boxes and
colorful diskette
17
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envelopes. The Company's software products are sold in the United States and
abroad under the names "The $5 Computer Software Store, " for 3.5" diskettes,
"White Wolf" and "Silver Coyote" for CD Roms, and Digital System Research for
boxed software through computer stores such as Comp USA, Computer City, and
Ingram Micro, national retailers such as K-Mart-Canada, Osco Drugs, Toys-R-Us
Canada, regional discount chains such as Longs Drugstores, Pharma Plus Drug
Canada, grocery stores such as Alpha Beta Supermarkets, Army & Air Force
Exchange Service and national and local specialty retailers.
The Company's objective is to become a leading marketer of affordable computer
software. The
Company's strategy for achieving this objective consists of three components:
(1) acquire rights to distribute high quality, easy to use software; (2)
continue to develop effective distribution channels for marketing such software;
and (3) market software at prices under $20.00 that meet the needs of a broad
base of users. In March 1996, in furtherance of this strategy, the Company
acquired Q & A Sales and Marketing, Inc. ("Q & A"), with sales in calendar 1995
of $3,893,000 specializing in home office, productivity and lifestyle software.
Q & A Acquisition and Internet/Intranet software.
Effective March 12, 1996 the Company acquired all of the
outstanding shares of Q & A Sales and
Marketing, Inc. ("Q & A") by merger of Q & A into a newly formed Nevada
subsidiary of the Company. In connection with the merger, Q & A's name was
changed to Q & A Software Company. The Company issued 300,000 shares of common
stock and 1,200,000 shares of Series B Preferred Stock, each share of which is
convertible into one share of common stock, at various times from August 7, 1996
to May 10, 1998 to the stockholders of Q & A, being Digital Systems Research,
Inc. and four employees of Q & A (the "Q & A Shareholders"). The Company agreed
to register the shares of common stock issued to the Q & A shareholders and the
common stock issuable upon the conversion of the Series B Preferred Stock and
has registered such shares in the registration statement of which this
Prospectus is a part.
Until such time as the Q & A Shareholders own collectively
less than 100,000 shares of common stock
(including shares issuable upon conversion of Series B Preferred Stock) or March
15, 1999 whichever first occurs, the Q & A Shareholders have the right to
purchase additional shares of Company common stock in the event the Company
issues shares of common stock for less than 85% of market value, at the same
price as sold to third parties in order to maintain their proportionate interest
in the Company's common stock. Pursuant to the agreement, DSR, Mr. Wolfe, the
president of Q & A and a Q & A Shareholder, Mar-Jeanne Tendler, Arthur S.
Tendler and Gil Gilgen entered into a Shareholder's Agreement wherein such
persons agreed to vote all securities of the Company held by them for the
election of a designee of the Q & A Shareholders to the Board of Directors. The
Company agreed to give the Q & A Shareholders notice of any meeting of
shareholders at which directors are to be elected and to nominate the designee
of the Q & A Shareholders at the meeting. In addition, the parties to the
Shareholder's Agreement agreed, insofar as they may be members of the board, to
elect the designee as a member of any executive committee of the Board. Pursuant
to the Shareholder's Agreement, W. Willie Woods, president of DSR, was elected
to the Board of Directors as of March 12, 1996 and was nominated and elected to
that position at the annual shareholder's meeting held April 22, 1996. There are
currently no executive committees of the Board of Directors. The Shareholder's
Agreement terminates on the earlier of March 8, 1999 or such time as less than
300,000 of the Q & A Shares remain outstanding. Finally, the Company agreed to
indemnify DSR for any liability DSR may have as a former guarantor of the Q & A
obligations.
In March 1996 in connection with the acquisition of Q & A,
the Company acquired rights to a new
generation of internet technology from Digital Systems Research, Inc. ("DSR")
originally developed for the United States Department of Defense. This
technology enables internet 'home pages' to be connected into a relational
database, and thereby converts the current 'static' internet home page, which
only has that information designed by the sponsor of the page, into a 'dynamic'
page which can reflect the needs of the consumer. The Company is marketing this
technology to two groups: first, manufacturers and distributors of consumer
products in order to give consumers internet access to product information and
to facilitate direct purchasing, and to businesses who wish to establish their
own internet networks on a time and cost effective basis. The Company plans to
establish the world's largest virtual shopping mall under the name "Wiz Mall"
using this technology. Pursuant to a Software Development and License Agreement
dated March 8, 1996 with DSR (the "Software Agreement"), the Company obtained a
worldwide, exclusive right to market technology to the public at large or to
retailers, as well as distributors, original equipment manufacturers or
wholesalers who support retail operations. The Software Agreement is for a term
of five years, with automatic extensions each five years. DSR is required under
the Software Agreement to assist the Company in developing the functional
specifications for each contract.
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<PAGE>
Q & A Product Line. In March 1996 the Company acquired Q
& A Sales and Marketing, Inc. Q &
A sells over 50 licensed proprietary software products at list prices under
$20.00 on CD Rom and 3.5" diskettes, all under its Digital Systems Research
label. Q & A's software titles include Labels Plus, Unlimited Fonts, Legal
Documents and My Family Tree, and emphasize home office and lifestyle software.
CD Rom. In fiscal 1995 the Company began development of
CD-Rom software. The CD-Rom software
is sold either as individual titles in CD boxes or jewel cases, typically at the
price of $9.99 per disk, or as part of a ten pack of CD Rom diskettes, for
$29.99. Initial sale of CD-Rom titles commenced in the last quarter of 1995 with
a shipment to approximately 80 CompUSA stores. The Company believes that CD-Rom
sales will be an increasing portion of its business in the future. CD-Rom
software consists both of shareware and licensed titles, and include bonus
programs also sold by the Company on 3.5" floppy disks as well as some titles
developed for CD-Rom.
The Wiz Mall
The Internet is a global collection of computer networks,
linking millions of public and private
computers around the world. Historically, the Internet was used by academic and
government agencies to exchange information and send and receive electronic
mail. A number of factors, including the proliferation of communication-enabled
personal computers, the availability of intuitive, geographical software and
wide accessibility to an increasingly robust network infrastructure, have
allowed widespread access to the Internet at a rapidly declining cost and have
facilitated the emergence of the Web, a client/server system of hyper-linked,
multimedia databases. The Web enables non-technical users to easily access
information of the Internet and enables individuals or organizations to offer
textual, graphical and other information on the Web using client software known
as Web "browsers." In recent years the Web has experienced a rapid increase in
the number of individual users. International Data Corporation ("IDC") has
estimated that the number of Internet users will reach approximately 200 million
by the end of 1999, from approximately 56 million at the end of 1995; and an
October 1995 CommerceNet/Neilse Internet Demographics Survey indicated that
approximately 18 million people in the U.S. and Canada had used the WEB during
the three month period prior to the survey.
The rapidly increasing number of Web users and ubiquitous
access to the Web, both in the United States
and internationally, have resulted in the emergence of the Web as a new mass
communications medium. The minimal cost required to publish content on the Web,
relative to traditional publishing methods, has resulted in an explosion of
Web-based content, including online magazines, news feeds and games, as well as
a wealth of product, educational, entertainment and political information. The
emergence of the Web also has created major opportunities for companies to
advertise and promote their products and services in a targeted, interactive and
multimedia environment.
Corporate Information Services
Through the Company's wholly owned subsidiary Capotec
Business Solutions, Inc., the Company has
commenced marketing of the "virtual network" technology licensed from DSR. This
technology enables group users to connect to a shared database of information
through the Internet, much like the typical client-server network. Users are
provided with passwords and predetermined access rights to the information on
the network. Depending on the desired configuration, users can be provided with
access to only that specific level of information which is deemed appropriate
for their security level. Private virtual networks enable a business to
disseminate and gather information to and from administrative staff, vendors,
sales staff, and customers such as document retrieval, financial information,
order status, and product availability and pricing. The Company is marketing the
Corporate Information Systems for a one-time start-up fee with monthly
maintenance charges.
Electronic Shopping. Most Internet users locate
information by using web browsers to search for their
topics of interest. The information search can be compared to a library: the
user searches for the home page of the desired source (similar to locating a
book or periodical) and then peruses the home page, book or periodical. The user
is able to access only one home page at a time. In the view of management, this
limitation of one homepage web site at a time has hindered the development of
the use of the Internet for shopping. The Company's technology permits the
consumer to access multiple web pages simultaneously, and in effect design a
customized electronic product catalog. For example, a consumer could request
information on all women's tennis shoes of a particular color from a number of
retailers or manufacturers
19
<PAGE>
simultaneously. The dynamic home page produced by the software would list all
such shoes offered, together with pictures, prices and ordering information.
The concept of an electronic mall or electronic shopping
is not new. Electronic shopping is available
through existing online services such as CompuServe, America Online and Prodigy,
and currently is activated by the user's selection of the particular merchant
who has obtained an electronic store location. The user is guided through an
electronic catalog of the merchant selected, reviews and selects the merchandise
and orders the product. The chief limitation of this system is that it only
allows the consumer to access one merchant at a time.
The Company's technology, implemented through the Wiz
Mall, will allow the consumer to create a
customized catalog made up of products from all vendors (including
manufacturers, distributors and retailers) who have contracted with the Company.
The Company anticipates that consumers will appreciate the larger range of
product choices available to them, and that vendors will be able to employ Wiz
Mall as an additional marketing channel. In addition, the Company believes that
vendors will be able to use Wiz Mall to obtain rapid feedback on consumer
preferences and demographics. The Company intends to offer Wiz Mall as part of
its services to vendors and receive a fixed fee and/or percentage of sales from
each vendor.
The Web as a New Advertising Medium
Advertisers have identified the Web as a means for mass
communication of their messages, similar in
many respects to the use of advertising in traditional media such as television
and radio broadcasting and print publishing. A report by Forrester Research in
June 1995, estimated that the market for advertising on the Internet will reach
$74 million in 1996 and will exceed $2 billion by the year 2000. This amount
would represent approximately 1% of projected advertising expenditures in
traditional print, television and radio broadcast media by the end of the
decade, according to published industry estimates.
Advertisers also have recognized that Web-based
advertising may be more effective in a number of
respects than traditional media advertising. Because the Web involves
"point-to-point" communication between a server and client that is requested by
the user, rather than broad indiscriminate distribution of messages, the Web
offers the potential for advertisers to present messages to specific,
self-selected audiences, and to enable users to interact with advertising
information presented in Web pages. This characteristic of the Web also permits
advertisers to measure more precisely the number of impressions, or times that
an advertisement appears in page view downloaded by users, through verification
by an independent third party auditor such as Nielsen I/PRO (Internet Profile
Corporation). Advertisers can also measure the effectiveness of advertising in
generating "click-through," or user requests for additional information made by
clicking on the advertiser's banner, linking the user to the advertiser's Web
site. The Company believes that increases in transmission bandwidth through
higher speed Internet connections, will increase the functionality of
advertising, and will make the Web an even more attractive advertising medium.
The Company also believes that technological developments may result in greater
ability to provide information and analysis about the effectiveness of Web
advertising, the demographic profiles of users, as well as the capability for
advertisers to frequently modify and more closely tailor their messages. This
should result in more targeted, higher impact advertising opportunities, and
greater integration of Web-based advertising into the range of marketing options
available to advertisers.
20
<PAGE>
SELLING STOCKHOLDERS
The shares of Common Stock of the Company offered by the
Selling Stockholders (the "Shares") will
be offered at market prices, as reflected on the American Stock Exchange. The
Shares are being offered by 13 persons. It is anticipated that registered
broker-dealers will be allowed the commissions which are usual and customary in
open market transactions. Each purchaser was required to represent, warrant,
agree and acknowledge that he or she had been provided with information
regarding the Company, the risks of an investment, that the shares were not
registered and must be held for an indefinite period of time unless registered,
and that a legend would be placed on the certificate representing the Shares.
The Shares are being offered pursuant to the right of these persons, or as set
forth in the subscription agreement or other agreement, to demand registration
of their shares.
The following table lists the Selling Stockholders, the
position, office or other material relationship with
the Company (or such person's spouse), if any, for all officers, the number of
Shares offered by each and the percentage of shares held before and after the
offering. None of the Selling Stockholders have any material relationship to the
Company, except as noted below. The Selling Stockholders intend to sell all of
the shares owned by each of them. Each Selling Stockholder will be required to
deliver a current prospectus at the time of sale of his or her own shares.
<TABLE>
<CAPTION>
Percentage
Ownership Shares Percentage
Shares Before Offered Held After
Name Held Offering For Sale Offering
<S> <C> <C> <C>
Q & A Shareholders
Digital Systems Research, Inc.(1) 1,099,201 12.7% 1,099,201 -
Gary Wolfe, employee(2) 346,623 4.0% 346,623 -
Walter Dreschler, employee(3) 6,040 * 6,040 -
Sheena Warner, employee(4) 23,962 * 23,962 -
Gary Sousa, employee(5) 24,160 * 24,160 -
Convertible Noteholders
Sanford I. Feld(6) 91,250 1.0% 91,250 -
Gregory M. Spirdis(6) 91,250 1.0% 91,250 -
Franklin H. Spirdis, M.D.(6) 91,250 1.0% 91,250 -
Alan D. Zelinsky(6) 91,250 1.0% 91,250 -
AIM Software, Inc. 30,000 * 30,000 -
Elaine & Gerson Lacoff(7) 53,333 * 53,333 -
Underwriter's Warrants
Allan M. Levine(8) 91,000 1.0 91,000 -
Michael Shumacher(8) 91,000 1.0 91,000 -
<FN>
* Less than 1%
(1) Includes 891,717 shares issuable upon conversion of 891,717 shares of Series
B Preferred Stock. (2) Includes 281,194 shares issuable upon conversion of
281,194 shares of Series B Preferred Stock. (3) Includes 3,020 shares issuable
upon conversion of 3,020 shares of Series B Preferred Stock. (4) Includes 11,981
shares issuable upon conversion of 11,981 shares of Series B Preferred Stock.
(5) Includes 12,080 shares issuable upon conversion of 12,080 shares of Series B
Preferred Stock. (6) Includes (a) an estimated 31,250 shares issuable upon
conversion of a $125,000 Convertible Promissory Note due August
22, 1996 held by each of the holders of the Convertible Promissory Notes,
based upon a conversion rate of $4.00 per share; (b) 30,000 shares issuable
upon exercise of an option at $2.50 per share granted to each holder of a
convertible promissory note is extended by the Company for an additional
year.
(7) Includes 10,000 shares issued to Mr. and Mrs. Lacoff as a consideration for
a loan fee earned in December 1992 and 53,333 shares issuable upon
conversion of the total amount of $80,000 of these loans from the Lacoffs to
the Company.
(8) Includes shares issuable upon exercise of Underwriter's Warrants issued in
connection with the Company's 1994 public offering.
</FN>
</TABLE>
21
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, $.001 par value per share, of which 8,618,558
shares were outstanding as of April 30, 1996. Holders of shares of Common Stock
are entitled to one vote for each share on all matters to be voted on by the
shareholders. Holders of Common Stock have no cumulative voting rights. Holders
of shares of Common Stock are entitled to share ratably in dividends, if any, as
may be declared, from time to time by the Board of Directors in its discretion,
from funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of Common Stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of Common Stock have no preemptive rights to purchase the
Company's Common Stock. There are no conversion rights or redemption or sinking
fund provisions with respect to the Common Stock. All of the outstanding shares
of Common Stock are validly issued, fully paid and non-assessable.
The transfer agent for the Common Stock is U.S. Stock Transfer Corporation,
1745 Gardena Avenue, Glendale, California
91204-2991.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of 10,000,000
shares of preferred stock, $.001 par value, of which 1,300 shares of Series A
Convertible Preferred Stock and 1,200,000 shares of Series B Convertible
Preferred Stock are outstanding. The Company currently has no plans to issue any
additional preferred stock. The Company's Board of Directors has authority,
without action by the shareholders, to issue all or any portion of the
authorized but unissued preferred stock in one or more series and to determine
the voting rights, preferences as to dividends and liquidation, conversion
rights, and other rights of such series. The preferred stock, if and when
issued, may carry rights superior to those of Common Stock, however, no
preferred stock may be issued with rights equal or senior to the preferred stock
without the consent of a majority of the holders of preferred stock.
The Company considers it desirable to have preferred stock available to
provide increased flexibility in structuring possible future acquisitions and
financings and in meeting corporate needs which may arise. If opportunities
arise that would make desirable the issuance of preferred stock through either
public offering or private placements, the provisions for preferred stock in the
Company's Articles of Incorporation would avoid the possible delay and expense
of a shareholder's meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result, however, in a series
of securities outstanding that will have certain preferences with respect to
dividends and liquidation over the Common Stock which would result in dilution
of the income per share and net book value of the Common Stock. Issuance of
additional Common Stock pursuant to any conversion right which may be attached
to the terms of any series of preferred stock may also result in dilution of the
net income per share and the net book value of the Common Stock. The specific
terms of any series of preferred stock will depend primarily on market
conditions, terms of a proposed acquisition or financing, and other factors
existing at the time of issuance. Therefore, it is not possible at this time to
determine in what respect a particular series of preferred stock will be
superior to the Company's Common Stock or any other series of preferred stock
which the Company may issue. The Board of Directors does not have any specific
plan for the issuance of preferred stock at the present time and does not intend
to issue any preferred stock, except on terms which it deems to be in the best
interest of the Company and its shareholders.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Further, certain provisions of Nevada law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. While such provisions are intended to enable the Board of Directors to
maximize stockholder value, they may have the effect of discouraging takeovers
which could be in the best interest of certain stockholders. There is no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future.
22
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the
Company by Hand & Hand, Dana Point, California.
EXPERTS
The consolidated balance sheet as of July 31, 1995 and the statements of
income, stockholders' equity and cash flows for the year ended July 31, 1995
included in this Prospectus have been so included in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The consolidated statements of income, shareholders' equity and cash flows
of the Company for the year ended July 31, 1994, included in this Prospectus and
in the related Registration Statement, have been audited by Corbin & Wertz,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and in the Registration Statement, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
23
<PAGE>
No dealer, salesman or other person is authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offer made hereby, and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company or the Underwriter. This Prospectus does not constitute an offer to sell
or a solicitation to an offer to buy the securities offered hereby to any person
in any state or other jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Additional Information...................... 2
Prospectus Summary.......................... 3
Risk Factors................................ 10
Market Price of Common Stock................ 15
Selected Financial Data..................... 17
Business - New Development ................. 18
Selling Stockholders........................ 22
Description of Securities................... 23
Legal Matters............................... 24
Experts..................................... 24
<PAGE>
WIZ TECHNOLOGY, INC.
PART II
Item 14. Other Expenses of Issuance and Distribution.
Filing fee under the Securities Act of 1933 $ 5,693.13
Blue Sky qualification fees and expenses(1)
Printing and engraving(1) 3,000.00
Legal Fees(1) 20,000.00
Accounting Fees(1) 10,000.00
Miscellaneous(1) 1,306.87
------------------
TOTAL $ 40,000.00
=================
(1) Estimates
Item 15. Indemnification of Directors and Officers.
The Company has adopted provisions in its articles of incorporation and
bylaws that limit the liability of its directors and provide for indemnification
of its directors and officers to the full extent permitted under the Nevada
General Corporation Law. Under the Company's articles of incorporation, and as
permitted under the Nevada General Corporation Law, directors are not liable to
the Company or its stockholders for monetary damages arising from a breach of
their fiduciary duty of care as directors. Such provisions do not, however,
relieve liability for breach of a director's duty of loyalty to the Company or
its stockholders, liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, liability for transactions
in which the director derived as improper personal benefit or liability for the
payment of a dividend in violation of Nevada law. Further, the provisions do not
relieve a director's liability for violation of, or otherwise relieve the
Company or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that may result in a claim for indemnification by any director or
officer.
II-1
<PAGE>
Item 16. Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession.
2.1 Agreement and Plan of Reorganization, dated February 14,
1996, between the Company, Q&A
Sales Marketing, Inc. and Q&A Acquisition Company(5)
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(2)
3.2 Bylaws(2)
3.3 Certificate of Amendment to Articles of Incorporation for
change in name of registrant to "WIZ
Technology, Inc."(1)
4. Instruments defining rights of holders, including indentures.
4.1 Warrant Agreement between the Company and Strasbourger
Pearson Tulcin Wolff(1)
5. Opinion of Hand & Hand as to legality of securities being
registered.(7)
10. Material Contracts
10.1 1992 Stock Option Plan, as amended(2)
10.2 Form of Stock Option Agreement with Mar-Jeanne Tendler,
Arthur S. Tendler and Bruce Allen "Gil" Gilgen(2) 10.3
Demand Promissory Note in favor of Elaine & Gerson Lacoff(2) 10.5
Consulting Agreement with Dale Kostman (1) 10.7 Employment Agreement
between the Company and Arthur S. Tendler(1) 10.8 Employment
Agreement between the Company and Mar-Jeanne Tendler(1) 10.9
Employment Agreement between the Company and Bruce Allen Gilgen(1)
10.10 Registration rights agreements and schedule of
beneficiaries(1) 10.12 Consulting Agreement between the Company and
Strasbourger Pearson Tulcin Wolff(1) 10.13 Promissory Note from
Company in favor of Mar-Jeanne and Arthur Tendler(1) 10.14 Extension
and amendment of Promissory Note from Company in favor
of Mar-Jeanne and Arthur Tendler(1)
10.15 Lease for the Company's executive offices(3)
10.16 Consulting Agreement between the Company and Stuart
Wertzberger(3) 10.17 Trust Agreement between Stuart Wertzberger and
the Company(3) 10.19 Consulting Agreement between the Company and
Jensen Consultants, Inc.(4) 10.20 Promissory note from Arthur
Tendler dated July 31, 1995(4) 10.21 Form of Convertible Promissory
Notes and schedule of details(4) 10.22 Software Development and
License Agreement between the Company and Digital Systems
Research, Inc. dated March 8, 1996(6)(P)
10.23 Employment Agreement with Gary Wolfe(6)(P)
10.24 Covenant Not-to-Compete(6)
16. Letter on change in certifying accountant(4)
21. Subsidiaries of the small business issuer(6)
23. Consents of Experts and Counsel
23.1 Consent of Corbin & Wertz(7)
23.2 Consent of Coopers & Lybrand, L.L.P.(7)
23.3 Consent of Hand & Hand included in Exhibit 5 hereto
II-2
<PAGE>
24. Powers of Attorney
24.1 Powers of Attorney are included on signature page(5)
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2, filed on November 1, 1993
(2) Incorporated by reference to the Company's Registration Statement on
Form 10-SB, File No. 0-20910 (the
"Form 10")
(3) Incorporated by reference to the Company's Annual Report on Form 10K-SB
for the year ended July 31.
1994.
(4) Incorporated by reference to the Company's Annual Report on Form 10K-SB
for the year ended July 31,
1995.
(5) Incorporated by reference to the Company's Current Report on Form 8-K
dated March 12, 1996.
(6) Filed herewith.
(7) To be filed by amendment.
All other Exhibits called for by Rule 601 of Regulation S-B are not
applicable to this filing.
Item 17. Undertakings.
(a) 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.
(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 offered therein,
and the offering of such securities offered at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the
purposes of determination any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) 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 foregoing provisions, 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 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 registrant will, unless in the opinion of its
counsel that 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.
(1) The undersigned registrant hereby undertakes that:
II-3
<PAGE>
(i) For purposes of determining any liability
under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be a part of this registration
statement as of the time it was declared effective.
(ii) For the purpose of determining any liability
under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to 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 S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Juan Capistrano, State of California on June 17,
1996.
WIZ TECHNOLOGY, INC.
By: /s/ M.J. Tendler
M.J. Tendler
Chief Executive Officer
The undersigned officer and/or director of Wiz Technology, Inc., a
Nevada corporation (the "Corporation"), hereby constitutes and appoints
MarJeanne Tendler and Arthur Tendler, and each of them, with full power of
substitution and resubstitution, as attorney to sign for the undersigned in any
and all capacities this Registration Statement and any and all amendments
thereto, and any and all applications or other documents to be filed pertaining
to this Registration Statement with the Securities and Exchange Commission or
with any states or other jurisdictions in which registration is necessary to
provide for notice or sale of all or part of the securities to be registered
pursuant to this Registration Statement and with full power and authority to do
and perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present. The undersigned hereby ratifies and confirms all
that said attorney-in-fact and agent, or any of his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof and incorporate such
changes as any of the said attorneys-in-fact deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 17, 1996.
By: /s/ M.J. Tendler Chief Executive Officer and Director
M.J. Tendler (principal executive officer)
By: /s/ Arthur S. Tendler President, Chief Operating and
Arthur S. Tendler Acting Financial
Officer, and Director (principal
accounting and financial officer)
By: /s/ Bruce Allen Gilgen Executive Vice President, Secretary
Bruce Allen Gilgen & Director
By: /s/ Willie Woods Director
Willie Woods
THIS COVENANT NOT TO COMPETE AGREEMENT (the "Agreement") is
entered into as of the date written below between Wiz Technology,
Inc., a Nevada corporation (the "Company"), Digital Systems
Research, Inc., a Virginia corporation ("DSR"), Brian Barry and
Willie Woods, officers of DSR. DSR, Brian Barry and Willie Woods
are collectively referred to herein as the "Covenanting Parties."
R E C I T A L S
A. Effective as of the date hereof, Q&A Sales Marketing,
Inc. ("Q&A") is entering into an Agreement and Plan of
Reorganization, pursuant to which Q&A will be merged (the "Merger")
with and into a subsidiary of Company, Q&A Acquisition Company
("QAC").
B. Prior to the Merger, DSR is a majority shareholder of
Q&A.
C. The Company is engaged in the business of developing,
marketing and selling boxed software, CD ROM software, or budget
consumer software to consumers throughout the world at
manufacturers' suggested retail prices of less than $50.00 (the
"Business").
NOW THEREFORE, in consideration of the Recitals, and the
covenants and conditions hereinafter set forth, Covenanting Parties
and Company agree as follows:
1. Covenant Not To Compete. The Covenanting Parties agree
not to compete with the Company or any of the Company's
subsidiaries in the Business worldwide. The parties agree that the
Covenanting Parties obligations hereunder may be construed as a
series of separate covenants in each county or other legal
jurisdiction in which the Company does business. For purposes of
this Agreement, a Covenanting Party shall not be deemed to compete
if it owns an interest in any corporation, partnership or other
entity which competes with the Company or any of its subsidiaries
provided that the beneficial equity or voting interest is less than
2%.
2. Term. The term of this Agreement shall commence on the
date hereof and shall remain in effect for a period of sixty (60)
months.
3. Remedies. In addition to any other remedies with Company
may have by virtue of this Agreement, the Covenanting Parties agree
that in the event a breach of the obligations under this Agreement
are threatened, Company shall be entitled to obtain a temporary
restraining order and preliminary injunction against the
Covenanting Parties to restrain any breach of covenant not to
compete under this Agreement.
4. Miscellaneous. No waiver of any breach or default of
this Agreement by DSR shall be considered to be a waiver of any
other breach or default of this Agreement. Should any litigation
be commenced between any of the Covenanting Parties and Company for
such breach, the party prevailing in such litigation shall be
entitled, in addition to such other relief that may be granted, to
a reasonable sum as and for their or his or its attorney's fees and
costs in such litigation. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is
determined to be illegal or invalid for any reason whatsoever, said
illegality or invalidity shall not affect the validity of the
remainder of this Agreement. The interpretation of this Agreement
shall be governed by the local law of the State of Virginia,
without regard to conflict of laws. This Agreement contains the
entire agreement between the parties hereto with respect to the
subject matter thereof. This Agreement shall inure to the benefit
of the Company, its successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of March 8, 1996.
WIZ TECHNOLOGY, INC.
By:
Its:
DIGITAL SYSTEMS RESEARCH, INC.
By:
Willie Woods, Chief Executive Officer
Willie Woods
Brian Barry
The registrant has two subsidiaries, Wiz Technology, Inc., incorporated in
California,and Capotec Business Solutions, Inc., incorporated
in Nevada. No trade names are utilized by these subsidiaries.
