As filed with the Securities and Exchange Commission on October 27, 1999
Registration No. 333-58109
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Post Effective Amendment No. 5
To
FORM SB-2
REGISTRATION STATEMENT
ON FORM S-3 UNDER
THE SECURITIES ACT OF 1933
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e-NET, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 7371 52-1929282
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
12800 MIDDLEBROOK ROAD, SUITE 200
GERMANTOWN, MARYLAND 20874
(301) 601-8700
(Address, including zip code, and telephone number, including area code,
of principal executive offices of Registrant)
ROBERT A. VESCHI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
12800 MIDDLEBROOK ROAD, SUITE 200
GERMANTOWN, MARYLAND 20874
(301) 601-8700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
CHARLES A. SWEET, ESQ.
WILLIAMS & CONNOLLY
725 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20005
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of 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 plans, 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, please 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. / /
THE REGISTRATION FEE WAS PREVIOUSLY PAID IN CONNECTION WITH THE FILING
OF THE REGISTRANT'S REGISTRATION STATEMENT ON FORM SB-2, REG. NO. 333-58019,
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 1998.
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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EXPLANATORY NOTE
This registration statement on Form S-3 is a post-effective amendment
to the Registration Statement on Form SB-2, Registration No. 333-58109, filed
with the Securities and Exchange Commission on June 30, 1998. It relates to the
offer and sale by the selling stockholders described herein of the following
securities: (A) 432,500 shares of common stock, par value $.01 per share,
comprised of (i) 57,500 shares of common stock issued in a private placement in
April 1998; and (ii) 75,000 shares of common stock underlying a five-year
warrant issued to Pennsylvania Merchant Group Ltd., the placement agent for the
private placement, with an exercise price of $9.00 per share; and (B) 300,000
shares of common stock underlying: (i) five-year warrants issued at the
direction of Barron Chase Securities, Inc., the underwriter of the e-Net's
initial public offering of securities in April 1997, to purchase 150,000 shares
of common stock, with an exercise price of $8.25 per share; and (ii) five-year
warrants to purchase 150,000 shares of common stock, with an exercise price of
$8.25 per share, which warrants underlie five-year warrants issued at the
direction of Barron Chase to purchase such warrants, with an exercise price of
$0.20625 per underlying warrant.
PROSPECTUS
e-NET, INC.
432,500 SHARES OF COMMON STOCK
Certain stockholders of e-Net, Inc. are selling up to 432,500 shares of
e-Net's common stock as follows:
- 57,500 shares of common stock issued in a private
placement in April 1998;
- 75,000 shares of common stock underlying a five-year
warrant issued to Pennsylvania Merchant Group Ltd.,
the placement agent for the private placement, with
an exercise price of $9.00 per share;
- 150,000 shares of common stock underlying five-year
warrants issued at the direction of Barron Chase
Securities, Inc., the underwriter of e-Net's initial
public offering in April 1997, to purchase such
shares with an exercise price of $8.25 per share; and
- 150,000 shares of common stock underlying five-year
warrants to purchase 150,000 shares, with an exercise
price of $8.25 per share, underlying five-year
warrants issued at the direction of Barron Chase to
purchase such warrants, with an exercise price of
$0.20625 per warrant.
e-Net's common stock is quoted on the Nasdaq SmallCap Market ("Nasdaq")
under the symbol "ETEL". On October 18, 1999, the closing price of e-Net's
common stock as quoted on the Nasdaq SmallCap Market was $5 15/32.
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An investment in these securities involves certain risks. See "Risk
Factors" on pages 3-4.
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The Securities and Exchange Commission (the "SEC") and state securities
regulators have not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The information in this prospectus is not complete and may be changed.
The selling stockholders are not allowed to sell the common stock offered by
this prospectus until the registration statement filed with the SEC becomes
effective. This prospectus is not an offer to sell e-Net's common stock - and
does not solicit an offer to buy - in any state where the offer or sale is not
permitted.
The date of this prospectus is October 27, 1999
TABLE OF CONTENTS
PAGE
----
Prospectus Summary................................................1
Risk Factors......................................................3
Forward-Looking and Cautionary
Statements........................................................5
Available Information and
Incorporation by Reference........................................5
Use of Proceeds...................................................5
Dilution..........................................................5
Selling Holders...................................................7
Plan of Distribution..............................................9
Legal Matters.....................................................9
Experts...........................................................9
ii
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information, financial statements and notes appearing elsewhere in this
prospectus. e-Net urges you to read this entire prospectus.
THE COMPANY
e-Net develops, produces, markets and supports open telecommunications
software and related hardware that enable, enhance, and manage telephone
communications over the Internet, private Internet Protocol networks and
"intranets," and other types of digital data networks. e-Net's Telecom
2000/TM/ products provide a user-friendly method of high fidelity telephone
communications through digital data networks. Through the use of Telecom 2000
products, e-Net's enterprise customers can reduce their telephone expenses by
extending their telephone services to remote offices and mobile employees, in
some cases bypassing long distance service charges, while using their
existing internal digital data networks. e-Net's service provider customers
can offer reduced long distance service or enhanced messaging services
combined with Internet Protocol data and telephony services.
e-Net maintains principal executive offices at 12800 Middlebrook Road,
Germantown, Maryland, 20874, telephone number 301-601-8700. See "Risk Factors"
for a discussion of certain factors that you should consider in evaluating e-Net
and its business.
THE OFFERING
Securities Offered.................432,500 shares of common stock, comprised of:
- 57,500 shares of common stock
issued in the April 1998 private
placement;
- 75,000 shares of common stock
underlying a five-year warrant
issued to the placement agent for
the April 1998 private placement,
with an exercise price of $9.00 per
share;
- 150,000 shares of common stock
underlying five-year warrants to
purchase such common stock issued
at the direction of the underwriter
of e-Net's initial public offering,
with an exercise price of $8.25 per
share; and
- 150,000 share of common stock
underlying five-year warrants to
purchase such shares, with an
exercise price of $8.25 per share,
underlying five-year warrants to
purchase such warrants, with an
exercise price of $0.20625 per
Selling Stockholders........................The common stock may be offered and
sold by the selling stockholders
described under "Selling Holders."
Common Stock Outstanding As Of
October 18, 1999............................8,449,660 shares
Warrants Outstanding As Of
October 18, 1999............................375,000
Warrants Exercised As Of
October 18, 1999............................-0-
Common Stock Outstanding If All Warrants
Are Exercised...............................8,824,660
Estimated Gross Proceeds If All Warrants
Are Exercised...............................$3,150,000
1
Use Of Proceeds.............................e-Net will not receive any proceeds
from the sale of common stock by the
selling stockholders. See "Use of
Proceeds."
ASDAQ Small Cap Market Symbol..............common stock: ETEL
2
RISK FACTORS
You should carefully consider the risks and uncertainties described
below and the other information in this prospectus. If any of the following
risks or other risks presently unknown to e-Net or currently deemed immaterial
by e-Net occur, e-Net's business, financial condition and operating results
could be materially adversely affected.
This prospectus also contains certain forward-looking statements that
involve risks. These statements refer to e-Net's future plans, objectives,
expectations and intentions. You can identify these statements by the use of
words such as "expects," "anticipates," "intends," "plans" and similar
expressions. e-Net's actual results could differ materially from those
anticipated in such forward-looking statements.
e-NET HAS A HISTORY OF
OPERATING LOSSES AND
ANTICIPATES FUTURE
LOSSES e-Net has never recorded an operating profit and had
an accumulated deficit of approximately $24,200,000
as of June 30, 1999. Whether e-Net will be profitable
in the future largely depends on its ability to
generate revenues from its products and services.
Given its focus on markets that are subject to rapid
technological change, and its intention to continue
to expend resources on research and development,
revenues must increase commensurately for e-Net to
achieve profitability. In the quarter ended June 30,
1999, e-Net expended approximately $391,000 on
research and development and, although no assurance
can be given, e-Net expects this expenditure rate to
increase in the future. In view of its operating
history, e-Net cannot assure you that it will be able
to generate sufficient revenue to achieve
profitability, to maintain profitability on a
quarterly or annual basis or to sustain or increase
revenue growth in future periods. e-Net's limited
capitalization may adversely affect its ability to
raise additional capital in the future and could
impair its ability to invest in research and
development, sales and marketing programs and other
operations, any of which could have a material
adverse effect on its business, financial condition
and results of operations.
e-NET HAS A LIMITED
OPERATING
HISTORY e-Net was incorporated in Delaware on January 9,
1995. As such, e-Net faces the risks and problems
associated with businesses in their early stages of
development and has a limited operating history upon
which to base an evaluation of its prospects. You
should consider its prospects in light of the risks,
expenses and difficulties frequently encountered in
the expansion of a business in an industry
characterized by a substantial number of market
entrants and intense competition.
e-NET MAY NEED TO SEEK
ADDITIONAL FINANCING IN
THE FUTURE e-Net expects to continue to make significant
investments in the future to support its overall
growth. Currently, e-Net anticipates that ongoing
operations in the near term will be financed
primarily from net proceeds of the April 1998 private
placement, warrant exercises, a $1,000,000 line of
credit facility, and from internally generated funds.
e-Net presently has the line of credit, investments,
and cash and cash equivalents on hand and believes
that these will be sufficient to meet near-term cash
requirements. e-Net expects that these cash
requirements will decrease somewhat as a result of
its restructuring efforts and "niche strategy",
primarily as a result of decreases in development
costs. However, to the extent e-Net experiences
greater than expected growth, its operating and
product development activities may require more cash
than e-Net has available. Consequently, such growth
may require e-Net to obtain additional sources of
financing. In any event, e-Net can make no assurances
that it will not require more working capital than it
currently has at its disposal or that such financing
will be available on acceptable terms.
e-NET DEPENDS ON KEY
PERSONNEL e-Net is principally dependent on its current
management personnel for the operation of its
business. In particular, Robert A. Veschi, e-Net's
president and chief executive officer, has played a
substantial role in the development and management of
e-Net, although e-Net can make no assurance that
additional
3
managerial assistance will not be required. e-Net
has entered into an employment agreement with Mr.
Veschi which is terminable at will by Mr. Veschi
without penalty. Accordingly, if Mr. Veschi's
employment terminates, or he is unable to perform
his duties, e-Net may be materially and adversely
affected. e-Net has purchased key-man life
insurance on Mr. Veschi in the amount of $2
million. e-Net is the owner and beneficiary of
this insurance policy.
e-NET RELIES ON MAJOR
CUSTOMERS AND LARGE
CONTRACTS Historically, substantially all of e-Net's revenue
has been derived from sales to a relatively small
number of customers. Approximately 78% of its
accounts receivable balance at June 30, 1999 was from
one customer, and approximately 94% of its sales for
the quarter ended June 30, 1999 were from two
customers. Similar or greater concentration of
e-Net's net sales among a limited number of
customers may occur in the future. In such event,
any material decrease in net sales to any one
of its largest customers that is not matched by
corresponding increases in net sales to new or
existing customers could have a material adverse
effect on its financial condition and results of
operations. e-Net can make no assurances that it
will receive orders from any existing customers or
from new customers.
YEAR 2000 PROBLEMS MAY
AFFECT e-NET'S BUSINESS The Year 2000 Issue is the result of computer
programs being written using two digits rather than
four to define the applicable year. Consequently, in
the Year 2000 those systems may be unable to
accurately process certain date-based information.
e-Net potentially could be affected by this issue due
to the internal computer applications it relies on,
as well as the software that it develops and sells.
e-Net is in the process of reviewing all of its
significant third party applications and obtaining
documentation from the manufacturers that certify
Year 2000 compliance or provide appropriate
assurances of future compliance. e-Net is also in the
process of examining the architecture of its
products, as well as documentation on the third party
components that are integrated into its software
products.
At this time, e-Net does not anticipate that Year
2000 compliance activities will have a material
effect on its business, product development,
financial position or results of operations. However,
e-Net can make no assurances that its systems and
products are Year 2000 compliant. Additionally,
despite the testing and review undertaken by e-Net,
it can make no assurances that the systems of other
companies on which e-Net relies will be Year 2000
compliant. Either of these unfavorable results could
result in a material adverse effect on e-Net's
business, financial condition and results of
operations.
4
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Certain statements made in this prospectus that are not historical are
forward-looking. The words "estimate," "project," "intend," "expect," "believe,"
and similar expressions are intended to identify forward-looking statements
which involve known and unknown risks and uncertainties. Many factors could
cause e-Net's actual results, performance or achievements to be materially
different from those contemplated by any such future statements. For additional
information regarding these and other risks and uncertainties associated with
e-Net's business, see "Risk Factors" below, as well as e-Net's reports filed
from time to time with the SEC.
AVAILABLE INFORMATION AND INCORPORATION BY REFERENCE
e-Net files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document e-Net files
at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, DC
20549; at Room 1400, 7 World Trade Center, New York, NY 10048; and at 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. e-Net's
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows e-Net to "incorporate by reference" the information
e-Net files with them, which means that e-Net can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later information
that e-Net files with the SEC will automatically update and supersede this
information. e-Net incorporates by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until the selling stockholders sell all the
common stock offered by this prospectus.
- e-Net's Annual Report on Form 10-KSB for the year ended March
31, 1999 as filed with the SEC on June 29, 1999;
- The description of e-Net's common stock contained in the
Registration Statement under the Exchange Act on Form 8-A
filed on February 13, 1999;
- e-Net's Quarterly Report on Form 10-QSB for the three months
ended June 30, 1999, as filed with the SEC on August 16, 1999;
and
- e-Net's Current Report on Form 8-K, as filed with the SEC on
September 23, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning e-Net at the following address:
Stockholder Relations, e-Net, Inc.
12800 Middlebrook Road
Germantown, Maryland 20874
(301) 601-8700
USE OF PROCEEDS
e-Net will receive no proceeds from the sale of the common stock by the
selling stockholders. e-Net will receive net proceeds of approximately
$3,125,000 if all the warrants are exercised.
e-Net intends to use the net proceeds from the exercise of the warrants
for the following purposes:
- To fund the sales and marketing of Telecom 2000 products;
- For research and development of other telecommunications
products; and
- For other working capital and general corporate purposes.
e-Net may also use a portion of the net proceeds for the acquisition of
businesses, products and technologies that are complementary to its products and
business. While e-Net from time to time has engaged, and expects to continue to
engage, in preliminary discussions with other businesses with regard to the
possibility of such acquisitions, no such discussions have resulted in any
definitive acquisition agreement. e-Net can make no assurances that it will be
able to reach a definitive agreement on or consummate any acquisition.
DILUTION
The difference between the per share exercise price of the warrants per
share of common stock and the pro forma net tangible book value per share of
common stock after this offering constitutes the dilution per share of common
stock to investors in this offering.
5
As of June 30, 1999, e-Net had net tangible book value of $4,535,000 or
$.54 per share. Net tangible book value per share means the tangible assets of
e-Net, less all liabilities, divided by the number of shares of common stock
outstanding. After giving effect to the exercise of the warrants and the sale of
the common stock by e-Net at assumed prices of $8.25 and $9.00 per share and
estimated offering expenses, net tangible book value would have been $7,660,000
or $.88 per share. The result will be an immediate increase in net tangible book
value per share of $.34 (62%) to existing stockholders and an immediate dilution
to new investors of $7.37 (89%), and $8.12 (90%) per share, respectively. As a
result, public investors will bear most of the risk of loss since their shares
are being purchased at a cost substantially above the price that existing
stockholders acquired their shares. The following table illustrates this
dilution:
Public offering prices of the common stock $ 8.25 $ 9.00
Pro forma net tangible book value per share, before the offering $ .54
Increase per share attributable to the sale by e-Net of the
common stock .34
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Pro forma net tangible book value per share, after the offering .88 .88
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Dilution per share to new investors $ 7.37 $ 8.12
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The following table summarizes the investments of all existing
stockholders and new investors after giving effect to the exercise of warrants
and sale of common stock offered by this prospectus.
Percent Percent Average
Shares if Total Aggregate of Total Price Per
Purchased Shares Consideration Invested Share
--------- -------- ------------- -------- ---------
Existing Stockholders (Pro Forma) 8,333,124 96% $28,658,000 90% $ 3.44
Investors in This Offering 375,000 4% 3,125,000 10% 8.33
----------- ---------- ----------- -------- ---------
Total 8,708,124 100% $31,783,000 100% $ 3.65
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e-Net can give no assurances as to the timing of the exercise of the
warrants or whether any or all of the warrants will be exercised. The foregoing
analysis assumes exercise of no other options or warrants. In the event any such
options or warrants are exercised, the percentage ownership of the investors in
this offering will be reduced and the dilution per share of common stock to
purchasers in this offering will increase.
6
SELLING HOLDERS
This prospectus relates to the offer and sale by the following selling
stockholders of the common stock issued in the April 1998 private placement and
common stock underlying a warrant issued to the placement agent of the private
placement. The following table sets forth certain information about the selling
stockholders for whom e-Net is registering such common stock for resale to the
public. To the best of e-Net's knowledge, none of the selling stockholders has
any plan, arrangement, understanding, agreement or commitment to sell their
securities. None of the following individuals or entities has held any position
or office within e-Net nor has had any other material relationship with it other
than in connection with the private placement.
Amount of
Securities Percentage
Amount of Owned After of
Amount of Securities Being Offering Securities
Securities Owned Registered (1)(2) Owned (2)
---------------- ---------- ------ ---------
Pennsylvania Merchant Group F/B/O 1,580 Shares of 1,580 Shares of 0 *
Peter Bodenheimer 401(K) Common Stock Common Stock
Frank Campbell 7,000 Shares of 7,000 Shares of 0 *
Common Stock Common Stock
Pennsylvania Merchant Group F/B/O 3,849 Shares of 3,849 Shares of 0 *
Frank J. Campbell, III 401(K) Common Stock Common Stock
Donaldson, Lufkin & Jenrette 10,000 Shares of 10,000 Shares of 0 *
Securities Corporation Custodian F/B/O Common Stock Common Stock
Frank J. Campbell III Account #
698-101714
Pennsylvania Merchant Group F/B/O 4,571 Shares of 4,571 Shares of 0 *
Richard A. Hansen 401(K) Common Stock Common Stock
Ronald B. Mandell 2,000 Shares of 2,000 Shares of 0 *
Common Stock Common Stock
Irving L. Mazer, Esq. 10,000 Shares of 10,000 Shares of 0 *
Common Stock Common Stock
Felix S. Miksis 1,000 Shares of 1,000 Shares of 0 *
Common Stock Common Stock
Harry Mittelman Revocable Trust 10,000 Shares of 10,000 Shares of 0 *
Common Stock Common Stock
Leonid S. Roytman and Alla S. 5,000 Shares of 5,000 Shares of 0 *
Roytman JTTEN Common Stock Common Stock
Talmor Capital Management Inc. 2,500 Shares of 2,500 Shares of 0 *
Common Stock Common Stock
SUBTOTAL 57,500 57,500
Amount of
Securities Percentage
Amount of Owned After of
Amount of Securities Being Offering Securities
Securities Owned Registered (1)(2) Owned (2)
---------------- ---------- ------ ---------
Pennsylvania Merchant Group Ltd. 75,000 Shares of 75,000 Shares of 0 *
Common Stock Common Stock
TOTAL 132,500 132,500
* Less than 1%.
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(1) Assumes exercise of all warrants.
(2) Assumes sale of all common stock being registered.
7
This prospectus relates to the offer and sale by the following selling
stockholders of the common stock underlying certain warrants issued at the
direction of the underwriter of e-Net's April 1997 initial public offering. The
following table sets forth certain information about the selling stockholders
for whom e-Net is registering such common stock for resale to the public. To the
best of e-Net's knowledge, none of the selling stockholders has any plan,
arrangement, understanding, agreement or commitment to sell their securities.
None of the following individuals or entities has held any position or office
within e-Net nor has had any other material relationship with e-Net other than
in connection with the initial public offering.
Amount of
Securities
Amount of Owned After Percentage
Amount of Securities Being Offering of Securities Owned
Recipient Securities Owned Registered (1)(2) (2)
--------- ---------------- ---------------- ------------ -------------------
Robert T. Kirk 240,000 Shares of 240,000 Shares of 0 2.72
Common Stock Common Stock
Michael Morrisett 15,000 Shares of 15,000 Shares of 0 *
Common Stock Common Stock
Marie Lima 15,000 Shares of 15,000 Shares of 0 *
Common Stock Common Stock
David A. Carter 15,000 Shares of 15,000 Shares of 0 *
Common Stock Common Stock
Wendy Tand Gusrae 15,000 Shares of 15,000 Shares of 0 *
Common Stock Common Stock
Total 300,000 Shares of 300,000 Shares of
Common Stock Common Stock
* Less than 1%.
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(1) Assumes exercise of all warrants.
(2) Assumes sale of all common stock being registered.
8
PLAN OF DISTRIBUTION
The selling stockholders or their pledgees, donees, transferees or
other successors-in interest may sell their common stock from time to time in
transactions on the Nasdaq SmallCap Market, in privately negotiated
transactions, through the writing of options on the shares, or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of the sale, at prices related to such prevailing market
prices or at negotiated prices. The selling stockholders may effect such
transactions by the sale of the common stock to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the selling stockholders in connection with
sales of the common stock. The selling stockholders have not entered into any
underwriting arrangements.
The selling stockholders and intermediaries through whom the common
stock is sold may be deemed "underwriters," within the meaning of the Securities
Act of 1933, with respect to the common stock and any profits realized or
commissions received may be deemed underwriting compensation.
The selling stockholders may also pledge the common stock to a
broker-dealer and upon default under such pledge the broker-dealer may effect
sales of the common stock pledged pursuant to this prospectus. In addition, the
common stock covered by this prospectus may be sold in private transactions or
under Rule 144, rather than pursuant to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the common stock will be sold in such jurisdictions, if required,
only through registered or licensed brokers or dealers.
e-Net will not receive any of the proceeds from the sale of the common
stock by the selling stockholders. e-Net has agreed to bear the expenses of
registration of the common stock under federal and state securities laws, other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents, and to indemnify the selling holders against certain liabilities,
including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the common stock being offered hereby has been passed
upon for e-Net by Williams & Connolly, Washington D.C.
EXPERTS
The financial statements of e-Net, Inc. as of March 31, 1999 and 1998
and for the years ended March 31, 1999 and 1998, incorporated by reference in
this prospectus, have been incorporated herein in reliance on the reports dated
June 10, 1999 of Grant Thornton LLP, Independent Certified Public Accountants,
and upon the authority of said firm as experts in accounting and auditing.
9
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Neither e-Net nor any selling stockholder
has authorized any person to make a
statement that differs from what is in this e-NET, INC.
prospectus. If any person does make a
statement that differs from what is in this 432,500 SHARES
prospectus, you should not rely on it. This OF COMMON STOCK
prospectus is not an offer to sell, nor is
it seeking an offer to buy, those securities
in any state where the offer or sale is not
permitted. The information in this
prospectus is complete and accurate as of
its date, but the information may change PROSPECTUS
after that date.
No action is being taken in any jurisdiction
outside the United States to permit a public
offering of the common stock or possession
or distribution of this prospectus in any
jurisdiction. Persons who come into
possession of this prospectus in
jurisdictions outside the United States and
Canada are required to inform themselves October 27, 1999
about and to observe any restrictions as to
this offering and the distribution of this
prospectus applicable in that jurisdiction.
Until (40 days after the
effective date of this prospectus), all
broker-dealers effecting transactions in the
registered securities, whether or not
participating in this distribution, may be
required to deliver a prospectus. This is in
addition to the obligation of dealers to
deliver a prospectus when acting as
underwriters and for their unsold allotments
or subscriptions.
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemization of expenses payable by the registrant
from the net proceeds of the offering, incurred by the registrant in connection
with the issuance and distribution of the common stock. All expenses are
estimated.
SEC Registration and Filing Fee $-0-
Nasdaq Registration and Filing Fee -0-
Financial Printing 3,500
Transfer Agent Fee -0-
Accounting Fees and Expenses 5,000
Legal Fees and Expenses 6,500
Blue Sky Fees and Expenses 5,000
Miscellaneous 5,000
-------
Total $25,000
-------
-------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Delaware law, the registrant's Restated Certificate of
Incorporation includes a provision that provides that the registrant will, to
the fullest extent permitted by applicable law, defend and hold harmless any
person who was or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding") by reason of the fact that he,
or a person for whom he is a legal representative, is or was a director or
officer of the registrant or is or was serving at the request of the registrant
as a director or officer of another corporation or of a partnership, joint
venture, trust enterprise or nonprofit entity, including services with respect
to employee benefit plans, against all liability and loss suffered and expenses
(including attorney's fees) reasonably incurred by such person. The registrant
shall be required to indemnify a person in connection with a Proceeding (or part
thereof) initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the registrant. To the fullest extent
permitted by the Delaware General Corporation Law ("DGCL") the same exists or
may hereafter be amended, a director of the registrant shall not be liable to
the registrant or its stockholders for monetary damages for the breach of
fiduciary duty as a director.
The provisions are intended to afford directors protection against, and
to limit their potential liability for, monetary damages resulting from suits
alleging a breach of the duty of care by a director; they also diminish the
potential rights of action which might otherwise be available to stockholders by
limiting the liability of directors to the maximum extent allowable under
Delaware law and by affording indemnification against most damages and
settlement amounts paid by a director of the registrant in connection with any
stockholders derivative action. As a consequence of these provisions,
stockholders of the registrant will be unable to recover monetary damages
against directors for action taken by them that may constitute negligence or
gross negligence in performance of their duties unless such conduct falls within
an exception under DGCL or under Delaware case law. The provision, however, does
not alter the applicable standards governing a director's fiduciary duty and
does not eliminate or limit the right of the registrant or any stockholder to
obtain an injunction or any other type of equitable relief in the event of a
breach of fiduciary duty. Management of the registrant believes these provisions
will assist the registrant in securing and retaining qualified persons to serve
as directors. Except as previously disclosed, the registrant is unaware of any
pending or threatened litigation against the registrant or its directors that
would result in any liability for which such director would seek indemnification
or similar protection.
The registrant believes that the substantial increase in the number of
lawsuits being threatened or filed against corporations and their directors has
resulted in a growing reluctance on the part of capable persons to serve as
members of boards of directors of public companies. The registrant also believes
that the increased risk of personal liability without adequate insurance or
other indemnity protection for its directors could result in overcautious and
less effective direction and management of the registrant. The limitation on
liability and indemnification provisions are intended to increase the protection
provided directors and, thus, increase the registrant's ability to attract and
retain qualified persons to serve as directors. Additionally, the registrant has
procured directors liability insurance coverage, but there is no assurance that
it will provide coverage to the extent of the director's claims for
indemnification. In such event, the registrant may be forced to bear a portion
or all of the cost of the director's claims for indemnification and, the value
of the registrant stock may be adversely affected as a result. There is also no
assurance that the registrant will be able to continue to procure directors
liability insurance. It is uncertain whether the registrant's directors would
continue to serve in such capacities if improved protection from liability were
not provided.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
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ITEM 16. EXHIBITS
No. Document
--- --------
4.0 Specimen Copy of Common Stock Certificate.*
4.1 Form of Warrant Certificate.*
4.2 Form of Representative's Warrant Agreement.*
4.3 Form of Warrant Agreement.*
4.4 Consent and Amendment No. 1 to Representative's Warrant Agreement.**
5.1 Opinion of Williams & Connolly **
23.0 Consent of Grant Thornton LLP.***
23.1 Consent of Williams & Connolly (included in Exhibit 5.1)**
24.0 Power of Attorney **
- --------------------
* Incorporated by reference from the registrant's Registration Statement
on Form SB-2, Registration No. 333-3860, as amended and declared
effective on April 7, 1997 (the "IPO Registration Statement").
** Previously filed.
*** Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to
participating broker-dealers, at the closing, certificates in such denominations
and registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.
The undersigned registrant also undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(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 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.
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 of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Post
Effective Amendment on Form S-3 to its Registration Statement on Form SB-2 to be
signed on its behalf by the undersigned, in the County of Montgomery, State of
Maryland, on October 27, 1999.
e-NET, INC.
By: /s/ Robert A. Veschi
-------------------------
Robert A. Veschi
President
NAME TITLE DATE
---- ----- ----
* Chairman of the Board October 27, 1999
- --------------------------------------------
Alonzo E. Short, Jr., Lt. Gen., USA (ret.)
/s/ Robert A. Veschi President, Chief Executive October 27, 1999
- -------------------------------------------- Officer, Director
Robert A. Veschi
/s/ Donald J. Shoff Chief Financial Officer (Chief October 27, 1999
- --------------------------------------------
Donald J. Shoff Accounting Officer)
* Director October 27, 1999
- --------------------------------------------
William L. Hooton
* Director October 27, 1999
- --------------------------------------------
Clive Whittenbury, Ph.D.
* Director October 27, 1999
- --------------------------------------------
William W. Rogers, Jr.
* Attorney-in-Fact
/s/ Robert A. Veschi
-----------------------------------
Robert A. Veschi
II-3