3,010,000 shares of common stock
ONEDENTIST RESOURCES, INC.
We are offering a minimum of 800,000 shares and a maximum of 1,600,000
shares of our common stock for sale at $1.25 per share on a best-efforts basis
for a maximum period of 90 days from the date of this prospectus and without the
assistance of an underwriter. Accordingly, we will close the offering the
earlier of the date all of the 1,600,000 shares are sold or 90 days from the
date of this prospectus unless extended by us for up to an additional 60 days.
In addition, our selling stockholders are offering up to 1,410,000 shares of our
common stock for sale at prevailing market prices. Until we sell 800,000 shares,
the proceeds from the sale of the shares sold by us will be deposited in an
escrow account at Key Bank, Denver, Colorado. In the event the minimum 800,000
shares are not sold all funds will be promptly returned to subscribers without
interest or deduction.
The selling stockholders may not offer their shares for sale until we close
our up to 1,600,000 share offering and our common stock is listed for trading on
the Nasdaq Over-the-Counter Bulletin Board Trading System.
There is no public market for our common stock and no assurance that a
market will develop.
Investing in our common stock involves substantial risks. See "Risk
Factors" beginning on page 5.
- --------------------------------------------------------------------------------
Offering Commissions and Net Proceeds
Discounts
- --------------------------------------------------------------------------------
Per Share $1.25 $.1625 $1.0875
Minimum $1,000,000 $130,000 $870,000
Maximum $2,000,000 $260,000 $1,740,000
- --------------------------------------------------------------------------------
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is January 3, 2000.
TABLE OF CONTENTS
About this Prospectus........................................................3
Summary......................................................................3
Risk Factors ................................................................7
Use of Proceeds.............................................................13
Dilution....................................................................14
Capitalization..............................................................15
Selected Financial Data.....................................................16
Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................17
Business....................................................................18
Management..................................................................25
Security Ownership of Executive Officers, Directors and Beneficial
Owners of Greater than 5% of Our Common Stock.........................29
Selling Stockholders........................................................30
Plan of Distribution........................................................42
Related Party and Other Material Transactions...............................43
Description of Capital Stock................................................43
Shares Eligible for Future Sale.............................................44
Experts.....................................................................45
Legal Matters...............................................................45
Where You Can Find More Information.........................................45
Financial Statements.......................................................F-1
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ABOUT THIS PROSPECTUS
You should rely only on the information contained in this prospectus as we
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where such an offer or sale is not permitted.
SUMMARY
This summary highlights material information regarding our company and the
offering contained in this prospectus. You should read the entire prospectus
carefully, including the financial information and related notes, before making
an investment decision. Share references throughout the prospectus do not
include stock options to purchase 450,000 shares granted to G. W. McClure, our
Chief Operating Officer.
Business.
We are a development stage company, organized to design and develop an on-
line Web site for the dental community including dentists, dental practitioners
and dental patients. We distinguish ourselves from many other competing
Web-based dental sites by designing and hosting for our dentists individual,
interactive Web sites. These Web sites enable our dentists to communicate with
and market to their patients and to provide their patients with content and
information tailored specifically to each dentist's practice. In doing so, we
act as an enabler, offering each dentist the opportunity to develop and maintain
his or her own brand identity with respect to communication with patients and
vendors.
We launched our OneDentist.com Web site in February 2000. Our initial
marketing efforts have included the completion of a strategic relationship with
Oxyfresh Worldwide, a network of over 10,000 dentists. Our management includes
two individuals recognized as experts in dental practice enhancement, dental
course design and advanced practice management. Nevertheless, we face
significant challenges in achieving profitability, raising any needed capital
and developing additional strategic relationships.
Our Market Opportunity.
According to the American Dental Association, in 1999 there were 150,000
dentists and 300,000 staff personnel in 113,000 general dental practices. Over
72% of those dental practices were operated by single practitioners. We believe
that most of these single-practitioner offices do not have the marketing and
administrative support available to larger dental practices and, accordingly,
represent our primary target market.
-3-
Strategy.
Our goal is to become a leading Web destination for both dental
professionals and dental patients by providing an interactive Web site, tailored
to the specific needs of each practitioner. In order to achieve our goal we will
take steps to:
o Increase the number of dental practitioners using our Web site.
o Increase the number of dental patients using our and our dentists' web
sites.
o Further expand the functionality of our dentists' Web sites.
o Generate revenue through the on-line sale of dental products,
advertising, e-commerce transaction fees and consultation services.
History.
We were incorporated in Colorado in November 1996 under the name Haleakala
Enterprises, Inc., and acquired in a June 2000 merger transaction all the
outstanding shares of OneDentist.com, Inc., an Ohio corporation organized in
July 1999. In June 2000 our board of directors authorized a reverse split of our
common stock on the basis of .75 share for each share outstanding and a name
change to OneDentist Resources, Inc. Our offices are located at 5300 McKitrick
Boulevard, Columbus, Ohio 43235, and our telephone number is (614) 538-2710. All
references to share amounts throughout this prospectus reflect this reverse
stock split.
Plan of Distribution.
We are offering a minimum of 800,000 shares and a maximum of 1,600,000
shares on a best efforts basis directly to the public through our officers and
directors as well as through NASD members. All subscriber funds will be held in
escrow until at least 800,000 shares are sold. If 800,000 shares are not sold by
us during the selling period, we will return subscriber funds without interest
or deduction.
-4-
The Offering.
Securities offered by us: 1,600,000 shares of common stock.
Securities offered by the
selling stockholders: 1,410,000 shares of common stock.
Common stock outstanding
prior to offering: 5,000,000 shares of common stock.
Common stock outstanding
after the offering: 6,600,000 shares of common stock.
Use of proceeds: Marketing expenses, expansion of product
offerings, purchase of equipment, general
and administrative expenses and working
capital.
Proposed Bulletin Board symbol: "WEBD"
Description of Selling Stockholders.
Through this prospectus, we are registering the resale of up to 1,410,000
shares of our common stock by a total of 225 selling stockholders, 209 of whom
acquired their shares in a private placement of our common stock in February
1997 and 16 of whom received their shares when we acquired all of the
outstanding shares of OneDentist.com, Inc., an Ohio corporation, in June 2000.
An additional eight OneDentist.com, Inc. stockholders, including five of our
officers and directors, are not offering any of their shares for sale. Our total
number of stockholders is 233 and we currently have 5,000,000 shares of common
stock outstanding.
Forward-Looking Statements.
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties and assumptions about us which are discussed in the Risk Factors
section below as well as throughout this prospectus. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
prospectus might not occur.
-5-
SUMMARY PRO FORMA FINANCIAL DATA
The following summary of historical and pro forma consolidated financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our audited financial
statements and related notes included elsewhere in this prospectus.
Statement of Operations Data: Pro forma Historical
Period from July 16, (Unaudited)
1999 (date of inception) Nine months ended
through December 31, 1999 September 30, 2000
------------------------- --------------------
Total costs and expenses $ 2,150 $ 224,085
Operating loss (2,150) (224,085)
Net loss (2,150) (220,460)
Net loss per share (0.00) (0.04)
Weighted average number
of shares of common
stock outstanding 5,000,000 5,000,000
Balance Sheet Data:
The as adjusted information gives effect to:
Minimum The sale of the 800,000 shares offered by this prospectus, the
receipt of estimated net proceeds of $710,000 and the elimination of
deferred offering costs of $75,147 at September 30, 2000.
Maximum The sale of the 1,600,000 shares offered by this prospectus, the
receipt of estimated net proceeds of $1,580,000 and the elimination
of deferred offering costs of $75,147 at September 30, 2000.
(Unaudited) (Unaudited)
(Unaudited) Minimum Maximum
Pro forma Historical As adjusted As adjusted
December 31, 1999 September 30, 2000 September 30, 2000 September 30, 2000
----------------- ------------------ ------------------ ------------------
Cash and cash equivalents $ -- $ 39,445 $ 824,592 $ 1,694,592
Software development asset 65,000 50,556 50,556 50,556
Total assets 65,000 166,217 876,217 1,746,217
Total liabilities 2,150 44,926 44,926 44,926
Common stock 2,252 284,752 994,752 1,864,752
Additional paid-in-capital 65,000 65,000 65,000 65,000
Accumulated deficit (4,402) (228,461) (228,461) (228,461)
Stockholders' equity 62,850 121,291 831,291 1,701,291
-6-
RISK FACTORS
The shares of common stock offered by this prospectus involve a high degree
of risk and represent a highly speculative investment. You should not purchase
these shares if you cannot afford the loss of your entire investment. In
addition to the other information contained in this prospectus, you should
carefully consider the following risk factors in evaluating our company, our
business prospects and an investment in our shares of common stock.
We cannot assure you that we will be profitable and may need additional capital.
Our limited operating history, lack of any revenue to date and the
uncertainty of the Internet market in which we operate our business make any
prediction of our future results of operations difficult or impossible. We
expect to increase considerably our operating expenses in the future,
particularly expenses to develop our on-line OneDentist.com, Inc., Web site. We
do not expect that our revenue will cover these expenses. As a result, we expect
to incur significant losses and expect that we will need to raise additional
capital. We cannot assure that we will be able to raise additional capital and
we do not know what the terms of any such capital raising would be. Any future
sale of our equity securities would dilute the ownership and control of our
stockholders and could be at prices substantially below the offering price. Our
inability to raise capital could require us to significantly curtail our
operations.
We have not generated any revenue since beginning operations in July 1999
and have an accumulated deficit from losses totaling $228,461 (unaudited) from
that date through September 30, 2000. In order to achieve profitability, we must
develop and market the OneDentist.com Web site. We cannot assure you that we
will ever achieve broad market acceptance, profitability or positive operating
cash flow.
We have received a going concern opinion from our auditors.
In their audit report dated June 20, 2000 our auditors indicated that there
was substantial doubt as to our ability to continue as a going concern and that
our ability to continue as a going concern was dependent upon our obtaining
additional financing for our operations or reaching profitability. We cannot
assure that we will be able to do either.
We have not completed the development of our Web site and cannot assure that we
will be able to do so in the future.
Many proposed features of our OneDentist.com Web site are not yet
functional, including our Web-based application software, standardized dental
office procedure manuals and dental product purchase software. We also have not
yet launched our chat rooms and message boards. If we are unable to include
these and other proposed functions on our Web site, our competitive position
will be adversely affected, and our Web site traffic will be significantly
curtailed.
-7-
If we are unable to develop strategic relationships for Web content, our Web
development time will be significantly extended, and our capital costs will be
significantly increased.
We intend to rely upon strategic partners to provide in-depth content and
resources to our Web site such as:
o Inventories of dental supplies;
o Educational programming;
o Financial, insurance and professional employer organization services;
o Marketing services and research; and
o Web-based application software.
If we are unable to enter into strategic relationships for the provision of
these and other content and resource assets, our Web site features and our Web
traffic will be greatly reduced, and our Web development time and capital costs
will be significantly increased.
We face intense competition which could reduce our revenue and earnings.
The on-line market for Internet users and advertisers which comprise Web
site communities is new and rapidly evolving, and competition for users and
advertisers is intense and is expected to increase significantly in the future.
Barriers to entry are not substantial. We believe that the principal competitive
factors for companies seeking to create these communities are critical mass,
functionality, brand recognition, member affinity and loyalty, broad demographic
focus and open access to visitors. Other companies who are primarily focused on
creating Web-based communities for healthcare on the Internet include WebMD,
which has registered the domain name WebDDS, and DR.Koop.com. Direct competitors
offering on-line dental services to dentists and patients include QSINet,
e-dental.com, dentistryon-line.com and r-dental.com. This competition could
reduce our revenue and earnings or otherwise adversely affect our operations.
Our operating results may fluctuate due to a variety of factors and are not a
meaningful indicator of future performance.
Our operating results may fluctuate significantly in the future depending
upon a variety of factors, including the incurrence of capital costs and the
introduction of new products and services. Additional factors that may
contribute to variability of our operating results include:
o The pricing and mix of services we offer on our Web site;
o Our member and customer retention rates; and
o Changes in pricing policies and product offerings by our competitors.
Our strategy of rapid growth will put a significant strain on our resources.
Our strategy of rapid growth will place a significant strain on our
managerial, operating, financial and other resources, including our ability to
ensure customer satisfaction. Our expansion efforts will also require
significant time commitments from our senior management and will place a strain
on their ability to manage our existing business. Our future performance will
-8-
depend, in part, upon our ability to manage this growth effectively. To that
end, we will have to undertake the following improvements, among others.
o Implement additional management information systems capabilities;
o Further develop our operating, administrative and financial and
accounting systems and controls;
o Improve coordination between our engineering, accounting, finance,
marketing and operations personnel; and
o Hire and train additional management personnel and employees.
We depend on key personnel and could be affected by the loss of their services
because of the limited number of qualified people in our industry.
Competition for qualified employees in the Internet services industry is
intense and there are a limited number of people with knowledge of and
experience in the industry. The process of locating personnel with the skills
required to carry out our strategies may be lengthy and costly. We do not have
employment agreements with any of our executive officers nor do we carry key man
insurance on their lives. Our success depends to a significant degree upon our
ability to attract and retain qualified management, technical, marketing and
sales personnel and upon the continued contributions of such people. Our
employees may voluntarily terminate their employment with us at any time. We
cannot assure you that we will be successful in attracting and retaining
qualified executives and personnel. The loss of the services of key personnel,
or the inability to attract additional qualified personnel, could have a
material adverse effect on our business, operating results and financial
condition.
Rapid technological change could negatively affect our business.
Rapidly changing technology, evolving industry standards, evolving customer
demands and frequent new product and service introductions characterize the
market for Internet related companies including business-to-business and
business-to-consumer Web sites. Our future success will depend in significant
part on our ability to improve the performance, content and reliability of our
Web site in response to both the evolving demands of the market and competitive
product offerings. Our efforts in these areas may not be successful.
Future governmental regulation, privacy concerns and regulations affecting
dentists could increase our costs, decrease demand for our products or curtail
our operations.
We are not currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. However, due to the increasing popularity and use of the
Internet, a number of legislative and regulatory proposals are under
consideration by federal, state, local and foreign governmental organizations,
and it is possible that a number of laws or regulations may be adopted with
respect to the Internet relating to issues such as user privacy, taxation,
infringement, pricing, quality of products and services and intellectual
property ownership. The adoption of any laws or regulations that have the effect
of imposing additional costs, liabilities or restrictions relating to the use of
the Internet by businesses or consumers could decrease the growth in the use of
-9-
the Internet, which could in turn decrease the demand for our Internet access,
and e-commerce and direct marketing services, increase our cost of doing
business, or otherwise have a material adverse effect on our business. Moreover,
the applicability to the Internet of existing laws governing issues such as
property ownership, copyright, trademark, trade secret, obscenity, libel and
personal privacy is uncertain and developing. Any new legislation or regulation,
or application or interpretation of existing laws, could have a material adverse
effect on our business. Our operations may also be limited by dental rules,
regulations and codes of conduct applicable to dentists, to the extent that our
products, services or compensation arrangements are inconsistent with such
rules, regulations and codes.
Our business model is new, unproven and changing.
Our business model consists of providing dentists and patients with on-line
products and information related to dentistry. We have only recently applied our
business model to the Internet, it is unproven and will need to be further
developed. Accordingly, our business model may not be successful, and we may
need to change it. Our ability to generate sufficient revenue to achieve
profitability will depend, in large part, on our ability to successfully market
our site to dentists that may not be convinced of the need for an on-line
presence or may be reluctant to rely upon third parties to help develop and
manage their dental practices and procedures.
We launched our OneDentist.com Web site in February 2000. Therefore, you
should also consider our prospects in light of the risks and difficulties
frequently encountered by early stage companies in the rapidly evolving on-line
market. These risks include, but are not limited to, an unpredictable business
environment, the difficulty of managing growth and the successful application of
our business model. To address these risks, we must, among other things:
o Expand our base of on-line dentists;
o Enhance OneDentist.com brand recognition;
o Expand our product and service offerings;
o Successfully implement our business and marketing strategy;
o Provide superior Web design, Web hosting and order processing to our
dentists;
o Respond effectively to competitive and technological developments; and
o Attract and retain qualified personnel.
If we do not increase brand awareness, our sales may suffer.
Due in part to the emerging nature of the markets for business-to-business
and business-to- consumer Web sites and the substantial resources available to
many of our competitors, our opportunity to achieve and maintain a significant
market share may be limited. Developing and maintaining awareness of the
OneDentist.com brand is critical to achieving widespread acceptance of the site
as well as of our e-commerce and direct marketing solutions. The importance of
brand recognition will increase as competition in our market increases.
Successfully promoting and positioning the OneDentist.com brand will depend
largely on the effectiveness of our marketing efforts and our ability to develop
reliable and useful products and services to dentists at competitive prices. If
our planned marketing efforts are ineffective, we may need to increase our
financial commitment to creating and maintaining brand awareness among shoppers
-10-
and merchants, which could divert financial and management resources from other
aspects of our business, or cause our operating expenses to increase
disproportionately to our revenues.
The security provided by our e-commerce services could be breached or our
network could fail.
A fundamental requirement for e-commerce is the secure transmission of
confidential information over the Internet. Third parties may attempt to breach
the security provided by our e- commerce services or the security of our
dentists' systems. If they are successful, they could obtain confidential
information about dentists and patients using our Web site, including their
passwords, financial account information, credit card numbers or other personal
information. We or our providers may be liable to our customers for any such
breach in security. Even if we are not held liable, a security breach could harm
our reputation, and the mere perception of security risks, whether or not valid,
could inhibit market acceptance of our services. We or our providers may be
required to expend significant capital and other resources to license additional
encryption or other technologies to protect against security breaches or to
alleviate problems caused by these breaches. In addition, our dentists might
decide to stop using our e-commerce services if their patients experience
security breaches.
Risks Related to the Offering.
Shares of our common stock which are eligible for sale by our stockholders may
decrease the price of our common stock.
Upon completion of the offering, we will have 6,600,000 shares outstanding,
including 3,010,000 shares which are freely tradeable, subject to a 90 day
lockup from the date of this prospectus on 1,331,625 shares, and 3,590,000
shares which are restricted shares but may be sold under Rule 144 commencing in
June 2001. If the holders sell substantial amounts of our common stock, then the
market price of our common stock could decrease.
There is no trading market for our common stock.
Our common stock is not eligible for trading on any stock exchange and
there can be no assurance that our common stock will achieve listing on any such
exchange. We have applied for listing on the Nasdaq Over-the-Counter Bulletin
Board Trading System pursuant to Rule 15c2-11 of the Securities Exchange Act of
1934, but there can be no assurance we will obtain such a listing. The Bulletin
Board tends to be highly illiquid, in part because there is no national
quotation system by which potential investors can track the market price of
shares except through information received or generated by a limited number of
broker-dealers that make a market in particular stocks. There is a greater
chance of market volatility for securities that trade on the Bulletin Board as
opposed to a national exchange or quotation system. This volatility may be
caused by a variety of factors, including:
o The lack of readily available price quotations;
o The absence of consistent administrative supervision of "bid" and
"ask" quotations;
o Lower trading volume; and
o Market conditions.
-11-
In a volatile market, you may experience wide fluctuations in the market
price of our securities. These fluctuations may have an extremely negative
effect on the market price of our securities and may prevent you from obtaining
a market price equal to your purchase price when you attempt to sell our
securities in the open market. In these situations, you may be required to
either sell our securities at a market price which is lower than your purchase
price, or to hold our securities for a longer period of time than you planned.
Because our common stock is likely to be classified as "penny stock", trading
will be limited, and our stock price could decline.
Because our common stock is likely to fall under the definition of "penny
stock," trading in our common stock, if any, is expected to be limited because
broker-dealers are required to provide their customers with disclosure documents
prior to allowing them to participate in transactions involving our common
stock. These disclosure requirements are burdensome to broker-dealers and may
discourage them from allowing their customers to participate in transactions
involving our common stock.
"Penny stocks" are equity securities with a market price below $5.00 per
share other than a security that is registered on a national exchange; included
for quotation on the Nasdaq system; or whose issuer has net tangible assets of
more than $2,000,000 and has been in continuous operation for greater than three
years. Issuers who have been in operation for less than three years must have
net tangible assets of at least $5,000,000.
Rules promulgated by the Securities and Exchange Commission under Section
15(g) of the Exchange Act require broker-dealers engaging in transactions in
penny stocks, to first provide to their customers a series of disclosures and
documents, including:
o A standardized risk disclosure document identifying the risks inherent
in investment in penny stocks;
o All compensation received by the broker-dealer in connection with the
transaction;
o Current quotation prices and other relevant market data; and
o Monthly account statements reflecting the fair market value of the
securities. In addition, these rules require that a broker-dealer
obtain financial and other information from a customer, determine that
transactions in penny stocks are suitable for such customer and
deliver a written statement to such customer setting forth the basis
for this determination.
In addition, under the Exchange Act and its regulations, any person engaged
in a distribution of shares of our common stock offered by this prospectus may
not simultaneously engage in market making activities with respect to the common
stock during the applicable "cooling off" periods prior to the commencement of
this distribution.
Our preferred stock may make a third-party acquisition of our company more
difficult.
Our articles of incorporation authorize our Board of Directors to issue up
to 10,000,000 shares of preferred stock having such rights as may be designated
by our Board of Directors, without stockholder approval. This issuance of
preferred stock could inhibit a change in control by making it more difficult to
acquire the majority of our voting stock.
We do not anticipate paying dividends.
We have not paid any cash dividends on our common stock since our inception
and we do not anticipate paying cash dividends in the foreseeable future. Any
dividends which we may pay in the future will be at the discretion of our Board
of Directors and will depend on our future earnings, any applicable regulatory
considerations, our financial requirements and other similarly unpredictable
factors. For the foreseeable future, we anticipate that we will retain any
earnings which we may generate from our operations to finance and develop our
growth.
-12-
USE OF PROCEEDS
The net proceeds of the offering after payment of all expenses will be
$710,000 if the minimum 800,000 shares are sold, and $1,580,000 if all 1,600,000
shares are sold. We expect to use the net proceeds over a 12-month period,
approximately as follows:
Purpose Minimum Maximum
------- ------- -------
Marketing expenses $150,000 $ 400,000
Expansion of product offerings $150,000 $ 300,000
Purchase of equipment $ 50,000 $ 150,000
General and administrative expenses $300,000 $ 500,000
Working capital $ 60,000 $ 230,000
-------- ----------
TOTALS $710,000 $1,580,000
======== ==========
Proceeds not immediately needed will be invested in bank certificates of
deposit, treasury bills, insured bank deposits or similar investments.
We will not receive any proceeds from the sale of shares of our common
stock being offered by the selling stockholders.
-13-
DILUTION
At September 30, 2000, the net tangible book value of our outstanding
shares of common stock was $(4,412)(unaudited), or $(0.01)(unaudited) per share.
"Net tangible book value" per share represents the total amount of our tangible
assets, less the amount of our liabilities, divided by the number of shares of
common stock outstanding. Without taking into account any changes in net
tangible book value after September 30, 2000, other than to give effect to the
sale of all 1,600,000 shares of common stock offered at the public offering
price of $1.25 per share, less discounts and commissions and estimated costs of
the offering, our net tangible book value at September 30, 2000, would have been
$1,650,735 (unaudited), or approximately $0.25 (unaudited), per share. This
represents an immediate increase in net tangible book value of $0.26 (unaudited)
per share of common stock to our existing stockholders, and an immediate
dilution of $1.00 (unaudited) per share to new investors at September 30, 2000.
"Dilution" per share represents the difference between the price to be paid
by the new stockholders and the net tangible book value per share of common
stock immediately after this offering. The following table illustrates this per
share dilution.
(Unaudited)
September 30, 2000
------------------
Initial public offering price per share: $1.25
Net tangible book value per share before
the offering: $(0.01)
Increase in net tangible book value per share
attributable to new investors purchasing
in the offering: $ 0.26
Net tangible book value per share after the offering: $0.25
Dilution per share to new investors: $1.00
Dilution as a percentage of the per share purchase price: 80%
The following table sets forth the number of shares of common stock
purchased, assuming all 1,600,000 shares are sold, the total consideration paid,
before the deduction of offering expenses, and the average price per share paid
by our existing stockholders as of September 30, 2000, and new investors
purchasing the shares of common stock offered:
Shares Purchased Total Consideration
---------------- ------------------- Average Price
Number Percentage Amount Percentage Per Share
------ ---------- ------ ---------- ---------
New investors 1,600,000 24% $ 2,000,000 84% $ 1.25
Existing stockholders 5,000,000 76% $ 379,752 16% $ 0.08
--------- ------ ------------ ------
Totals: 6,600,000 100% $ 2,379,752 100%
------- ========= ====== ============ ======
-14-
CAPITALIZATION
The following table sets forth our historical and as adjusted
capitalization as of September 30, 2000 (unaudited), after deducting discounts
and commissions and estimated offering expenses. As adjusted capitalization
reflects the sale of the maximum 1,600,000 shares of common stock offered by us
hereby at an assumed offering price of $1.25 per share and the application of
the net proceeds. You should carefully read our financial statements and related
notes included elsewhere in this prospectus.
(Unaudited) (Unaudited)
September 30, 2000 September 30, 2000
Historical As Adjusted
-------------- -------------
Long-term liabilities $ 0 $ 0
Common Stock, no par value,
25,000,000 shares authorized,
5,000,000 shares outstanding,
6,600,000 shares outstanding
as adjusted $ 284,752 $ 1,864,752
Preferred stock, no par value,
10,000,000 shares authorized,
no shares issued -- --
Additional paid-in-capital 65,000 65,000
Accumulated deficit (228,461) (228,461)
---------- ------------
Total stockholders' equity 121,291 1,701,291
---------- ------------
Total capitalization $ 121,291 $ 1,701,291
========== ============
-15-
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. On June 30, 2000, Haleakala
Enterprises, Inc. completed a share exchange with OneDentist.com, Inc. whereby
the shareholders of OneDentist.com, Inc. exchanged all of their OneDentist.com,
Inc. shares for a majority interest of Haleakala Enterprises, Inc. For
accounting purposes, OneDentist.com, Inc. is considered to be the acquirer. The
operating data for the period from July 16, 1999 (date of inception) through
December 31, 1999 is derived from the proforma financial statements which give
effect to the merger of Haleakala Enterprises, Inc. and OneDentist.com, Inc. The
proforma financial statements as of December 31, 1999 were prepared utilizing
the financial statements of OneDentist.com, Inc. which have been audited by
Hausser + Taylor LLP, independent accountants, and are included in this
prospectus, and the financial statements of Haleakala Enterprises, Inc. which
have been audited by Angell & Deering, independent accountants, and are included
in this prospectus. Subsequent to the merger, the Company changed its name to
OneDentist Resources, Inc. The unaudited financial statements as of September
30, 2000 and for the nine months then ended include the financial statements of
OneDentist Resources, Inc.
The unaudited financial statements have been prepared on substantially the
same basis as the audited financial statements and, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the results of operations
for these periods. Historical results are not necessarily indicative of the
results to be expected in the future, and the results of interim periods are not
necessarily indicative of results for the entire year.
Operating data:
Period from July 16,
1999 (date of (Unaudited)
inception) through Nine months ended
December 31, 1999 September 30, 2000
-------------------- --------------------
Costs and expenses:
Legal, consulting and accounting $ 2,150 $ 116,724
Compensation and related expenses -- 36,342
Occupancy expenses -- 18,402
Depreciation and amortization -- 14,475
Other operating expenses -- 38,142
----------- -----------
Total costs and expenses 2,150 224,085
----------- -----------
Operating loss (2,150) (224,085)
----------- -----------
Interest income -- 3,625
----------- -----------
Net loss $ (2,150) $ (220,460)
=========== ===========
Net loss per share $ (0.01) $ (0.04)
=========== ===========
Weighted average number of shares
of common stock outstanding 5,000,000 5,000,000
=========== ===========
Balance Sheet data:
(Unaudited)
As of As of
December 31, 1999 September 30, 2000
----------------- ------------------
Cash and cash equivalents $ -- $ 39,445
Total assets 65,000 166,217
Total liabilities 2,150 44,926
Common stock 2,252 284,752
Additional paid-in-capital 65,000 65,000
Accumulated deficit (4,402) (228,461)
Stockholders' equity 62,850 121,291
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those set forth under "Risk Factors" and elsewhere in this prospectus. This
discussion should be read in conjunction with our audited financial statements
and footnotes included elsewhere in this prospectus.
Results of Operations.
Period from inception, July 16, 1999, to September 30, 2000.
We commenced operations on July 16, 1999. From July 16, 1999 through
September 30, 2000, we incurred a net loss of $220,460, or $0.04 per share, and
did not generate any operating revenue.
The majority of the expenses we incurred prior to December 31, 1999 related
to organizational matters in connection with our merger, and the majority of
expenses from January 1, 2000 to September 30, 2000 related to the development
of our Web site, subscriber base, content and establishment of our
administrative offices. All expenses have been paid in cash rather than in our
securities.
Liquidity and Capital Resources.
To date we have not generated positive cash flow from operations due to
development and infrastructure costs to support expected growth. In March 2000
we completed a $312,500 private placement of our securities to fund our cash
requirements. We intend to continue to fund the development of our
OneDentist.com Web site.
We expect to need additional funds to add features to our OneDentist.com
Web site. We intend to seek additional funding through this offering. However,
there can be no assurance that new capital will be available to us or that
adequate funds for our operations, whether from debt or equity financings, will
be available when needed or on terms satisfactory to us. Our failure to obtain
adequate additional financing may require us to delay or curtail some or all of
our programs, sales and marketing efforts, or other operations. Any additional
equity financing may involve substantial dilution to our then-existing
stockholders.
-17-
BUSINESS
The Dental Industry Challenge.
According to the American Dental Association, in 1999 dental practices
employed over 450,000 people in 113,000 dental offices across the United States.
Over 72% of these dental offices were operated by a single practitioner who did
not have access to the marketing and administrative support available to larger
dental offices. While dental practitioner income is increasing regularly due to
the aging of the U.S. population, older Americans are in need of increasingly
more complex dental treatments. Accordingly, dentists face the increased
challenges of requiring more sophisticated expertise and more technologically
advanced equipment while controlling their operating margins, managing the
business side of their dental practice and learning new and improved dental
practices and procedures.
The Internet offers us the opportunity to reach dental practitioners as
well as dental patients. Worldwide transactions on the Internet, Internet users
and Internet commerce continue to grow at a substantial rate. OneDentist.com is
designed to take advantage of the growth in both business-to-consumer as well as
business-to-business transactions by providing products and services on-line to
dental practitioners and patients.
There are few cost-effective resources available to single-practitioner
dental practices. In addition to spiraling equipment and supply costs, most
information technology-based dental solutions and systems require investments
beyond the resources of small dental practices. This problem is further
aggravated by the fact that most dental offices have staff with little or no
professional business training.
OneDentist.com.
We have designed OneDentist.com, a Web site which we launched in February
2000, as an enabler, providing innovative business-to-business features for
dentists, and interactive business-to-consumer resources for dental patients. We
distinguish ourselves from other Web-based dental sites by designing and hosting
for our dentists individual, interactive Web sites. These Web sites enable our
dentists to communicate with and market to their patients and to provide their
patients with content and information tailored specifically to each dentist's
practice. In doing so, we offer each dentist the opportunity to develop and
maintain his or her own brand identity with respect to communication with
patients and vendors.
For dentists, our OneDentist.com Web site currently offers:
o A personalized dental practice Web site designed with our resources;
o Web hosting and interactive communication using e-mail to set
appointments, deliver appointment reminders and answer patient
questions;
o Standardized dental office procedures, manuals and forms;
o The ability to purchase dental supplies and other goods and services
on-line;
o Educational features including dental news, classified advertisements,
continuing dental education programs, marketing research and
statistical profiles of other dental practices; and
o Patient referrals and relationship development through our Web site.
18
We offer dentists integrated back-office tools and systems and intend
to provide these resources on a secure, easy-to-implement browser-based Web
platform in order to reduce dental office administrative burdens. Our
OneDentist.com Web site also offers dentists marketing assistance through
on-line patient referrals and appointment reminders designed to improve the
relationship and bond between dentist and patient. The OneDentist.com Web site
provides standardized dental office procedures and forms while allowing dentists
to purchase dental supplies currently by e-mail and soon on-line. In order to
support the need for continuing dental education, we intend to offer on-line
continuing dental education programs, dental news, marketing research and
statistical profiles of other dental practices, as well as classified dental
advertisements.
In the future, we intend to provide Web-based application software which
will provide billing, scheduling, insurance and managed care benefits to our
dentists. We are also negotiating strategic relationships which we believe will
allow us to provide financial, insurance and professional employer organization
services to our dentists.
For dental patients, our OneDentist.com Web site currently offers:
o A dentist finder search-engine, which enables consumers to locate and
compare dentists by geographical location;
o In-depth information on dental practices including location, map
finding, areas of specialty, insurance information and backgrounds on
practitioners;
o Dental education, including dental health news and articles on dental
treatments;
o Interactive communication with the dental practice through e-mail,
including scheduling arrangements, billing inquiries, insurance
information and general questions; and
o Dental products for sale.
In order to attract dental patients, our OneDentist.com Web site offers
consumers a dentist-finder search engine, which enables consumers to locate and
compare dentists by geographical location and offers in-depth information on
dental practices, including map-finding, areas of specialty, insurance
information and backgrounds on dental practitioners. In order to attract
consumers to our Web site, we also offer free dental education information such
as dental health news and articles on dental treatments. We offer patients the
convenience of interactive communication with their dentists through e-mail,
which allows for scheduling of appointments, billing inquiries and the exchange
of insurance information. We also offer dental products for sale to consumers
and in the future intend to increase the amount of time visitors are on our Web
site by offering dental-related chat rooms and message boards.
19
Sources of Revenue.
We will charge fees to our dental practitioners for designing, developing
and hosting their Web sites, along with a monthly membership fee.
In the future, we intend to earn additional revenue through:
o The sale of dental products to dentists and patients;
o The sale of on-line continuing dental education products such as
classes and seminars in dental practices;
o Patient referral fees, appointment confirmations and satisfaction
inquiries charged to dentists;
o Fees and commissions earned under strategic arrangements with
providers of financial, insurance, professional employer organization
and related services;
o E-commerce transaction fees charged for sales made by our dental and
non-dental suppliers and vendors;
o In-practice consultation fees charged directly to dental offices; and
o The sale of advertising and marketing messages targeted to specific
demographic groups among our dentists and users.
To date, other than Oxyfresh Worldwide, we have not entered into agreements
with any third parties which will generate sales of products or services.
Accordingly, we cannot assure that we will generate any such revenue in the
future.
Strategy.
Our goal is for OneDentist.com to become a leading Web destination for both
dental professionals and dental patients by providing an interactive Web site
tailored to the specific needs of each practitioner. In order to achieve our
goal, we intend to:
o Increase the number of dental practitioners using our Web site by:
Continuing to Develop Strategic Relationships. We intend to continue to
develop strategic relationships with dental practice associations, insurance
providers, billing services and practice- management groups. We will also offer
tailored services and group discount rates to members of these strategic groups
in order to obtain sponsorship and referrals from such groups. Consistent with
this approach, we have entered into an agreement with Oxyfresh Worldwide, a
network which includes approximately 10,000 dentists that distributes
proprietary oral and other healthcare products through dental practitioners who
act as distributors of the Oxyfresh dental product lines. Under the terms of our
agreement with Oxyfresh, we provide free Web site design, e-mail, and Web
-20-
hosting for Oxyfresh dentists who become members of the OneDentist.com program.
In turn, Oxyfresh recommends our Web site to its dentist members, provides our
promotional materials to be included in mailings made by Oxyfresh to its dentist
members and generally recommends the use of our OneDentist.com Web site to its
membership. Our agreement with Oxyfresh may be canceled by either party at any
time.
Entering Into Vendor Arrangements. We intend to negotiate supplier and
vendor agreements covering a broad range of products and services. Our goal is
to allow our dental practitioners to use our Web site as a one-stop shopping
source for dental as well as non-dental products and services. We expect that
our on-line suppliers and vendors will be national, regional and local firms who
will be motivated to enter into strategic arrangements with us in order to
access our dental practice database while reducing their transaction costs and
improving their marketing efficiencies.
Offering Innovative Web-Based Back-Office Management Software. We intend to
become a Web-based application service provider, generally referred to as an
"ASP", offering a complete line of management software for dental practitioners.
Under our "digital dashboard" trade name, we will offer a wide variety of office
management software tools which will include extensive collections of integrated
back-office software, including billing, scheduling, insurance, managed-care
benefits and other related back-office practice methods. The digital dashboard
will also become a source of news and trends within the dental industry, and
allow for the exchange of information, similar to an intranet, between dental
practitioners through e-mail and real-time chats.
Developing Direct Marketing Programs to Attract Small- to Medium-Size
Dental Practices. In addition to marketing through trade groups and associations
such as Oxyfresh, we intend to market directly to smaller dental practices. Due
to the extreme fragmentation of the dental industry, we will seek to enroll
dentists by initially concentrating on the top 100 dental markets. Our marketing
will include conducting dental education seminars, and the use of on-line and
traditional advertising media.
Sponsoring Dental Trade Meetings, Promotional Events and Mentoring
Programs. We intend to sponsor a number of events attended by dental
professionals in order to further expose our brand. These events will include
dental trade meetings and promotional events which are attended by dentists and
dental product vendors as well as mentoring programs and related continuing
dental education seminars and conferences.
Offering Value-Priced Dental Products for the Practitioner. Through our
anticipated national vendor relationships we expect to provide our dentists with
dental products at significant discounts to their current supplier prices. In
the future we also expect to provide our dentists with access to more
information about suppliers and their products, as well as access to product
supply auctions held by larger vendors.
o Increase the number of dental patients using our and our dentists' Web
sites by:
Offering a User-Friendly Guide to Selecting Dentists in the User's
Location. OneDentist.com provides dental consumers with a search engine that
allows them to locate and compare our dentist members by geographical location.
-21-
Once a potential dental practice is selected, the site offers the consumer
in-depth information on the dental practice including map-finding assistance,
areas of specialty, insurance information and backgrounds on the practitioners.
Providing Interesting and Informative News and Articles on Dental Subjects.
We intend to enter into strategic relationships with industry partners in order
to provide contemporary dental information and interesting dental content on a
wide variety of dental subjects, including information on dental cosmetic
procedures and new dental technological developments.
Promoting the OneDentist.com Brand Name Through Web-Based and Traditional
Media Advertising. We intend to use Web-based and traditional media to promote
our brand directly to consumers. We believe that by increasing our consumer base
we will attract additional dentist members, as well as advertisers and suppliers
whose products and services are directed to the dental consumer.
Developing Multi-Lingual Versions of Our Web Site. We intend to outsource
the development of foreign language features for at least a portion of the
OneDentist.com Web site, in order to attract non-English speaking users.
o Further expand the functionality of our dentists' Web sites:
We intend to further expand the functionality of our dentists' Web sites to
provide substantially all of the content that will be available on our own
OneDentist.com Web site. Accordingly, patients will find a content-rich and
robust home page provided by their own dentist, thereby assisting the dentist in
establishing his or her own brand, improving the relationship between the
dentist and patient and allowing the patient to use the Web site as a portal for
all dental needs.
o Generate additional revenue through the on-line sale of dental products,
advertising, e-commerce transaction fees and consultation services:
In addition to the on-line sale of dental products and advertising, we
believe we can generate additional revenue through e-commerce transaction fees
and various consultation services. These services would include out-source
activities such as patient appointment confirmation, fulfillment center services
such as delivery of sample products, follow-up patient satisfaction inquiries
and the like.
Marketing.
We intend to market OneDentist.com memberships to dentists through dental
practice associations such as Oxyfresh, insurance providers, dental product
supply companies, billing services and practice-management groups. To support
this effort, we intend to offer discounted Web services to members of these
strategic groups. We will also market directly to small- and medium-size dental
practices through on-line and traditional media advertising such as banner ads,
targeted e-mail, direct mail, telemarketing and magazine advertisements. At the
same time, we will seek to establish our brand with dental consumers through
advertisements in national, regional and local magazines, as well as through
on-line banner advertisements.
-22-
We will also conduct educational seminars aimed at dentists, co-sponsored
by advertising partners or vendors, relating to ongoing dental education as well
as dental topics of current interest to dentists.
Competition.
The on-line market for industry specific businesses, users and advertisers
is new and rapidly evolving, and competition for users and advertisers is
intense and is expected to increase significantly in the future. Barriers to
entry are relatively insubstantial. We believe that the principal competitive
factors for companies seeking to create these industry specific communities are
critical mass, functionality, brand recognition, member affinity and loyalty,
broad demographic focus and open access to visitors.
A number of other companies have created Web-based communities for
healthcare on the Internet including WebMD and DR.Koop.com. More specifically, a
number of direct competitors offer on-line dental services to dentists and
patients including QSINet, e-dental.com, dentistryon- line.com and r-dental.com.
Most of these competitors offer Web sites focused on dentist referrals and
dental information or news, while we emphasize the development of individual Web
sites for dentists which allow for interactive communication with dental
consumers and the delivery of marketing messages and in depth dental information
to users. This competition could reduce our revenue or earnings or otherwise
adversely affect our operations.
We may also face competition in the future from Web directories, search
engines, software archives, content sites, commercial on-line services, sites
maintained by Internet service providers or ISPs, and other entities that
establish dental communities on the Internet by developing their own Web sites
or purchasing one of our competitors. In addition, we could face competition in
the future from traditional media companies, a number of which have recently
made significant acquisitions of or investments in Internet companies. There can
be no assurance that our competitors and potential competitors will not develop
communities that are equal or superior to or that achieve greater market
acceptance than ours.
We also compete with traditional forms of media such as newspapers,
magazines, radio and television, for advertisers and advertising revenue. We
believe that the principal competitive factors in attracting advertisers include
the amount of traffic on the Web site, brand recognition, customer service, and
the demographics of our members and viewers. We believe that the number of
Internet companies relying on Web-based advertising revenue will increase in the
future. Accordingly, we will likely face increased competition resulting in
increased pricing pressures on our advertising rates which could in turn have a
material adverse effect on our business, results of operations and financial
condition.
Virtually all of our existing and potential competitors, including Web
directories and search engines and large traditional media companies, have
longer operating histories in the Web market, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. These competitors are able to undertake more extensive
marketing campaigns for their brands and services, adopt more aggressive
advertising pricing policies and make more attractive offers to potential
employees, distribution partners, commerce companies, advertisers and
-23-
third-party content providers. There can be no assurance that Internet content
providers and ISPs, including Web directories, search engines, shareware
archives, sites that offer professional editorial content, commercial on-line
services and sites maintained by ISPs, will not be perceived by advertisers as
having more desirable Web sites for placement of advertisements.
Many of our potential advertising customers and strategic partners have
established collaborative relationships with competitors or potential
competitors, and other high-traffic Web sites. Accordingly, there can be no
assurance that we will be able to develop and increase our membership, traffic
levels and advertiser customer-base. There can also be no assurance that we will
be able to compete successfully against our current or future competitors or
that competitors will not have a material adverse effect on our business,
results of operation and financial condition.
Intellectual Property.
We regard our technology as proprietary and intend to restrict use by
others by seeking trademark, service mark, copyright and trade-secret
protection. We currently have no patents or patents pending and do not
anticipate that patents will become a significant part of our intellectual
property in the foreseeable future. We generally enter into confidentiality
agreements with our employees and consultants, and generally control access to
and distribution of our documentation and other proprietary information. Despite
these precautions, it may be possible for a third party to copy or otherwise
obtain and use our proprietary information without authorization, or to develop
similar technology independently. We have registered the domain names
"onedentist.com" and "1dentist.com" and intend to pursue the registration of our
service marks in the United States and internationally. We have applied for the
registration in the United States for the service mark "OneDentist." Effective
trademark, service mark, copyright and trade-secret protection may not be
available in every country in which our services are distributed or made
available through the Internet, and policing unauthorized use of our proprietary
information will be difficult.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving; no assurance can be given as to the future
viability or value of any proprietary rights of ours or other companies within
our market. There can be no assurance that steps taken by us will prevent
misappropriation or infringement of our proprietary information. Any such
infringement or misappropriation, should they occur, might have a material
adverse effect on our business, results of operations and financial condition.
In addition, litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets, or to determine the
validity and scope of the proprietary rights of others. Such litigation might
result in substantial costs and diversion of resources and management attention,
and could have a material adverse effect on our business, results of operations,
and financial condition. Furthermore, there can be no assurance that our
business activities will not infringe upon the proprietary rights of others, or
that other parties will not assert infringement claims against us.
Employees.
As of September 30, 2000, we had one full-time employee and two part-time
employees, including our executive officers.
Facilities.
We currently sublease 1,500 square feet of office space on a month-to-month
basis in Columbus, Ohio, from an affiliated entity for $1,545 per month. The
amount we are paying on the sublease is the same amount paid by the affiliate to
the landlord and is fair, reasonable and consistent with rentals charged by
unaffiliated landlords in the same market area.
-24-
MANAGEMENT
Directors and Executive Officers.
The following table sets forth information regarding our executive officers
and directors, all of whom joined us in 1999:
Officer or
Name Age Office Director Since
---- --- ------ --------------
Richard J. Horn 47 Chairman of the Board and July 1999
Chief Executive Officer
Graydon D. Webb 52 President, Treasurer and July 1999
Director
G. W. McClure 50 Chief Operating Officer September 2000
Gerald S. Strauss 53 Secretary and Director July 1999
Louis P. DiOrio 68 Director of Education Content July 1999
Phillip A. Knall 51 Vice President - Sales July 1999
Directors hold office for a period of one year from their election at the
annual meeting of stockholders and until their successors are duly elected and
qualified. Officers are elected by, and serve at the discretion of, the Board of
Directors. None of the above individuals has any family relationship with any
other. Our audit committee is composed of: Messrs. Horn, Webb and Strauss.
Directors do not receive payment for attending Board meetings, but are
reimbursed for out-of- pocket expenses.
The following is a summary of the business experience of each of our
executive officers and directors:
Richard J. Horn, is a graduate of Miami University of Ohio. In 1999 he
co-founded Horn Interactive, Inc., a Web development company specializing in
tools and content for corporate Intranets. From 1982 to 1999, he served as Chief
Executive Officer of Comware Incorporated, a developer of on-line training
programs for Fortune 500 corporations. He has won numerous national and
international awards for his work in on-line learning, work tools and content.
Mr. Horn devotes approximately 30 hours per week to our affairs and provides Web
development and content management assistance through Horn Interactive.
Graydon D. Webb, is a graduate of The Ohio State University and
participated in its Executive MBA Program. Mr. Webb served as Vice President of
Franchise Sales for Wendy's from 1973-1980. He founded G.D. Ritzy's, Inc., a
fast-food franchiser, in 1980 and served as its Chairman through 1988. In 1988,
he co-founded TouchChoice Systems, an interactive communications company, and
-25-
served as an executive officer and director until 1991. From 1991 to 1998, he
was founder and sole proprietor of Auric Group, a consulting group specializing
in restaurant and general franchising activities. Auric's clients included
PepsiCo, Bunge Foods International and Rally's. Since 1996, he has been Managing
Director of Chapman Partners, LLC, a company engaged in mergers and acquisitions
for food-related companies.
G. W. "Rusty" McClure is a graduate of Ohio Wesleyan University with a
Bachelor of Arts degree in Economics. He also earned a Master of Divinity degree
from Emory University and a Master of Business Administration from Harvard
Business School. From 1976 to 1983, Mr. McClure served as President and CEO of
Brown Publishing Company where he directed the development and management of
this holding company for 17 Mid West United States based newspapers including
seven printing plants with revenue of $17 million per year. From 1983 to 1999,
he was President and owner of Famous/Fraternity Sportsware a 23 year old
decorator/distributor of silk screened and embroidered activeware and glassware,
which primarily targeted the college and recreational markets. At
Famous/Fraternity he was responsible for organizational structures, marketing
concepts and financial planning. During his tenure Famous/Fraternity grew to 170
associates and 12 retail stores in six states. Since 1999, he has served as a
consultant to Twenty First Century Communications, a leader in computer
automated telephony to the electric utility industry.
Gerald S. Strauss, is a graduate of The Ohio State University College of
Dentistry and has been practicing general family dentistry in Marysville, Ohio,
since 1973. During this time he also served as a Clinical Instructor at The Ohio
State University College of Dentistry. He is an expert in dental practice
valuation and enhancement. Dr. Strauss devotes approximately 30% of his time to
our affairs.
Louis P. DiOrio, MA, DDS, is a Professor Emeritus at The Ohio State
University, having served on the dental faculty since 1974. He was an Associate
Professor and Chair of Community Dentistry at the University of Texas Dental
Branch at Houston from 1968 to 1973 and is an authority on dental practice
enhancement and dental course design. He has authored several books, articles
and manuals dealing with dental education. Dr. DiOrio devotes approximately 40%
of his time to our affairs.
Phillip A. Knall, D.D.S., is a graduate of The Ohio State University
College of Dentistry, and has been a practicing dentist since 1974. He is also a
dental consultant presenting seminars on the application of technology and
advanced practice management to dental groups throughout the United Sates. Dr.
Knall devotes approximately 30% of his time to our affairs.
Executive Compensation.
None of our executive officers have received or currently receive
compensation in excess of $100,000 per year. Mr. Webb, our President, does not
currently receive a salary or other compensation from us. In September 2000 Mr.
McClure, our Chief Operating Officer, entered into a two year employment
agreement with us, providing for a salary of $5,000 per month until completion
of the offering followed by a salary of $10,000 per month during the remaining
term of the employment agreement. In connection with his employment, we also
granted Mr. McClure options to purchase 450,000 shares of our common stock for
$2.00 per share, vesting over a one year period.
Although we have developed a stock option plan, none of our executive
officers or directors, except Mr. McClure, have been granted stock options,
warrants or similar securities.
-26-
Stock Option Plan.
In July 2000, our board of directors adopted, subject to stockholder
approval, our 2000 Stock Option Plan, which provides for the grant to employees,
officers, directors and consultants of options to purchase up to an aggregate of
500,000 shares of common stock, consisting of both "incentive stock options"
within the meaning of Section 422A of the United States Internal Revenue Code of
1986 (the "Code") and "non-qualified" options. Incentive stock options are
issuable only to employees, while non-qualified options may be issued to
non-employee directors, consultants and others, as well as to employees.
The Plan will be administered by our board of directors, which will
determine those individuals who are to receive options, the time period during
which the options may be partially or fully exercised, the number of shares of
common stock that may be purchased under each option, and the option price.
The per share exercise price of the common stock subject to an incentive
stock option or nonqualified option may not be less than the fair market value
of the common stock on the date the option is granted. The per share exercise
price of the common stock subject to a non-qualified option will be established
by the board of directors. The aggregate fair market value, determined as of the
date the option is granted, of the common stock that any employee may purchase
in any calendar year pursuant to the exercise of incentive stock options may not
exceed $1,000,000. No person who owns, directly or indirectly, at the time of
the granting of an incentive stock option to him, more than 10% of the total
combined voting power of all classes of our stock is eligible to receive any
incentive stock options under the Plan unless the option price is at least 110%
of the fair market value of the common stock subject to the option, determined
on the date of grant. Non-qualified options are not subject to this limitation.
No incentive stock option may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the option will be exercisable only by him or her. In the event of
termination of employment other than by death or disability, the optionee has
three months after such termination during which he or she can exercise the
option. Upon termination of employment of an optionee by reason of death or
permanent total disability, his or her option remains exercisable for one year
thereafter to the extent it was exercisable on the date of such termination. No
similar limitation applies to non-qualified options.
Options under the Plan must be granted within ten years from the effective
date as amended of the Plan. The incentive stock options granted under the Plan
cannot be exercised more than ten years from the date of grant except that
incentive stock options issued to 10% or greater stock- holders are limited to
five year terms. All options granted under the Plan will provide for the payment
of the exercise price in cash or by delivery to us of shares of common stock
already owned by the optionee having a fair market value equal to the exercise
price of the options being exercised, or by a combination of such methods of
payment. Therefore, an optionee may be able to tender shares of common stock to
purchase additional shares of common stock and may theoretically exercise all of
his stock options with no additional investment other than his original shares.
Any unexercised options that expire or that terminate upon an optionee
ceasing to be an officer, director or an employee becomes available once again
for issuance. We have granted 450,000 options under the Plan to Mr. McClure.
Liability and Indemnification of Officers and Directors.
Our Articles of Incorporation provides that our directors will not be
liable for monetary damages for breach of their fiduciary duty as directors,
other than the liability of a director for:
-27-
o A breach of the director's duty of loyalty to our company or our
stockholders;
o Acts or omissions by the director not in good faith or which involve
intentional misconduct or a knowing violation of law;
o Willful or negligent declaration of an unlawful dividend, stock
purchase or redemption; or
o Transactions from which the director derived an improper personal
benefit.
Our Articles of Incorporation require us to indemnify all persons whom we
may indemnify pursuant to Colorado law to the full extent permitted by Colorado
law.
In addition, our bylaws require us to indemnify our officers and directors
and other persons against expenses, judgments, fines and amounts incurred or
paid in settlement in connection with civil or criminal claims, actions, suits
or proceedings against such persons by reason of serving or having served as
officers, directors, or in other capacities, if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to our
best interests and, in a criminal action or proceeding, if he had no reasonable
cause to believe that his/her conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of no contest or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to our best interests or that he or
she had reasonable cause to believe his or her conduct was unlawful.
Indemnification as provided in our bylaws shall be made only as authorized in a
specific case and upon a determination that the person met the applicable
standards of conduct. Insofar as the limitation of, or indemnification for,
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers, or persons controlling us pursuant to the foregoing, or
otherwise, we have been advised that, in the opinion of the Securities and
Exchange Commission, such limitation or indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore, unenforceable.
-28-
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND
BENEFICIAL OWNERS OF GREATER THAN 5% OF OUR COMMON STOCK
The following table sets forth information with respect to the beneficial
ownership of our common stock owned, as of September 30, 2000, by:
o The holders of more than 5% of our common stock;
o Each of our directors; and
o All of our directors and executive officers as a group.
Each stockholder's address is in care of our company at 5300 McKitrick
Boulevard, Columbus, Ohio 43235.
Number of Percent of Common Percent of Common
Shares of Common Stock Owned Stock Owned
Name of Beneficial Owner Stock Owned Prior To Offering After Offering
- ------------------------ ---------------- ------------------ ------------------
Richard J. Horn 841,361 16.8% 12.7%
Graydon D. Webb 425,941 8.5% 6.5%
Gerald S. Strauss 483,212 9.7% 7.3%
Andrew L. Horn 587,612 11.8% 8.9%
Edward Kelley 383,525 7.7% 5.8%
Joel M. McCuen 483,212 9.7% 7.3%
Louis P. DiOrio 305,587 6.1% 4.6%
All officers and directors
as a group (six persons) 2,263,376 45.3% 34.3%
-29-
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders and
the number of shares of our common stock beneficially owned by the selling
stockholders as of September 30, 2000. Each selling stockholder is offering all
shares owned by him or her. The table includes 209 selling stockholders who
acquired their shares in a private placement of our common stock under the
provisions of Rule 506 of Regulation D enacted under the Securities Act of 1933,
in February 1997.
The following shares may be offered from time to time by the selling
stockholders named below. The selling stockholders may not offer their shares
for sale until we close our offering of up to 1,600,000 shares and our common
stock is listed for trading on the Bulletin Board or the Pink Sheets. However,
the selling stockholders are under no obligation to sell all or any portion of
these shares of our common stock. In addition, the selling stockholders are not
obligated to sell such shares of our common stock immediately under this
prospectus. Since the selling stockholders may sell all or part of the shares of
common stock offered in this prospectus, we cannot estimate the number of shares
of our common stock that will be held by the selling stockholders upon
termination of this offering.
Other that Mr. Kelley, none of the selling stockholders are officers,
directors or principal stockholders of our company, and none own 5% or more of
our outstanding common stock. The address of each selling stockholder is in care
of our company at 5300 McKitrick Boulevard, Columbus, Ohio 43235.
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Helene Abrahams 375 *
Marshall Abrahams 375 *
Gary A. Agron 112,312 1.7%
William C. Anderson 100,000 1.5%
Elaine Asarch 375 *
Richard Asarch 375 *
Asian Pacific Industries Ltd. 375 *
Brenda S. Bagg 375 *
Gerald A. Bagg 375 *
Douglas C. Ball 375 *
-30-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Milton H. Barbarosh 375 *
Ricki Barbarosh 375 *
James D. Beatty 375 *
Susan Elliot Beatty 375 *
Carylyn K. Bell 375 *
J. Daniel Bell 375 *
Gerald M. Berenstein 375 *
Kathy Berenstein 375 *
Andrew N. Bernstein 375 *
Barbara V. Bernstein 375 *
Mitchell H. Bernstein 375 *
Angela Bortoluzzi 375 *
Eugene Bortoluzzi 375 *
Bruce W. Breitweiser 375 *
Jeannie W. Breitweiser 375 *
Arna K. Campbell 375 *
Roger R. Campbell 375 *
Capital General Corporation
Limited 375 *
Robert Carrier 375 *
Ben Casale 375 *
Christina Casale 375 *
John E. Cathcart 375 *
Jack H. Chabot 25,000 *
Ki Wai Chan 375 *
Ting Sun Chang 375 *
Barbara F. Chapman 375 *
-31-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Jay H. Chapman 375 *
Jiansi Chen 375 *
Andrew Chu 375 *
Kwok Fu Chu 375 *
Yin Kam Chu 375 *
Naomi R. Cohn 375 *
Rennei K. Coleman 375 *
Robert J. Coleman 375 *
David L. Cove 375 *
Garth G. Cox 25,000 *
Gerald Crouch 50,000 *
Keith A. Darling 25,000 *
Jack R. Daugherty 375 *
Shelley F. Daugherty 375 *
Joseph F. Demeo 375 *
Mary Jean Demeo 375 *
Tim DeRosa 25,000 *
Ernest DuFresne 375 *
eCap Ventures, LLC 50,000 *
Elliot Living Trust 375 *
Joanne Ernsten 375 *
Heather Evans 375 *
Joseph Fazzone 112,313 1.7%
H. Thomas Fehn 375 *
Monica R. Fehn 375 *
John E. Fitzpatrick 375 *
-32-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Suzanne Fitzpatrick 375 *
Five Oaks Investment Corp. 375 *
Wayne Fletcher 375 *
Carolyn Fong 375 *
Henry Fong 375 *
Chris Freeman 375 *
Maria Freeman 375 *
Jeffrey Frieldand 375 *
GM/CM Family Partners, Ltd. 112,312 1.7%
Penelope S. Gallagher 375 *
William J. Gallagher 112,313 1.7%
Anthony P. Gargiulo 375 *
Marcia A. Gargiulo 375 *
Judith H. Geller 375 *
Richard A. Geller 375 *
Bruce Gillman 50,000 *
Kimberly K. Gollehon 375 *
Ronald D. Gollehon 375 *
Zachary T. Gordon 375 *
Caryljo M. Greenblatt 375 *
Phill D. Greenblatt 375 *
Ian Gunn 375 *
Michele Gunn 375 *
Gary Gutterman 375 *
-33-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Sheila M. Gutterman 375 *
Harris Trust Dtd 8/22/94
Robert Allen Strahl Trustee 375 *
Deborah Hattoy-Londelius 375 *
John Hickey 375 *
Marsha Hillhouse 375 *
Matthew Hillhouse 375 *
Anne Marie Janssens-Lens 375 *
Paul F. Janssens-Lens 375 *
John Epert Family Trust 375 *
Leys Johnston-Koyle 375 *
Bernard F. Jones 25,000 *
Jeffrey E. Kahler 375 *
Joshua S. Kanter 375 *
Linda B. Kaufmann 375 *
Thomas A. Kaufmann 375 *
Brian Kelley 375 *
Edward Kelley 35,000 *
Jack D. Kelley 375 *
Jane A. Kelley 375 *
Teresa M. Kelley 375 *
George L. Kentris 50,000 *
Colleen A. Keogh 375 *
Gary E. Keogh 375 *
Mary Kilgore 375 *
Raymond Kilgore 375 *
-34-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Cynthia Kirby 375 *
Gerald Kirby 375 *
Lisa A. Kirby 375 *
Michael Kirby 375 *
Michael Kleinman 375 *
Michael J. Kourie 50,000 *
W. Koyle 375 *
Janet A. Kritzer 375 *
Stuart A. Kritzer 375 *
Lyckle Kuipers 375 *
Dave Lageschulte 375 *
Noel Langdon 375 *
Mrs. Noel Langdon 375 *
Bernard Laurent 375 *
Corinne Laurent 375 *
Jill A. Lee 375 *
Herbert I. Lee 375 *
Alan J. Levin DDS 375 *
Cynthia L. Levin 375 *
John T. Lisenby 375 *
Mary Jane Lisenby 375 *
John Londelius 375 *
Patricia Lorenz 375 *
Chi Ting Lui 375 *
Luen Hing Lui 375 *
-35-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Michael Lupynec 375 *
Stephanie Lupynec 375 *
Neil G. Macey 375 *
Sharon Marks 375 *
Stanley Marks 375 *
David K. Marshall 375 *
Janet M. Marshall 375 *
Earnest Mathis 375 *
Jessie Mathis 375 *
Mathis Family Partners, Ltd. 112,312 1.7%
Don D. Miller 25,000 *
Don E. Montague 375 *
Gary A. Mosko 375 *
Paula L. Mosko 375 *
Leslie L. Neadeau 375 *
Jeane Hays Nerlino 375 *
Vincent Nerlino 375 *
Paul Newland 375 *
Po Ming Ng 375 *
Gertrude R. Nittler 375 *
Roger J. Nittler 375 *
Noraminter Holdings Limited 375 *
Kurt Ohlson 375 *
-36-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Tam Ohlson 375 *
868982 Ontario Inc. 375 *
932027 Ontario Inc. 375 *
Carol R. Paderski 375 *
David R. Paderski 375 *
Fong Nei Pak 375 *
C.K.C. Partners 375 *
Stuart W. Pattison 375 *
Gary B. Peterson 375 *
Gordon E. Peterson 375 *
Dana L. Phillips 375 *
Ramon D. Phillips 375 *
C.R. Plaxton 375 *
Gail E. Ploen 375 *
Jeff P. Ploen 375 *
Annette Pluss 375 *
Richard G. Pluss 375 *
Jeffrey B. Preitauer 375 *
Michelle Preitauer 375 *
Gregory Pusey 375 *
Jill Pusey 375 *
Adam Radley 375 *
-37-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Pamela S. Randall 375 *
Richard Randall 375 *
Gisela Ratcliff 375 *
Richard Ratcliff 375 *
Debra S. Rhoads 375 *
Mitchell E. Rhoads 375 *
A. J. Robbins 375 *
Barbara J. Robbins 375 *
John Robertson 375 *
Shane XG Rodgers 375 *
Danielle L. Rosendahl 375 *
Steven F. Rosendahl 375 *
Len Rothstein 375 *
Dan Rudden 375 *
Peg Rudden 375 *
Martha H. Rudman 375 *
Ronald L. Rudman 375 *
Barry Schechter 375 *
Suzanne Schechter 375 *
John W. Scherer 375 *
Edward Schlauch 375 *
Janice Schneider 375 *
-38-
Shares Beneficially
Owned and Offered As of
the Offering Date
Name
of Beneficial Owner Number Percent
------------------- ------ -------
Richard Schneider 375 *
Chester P. Schwartz 375 *
Louise S. Schwartz 375 *
Adele A. Seger 375 *
Chad Seger 375 *
Shaneko Investment
Corporation 375 *
Jeanette I. Shaw 375 *
Jerry L. Shaw 375 *
Douglas Shields 375 *
Mary D. Silleck 375 *
R. Hayden Silleck 375 *
Beverle A. Skufca 375 *
William Skufca 375 *
Martha Sue Sloven 375 *
Sam S. Sloven 375 *
Snoflake Limited 375 *
Stewart Somers 375 *
Izzy Sonenreich 375 *
Surfco International, Inc. 112,313 1.7%
Dirk Tinley 375 *
Donald S. Unruh 50,000 *
Ronald Wilson 50,000 *
Paul D. Yoder 25,000 *
* Less than 1%
-39-
Information Regarding the Selling Stockholders.
The shares of our common stock which the selling stockholders or their pledgees,
donees, transferees or other successors in interest are offering for resale will
be sold from time to time in one or more of the following transactions:
o Block transactions;
o Transactions on the Bulletin Board or on such other market on which
our common stock may from time to time be trading;
o Privately negotiated transactions;
o Through the writing of options on the shares;
o Short sales; or
o Any combination of these transactions
The sale price to the public in these transactions may be:
o The market price prevailing at the time of sale;
o A price related to the prevailing market price;
o Negotiated prices; or
o Such other price as the selling stockholders determine from time to
time.
The selling stockholders may not offer their shares for sale until we close
our offering of up to 1,600,000 shares and then not until our common stock is
listed for trading on the Bulletin Board or the Pink Sheets.
In the event that we permit or cause this prospectus to lapse, the selling
stockholders may sell shares of our common stock pursuant to Rule 144 under the
Securities Act of 1933. The selling stockholders will have the sole and absolute
discretion not to accept any purchase offer or make any sale of these shares of
our common stock if they deem the purchase price to be unsatisfactory at any
particular time.
The selling stockholders or their pledges, donees, transferees or other
successors in interest, may also sell these shares of our common stock directly
to market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. These broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of these shares of our common stock for whom such
broker-dealers may act as agents or to whom they sell as principal, or both. As
to a particular broker-dealer, this compensation might be in excess of customary
commissions. Market makers and block purchasers purchasing these shares of our
common stock will do so for their own account and at their own risk. It is
possible that a selling stockholder will attempt to sell shares of our common
stock in block transactions to market makers or other purchasers at a price per
share which may be below the prevailing market price of our common stock. There
can be no assurance that all or any of these shares of our common stock offered
hereby will be issued to, or sold by, the selling stockholders. Upon effecting
the sale of any of these shares of our common stock offered under this
-40-
prospectus, the selling stockholders and any brokers, dealers or agents, hereby,
may be deemed "underwriters" as that term is defined under the Securities Act of
1933 or the Securities Exchange Act of 1934, or the rules and regulations
thereunder.
Alternatively, the selling stockholders may sell all or any part of the
shares of our common stock offered hereby through an underwriter. No selling
stockholder has entered into any agreement with a prospective underwriter and
there is no assurance that any such agreement will be entered into. If a selling
stockholder enters into an agreement or agreements with an underwriter, then the
relevant details will be set forth in a supplement or revision to this
prospectus.
The selling stockholders and any other persons participating in the sale or
distribution of these shares of our common stock will be subject to applicable
provisions of the Securities Exchange Act of 1934 and the rules and regulations
thereunder including, without limitation, Regulation M. These provisions may
restrict activities of, and limit the timing of purchases and sales of any of
these shares of our common stock by, the selling stockholders. Furthermore,
pursuant to Regulation M, a person engaged in a distribution of our securities
prohibited from bidding for, purchasing, or attempting to induce any person to
bid for or purchase our securities for a period beginning five business days
prior to the date of this prospectus throughout the applicable restrictive
period. These regulations may affect the marketability of these shares of
our common stock.
We will pay substantially all of the expenses incident to the registration
and offering of our common stock, other than commissions or discounts of
underwriters, broker-dealers or agents.
-41-
PLAN OF DISTRIBUTION
We are offering a minimum of 800,000 shares and a maximum of 1,600,000
shares on a best- efforts basis directly to the public through our officers and
directors, as well as through securities brokers-dealers who are members of the
NASD. Our officers and directors will not receive any compensation for assisting
us with the offering, but NASD members will receive a commission of $0.1625 for
each share sold. We will also issue to NASD members one common stock purchase
warrant for each ten shares sold. Each warrant will be exercisable to purchase
one share of our common stock at $1.875 per share, or 150% of the public
offering price per share, commencing one year from the date of this prospectus
and for a period of four years thereafter. The warrants may not be assigned,
transferred or hypothecated for a period of one year except to officers and
partners, but not directors, of the selling NASD members. No broker-dealer has
agreed to participate in the offering as of the date of this prospectus.
Following this one year period, we may agree to register the shares underlying
the warrants for resale, although we will not be obligated to do so.
We may provide NASD members who participate in the offering with a list of
persons compiled by our President who we believe may be interested in purchasing
shares. These persons will primarily be individuals who become aware of our
offering as a result of our SEC filings, individuals referred to us by other
individuals who are aware of our offering, dentists who become aware of our
offering and referrals from broker dealers to whom our President has spoken, but
who do not want to participate with us as a selected dealer. NASD members who do
participate with us as selected dealers may sell shares to such persons and to
their own customers. No affiliated person will be allowed to purchase shares to
meet the minimum share requirement.
We intend to apply to list our common stock on the Electronic Bulletin
Board. Unless and until the common stock is accepted for listing, no public
market will develop for the resale of the securities.
Prior to this offering, there has been no market for our securities.
Accordingly, the public offering price for the shares was determined solely by
us. Among the factors we considered in determining the public offering price
were our record of operations, our current financial condition, our future
prospects, the background of our management, and the general condition of the
equity securities market.
Method of Subscribing.
Persons may subscribe by completing and returning our subscription
agreement. The offering price of $1.25 per share must accompany the subscription
agreement. All checks must be made payable to "Key Bank - OneDentist Resources,
Inc. Escrow Account". All checks will be transmitted by broker-dealers to the
escrow account by noon of the next business day following receipt. The minimum
purchase is 2,000 shares for $2,500. Certificates for the shares subscribed will
be issued within three business days following the closing of the offering.
Selling Period.
The selling period of the offering will terminate 90 days from the date of
this prospectus unless extended for up to an additional 60 days.
Minimum-Maximum and Escrow.
Until the minimum 800,000 shares are sold, all funds will be deposited in a
non-interest bearing escrow account at Key Bank, Denver, Colorado and such funds
will only be invested in investments permissible under SEC Rule 15c2-4. In the
event that 800,000 shares are not sold during the 90-day selling period
-42-
commencing on the date of this prospectus, all funds will be promptly returned
to investors without deduction or interest. If 800,000 shares are sold, we may
either continue the offering for the remainder of the selling period or close
the offering at any time.
Right to Reject.
We reserve the right to reject any subscription, and to withdraw the
offering at any time prior to acceptance of the subscriptions received, if
acceptance of a subscription would result in the violation of any laws to which
we are subject.
RELATED PARTY AND OTHER MATERIAL TRANSACTIONS
In January, 2000 we entered into an agreement with JagCapial, Inc. to
provide financial consulting services to us. We paid JagCapital a fee of $25,000
to give us general financial advice, to assist us in merging with Haleakala
Enterprises, Inc. and to advise us on conducting a private placement of our
securities. We currently pay JagCapital a fee of $2,000 per month for continuing
financial consulting services.
In April, 2000 we entered into a license agreement with Horn Interactive,
Inc., a company owned and controlled by Mr. Horn, the Chairman of our board of
directors, under which we received an exclusive and perpetual license for the
software currently powering our Web site for $1.00 together with the issuance of
841,361 shares of our common stock to Mr. Horn. The fair market value of the
Web site development is approximately $65,000 and has been capitalized and
recorded as additional paid in capital. In the future, we may pay fees to Horn
Interactive for software development. Any payments to any affiliated company,
including Horn Interactive, will be approved by the independent members of our
board of directors and will be fair, reasonable and consistent with fees and
charges which would be assessed by non-affiliates in our market area.
DESCRIPTION OF CAPITAL STOCK
General.
We are authorized to issue 25,000,000 shares of common stock, no par value
per share, and 10,000,000 shares of preferred stock, no par value per share.
Common Stock.
At September 30, 2000, there were 5,000,000 shares of common stock
outstanding. The holders of common stock are entitled to one vote per share on
all matters submitted to a vote of stockholders, including the election of
directors. There is no right to cumulate votes in the election of directors. The
holders of common stock are entitled to any dividends that may be declared by
the Board of Directors out of funds legally available therefor subject to the
prior rights of holders of preferred stock and any contractual restrictions we
have against the payment of dividends on common stock. In the event of our
liquidation or dissolution, holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preferences of any outstanding shares of preferred stock.
Holders of common stock have no preemptive rights and have no right to
convert their common stock into any other securities. All of the outstanding
shares of common stock are fully paid and nonassessable.
-43-
Preferred Stock.
Shares of preferred stock may be issued from time to time in one or more
series with such designations, voting powers, if any, preferences and relative,
participating, optional or other special rights, and such qualifications,
limitations and restrictions, as are determined by resolution of our Board of
Directors. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of our company without further
action by stockholders and could adversely affect the rights and powers,
including voting rights, of the holders of common stock. In certain
circumstances, the issuance of preferred stock could depress the market price of
the common stock. There are no shares of Preferred Stock outstanding.
Dividends.
We do not intend to pay dividends on our capital stock in the foreseeable
future.
Transfer Agent.
Corporate Stock Transfer, Inc., Denver, Colorado is our transfer agent.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, we will have 6,600,000 shares outstanding,
including 3,010,000 shares which have been registered by this prospectus and
3,590,000 shares which are restricted shares but may be sold under Rule 144
commencing in June 2001.
In general, under Rule 144 as currently in effect, a person, or persons
whose shares are aggregated, who owns shares that were purchased from us, or any
affiliate, at least one year previously, including a person who may be deemed
our affiliate, is entitled to sell within any three- month period, a number of
shares that does not exceed the greater of:
o 1% of the then outstanding shares of our common stock; or
o The average weekly trading volume of our common stock during the four
calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission.
Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about us. Any
person who is not deemed to have been our affiliate at any time during the 90
days preceding a sale, and who owns shares within the definition of "restricted
securities" under Rule 144 under the Securities Act that were purchased from us,
or any affiliate, at least two years previously, is entitled to sell such shares
under Rule 144(k) without regard to the volume limitations, manner of sale
provisions, public information requirements or notice requirements.
Future sales of restricted common stock under Rule 144 or otherwise or of
the shares which we are registering under this prospectus could negatively
-44-
impact the market price of our common stock. We are unable to estimate the
number of shares that may be sold in the future by our existing stockholders or
the effect, if any, that sales of shares by such stockholders will have on the
market price of our common stock prevailing from time to time. Sales of
substantial amounts of our common stock by existing stockholders could adversely
affect prevailing market prices.
EXPERTS
Our financial statements included in this prospectus as of and for the
period ended December 31, 1999, have been included in reliance on the reports of
Hausser & Taylor, LLP, independent certified public accountants, given on the
authority of this firm as experts in accounting and auditing.
The financial statements of Haleakala Enterprises, Inc. for the years ended
December 31, 1999 and 1998 and the period from November 26, 1996 (date of
inception) to December 31, 1999 have been included in reliance upon the report
of Angell & Deering, independent certified public accountants, given on the
authority of this firm as experts in accounting and auditing. Angell & Deering
have not audited or reviewed the unaudited interim financial information and
have not expressed an opinion or any other form of assurance with respect to
such financial information.
LEGAL MATTERS
The validity of our common stock offered hereby will be passed upon for us
by the Law Office of Gary A. Agron, Englewood, Colorado. Mr. Agron owns 112,312
shares of our common stock.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, a registration statement on Form SB-2 under the Securities Act of 1933
with respect to our common stock offered by this prospectus. This prospectus
does not contain all of the information set forth in the registration statement
and the exhibits to the registration statement. For further information with
respect to OneDentist Resources, Inc., and our common stock offered hereby,
reference is made to the registration statement and the exhibits filed as part
of the registration statement. Following the effective date of the prospectus,
we will be required to file periodic reports with the Securities and Exchange
Commission, including quarterly reports, annual reports which include our
audited financial statements and proxy statements. The registration statement,
including exhibits thereto, and all of our periodic reports may be inspected
without charge at the Securities and Exchange Commission's principal office in
Washington, D.C., and copies of all or any part thereof may be obtained from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Securities and Exchange
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, 13th
Floor, New York, New York 10048, after payment of fees prescribed by the
Securities and Exchange Commission. You may obtain additional information
regarding the operation of the Public Reference Section by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains a World Wide Web site which provides on-line
access to reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission at the address: http://www.sec.gov.
-45-
INDEX TO FINANCIAL STATEMENTS
Page
----
OneDentist Resources, Inc.
Pro Forma Financial Information
Pro Forma Statement of Operations ............................... F-1
Pro Forma Notes ................................................. F-2
OneDentist Resources, Inc.
Independent Auditors' Report .................................... F-3
Balance Sheets................................................... F-4
Statements of Operations ........................................ F-5
Statements of Stockholders' Equity .............................. F-6
Statements of Cash Flows ........................................ F-7
Notes to Financial Statements ................................... F-8
Haleakala Enterprises, Inc.
Independent Auditors' Report .................................... F-14
Balance Sheets as of April 30, 2000 (unaudited) and
December 31, 1999 .............................................. F-15
Statements of Operations for the four months ended
April 30, 2000 and 1999 (unaudited) and for the period from
November 27, 1996 (date of inception) to April 30, 2000
(unaudited) and for the years ended December 31, 1999 and 1998
and for the period from November 27, 1996 (date of inception)
to December 31, 1999 ........................................... F-16
Statements of Changes in Stockholders' Equity (Deficit)
for the four months ended April 30, 2000 (unaudited) and
for the years ended December 31, 1999, 1998, 1997 and 1996 ..... F-17
Statements of Cash Flows for the four months ended
April 30, 2000 and 1999 (unaudited) and for the period from
November 27, 1996 (date of inception) to April 30, 2000
(unaudited) and for the years ended December 31, 1999 and 1998
and for the period from November 27, 1996 (date of inception)
to December 31, 1999 ........................................... F-18
Notes to Financial Statements ................................... F-19
OneDentist Resources, Inc.
(A Development Stage Company)
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma combined financial statements give effect to the
merger using the purchase method of accounting. These unaudited pro forma
financial statements have been prepared as if the merger of OneDentist.com, Inc.
and Haleakala Enterprises, Inc. had occurred on July 16, 1999. The business
combination was closed effective June 30, 2000 with the shareholders of
OneDentist.com, Inc. succeeding to the controlling interest in Haleakala
Enterprises, Inc. in a transaction similar to a "reverse merger". This
transaction has been recorded as a re-capitalization with OneDentist.com, Inc.
considered the acquirer. Subsequent to the merger, the Company changed their
name to OneDentist Resources, Inc. Due to the re-capitalization, historical
stockholders' equity of the acquirer prior to the merger has been adjusted to
the equivalent number of shares received in the merger.
PROFORMA STATEMENT OF OPERATIONS
The period from July 16, 1999 (date of inception) through December 31, 1999
---------------------------------------------------------------------------
Haleakala Statement
Enterprises, Inc. OneDentist.com, Inc. of Operations
----------------- ------------------- -------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES $ -- $ 2,150 $ 2,150
----------- ----------- -----------
OPERATING LOSS -- (2,150) (2,150)
OTHER INCOME
Interest income -- -- --
----------- ----------- -----------
NET LOSS $ -- $ (2,150) (2,150)
=========== =========== ===========
BASIC AND DILUTIVE LOSS PER
SHARE $ -- $ (0.00) $ (0.00)
=========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 750,000 4,250,000 5,000,000
=========== =========== ===========
PROFORMA STATEMENT OF OPERATIONS
Nine months ended September 30, 2000 (Unaudited)
------------------------------------------------
(Unaudited) (Unaudited)
Haleakala (Unaudited) Statement
Enterprises, Inc. OneDentist.com, Inc. of Operations
----------------- -------------------- -------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES $ 3,600 $ 220,485 $ 224,085
----------- ----------- -----------
OPERATING LOSS (3,600) (220,485) (224,085)
OTHER INCOME
Interest income -- 3,625 3,625
----------- ----------- -----------
NET LOSS $ (3,600) $ (216,860) (220,460)
=========== =========== ===========
BASIC AND DILUTIVE LOSS PER
SHARE $ (0.00) $ (0.05) $ (0.04)
=========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 750,000 4,250,000 5,000,000
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-1
OneDentist Resources, Inc.
(A Development Stage Company)
Notes to Pro Forma Financial Statements
The unaudited pro forma combined financial statements give effect to the
merger using the purchase method of accounting. These unaudited pro forma
financial statements have been prepared as if the merger of OneDentist.com,
Inc. and Haleakala Enterprises, Inc. occurred July 16, 1999.
Note 1. Merger of OneDentist.com, Inc. and Haleakala Enterprises, Inc.
At July 16, 1999, Haleakala Enterprises, Inc. (Haleakala) had
25,000,000 shares of no par value common stock authorized of which
1,000,000 shares were issued and outstanding. Haleakala had 10,000,000
shares of no par value preferred stock, none of which were issued or
outstanding. At July 16, 1999, OneDentist.com, Inc. had authorized 850
shares of no par value common stock, 100 shares issued and outstanding. On
June 30, 2000, the companies entered into a shares exchange agreement.
Haleakala effectuated a reverse stock split of its outstanding common
stock, reducing 1,000,000 shares to 750,000 shares. The shareholders of
OneDentist.com, Inc. exchanged all of their outstanding shares with
Haleakala for 4,250,000 newly issued shares of Haleakala's no par value
common stock. Subsequent to the merger, the Company changed their name to
OneDentist Resources, Inc.
F-2
To the Stockholders
OneDentist Resources, Inc.
Columbus, Ohio
Independent Auditors' Report
----------------------------
We have audited the accompanying balance sheet of OneDentist Resources,
Inc. as described in Note 1A, (a development stage company) as of December 31,
1999, and the related interim statements of operations, stockholders' equity,
and cash flows for the period from July 16, 1999 (date of inception) through
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material aspects, the financial position of OneDentist Resources, Inc. (a
development stage company) as of December 31, 1999, and the results of its
operations and its cash flows for the period from July 16, 1999 (date of
inception) through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As shown in the accompanying financial
statements and discussed in Note 1, the Company has incurred losses from
operations since inception and is dependent on obtaining additional financing
for continuation of its operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 7. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Hausser + Taylor LLP
June 20, 2000, except for Notes 1A,
3 and 6 as to which the date is
June 30, 2000
Columbus, Ohio
F-3
OneDentist Resources, Inc.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
ASSETS December 31, 1999 September 30, 2000
------ ----------------- ------------------
CURRENT ASSETS
Cash and cash equivalents $ -- $ 39,445
Deferred costs (Note 1) -- 75,147
--------- ---------
Total current assets -- 114,592
--------- ---------
Computer equipment, net of accumulated
depreciation (Note 1) -- 1,069
--------- ---------
OTHER ASSETS
Software development asset,
net of accumulated amortization (Note 3) 65,000 50,556
--------- ---------
Total other assets 65,000 50,556
--------- ---------
$ 65,000 $ 166,217
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,150 $ 41,190
Accrued payroll and related taxes -- 3,736
--------- ---------
Total current liabilities 2,150 44,926
--------- ---------
COMMITMENTS (Note 2) -- --
STOCKHOLDERS' EQUITY
Common stock, no par value,
25,000,000 shares authorized,
5,000,000 issued and outstanding (Note 6) 1 284,752
Preferred stock, no par value,
10,000,000 shares authorized, no shares
issued and outstanding -- --
Additional paid-in-capital (Note 3) 65,000 65,000
Deficit accumulated during the development stage (2,151) (228,461)
--------- ---------
62,850 121,291
--------- ---------
$ 65,000 $ 166,217
========= =========
The accompanying notes are an integral part of these financial statements.
F-4
OneDentist Resources, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
The period from The period from
July 16, 1999 (date (Unaudited) July 16, 1999 (date
of inception) through Nine months ended of inception) through
December 31, 1999 September 30, 2000 September 30, 2000
----------------- ------------------ ------------------
REVENUES $ -- $ -- $ --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,150 224,085 226,235
----------- ----------- -----------
OPERATING LOSS (2,150) (224,085) (226,235)
OTHER INCOME
Interest income -- 3,625 3,625
----------- ----------- -----------
NET LOSS $ (2,150) $ (220,460) $ (222,610)
=========== =========== ===========
BASIC AND DILUTIVE LOSS PER SHARE $ (0.01) $ (0.04) $ (0.04)
=========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,000,000 5,000,000 5,000,000
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
OneDentist Resources, Inc.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Number Additional During The
of Common Paid-in- Development
Shares Stock capital Stage
------------ -------- ---------- -----------
Initial capitalization
of OneDentist.com, Inc. (Notes 3 and 6) 100.00 $ 1 65,000 $ --
Net loss for the period from July 16, 1999
through December 31, 1999 -- -- -- (2,150)
------------ -------- -------- --------
Balance December 31, 1999 100.00 1 65,000 (2,150)
------------ -------- -------- --------
Sale of common stock, net of related
costs of $30,000 (Note 6) 14.29 282,500 -- --
Stock issued to the stockholders of
OneDentist.com, Inc. in exchange for 100%
of their voting shares (Note 6):
Exchange of OneDentist.com, Inc. shares (114.29) -- -- --
Receipt of Haleakala Enterprises, Inc. shares 4,250,000.00 -- -- --
Effect of re-capitalization (Note 6) 750,000.00 2,251 -- (5,851)
Net loss for the nine months ended
September 30, 2000 (unaudited) -- -- -- (220,460)
------------ -------- -------- --------
Balance September 30, 2000 (unaudited) 5,000,000.00 $284,752 $ 65,000 (228,461)
============ ======== ======== =======
The accompanying notes are an integral part of these financial statements.
F-6
OneDentist Resources, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
The period from
July 16, 1999 (date (Unaudited)
of inception) through Nine months ended
December 31, 1999 September 30, 2000
----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,150) $(220,460)
--------- ---------
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization -- 14,475
Increase in current assets:
Deferred costs -- (75,147)
Increase in current liabilities: --
Accounts payable 2,150 35,442
Accrued payroll and related taxes -- 3,735
--------- ---------
Total adjustments 2,150 (21,495)
--------- ---------
Net cash used in operating activities -- (241,955)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of computer equipment -- (1,100)
--------- ---------
Net cash used in investing activities -- (1,100)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock -- 282,500
--------- ---------
Net cash provided by financing activities -- 282,500
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS -- 39,445
CASH AND CASH EQUIVALENTS - Beginning -- --
--------- ---------
CASH AND CASH EQUIVALENTS - Ending $ -- $ 39,445
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
In 1999, the Company issued shares of stock in exchange for a
software development asset with a fair market value of $65,000.
The accompanying notes are an integral part of these financial statements.
F-7
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies
followed in the preparation of the financial statements.
A. Business Organization and Basis of Presentation - OneDentist.com,
Inc. (a development stage company) (the Company) was incorporated
on July 16, 1999 in the State of Ohio. On June 30, 2000, the
Company's shareholders exchanged their shares for shares of
Haleakala Enterprises, Inc. Haleakala Enterprises, Inc. then
changed their name to OneDentist Resources, Inc. (See Note 6).
For accounting purposes, OneDentist.com, Inc. is considered to be
the acquirer and therefore the financial statements presented are
those of OneDentist.com, Inc.'s. The Company has been in the
development stage since its inception. The Company was formed to
develop an online website for the dental community including
dentists, dental practitioners and dental patients.
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern.
OneDentist Resources, Inc. is in the process of raising capital
which will be used to accelerate sales and marketing efforts for
their products. As OneDentist Resources, Inc. is in the
preliminary stages of marketing, realization of a major portion
of the assets is dependent on obtaining satisfactory and adequate
financing for marketing efforts and the success of future
operations, the outcome of which cannot be determined at this
time. See Note 7.
B. Cash Equivalents - For the purpose of the statement of cash flow,
the Company considers cash and cash equivalents to include cash
and money market investments with maturities at purchase of three
months or less. There were no such investments at December 31,
1999 or September 30, 2000.
C. Concentration of Credit Risk - The Company maintains its demand
deposits in one financial institution located in Columbus, Ohio.
All deposits are insured by the Federal Deposit Insurance
Corporation up to $100,000. At times throughout the year, the
Company's demand deposits were in excess of the insured limit.
D. Income Taxes - Income taxes are provided based on the liability
method of accounting. Income tax benefits of net operating loss
carryforwards have been offset with an allowance equal to the
benefit which may be realized in future periods. (See Note 5).
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
these estimates.
F. Advertising - All of the Company's advertising costs are of the
nondirect response type. The Company expenses all advertising
costs as incurred or at the time the advertising takes place.
Total advertising costs incurred during the period from July 16,
1999 through December 31, 1999 and the nine months ended
September 30, 2000 amounted to $0 and $1,573 (unaudited),
respectively.
F-8
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
G. Earnings Per Share - Basic earnings per share is computed using
the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share reflect the
dilutive effect of common stock equivalents using the treasury
stock method. There are no dilutive common stock equivalents
outstanding at December 31, 1999 or September 30, 2000. The
number of outstanding shares and weighted average common shares
outstanding have been restated to give effect to the merger and
re-capitalization as if these transactions had occurred on July
16, 1999 (date of inception) (see Note 6).
H. Revenue Recognition - The Company intends to generate revenue
through fees charged to subscribers to web portals, advertising
income from third party advertisers at web portals, percentage
interests in the income derived by third parties who provide
seminars, training and speeches at web portals and commissions
earned on the sale of products and services at a web store.
Subscribers will be charged a monthly fee. Revenue will be
recognized as products are delivered or services are performed.
I. Organization Costs and Start-up Expenses - In accordance with
Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities," organization costs and start-up expenditures are
being expensed as incurred.
J. Fair Value of Financial Instruments - Cash, accounts payable and
accrued expenses are reflected in the financial statements at
cost, which approximates fair market value because of the
short-term maturity of those instruments.
K. Deferred Costs - The Company has incurred legal and accounting
fees of $0 through December 31, 1999 and $75,147 (unaudited)
through September 30, 2000, respectively, related to the
Registration Statement on Form SB-2 under the provision of the
Securities and Exchange Commission. The costs associated with
Form SB-2 in raising capital will reduce equity, if successful
(See Note 2). If unsuccessful, the costs will be expensed.
L. Computer Equipment - The Company has capitalized computer
equipment at its original cost and is depreciating the equipment
over three years utilizing the straight line method.
M. Unaudited Financial Statements - The accompanying unaudited
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for
fair presentation of the results of operations for the periods
presented have been included. Interim results are not necessarily
indicative of results for the full year.
F-9
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 2. Commitments
The Company leases office space under a month-to-month lease
which requires monthly payments of $1,545. No rent expense was
incurred during the period from July 16, 1999 (date of inception)
through December 31, 1999. Rent expense for the nine months ended
September 30, 2000 amounted to $13,905 (unaudited).
The Company entered into a consulting agreement with Jag Capital,
Inc. The consulting agreement required the Company to pay Jag
Capital, Inc. $25,000 for their assistance with the Company's
limited private placement. The consulting agreement also requires
the Company to pay Jag Capital, Inc. $2,000 per month for twelve
months, beginning May 2000 for financial consulting. At September
30, 2000, the remaining amount due of $16,000 is payable
regardless of services performed and is included in accounts
payable on the accompanying balance sheet. A principal
shareholder of Jag Capital, Inc. is a shareholder in the Company.
As part of the Company's public offering, the Company will pay
third party securities brokers-dealers a success fee, not to
exceed 10% of funds raised and a non-accountable expense
allowance equal to 3% of funds raised. In addition, the Company
will issue warrants to third party securities brokers-dealers to
purchase an aggregate of 10% of the securities issued. The
warrants will be exercisable from the date of the initial
offering and for a period of 5 years from that date at 150% of
the price per share as paid by the investors at the initial
offering.
The Company entered into a contract with an attorney to prepare a
Registration Statement on Form SB-2 under the provisions of the
Securities and Exchange Commission. (See Note 6). The legal fee
for preparation of the Registration Statement is $80,000 of which
$53,332 was billed and paid and is included in deferred costs at
September 30, 2000. The attorney is a shareholder in the Company.
Note 3. Software Development and License Agreement
Horn Interactive Inc. (Horn) developed the Company's website. On
July 16, 1999, as a consideration for the website development,
the Company issued Horn 23 shares of the initial issuance of
common stock. As a result of the share exchange agreement
effective June 30, 2000, Horn owns 841,361 shares of the
Company's common stock. (See notes 1A and 6). The fair market
value of the website development is approximately $65,000 based
upon the fair value of the software and is reflected in the
accompanying financial statements as software development asset
and additional paid-in-capital. The asset is being amortized over
its estimated useful life of three years utilizing the straight
line method, beginning in February 2000 when the website was
launched. In addition, the Company entered into a license
agreement with Horn Interactive, Inc. for the use of the software
underlying the OneDentist website.
Note 4. Related Party Transactions
During the nine months ended September 30, 2000, the Company
reimbursed Classic Impressions, Inc., a company related through
common ownership, $35,826 (unaudited) for payroll and related
expenses.
F-10
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 5. Income Taxes
Deferred income taxes arise from temporary differences resulting
from income and expense items reported for financial accounting
and tax reporting purposes in different periods. Deferred taxes
are classified as current or long-term, depending on the
classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that
are not related to an asset or liability are classified as
current or long-term depending on the periods in which the
temporary differences are expected to reverse.
The components of the deferred tax asset consist of the
following:
(Unaudited)
December 31, September 30,
1999 2000
------------ -------------
Deferred tax asset arising
from the benefit
of federal net operating
loss carryforward $ 730 $ 75,680
Less valuation allowance (730) (75,680)
---------- -----------
Net noncurrent asset $ -- $ --
========== ===========
At December 31, 1999 and September 30, 2000, the Company has
federal net operating loss carryforwards approximating $2,100 and
$222,600 (unaudited), respectively, which expire in 2020. The
Company has assessed its past earnings history and trends and has
determined that it is more likely than not that no deferred tax
assets will be realized. The Company has recorded a valuation
allowance in accordance with the provisions of SFAS No. 109 to
reflect the estimated amount of deferred tax assets that may not
be realized. The Company will continue to review this valuation
on an annual basis and make adjustments as needed.
Note 6. Stock Transactions and Subsequent Events
Issuance of Stock
-----------------
The founding shareholders of the Company received an aggregate of
77 shares of the Company's common stock at incorporation for $1.
The shareholders contributed their time and expertise to the
Company. The value of this contributed time is not reflected in
the accompanying financial statements since it is not susceptible
to objective measurement or valuation by management.
Stock Split
-----------
During 2000, the Company issued 625,000 shares of common stock in
connection with its limited private placement offering that
raised equity capital of $312,500 less related costs of $30,000.
Effective June 30, 2000, the Company completed a reverse stock
split of the 625,000 shares issued as a result of the private
placement offering, reducing the number of shares issued from
625,000 to 14.29. The accompanying balance sheet and statement of
operations have been restated to reflect the split.
F-11
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 6. Stock Transactions and Subsequent Events (Continued)
Merger
------
Effective June 30, 2000, OneDentist.com, Inc. executed a share
exchange agreement with Haleakala Enterprises, Inc.
("Haleakala"), a Colorado corporation. Haleakala is a privately
owned corporation whose shares are widely held among 209
stockholders. Haleakala was organized in November 1996 for the
purpose of merging in the future with a company seeking a larger
stockholder base. Haleakala has not been operational since it was
organized and has no specific place of operations and virtually
no assets or liabilities. Prior to the exchange of stock,
Haleakala effectuated a reverse stock split of its outstanding
common stock, reducing to a total of 750,000 outstanding shares.
The Company's stockholders exchanged 100% of their shares for
4,250,000 shares of Haleakala. Haleakala changed its name to
OneDentist Resources, Inc. Immediately after the exchange, the
ownership of OneDentist Resources, Inc. is 15% by existing
Haleakala stockholders and 85% by the existing OneDentist.com,
Inc. stockholders. The merger was recorded as a re-capitalization
with OneDentist.com, Inc. as the acquirer.
The following pro forma combined balance sheet gives effect to
the merger using the purchase method of accounting as if the
merger had occurred on December 31, 1999.
PRO FORMA BALANCE SHEET
As of December 31, 1999
------------------------
(Unaudited) Proforma
Haleakala OneDentist.com Balance
Enterprises, Inc. Inc. Sheet
----------------- --------------- ---------
Total assets $ -- $ 65,000 $ 65,000
========= =========== =========
Total liabilities $ -- $ 2,150 $ 2,150
--------- ----------- ---------
Stockholders' equity
Common stock 2,251 1 2,252
Additional paid in
capital -- 65,000 65,000
Deficit accumulated
during the
development stage (2,251) (2,151) (4,402)
--------- ----------- ---------
Total stockholders'
equity -- 62,850 62,850
--------- ----------- ---------
Total liabilities
and stockholders'
equity $ -- $ 65,000 $ 65,000
========= =========== =========
Stock Option Plan
-----------------
In July 2000, the Company's board of directors adopted, subject
to stockholder approval, a stock option plan, which provides for
the grant to employees, officers, directors and consultants of
options to purchase up to an aggregate of 500,000 shares of
common stock. No options have been granted under the plan.
F-12
OneDentist Resources, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 7. Business Continuation
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.
As shown in the accompanying financial statements, the Company
has incurred losses of $2,150 and $220,460 (unaudited) for the
period from July 16, 1999 (date of inception) through December
31, 1999 and for the nine months ended September 30, 2000
(unaudited), respectively and has generated no revenues. These
factors indicate that the Company will be unable to continue as a
going concern for a reasonable period of time.
The financial statements do not include any adjustments relating
to the recoverability and classification of assets that might be
necessary should the Company be unable to continue as a going
concern.
The Company is actively pursuing additional equity financing
through registration of the sale of 1,600,000 shares of its
common stock with the Securities and Exchange Commission.
F-13
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Haleakala Enterprises, Inc.
We have audited the accompanying balance sheet of Haleakala Enterprises, Inc. (a
development stage Company) as of December 31, 1999, and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows for the
years ended December 31, 1999 and 1998 and for the period from November 27, 1996
(date of inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Haleakala Enterprises, Inc. as
of December 31, 1999, and the results of its operations and its cash flows for
the years ended December 31, 1999 and 1998 and for the period from November 27,
1996 (date of inception) to December 31, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has no assets as of December 31, 1999. As discussed in Note 1 to the
financial statements, the Company's lack of working capital raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Angell & Deering
Certified Public Accountants
Denver, Colorado
April 18, 2000, except for the
second paragraph of Note 4 as to
which the date is June 30, 2000
F-14
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
April 30, December 31,
2000 1999
------- -------
(Unaudited)
Current Assets:
Cash and cash equivalents $ -- $ --
------- -------
Total Assets $ -- $ --
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current Liabilities:
Accounts payable - trade $ 3,600 $ --
------- -------
Stockholders' Equity (Deficit):
Preferred stock: no par value, 10,000,000 shares
authorized, none issued or outstanding -- --
Common stock: no par value, 25,000,000 shares
authorized, 750,000 shares issued and outstanding 2,251 2,251
Deficit accumulated during the development stage (5,851) (2,251)
------- -------
Total Stockholders' Equity (Deficit) (3,600) --
------- -------
Total Liabilities and Stockholders' Equity (Deficit) $ -- $ --
======= =======
The accompanying notes are an integral
part of these financial statements.
F-15
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Four Months Ended Inception To Year Ended Inception To
April 30, April 30, December 31, December 31,
2000 1999 2000 1999 1998 1999
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses 3,600 -- 5,851 -- -- 2,251
----------- ------------ ----------- ------------ ------------ -----------
Net Income (Loss) $ (3,600) $ -- $ (5,851) $ -- $ -- $ (2,251)
=========== ============ =========== ============ ============ ===========
Net Income (Loss) Per Share of
Common Stock:
Basic $ -- $ -- $ (.01) $ -- $ -- $ --
=========== ============ =========== ============ ============ ===========
Diluted $ -- $ -- $ (.01) $ -- $ -- $ --
=========== ============ =========== ============ ============ ===========
Weighted Average Number of
Common Shares Outstanding:
Basic 750,000 750,000 745,050 750,000 750,000 744,557
Diluted 750,000 750,000 745,050 750,000 750,000 744,557
The accompanying notes are an integral
part of these financial statements.
F-16
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Deficit
Accumulated
Common Stock During The
------------ Development
Shares Amount Stage
------ ------ -----
Balance at November 27, 1996 (inception) -- $ -- $ --
Shares of common stock issued in November
1996 for cash at $.0001 per share 675,000 90 --
Net loss for the period -- -- --
--------- --------- ---------
Balance at December 31, 1996 675,000 90 --
Shares of common stock issued in
February 1997 Private Placement
distribution for no cash, valued
at $.01 per share 75,000 1,000 --
Capital contributed in April 1997 -- 1,161 --
Net loss for the year -- -- (2,251)
--------- --------- ---------
Balance at December 31, 1997 750,000 2,251 (2,251)
Net loss for the year -- -- --
--------- --------- ---------
Balance at December 31, 1998 750,000 2,251 (2,251)
Net loss for the year -- -- --
Balance at December 31, 1999 750,000 2,251 (2,251)
Net loss for the period (unaudited) -- -- (3,600)
--------- --------- ---------
Balance at April 30, 2000 (unaudited) 750,000 $ 2,251 $ (5,851)
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-17
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Four Months Ended Inception To Year Ended Inception To
April 30, April 30, December 31, December 31,
2000 1999 2000 1999 1998 1999
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income (loss) $ (3,600) $ -- $(5,851) $-- $-- $(2,251)
Adjustments to reconcile net
income (loss) to net cash (used)
by operating activities:
Issuance of common stock in Private
Placement distribution -- -- 1,000 -- -- 1,000
Changes in liabilities:
Accounts payable 3,600 -- 3,600 -- -- --
------------ ------------ ------- ---- ---- -------
Net Cash (Used) By Operating
Activities -- -- (1,251) -- -- (1,251)
------------ ------------ ------- ---- ---- -------
Cash Flows From Financing Activities:
Contribution of capital -- -- 1,161 -- -- 1,161
Issuance of common stock -- -- 90 -- -- 90
------------ ------------ ------- ---- ---- -------
Net Cash Provided By Financing
Activities -- -- 1,251 -- -- 1,251
------------ ------------ ------- ---- ---- -------
Net Increase in Cash
and Cash Equivalents -- -- -- -- -- --
Cash and Cash Equivalents at
Beginning of Period -- -- -- -- -- --
------------ ------------ ------- ---- ---- -------
Cash and Cash Equivalents at
End of Period $ -- $ -- $ -- $-- $-- $ --
============ ============ ======= ==== ==== =======
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for:
Interest $ -- $ -- $ -- $-- $-- $ --
Income taxes -- -- -- -- -- --
The accompanying notes are an integral
part of these financial statements.
F-18
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
------------------------------------------
Description of Business
-----------------------
Haleakala Enterprises, Inc. (the "Company") was organized on November
27, 1996 as a Colorado corporation. The Company is in the development
stage as is more fully defined in Statement of Financial Accounting
Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage
Enterprises". The Company intends to evaluate, structure and complete a
merger with, or acquisition of, prospects consisting of private
companies, partnerships or sole proprietorships. The Company may seek to
acquire a controlling interest in such entities in contemplation of
later completing an acquisition.
Unaudited Interim Financial Statements
--------------------------------------
The financial statements as of April 30, 2000 and for the four months
ended April 30, 2000 and 1999 and for the period from November 27, 1996
(date of inception ) to April 30, 2000 are unaudited, however in the
opinion of management of the Company, all adjustments (consisting solely
of normal recurring adjustments) necessary to a fair presentation of the
financial statements for the interim periods have been made.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amount and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis
and to obtain additional financing as may be required.
The Company's continued existence is dependent upon its ability to
secure loans from its principal stockholder and/or obtain additional
capital contributions. Future operating expenses will be funded by these
loans or capital contributions. The Company's ability to continue to
meet its obligations is dependent upon obtaining the above financing.
Cash and Cash Equivalents
-------------------------
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less at the
date of purchase to be cash equivalents.
Income Taxes
------------
Deferred income taxes are provided for temporary differences between the
financial reporting and tax basis of assets and liabilities using
enacted tax laws and rates for the years when the differences are
expected to reverse.
Net Income (Loss) Per Share of Common Stock
-------------------------------------------
The Company adopted SFAS No. 128, "Earnings Per Share", which specifies
the method of computation, presentation and disclosure for earnings per
share. SFAS No. 128 requires the presentation of two earnings per share
amounts, basic and diluted.
Basic earnings per share is calculated using the average number of
common shares outstanding. Diluted earnings per share is computed on
the basis of the average number of common shares outstanding plus the
dilutive effect of outstanding stock options using the "treasury
stock" method.
F-19
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (Continued)
Estimates
---------
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. Preferred Stock
---------------
The authorized preferred stock of the Company consists of 10,000,000
shares, no par value. The preferred stock may be issued in series from
time to time with such designation, rights, preferences and limitations
as the Board of Directors of the Company may determine by resolution.
The rights, preferences and limitations of separate series of preferred
stock may differ with respect to such matters as may be determined by
the Board of Directors, including without limitation, the rate of
dividends, method and nature of payment of dividends, terms of
redemption, amounts payable on liquidation, sinking fund provisions (if
any), conversion rights (if any), and voting rights. Unless the nature
of a particular transaction and applicable statutes require approval,
the Board of Directors has the authority to issue these shares without
shareholder approval.
3. Income Taxes
------------
The components of the provision for income taxes are as follows:
Year Ended Inception To
December 31, December 31,
1999 1998 1999
---- ---- ----
Current:
Federal $-- $-- $--
State -- -- --
---- ---- ----
Total -- -- --
---- ---- ----
Deferred:
Federal -- -- --
State -- -- --
---- ---- ----
Total -- -- --
---- ---- ----
Total Provision For Income Taxes $-- $-- $--
==== ==== ====
The provision (benefit) for income taxes reconciles to the amount
computed by applying the federal statutory rate to income before the
provision (benefit) for income taxes as follows:
F-20
HALEAKALA ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
3. Income Taxes (Continued)
Year Ended Inception To
December 31, December 31,
1999 1998 1999
---- ---- ----
Federal statutory rate (34)% (34)% (34)%
State income taxes, net of federal
benefits (3) (3) (3)
Valuation allowance 37 37 37
---- ---- ----
Total --% --% --%
==== ==== ====
The following is a reconciliation of the provision for income taxes
to income before provision for income taxes computed at the federal
statutory rate of 34%.
Year Ended Inception To
December 31, December 31,
1999 1998 1999
---- ---- ----
Income taxes at the federal statutory rate $ -- $ -- $(765)
Federal surtax exemption -- -- 428
State income taxes, net of federal benefits -- -- (68)
Valuation Allowance -- -- 405
----- ----- -----
Total $ -- $ -- $ --
===== ===== =====
Significant components of deferred income taxes as of December 31, 1999
are as follows:
Net operating loss carry forward $ 429
-----
Total deferred tax asset 429
Less valuation allowance (429)
-----
Net Deferred Tax Asset $ --
=====
The Company has assessed its past earnings history and trends and
expiration dates of carryforwards and has determined that it is more
likely than not that no deferred tax assets will be realized. A
valuation allowance of $429 as of December 31, 1999 is maintained on
deferred tax assets which the Company has not determined to be more
likely than not realizable at this time. There was no change in the
valuation allowance for deferred tax assets for the year ended December
31, 1999. The Company will continue to review this valuation on an
annual basis and make adjustments as appropriate.
As of December 31, 1999 the Company had net operating loss carryforwards
of approximately $2,200. The net operating losses can be carried forward
fifteen years to offset future taxable income. The net operating loss
carryforwards expire in 2012.
F-21
HALEAKALA ENTERPRISES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
4. Proposed Acquisition
--------------------
The Company entered into a Term Sheet for a merger with
OneDentist.com, Inc. ("OneDentist") in February 2000. Under the terms
of the Agreement the Company will exchange 4,250,000 shares of its no
par value common stock for all of the issued and outstanding shares of
OneDentist's common stock. Immediately after the exchange the
ownership of the Company will be 15% by existing Haleakala
stockholders and 85% by the existing OneDentist stockholders. Prior to
the merger, the Company plans to effect a reverse stock split reducing
its issued and outstanding common shares to 750,000. The Company will
change its name to OneDentist Resources, Inc. after the effective date
of the merger. The merger will be treated as a recapitalization of
OneDentist, similar to a reverse acquisition. Therefore, OneDentist
will be treated as the acquiror for accounting purposes, whereas for
legal purposes the Company is the acquiror. Closing is expected in
2000 after all conditions of the Term Sheet are satisfied including
OneDentist raising a minimum of $300,000 in equity financing.
The merger was completed on June 30, 2000 and as of that date the
reverse stock split was completed. All share information and per share
data have been retroactively restated for all periods presented to
reflect the reverse stock split.
F-22