UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HIGH-TECH INDUSTRIES, INC.
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(Name of Small Business Issuer in its Charter)
COLORADO 7372 84-1441445
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(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
849 W. Hillfield Road, Suite 201, Layton, UT 84041 (801) 593-0513
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(Address and Telephone Number of Principal Executive Offices)
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(Address of Principal Place of Business or Intended Principal Place of Business)
KURT A. MOORE
849 W. Hillfield Road, Suite 201, Layton, UT 84041
(801) 593-0513
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(Name, Address and Telephone Number of Agent for Service)
Approximate date of commencement of proposed sale to the public: Effective date
of this registration statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement of the earlier effective registration statement for the
same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------- -------------------- ------------------- ------------------- -----------------
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to Dollar Amount Offering Price Aggregate Amount of
be Registered to be Registered per Unit Offering Price Registration Fee
- --------------------------------------- -------------------- ------------------- ------------------- -----------------
Common Stock par value $.001 $200,000 $1.00 $200,000 $50.00
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
For the Initial Public Offering for Sale of
From 1 to 200,000 Shares of Common Stock*
of
High-Tech Industries, Inc.
Total Total
If No If All 200,000
Shares Shares
Per Share Are Sold Are Sold
----------- ----------- ---------------
Initial Offering Price to the Public: $1.00 0 $200,000
Offering Expenses: $0.25 $50,000 $50,000
Net Proceeds: $0.75 ($50,000) $150,000
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* The offering being presented in this Prospectus (the "Offering") is being
conducted on a direct participation basis without the assistance of an
underwriter. No commissions are being paid. There is no minimum number of
shares we must sell and no minimum investment required of an investor. A
trust, escrow, or similar account will not be established pending the sale
of the shares offered hereby (the "Shares"), and any proceeds from this
Offering will become immediately available for our use. No funds will be
returned regardless of how many or how few shares are sold.
This Offering will terminate six months from the date of this Prospectus unless
all of the Shares offered hereby are sold prior to that date.
Investing in the Shares involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. See "Risk Factors" beginning on
page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Shares securities or determined that
this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is November 15, 2001
Table of Contents
Page
PART I.................................................................... 3
Summary Information....................................................... 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 10
Determination of Offering Price........................................... 11
Dilution.................................................................. 11
Plan of Distribution...................................................... 12
Directors, Executive Officers, Promoters, and Control Persons............. 13
Security Ownership of Certain Beneficial Owners and Managers.............. 13
Description of Securities................................................. 14
Indemnification for Securities Act Liabilities............................ 17
Organization Within the Last Five Years................................... 17
Description of Business and Plan of Operation............................. 17
Description of Property................................................... 20
Certain Relationships and Related Transactions............................ 20
Market for Common Equity and Related Shareholder Matters.................. 20
Executive Compensation.................................................... 23
Experts................................................................... 23
Additional Information.................................................... 23
Financial Information..................................................... 23
Financial Statements.................................................F-1 - F-11
PART II................................................................... II-1
Indemnification of Directors and Officers................................. II-1
Other Expenses of Issuance and Distribution............................... II-1
Recent Sales of Unregistered Securities................................... II-1
Exhibits.................................................................. II-2
Undertakings.............................................................. II-2
Signatures................................................................ II-3
No dealer, salesman, or other person has been authorized to give any information
or to make any representations other than contained in this Prospectus in
connection with the Offering described here. If given or made, such information
or representations must not be relied upon as having been authorized by us. This
Prospectus does not constitute an offer to sell, or the solicitation of an offer
to buy, the securities offered by this Prospectus to any person in any state or
other jurisdiction in which the offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale under this Prospectus shall, under any
circumstances, create any implication that there has been no change in our
affairs since this date.
Only our President, Kurt A. Moore is authorized to offer these securities on our
behalf. See "Plan of Distribution," page 12.
Until February 13, 2002 (90 days after the date of this Prospectus), all dealers
effecting transactions in the securities registered in this Offering may be
required to deliver a Prospectus. This is in addition to the dealer's obligation
to deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
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FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements that are based on
beliefs and assumptions of our management. Often, you can recognize these
statements because we use words such as "believe," "anticipate," "intend,"
"estimate," and "expect" in the statements. Our actual performance in 2001 and
beyond could differ materially from the forward-looking statements contained in
this Prospectus. However, we are not obligated to release publicly, and do not
presently intend to release, any revisions to the forward-looking statements
contained in this Prospectus, except to the extent that we are obligated to do
so under Item 28 of our registration statement filed with the SEC on Form SB-2.
This Item requires us to file post-effective amendments to this registration
statement to include in the Prospectus any facts or events which, individually
or together, represent a fundamental change in the registration statement, and
also to include any additional or changed material information on the plan of
distribution.
SUMMARY INFORMATION
This Prospectus pertains to shares of common stock being offered in High-Tech
Industries, Inc. ("High-Tech," "us," "we," the "Company," etc.), a Colorado
company formed in December 1997. From inception through November 2000, High-Tech
was inactive and had no business activity. On December 15, 2000, we entered into
an Agreement and Plan of Exchange (the "Agreement") with Nojata, Inc.
("Nojata"), a Nevada corporation, pursuant to which Nojata became a wholly-owned
subsidiary of High-Tech. Nojata was organized under the name Laredo Enterprises,
Inc. ("Laredo") on March 31, 2000. On November 21, 2000, Laredo's name was
changed to Nojata.
Business
Currently our only operations are conducted through our subsidiary, Nojata.
Nojata is an Internet service provider ("ISP") based in Utah. Nojata continues
to develop an ISP business that offers quality Internet access through a sales
and marketing plan based upon a referral fee program. Unlike free Internet
services, Nojata's target market includes potential users who are willing to pay
for access and who wish to earn a fee by referring new customers to Nojata. See
"Description of Business and Plan of Operation" on page 17.
We offer a "Premium Plan" which includes unlimited V.90 56K Internet access, up
to five e-mail accounts, and 10MB storage, and also includes the opportunity to
earn referral fees. Our dial-up network is currently available throughout most
of the continental U.S. Premium Members receive $4.00 for each new user they
refer who signs up to use our Premium Plan for each month of service received
for the life of the new user account.
A second plan, the "Affiliate Program," makes it possible for the hosts of other
websites to receive referral fees by linking our site to theirs. Under this
plan, each time a user of such a site clicks on an icon linking to our site, and
subscribes to our services, the host earns a referral fee.
Operating Results
We have a very limited operating history since our inception in 1997. We
experienced no sales revenues in 2000 and only nominal sales revenues through
the third quarter of 2001. After the merger in December 2000, we began actively
developing our business plan and ISP site and services. We continue to make
modifications to our site and marketing strategy to attempt to attract more
users to generate income.
Our infrastructure has been established which allowed us to begin generating
limited revenues of approximately $3,300 during 2001. Although these revenues
are relatively insignificant in amount, they represent our product now being
available for wider spread roll-out and marketing with the infusion of capital.
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In addition to the initial sales during 2001, we are having some encouraging
initial successes in marketing our service to organizations that wish to use it
as a fund-raising vehicle. We currently have a verbal commitment from Utah State
University to include a Nojata flyer in a newsletter mailing to approximately
80,000 alumni, scheduled to occur in November 2001. Proceeds from any referral
fees that are generated through this mailing will be given to the university.
Proposed Plan of Operations
We intend to continue to refine and add services to our business. Recently we
began offering a filtering service provided by Cerberian, Inc. through Nojata.
Cerberian has developed a premier technology which allows effective filtering
and tracking of Internet usage. At the additional cost of $2.00 per month,
Nojata customers can receive the best pricing available for Cerberian's
filtering service.
By providing a quality product and offering unique services in a manner which
provides referral fee income opportunities, we believe we can compete in the ISP
market. We intend to focus our marketing efforts on entities that could benefit
from our referral fee program such as schools, groups, clubs, and charities that
have a desire to provide their patrons with a quality service that helps the
organization raise funds. See "Description of Business and Plan of Operation" on
page 17.
Equity Offered
(A) Common Stock Offered....... A total of from 1 to 200,000 Shares of par
value $.001 common stock will be offered
hereunder. We will attempt to sell the
Shares to the public ourselves without the
assistance of an underwriter. There is no
minimum amount which must be sold in order
for the Offering to proceed and no minimum
investment is required. Funds from this
Offering will not be held in escrow and this
Offering will close in six months,
regardless of how many or how few Shares are
sold. All funds we receive may be used
immediately. No funds will be returned
regardless of how many or how few Shares are
sold. Only our President, Kurt A. Moore is
authorized to offer or sell these securities
on our behalf (see "Plan of Distribution,"
page 13).
(B) Proposed Symbol
and Trading Market........... There currently is no trading market for our
stock.
(C) Use of Proceeds.............. We will use the proceeds of this Offering
first to pay the Offering expenses.
Additional proceeds will be used to pay for
product inventory, marketing, general
expenses related to operating the business,
will serve as working capital, and will go
to pay off business-related loans (see "Use
of Proceeds" on page 10).
(D) Offering Costs............... If we are unable to raise sufficient proceed
to cover the Offering costs, we intend to
cover the expenses with loan proceeds.
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There is no minimum investment that any investor must make in this Offering.
Further, there is no minimum amount of stock that must be sold in order for this
Offering to go forward. All funds received by us from the sale of the Shares
will be deposited immediately into our operating account and used in our
operations.
This Offering will terminate six months from the date of this Prospectus unless
all the Shares are sold prior to that time.
RISK FACTORS
This Offering involves a high degree of risk. You should carefully consider the
risks and uncertainties described below, and other information contained in the
Prospectus, before deciding whether to invest in the Shares. If any of the risks
outlined occur, our business results and financial condition could be adversely
affected. This could cause the price of our common stock to decline, and you
might lose part or all of your investment.
Risks Associated with Our Financial Position
Insufficient working capital to fully implement plan of operations. We
are a newly-reconstituted venture without material assets or cash. We have
generated only nominal revenues to offset operating expenses. Our lack of cash
makes it difficult for us to expand our business through marketing effort.
Continuing losses are possible, and there is no assurance that our business will
ever become profitable.
Need to sell all the Shares included in this Offering. There is no
minimum number of Shares that must be sold in this Offering; however, in order
to fully implement our proposed plan of operations, we need to sell all 200,000
Shares that are included in this Offering. If we are not successful in selling
all of the Shares, the resulting cash shortfall will, in all likelihood, impair
our ability to reach profitability. Furthermore, if we raise less than the costs
of this Offering, none of the Offering proceed will be used to pursue our plan
of operations.
Risk and volatility of penny stock. Stock in our Company is currently
considered "penny stock" as that term is defined by the Securities and Exchange
Commission ("SEC") Rule 3a-51-1. You should be aware that, according to the SEC
Release No. 34-29093, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse which could cause investors in penny stocks to
lose their entire investment. Such patterns include:
o control of the market for the security by one or a few
broker-dealers that are often related to the promoter or
issuer;
o manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases;
o "boiler room" practices involving high pressure sales tactics
and unrealistic price projections by inexperienced sales
persons;
o excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and
o the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired
level, along with the inevitable collapse of those prices with
consequent investor losses.
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Risks Associated with How This Offering is Being Conducted
No underwriter to be used. We have not hired an underwriter to assist
us in selling the Shares. Only our President, Kurt A. Moore, is authorized to
offer and sell these securities. Mr. Moore does not have any prior experience in
selling stock to the public and there can be no assurance that he will be able
to sell all or any part of the Offering.
No escrow to be used. There is no escrow account into which the
proceeds of this Offering will be deposited pending the sale of all Shares. If
we fail to sell all the Shares included in this Offering, no funds will be
returned. All proceeds of this Offering will be deposited directly into our
operating account, regardless of the number of Shares sold for our immediate
use.
Arbitrary determination of price per Share. In most public offerings
that use the services of an underwriter, the underwriter has the opportunity to
review the terms of the public offering and decide whether the offering price of
a stock is fair and reasonable. Because we are attempting to sell the Shares
ourselves without using an underwriter, we arbitrarily determined the offering
price, and no independent review will be conducted regarding the stock pricing.
Prospective investors should not assume that the offering price of the Shares
necessarily reflects the actual value of our common stock. The price does not
bear any relationship to assets, earnings, book value, or any other objective
criteria of value. See "Determination of Offering Price," page 11.
Auditor going concern statement. Our independent auditor has expressed
doubt regarding our ability to continue as a going concern. This doubt likely
arises from our lack of operating history and working capital. The opinion of
our certified public accountants should be carefully considered when making a
decision whether to purchase the Shares.
Other Factors that may Diminish the Value of Our Common Stock
Lack of a public market. Before this Offering, there has not been any
public market for our common stock. Furthermore, it is possible that an active
public market for our common stock may never develop or be sustained. We do not
intend to list our common stock on any national securities exchange or to apply
for listing on The Nasdaq National Stock Market or The Nasdaq SmallCap Stock
Market. Any public trading in our common stock, if any in the future would most
likely take place in the over-the-counter market in the so-called "pink sheets"
reported on the OTC Bulletin Board ("OTC:BB") service. We have not applied to be
have our stock trades reported on the OTC:BB. If a public market does not
develop or is not sustained, there is a risk that an investor might find it
difficult to sell our common stock at a time when the investor needs or desires
to do so.
Difficulty of assessing the market value of our common stock. If our
stock is ultimately traded through the pink sheets or on the OTC:BB, a relative
lack of liquidity or volume and the participation of only a few market makers
would make it more likely that wide fluctuations in the quoted price of our
common stock would occur. As a result, there is a risk that an investor will not
be able to obtain accurate price quotes or be able to correctly assess the
market price of his stock. Increases in volatility could also make it more
difficult to pledge our common stock as collateral if an investor sought to do
so because a lender might also be unable to accurately value our common stock.
Even if our stock were to be traded on the Nasdaq National or SmallCap Stock
Markets, which we do not anticipate at the present time, the possibility of
volatility would still exist. These markets and the stocks traded thereon are
also subject to sharp fluctuations in value and in the number of shares traded.
Immediate, substantial dilution. The public offering price of our
common stock is much higher than the net book value of our common stock that we
have already issued. As a result, purchasers of our common stock who pay $1.00
per Share will experience immediate and substantial dilution. Dilution to the
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purchasers of Shares included in this Offering will range from 97% to 100%,
depending on the number of Shares sold.
Number of Shares available for sale. Any shares sold in this Offering
are unrestricted and thus may be resold in the public market immediately after
they are purchased. The remaining 6,520,000 of our outstanding shares are
restricted shares that were sold prior to this Offering. These restricted shares
are available for resale in the public market, or will become available soon. As
more restricted shares become available for resale, the market price could drop
significantly if the holders of these restricted shares sell them or are
perceived by the market as intending to sell them.
No dividends on common stock anytime soon. We expect to use all
earnings and the proceeds from this Offering to develop our business. Anyone in
need of or expecting dividend income should not invest in our Common Stock
because we do not intend to pay dividends anytime soon if ever.
One individual's control of the Company. After this Offering,
approximately 74% of our common stock will be controlled by Kurt A. Moore.
Accordingly, under our Articles of Incorporation and the Colorado corporate
laws, Mr. Moore will control the votes necessary to approve or disapprove of any
potential acquisitions, mergers, or other actions requiring a simple majority
vote of the stockholders.
Risk of litigation due to stock price decline. Class action lawsuits
are often brought against companies following sharp declines in the market price
of their stock. Internet focused companies such as ours may be particularly
vulnerable to this type of litigation due to the volatility in their stock
prices. Accordingly, we may be subject to securities lawsuits in the future.
Such litigation could result in substantial costs and could divert management's
attention and resources.
Risk of substantial dilution. After this Offering, we will have
outstanding up to 6,720,000 shares of common stock, assuming the full
subscription of this Offering. The 200,000 shares offered hereby may be resold
in the public market immediately if a market develops. Of the remaining 97%, or
6,520,000 shares, a total of 970,000 will be immediately available for resale in
the public market, and a total of 5,550,000 will become available for resale in
the public market as soon as December 15, 2001, subject to Rule 144 of the
Securities Act of 1933. As restrictions on resale end, the market price could
drop significantly if the holders of these restricted shares sell them or are
perceived by the market as intending to sell them.
Business Factors that may have a Negative Effect on Our Operations
Intense competition. The Internet Service Provider ("ISP") industry in
which we compete is highly competitive, and we anticipate that competition will
continue to intensify. Several major players in the ISP market currently hold
significant market share, while at the same time, many smaller ISPs exist and
others are always vying for entry into the market. Many others have tried and
failed to enter the market and achieve viability. The keen competition that
exists in our industry will require us to expend funds for advertising, may
drive up our personnel and other costs and, in general, may adversely impact our
ability to survive and make a profit. Competitive pressures may also force us to
cut our monthly service fees, thus directly affecting our profit margins. In
view of the competition that we expect in our industry, we cannot guaranty that
we will be able to successfully gain and hold market share or that our
operations will ever be profitable.
Governmental regulations and environmental factors. Changes in laws
governing the Internet may also affect our prospects for success. Currently
there are few laws explicitly applicable to the Internet. The way that existing
laws on a variety of topics will be applied is not yet clear. These topics
include advertising, taxation, gambling, privacy, defamation, pricing,
promotions, sweepstakes, intellectual property ownership, product quality, and
content. Any changes in the regulatory environment in which we operate could
have the unexpected result of subjecting us or our users to liability for
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activities previously thought to be protected or unregulated. Any such
developments could have a material and adverse impact on our business.
Potential Lawsuits. As an ISP we could be subjected to lawsuits for a
number of reasons. For example, users or third-parties could attempt to sue us
for lost or misdirected e-mail, for incidental and consequential damages
resulting from interruptions or errors in our service, or for damage to their
own systems arising from viruses transmitted unknowingly. While we do attempt to
shield ourselves by requiring users to accept the terms of appropriate
agreements, we cannot guaranty that we will not be subject to such suits or that
we will be able to successfully defend ourselves against them.
Management of growth. At present our operations are relatively simple.
We have only a small number of users. Our servers and operations are housed
free-of-charge in the office of Ready Technologies, and our President, Kurt A.
Moore, is our only employee; however, if we are successful in increasing sales
and growing our business, the size and complexity of our operations will
inevitably increase. We may need larger facilities, more employees, and
additional hardware. We may also need augmented capabilities for billing and
customer service, functions currently contracted out to third parties. We cannot
guarantee that our management will adequately manage our growth or will select
contractors who will be able to effectively provide the services we require.
Casualty, acts of God, and security risks. Our operations are
susceptible to outages due to fire, floods, power loss, telecommunications
failures, break-ins, and similar events. In addition, the majority of our
infrastructure is located along the Wasatch Front in Utah, a region known to be
susceptible to earthquakes. We do not have multiple site capacity in the event
of any such occurrence. Despite our implementation of network security measures,
our servers may be vulnerable to computer break-ins or to coordinated attempts
to overload our systems with data. We do not carry business interruption
insurance that would compensate us for losses that could occur as a result of
any such events. We have backup power that that would support our service for
approximately twenty-four hours if we were to experience a power outage, but
beyond that, we could not guaranty that our service would function in the event
of an outage.
Unproven business model. Even though we believe our business model is
innovative and holds promise, it remains unproven. We cannot provide any
assurance that we will be able to attract and retain a number of users
sufficient to ensure our profitability and viability.
Limited operating history. Because our operations are young and have
not developed significant revenues, we have only a limited operating history.
This may affect our business in ways that we may or may not be able to
anticipate. We anticipate, at a minimum, that our limited history may make it
difficult for us to raise funds, attract and retain qualified personnel, lease
or purchase needed equipment, attract and hold users, and maintain or expand the
services we offer. Even as we begin to develop an operating history,
quarter-to-quarter comparisons of operating results are not likely to be
meaningful. The Internet industry is changing so rapidly and is subject to so
many variables that investors should be cautious not to place too much reliance
on comparisons. Strong growth in one quarter will not necessarily portend growth
in a subsequent quarter. Conversely, losses in any given quarter will not
necessarily mean that subsequent quarters will be unprofitable for the company.
Several factors could cause such unpredictability in quarterly results:
o drops in our revenue due to payment of referral fees for new
users;
o changes in our pricing and referral-fee policy in response to
actual or potential market conditions and trends;
o the introduction of new services;
10
o planned or unanticipated needs for technological upgrades;
o increases in our fixed costs, such as for dial-up access for
our users;
o the introduction of new products or services by our
competitors;
o unexpected costs or delays resulting from our expanded
operations; or
o the occurrence of technical difficulties or unanticipated
downtime.
Due to these and other factors, we believe that quarter-to-quarter comparisons
of our operating results may not be meaningful, and investors should not rely on
them as an indication of our future performance.
Ability to attract and retain new users. Our ability to increase the
number of our users and retain existing users is crucial to our success. At
present we rely primarily on word-of-mouth and advertising to attract new users
and count on our referral program and quality access to retain them. This
word-of-mouth type of marketing is outside of our direct control and makes it
difficult to predict future use levels. To date our advertising efforts have met
with only limited success. There are a variety of reasons why we might loose
users. A few examples would be:
o we might reduce the amount we pay our users for referrals, or
our competitors might pay more than we do;
o the imposition of local taxes on users in connection with
payments we make to them;
o reliability issues in our service, which could result from
technical problems which may not be within our control; or
o competition from other ISPs, including those that pay referral
fees or those that offer free service.
Attracting and retaining employees. We not only will need to retain key
employees, but we also will need to attract and retain other employees in order
to meet the challenge of growth. Finding employees with the requisite technical
skills and experience has become increasingly difficult in the United States.
Salaries for employees with computer-related skills have gone up substantially
in recent years, making increasingly more costly for employers to hire and
retain such persons. Moreover, the failure of many so-called "dotcom" businesses
and the weakening in the Nasdaq market particularly may have made some potential
employees hesitant to accept work with start-up ventures such as ours.
Technological risks. The applications that run our various servers and
networks run on commercially available computers. These complex computers can be
expected to fail periodically, leading to the possible interruption of service
to our members. Although steps have been taken to provide redundancy, our
computers and even our redundant systems may fail from time to time. The rapid
pace of change in the Internet industry also presents certain risks. New
hardware, software, and other technologies are introduced frequently and
although we stay abreast of these developments, there is always a possibility
that our mangers will either be too quick or too slow to adopt new technologies.
If we move too quickly in adopting new methods or in using new equipment, we
could experience technical problems that could impact our ability to compete.
Conversely, if we move too slowly, we may be unable to match the quality of
service and features offered by our competitors. Were this to occur, our
business could also be adversely affected.
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Intellectual property rights. We have been and are in the process of
developing valuable intellectual property as we refine our product offering and
operations. The loss of our intellectual property could cause us serious or even
irreparable harm.
Reliance on third parties. We rely on third parties to a great degree
for several critical elements of our business. One of these parties is Ready
Technologies, Inc. ("Ready"). Ready provides us with certain support services
and facilities at no charge and also supplies accounting and billing services at
a cost of $4.00 per Premium Member per month. In the future as our business
expands, we may subcontract additional functions to Ready or other parties. If
any of these were to prove unreliable or were to cease rendering support or
services to us, our business could be materially and adversely affected. We also
rely heavily upon Broadwing Communications Services, Inc. which provides our
nationwide dialup service for our users. Presently we pay $8.00 a user per month
for this service on a fee-for-use basis, plus a $500 monthly minimum fee.
Broadwing could raise this fee at any time and could also elect to terminate our
use of its service. Were either of these scenarios to occur, we believe it
likely that we could find a suitable replacement supplier of dialup service for
a comparable price; however, it is possible in transitioning to a new supplier,
that our service and business could be materially affected.
Excessive demand. We may from time to time experience dramatic
increases in our user base resulting in sign-ups and usage that exceed our
telecommunications capacity and the capacity of our internal servers. As a
result, users may be unable to register or log on to our service, may experience
a general slow-down in their Internet access or may be disconnected from their
sessions. Excessive user demand could also result in system failures of our
internal server networks. Inaccessability, interruptions, or other limitations
on the ability to access our service due to excessive user demand or any failure
of our servers to handle user traffic would have a material adverse effect on
our business, results of operations, and financial condition.
Competition for advertising customers. Our business model allows us to
achieve profitability without relying on advertising; however, at present we
include a modest amount of advertising on our site and anticipate that we will
continue to do so in the future. Advertising revenues will help improve our
chances of attaining profitability, and will serve to cushion us financially
from unexpected increases in our costs. Attracting advertisers is not a simple
matter. We will have to compete with more established ISPs and Internet
companies in attempting to attract advertising, and we may also encounter
competition from a number of other sources, including content aggregation
companies, advertising sales networks, advertising agencies, and other companies
which facilitate Internet advertising.
USE OF PROCEEDS
The following table describes the intended use of proceeds of this Offering.
Because it is difficult to predict how many Shares of this Offering may be sold
given the fact that we are attempting to sell the Shares ourselves rather than
using the services of an underwriter, the table presents information that
assumes that one-fourth, one-half, three-fourths and all of the Shares are sold.
It is also possible that we will sell less than one-fourth of the Shares covered
by this Offering. If we sell less than approximately one-fourth of the Shares
registered in this Offering none of the funds raised would be available to our
Company; all would be used to pay the expenses of this Offering.
The categories of expenditures are also listed in the order of priority, with
purchase of merchandise being the most important category and working capital
the least important category. Accordingly, anywhere between approximately
$50,000 and $200,000 in gross proceeds would be allocated among the intended
uses as follows:
12
Percentage of Shares Sold in This Offering
Amount($)
25% 50 % 75 % 100 %
---------- ---------- ---------- ----------
Description:
Offering Expenses(1).............. $20,000 $30,000 $40,000 $40,000
Debt Repayment.................... $10,000 $20,000 $30,000 $50,000
Marketing and Sales............... $10,000 $15,000 $30,000 $40,000
General and Administrative(2)..... $5,000 $10,000 $20,000 $30,000
Capital Equipment................. $-0- $10,000 $15,000 $20,000
Working Capital .................. $5,000 $15,000 $15,000 $20,000
---------- ---------- ---------- ----------
Total............................. $50,000 $100,000 $150,000 $200,000
- -------------------------------
(1) The expenses of the Offering are estimated to be $50,000 and include
filing fees, transfer agent fees and expenses, legal fees and expenses,
and accounting fees and expenses. Some offering expenses have already
been paid with borrowed funds which will be repaid as indicated under
the Debt Repayment item.
(2) Includes officers' salaries, rent, other fixed overhead expenses, and
other costs associated with office space we anticipate leasing. All of
these expenses are associated with the development and implementation
of our proposed plan of operations.
Certain of our investors have loaned us funds that are being used as operating
expenses and for the costs of this Offering. A portion of the proceeds of this
Offering will be used to pay off these loans. Thus far, these loans amount to
approximately $56,000. We intend to borrow up to a total of $80,000 in this
manner. The loans are in the form of promissory notes bearing interest at a rate
of 10% per annum. The loans mature in one year and most will be due beginning in
January 2002.
If we are successful in raising only a minimal amount of money, the resulting
lack of proceeds will make it unlikely that we will be able to fully implement
our proposed plan of operations. The projected expenditures above are estimates
and approximations only and may change due to changes in our business; however,
as of the date hereof, they represent our best projection for how the funds
raised by this Offering will be used. For example, we may determine that funds
earmarked for one particular type of allocation may be more productively spent
in another allocated use, based upon the experience of our management in
evaluating our needs over the next 12 months. Proceeds not immediately used will
be invested in bank certificates of deposit, insured bank deposit accounts, or
similar investments.
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DETERMINATION OF OFFERING PRICE
We arbitrarily determined the offering price and other terms of our common stock
after generally considering the following:
o the amount of proceeds required to initiate our business plan
and marketing strategy;
o our lack of revenues;
o our management capability;
o our plans for future growth;
o the general condition of the securities markets; and
o the amount of retained equity to the present shareholders.
Prospective investors should not assume that the offering price of our common
stock reflects the actual value of our common stock.
DILUTION
The net tangible book value of our outstanding shares of common stock as of
December 31, 2000, was approximately $25,570 or $.004 per share. "Net tangible
book value" per share represents the total amount of our tangible assets, less
the total amount of our liabilities, divided by the number of shares of common
stock outstanding. After giving effect to the sale of 200,000 Shares offered at
an initial public offering price of $1.00 per share less estimated costs of the
Offering, our net tangible book value at December 31, 2000 would have been
$175,570 or approximately $0.026 per share. This represents an immediate
increase in net tangible book value of $0.022 per share to existing shareholders
and an immediate dilution of over $0.974 per share of common stock to new
investors. The following tables illustrate what dilution would have been,
respectively, as of December 31, 2000, assuming we had sold 100% and 25% of the
Shares offered hereby:
If the Offering is 100% sold:
Initial public offering price per share............. $1.00
Net tangible book value per share
before the Offering............................. ($0.004)
14
Increase per share attributable to new investors
purchasing this Offering........................ $0.022
Net tangible book value per share
after this Offering............................. $0.026
Dilution per share to new investors................. $0.974
If the Offering is 25% sold:
Initial public offering price per share............. $1.00
Net tangible book value per share
before Offering................................. ($0.004)
Increase per share attributable to new investors
purchasing this Offering........................ ($0.00)
Net tangible book value per share
after this Offering............................. ($0.004)
Dilution per share to new investors................. ($1.004)
The following table sets forth the number of shares of common stock purchased,
the total consideration paid and the average price per share paid, by our
existing stockholders as of September 30, 2001, and any new investors purchasing
the shares of common stock offered:
Shares Purchase Total Consideration Average
---------------------------------- ----------------------------- Price Per
Number Percent(1) Amount Percent Share(2)
---------------- -------------- -------------- ----------- -------------
Existing shareholders........ 6,520,000 97.20% $25,570 11.34% $0.004
New investors................ 200,000 2.98% $200,000 88.66% $1.00
Total........................ 6,720,000 100.00% $225,570 100.00%
- -------------------
(1) If less than all of the offered Shares are sold, the new investors will
receive a smaller aggregate percentage of ownership while the existing
shareholders will retain a greater percentage ownership. The above
discussion assumes that all 200,000 Shares that we are offering to the
public at $1.00 will be sold.
(2) If less than $200,000 in gross proceeds is received from the Offering,
dilution to new investors who invest in the common sock will be greater
than described above. See the summary chart showing dilution if 25% of
the Offering is sold.
Plan of Distribution
We are offering to sell from 1 to 200,000 Shares of our common stock at a
purchase price of $1.00 per Share. The Shares are being offered by our officers
and directors on a "direct participation" basis. This means that no underwriter
will be involved to assist in our sales efforts. The only person authorized to
offer or sell securities on our behalf under this Offering is Kurt A. Moore, our
President and sole director. The principal shareholders will supply names of
prospective investors to Mr. Moore. None of these prospective investors shall
have been offered shares of common stock prior to the date of this Prospectus.
We do not intend to offer the Shares by means of general advertising or
solicitation. We reserve the right to withdraw, cancel or reject any offer to
purchase the Shares. There are no plans, proposals, arrangements, or
understandings with any potential sales agent with respect to participating in
the distribution of our securities. If at some point in the future,
participation with sales agents develops, the registration statement will be
amended to identify those persons.
In selling the common stock offered in this Offering, Mr. Moore will rely on the
safe harbor in Rule 3a4-1 under the Securities Exchange Act of 1934 to sell our
securities. Moore is not subject to any statutory disqualification under Section
3(a)(39) of the Securities Exchange Act of 1934, nor will he receive any sales
commission, finder's fee, or other compensation (other than his normal salary)
for our common stock that he sells. Mr. Moore is not an associated person of a
broker or dealer as those terms are defined in Rule 3a4-1 nor has he been in the
last twelve months. Mr. Moore meets the criteria set forth in Rule
3a4-1(a)(4)(ii). He performs substantial duties on our behalf other than in
connection with transactions in securities and neither has or will participate
in an offering of securities by any issuer more than once in any twelve-month
period.
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No Minimum Investment
There is no minimum investment that any investor must make in this Offering.
Further, there is no minimum amount of stock that must be sold in order for this
Offering to go forward. All funds received by us from the sale of our common
stock offered by this Prospectus will be deposited immediately into our
operating account and used as described above under "Use of Proceeds."
Termination of Offering
This Offering will terminate six months from the date of this Prospectus unless
all Shares offered by this Prospectus are sold prior to that date.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
Officers and Directors
Information concerning each of our executive officers and directors is set forth
below:
Name Age Position
---- --- --------
Kurt A. Moore 44 President, Secretary, Treasurer, Acting
Chief Financial Officer, and Director
Rodney Zundel 35 Director
Our directors are elected to hold office until the next annual meeting of
shareholders and until their respective successors have been elected and
qualified. Our officers are elected by the Board of Directors and hold office
until their successors are elected and qualified.
Mr. Moore has served in the above-mentioned positions since being appointed on
December 15, 2000 by written consent of High-Tech's shareholders. Mr. Zundel was
appointed to the Board in October 2001.
We have no audit or compensation committee.
Kurt A. Moore. Kurt A. Moore became the President and a Director of
High-Tech at the time of the merger in December 2000 and spends 90% of his time
with High-Tech. Before the merger, Mr. Moore served as the President and sole
director of Nojata.com, Inc. from its inception. Mr. Moore has served as the
Vice President of Marketing for Ready Technologies since November 1999 where his
primary responsibilities include opening new accounts and marketing support.
Ready specializes in computer hardware sales and in website hosting, design, and
integration. During its first full year of operation, Ready had approximately
$500,000 in sales. Sales year-to-date for 2001 are already approaching $800,000.
Mr. Moore spends 10% of his time working for Ready. From 1995 through 1998, Mr.
Moore was employed with Renaissance Golf Products, Inc. (a then publicly-traded
company) and served after September 1997 as the Executive Vice President of
Renaissance where he was primarily responsible for managing all major accounts
with companies such as Target Stores, Fred Meyer, and Gart Sports. He also
managed a sales force of 25 representatives calling on specialty stores and golf
pro-shops. Mr. Moore worked with Carbon Fiber Products ("CFP," now Cyntech
Technologies, Inc. a publicly-traded company), as a sales manager from 1983 to
1993, and as the company's President from 1993 to 1995. His responsibilities
included opening new business accounts with companies such as Ping, Spalding,
17
Maxfli, and other major golf companies. He also served as a director for CFP
from 1992 to 1995. Mr. Moore attended Weber State University from 1975 to 1979,
where he was a marketing major.
Rodney Zundel. Rod Zundel was appointed as a Director of the Company in
October 2001. Mr. Zundel currently reports and anchors for the KSL-TV Sports
Department. He is the recipient of the SPJ (Society of Professional Journalist)
award for excellence in the journalistic field. Prior to joining KSL in 1995,
Rod worked for two other stations as a sportscaster, KUTV, Channel 2 for a total
of eight years, and KIFI, Channel 8 in Idaho Falls, Idaho for four years. In his
years of covering sports, he has covered the NBA All-Star Game, the Utah Jazz,
as well as major university sporting events. Rod attended Weber State University
where he graduated with a Bachelor of Science in Public Relations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGERS
The following table and notes set forth information concerning the beneficial
ownership of the Company's shares as of June 1, 2001 for (i) each current
Director and each nominee for Director (ii) each named executive officer of the
Company as defined in 402(a)(2) of Regulation S-B of the Securities Act of 1933,
(iii) all persons known by the Company to beneficially own more than 5% of the
Company's voting shares, and (iv) all officers and Directors of the Company as a
group.
Amount and Percentage
Nature of of
Name Title Ownership(1)(2) Class(3)
- --------------------------- -------------------------------- -------------- --------------
Kurt A. Moore(4)........... President, Secretary/Treasurer, 5,000,000 74.40%
Acting Chief Financial Officer,
and Director
Kurt C. Allen(5) Beneficial Owner 550,000 8.43%
All Directors and Officers
as a Group................. 5,000,000 74.40%
- ------------------
(1) Unless otherwise noted, the Company believes that all shares are
beneficially owned and that all persons named in the table or family
members have sole voting and investment power with respect to all
shares owned by them.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options.
(3) Assumes 6,520,000 shares outstanding plus, for each individual, any
securities that such individual has the right to acquire upon exercise
of presently exercisable stock options. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person)
and which are exercisable within 60 days from the date hereof have been
exercised.
(4) Mr. Moore's address is 849 West Hillfield Road, Suite 201, Layton, Utah
84041.
(5) Mr. Allen's address is 1015 East 126000 North, Cove, Utah 84320.
18
DESCRIPTION OF SECURITIES
General
We are authorized to issue 50,000,000 shares of $0.001 par value common stock
and 10,000,000 shares of $0.001 par value preferred stock.
Common Stock
As of the date of this Prospectus, there were 6,520,000 shares of common stock
outstanding held by seven shareholders.
Holders of common stock are entitled to one vote per share in all matters to be
voted on by the shareholders. Except for any priority in the payment of
dividends, which may be granted to the holders of preferred stock, holders of
common stock are entitled to receive on a per share basis any dividends that may
be legally declared from time to time by our Board of Directors. If we were to
liquidate, dissolve, or wind up our affairs, holders of common stock would be
entitled to share ratably in all assets remaining after payment of our
liabilities and the liquidation preference, if any, of any outstanding preferred
stock. The rights, preferences, and privileges of common stock holders are
subject to the rights of the holders of preferred stock even if the preferred
stock is issued after your common stock.
Preferred Stock
The Board of Directors has the authority, without any further vote or action by
the shareholders, to issue up to 10,000,000 shares of preferred stock from time
to time on those terms that the Board of Directors may determine. Although it is
not possible to state what effect, if any, issuance of preferred stock might
have on the rights of common stockholders, the issuance of preferred stock may
have one or more of the following effects:
o to restrict common stock dividends if preferred stock
dividends have not been paid;
o to dilute the voting power and equity interest of holders of
common stock to the extent that any preferred stock has voting
rights or is convertible into common stock; and
o to prevent current holders of common stock from participating
in our assets if we were to liquidate until the preferred
stockholders have been paid.
The issuance of any shares of preferred stock having rights superior to those of
common stock may result in a decrease of the value or market price of our common
stock. The issuance of preferred stock could also be used by the Board of
Directors as a device to prevent a change in our control. There are no shares of
preferred stock presently outstanding and the Board of Directors does not
presently intend to issue any shares of preferred stock.
No Preemptive Rights
Holders of common stock do not have any preemptive right to subscribe for or
purchase any class of our securities nor do they have any redemption or
conversion rights.
19
No Cumulative Voting
Common stock shareholders do not have the right to cumulate his or her votes in
an election of directors or for any other matter or matters to be voted upon by
our shareholders.
Certain Provisions of the Colorado Corporations Code
As a Colorado corporation, High-Tech is subject to the Colorado Corporations
Code. Certain provisions of Colorado law create rights that might be deemed
material to our shareholders. Other provisions might delay or make more
difficult acquisitions of our stock or changes in our control or might also have
the effect of preventing changes in our management or might make it more
difficult to accomplish transactions that some of our shareholders may believe
to be in their best interests.
Dissenters' Rights. Among the rights granted under Colorado law which might be
considered material is the right for shareholders to dissent from certain
corporate actions and obtain payment for their shares (see Colorado Revised
Statutes ("CRS"), 7-113-102). This right is subject to exceptions, summarized
below, and may arise in the event of a corporate action such as a merger, plan
of exchange, or a sale, lease, or disposition of all or substantially all the
assets of either High-Tech or Nojata.
A shareholder does not have the right to dissent with respect to any plan of
merger or exchange if the shares held by the shareholder are part of a class of
shares which are:
o listed on a national securities exchange,
o included in the national market system by the National
Association of Securities Dealers, or
o held of record by not less than 2,000 holders.
These exceptions will not apply if the dissenting shareholder is to receive
anything pursuant to the corporate action except:
o shares of the corporation surviving the consummation of the
plan of merger or share exchange,
o shares of a company which at the effective date of the plan of
merger or share exchange will fall in any of the three
exceptions listed above,
o cash in lieu of fractional shares, or
o any combination of the foregoing described shares or cash in
lieu of shares.
Inspection rights. Under CRS Section 7-116-102, a shareholder is
entitled to inspect and copy during regular business hours at our principal
office certain company records. Any shareholder desiring to exercise this right
must give us at least five business days' notice in writing in advance prior to
inspecting and copying the records. The records that may be inspected and copied
pursuant to this right are specified in CRS Section 7-116-101(5). These include
the following records of High-Tech:
o Articles of Incorporation,
o Bylaws,
20
o the minutes of all shareholders' meetings, and records of all
actions taken by shareholders without a meeting, for the past
three years,
o all written communications to shareholders for the past three
years to shareholders as a group or to the holders of any
class or series of shares as a group,
o a list of the names and business addresses of our current
directors and officers,
o a copy of our most recent periodic report submitted to the
Colorado Secretary of State, and
o financial statements prepared for periods ending during the
last three years that a shareholder could request under CRS
7-116-107.
In addition to the rights specified above, certain shareholders may be entitled
to inspect and copy additional records ("Additional Records") of High-Tech,
including:
o a list of our shareholders,
o accounting records,
o minutes from any meeting of the board of directors or from any
action taken by the board of directors,
o minutes of any meeting of shareholders or of actions taken by
the shareholders without a meeting,
o excerpts of records of any action taken by a committee of the
board of directors while acting in place of the board of
directors, and
o waivers of notices of any meetings of shareholders, the board
of directors, or any committee thereof.
Only a shareholder who have been shareholders for at least three months
immediately preceding the demand to inspect or copy records, or who hold at
least five percent of the outstanding shares of any class of our stock are
eligible to copy the Additional Records. Any request to inspect and copy
Additional Records must be made in good faith, for a purpose reasonably related
to the requesting shareholder's interest as a shareholder.
Amendments to Bylaws. Our Board of Directors has authority under CRS
7-110-201 to amend our bylaws unless this power is reserved to our shareholders
pursuant to certain enumerated portions of the Colorado Corporations Code. In
exercising this discretion, our Board of Directors could conceivably alter our
bylaws in ways that would affect the rights of our shareholders and the ability
of any shareholder or group to effect a change in our control; however, the
Board would not have the right to do so in a way that would violate law or any
applicable provisions in our Articles of Incorporation.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Amended Articles of Incorporation contain a provision permitted under
Colorado law concerning the liability of directors. This provision requires us
to indemnify, the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of our company against any
21
claim, liability or expense arising against or incurred by such person because
of his or her service to our company.
This provision does not limit or eliminate our rights or the rights of any
shareholder to seek non-monetary relief, like an injunction or rescission, if
there is a breach of a director's fiduciary duty. This provision will not change
a director's liability under federal securities laws.
Insofar as indemnification for liabilities arising under the Securities Act is
permitted to our directors, officers, or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the SEC, this
type of indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
High-Tech was formed on December 3, 1997. Following our inception we had no
business activity until we merged with Nojata on December 15, 2000. Pursuant to
the terms of this merger agreement the shareholders of Nojata became
shareholders of High-Tech and Nojata became a wholly-owned subsidiary of
High-Tech. At present, Nojata is our sole subsidiary and all of our business is
conducted through that entity.
DESCRIPTION OF BUSINESS AND PLAN OF OPERATION
Introduction
Our goal has been and is to build an Internet Service Provider (ISP) business
with minimal start-up costs. An important advantage we have in pursuing this
objective is our relationship with Ready Technologies ("Ready"), a business that
specializes in Internet-related services. Ready allows us the use of office
space for Kurt Moore and for our servers at no charge. Mr. Moore is also the
Vice President of Marketing for Ready. Ready provides us accounting and billing
support services for a monthly fee of $4.00 per Premium Member. This
relationship with Ready permits us to focus on the marketing aspects of our
business and helps keep our need for capital to a minimum.
Our relationship with Ready has been important in other ways as well. Ready
developed our website and portal for us for fees of approximately $24,000. This
amount represents our total investment to date in research and development. We
have also expended approximately $15,000 to acquire the servers, drives, and
backup systems we need in order to put our service into operation. In expending
these two sums we acquired the equipment, programming, and technology we need in
order commence operations as an ISP.
Our mission is to provide quality internet access at reasonable rates and to
offer our users ("Members") a way earn money by referring new Members. At
present, we offer three types of service. Our Premium Plan offers unlimited
Internet V.90 56K Internet access, up to five e-mail accounts, 10MB storage, and
use of our calendaring software, plus the opportunity to earn commissions for
referring new members. We currently pay our users $4.00 per month for every user
who subscribes to our Premium Reseller service. We pay these amounts monthly,
for the life of the new user account.
A second plan, the "Affiliate Program," makes it possible for the hosts of other
websites to receive referral fees by linking our site to theirs. Under this
plan, each time a user of such a site clicks on an icon linking to our site, and
subscribes to our services, the host earns a referral fee of $4.00 for each new
Premium Member.
22
Dialup Access
Another important relationship that we have is with Broadwing Communications
Service, Inc., a full-service, local and national provider of data and voice
communications services. Through Broadwing, we are able to offer our potential
users approximately 1,700 local access numbers throughout the United States.
Marketing Strategy
We believe that our referral fee program offers a unique way for schools groups,
clubs, and charities to raise funds. Such organizations often sponsor
fund-raising activities and sometimes have a difficult time identifying
money-making opportunities that set them apart from other groups. Our Premium
Plan may offer the members of such groups a unique idea for fund-raising. Many
of the items or services (e.g., candy, food items, small gifts, and services,
such as car washes) that are sold in such fund-raisers are quickly used or
consumed and offer little chance to generate an on-going revenue stream for the
sponsoring organization. In contrast, Internet services are used on a continuing
basis by an increasing number of American households.
We are having some encouraging initial successes in marketing our service to
organizations that wish to use it as a fund-raising vehicle. For example, we
have a verbal commitment from Utah State University to include a Nojata flyer in
a newsletter mailing to approximately 80,000 alumni, scheduled to occur in
November 2001. Proceeds from any referral fees that are generated through this
mailing will be given to the University.
In order to promote interest in our ISP, we provide Premium Members with
referral cards bearing the Nojata.com name and logo. There is a box on these
cards for a "referral code" that is linked in our accounting system to the
particular Premium Member or an organization designated by the Member. When new
Members subscribe for our service using our online registration system they fill
in a line for the referral code, ensuring proper credit of referral fees for the
appropriate Member or organization.
Beginning in August 2001, Nojata started running a series of advertisements on
popular radio shows that air daily on radio KSL in the Salt Lake City area, the
Grant and Amanda Show and the Doug Wright Show. While this advertisement
generated an upsurge in visits to our website, it has yet to produce many new
subscribers. Some potential subscribers have inquired about whether they can
receive Internet access that is filtered, a capacity that until recently we did
not have, but now can offer through Cerberian, Inc., an Internet content
management company. Cerberian will provide content filtering to any of our
customers for a monthly fee of $2.00. This fee is added to the customer's
monthly bill of $19.95 for our Premium Plan.
Industry Overview and Competition
The Internet industry in which we operate is a dynamic environment that has been
characterized by high-growth during the last several years, both in use and in
the number of ISPs entering the market. Several well-known companies have
already established themselves as major players and are likely to retain
substantial market share for the foreseeable future. Besides the larger ISPs,
there are many smaller ISPs competing for users. The total number of ISPs in the
U.S. is possibly in the thousands; one website that serves as a searchable
database of ISPs shows over 9,600 listings (http://thelist.internet.com).
Among ISPs, the largest are those that provide Internet access for a fee, rather
than at no charge. The best example of this is America Online ("AOL"), by far
the largest player in this market at present, with 23 million users. AOL has
succeeded, in part, by offering more than just Internet access. AOL boasts a
23
whole series of services, links, and content of interest to a wide range of
users, available with several possible pricing plans (unlimited access, billed
monthly is $21.95).
Earthlink runs a distant second, with 4.7 million users. This ISP offers a
variety of plans targeted to individuals, families, and businesses, with basic
56K unlimited access starting at $19.95 per month.
Other ISPs take advantage of name-recognition in related industries to attract
customers, ATT Worldnet Service being an example of this. This service offers
plans ranging in price from $16.95 for 150 hours a month of access, with
unlimited access costing $21.95 per month.
Another major ISP is Juno, which originally offered free e-mail, then free
Internet access supported by advertising revenue. Juno still offers this free
service and free e-mail, but also now offers Premium Access at prices ranging
from $9.95 to $19.95 a month. Juno reported having 4.1 million active users as
of March 31, 2000, with 88% of those having full web access.
While there are a number of major ISPs that we will have to compete with in
order to attract and retain users, these ISPs utilize very different business
models. Some established ISPs offer quality access while requiring their users
to view no or little advertising. Our Premium Plan will be in direct competition
with these ISPs. Likewise, we will be competing with ISPs that offer free
Internet access and rely in part or in whole on advertising to bring in revenue.
Companies such as Juno, NetZero, and dotNOW have established market. In June
2001, Juno and Net Zero, two of these companies, announced plans for a merger.
Under the merger plan, both companies are to become subsidiaries of a new
company, United Online, Inc. Juno and Net Zero anticipate that United Online
will become the nation's second largest ISP after America Online.
Even if the new United Online does displace Earthlink as the number two ISP, the
long-term viability of this new company and of other free services remains to be
proven. Neither Juno nor Net Zero have yet made a profit, despite their large
market shares. Juno is approaching profitability but is relying heavily on
attracting subscribers for its paid service, Premium Access. Net Zero recently
announced broad changes intended to move it closer to profitability, including
layoffs, fewer free hours of Internet service per household user than previously
(10 v. 40 hours per month). Net Zero also is discontinuing its free service in
certain areas where telecommunications costs are high.
We also anticipate competition from ISPs that pay their users. Some may offer
referral commissions, as we plan to. America Online has recently begun to offer
a $25.00 referral fee to any user who refers a new subscriber. Companies such as
Cashfiesta, Spedia, and Ignifudge pay their users, usually to view advertising
(or, in the case of Ignifudge, if you make them your start page). At least one
such company has ceased service already. Alladvantage looked for a time like it
would become an industry leader in "pay-for-surf" access.
Billing and Cancellation Policies
Our cancellation policy provides that we or the user may cancel a given user's
account at any time for any reason or for no reason. Users that wish to cancel
must either notify the Company through (i) our secure online Member's Account
Administration, (ii) by phone at (801) 593-5363, (iii) or by fax to (801)
593-0515. The Company will automatically terminate a user's account if such user
is 15 days or more late in any payment due the Company.
Company policy posted on our website also provides that we reserve the right to
change the amount of any fee or charge, or any part thereof, and to institute
new fees or charges, effective upon either posting of the modified amount or
notifying the Member through e-mail. The first monthly fee is due at the time
24
that a new user registers with us. New users may cancel their service agreement
within thirty (30) days from registration for a full money-back refund.
DESCRIPTION OF PROPERTY
Our corporate offices are located at the offices of Ready Technologies. Mr.
Moore is the Vice President of Marketing for Ready. Under an oral agreement with
Ready, we pay no rent for the use of this office space.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 15, 2000, our shareholders approved the acquisition of Nojata. As
part of the acquisition agreement, shareholders approved the exchange of
1,100,000 shares of Nojata common stock for 5,550,000 shares of common stock in
High-Tech. As a result, Nojata became a wholly-owned subsidiary of High-Tech.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
No Public Market
Before the Offering, there has been no established trading market for our common
stock, and even if a public market were to be created or maintained, brokers or
dealers who make a market in or otherwise trade in our common stock would be
subject to requirements when trading our stock that are not imposed upon the
trading of stock with a higher market value. This is because our stock would be
considered to be a "penny stock." For example, Rule 15g-9 under the Securities
Exchange Act of 1934 imposes additional sales practice requirements upon
broker-dealers who sell "penny stocks" to persons other than established
customers and institutional accredited investors. For transactions under this
rule, a broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transaction
prior to the sale.
The term "penny stock" is defined in Rule 3a51-1 of the Securities and Exchange
Commission. "Penny stocks" are securities:
o with a price of less than five dollars per share;
o that are not traded on a "recognized" national exchange;
o whose prices are not quoted on the Nasdaq automated quotation
system (Nasdaq-listed stocks must still meet the first
requirement above); or
o of an issuer with net tangible assets less than $2,000,000 (if
the issuer has been in continuous operation for at least three
years) or $5,000,000 (if in continuous operation for less than
three years), or with average annual revenues of less than
$6,000,000 for the last three years.
Section 15(g) of the 1934 Act, and Rule 15g-2 of the Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account.
25
Rule 15g-9 of the Commission requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling any
penny stock to that investor. This procedure requires the broker-dealer to:
o obtain from the investor information concerning his or her
financial situation, investment experience, and investment
objectives;
o reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and
that the investor has sufficient knowledge and experience as
to be reasonably capable of evaluating the risks of penny
stock transactions;
o provide the investor with a written statement setting forth
the basis on which the broker-dealer made his or her
determination; and
o receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the
investor's financial situation, investment experience, and
investment objectives.
Compliance with these requirements may make it more difficult for purchasers of
our common stock to resell their shares to third parties or to otherwise dispose
of them.
In addition, the National Association of Securities Dealers, Inc. ("NASD") has
adopted a series of changes pertaining to the OTC Bulletin Board and the OTC
market. Generally stated, these changes:
o allow only those companies that report their current financial
information to the SEC, banking, or insurance regulators to be
quoted on the OTC Bulletin Board;
o require brokers, before they recommend a transaction involving
an OTC security, to review current financial statements on the
company they are recommending; and
o prior to the initial purchase of an OTC security, require that
every investor receive a standard disclosure statement
(prepared by the NASD) emphasizing the differences between OTC
securities and other market-listed securities.
The NASD has also adopted a rule which grants authority for the NASD to halt
trading of securities on the OTC Bulletin Board under circumstances where the
NASD believed the investment public could be harmed. We cannot predict the
likelihood of these proposed changes being approved by the SEC in their current
form or the adoption of any additional changes by the NASD.
In addition, in order to create a market in our common stock that would trade on
the OTC Bulletin Board, we would need to recruit a NASD member broker-dealer to
act as a market maker. Although we have identified some potential market makers,
we have not entered into any negotiations or arrangements with any broker-dealer
to act as a market maker. Even if such a public market were to develop, the
vagaries of the stock market might subject our stock to significant price and
volume fluctuations that may or may not be related to our operating performance.
Such a market maker cannot accept any consideration from us for initiating
quotations in our stock.
We have not applied for a trading symbol under which our stock would trade. It
is anticipated that we would apply for a trading symbol once we have identified
a market maker that would agree to make a market in our stock.
26
In General
Once the Offering is complete, we will have a total of at least 6,570,000 shares
of common stock outstanding, and may have as many as 6,720,000, depending on how
many Shares we sell under this Offering. Of these shares of common stock, all
shares from the Offering will be freely tradable without restriction or further
registration under the Securities Act.
Sales of Restricted Shares
In general. The remaining 6,520,000 shares of common stock outstanding
before the Offering are "restricted securities" as defined in Rule 144 of the
Securities Act of 1933. Restricted securities may be sold in the public market
only if they are registered or if they qualify for an exemption from
registration under the Securities Act. Subject to the volume limitations
described below, all these will be eligible for sale under Rule 144 by December
31, 2001.
Who can Sell
In general. Under Rule 144, in general, a person (or persons whose shares
are aggregated), including an affiliate, who has beneficially owned shares for
at least one year can sell, within any three-month period a number of shares of
common stock that does not exceed the greater of:
(a) 1% of the then outstanding shares of common stock (between 67,200 and
65,200 shares immediately after the Offering); or
(b) the average weekly trading volume in our common stock during the four
calendar weeks before notice of the Rule 144 sale is filed, subject to
a few restrictions described in Rule 144.
No volume limits. In addition, any person who has not been our affiliate at
anytime during the 90 days before a sale and who has beneficially owned the
shares he or she desires to sell for at least two years may sell those shares
under Rule 144(k) and not be concerned with the volume limits described above.
Effect of sales of Shares. Before the Offering, there has been no public
market for our common stock. No precise prediction can be made as to whether a
market will be created or sustained after the Offering; therefore, we cannot
predict what precise effect sales of restricted stock may have on the market
price of our common stock. Nevertheless, sale of substantial amounts of common
stock in the public market could adversely affect market prices. Sales of
restricted stock could also impair our future ability to raise capital through
the sale of our equity securities.
Dividend Policy
We currently plan to retain any earnings and use them to finance the growth and
development of our business. We also intend to use earnings for working capital
and general corporate purposes. We do not anticipate paying cash dividends on
the common stock for at least the next three years. Any payment of dividends
will be at the discretion of the board of directors and will depend upon the
following factors:
o earnings,
o financial condition,
o capital requirements,
27
o level of indebtedness,
o contractual provisions that might restrict the payment of
dividends, and
o factors that we cannot currently predict.
Persons who desire or need dividend income should not invest in the Shares.
Transfer Agent and Registrar
Before the effective date of this Offering, we intend to engage Interwest
Transfer Company, Inc. of Salt Lake City, Utah, as the transfer agent and
registrar of our common stock.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning compensation
paid to executive officers since inception. There were no stock appreciation
rights outstanding during the fiscal year ending December 31, 2000, nor are
there any rights outstanding as of the date of this Prospectus.
Long-term Compensation
-----------------------
Fiscal Other Annual
Name and Position Year Salary($) Bonus($) Compensation($)
-------------------- --------- ------------ ---------- -----------------------
Kurt A. Moore,
President........... 2000 $36,000 0 0
EXPERTS
The balance sheet of the Company as of December 31, 2000 and the statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 2000 and 1999 have been included herein in reliance upon the report of
Mantlya & McReynolds, Independent Certified Public Accountants, given as the
authority of that firm as experts in accounting and auditing.
We are being advised on the legality of issuing our common stock offered by this
Prospectus by Gibson, Haglund & Paulsen, Sandy, Utah.
ADDITIONAL INFORMATION
We have filed our Form SB-2 Registration Statement with the SEC. This Prospectus
does not contain all of the information set forth in the registration statement.
You will find additional information about us and our common stock in the
registration statement and in the exhibits attached thereto. The registration
statement, including its exhibits, may be inspected without charge at the SEC's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
may be obtained from that office, if you pay the applicable fees. The
registration statement is available on the SEC's website at www.sec.gov.
28
We have to comply with the information requirements of the Securities Exchange
Act of 1934, and will file reports, proxy statements, and other information with
the SEC. These materials can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
Some information about us is also available on the SEC's website at www.sec.gov.
We intend to furnish our shareholders, after the close of each calendar year,
with an annual report that describes our business and contains audited financial
statements that have been examined and reported upon by an independent certified
public accountant. In addition, we may from time to time furnish our
shareholders with other reports that we believe will help keep them informed
about our business.
FINANCIAL INFORMATION
The Company financial statements for the year ended as of December 31, 2000, and
the related statements of operations, stockholders' deficit, and cash flows for
the year ended December 31, 2000 and the period from December 3, 1997
(inception) to December 31, 2000; and the unaudited financial statements for the
third quarter of 2001 included below.
High-Tech Industries, Inc.
[A Development Stage Company]
Condensed Consolidated Financial Statements
(unaudited)
September 30, 2001
F-1
High-Tech Industries, Inc.
[A Development Stage Company]
Condensed Consolidated Balance Sheet
(unaudited)
ASSETS
Unaudited
September 30,
2001
----------------------
Current Assets
Cash $ 1,544
----------------------
Total Current Assets 1,544
Equipment, net 12,700
Other Assets 0
----------------------
TOTAL ASSETS $ 14,244
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 56,000
Interest payable 3,379
----------------------
Total Current Liabilities 59,379
Total Liabilities 59,379
Stockholders' Equity
Common stock 6,520
Additional paid in capital 20,201
Accumulated deficit during development stage (71,856)
----------------------
Total Stockholders' Equity (45,135)
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,244
======================
See accompanying notes
F-2
High-Tech Industries, Inc.
[A Development Stage Company]
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three For the Three
Months Ended Months Ended
September 30, September 30,
2001 2000
--------------------- -------------------
Revenues $ 1,670 $ 0
General and administrative
expense 12,805 51
--------------------- -------------------
Operating Loss (11,135) (51)
Interest income 39
Interest expense (1,411)
--------------------- -------------------
Net Loss $ (12,507) $ (51)
===================== ===================
Net Loss per Share $ (0.01) $ (0.01)
Weighted Average Number of
Shares Outstanding 6,520,000 970,000
===================== ===================
See accompanying notes
F-3
High-Tech Industries, Inc.
[A Development Stage Company]
Condensed Consolidated Statements of Operations
(Unaudited)
For the Period
For the Nine For the Nine from inception
Months Ended Months Ended Through
September 30, September 30, September 30,
2001 2000 2001
------------------- ---------------- ------------------
Revenues $ 3,306 $ 0 $ 3,306
General and administrative
expense 70,823 155 71,973
------------------- ---------------- ------------------
Operating Loss (67,517) (155) (68,667)
Interest income 190 0 190
Interest expense (3,379) 0 (3,379)
------------------- ---------------- ------------------
Net Loss $ (70,706) $ (155) $ (71,856)
=================== ================ ==================
Net Loss per Share $ (0.01) $ (0.01) $ (0.03)
Weighted Average Number
of Shares Outstanding 6,520,000 970,000 2,118,139
=================== ================ ==================
See accompanying notes
F-4
High-Tech Industries, Inc.
[A Development Stage Company]
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Period
For the Nine For the Nine from
Months Months inception
Ended Ended Through
September 30, September 30, September 30,
2001 2000 2001
-------------------- -------------------- --------------------
Cash Flows Used for Operating Activities:
Net Loss $ (70,706) $ (155) $ (71,857)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation 2,287 0 2,541
Increase in Accrued Interest Payable 3,379 0 3,379
-------------------- -------------------- --------------------
Net Cash Flows Used for Operating Activities (65,040) (155) (65,937)
Cash Flows Used for Investing Activities:
0 0 0
-------------------- -------------------- --------------------
Net Cash Flows Used for Investing Activities 0 0 0
Cash Flows Provided by Financing Activities
Stock issued for cash 970
Cash acquired with Nojata 10,511
Proceeds from borrowing 56,000 0 56,000
-------------------- -------------------- --------------------
Net Cash Flows from by Financing Activities 56,000 0 67,481
Net Increase (Decrease) in Cash (9,040) (155) 1,544
Beginning Cash Balance 10,584 279 0
-------------------- -------------------- --------------------
Ending Cash Balance $ 1,544 $ 124 $ 1,544
==================== ==================== ====================
See accompanying notes
F-5
High-Tech Industries, Inc.
[A Development Stage Company]
Notes to Condensed Consolidated Financial Statements
September 30, 2001
PRELIMINARY NOTE
The accompanying condensed consolidated financial statements have been
prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Interim financial statements
reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation for the period. Certain information
and disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United
States have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report for the year ended December 31, 2000.
F-6
High-Tech Industries, Inc.
[A Development Stage Company]
Independent Auditors' Report
and
Consolidated Financial Statements
December 31, 2000
F-8
High-Tech Industries, Inc.
[A Development Stage Company]
TABLE OF CONTENTS
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-10
Consolidated Balance Sheet - December 31, 2000 . . . . . . . . . F-11
Consolidated Statements of Operations for the years
ended December 31, 2000 and 1999 and for the period from
inception [December 3, 1997] through December 31, 2000 . . . . . F-12
Consolidated Statements of Stockholders' Equity for the
period from inception [December 3, 1997] through
December 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . F-13
Consolidated Statements of Cash Flows for the years
ended December 31, 2000 and 1999 and for the period from
inception [December 3, 1997] through December 31, 2000 . . . . . F-14
Notes to Consolidated Financial Statements . . . . . . . . . . F-15-18
F-9
Independent Auditors' Report
The Board of Directors and Shareholders
High-Tech Industries, Inc.[a development stage company]
We have audited the accompanying consolidated balance sheet of High-Tech
Industries, Inc.,[a development stage company] including the accounts of its
subsidiary, as of December 31, 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 2000 and 1999, and for the period from inception [December 3, 1997] through
December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of High-Tech
Industries, Inc. as of December 31, 2000, and the results of operations and cash
flows for the years ended December 31, 2000 and 1999, and from the period from
inception through December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has accumulated losses since
inception and is just beginning its planned principal operations, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
MANTYLA MCREYNOLDS
Salt Lake City, Utah
August 9, 2001
F-10
High-Tech Industries, Inc.
[A Development Stage Company]
Consolidated Balance Sheet
December 31, 2000
ASSETS
Current Assets:
Cash $ 10,584
-----------------
Total Current Assets 10,584
Property & Equipment, net - Note 5 14,986
TOTAL ASSETS $ 25,570
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Liabilities $ 0
Other Liabilities 0
Total Liabilities 0
Stockholders' Equity - Note 4
Preferred Stock, $.001 par value; authorized
10,000,000 shares; issued and outstanding, none 0
Common stock, $.001 par value;
authorized 50,000,000 shares; issued
and outstanding 6,520,000 6,520
Additional paid-in capital 20,201
Deficit accumulated during development stage (1,151)
Total Stockholders' Equity 25,570
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,570
===================
See accompanying notes to financial statements
F-11
High-Tech Industries, Inc.
[A Development Stage Company]
Consolidated Statements of Operations For
the years ended December 31, 2000 and 1999 and for the period from
inception [December 3, 1997] through December 31, 2000
Period from
inception
Revenues: 2000 1999 through 2000
---------------- ----------------- -------------------
Fees $ 0 $ 0 $ 0
General and administrative expenses 460 72 1,151
---------------- ----------------- -------------------
Net Loss from Operations (460) (72) (1,151)
Net Loss Before Taxes (460) (72) (1,151)
Income taxes 0 0 0
Net Loss $ (460) $ (72) $ (1,151)
================ ================= ===================
Loss Per Share $ (0.01) $ (0.01) $ (0.01)
================ ================= ===================
Weighted Average Shares
Outstanding 1,212,623 970,000 1,049,004
================ ================= ===================
See accompanying notes to consolidated financial statements.
F-12
High-Tech Industries, Inc.
[A Development Stage Company]
Consolidated Statements of Stockholders'
Equity For the period from inception [December 3, 1997]
through December 31, 2000
Addit'l Accum- Total
Shares Common Paid-in ulated Stockholders'
Issued Stock Capital Deficit Equity
--------------- ------------- --------------- --------------- -----------------
Balance December 3, 1997 0 $ 0 $ 0 $ 0 $ 0
Issued stock to founders at
inception, at par 970,000 970 970
Net loss for year ended
December 31, 1997 0 0
--------------- ------------- --------------- --------------- -----------------
Balance at December 31, 1997 970,000 970 0 0 970
--------------- ------------- --------------- --------------- -----------------
Net loss for year ended
December 31, 1998 (619) (619)
--------------- ------------- --------------- --------------- -----------------
Balance at December 31, 1998 970,000 970 0 (619) 351
--------------- ------------- --------------- --------------- -----------------
Net loss for year ended
December 31, 1999 (72) (72)
--------------- ------------- --------------- --------------- -----------------
Balance at December 31, 1999 970,000 970 0 (691) 279
--------------- ------------- --------------- --------------- -----------------
Issued shares to acquire stock of
Nojata, Inc., $.00464 per share,
12/15/2000 5,550,000 5,550 20,201 25,751
Net loss for year ended
December 31, 2000 (460) (460)
--------------- ------------- --------------- --------------- -----------------
Balance, December 31, 2000 6,520,000 $ 6,520 $ 20,201 $ (1,151) $ 25,570
=============== ============= =============== =============== =================
See accompanying notes to consolidated financial statements.
F-13
High-Tech Industries, Inc.
[A Development Stage Company]
Consolidated Statements of Cash Flows
For the years ended December 31, 2000 and 1999,
and for the period from inception [December 3, 1997]
through December 31, 2000
Period from
inception
through
2000 1999 2000
------------- ------------- ---- ---------------
Cash Flows Provided by/(Used for) Operating Activities
Net Loss $ (460) $ (72) $ (1,151)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 254 0 254
Net Cash Provided by/(used for) Operating Activities (206) (72) (897)
Cash Flows Provided by/(Used for) Investing Activities
------------- ------------- ---------------
Net Cash Used for Investing Activities 0 0 0
Cash Flows Provided by/(Used for) Financing Activities
Stock issued to founders for cash 0 970
Cash acquired with subsidiary 10,511 10,511
------------- ------------- ---------------
Net Cash Provided by Financing Activities 10,511 0 11,481
------------- ------------- ---------------
Net Increase/(Decrease) in Cash 10,305 (72) 10,584
Beginning Cash Balance 279 351 0
------------- ------------- ---------------
Ending Cash Balance $ 10,584 $ 279 $ 10,584
============= ============= ===============
Supplemental Disclosures
Interest paid $ 0 $ 0 $ 0
Income taxes paid 0 0 0
Stock issued for assets 15,240 0 15,240
See accompanying notes to consolidated financial statements.
F-14
High-Tech Industries, Inc.
[A Development Stage Company]
Notes to Consolidated Financial Statements
December 31, 2000
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
High-Tech Industries, Inc., ("Company") organized under the laws of the
State of Colorado in December 1997. The Company is currently developing
its planned principal operations, which is investing in technology. On
December 15, 2000, the Company acquired all the outstanding stock of
Nojata, Inc., ("Nojata") a Nevada corporation, which is developing as
an Internet services provider. The transaction was accounted for on a
purchase basis. Principal operating activities are now commencing and
the Company is considered to be in the development stage.
The consolidated financial statements of the Company include the
accounts of Nojata, a wholly owned subsidiary. All significant
intercompany transactions have been eliminated.
The financial statements of the Company have been prepared in
accordance with U. S. generally accepted accounting principles. The
following summarizes the more significant of such policies:
(b) Income Taxes
The Company applies the provisions of Statement of Financial Accounting
Standards No. 109 [the Statement], "Accounting for Income Taxes." The
Statement requires an asset and liability approach for financial
accounting and reporting for income taxes, and the recognition of
deferred tax assets and liabilities for the temporary differences
between the financial reporting basis and tax basis of the Company's
assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled.
(c) Net Loss Per Common Share
In accordance with Financial Accounting Standards No. 128, "Earnings
Per Share," basic loss per common share is computed using the weighted
average number of common shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash on deposit in banks or on hand to be cash. The Company has $10,584
cash at December 31, 2000.
F-15
High-Tech Industries, Inc.
[A Development Stage Company]
Notes to Financial Statements [continued]
December 31, 2000
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [continued]
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U. S.
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 those estimates.
(f) Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
using the straight-line basis over the useful lives of the related
assets. Expenditures for maintenance and repairs are charged to expense
as incurred.
(g) Principles of Consolidation
The accompanying consolidated balance sheet includes the accounts of
Nojata, Inc. Nojata is a startup company which was organized in March
of 2000. The statements of operations include the results of operations
of the combined entity for all periods presented. All significant
intercompany balances and transactions are eliminated.
Note 2 LIQUIDITY
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. As shown
in the financial statements, the Company has accumulated losses through
December 31, 2000, amounting to $1,151, and is still developing its
planned principal operations. These factors indicate that the Company
may not be able to continue as a going concern without additional
sources of funding or development of significant operating revenue.
Financing for the Company's operations and initial acquisitions to date
has been through cash contributed by the founders for common stock. The
Company's ability to achieve a level of profitable operations and/or
additional financing may impact the Company's ability to continue as
presently organized. Resolution of these issues is dependent on the
success of management's plans to raise funds through the sale of its
equity securities in private placement or a public offering. The
consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
F-16
High-Tech Industries, Inc.
[A Development Stage Company]
Notes to Financial Statements [continued]
December 31, 2000
Note 3 INCOME TAXES
The Company adopted Statement No. 109 as of December 3, 1997. No
provision has been made in the financial statements for income taxes
because the Company has accumulated losses since inception.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset at December 31, 2000 have no impact
on the financial position of the Company. A valuation allowance is
provided when it is more likely than not that some portion of the
deferred tax asset will not be realized. Because of the lack of taxable
earnings history, the Company has established a valuation allowance for
all future deductible temporary differences.
Deferred tax assets Balance Tax Rate
---------------------------------------- --------- --------- --------
Loss carryforward (expires through 2020) $1,151 $ 173 15%
Valuation allowance (173)
---------
Deferred tax asset $ 0
=========
The valuation allowance has increased $69 from $104 in the prior year.
Note 4 CAPITAL STOCK
In December 1997, the Company issued 970,000 shares of common stock to
two entities in blocks of 485,000 shares. The shares were issued at par
($.001) for cash of $970 as part of the initial organization.
On December 15, 2000, the Company issued 5,550,000 shares of common
stock for all of the outstanding shares (1,110,000 common) of Nojata,
Inc. at approximately $.00464 per share.
Note 5 PROPERTY AND EQUIPMENT
The major classes of assets as of the balance sheet date are as
follows:
Accumulated
Depreciation/ Net
Asset Class Cost Amortization Book Method/Life
- --------------------- ----------- --------------- ----------- -----------
Electronic Equipment $ 15,240 $ 254 $ 14,986 SL/5 years
Total $ 15,240 $ 254 $ 14,986
============= ================ ============
Depreciation expense was $254 in 2000, and $0 in 1999.
F-17
High-Tech Industries, Inc.
[A Development Stage Company]
Notes to Financial Statements
December 31, 2000
Note 6 CONTRACTS
On December 11, 2000, Nojata executed an open ended agreement to have
another third party company ("Consultant") assist in creating a Portal
site, Internet Service Provider, and site management. In exchange for
reduced rates for services, Nojata agreed to pay the Consultant a $4
per user charge for project management, accounting, and technical
support. The Consultant also provides certain support and facilities to
Nojata at no charge.
Note 7 SUBSEQUENT EVENTS
On January 11, 2001, High-Tech borrowed $40,000 from an investor. The
note bears interest at 10% per annum. The entire principal and interest
are due on January 11, 2002. The proceeds from the loan are for
operating expenses of both the parent and subsidiary.
In May and in June 2001, the Company borrowed $3,500 and $12,500,
respectively, from an investor. This obligation bears interest at 10%
and is payable on demand.
On February 8, 2001, Nojata entered into a telecommunications contract
for Dial-up Internet Services, from an outside provider. The agreement
allows for an initial credit limit of up to $40,000 for the services.
The terms of the contract provide that Nojata will have a twelve-month
"ramp-up period" in which to place a minimum of ten thousand (10,000)
end users on the provider's network. The contract will continue for an
additional 24 months during which Nojata will have monthly commitments.
F-18
PART II - Information Not Required in Prospectus
Item 24. Indemnification of Directors and Officers.
Our Amended Articles of Incorporation contain a provision permitted under
Colorado law concerning the liability of directors. This provision requires us
to indemnify, the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of our company against any
claim, liability or expense arising against or incurred by such person because
of his or her service to our company.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities offered hereby.
Amount
------------
SEC Registration Fee....................... $ 50
Printing .................................. $ 100
Blue Sky Fees and Expenses................. $ 5,000
Transfer Agent Fees........................ $ 2,500
Accounting Fees and Expenses............... $12,500
Legal Fees and Expenses.................... $25,000
Miscellaneous Fees and Expenses............ $ 4,850
------------
Total......................... $50,000
============
Item 26. Recent Sales of Unregistered Securities.
Since our inception, sales of unregistered common stock (the only issued and
outstanding securities of the Company) were made by the small business issuer as
follows:
Name and Consideration Date Sold Number of Shares Cash
- ----------------------------- ------------ --------------------- ----------
GM/CM Family Partners, LTD 12/31/97 485,000(1) $485.00
USA Ventures 1/15/98 485,000(2) $485.00
- ----------------
(1) A total of 242,000 of these shares were subsequently transferred
through private sales to third parties.
(2) A total of 242,000 of these shares were subsequently transferred
through private sales to third parties.
With respect to the sale of all unregistered securities as described above, this
small business issuer relied upon the exemption afforded by Section 4(2) of the
Securities Act of 1933 which relates to transactions in securities not involving
a public offering. All recipients had a preexisting personal relationship with a
founder, officer, or director of the Company. No advertisement or general
solicitation was used to promote sales of the Company's stock. The Company
believed that each purchaser was purchasing with the intent to invest, and not
with a view to distribution. No transfer of restricted securities will be
permitted without opinion of counsel that such transfer is in compliance with
the rules and regulations of the SEC.
Item 27. Exhibits.
Number Description
2.1 Agreement and Plan of Exchange between High-Tech Industries,
Inc. and Nojata, Inc.
29
3.1 Articles of Incorporation of High-Tech Industries, Inc.
3.2 Bylaws of High-Tech Industries, Inc.
5.1 Opinion of Gibson, Haglund & Paulsen
21.1 Information Regarding our Subsidiary, Nojata, Inc.
23.1 Consent of Mantyla & McReynolds
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities
under Rule 415 of the Securities Act, a post-effective amendment to this
registration statement to:
(i) include any Prospectus required by section 10(a)(3) of the
Securities Act; and
(ii) reflect in the Prospectus any facts or events which, individually
or together, represent a fundamental change in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
30
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Layton,
State of Utah, on November 15, 2001.
HIGH-TECH INDUSTRIES, INC.,
a Colorado corporation
By: /s/ Kurt A. Moore
------------------------------------
Kurt A. Moore, President, Secretary,
Treasurer, and Acting Chief
Financial Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Name Title Date
---- ----- ----
/s/ Kurt A. Moore President, Secretary, Treasurer, Acting November 15, 2001
- ------------------ Chief Financial Officer, and Director
Kurt A. Moore
31