U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
eCONNECT
(Name of Small Business Issuer in its charter)
Nevada 454390 43-1239043
(State or jurisdiction of Primary IRS Employer
of incorporation or Standard Identification
organization) Industrial No.
Classification
Code Number
31310 Eaglehaven Center, Suite 10, Rancho Palos
Verdes, California 90275; (310) 541-4393
(Address and telephone number of Registrant's
principal executive offices and principal place of
business)
Shawn F. Hackman, Esq., 3360 West Sahara Avenue,
Suite 200, Las Vegas, Nevada 89102; (702) 732-2253
(Name, address, and telephone number of agent for
service)
Approximate date of proposed sale to the public: As
soon as practicable after this Registration Statement
becomes effective.
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following
box and list the Securities Act registration 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 number of the earlier effective registration
statement for the same offering.
If the delivery of the prospectus is expected to be made
pursuant to Rule 434, check the following box.
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Proposed Amount of
each class registered maximum maximum registration
of (1) offering aggregate fee
securities price per offering
to be unit (2) price
Common
Stock 61,000,000 $0.19 $11,590,000 $3,222.02
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.
(1) Pursuant to Rule 416, such additional amounts to
prevent dilution from stock splits or similar
transactions.
(2) Calculated in accordance with Rule 457(c): The
average of the bid and asked price as of August 18,
1999.
PART I. INFORMATION REQUIRED IN PROSPCTUS
PROSPECTUS
eCONNECT
61,000,000 Shares *
Common Stock
Offering Price $0.19 per Share
eConnect, a Nevada corporation ("Company"), is hereby
offering up to 61,000,000 shares of its $0.001 par
value common stock ("Shares") at an offering price of
$0.19 per Share on a delayed basis under Rule 415
pursuant to the terms of this Prospectus for the
purpose of providing working capital for the Company.
The Shares offered hereby are highly speculative and
involve a high degree of risk to public investors and
should be purchased only by persons who can afford to
lose their entire investment (See "Risk Factors" on
page 4).
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Underwriting Proceeds to
Public Discounts & Issuer (3)
Commissions
Per Share $0.19 $0 $0.19
Total Maximum $67,800,000 $0 $9,087,000
Information contained herein is subject to completion
or amendment. The registration statement relating to
the securities has been filed with the Securities and
Exchange Commission. The securities may not be sold
nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there
be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful
prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, Dated ________________, 1999
*Pursuant to SEC Rule 416, there will be a change in
the amount of securities being issued to prevent
dilution resulting from stock splits, stock
dividends, or similar transaction.
THE SHARES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR
SALE, ACCEPTANCE OF THE SUBSCRIPTIONS BY THE COMPANY
AND APPROVAL OF CERTAIN LEGAL MATTERS BY COUNSEL TO
THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OPEN OFFER TO BUY INTO SECURITIES
OFFERED HEREBY A STATE IN WHICH, OR TO A PERSON TRUE,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGEIN THE
INFORMATION CONTAINED HEREIN SUBSEQUENT TO THE DATE
THEREOF. HOWEVER, IF A MATERIAL CHANGE OCCURS, THIS
prospectus WILL BE AMENDED OR SUPPLEMENTED
ACCORDINGLY FOR ALL EXISTING SHAREHOLDERS, AND FOR
ALL PROSPECTIVE INVESTORS WHO HAVE NOT YET BEEN
ACCEPTED AS SHAREHOLDERS IN THE COMPANY.
THIS PROSPECTUS DOES NOT INTENTIONALLY OMIT ANY
MATERIAL FACT OR CONTAIN ANY UNTRUE STATEMENT OF
MATERIAL FACT. NO PERSON OR ENTITY HAS BEEN
AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR
MAKE A REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT WHICH IS NOT EXPRESSLY PROVIDED FOR OR
CONTAINED IN THIS PROSPECTUS; IF GIVEN OR MADE, SUCH
INFORMATION, REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THE COMPANY IS A REPORTING COMPANY. EACH PERSON WHO
RECEIVES A PROPSECTUS WILL HAVE AN OPPORTUNITY TO
MEET WITH REPRESENTATIVES OF THE COMPANY, DURING
NORMAL BUSINESS HOURS UPON WRITTEN OR ORAL REQUEST TO
THE COMPANY, IN ORDER TO VERIFY ANY OF THE
INFORMATION INCLUDED IN THIS PROSPECTUS AND TO OBTAIN
ADDITIONAL INFORMATION REGARDING THE COMPANY. IN
ADDITION, EACH SUCH PERSON WILL BE PROVIDED WITHOUT
CHARGE, UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY
OF THE INFORMATION THAT IS INCORPORATED BY REFERENCE
IN THE PROSPECTUS AND THE ADDRESS (INCLUDING TITLE OR
DEPARTMENT) AND TELEPHONE NUMBER TO WHICH SUCH
REQUEST IS TO BE DIRECTED.
ALL OFFEREES AND SUBSCRIBERS WILL BE ASKED TO
ACKNOWLEDGE IN WRITING THAT THEY HAVE READ THIS
PROSPECTUS CAREFULLY AND THOROUGHLY, and understood
the contents thereof, THEY WERE GIVEN THE OPPORTUNITY
TO OBTAIN ADDITIONAL INFORMATION; AND THEY DID SO TO
THEIR SATISFACTION.
(1) A maximum of 61,000,000 shares may be sold on a
delayed basis under Rule 415 under the Securities Act
of 1933, as amended. The Price to Public only shows
the Shares and warrants for common stock that will be
offered to the public; 8,000,000 of the total Shares
will be set aside for employees stock options and
In addition, 5,200,000 of the shares
are being sold by selling shareholders of the
Company: Ranco Plasticos, a Costa Rica corporation,
and Menhur Azul, S.A., a Costa Rica corporation. The
offering will remain open until the last date that
the warrants can be exercised, which is December 31, 2001.
(2) No commissions will be paid in connection with
the sale of the Shares on this delayed basis.
(3) The Net Proceeds to the Company is before the
payment of certain expenses in connection with this
offering. See "Use of Proceeds."
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
detailed information appearing elsewhere in this
prospectus ("Prospectus"). Each prospective investor
is urged to read this Prospectus, and the attached
Exhibits, in their entirety.
The Company.
(a) Background.
Betting, Inc. was originally organized under the
laws of the State of Missouri on September 1, 1981,
as HANDY-TOP, INC. On April 20, 1983, the Articles
of Incorporation were amended to change the name of
the corporation to HTI Corporation. On May 28, 1993,
the Articles of Incorporation were amended to change
the name of the corporation to Leggoons, Inc. In
addition to changing the company's name, the May
28,1993, amendment to the Articles of Incorporation
increased the number of authorized shares of common
stock from 40,000 to 10,000,000 and decreased the par
value of the common stock from $1.00 per share to
$.01 per share. Also on May 28, 1993, Leggoons, Inc.,
declared a 14-for-1 stock split.
Leggoons, Inc., was engaged in the design,
manufacture and distribution of apparel and related
accessories which are sold to better specialty and
department stores nationwide under the brands
Leggoons, CPO by Leggoons, John Lennon Artwork
Apparel, and Snooggel. On January 19, 1996,
Leggoons, Inc., entered into a Licensing Agreement
with Robert Tamsky, a former director and employee of
the Leggoons, Inc. Pursuant to the terms of the
Licensing Agreement, the Leggoons, Inc., granted Mr.
Tamsky effective January 1, 1996, the right to use
the LEGGOONS trademark in connection with the design,
production, marketing, sales and sublicensing of all
clothing, wearing apparel and accessories bearing the
"LEGGOONS" symbol. This right will continue until
December 31, 1998, and may be extended thereafter
each year for an additional year. In consideration
for the license, Mr. Tamsky, according to the
Licensing Agreement, shall pay to the Leggoons, Inc.
a royalty of five percent of the net sales of
"LEGGOONS" products.
Also on January 19, 1996, the Leggoons, Inc., adopted
a formal plan to discontinue the designing, selling,
manufacturing and distribution of its apparel
products. As part of such plan, Leggoons, Inc.,
discontinued production on April 30, 1996, and
intended to either sell or liquidate the operations
within twelve months of that date.
On June 12, 1996, Leggoons, Inc., transferred all of
its assets and liabilities to a third party assignee,
under an "Assignment for the Benefit of Creditors"
(the "Assignment"). An Assignment is a business
liquidation device available as an alternative to
bankruptcy. The third party assignee, a Nebraska
corporation, also named Leggoons, Inc. (the
"Assignee"), will be required to properly, timely,
and orderly dispose of all remaining assets for the
benefit of creditors. Included in the Assignment were
the rights and obligations of the Licensing
Agreement. Leggoons, Inc. continued to maintain its
status as a shell corporation.
On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales,
Inc.(now know as Electronic Transactions & Technology
- - "ET&T")) for the purpose of licensing certain
technology for the development of Personal Encrypted
Remote Financial Electronic Card Transactions
("PERFECT"). ET&T is a privately held corporation
70% owned by Thomas S. Hughes, President of the
Company. This technology provides consumers with the
option to instantly pay bills or impulse purchase
from home with real time cash transactions.
Management believes the proprietary technology and
the large demand for wagering opportunities in
today's marketplace will combine to generate
substantial sales for the Company over the medium
term.
Thomas S. Hughes, Chairman of ET&T, became Chairman
and President of Leggoons, Inc., on March 1, 1997.
At that time, the name was changed to Betting, Inc.
On April 28, 1997, the Company entered into a Host
Processing Agreement with ET&T for the purpose of
having ET&T act as the bank host processing for all
Betting, Inc.'s transactions that are sent by
terminal s that read credit cards or ATM cards. On
March 27, 1998, the Company entered into a License
Agreement with ET&T for the purpose of licensing
additional technology for processing electronic
banking transactions. This licensing supplements the
technology licensed under the Agreement dated
February 18, 1997.
On May 17, 1999, an Agreement and Plan of Merger
between Betting, Inc., a Missouri corporation, into
Betting, Inc., a Nevada corporation ("Company") was
executed by an authorized signatory of each company.
At a duly called meeting of shareholders on May 21,
1999, the merger of the two companies was approved by
a majority of the shareholders appearing in person or
by proxy. Effective on June 1, 1999, Articles of
Merger were filed with the Nevada Secretary of State,
which formally resulted in the redomicile to the
State of Nevada. On June 4, 1999, a Certificate of
Amendment to Articles of Incorporation was filed with
the Nevada Secretary of State changing the name of
the Company to "eConnect" and increasing the number
of authorized common shares to 100,000,000. On
August 23, 1999, a Certificate of Amendment to
Articles of Incorporation was filed with the Nevada
Secretary of State increasing the number of
authorized common shares to 200,000,000.
(b) Business.
The Company is made up of two divisions: The first,
eGaming, is presently generating revenues and
earnings from its eSportsbet and 777WINS.com
acquisitions (internet gaming). The second division
of eGate which is developing technology for ATM card
with PIN or smart card payments (same-as-cash - only
the merchant can reverse the transaction) using the
Personal Encrypted Remote Financial Electronic Card
Transactions ("PERFECT"). Thus, the Company is both
an Internet and non Internet company, and both a
gaming and non gaming company. focused on connecting
the consumer directly to the recipient merchant... no
middlepersons. See "Description of Business."
The internet gaming industry is an industry that has
developed significantly in recent years. The internet
gaming industry as a whole is under increasing
governmental scrutiny as the industry develops. It
is possible that at some point in the future there
could be legislation against gambling on the internet
or other similar methods. See "Risk Factors."
The Offering.
Shares of the Company will be offered as a shelf
registration under Securities and Exchange Commission
Rule 415 at $0.19 per Share. See "Plan of
Distribution." The offering will be primarily used
for the following purposes (maximum amounts): (a)
sales to the general public of the following: (i)
20,000,000 Shares; and (ii) 27,800,000 warrants
(exercisable at $1.00 per Share from the effective
date of this Registration Statement to December 31,
2001); (b) 5,000,000 options for Shares to be issued in the
future to employees of the Company, exercisable at
$0.50 per Share; (c) 3,000,000 options for Shares to
be issued in the future to Thomas S. Hughes,
President of the Company, exercisable at $0.50 per
Share; and (d) 5,200,000 of restricted shares being
sold by selling shareholders of the Company: Ranco
Plasticos, a Costa Rica corporation, and Menhur Azul,
S.A., a Costa Rica corporation. See "Plan of
Distribution." If all the Shares being offered to
the public are sold, this will represent net proceeds
of a maximum of $9,082,000, less certain costs
associated with this offering. See "Use of
Proceeds." This balance will be used as working
capital for the Company.
Liquidity of Investment.
Although the Shares will be "free trading," and is an
established market for the Shares, and there is a
large public float in the Shares as of August 13,
1999 (60,523,775), these shares are owned by only
415 shareholders. Therefore, an investor may not be
able to sell is Shares when he or she wishes;
therefore, an investor may consider his or her
investment to be long-term. See "Risk Factors."
Risk Factors.
And investment in the company involved risks due in
part to a limited previous financial and operating
history of Company, as well as competition in the
internet gaming industry. Also, certain potential
conflicts of interest arise due to the relationship
of the Company to management and others. See "Risk
Factors."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE
IN NATURE AND INVOLVE A HIGH DEGREE OF RISK. THEY
SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH
PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE,
CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS
AMONG OTHER THINGS, AS WELL AS ALL OTHER INFORMATION
SET FORTH IN THIS PROSPECTUS.
Limited Prior Operations and Experience.
The Company is newly reorganized, has only limited
revenues from its new internet operations, and has
only limited assets. There can be no assurance that
the Company will generate significant revenues in the
future; and there can be no assurance that the
Company will operate at a profitable level. See
"Description of Business." If the Company is unable
to obtain customers and generate sufficient revenues
so that it can profitably operate, the Company's
business will not succeed. In such event, investors
in the Shares may lose their entire cash investment.
Also the Company and its management do not have
significant experience in the internet business, and
in particular the on-line gaming business. See
"Directors, Officers, Promoters, and Control
Persons."
Dependence on the Internet Industry
The Company's business is influenced by the rate of
use and expansion in the internet industry.
Although this industry, and in particular on-line
gaming, have been expanding at a rapid rate in
recent years, there is no guarantee that it will
continue to do so in the future. Declines in these
industries may influence the Company's revenues
adversely.
Influence of Other External Factors.
The internet industry, and internet gaming in
particular, is a speculative venture necessarily
involving some substantial risk. There is no
certainty that the expenditures to be made by the
Company will result in commercially profitable
business. The marketability of internet gaming will
be affected by numerous factors beyond the control of
the Company. These factors include market
fluctuations, and the general state of the economy
(including the rate of inflation, and local economic
conditions), which can affect peoples' discretionary
spending. Factors which leave less money in the hands
of potential clients of the Company will likely have
an adverse effect on the Company. The exact effect
of these factors cannot be accurately predicted, but
the combination of these factors may result in the
Company not receiving an adequate return on invested
capital.
Regulatory Factors.
Existing and possible future consumer legislation,
regulations and actions could cause additional
expense, capital expenditures, restrictions and
delays in the activities undertaken in connection
with the party planning business, the extent of which
cannot be predicted. The U.S. Senate is presenting
discussing a proposed bill by Senator Jon Kyl of
Arizona which would ban internet gaming in the United
States. The passage of such a bill may adversely
affect the operation of the Company, including
increased costs if certain of the Company operations
are then moved to a foreign jurisdiction. The exact
affect of such legislation cannot be predicted until
it is in final form. If, however, a federal statute
was passed into legislation making Internet gambling
illegal, eSportsbet.com is prepared to make the
necessary adjustments to continue to operate legally.
Competition.
The Company may experience substantial competition in
its efforts to locate and attract clients. Many
competitors in the internet industry, and in
particular internet gaming, have greater experience,
resources, and managerial capabilities than the
Company and may be in a better position than the
Company to obtain access to attractive clientele.
There are a number of larger companies which will
directly compete with the Company. Such competition
could have a material adverse effect on the Company's
profitability.
Success of Management.
Any potential investor is strongly cautioned that the
purchase of these securities should be evaluated on
the basis of: (i) the limited diversification of the
venture capital opportunities afforded to the
Company, (ii) the high-risk nature and limited
liquidity of the Company, and (iii) the Company's
ability to utilize funds for the successful
development and distribution of revenues as derived
by the revenues received by the Company's yet
undeveloped portfolio of clients, and any new
potentially profitable ventures, among other things.
The Company can offer no assurance that any
particular client and/or property under its
management contract will become successful.
Reliance on Management.
The Company's success is dependent upon the hiring of
key administrative personnel. None of the officers or
directors, or any of the other key personnel, has any
employment or non-competition agreement with the
Company. Therefore, there can be no assurance that
these personnel will remain employed by the Company.
Should any of these individuals cease to be
affiliated with the Company for any reason before
qualified replacements could be found, there could be
material adverse effects on the Company's business
and prospects. In addition, management has no
experience is managing companies in the same business
as the Company.
In addition, all decisions with respect to the
management of the Company will be made exclusively by
the officers and directors of the Company. Investors
will only have rights associated with minority
ownership interest rights to make decision which
effect the Company. The success of the Company, to a
large extent, will depend on the quality of the
directors and officers of the Company. Accordingly,
no person should invest in the Shares unless he is
willing to entrust all aspects of the management of
the Company to the officers and directors.
Use of Proceeds Not Specific.
The proceeds of this offering have been allocated
only generally. Proceeds from the offering have been
allocated generally to legal and accounting, and
working capital. Accordingly, investors will entrust
their funds with management in whose judgment
investors may depend, with only limited information
about management's specific intentions with respect
to a significant amount of the proceeds of this
offering. See "Use of Proceeds."
Lack of Diversification.
The size of the Company makes it unlikely that the
Company will be able to commit its funds to diversify
the business until it has a proven track record, and
the Company may not be able to achieve the same level
of diversification as larger entities engaged in this
type of business.
No Cumulative Voting
Holders of the Shares are not entitled to accumulate
their votes for the election of directors or
otherwise. Accordingly, the holders of a majority of
the Shares present at a meeting of shareholders will
be able to elect all of the directors of the Company,
and the minority shareholders will not be able to
elect a representative to the Company's board of
directors.
Absence of Cash Dividends
The Board of Directors does not anticipate paying
cash dividends on the Shares for the foreseeable
future and intends to retain any future earnings to
finance the growth of the Company's business. Payment
of dividends, if any, will depend, among other
factors, on earnings, capital requirements, and the
general operating and financial condition of the
Company, and will be subject to legal limitations on
the payment of dividends out of paid-in capital.
Conflicts of Interest.
The officers and directors have other interests to
which they devote substantial time, either
individually or through partnerships and corporations
in which they have an interest, hold an office, or
serve on boards of directors, and each will continue
to do so notwithstanding the fact that management
time may be necessary to the business of the Company.
As a result, certain conflicts of interest may exist
between the Company and its officers and/or directors
which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the
area of corporate opportunities which cannot be
resolved through arm's length negotiations. All of
the potential conflicts of interest will be resolved
only through exercise by the directors of such
judgment as is consistent with their fiduciary duties
to the Company. It is the intention of management,
so as to minimize any potential conflicts of
interest, to present first to the Board of Directors
to the Company, any proposed investments for its
evaluation.
Investment Valuation Determined by the Board of
Directors.
The Company's Board of Directors is responsible for
valuation of the Company's investments. There are a
wide range of values which are reasonable for an
investment for the Company's services. Although the
Board of Directors can adopt several methods for an
accurate evaluation, ultimately the determination of
fair value involves subjective judgment not capable
of substantiation by auditing standards. Accordingly,
in some instances it may not be possible to
substantiate by auditing standards the value of the
Company's investments. The Company's Board of
Directors will serve as the valuation committee,
responsible for valuing each of the Company's
investments. In connection with any future
distributions which the Company may make, the value
of the securities received by investors as determined
by the Board may not be the actual value that the
investors would be able to obtain even if they sought
to sell such securities immediately after a
distribution. In addition, the value of the
distribution may decrease or increase significantly
subsequent to the distributee shareholders' receipt
thereof, notwithstanding the accuracy of the Board's
evaluation.
Additional Financing May Be Required.
Even if all of the 47,800,000 Shares offered to the
public and in connection with the acquisition hereby
are sold, the funds available to the Company may not
be adequate for it to be competitive in the areas in
which it intends to operate. See "Plan of
Distribution." There is no assurance that additional
funds will be available from any source when needed
by the Company for expansion; and, if not available,
the Company may not be able to expand its operation
as rapidly as it could if such financing were
available. The proceeds from this offering are
expected to be sufficient for the Company to become
develop and market it line of services. Additional
financing could possibly come in the form of
debt/preferred stock. If additional shares were
issued to obtain financing, investors in this
offering would suffer a dilutive effect on their
percentage of stock ownership in the Company.
However, the book value of their shares would not be
diluted, provided additional shares are sold at a
price greater than that paid by investors in this
offering. The Company does not anticipate having
within the next 12 months any cash flow or liquidity
problems
Purchases by Affiliates.
Certain officers, directors, principal shareholders
and affiliates may purchase, for investment purposes,
a portion of the Shares offered hereby, which could,
upon conversion, increase the percentage of the
Shares owned by such persons. The purchases by these
control persons may make it possible for the Offering
to meet the escrow amount.
No Assurance Shares Will Be Sold.
The 47,800,000 Shares being offered to the public and
in connection with the acquisition are to be offered
directly by the Company, and no individual, firm, or
corporation has agreed to purchase or take down any
of the shares. No assurance can be given that any or
all of the Shares will be sold.
Offering Price.
The offering price of the Shares bears no relation to
book value, assets, earnings, and was calculated in
accordance with SEC Rule 457(c): The average of the
bid and asked price as of a date within five business
days from the filing date of the Registration
Statement covering this offering August 18, 1999
($0.19). There can be no assurance that the Shares
will maintain market values commensurate with the
offering price. See "Determination of Offering
Price."
"Shelf" Offering
The Shares are offered directly by the Company on a
delayed basis pursuant to certain exercise rights of
warrants and conversion rights of debentures. No
individual, firm or corporation has agreed to elect
such exercise or conversion of any of the offered
Shares. No assurance can be given that any or all of
the Shares will be issued. No broker-dealer has been
retained as an underwriter and no broker-dealer is
under any obligation to purchase any of the Shares.
In addition, the officers and directors of the
Company, collectively, have limited experience in the
offer and sale of securities on behalf of the
Company. See "Plan of Distribution."
Limited Public Market for Company's Securities.
Prior to the Offering, there has been only a limited
public market for the Shares being offered (a total
of issued and outstanding shares as of August 13,
1999 of 60,523,775 held by only 415 shareholders of
record). There can be no assurance that an active
trading market will develop or that purchasers of the
Shares will be able to resell their securities at
prices equal to or greater than the respective
initial public offering prices. The market price of
the Shares may be affected significantly by factors
such as announcements by the Company or its
competitors, variations in the Company's results of
operations, and market conditions in the retail,
electron commerce, and internet industries in
general. The market price may also be affected by
movements in prices of stock in general. As a result
of these factors, purchasers of the Shares offered
hereby may not be able to liquidate an investment in
the Shares readily or at all.
Penny Stock Regulations.
The Company's Shares will be quoted on the
"Electronic Bulletin Board" maintained by the
National Quotation Bureau, Inc., which reports
quotations by brokers or dealers making a market in
particular securities. In view of the fact that no
broker will be involved in the Offering, it is likely
to be difficult to find a broker who is willing to
make an active market in the stock. The Securities
and Exchange Commission (the "Commission") has
adopted regulations which generally define "penny
stock" to be any equity security that has a market
price less than $5.00 per share. The Company's shares
will become subject to rules that impose additional
sales practice requirements on broker-dealers who
sell penny stocks to persons other than established
customers and accredited investors (generally those
with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules,
broker-dealers must make a special suitability
determination for the purpose of such securities and
must have received the purchaser's written consent to
the transaction prior to the purchase.
Additionally, for any transaction effected involving
a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure
schedule prepared by the Commission relating to the
penny stock market. A broker-dealer also must
disclose the commissions payable to both the broker--
dealer and the registered representative, and current
quotations for the securities. Finally, monthly
statements must be sent disclosing recent price
information for the penny stock held in the account
and information on the limited market in penny
stocks. Consequently, these rules may restrict the
ability of broker-dealers to sell the Company's
Shares and may affect the ability of purchasers in
the Offering to sell the Company's securities in the
secondary market. There is no assurance that a market
will develop for the Company's Shares.
Shares Eligible For Future Sale
All of the 9,850,000 Shares which are currently held,
directly or indirectly, by management have been
issued in reliance on the private placement exemption
under the Securities Act of 1933, as amended ("Act").
See "Security Ownership of Certain Beneficial Owners
and Management." Such Shares will not be available
for sale in the open market without separate
registration except in reliance upon Rule 144 under
the Act. In general, under Rule 144 a person (or
persons whose shares are aggregated) who has
beneficially owned shares acquired in a non-public
transaction for at least on year, including persons
who may be deemed affiliates of the Company (as that
term is defined under the Act) would be entitled to
sell within any three-month period a number of shares
that does not exceed the greater of 1% of the then
outstanding shares of common stock, or the average
weekly reported trading volume on all national
securities exchanges and through NASDAQ during the
four calendar weeks preceding such sale, provided
that certain current public information is then
available. If a substantial number of the Shares
owned by these shareholders were sold pursuant to
Rule 144 or a registered offering, the market price
of the Common Stock could be adversely affected.
Forward-Looking Statements.
This Prospectus contains "forward looking statements"
within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, and as
contemplated under the Private Securities Litigation
Reform Act of 1995, including statements regarding,
among other items, the Company's business strategies,
continued growth in the Company's markets,
projections, and anticipated trends in the Company's
business and the industry in which it operates. The
words "believe," "expect," "anticipate," "intends,"
"forecast," "project," and similar expressions
identify forward-looking statements. These forward-
looking statements are based largely on the Company's
expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the
Company's control. The Company cautions that these
statements are further qualified by important factors
that could cause actual results to differ materially
from those in the forward looking statements,
including those factors described under "Risk
Factors" and elsewhere herein In light of these
risks and uncertainties, there can be no assurance
that the forward-looking information contained in
this Prospectus will in fact transpire or prove to be
accurate. All subsequent written and oral forward-
looking statements attributable to the Company or
persons acting on its behalf are expressly qualified
in their entirety by this section.
Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized
systems use two digits rather than four to identify a
year. Date sensitive systems may recognize the year
2000 as 1900 or some other date, resulting in errors
when information using the year 2000 date is
processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to
represent something other than a date. The effects
of the Year 2000 issue may be experienced before, on,
or after January 1, 2000, and if not addressed, the
impact on operations and financial reporting may
range from minor errors to significant system failure
which could affect the Company's ability to conduct
normal business operations. This creates potential
risk for all companies, even if their own computer
systems are Year 2000 compliant. It is not possible
to be certain that all aspects of the Year 2000 issue
affecting the Company, including those related to the
efforts of customers, suppliers, or other third
parties, will be fully resolved.
The Company currently believes that its systems are
Year 2000 compliant in all material respects, its
current systems and products may contain undetected
errors or defects with Year 2000 date functions that
may result in material costs. Although management is
not aware of any material operational issues or costs
associated with preparing its internal systems for
the Year 2000, the Company may experience serious
unanticipated negative consequences (such as
significant downtime for one or more of its web site
properties) or material costs caused by undetected
errors or defects in the technology used in its
internal systems. Furthermore, the purchasing
patterns of advertisers may be affected by Year 2000
issues as companies expend significant resources to
correct their current systems for Year 2000
compliance. The Company does not currently have any
information about the Year 2000 status of its
advertising customers. However, these expenditures
may result in reduced funds available for web
advertising or sponsorship of web services, which
could have a material adverse effect on its business,
results of operations, and financial condition. The
Company's Year 2000 plans are based on management's
best estimates.
USE OF PROCEEDS
Following the issuance of the 47,800,000 Shares and
warrants for common stock offered for sale by the
Company to the public, this will represent gross
proceeds to the Company of approximately $9,082,000
(less certain expenses of this offering). These
proceeds, less the expenses of the offering, will be
used to provide working capital for the Company.
The following table sets forth the use of proceeds
from this offering (based on the minimum and maximum
offering amounts):
Use of Proceeds Maximum Offering
Amount Percent
Transfer Agent Fee $1,000 0.01%
Printing Costs $1,000 0.01%
Legal Fees $50,000 0.55%
Accounting Fees $1,500 0.015%
Working Capital $9,028,500 99.41%
Total $9,028,500 100.00%
Management anticipates expending these funds for the
purposes indicated above. To the extent that
expenditures are less than projected, the resulting
balances will be retained and used for general
working capital purposes or allocated according to
the discretion of the Board of Directors. Conversely,
to the extent that such expenditures require the
utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from
other sources, including, but not limited to, general
working capital and/or external financing. The net
proceeds of this offering that are not expended
immediately may be deposited in interest or non-
interest bearing accounts, or invested in government
obligations, certificates of deposit, commercial
paper, money market mutual funds, or similar
investments.
DETERMINATION OF OFFERING PRICE
The offering price is not based upon the Company's
net worth, total asset value, or any other objective
measure of value based upon accounting measurements.
The offering price was determined under Securities
and Exchange Commission Rule 457(c), which states
that where the securities to be offered pursuant to
warrants or other rights to purchase such securities
the registration fee is to be calculated upon the
basis of the price at which the warrants or rights or
securities subject thereto are to be offered to the
public. If such offering price cannot be determined
at the time of filing the registration statement, the
registration fee is to be calculated upon the basis
of the highest of the following: (1) the price at
which the warrants or rights may be exercised, if
known at the time of filing the registration
statement; (2) the offering price of securities of
the same class included in the registration
statement; or (3) the price of securities of the same
class, as determined in accordance with paragraph (c)
of that Rule. Since the offering price based on the
warrants and debentures cannot be determined based on
(1) and (2), it was calculated under Rule 457(c) as
the average of the bid and asked price as of a date
within five (5) business days of the filing date
(August 18, 1999): $0.19 per Share.
PLAN OF DISTRIBUTION
The Company will issue a maximum of 61,000,000 Shares
of its common stock, par value $0.001 per Share, as
follows (maximum amounts): (a) sales to the general
public of the following: (i) 20,000,000 Shares; and
(ii) 27,800,000 warrants (exercisable at $1.00 per
Share from the effective date of this Registration
Statement to December 31, 2001); (b) 5,000,000 options
for Shares to be issued in the future to employees of
the Company, exercisable at $0.50 per Share; (c) 3,000,000
options for Shares to be issued in the future to Thomas S.
Hughes, President of the Company, exercisable at
$0.50 per Share; and (d) 5,200,000 of restricted
shares being sold by selling shareholders of the
Company: Ranco Plasticos, a Costa Rica corporation,
and Menhur Azul, S.A., a Costa Rica corporation.
There can be no assurance that any of these Shares
will be issued, except for the warrants to
shareholders of record and in connection with the
acquisition. The gross proceeds to the Company
represented by issue of all the Shares and warrants
for Shares under this offering to the public
(47,800,000) will be $9,082,000. No commissions or
other fees will be paid, directly or indirectly, by
the Company, or any of its principals, to any person
or firm in connection with solicitation of sales of
the shares. The public offering price of the Shares
will be modified, from time to time, by amendment to
this Prospectus, in accordance with changes in the
market price of the Company's common stock. These
securities are offered by the Company subject to
prior issue and to approval of certain legal matters
by counsel.
Opportunity to Make Inquiries.
The Company will make available to each Offeree,
prior to any issue of the Shares, the opportunity to
ask questions and receive answers from the Company
concerning any aspect of the investment and to obtain
any additional information contained in this
Prospectus, to the extent that the Company possesses
such information or can acquire it without
unreasonable effort or expense.
Execution of Documents.
Each person desiring to be issued Shares, either as a
conversion of a debenture, or an exercise of a
warrant, must complete, execute, acknowledge, and
delivered to the Company certain documents, By
executing these documents, the subscriber is agreeing
that such subscriber will be, a shareholder in the
Company and will be otherwise bound by the articles
of incorporation and the bylaws of the Company in the
form attached to this Prospectus.
LEGAL PROCEEDINGS
The Company is not a party to any material pending
legal proceedings. On August 19, 1999, counsel for
Thomson Kernaghan, a Canadian investment firm ("TK"),
threatened to file suit against the Company in
connection with TK providing certain funds to the
Company in the amount of $500,000. The Company has
indicated to this counsel that based on the actions
of TK in this matter, the Company is not now indebted
to TK in any amount since TK has caused damage to the
Company and its shareholders well in excess of any
amount allegedly owed by the Company to TK. The
Company intends to vigorously defend any such action
and to pursue applicable counterclaims.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The names, ages, and respective positions of the
directors, officers, and significant employees of the
Company are set forth below. There are no other
persons which can be classified as a promoter or
controlling person of the Company.
Thomas S. Hughes, President/Director.
Mr. Hughes, Age 52, has been President of the Company
since March 1997. From 1993 to the present, he has
also served as the President of Electronic
Transactions & Technologies, a privately held Nevada
corporation which developed terminals for wireless
home and internet applications.
Jack M. Hall, Secretary/Director.
Mr. Hall, age 72, founded and is currently President
of Hall Developments, a real estate development
company he founded in 1991, which employs a staff of
10 people. Mr. Hall spends approximately 20 hours
per week searching out strategic alliances for the
Company.
Diane Hewitt, Treasurer/Director.
Ms. Hewitt, age 51, has been an interior designer
since 1991. Currently she owns and manages her own
firm, D. Diane Hewitt Designs. This firm's expertise
is churches and employs a staff of five people. Ms.
Hewitt currently devotes approximately 25 hours per
week in working with the Company's image development
and consulting with the Company's advertising firm.
Anthony L. Hall, Vice President, Director of
Technology.
Mr. Hall, age 34, has been Vice President and
Director of Technology of the Company since
inception. Mr. Hall has been the creative mind behind
the state of the art advancements made by the
company. Mr. Hall is responsible for all
technological decisions including but not limited to
telephone call center, web site design and in- house
software implementation and computer systems
engineering and support. Mr. Hall is a unique
individual within the technological community. A
technological savante who combines incomparable
knowledge of the computer world with the savvy of a
successful businessman. Mr. Hall learned his trade
over the last six years with such renowned
institutions as the Kraft Group (owners of
International Forest Products and the New England
Patriots), Fidelity Investments, Partners Health Care
and most recently as Managing Director of the firm he
founded, Isis Technology Group.
Kevin J. Lewis, Vice President, Sports Book
Operations.
Mr. Lewis, age 36, has been Vice President and Senior
Manager of Sports Book Operations of the Company
since it was founded. After a long and exhaustive
process, Mr. Lewis was selected from a select group
of candidates to lead the operations and sports
handicapping management of the company. He has 19
years experience as a sports book manager with
several of the largest and most profitable sports
books in the world. He has worked in Las Vegas, the
Domincan Republic, Antigua, Costa Rica and Canada
with such respected sports books as Tradewinds, Grand
Prix Sports Book and WWTS. Mr. Lewis is known as a
sage amongst his peers and is, with little doubt, the
best sports book and betting line manager in the
industry.
Over the next few months, James Wexler, will phase
into the position as CEO of the Company. Presently,
Thomas S. Hughes is fulfilling that role. Hughes
will remain as the chairman of the Company once James
Wexler has taken the CEO position.
Mr. Wexler is a highly motivated professional with
almost six years experience in the investment banking
industry primarily with the firms of Morgan Stanley
Dean Witter and Bear Stearns & Co., Inc. In addition,
Mr. Wexler has more than twelve years experience in
the gambling and sports handicapping fields and is
considered a knowledgeable expert within the
industry. For many years, he has served as a
consultant to off shore sports books, handicappers
and sports bettors. Mr. Wexler's visionary leadership
creates the ideal union between fundamental business
theory, state of the art technology and the necessary
knowledge of sports gambling.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of August 13,
1999, the outstanding Shares of common stock of the
Company owned of record or beneficially by each
person who owned of record, or was known by the
Company to own beneficially, more than 5% of the
Company's Common Stock, and the name and share
holdings of each officer and director and all
officers and directors as a group (out of a total
issued and outstanding shares of 60,523,775 as of
that date):
Title of Name and Amount and Percent
Class Address of Nature of of
Beneficial Beneficial
Owner (1) Owner (2)
Common
Stock Thomas S. Hughes 4,450,000 7.35%
31310 Eaglehaven
Circle
Rancho Palos
Verdes,
Ca 90275
Common
Stock Electronic 5,400,000 8.92%
Transactions
& Technologies
2500 Via
Cabrillo Marina,
Suite 112
San Pedro,
Ca 90731
Common
Stock Rogel 5,000,000 8.26%
Technologies
3399 East 19th
Street
Signal Hill,
Ca 90804
Common
Stock Cede & Co. 15,609,149 25.79%
P.O. Box 222
Bowling Green
Station
New York, NY 10274
(1) Other than the Shares owned by Mr. Hughes
directly and indirectly through Electronic
Transactions & Technologies, none of the other
officers or directors of the Company own any of the
Shares.
(2) Neither Mr. Clinton nor Mr. Hughes have the right
to acquire any amount of the Shares within sixty days
from options, warrants, rights, conversion privilege,
or similar obligations.
DESCRIPTION OF SECURITIES
General Description.
The securities being offered are shares of common
stock. The Articles of Incorporation authorize the
issuance of 200,000,000 shares of common stock, with
a par value of $0.001. The holders of the Shares: (a)
have equal ratable rights to dividends from funds
legally available therefore, when, as, and if
declared by the Board of Directors of the Company;
(b) are entitled to share ratably in all of the
assets of the Company available for distribution upon
winding up of the affairs of the Company; (c) do not
have preemptive subscription or conversion rights and
there are no redemption or sinking fund applicable
thereto; and (d) are entitled to one non-cumulative
vote per share on all matters on which shareholders
may vote at all meetings of shareholders. These
securities do not have any of the following rights:
(a) cumulative or special voting rights; (b)
preemptive rights to purchase in new issues of
Shares; (c) preference as to dividends or interest;
(d) preference upon liquidation; or (e) any other
special rights or preferences. In addition, the
Shares are not convertible into any other security.
There are no restrictions on dividends under any loan
other financing arrangements or otherwise. See a copy
of the Articles of Incorporation, and amendments
thereto, and Bylaws of the Company, attached as
Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3,
respectively, to this Form SB-2.
Non-Cumulative Voting.
The holders of Shares of Common Stock of the Company
do not have cumulative voting rights, which means
that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can
elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining
Shares will not be able to elect any of the Company's
directors.
Dividends.
The Company does not currently intend to pay cash
dividends. The Company's proposed dividend policy is
to make distributions of its revenues to its
stockholders when the Company's Board of Directors
deems such distributions appropriate. Because the
Company does not intend to make cash distributions,
potential shareholders would need to sell their
shares to realize a return on their investment. There
can be no assurances of the projected values of the
shares, nor can there be any guarantees of the
success of the Company.
A distribution of revenues will be made only when, in
the judgment of the Company's Board of Directors, it
is in the best interest of the Company's stockholders
to do so. The Board of Directors will review, among
other things, the investment quality and
marketability of the securities considered for
distribution; the impact of a distribution of the
investee's securities on its customers, joint venture
associates, management contracts, other investors,
financial institutions, and the company's internal
management, plus the tax consequences and the market
effects of an initial or broader distribution of such
securities.
Possible Anti-Takeover Effects of Authorized but
Unissued Stock.
Upon the completion of this Offering, assuming the
maximum offering of 61,000,000 is sold, the Company's
authorized but unissued capital stock will consist of
78,476,225 shares of common stock (based on the
issued and outstanding Shares of 60,523,775 as of
August 13, 1999). One effect of the existence of
authorized but unissued capital stock may be to
enable the Board of Directors to render more
difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender
offer, proxy contest, or otherwise, and thereby to
protect the continuity of the Company's management.
If, in the due exercise of its fiduciary obligations,
for example, the Board of Directors were to determine
that a takeover proposal was not in the Company's
best interests, such shares could be issued by the
Board of Directors without stockholder approval in
one or more private placements or other transactions
that might prevent, or render more difficult or
costly, completion of the takeover transaction by
diluting the voting or other rights of the proposed
acquiror or insurgent stockholder or stockholder
group, by creating a substantial voting block in
institutional or other hands that might undertake to
support the position of the incumbent Board of
Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise.
Transfer Agent.
The Company has engaged the services of Corporate
Stock Transfer, 370 17th Street, Denver, Colorado
80202, to act as transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
No named expert or counsel was hired on a contingent
basis, will receive a direct or indirect interest in
the small business issuer, or was a promoter,
underwriter, voting trustee, director, officer, or
employee of the small business issuer.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
No director of the Company will have personal
liability to the Company or any of its stockholders
for monetary damages for breach of fiduciary duty as
a director involving any act or omission of any such
director since provisions have been made in the
Articles of Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit
the liability of a director (i) for any breach of the
director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good
faith or, which involve intentional misconduct or a
knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the
payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes or, (v) for any
transaction from which the director derived an
improper personal benefit.
The By-laws provide for indemnification of the
directors, officers, and employees of the Company in
most cases for any liability suffered by them or
arising out of their activities as directors,
officers, and employees of the Company if they were
not engaged in willful misfeasance or malfeasance in
the performance of his or her duties; provided that
in the event of a settlement the indemnification will
apply only when the Board of Directors approves such
settlement and reimbursement as being for the best
interests of the Corporation. The Bylaws, therefore,
limit the liability of directors to the maximum
extent permitted by Nevada law (Section 78.751).
The officers and directors of the Company are
accountable to the Company as fiduciaries, which
means they are required to exercise good faith and
fairness in all dealings affecting the Company. In
the event that a shareholder believes the officers
and/or directors have violated their fiduciary duties
to the Company, the shareholder may, subject to
applicable rules of civil procedure, be able to bring
a class action or derivative suit to enforce the
shareholder's rights, including rights under certain
federal and state securities laws and regulations to
recover damages from and require an accounting by
management. Shareholders who have suffered losses
in connection with the purchase or sale of their
interest in the Company in connection with such sale
or purchase, including the misapplication by any such
officer or director of the proceeds from the sale of
these securities, may be able to recover such losses
from the Company.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling
persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion
of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
The names of the promoters of the registrant are the
officers and directors as disclosed elsewhere in this
Form SB-2. None of the promoters have received
anything of value from the registrant.
DESCRIPTION OF BUSINESS
The Company is made up of two divisions: The first,
eGaming, is presently generating revenues and
earnings from its eSportsbet and 777WINS.com
acquisitions. The second division of eGate which is
developing technology for ATM card with PIN or smart
card payments (same-as-cash - only the merchant can
reverse the transaction) using the Personal Encrypted
Remote Financial Electronic Card Transactions
("PERFECT"). Thus, the Company is both an Internet
and non Internet company, and both a gaming and non
gaming company. focused on connecting the consumer
directly to the recipient merchant... no
middlepersons.
eGaming.
This division of of the Company consists of
777WINS.com and eSportsbetcom. These recent
acquisitions are generating revenues and earnings for
the Company. eSportsbet and 777WINS.com are both
located in Costa Rica. eSportsbet is projecting $1
million in revenue by the fourth quarter of 1999 and
777WINS.com is projecting $500,000 in revenue by the
same time period.
It is intended that eSportsbet will have a web
presence shortly. 777WINS.com is increasing their
band width and is the first Internet casino to offer
a Tournament whereby the winners travel to a real
Casino in Costa Rica. eGaming will be creating the
sites of Bingo and Slots over the next several
months.
The Company is presently generating about $150,000
per month in revenues from this division. A new
business unit will be EzyGame,which will be the on
site or off site usage of the Company's equipment to
effect Lottery and Powerball transactions by ATM card
or EzyCard.
(a) Business Strategy.
There are currently less than 50 off shore sports
books servicing an average less than 1000 clients
each. In fact, there are less than 10 Internet sites
that are fully operational for on-line wagering. In
concise terms, less than 0.06 % of bettors are
wagering off shore. More significantly, less than
0.0125% of bettors are wagering through the Internet.
The off shore gambling market is a virgin industry
with over 80 million potential customers and
virtually no place for these people to bet. We are in
a position to exploit this opportunity and have
already begun the process.
eSportsbet.com was founded in early 1998 and has
recently emerged from its development stage. The
sports book has been fully operational since
September 1, 1998. Development of on-line sports
wagering services is now complete. This division of
the company can best be described as being in the
business of providing a legal, reliable, and secure
home or bank to place wagers. Our key strengths
include state-of-the-art-technology, customer service
and innovative marketing. Our management team is in
place. We have hired a sports book manager to
complete our team. We are currently hiring ten
employees to answer phone calls from prospective
customers and current clients who wish to place
wagers.
The marketplace has been expanding rapidly. The
Company is now poised to capitalize on the
convergence increased Internet access, ease of web
site operability and security with a flourishing
demand to place wagers in this form. Current
customers of offshore sports books are requesting
that the Company provide the ability to place wagers
on-line much in the same way that individual
investors can enact stock transactions on-line with
companies such as Fidelity, Schwabb and E-Trade.
To assure the best possible service decisions are
made, the Company has implemented the following
criteria for servicing the most important asset, the
Company's clients: Service assistance for customers
with opening new accounts, reducing time, effort and
expense by delineating responsibilities by
department. Service will be implemented using six
separate departments: new accounts, accounts payable
and receivable, customer service, phone clerks to
accept wagers and the executive office.
Advertising and marketing will be the Company's
largest expense; the focus on attaining customers and
keeping clients is the Company's foremost goal. The
idea is to keep customers indefinitely by continually
offering them a valuable service, thereby diminishing
the Company's costs of continually reaching and
appealing to them. In order to separate the Company
from others in this field, wise selection of service
offerings is therefore critical to eSportsbet.com's
success.
(b) Marketing and Advertising Strategy.
eSportsbet.com's marketing strategy is to enhance,
promote and support the fact that the Company's
product is unique in terms of ease of operability,
reliability, security. Most importantly, from a
bettor's perspective it is the opinion of management
that the Company's product offer the highest odds pay
outs in the entire industry.
eSportsbet.com's marketing strategy incorporates
plans to sell its product through several channels.
These distribution channels include: Friday,
Saturday and Sunday sports sections of regional
newspapers; print media in direct market sports and
male dominated periodicals; thirty and sixty second
radio spots on popular sports talk radio shows;
printed flyers and brochures handed out at major
sporting events. The determining factors in choosing
these channels are customer profile; i.e., age,
gender, sports enthusiast, etc. Key competition uses
only print media in industry publications and word of
mouth as distribution channels. The Company's mix of
distribution channels will give the advantages of
complete market saturation, not limiting the Company
to region or sports specific publications versus the
competition.
eSportsbet.com recognizes the key to success at this
time requires extensive promotion. This must be done
aggressively on a wide scale. To accomplish the
Company's sales goals, an extremely capable
advertising agency and public relations firm will be
required.
The Company will develop an advertising campaign
built around ease of operability, reliability,
security, instant pay outs if requested and most
importantly from a bettor's perspective, and, in the
opinion of the Company, the highest pay out odds
available anywhere in the industry. Further, the
Company will develop a consistent reach and frequency
with advertising throughout the year. In addition to
standard advertising practices, eSportsbet.com will
gain considerable recognition through grass roots,
guerrilla marketing campaigns. This strategy will
include flyers handed out to spectators of the four
major sporting events and boxing, promotions made
available to local sports bars in Boston and other
metropolitan areas.
eSportsbet.com's overall advertising and promotional
objectives are to: Position eSportsbet.com as the
leader in the market; increase company awareness and
brand name recognition; generate qualified sales
leads and potential new distributors; create product-
advertising programs supporting our market dominant
position; coordinate sales literature, materials,
telemarketing programs; and direct response
promotions in order to continually saturate the
market with our name and logo. Establish the proper
image of eSportsbet.com which in our opinion is the
"bank" of the betting world and indicates that
association with security, safety and stability
The Company is building its capabilities in database
marketing. Registration cards and periodic customer
surveys will help the Company understand the
customer, and help to measure the success of the
marketing, sales and product activities. The Company
plans to develop a customer information system that
will help make sound decisions by providing
historical answers to the marketing questions that
are posed.
The Company will use in house telemarketing service
to perform the following functions:
Address customer complaints
Respond to inquiries
Generate new business
(c) Direct Response Mail.
The Company will be exploring the benefits of
incremental, coordinated direct mail programs in the
next several months. The Company will be approaching
this quantitatively, as customer targeting ability is
improved. The Company has purchased mailing lists
from sports gambling magazines and newsletters and
sports bettors from Las Vegas casinos. In addition,
the direct mail activities will be continually
directed to the existing customer base to ask for
referrals. A $100 betting voucher will be provided to
these clients for every referral that signs up.
(d) Internal/External Newsletter.
The Company is currently planning to produce a
newsletter to serve as an informational piece for
internal personnel, the sales force, and customers.
It will include sections covering each major
department or organization within eSportsbet.com,
useful trade information and the latest updates.
Importantly, these newsletters will provide
incentives and promotions for clients and new
customers.
eGate.
Business Strategy.
The Company is positioning itself to facilitate same
as cash ATM card or smart card transactions that are
originating from bank host processing centers and are
being sent to retailers and gaming operators. ATM
card with PIN or smart card payments are the same-as-
cash (only the merchant can reverse the transaction).
These devices will enable the consumer to send in
what the Company calls transactions which are
Personal Encrypted Remote Financial Electronic Card
Transactions ("PERFECT").
These transactions are being effected with electronic
equipment that allows self service pay per play and
no actual communications between the retailer or the
gaming operator. These types of transactions will be
originating from homes, offices, and public walk in
locations. For the gaming industry, for example, the
Company will act as the interface that will
communicate data to the gaming operators, receive
back their acknowledgment of the transaction and then
pass on this gaming acknowledgment to the bank host
processing center that has been standing by for this
information and has already completed the bank
authorization of the pay per play transaction.
The driving industries behind the placement of these
PERFECT devices into the home will be the telephone,
utility, cable, finance, insurance and direct
response industries who: (a) want their banked
consumers to pay cash from the home rather than a
check; and (b) want their non-banked consumers to pay
cash from the home rather send in a money order or
walk in to pay the bills. The Company estimates that
over $1 billion in advertising and marketing will be
willingly spent by these industries over the next two
years to educate their consumers to pay their bills
by same-as-cash hardware enabled PERFECT
transactions.
The business model of the Company is to receive a fee
per transaction paid by the bank host processing
center at the moment of the transaction. In general,
this fee will be from between 2% to 6% of the wager
placed on a pay per play or a $6 flat fee in the case
of an account being opened.
The Company is planning an upcoming testing with
First Entertainment.com (OTC:BB:FTET) of ATM card
with PIN same-as-cash purchases. Additionally, the
Internet application of same-as-cash PERFECT testing
by ATM card and PIN Internet transactions is
scheduled for a mid August test. This will the usage
of hardware to effect Internet credit or real time
debit same- as- cash transactions.
(b) EzyShop.
The first revenue generator for eGate will be the
business unit of EzyShop. is shortly launching
EzyShop, whereby waiting consumers can shop from
upscale catalogs using their bank cards and Company
equipment services and technologies that eConnect
will offer to Internet merchants. Over the next 6
months, we will begin to receive PERFECT same-as-cash
transactions being sent by EzyShoppers. This is the
application whereby the proprietary working
EzyShopper is freely distributed in the South Bay
area of Los Angeles. The mission of the Company is
to be the leader in connecting the merchant, both
Internet and non Internet, with home or office or
publicly originated same-as-cash transactions being
sent by consumers using ATM card with PIN or value
added EzyCard payments.
The immediate future is Merry Jane using her
EzyShopper at the car wash to purchase with her
credit card or other bank card from upscale catalogs.
A few months later, Mary Jane has purchased an
EzyShopper and is using it from her home to pay
bills, to legally wager, to make donations and to
purchase products.
The simple EzyShop business model entails giving away
the EzyShopper to high traffic locations such as
clinics, car washes, hotel lobbies etc. Other Ezy
business units will be EzyPay, EzyBet and EzyCash,
all originating from the same EzyShopper location or
in new locations which are specifically suited to the
Ezy application. From the EzyShop locations will
evolve the applications of EzyPay, which is the self
servicing of bill payments by ATM card and PIN or by
EzyCard for the non banked; EzyCash, which is the
self servicing of a Western Union transaction;
EzyGame which is the self servicing of a lottery
transaction; and EzyCard which will primarily focus
on services for the non banked.
It does not appear that the Company has any
competition in this area, and it is intended that the
Company will expand into a national presence by
second quarter 2000. Also, it is anticipated that
the eGate Division will vastly surpass the eGaming
Division by September 2000. The Company is projecting
a monthly net EzyShop sales of $200,000 as of May
2000 based on 500 locations generating an average of
6 daily transactions at an average of $3 per
transaction. The Company's vision is that by 2001,
there will be many types of EzyShoppers, made by many
companies and promoted by payees such as Phone or
Mortgage or Securities, as through hardware, the
consumer can pay instantly with same-as-cashTM
transactions.
Also within the eGate division is Rogel Technologies,
specialists in encryption and software and who have a
3 year contract valued at a potential $20 million
dollars in service fees to eConnect and which will
licenses JVC to sell secure email solutions to
Pacific Rim companies. This is accomplished by using
hardware which reads bank cards ranging from credit
to on line real time debit to value added cards.
eConnect has such proprietary hardware. Also
necessary is a host processing center which "drives"
these transactions from homes, offices, cars,
anywhere into the bank system. eConnect has
developed such a host center.
It is the intention of eConnect to spin off each
business unit within this division as a publicly
traded company within the next 12 months. eConnect
shall retain 25% ownership of such companies and
shall issue 1 for 1 stock in the new companies to any
eConnect Shareholder of Record as of September 1,
1999. The eConnect certificate can not be traded
from September 1,1999 onwards.
eConnect Staff.
eConnect staff consists of 7 employees at
777WINS.com, 11 employees at eSportsbet.com, 4
employees at EzyShop, 6 employees at Rogel
Technologies and 5 corporate eConnect staff. The
staff expertise ranges from sportsgaming specialists
to transaction processing specialists to encryption
specialists.
PLAN OF OPERATION
A discussion of the Company's plan of operation over
the next 12 months in incorporated into the
discussion of the Company's business. See
"Description of Business."
DESCRIPTION OF PROPERTY
The Company currently owns the following property in
connection with its operations:
Four servers for the operation of eSportsbet.com and
777WINNS.com, valued at $15,000 each.
(b) Approximately $50,000 of various office
equipment, including personal computers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, certain transactions which
occurred between the Company and its officers and
directors are set forth below. With respect to each
such transaction, the Company believes that the terms
of each transaction were approximately as favorable
to the Company as could have been obtained from an
unrelated third party:
(1) The Company utilized cash accounts maintained by
ET&T to fund day to day operations of the Company
over the period of March 1998 through September 1998.
At August 31, 1998, the net result of these
transactions is a payable to ET&T of $18,969.
(2) The Company issued 1,000,000 shares of
restricted common stock to Thomas S. Hughes during
May 1997 in exchange for service rendered to the
Company. The Company did not receive any cash
consideration for this common stock issuance and has
treated this as an expense to the Company of
$375,000.
(3) On February 18, 1997, Leggoons, Inc. entered
into an Agreement to License Assets from Home Point
of Sales, Inc.("HPOS") (now know as Electronic
Transactions & Technology - "ET&T")) (this agreement
is incorporated by reference at Exhibit 10.1 to this
Form SB-2). ET&T is a privately held corporation 70%
owned by Thomas S. Hughes, President of the Company,
which is focused on the emergence of the Personal
Encrypted Remote Financial Electronic Card
Transactions industry (although this agreement was
entered into prior to Mr. Hughes becoming affiliated
with the Company, it is included here since certain
of the conditions under that agreement have not been
completely fulfilled, as discussed below).
The assets included under this agreement are the
following: (a) The name "Betting, Inc.", as
trademarked by HPOS; (b) The Wagering Gate (receive
incoming data transfer commands from the Host Center
and other competitive Host Centers who have received
ATM and SMART card wagering payment from off site
home or office locations and then who command the
Wagering GATE to alert the recipient gaming companies
that they have been paid and to respond back with an
acknowledgement of such payment; and, the general
promotion and education of home ATM and SMART card
wagering over the Internet through the HPOS Secure
Computer Keyboard or over the telephone through the
HPOS stand alone Infinity unit); (c) the specific
application of Wagering with an ATM card or SMART
card with the Secure Computer Keyboard (any other
uses of the Secure Computer Keyboard, such as Bill
Pay or Impulse Purchase that are not Wagering
transactions, are not included); (d) the HPOS
developed Merchant Response Software for the specific
application only of transacting Off Site ATM and
Smart card Wagering through the Wagering Gate; and
(e) HPOS' interest in the use of and revenue from the
HPOS Personal Encrypted Remote Financial Electronic
Card transaction relating to the Wagering Business in
all HPOS partner countries.
Under terms of this licensing agreement, the Company
is to issue 2,900,000 shares of restricted common
stock to HPOS in exchange for licensing home ATM card
and SMART card wagering technology developed by HPOS.
Of this amount, 2,755,000 shares were placed in
escrow subject to cancellation on February 10, 1998,
in the event the bid price of the common stock of the
Company is not at least $3.00 per share for any
twenty consecutive day period as reported on the
NASD's Electronic Bulletin Board or NASDAQ's Small
Cap Market from the date of the agreement through
February 10, 1998 (this escrow agreement is
incorporated by reference at Exhibit 10.2 to the Form
SB-2).
As of the date of this Prospectus, the terms of the
Licensing Agreement have not been met by the Company.
However, the Company has entered into amendment(s)
of the original agreement that provide for an
extension of the cancellation deadline from February
10, 1998, to September 1, 1999, subject to certain
conditions specified in the agreement. All
conditions set forth in the original agreement need
to be met on or before September 1, 1999. The
Company is currently negotiating an extension of
this Agreement.
The License Agreement also provides that in the event
that the bid price for the common stock of the
Company is more than $3.00 per share for any twenty
consecutive day period, then HPOS shall have the
option to purchase up to 13,822,000 additional shares
of the Company common stock at an exercise price of
$.30 per share.
(4) On April 28, 1997, the Company entered into a
Host Processing Agreement with ET&T for the purpose
of having ET&T act as the bank host processing for
all Company transactions that are sent by terminals
that read credit cards or ATM cards (this agreement
is incorporated by reference at Exhibit 10.3 to this
Form SB-2). ET&T is to charge the Betting, Inc. a
fee of $0.25 per transaction or 2.5% of the wager
being sent by Betting, Inc. to gaming operators.
These transactions are to originate from globally
placed Betting, Inc. equipment and/or Betting, Inc.
licensed operators.
(5) On March 27, 1998, the Company entered into a
License Agreement with ET&T for the purpose of
licensing additional technology for processing
electronic banking transactions (this agreement is
incorporated by reference at Exhibit 10.4 to this
Form SB-2). This licensing supplements the
technology licensed under the Agreement date February
18, 1997. This agreement states that ET&T licenses
the following ET&T products to Betting, Inc. for the
exclusive global usage of wagering by PERFECT
originated ATM cards, credit cards, and smart cards:
The PayMaster, defined as a stand alone terminal that
attaches to phone lines and which calls the ET&T host
processing center with bank data.
The SLICK, defined as a stand alone keyboard terminal
that attaches to phone lines and call the ET&T host
processing center with bank data that has bypassed
the Internet.
The PocketPay, defined as a pocket sized terminal and
telephone that sends bank data by wireless
transmission to the ET&T host processing center.
The TV Pin Pad Remote, defined as a set top box and
TV remote that sends bank data by landline dial up
transmission to the ET&T host processing center.
Each ET&T product is exclusively licensed to Betting,
Inc. on a global basis for the application of PERFECT
wagering at a licensing fee of $2,000,000 each. The
duration of the exclusive license is 20 years. The
licensing fee is to be paid by the Company at the
rate of $30,000 per month; however, under the terms
of this License Agreement, this fee is not due and
payable until the technology for a particular product
covered by the license has been perfected and is
ready for public use. As of the date of this
Form SB-2, only the PayMaster has been perfected and
the licensing fee for this has been paid (as
reflected in the Form 10-QSB for the quarter ended
June 30, 1999).
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) Market Information.
The Company's Shares are traded in the over-the-
counter market and the range of closing bid prices
shown below is as reported by the OTC Bulletin Board.
The quotations shown reflect inter-dealer prices,
without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 1999
High Low
First Quarter 1.0625 0.375
Second Quarter 0.85 0.41
Per Share Common Stock Bid Prices by Quarter
For the Transition Period Ended on December 31, 1998*
High Low
Transition Period 0.98 0.05
* Due to a change in the fiscal year end of the
Company from August 31 to December 31 as a result of
the merger of the Company with Betting, Inc.
(Missouri).
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1998
High Low
First Quarter 0.12 0
Second Quarter ** 0.08 0
Third Quarter 0.15 0.03
Fourth Quarter 0.20 0.06
** The Shares did not trade from February 18, 1998
through February 28, 1998
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1997
High Low
First Quarter 8 5.875
Second Quarter *** 8.125 7.625
Third Quarter *** 0.8125 0.0625
Fourth Quarter 0.5625 0.06
*** The Shares did not trade from December 13, 1996
through April 24, 1997
(b) Holders of Common Equity.
As of August 13, 1999, there were 415 shareholders of
record of the Company's common stock.
(c) Dividends.
The Company has not declared or paid a cash dividend
to stockholders since it became a "C" corporation on
November 18, 1993. The Board of Directors presently
intends to retain any earnings to finance Company
operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of
cash dividends in the future will depend upon the
Company's earnings, capital requirements and other
factors.
EXECUTIVE COMPENSATION
(a) No officer or director of the Company is
receiving any remuneration at this time, except as
follows: Thomas S. Hughes received a salary payment
in June 1999 of $50,000. He had not previously
received any salary from the Company.
(b) There are no annuity, pension or retirement
benefits proposed to be paid to officers, directors,
or employees of the corporation in the event of
retirement at normal retirement date pursuant to any
presently existing plan provided or contributed to by
the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be in the future
directly or indirectly by the corporation to any
officer or director under any plan which is presently
existing.
FINANCIAL STATEMENTS
The Financial Statements required by Item 310 of
Regulation S-B (in the form of the latest Annual
Report on Form 10-KSB and Quarterly Report on Form
10-QSB) are incorporated by reference in this
Prospectus, and are set forth in their entirety as
Exhibits 13.1 and 13.2 to this Form SB-2.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
(a) On August 1, 1998, the Company engaged the
services of George Brenner, C.P.A. of Beverly Hills,
California, to provide an audit of the Company's
financial statements for the fiscal years ended
August 31, 1997 and 1998. The former accountant for
the Company, BDO Seidman L.L.P. of St. Louis Missouri
declined the stand for re-election for the 1997
engagement. The independent auditor's reports for
August 31, 1996 and 1995, were modified as to the
uncertainties about the Company's ability to continue
as a going concern. The decision to change
accountants was approved by the Company's Board of
Directors with the selection of the successor
accountant. The Company and its former accountants
had no disagreement during the fiscal years ended
August 31, 1996 and 1995, and through the date they
declined to stand for re-election.
(b) Effective on July 19, 1999, the independent
accountant who was previously engaged as the
principal accountant to audit the registrant's
financial statements, resigned. This accountant's
report on the financial statements for the past two
years neither contained an adverse opinion or a
disclaimer of opinion, nor was qualified or modified
as to uncertainty, audit scope, or accounting
principles. The decision to change accountants was
approved by the Board of Directors.
During the registrant's two most recent fiscal years
and any subsequent interim period preceding such
resignation, there were no disagreements with the
former accountant on any matter of accounting
principles or practices, financial statement
disclosure, or auditing scope or procedure. In
addition, there were no "reportable events" as
described in Item 304(a)(1)(v)(A) through (D) of
Regulation S-K that occurred within the registrant's
two most recent fiscal years and the subsequent
interim period preceding the former accountant's
resignation.
(c) Effective on July 22, 1999, the firm of Farber &
Hass has been engaged to serve as the new principal
accountant to audit the registrant's financial
statements. During the registrant's two most recent
fiscal years, and the subsequent interim period prior
to engaging that accountant, neither the registrant
(nor someone on its behalf) consulted the newly
engaged accountant regarding any matter.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Information on this item is set forth in Propsectus
under the heading "Disclosure of Commission Position
on Indemnification for Securities Act Liabilities."
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Information on this item is set forth in the
Prospectus under the heading "Use of Proceeds."
RECENT SALES OF UNREGISTERED SECURITIES
None.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-B,
and an index thereto, are attached.
UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers
or sells securities, a post-effective amendment to
this registration statement to:
(i) Include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
registration statement; and Notwithstanding the
forgoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation From the low or high
end of the estimated maximum offering range may be
reflected in the form of prospects filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities
Act, treat each post-effective amendment as a new
registration statement of the securities offered, and
the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold
at the end of the offering.
(d) Provide to the underwriter at the closing
specified in the underwriting agreement certificates
in such denominations and registered in such names as
required by the underwriter to permit prompt delivery
to each purchaser.
(e) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the "Act")
may be permitted to directors, officers and
controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the small business issuer of expenses
incurred or paid by a director, officer or
controlling person of the small business issuer in
the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the small business issuer will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities
Act of 1933, the registrant certifies that it has
reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and
authorized this registration statement to be signed
on its behalf by the undersigned, thereunto duly
authorize, in the City of San Pedro, State of
California, on August 19, 1999.
eCONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
Special Power of Attorney
The undersigned constitute and appoint Thomas S.
Hughes their true and lawful attorney-in-fact and
agent with full power of substitution, for him and in
his name, place, and stead, in any and all
capacities, to sign any and all amendments, including
post-effective amendments, to this Form SB-2
Registration Statement, and to file the same with all
exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange
Commission, granting such attorney-in-fact the full
power and authority to do and perform each and every
act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents
and purposes as he might or could do in person,
hereby ratifying and confirming all that such
attorney0in-fact may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by
the following persons in the capacities and on the
date indicated:
Signature Title Date
/s/ Thomas S.Hughes President, Chief August 19, 1999
Thomas S.Hughes Executive Officer
Director
/s/ Jack M. Hall Secretary, Director August 19, 1999
Jack M. Hall
/s/ Diane Hewitt Treasurer (Principal August 19, 1999
Diane Hewitt Financial and
Accounting Officer),
Director
EXHIBIT INDEX
Exhibit Method of
Number Description Filing
3.1 Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to the
Registration Statement on Form SB-2
filed on July 2, 1999) Incorporated
by Reference
3.2 Certificate of Amendment of Articles
of Incorporation (incorporated by
reference to Exhibit 3.2 to the
Registration Statement on Form SB-2
filed on July 2, 1999) Incorporated
by Reference
3.3 Certificate of Amendment of Articles of
Incorporation See Below
3.4 Bylaws (incorporated by reference to
Exhibit 3.3 to the Registration
Statement on Form SB-2 filed on
July 2, 1999) Incorporated
by Reference
4 Class A Warrant Agreement (incorporated
by reference to Exhibit 4.2 of Leggoons,
Inc.'s Registration Statement on
Form S-1 filed on October 28, 1993). Incorporated
by Reference
5.23.1 Opinion Re: Legality; Consent of
Counsel See Below
10.1 Agreement to License Assets
(incorporated by reference to Exhibit
10.16 to the Form 8-K filed on
February 25, 1997) Incorporated
by Reference
10.2 Escrow Agreement (incorporated by
reference to Exhibit 10.17 to the Form
8-K filed on February 25, 1997) Incorporated
by Reference
10.3 Host Processing Agreement (incorporated
by reference to Exhibit 10.3 of the Form
10-KSB/A for the fiscal year ended
August 31, 1998) Incorporated
by Reference
10.4 Licensing Agreement (incorporated by
reference to Exhibit 10.4 of the Form
10-KSB/A for the fiscal year ended
August 31, 1998) Incorporated
by Reference
10.5 Letter of Commitment (incorporated by
reference to Exhibit 10.5 to the Form
10-QSB for the quarter ended June 30,
1999) Incorporated
by Reference
13.1 Latest Annual Report to Security Holders
on Form 10-KSB/A See Below
13.2 Latest Quarterly Report to Security
Holders on Form 10-QSB See Below
23.2 Consent of Accountant See Below
24 Special Power of Attorney See Signature
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